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The plans of two of Indonesia’s largest Islamic-based banks,
Bank Syariah Mandiri (BSM) and Bank Muamalat, to hold an initial public
offerings (IPO) have been dampened by Bank Indonesia (BI), the
country’s banking regulator, which has suggested that the banks bide
time before floating their shares on the bourse.
BI director for
sharia banking, Edy Setiadi, says that there are still problems plaguing
Islamic-based banks’ operations in Indonesia, such as their huge
reliance on haj funds managed by the Religious Affairs Ministry, which
is the reason the country’s sharia banking has seen lower-than-expected
growth in recent months.
“They should proceed when they have a
firm foothold in the banking industry, and their brand name is
recognized among the public,” he told reporters at BI headquarters in
Jakarta recently.
Both Bank Muamalat, the country’s oldest
Islamic-based bank, and BSM, the sharia unit of Indonesian lending giant
Bank Mandiri, have announced their plan to hold IPOs as early as next
year to boost their capital for expansion, as well as to comply with the
new banking ownership rule.
Under the new banking regulation,
banks that are owned by other banks are obliged to float at least 20
percent of their shares on the Indonesia Stock Exchange (IDX) within
five years, starting in 2014.
Analysts say that Islamic-based
banks in Indonesia still had ample room to expand their business,
considering the country’s massive Muslim population, as well as the
rapid growth of the country’s sharia banking. The assets of
Islamic-based banks have increased on average 49 percent every year, far
outperforming commercial banks whose assets grew only 11.7 percent
annually, according to a data from the Indonesian Sharia Banks
Association (Asbisindo).
The robust growth and large potential of
Islamic banking in Indonesia, which has the highest Muslim population
in the world, have turned the heads of foreign investors, with at least
three companies originating from the Mideast expressing interest in
investing in Indonesia, a top official at the central bank says.
The
robust growth of Indonesia’s sharia banking, however, faced a speed
bump recently after the Religious Affairs Ministry withdrew around Rp 7
trillion (US$731.5 million) of haj funds from the vaults of Indonesian
sharia banks to invest it in state Islamic bonds, called the Indonesian
Haj Funds Sukuk (SDHI).
The withdrawal dried up Indonesian sharia
banks’ third-party funds (DPK), which increased only 3 percent in the
first half of this year, compared to 51 percent a year earlier,
according to BI data. The sharia banks’ assets growth also decreased to 7
percent from last year’s figure of 48 percent.
Responding to
BI’s suggestion, Bank Muamalat president director Arviyan Arifin said
that proceeding with the IPO would be beneficial as it would encourage a
higher degree of transparency and internal management. He also
dismissed concerns over the slowing growth of sharia banking in
Indonesia. “The potential for growth in sharia banking in Indonesia is
still high, we still have ample room to expand,” Arviyan told The
Jakarta Post over the weekend.
(sat)
source: thejakartapost.com
6:21 AM
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