Global Business Guide Indonesia

Education in Indonesia Education in Indonesia Education in Indonesia Education in Indonesia Education in Indonesia
Sign up for the GBG Indonesia Quarterly Business Intelligence Report for the latest news on your sector.
Sign Up
Education | Islamic Finance & Business Education

Despite being the largest Muslim majority country in the world with numerous Islamic universities across the country, Indonesia has been slow to take advantage of the increasing need for formalised education in Islamic banking and Shariah law. Having relatively recent beginnings, the first Islamic bank being only set up in 1991, the future progress of the sector is dependent on the education system generating qualified human resources (see Indonesia’s Islamic Banking Sector).

Islamic finance in Indonesia is still at an infantile stage with less than 5% of total banking assets under Islamic banks in comparison to Malaysia with approximately 21% as per 2010. The major challenge faced by Shariah banks, not just in Indonesia, is the lack of qualified professionals to be able to expand. Bank Muamalat was the first Islamic bank in the country and remains today the only stand alone shariah bank. The President Director, Arviyan Arifin recognises the challenge in human resources ‘as a new industry we lack the quality in our human resources as they mostly come from a conventional banking background and then have to learn about Shariah banking’. To meet this challenge, Islamic banks are forced to provide their own in house training to fresh graduates and new staff.

Responding to this need, Indonesia’s central bank has asked universities to begin courses that cater to the growing demand for qualified graduates. Universitas Indonesia offers a Masters in Islamic Banking and business schools have begun to offer electorates in the subject as part of their MBA program. More universities are expected to follow suit in offering degrees specifically focused on the subject from Bachelor level and upwards as the sector is poised to grow by 45% in 2011 according to Bank Indonesia. In light of this, the schools themselves may face the challenge of finding qualified lecturers to teach the courses presenting the opportunity for faculty exchanges and joint research programs.

Professor Kisworo of Perbanas Institute notes that Shariah banking has continuously been taught as a religious discipline or a specialised concentration as opposed to a science: ‘a science should be free from any religious context but as long as Shariah banking uses Arabic terminology it will not be recognised as a science.’ The growing importance of formalised training in this sector is being taken up by universities with the opening of new faculties focused on creating fully fledged graduates in the subject. The Perbanas Institute is pioneering the secularisation of education in Shariah banking arguing that it is an alternative method of banking utilising moral values that all religions share.

Training in shariah compliant business law and insurance is another area where the industry sorely lack qualified professionals. This can be attributed to the lack of communication between the private sector and educational institutions, but also due to the lack of clarity on the laws governing Shariah practices in Indonesia itself. The country’s Islamic universities are stepping in to take advantage of the increased interest. Al Azhar University’s Rector, Professor Zuhal is keen to capitalise on Indonesia’s potential for research in Islamic corporate law ‘we want to focus on areas of research that other universities do not. Through our partnership with the University of South Carolina we provide expertise of shariah corporate law and based on that we do joint research that has been used by Citibank’. This illustrates the moderate approach that the country’s universities want to take towards furthering education in the sector.

As recognised by President Obama during his speech at Universitas Indonesia in November 2010, Indonesia provides a model of how Islam, democracy, science and technology can go together hand in hand. Being the largest Muslim majority country in the world and having a moderate approach to Islam provide fertile ground for advancing education into shariah compliant business with universal access and appeal. As the saturation of Islamic financial products remains low in comparison to neighbouring Malaysia and the Middle East, the sector provides scope for forging international ties in both academic and corporate spheres.

Global Business Guide Indonesia - 2012

icone share