Indonesia’s Islamic economy, finance committee to cover 4 areas including halal products development
JAKARTA – Indonesia’s National Committee for Islamic Economy and Finance (KNEKS), formerly the National Islamic Finance Committee (KNKS), will focus on four areas according to new presidential decree number 28/2020 effective on February 10, 2020.
The four areas are halal products industry development, Islamic finance development, Islamic social finance development, and increasing Islamic business activities, Dr. Sutan Emir Hidayat, its Director of Education and Research told Salaam Gateway after KNEKS’ first meeting on Feb 21 with its newly-appointed daily chairperson Vice President Ma’ruf Amin.
With the new focus areas, the Vice President has called for an additional directorate to be formed within the executive management of KNEKS that currently holds six directors, said Dr. Sutan.
In addition, there will be an adjustment to the action plan that breaks down the 443-page Shariah Economy Masterplan (MEKSI 2019-2024).
After the formation of the new executive management and the adjusted action plan that will be completed by next month, there will be a plenary meeting with President Joko Widodo, who remains the committee’s overall chair.
“In short, the government wants to strengthen this committee through the new presidential decree,” said Dr. Sutan.
“According to the decree, the Finance Minister has been appointed as the secretary of this committee. During the meeting, the Vice President instructed the secretary, advisers to the Vice President and us (executive management) to formulate a new nomenclature in accordance with the presidential decree. For example, we currently don't have any directorate that handles Islamic business activity development,” he added.
VP Ma'ruf also gave detailed instructions on each new focus area, according to Dr. Sutan.
These include the formulation of a national strategy for the development of the halal products industry, in coordination with relevant ministries and agencies such as the Coordinating Ministry for Economic Affairs, Ministry of Industry, Ministry of Trade, Majelis Ulama Indonesia, and the Ministry of Cooperatives and SMEs.
As part of this new strategy, there will be a focus on a few areas, including ensuring there are enough halal industrial zones and offering big incentives for them, as well as research on halal substitutes for non-permissible raw materials.
There is a long list of tasks for the Islamic finance focus.
“For Islamic finance development, there should be enough attractive incentives to boost the industry development, increase innovation for Islamic finance products, increase HR quality, increase digitization, review the laws on Islamic banking and insurance which are related to the spin-off plan of Islamic business units of the conventional banks and insurance companies, create the first Islamic investment bank, and increase Islamic financial literacy,” said Dr. Sutan.
“Several ministries and institutions that will be in charge of this are the Financial Services Authority (OJK), Ministry of Finance, Ministry of State-Owned Enterprises, the central bank, and the Ministry of Religious Affairs,” he added.
There is also a long list of to-dos for Islamic social finance. Focus areas include reviewing the zakat law, digitizing zakat management, establishing a reliable database to measure national zakat potency, reviewing the waqf law, digitizing waqf, creating a national waqf database, increasing national cash waqf activities, and providing Islamic microfinance to mosques and Islamic schools. Action plans for these will involve the Ministry of Cooperatives and SMEs, OJK, and the central bank.
“For the last area, increasing Islamic business activities, there should be programs to improve the ease of doing business for the micro, small and medium enterprises which run halal businesses, such as simpler license approvals, ease of getting halal certificates, providing access to financing, improving competency, improving competitiveness and market expansion,” said Dr. Sutan.
This will involve the Indonesian Chamber of Commerce and industry, the Ministry of Tourism and Creative Economy, the Ministry of Cooperatives and SMEs, the Ministry of State-Owned Enterprises, and the Coordinating Ministry for Economic Affairs.
(Reporting by Yosi Winosa; Editing by Emmy Abdul Alim emmy.abdulalim@salaamgateway.com)
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