Barrier Factors for Development of Sharia Banks In Indonesia

(Comparative Study of Sharia Banking in Malaysia)

Abstract

If we look at the development of Islamic banks in Malaysia which is quite good compared to Indonesia, then there will be a question why this could happen where Indonesia is a country with the largest Muslim majority in the World. Although based on the assessment of the Global Islamic Financial Report (GIFR) in 2011, Indonesia ranks fourth in the country that has potential and is conducive to the development of the Islamic financial industry after Iran, Malaysia and Saudi Arabia, but so far this has been somewhat reversed with the development of the Islamic banking industry in Indonesia experienced ups and downs along with the development of the conventional banking industry. In addition to differences in approaches between Indonesia and Malaysia, where Malaysia uses a state driven approach while Indonesia still uses a market driven approach that has quite a lot of influence on that development. In addition, in writing this paper, several other inhibiting factors were found, including: a. legal basis delays, b. the lack of human resources owned by Islamic banking is still far below the quality of conventional banking, c. although 88 percent of Indonesia's population is Muslim, it seems that the public's knowledge and understanding of the development of Islamic Banking is still low.