Indonesia leads as world's largest digital Islamic economy 

Indonesia hosts the world’s largest digital Islamic economy by market size, valued at $40.57 billion in 2022, a new study has said. 

It is expected to grow to $76.09 billion by the year 2027 driven by a thriving Muslim population and growing e-commerce revenue. 

The Indonesia Digital Islamic Economy Report 2023/24, produced by DinarStandard in partnership with the Indonesia Halal Lifestyle Center, reveals that the Southeast country comprised 15% of the global digital Islamic economy valued at $266.14 billion in 2022. 

The US came in second, raking in $25.5 billion in digital Islamic economy revenue in 2022. It was followed by China ($22.8 billion), Türkiye ($20 billion), and Saudi Arabia ($14.9 billion). Iran, the UAE,  the UK, India and Egypt rounded off top 10 markets. 

The report, which defines digital Islamic economy as digital-native, consumer-facing services driven by Islamic content or requirement, identifies 127 players in Indonesia, that extend such offerings. 51 of    the companies are Islamic fintech providers, highlighting the growing demand for Shariah-financing technology. 

Halal foodtech is the second-largest sector across Indonesia's digital Islamic economy, accounting for 20 companies. Of the pack, eight companies are unicorns, seven of which belong to the commerce and exchange category. 

"The launch of the Indonesia Digital Islamic Economy Report 2023/2024 aims to provide a deeper understanding of the landscape and prospects of the Islamic digital economy in Indonesia. This report offers a comprehensive analysis of trends, challenges, and opportunities in this sector, as well as strategic recommendations for stakeholders to further drive growth," said Suharso Monoarfa, Indonesian minister of national development planning and head of national development planning agency.

“The digital economy has become a crucial driver of Indonesia’s overall economic growth, and the intersection of digital innovation with Islamic principles and the growing halal lifestyle market is creating new opportunities for businesses, consumers, and investors alike,” added Rafi-uddin Shikoh, managing partner and CEO at DinarStandard.

From a provincial standpoint, West, East and Central Java have the largest digital Islamic economies in Indonesia. In 2022, the digital Islamic economy in West Java was worth $8.1 billion, East Java was worth $6.04 billion and Central Java was worth $5.88 billion. 

The report states 15 strategic recommendations, including the establishment of a dedicated digital Islamic economy entity. These recommendations are driven by three  key performance indicators (KPIs).  

"Looking ahead, the vision for Indonesia’s digital Islamic economy is to increase its  global share to 17% by 2029, contributing significantly to national GDP and creating over 200,000 new jobs," added Shikoh.