The development of Islamic banks began to be felt since the amendment to the Law no. 7/1992 to become Law. 10/1998 which provides a clearer basis for the operation of Islamic banks. As
a follow-up bill, Bank Indonesia (BI) started to give serious attention
to the development of Islamic banking, which formed a special unit in
April 1999. This
special unit to handle the research and development of Islamic banks
(Research and Development Directorate of Islamic Banking under the
Banking Research and Regulation) which became the forerunner for Islamic
Banking Bureau, established in May 31, 2001, and now officially a
Sharia Banking Directorate of Bank Indonesia since August , 2003.With
the banyakya number of Islamic banks, Islamic market structure was
changed from monopoly to oligopoly, leading to increasing levels of
competition among Islamic banks. Thus, in order to compete with conventional banks, even this bank changed his strategy. As
of December 2003, players in the Islamic banking industry consists of
two Islamic banks (BUS) and 8 units of sharia (UUS) of conventional
banks (BUK) which all have a network of offices numbered 119 KCS (Branch
Office), and 84 SRB (Sharia Rural Bank). An
increasing number of players in the Islamic banking industry looks
quite rapidly when compared circumstances in late 1998 which amounted to
only 1 BUS with 8 KCS and 78 SRB. As of March 2004, players in the Islamic banking industry consists of 2 BUS and UUS 11 of BUK. BUS
and UUS existing today is Bank Muamalat, Bank Syariah Mandiri, Bank
Rakyat Indonesia Syariah, BNI Syariah, Bank Danamon Syariah, IFI Islamic
Bank, Bank Jabar Sharia, Islamic Bukopin, Bank International Indonesia
Sharia, HSBC, and Bank Ltd Jakarta (March 2004).Investors
to open an office of Islamic banks is not limited on the island of
Java, but it has also spread to other islands are: Sumatra (Banda Aceh,
Medan, Padang, Palembang and Pekanbaru), Kalimantan (Balikpapan and
Banjarmasin), Sulawesi (Makassar); Madura (Pamekasan) and Irian Jaya (Jayapura). With the recent development of the Islamic banking network has covered 18 provinces. In
addition, there are now a number of BUK is in the process of opening
UUS, the Islamic Bank Indonesia (Bank Column), Bank Central Asia (BCA),
Bank of North Sumatra, the State Savings Bank, Bank Niaga, Bank Riau,
Bank Permata, Bank CIC, Bank Bumiputera, and the Bank of South Kalimantan.In 2004, it is estimated there will be 10 more banks that will offer Islamic banking services. This
means that the achievement of a number of Islamic banking during the
past 12 years (1992-2003) at 10 banks, is just a 12 month period in
2004. This is an interesting phenomenon for the banking industry especially in Islamic banking.
Potential and Prospects of Islamic Banking MarketCompetition between Islamic banks and the conventional banks, Islamic banks can not be separated from the existing segmentation in the banking market in Indonesia. Banking market segmentation can be divided into three segments, namely conventional segments, segment and cement floating mass loyalist shariah. Segmentation is valid for both the financing and funding markets.In terms of financial markets, the third difference lies in the view of this segment of the costs to be paid by the customer of a bank (financial markets) or income received (financial markets). Conventional segment will select flowers because flowers are thought to reflect a favorable cost in terms of funding or favorable return in terms of funding. Whereas shari'a loyalist segment will choose Islamic banks, Islamic banks despite the difference in rate is 1-2% above the bank rate of conventional / Non-Bank Financial Institutions (NBFIs) in terms of financing, and 1-2% lower in terms of funding. In contrast, the floating mass segment will tend to choose the lowest cost or the highest return. The selection of Islamic banks would occur if the difference in rate of Islamic banks smaller or larger 2-3% of a conventional bank or non-bank financial institutions.In terms of market size, the largest segment in the segment are actually floating mass. Instead there is the smallest segment of the shariah loyalist segment. According to estimates KARIM Business Consulting (2003), floating mass market segment is estimated to reach Rp 720 trillion. While conventional segment and segment shariah loyalist respectively Rp 240 trillion and Rp 10 trillion.In addition to a very large market size of the floating mass segment, as the name implies, this segment represents a segment that has a behavior that can be moved into position to choose a conventional bank products or choose products of Islamic banks. As a result, a bank that provides services of conventional banks may lose customers if it is not able to provide Islamic banking services.Segment shariah loyalist, on the other hand, represents a segment of the anti to conventional banking services. This attitude is due to the view that interest with riba (unlawful or prohibited). As a result, conventional banks will be difficult to penetrate this segment. In reality, Islamic banks that are part of the dual banking systems (Sharia is a conventional bank) will also have difficulty penetrating this segment because this segment of the view that tends to seek the return of their savings "completely lawful." This segment appears to be easier to be the target market of Islamic banks stand alone as Bank Muamalat Indonesia and Bank Syariah Mandiri.
Challenge: Overheating Islamic BankingA car made its debut Islamic banks in early 2004 with high speed. Just like a car, engine overheating symptoms (over-heating) also experienced the economy including Islamic banking macro-economic context, over-heating is characterized by a rapid rate of inflation exceeds the rate of economic growth, so in real terms the growth even negative growth. In the context of Islamic banks, over-heating is characterized by rapid growth, increasing financing problems, and falling for the results to customers of third party funds (DPK). At a severe over-heating has the effect of contracting diseases such as dengue fever that high heat followed by hemorrhage (bleeding).In the context of banking, bleeding occurs when interest income is less than the cost of interest. While in the context of Islamic banking, finance bleeding occurs when income is less than the cost of overhead.There are two ways to cope with over-heating, which slow the rate of growth or to prepare the system to grow rapidly .. The first option is certainly notdesired by anyone, from BI, economic actors, the public, or MUI. The second option should be equally we formulated. System procedures are reliable, high-quality human resources, and the monitoring system is required to continue to develop fantastic.Level of financing problems of Islamic banking is only half compared to conventional banking. But if you look at the movement it feels like the right time to prevent a worse situation. Relatively stable in percentage value, 4.12% (Dec 2002), 3.96% (Mar 2003), 3.93% (Jun 2003), 3.96% (Sep 2003), 3.67% (Oct 2003) , 3.39% (Nov 2003). In such a fast growing financial circumstances, stable figures does not constitute an encouraging: if the divisor is growing, and the result is the same, it means the split was growing as fast as denominator.Nominally financing jammed up from month to month than Rp 53 billion (December 2002) to Rp 71 billion (November 2003). At the same time, less current financing increased from Rp 51 billion to Rp 84 billion, as special financing increased from Rp119 billion to Rp 344 billion.Surge deposits made Islamic banks excess liquidity, which is evident from the increasing number of Islamic banks funds placed at Wadiah Bank Indonesia Certificates (SWBI). At the same time the task of the National Bank Restructuring Agency (IBRA) is completed. With the completion of the task of IBRA, hundreds of thousands of assets that was originally on IBRA back into the market, it can be restructured, re-financed and active again. The availability of excess liquidity and the availability of ex IBRA assets are ready to be funded right chemical mix for funding boost growth. This is the urgency of this paper. The precautionary principle in the provision of finance should take precedence memproduktifkan funds saved in SWBI. Are not the rules say dar-ul fiqh mafasid muqaddam 'ala jabbal mashalih (prioritize preventing harm more important than looking for benefits).The second option is to buy Islamic bonds and medium term notes (MTN) Islamic increasingly widespread. From the aspect of the rise of this instrument kesyariahan certainly be grateful. But it was not to forget the consequences of the risk of a corporate bond, in this case the rating he got from Pefindo (Rating Agency of Indonesia). Currently, not all of the six Islamic bonds and Islamic MTN issued one, which bears minimum rating of A-. Even though we both know to investment grade (investment grade) do not need A-. Although the risk of default is new will appear 5-7 years later, but at least it should be observed carefully.For results DPK Islamic banks is higher than the interest rate. When interest rates (currently) about 6%, the yield could reach 9%. On the one hand this is certainly encouraging. On the other hand, it must also be examined, especially the decline for the results. In Islamic banking, the results are a direct reflection DPK financing income that is not directly reflect the quality of financing. In banking, interest rates are determined in a meeting ALCO (Asset & Liabilily Committee) that do not directly reflect the performance on the asset. So that when the current interest rate of 6%, next month could be increased to 7%, 8%, 9% or even without the need for improved credit performance. Not so in Islamic banks, especially if we know that 72% of funding is channeled Islamic banking murabaha (sale and purchase financing with fixed installments) which would theoretically provide a fixed level of income rate. When then-sharing deposits declined, then there are two possibilities. First, Islamic banks lose customers profit sharing ratio. Second, financial performance deteriorates. For the former, of course, Islamic banks should ask for a new deal customers will benefit ratio tersebut.Penurunan ratio without customer agreement, would violate Sharia. For the latter, should be observed more carefully.In the aspect of sharia supervision, it is not easy to be responsible for the supervision of Islamic banking transactions so complex given. Impose a heavy burden is only to Shariah Supervisory Board (SSB) is not a realistic way. Sharia Supervision should be a shared responsibility among all stakeholders. Besides DPS responsible for the aspects of sharia, for monitoring the operational aspects of sharia should at least be done by bank internal audit, compliance director, even the commissioner must take maintain compliance with Shariah. An external audit by a public accounting firm should also not be missed not just a violation of sharia compliance. And of course, BI as an authority responsible for banking. All of these institutions according to its competence and authority of each should stand shoulder to shoulder to supervise Sharia.
Potential and Prospects of Islamic Banking MarketCompetition between Islamic banks and the conventional banks, Islamic banks can not be separated from the existing segmentation in the banking market in Indonesia. Banking market segmentation can be divided into three segments, namely conventional segments, segment and cement floating mass loyalist shariah. Segmentation is valid for both the financing and funding markets.In terms of financial markets, the third difference lies in the view of this segment of the costs to be paid by the customer of a bank (financial markets) or income received (financial markets). Conventional segment will select flowers because flowers are thought to reflect a favorable cost in terms of funding or favorable return in terms of funding. Whereas shari'a loyalist segment will choose Islamic banks, Islamic banks despite the difference in rate is 1-2% above the bank rate of conventional / Non-Bank Financial Institutions (NBFIs) in terms of financing, and 1-2% lower in terms of funding. In contrast, the floating mass segment will tend to choose the lowest cost or the highest return. The selection of Islamic banks would occur if the difference in rate of Islamic banks smaller or larger 2-3% of a conventional bank or non-bank financial institutions.In terms of market size, the largest segment in the segment are actually floating mass. Instead there is the smallest segment of the shariah loyalist segment. According to estimates KARIM Business Consulting (2003), floating mass market segment is estimated to reach Rp 720 trillion. While conventional segment and segment shariah loyalist respectively Rp 240 trillion and Rp 10 trillion.In addition to a very large market size of the floating mass segment, as the name implies, this segment represents a segment that has a behavior that can be moved into position to choose a conventional bank products or choose products of Islamic banks. As a result, a bank that provides services of conventional banks may lose customers if it is not able to provide Islamic banking services.Segment shariah loyalist, on the other hand, represents a segment of the anti to conventional banking services. This attitude is due to the view that interest with riba (unlawful or prohibited). As a result, conventional banks will be difficult to penetrate this segment. In reality, Islamic banks that are part of the dual banking systems (Sharia is a conventional bank) will also have difficulty penetrating this segment because this segment of the view that tends to seek the return of their savings "completely lawful." This segment appears to be easier to be the target market of Islamic banks stand alone as Bank Muamalat Indonesia and Bank Syariah Mandiri.
Challenge: Overheating Islamic BankingA car made its debut Islamic banks in early 2004 with high speed. Just like a car, engine overheating symptoms (over-heating) also experienced the economy including Islamic banking macro-economic context, over-heating is characterized by a rapid rate of inflation exceeds the rate of economic growth, so in real terms the growth even negative growth. In the context of Islamic banks, over-heating is characterized by rapid growth, increasing financing problems, and falling for the results to customers of third party funds (DPK). At a severe over-heating has the effect of contracting diseases such as dengue fever that high heat followed by hemorrhage (bleeding).In the context of banking, bleeding occurs when interest income is less than the cost of interest. While in the context of Islamic banking, finance bleeding occurs when income is less than the cost of overhead.There are two ways to cope with over-heating, which slow the rate of growth or to prepare the system to grow rapidly .. The first option is certainly notdesired by anyone, from BI, economic actors, the public, or MUI. The second option should be equally we formulated. System procedures are reliable, high-quality human resources, and the monitoring system is required to continue to develop fantastic.Level of financing problems of Islamic banking is only half compared to conventional banking. But if you look at the movement it feels like the right time to prevent a worse situation. Relatively stable in percentage value, 4.12% (Dec 2002), 3.96% (Mar 2003), 3.93% (Jun 2003), 3.96% (Sep 2003), 3.67% (Oct 2003) , 3.39% (Nov 2003). In such a fast growing financial circumstances, stable figures does not constitute an encouraging: if the divisor is growing, and the result is the same, it means the split was growing as fast as denominator.Nominally financing jammed up from month to month than Rp 53 billion (December 2002) to Rp 71 billion (November 2003). At the same time, less current financing increased from Rp 51 billion to Rp 84 billion, as special financing increased from Rp119 billion to Rp 344 billion.Surge deposits made Islamic banks excess liquidity, which is evident from the increasing number of Islamic banks funds placed at Wadiah Bank Indonesia Certificates (SWBI). At the same time the task of the National Bank Restructuring Agency (IBRA) is completed. With the completion of the task of IBRA, hundreds of thousands of assets that was originally on IBRA back into the market, it can be restructured, re-financed and active again. The availability of excess liquidity and the availability of ex IBRA assets are ready to be funded right chemical mix for funding boost growth. This is the urgency of this paper. The precautionary principle in the provision of finance should take precedence memproduktifkan funds saved in SWBI. Are not the rules say dar-ul fiqh mafasid muqaddam 'ala jabbal mashalih (prioritize preventing harm more important than looking for benefits).The second option is to buy Islamic bonds and medium term notes (MTN) Islamic increasingly widespread. From the aspect of the rise of this instrument kesyariahan certainly be grateful. But it was not to forget the consequences of the risk of a corporate bond, in this case the rating he got from Pefindo (Rating Agency of Indonesia). Currently, not all of the six Islamic bonds and Islamic MTN issued one, which bears minimum rating of A-. Even though we both know to investment grade (investment grade) do not need A-. Although the risk of default is new will appear 5-7 years later, but at least it should be observed carefully.For results DPK Islamic banks is higher than the interest rate. When interest rates (currently) about 6%, the yield could reach 9%. On the one hand this is certainly encouraging. On the other hand, it must also be examined, especially the decline for the results. In Islamic banking, the results are a direct reflection DPK financing income that is not directly reflect the quality of financing. In banking, interest rates are determined in a meeting ALCO (Asset & Liabilily Committee) that do not directly reflect the performance on the asset. So that when the current interest rate of 6%, next month could be increased to 7%, 8%, 9% or even without the need for improved credit performance. Not so in Islamic banks, especially if we know that 72% of funding is channeled Islamic banking murabaha (sale and purchase financing with fixed installments) which would theoretically provide a fixed level of income rate. When then-sharing deposits declined, then there are two possibilities. First, Islamic banks lose customers profit sharing ratio. Second, financial performance deteriorates. For the former, of course, Islamic banks should ask for a new deal customers will benefit ratio tersebut.Penurunan ratio without customer agreement, would violate Sharia. For the latter, should be observed more carefully.In the aspect of sharia supervision, it is not easy to be responsible for the supervision of Islamic banking transactions so complex given. Impose a heavy burden is only to Shariah Supervisory Board (SSB) is not a realistic way. Sharia Supervision should be a shared responsibility among all stakeholders. Besides DPS responsible for the aspects of sharia, for monitoring the operational aspects of sharia should at least be done by bank internal audit, compliance director, even the commissioner must take maintain compliance with Shariah. An external audit by a public accounting firm should also not be missed not just a violation of sharia compliance. And of course, BI as an authority responsible for banking. All of these institutions according to its competence and authority of each should stand shoulder to shoulder to supervise Sharia.
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