Islamic Economics and Innovations in Development Financing

By Irfan Syauqi Beik, Dean and Professor at the Faculty of Economics and Management, IPB University. Islamic economics has shown a rising performance over the past decade. Based on Bank Indonesia’s 2025 Kajian Ekonomi dan Keuangan Syariah Indonesia (KEKSI) report, released in February, the contribution of the Halal Value Chain (HVC) sector to our national GDP rose from 25 percent in 2024 to 27 percent in 2025. The growth of the HVC sector stood at 6.21 percent in 2025, up from 4 percent in the previous year. BI data also shows that this growth is led by three flagship sectors: halal agriculture and food & beverage, Muslim-friendly tourism, and Muslim fashion. The growth is supported by robust consumption, price stability and improving investment in the halal sector. Likewise, the performance of the Islamic financial sector has shown an upward trend. For instance, financing by Islamic banks grew around 9.66 percent. This growth is supported by financing for the HVC sector, which is very strong, proving that the real economy and the Islamic financial sector are increasingly robust. Halal food & beverage and Muslim-friendly tourism are the two sectors where Islamic bank financing grew around 20 percent. In addition, the performance of the Islamic social finance sector, particularly ZISWAF (zakat, infak, sedekah and wakaf) and other religious social funds (DSKL), has also shown encouraging development. Zakat collection reached Rp 41 trillion in 2024, up 26.9 percent from the previous year’s Rp 32.3 trillion. Meanwhile wakaf monetary collection surpassed Rp 3 trillion in the same year. With the above performance, it can be concluded that the development of Islamic economic and financial instruments is on the right track. However, efforts to strengthen inclusive and just Islamic economic development must continue. There remains a very large gap between state revenue capacity and the volume of development financing required, especially in achieving sustainable development goals by 2030. Therefore, several innovations need to be developed further. At least two innovations are necessary, which will be discussed in detail at the Islamic Economy Seminar in Surabaya, on 7 March 2026, organised by Syarikat Islam and OJK East Java.