WORLD ISLAMIC ECONOMIC FORUM
———————–Catatan Mafia Gombak———————-
6th World Islamic Economic Forum (WIEF) was held in Kuala Lumpur for three days (18th-20th of May) which invited the major heads of state and government, industry leaders, rising industrialists of the Muslim world, to debate and discuss trade and economic issues affecting the globe today. It provided an opportunity for investors, fund managers, entrepreneurs, bankers, and other stakeholders of the business community to know the best technologies and strategies to get sustainability in the long run.
Actually, WIEF is an international conference which provides an international business platform to people of Muslim nations and communities to assemble for the business opportunity. Susilo Bambang Yudhoyono was one of among the world leaders participating in this forum. In his speech of inaugural session, he stressed the importance of togetherness and cooperation among the nations to face the current global problems.
SBY also invited the Muslim world investors to come in Indonesia. Indonesia which is the biggest economy in Southeast Asia and the highest Muslim population in the world has promising business opportunities such as in terms of energy, mining, infrastructure and agriculture. He then introduced what Indonesia government has done so far to increase the investor trust such as combating the corruption, increasing the quality of human resource and improving the relationship between the business owners and workers.
Every Muslim nation has its uniqueness and strength to cooperate each other in order to get the mutual benefit among them for example the rich Gulf Countries has the excessive petrodollar due to windfall profit from the soaring oil prices and Indonesia has large business opportunities. So, the rich Gulf Countries could invest their excessive capital in Indonesia’s market. The WIEF is aimed to bridge this golden opportunity among the nation Muslim and other communities to mutual benefit among their strengths.
As known today, Muslim world has opportunity to play a significant role in the global financial system especially in terms of Islamic banking and financial system which has become the fastest growing financial segments in the international financial system. Even the Islamic economic analysts who gathered at International Islamic Finance Forum 2010 predicted that the assets of shariah banking will reach USD 4 trillion in 2020.
Currently, the assets of Islamic finance are expected to reach USD 1 trillion. Islamic finance products have attracted the European investors like England and Swede who are looking for diversification of financing and also this industry has successfully become an alternative investment in Asia countries such as Singapore, Malaysia, Hong Kong, South Korea, Indonesia and also Australia.
The development of Islamic finance industry today is not motivated by religious sentiment at all but due to its industry which promises high business profit for its stakeholders. Ideally, Indonesia as the largest Muslim population and has stable domestic economic performance should take more portion in this industry. Unfortunately, in fact the total market share of shariah banking in Indonesia is still below 5 percent of national banking and it is still under one percent (0, 79%) of the total assets of global Islamic banking.
Based on the research of Indonesian Bank (2009), the demand for shariah-based financial instruments around the world was concentrated in sukuk, equity, trade finance, commodity murabaha, property, and leasing. The more significant development of Islamic finance is the development of the sukuk (bond) market.
As at the end of 2008, total global sukuk issuance stood at USD 14.9 billion, down significantly by 56 percent from approximately USD 34.4 billion in 2007. The primary sukuk market continued to be dominated by Malaysia accounting for 37 percent of total new issuances, and closely trailed by the United Arab Emirates (UAE) with 35.6 percent.
The long term prospects for the sukuk market are expected to remain strong, given the increasing popularity of shariah-compliant products, support from governments for Islamic finance, huge investment and financing requirements in the Gulf Co-operation Council (GCC) countries and Asia, and the desire of issuers to tap investors from the Middle East and Muslim Asia.
Infrastructure will underpin growth in Asia over the next decade and remains one of the fastest growing industries in the region and globally. And also over the last view years is attributable to the changing demographics of Asia, rapid population growth, urbanization trends and improvement in living standards.
As conclusion, Indonesia government and its business people should dynamically involve in the world economic forum especially in World Islamic Economic Forum to take more benefits and advantages from them. Indonesian delegation can promote the Indonesia’s enormous resources to the world to attract Muslim investors through shariah-based financial instruments.
Master Student in Economics