Purbaya: Sharia Economy Must Become Mainstream, Not Merely a Label
Finance Minister Purbaya Yudhi Sadewa has affirmed that Indonesia’s sharia economy must no longer be treated as mere jargon or a relabelling exercise. He demanded that the sector genuinely become part of the country’s overarching national development strategy, on an equal footing with the green and digital economies.
The Irony of Islamic Finance Centres
Speaking at the Sharia Economic Forum held last week, Purbaya highlighted a glaring irony: Indonesia has the world’s largest Muslim population, yet the centres of Islamic finance are in London, Hong Kong, and Singapore. “We are very far behind in this regard,” he said.
Criticism of Sharia Banking Practices
His sharpest criticism was directed at sharia banking practices — whilst the term “riba” (usury) is avoided, financing costs are often higher than their conventional equivalents. Purbaya cautioned that a sharia economy is not simply about replacing the word “interest” with “margin” or “profit-sharing”. If the practice remains expensive and burdensome for businesses, then the substance has not changed.
Germany as a Model
Purbaya pointed to Germany, where the banking sector is dominated by small and regional banks operating on slim margins — deposit rates of one per cent and lending rates of two per cent. The focus is on sustainability and the real economy rather than chasing large profits. He argued that this model creates stability and fairness closely aligned with sharia principles.
Minimal Support for the Sharia Economy
“Throughout my years as an economist — 25 years I have been an economist — I have always observed that we have a large Islamic economy, but the support for the sharia economy has been virtually non-existent,” Purbaya stated. He added that the problem lies not only with the government but also with the Muslim community itself, which he characterised as tending towards passivity. If the sharia economy is to be built, he said, it must be pursued earnestly, not merely through labelling.
Sukuk, Halal Industry, and MSMEs
Purbaya also addressed the large volumes of sukuk and green sukuk that have been issued. These instruments are not merely tools for financing the state budget but vehicles for building the sharia ecosystem. However, without genuine flows into micro, small, and medium enterprises (MSMEs), the halal industry, and productive sectors, the figures remain nothing more than numbers on paper.
Sharia Economy as a Core Pillar
The Finance Minister affirmed that the direction of fiscal policy going forward will position the sharia economy alongside the green and digital economies. However, he stressed that its development requires strong commitment from both the government and the financial industry to ensure it does not stall at the conceptual level.