Global Business Guide Indonesia

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Induk Harta Insan Karimah | Mr Saifuddien Hasan
Mr Saifuddien Hasan

We aim to provide our rural bank customers with the same experience as customers of commercial banks. To achieve this goal, we can work together with firms such as commercial Islamic banks able to bring in technology and know-how.

Mr Saifuddien Hasan, President Director

PT Induk Harta Insan Karimah was established in 1992 and is involved in the field of shariah micro banking in Indonesia. What can you tell us about your company’s history and its main strategies going forward?

Our company was founded by the alumni of the Faculty of Economics at Gadjah Mada University coming from a wide range of professional backgrounds. At the time of our establishment there were no regulations governing shariah micro banking and it was not clear as to whether Islamic banks followed the same laws as conventional banks. Operating within this uncertainty, the alumni as founders of Induk HIK decided to take upon the role of shareholders and recruited financial sector professionals to run our banking operations. Over time as Indonesia developed a more straightforward legal framework for Islamic financial services, our bank grew and eventually came to acquire two ailing banks that now serve as members of our holding company. In addition to Induk HIK, we soon came to operate Harta Insan Karimah – Bekasi and Harta Insan Karimah – Parahyangan.

Our strategy centres on developing infrastructure and raising funds so that we can pursue similar acquisition opportunities and set up new micro banking facilities. With this kind of model, we have since been able to add another six shariah micro banks as well as 4 conventional banks. Our motivation in deciding upon this acquisition-driven strategy is that it allows for rapid expansion and minimizes time needed to set up new operations. Upon acquiring a bank we make it our priority to return it to a healthy state before converting it to a shariah micro bank. From an investor’s perspective, this means that we are open to exploring opportunities to raise capital to fund a nationwide network of companies offering shariah micro banking services.

What is your outlook for Indonesia’s Islamic banking sector, specifically as it pertains to shariah micro banking?

Infrastructural inadequacies and tax policies in the past were impediments to the competitiveness of this industry in Indonesia. This challenge has been addressed to an extent following the implementation of clearer laws and regulations, and we expect the shariah micro banking industry to continue to grow rapidly.

With that said, in Indonesia the development of Islamic banking has mostly been driven by society while the government has instead prioritised conventional banks. In Malaysia the opposite is true, in that their government is driving growth in Islamic banking through the provision of advantageous facilities to shariah banks. Should Indonesia’s begin to take similar steps, our outlook for the industry’s future will be even more positive.

How does your company plan to innovate and introduce new products?

Unlike general commercial banks that can serve customers across the country, rural banks such as the ones we operate are limited to serving a specific region within a given province, and focus on working with small-scale entrepreneurs.

It is thus our plan to introduce technology already implemented among commercial banks to our micro banking systems. We aim to provide our rural bank customers with the same experience as customers of commercial banks. 

To achieve this goal, we can work together with firms such as commercial Islamic banks able to bring in technology and know-how.

As a small and agile player in the Islamic banking industry we are able to work closely with the Shariah Board. This allows for a quick mandatory endorsement process for our new products and services, and means that we are able to offer a diverse range of innovative shariah compliant products to customers while tailoring services to individual needs.

What are your priorities for expansion on both the local and regional stage?

We are still currently focused on Java and have first set about creating a network in Jakarta and its surrounding areas. Our company’s expansion going forward will involve a move into Central Java and East Java, but there is scope for our entry into Sulawesi as well as Sumatra. As previously mentioned, this will require capital and as such our approach is likely to be a gradual one that prioritises identifying key opportunities in strategic locations.

How is Induk Harta Insan Karimah positioned towards cooperation with foreign partners and international investors?

We more than welcome this type of cooperation, with the caveat that we would need to consult with regulators that this is keeping with the consensus of rural shariah banks in Indonesia. For foreign entities to invest in commercial Islamic banks there is no issue as the opportunities to be taken advantage of through the partnership are clear to see, such as expanding on a national level and reaching out to new parts of the country. When it comes to shariah micro banking, one needs to be more specific in terms of the goal of foreign investment, because as previously mentioned there are limitations to who and where we can offer our products. There is also a general preference among regulators for local owners when it comes to rural banks. Our strategy so far has thus been to operate as a holding company with multiple subsidiaries and affiliated rural banks each within their designated area. Because holding companies are not subject to the same local ownership requirements, there are potential openings for foreign investment here. Investment into our holding company from either domestic or foreign partners would then be used to inject capital into our banks across the country.

In partnering with foreign companies we are also interested in technology that would allow us to form links between our companies. For example, we are looking to provide our customers with the capability of using their ATM card from our Jakarta-based bank in other parts of the country.

As a final message, what would you like Global Business Guide Indonesia’s readers to remember about your company?

We offer attractive investment returns, having recently achieved 17% dividend payout to investors. Our policy is that 20% of profit from operations is allocated for return earnings, another 20% is allocated for bonuses and the remaining 60% is distributed to shareholders. Moreover, continued growth and expansion should see our company position itself to go public.

Global Business Guide Indonesia - 2015

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