JAKARTA (TheInsiderStories) - Global Islamic Finance assets are forecast to reach US$3.69 trillion by 2024, according to the latest report by Refinitiv and the Islamic Corporation for the Development of the Private Sector. The amount increased by 14 percent compared to a year ago totaling of $2.88 trillion.
In detail, the report said, Islamic Finance assets of Gulf Cooperation Council reached $1.2 trillion in 2019, followed by Middle East and North Africa at $755 billion, and Southeast Asia amounting to $685 billion. The Islamic banking sector contributes the bulk of the global assets.
These sector grew 14 percent in 2019, equating to $1.99 trillion in global assets, showed by the report. This compares with just 1 percent growth in 2018 and an average annual growth of 5 percent over the period 2015 to 2018.
According to the report, the top five developed countries in relation to Islamic Finance are Malaysia, Indonesia, Bahrain, Uni Arab Emirates, and Saudi Arabia. This year, Indonesia displayed one of the most notable improvements in the Islamic Finance Development Indicator, moving into second place for the first time due to its high knowledge and awareness ranking.
David Craig, CEO of Refinitiv, commented “A lack of relevant, actionable data has held back the Islamic finance industry for too long. That’s why the Islamic Finance Development Indicator is now such an important tool for policy makers and market participants.”
He continued, “This market is worth nearly $3 trillion already and I’m excited about its future, particularly when it comes to SUKUK and because Islamic finance has so much in common with sustainable finance - one of the most significant trends in global business today.”
It said, the pandemic was a game changer as several Islamic banks reported losses and reduced profits throughout this year. The pandemic has also led to growth in some areas of the industry as some regulators turned to Islamic finance to mitigate the economic impact.
Corporate SUKUK issuance has also picked up after a cautious halt in the first quarter of 2020. The report indicates that companies are taking advantage of low borrowing costs to shore up their finances, while the pandemic continues to batter trade and economies.
In October, vice president, Ma’ruf Amin, aimed to bring Indonesia become the world’ largest halal producer by 2024, considering 87 percent of the nation’ population are Moslem. While, finance minister, Sri Mulyani Indrawati sees the total potential value of Indonesian halal food exports could reached US$229 million.
Referring to the 2019 Global Islamic Economic Report, he said, the largest halal producer in the world is Brazil, whose exports are valued at $5.5 billion and Australia with total exports worth of $2.4 billion. The global demand for halal products in 2018 stood at $2.2 trillion and is projected to touch $3.2 trillion by 2024, he adds.
Amin stated, with an estimated Moslem population could reach 2.2 billion people in 2030, the global halal industry market economy will continue to increase rapidly. He asserted, this is a huge potential that Indonesia must take advantage to meet the global needs through export of halal products from Indonesia.
So far, the government has provided fiscal incentives to encourage investment and to boost the halal products export. She highlighted the incentives in form of tax holidays, tax allowances, import income tax, and super deduction for vocational research and training.
The consumption value of Indonesian halal products in 2018 reached US$220 billion, and is projected to increase to $330.5 billion in 2025. Seeing the great potential, the industry ministry together with other stakeholders is trying to accelerate sharia economy growth from a regional aspect by encouraging the preparation of a halal industrial ecosystem with the issuance of of the minister of industry regulation Number 17 of 2020.
Written by Editorial Staff, Email: theinsiderstories@gmail.com
