Development of Islamic Economics Based on Publicity

 

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Indonesia as a country with the largest Muslim population in the world has high potential to develop the Islamic economic sector. The Islamic economic sector includes many industries such as Islamic banking, non-bank finance, capital markets, Islamic hospitals, hotels, tourism, halal food, fashion and many more. Based on the report of The State of The Global Islamic Economy 2020, Indonesia is now in 4th position, increasing from 5th position in 2019 and the previous year which was in 10th position.

The Islamic economic system can be an alternative to the conventional banking system because this system has a strong enough resistance to the global financial crisis like now. As stated by the Minister of Finance Sri Mulyani Indrawati, the performance of Islamic banking in the country recorded stable growth, even higher than conventional banking in the midst of the Covid-19 pandemic. “What is interesting is that in the very pressing conditions caused by Covid-19, national banking intermediation tends to decline, but the performance of Islamic banking is actually stable and grows higher than conventional banks,” [1]

In terms of assets, Islamic banking recorded higher growth. , namely an increase of 10.97 percent on an annual basis, compared to conventional banks whose growth was recorded at 7.7 percent on an annual basis. Islamic banking third party funds (DPK) in the same period were recorded to have grown by 11.56 percent on an annual basis, slightly above the increase in TPF by conventional banks of 11.49 percent. Meanwhile, from the financing side, Islamic banks grew 9.42 percent annually, much higher than conventional banks which only grew 0.55 percent annually.

 

In terms of endurance, Islamic banking capital also tends to be stable, with a capital adequacy ratio (CAR) recorded at 23.5 percent and a non-performing financing ratio (NPF) of 3.31 percent. This means that the performance of Islamic banking, which is still progressing positively even in the midst of this crisis, can be used as a bridge or initial capital to continue to develop a good quality Islamic financial ecosystem.