June, 25, 2010

Islamic banking in Indonesia is poised to be the next catalyst of growth for the banking industry and holds great opportunities for foreign investors as the country has the world’s largest Muslim population.“At the moment, Islamic banking has only a 2% share of the banking sector in the country,” said Ch’ng Ching Hon, CEO of Succsani Corporate Advisory.Recognising the country’s Islamic banking potential, Malayan Banking Bhd (Maybank) announced on Wednesday it would convert its Indonesian unit, PT Bank Maybank Indocorp, into an Islamic bank.

Maybank did not give a timeline for the conversion.Reuters quoted Indonesia’s central bank deputy governor Muliaman Hadad as saying that the Malaysian bank would set up a syariah bank by August.While Malaysia and Singapore vie to be the regional hub for Islamic banking, Succsani does not foresee Indonesia becoming a future contender as it has a huge domestic market.Indonesia is still in its infancy in terms of Islamic banking. It will probably not compete with Malaysia per se to be a regional player as it has its own market to grow and focus on,” said Ch’ng.