The Indonesian government has taken another step towards making the world's biggest Muslim majority country a global hub for the Islamic financial industry, with the inauguration of the high-profile National Committee for Shariah Finance (KNKS) on 27 July by President Joko Widodo.
"The formation of the National Committee for Shariah Finance is part of the government's commitment to develop Islamic finance in Indonesia," Jakarta Globe reported, citing a statement by National Development Planning Minister Bambang Brodjonegoro.
"KNKS has a mandate to accelerate, expand and develop Shariah-compliant financial services to support the country's development," Mr Bambang said.
The committee is formed by the top leaders of the country. The President and the Vice President chair the committee, whose members include the Coordinating Economic Affairs Minister, the National Development Planning Minister, the Finance Minister, the Religious Affairs Minister, the Small and Medium Enterprises Minister, the Financial Services Authority Chairman, Bank Indonesia Governor, the Deposit Insurance Agency Chairman and the Chairman of the Indonesian Ulema Council.
Although KNKS is not a government agency, it has a strategic role in providing recommendations to the administration regarding Islamic finance. It also has the authority to supervise and evaluate strategic programmes in the industry.
The establishment of KNKS is based on a presidential decree signed in November 2016. Last August, the Indonesian government launched a national master plan to develop the Islamic finance industry, with proposals including issuing sukuk and setting up the coordination committee.
Although Indonesia's Islamic finance sector lags behind those of Malaysia and Saudi Arabia, the country has the world's biggest number of Islamic finance organisations — including 34 Shariah-compliant lenders, 58 takaful operators, seven Shariah venture capital firms and around 5,500 Shariah cooperatives.