“Experience in countries which have successfully developed Shariah banking shows that tax incentives are very helpful in expanding the industry,” he told reporters. The study may be completed by the end of this year, said Siregar, declining to provide more details.
Islamic banking assets in Indonesia totaled 75 trillion rupiah at the end of last year, about 2.9 percent of the total, Siregar said in August. That compares with Malaysia’s 337.6 billion ringgit ($109 billion), accounting for 20 percent of the country’s total, according to Bank Negara Malaysia’s website.
Indonesia needs to do more to bolster investment in Islamic banking, said Ventje Rahardjo, president director of Jakarta- based PT Bank Syariah BRI, a unit of Indonesia’s second-largest lender by assets.
“We have been asked by the government to share our views” on this issue, Rahardjo told reporters. “We are discussing what types of things might help Shariah banks to compete with conventional banks because our Islamic finance industry is still in its infancy.”
Malaysia’s Prime Minister Najib Razak said on Oct. 15 the country plans to cut taxes on certain types of Shariah-compliant transactions to promote innovation in the industry that has total assets of $1 trillion. The government also announced plans last week to start selling Islamic bonds to individual investors
In the past year, Malaysia has also issued permits to global investors including Aberdeen Asset Management Plc and Franklin Templeton Investments to start Islamic fund management businesses.