Time for Indonesia's Islamic Finance to Become Impact-Oriented
Global sharia finance is entering a critical phase. The State of the Global Islamic Economy Report (SGIE) 2025/26 notes that global Islamic finance assets reached US$5.99 trillion in 2024 and are projected to rise to US$9.72 trillion by 2029. In the global Islamic finance sector rankings, the top five spots are occupied by Malaysia, Saudi Arabia, the United Arab Emirates, Iran, and Bahrain. Indonesia has not yet entered the top five. This is not merely a matter of ranking; it is a signal that Indonesian sharia finance needs fundamental reform to ensure it is not only growing institutionally but also strongly in terms of impact.
Indonesia actually possesses significant capital. It has a large Muslim population, a very expansive landscape of MSMEs, widespread pesantren (Islamic boarding schools), a continuously growing halal market, increasingly recognised sharia capital market instruments, and zakat, infak, sedekah, and wakaf (Islamic endowments) that have strong social roots. The Financial Services Authority (OJK) recorded that total national sharia financial assets as of June 2025 reached Rp 2,972.94 trillion, growing 8.21 percent year-on-year, with a market share of 11.47 percent of the national financial industry. However, this growth must be examined critically. Expansion does not necessarily mean depth, growth is not always equitable, and being strong in assets does not guarantee the benefits are felt by the community.
This is the most important homework. Indonesian Islamic finance must not be solely preoccupied with chasing figures, assets, rankings, profits, and product expansion. The lower-middle class community is not waiting for news about trillions of rupiah. They are waiting for benefits that are closer to their daily lives: easily accessible business capital, fair financing, instalments that do not ensnare, more affordable housing, small traders who are not dependent on loan sharks, farmers who do not always lose out to middlemen, and MSMEs capable of moving up a class. Therefore, Indonesia’s lagging behind the global top five must be used as momentum for improvement. It should not merely be an ambition to chase a ranking. Rankings are important as a reflection of competitiveness, but the ultimate goal of Islamic finance is not to become large on paper reports, but rather to become useful in people’s lives.
The measure of success must shift from asset-driven Islamic finance towards impact-driven Islamic finance; from assets to access, from contracts to impact, from products to solutions. Indonesia needs to offer the world a model of Islamic finance as an infrastructure for social mobility. This means sharia finance must become a pathway for underprivileged communities to move upward: from informal businesses to bankable enterprises, from aid recipients to producers, from micro-traders to suppliers in the halal chain, from consumptive pesantren to productive economic centres, and from vulnerable families to families possessing economic resilience.
The first agenda is connecting Islamic finance with the halal value chain. Sharia banks, Sharia Rural Banks (BPRS), Baitul Maal wat Tamwil (BMT), sharia cooperatives, sharia fintech, sukuk, zakat, and waqf must not operate in silos. All must enter the ecosystem of halal food, modest fashion, halal cosmetics, halal pharmaceuticals, the Muslim creative economy, Muslim-friendly tourism, and halal product exports. Sharia financing must be present from raw materials, production, certification, packaging, distribution, and digitalisation, right through to access to global markets.
The second agenda is making MSMEs the centre of strategy, not a mere complement. Many small business operators lack collateral and neat financial reports, yet they possess transactions, reputation, community ties, discipline, and market access. This is where technology must be employed to build trust-based financing — financing based on transaction data, communities, cooperatives, pesantren, supply chains, and business track records. Technology in Islamic finance must not become a selection tool that further excludes the common people, but must instead become a bridge for building new trust.
The third agenda is elevating the class of zakat and waqf, transforming them from charity into instruments of transformation. Zakat can act as a social cushion for vulnerable groups. Productive waqf can finance clinics, vocational schools, food warehouses, halal slaughterhouses, logistics centres, MSME incubators, and productive community assets. If zakat and waqf are combined with commercial sharia financing, the risk of financing for the people can be reduced and access for the underprivileged community can be widened.
The fourth agenda is improving literacy and inclusion. The 2025 National Survey of Financial Literacy and Inclusion (SNLIK) shows that sharia financial literacy is only at 43.42 percent, while sharia financial inclusion is a mere 13.41 percent. This means that while quite a number of people are beginning to recognise the concept of sharia finance, they have not truly utilised its services. This gap should serve as an alarm. Sharia products must not only be correct in terms of their contracts; they must also be easy to understand, accessible, trusted, and relevant to the needs of the community. Sharia financial education also needs to change. It should not stop at seminars, slogans, and ceremonies. Farmers need assistance with calculating planting costs. Fishermen need a financing scheme that matches the fishing season. Market traders need help managing cash flow. Housewives need access to savings, protection, and micro-financing. Young people need to be directed towards healthy sharia investment, not speculation. MSMEs need assistance with creating simple bookkeeping in order to become eligible for financing.
At a global level, Indonesia does not need to simply imitate Malaysia or the Gulf countries. Indonesia must build its own model: an archipelagic Islamic finance that is inclusive, productive, digital, and community-based. This model connects large banks with BMT, fintech with cooperatives, sukuk with public projects, waqf with social infrastructure, zakat with poverty alleviation, and sharia financing with halal product exports. The spirit of sharia finance is justice, partnership, transparency, public benefit, and protection from exploitation. A product that is legally sound according to its contract but does not solve the people’s problems will struggle to build loyalty. Conversely, a product that is fair, simple, productive, and whose benefits are truly felt will be championed by the public naturally.