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HSBC Indonesia is set to accommodate increasing Indonesian
demand for sharia financial services, after providing similar services
globally for more than a decade.
"Indonesia is the largest Muslim country in the world. We see a growing
number of Islamic customers who want to have sharia financial services,
and we think we should provide that," HSBC Group chairman Stephen K.
Green said Monday.
"It's also good momentum as the macroeconomic environment is quite
attractive. This young market is about to develop."
The bank, which initially introduced Islamic financial services in
Malaysia in 1994, sees potential market growth as fast as that
projected by Bank Indonesia (BI), the nation's central bank.
"At the moment, only 1.5 percent of the overall banking market is
Islamic. BI has said by the end of 2008... that (figure) would move up
to 5 percent," said HSBC's Indonesia CEO Richard McHowat.
The bank has targeted attracting 200,000 new sharia customers over the
next three years, raising about US$300 million in liabilities.
According to HSBC's survey, about 40 percent of conventional banking
customers here are interested in sharia financial services.
In 2003, HSBC also established a sharia unit providing sharia-based
corporate financial services.
Meanwhile, Din Syamsuddin, the chairman of Indonesia's second-largest
Muslim organization, Muhammadiyah, said the government should provide
more assistance to encourage sharia banking in the country.
"The government should provide regulations to guarantee the flourishing
of sharia banking because such mechanisms can be a solution to economic
problems," he said.
In addition, he said, sharia financial practices did not necessarily
correspond with the implementation of Islamic bylaws. "(Sharia banking)
merely provides alternative products in the banking industry."
Indonesia will be the eighth country -- after Malaysia, the United Arab
Emirates, Saudi Arabia, the United States, Britain, Brunei and
Singapore -- where HSBC provides sharia retail products.
Similar sharia products are currently provided in Indonesia by various
banks, including sharia banking pioneer Bank Muamalat Indonesia, Bank
Syariah Mandiri, Bank Mega Syariah, Bank Negara Indonesia and Bank
Rakyat Indonesia.
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