In a bid to enhance monitoring on Indonesia’s financial services sector, to deepen financial markets, and to widen people’s access to financial services, the Financial Services Authority (OJK) has introduced 20 new rules ranging from corporate governance to microfinance. The institution also revised Islamic banking rules involving asset quality and capital adequacy in an effort to increase the role of Islamic banking (sharia banking) in Indonesia’s financial system. Authorities target that Islamic banks hold more than 15 percent of the market by 2023.
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5 August 2020 (closed)
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Today's Headlines Otoritas Jasa Keuangan
Having the world’s largest Muslim population and experiencing sustained economic growth at a pace of +5 percent implies that Indonesia harbours great potential for Islamic finance (sharia banking). However, Indonesia is yet to tap the full potential of the Islamic financial services market. As an illustration, with a figure of USD $24 billion, Indonesia’s Islamic banks only held 4.9 percent of the country’s total banking assets in 2013. This is small compared to Malaysia (where Islamic banking holds a 20 percent market share).
Indonesia’s Financial Services Authority (OJK) announced that it is studying the requests of seven Indonesian companies to conduct an initial public offering (IPO) on the Indonesia Stock Exchange in the first semester (January-June) of 2014. If the OJK grants permission to these requests, it means that 17 companies will have conducted an IPO on the Indonesia Stock Exchange (IDX) in the first half of 2014. In total, 30 new company listings are expected on the IDX in 2014.
Credit growth in Indonesia's banking sector in 2014 is estimated to range between 17 and 18 percent. This estimation is higher than the central bank's target of 15 to 17 percent but lower than credit growth in 2013. According to Indonesia's Financial Services Authority (Otoritas Jasa Keuangan, OJK), this pace of growth is at a safe level. Third party funds are projected to grow 16 to 16.5 percent, while the OJK did not provide an estimation of the loan to deposit ratio (LDR) yet although it did say that the LDR was at a safe level too.
The Financial Services Authority of Indonesia (Otoritas Jasa Keuangan, abbreviated OJK) is studying the possibility to raise the minimum ratio of shares that has to be offered to the public for an initial public offering (IPO) to 30 percent. Currently, a company that conducts an IPO on the Indonesia Stock Exchange (IDX) needs to offer at least 10 percent of its enlarged capital to the public. Previously, the stock exchange had suggested to raise the minimum ratio to 20 percent. However, the OJK seems eager to push the boundary higher.
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Syariah banking or Islamic finance is a large untapped potential in Indonesia, a country where about 13 percent of the total global Muslim population live. With nearly 90 percent of the 250 million people in Indonesia adhering to Islam, the market share of syariah (sharia) finance is remarkably low. At USD $24 billion, Islamic banks in Indonesia only held 4.9 percent of the country’s total banking assets in 2013, hence making Indonesia’s Financial Services Authority (OJK) decide to launch a five-year roadmap in a move to boost syariah banking.
Bank Indonesia (the central bank of Indonesia) and the Financial Services Authority (OJK) signed an agreement (the ASEAN Banking Integration Framework, abbreviated ABIF) with Malaysia’s central bank to support banking integration in the ASEAN region. The website of Bank Indonesia states that ABIF “provides an operating framework for ASEAN member states to implement principles and the integration process in the banking sector to support the ASEAN Economic Community (AEC) [which is to be implemented later this year]”.
The Financial Services Authority (Otoritas Jasa Keuangan, OJK) of Indonesia announced that it has declared five Indonesian insurance companies insolvent as they do not meet capital requirements. OJK official Dumoly Freddy Pardede said that Bakrie Life, Asuransi Jiwa Tugu Mandiri and MAA General Assurance are three of the five insolvent companies. He refrained from mentioning the names of the other two insurance companies. The OJK will continue to monitor the five companies and force them to meet all capital requirements.
Today (31/12), the central bank of Indonesia (Bank Indonesia) officially transfers its authority to regulate and supervise the banking sector to the Financial Services Authority (Otoritas Jasa Keuangan, abbreviated OJK). Muliaman D. Hadad, Chairman of the Board of the OJK, said that all functions, duties as well as powers of regulation and banking supervision, licensing, inspection, investigation and consumer protection have been transferred to the 35 (regional) offices of the OJK.
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