More growth in Indonesian Islamic banks seen

More than 80 percent expected growth would depend on effectiveness of regulations like eliminating double taxation.

While Islamic banking had activated total assets of Rp 61.4 trillion ($6.54 billion), as of November, Bank Indonesia (BI) predicted it could post a 37 percent increase from the previous year, with total assets reaching Rp 68 trillion ($7.2 billion) by the end of 2009.
In the last five years, Islamic banking grew, but from a modest starting point, at above 32 percent annually, BI said in a report in The Jakarta Post.

"The growth of Islamic banking in 2010 is expected to further increase, not only because of an organic growth from the existing industry but also due to an increase in the number of banks or new players in the industry," BI acting governor Darmin Nasution said in a speech, read by BI deputy governor Budi Mulya, in a seminar on the prospects for Islamic banking in the country.

As the global economic recovery will bolster the financial sector, the abolition of double taxation on collateral used in sharia-based financial transactions further benefit Islamic banks, BI said.