Comparative Country Study Of Product Development Strategy Of Indonesian Islamic Banks

By Amid Sambo Tarigan


With the phenomenal global development in Islamic finance especially over the last thirty years, Islamic banking has succeeded to attract attention of both developed and emerging economies. In Southeast Asia region, Indonesia and Malaysia are the two most populous Muslim countries in where approximately 200 million and eighteen million Muslims live in these two countries respectively. Factors such as commitment from the government, proper legislation, awareness and understanding by the public, research efforts and innovative products and services are several determinants that have played significant roles in shaping the different infra-structure design and performance of Islamic banking institutions in both countries. 

This study attempts to identify possible reason to understand the nature of Islamic banking products and explain why these products appeal to a broader segment of the corporate and retail market both in Indonesia and Malaysia.  In-depth interview was used in the study used to collect the data. The result shows, by contract used, Murabahah takes the pole position because of its simplicity in practical application. However, it shows that Islamic Banking in Indonesia still “play safely” by using Murabahah, which is debt financing contract. Other important point was that the different philosophy used by each bank has significant influences in how the bank is doing its business. BSM perceives Islamic bank as a bank for everyone (universal bank) whereas BMI views Islamic bank still more on religious duty. 

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