Bank Indonesia Releases Literacy Index to Accelerate the Islamic Economy - Bank Sentral Republik Indonesia
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June 01, 2020

Bank Indonesia today (30/03) released the Islamic Economic Literacy Index as a tangible form of commitment to stimulate development of the Islamic economy and finance (eksyar). The Islamic Economic Literacy Index reflects the level of public literacy in Indonesia concerning the Islamic economy and finance as well as the level of public inclusion in terms of Islamic financial services, Islamic social financial services (ZISWAF) in particular. Consequently, the Islamic Economic Literacy Index is expected to be used as a reference underlying optimal strategy formulation for further development of the Islamic economy and Finance in Indonesia.

In 2019, the Islamic Economic Literacy Index was recorded at 16.3% (well literate) on a scale of up to 100%, thus reflecting a further opportunity to raise public understanding concerning the Islamic economy and finance in Indonesia. The Islamic Economic Literacy Index is calculated based on a national Islamic economic literacy survey conducted in 13 provinces that accommodate more than 80% of Indonesia's Muslim population with the involvement of 3,312 respondents. The Survey covers aspects including Islamic economic fundamentals, Islamic social Finance and halal products/services.

The Islamic Development Bank (IsDB) has welcomed the release of Bank Indonesia’s Islamic Economic Literacy Index, acknowledging that it is the first of its kind in Indonesia, implemented well and backed by a methodology commonly applied in standardised global research. Therefore, the Islamic Economic Literacy Index is certain to increase the references available concerning national literacy of the Islamic economy and finance, while complementing existing Islamic literacy indexes, such as the Islamic Financial Literacy Index published by the Indonesian Financial Services Authority (OJK).

Comprehensive efforts to develop the Islamic economy and finance are required from the supply and demand sides. On the supply side, the presence of Islamic economic and financial players and Islamic commercial financial institutions, such as banks, a capital market and takaful (Islamic insurance), will continue to be developed in conjunction with other relevant authorities. In terms of the Islamic Social Fund (ISF), Bank Indonesia and other relevant stakeholders are developing the waqf and zakat sectors, including cash waqf-linked sukuk (CWLS) together with several other breakthroughs, including implementation of the Waqf and Zakat Core Principles to strengthen the social safety nets in the Islamic economy.

Development of a prominent Islamic economy and finance, the presence of a broad halal-based production sector and strong public understanding will be a boon to expansive business activity in the national Islamic economy, which will ultimately contribute to economic stability and simultaneously build growth momentum. As a measure of financial literacy, the Islamic Economic Literacy Index is an important indicator of public propensity towards the halal products offered in Indonesia.

Moving forward, Bank Indonesia is firmly committed to increasing public literacy in Indonesia concerning the Islamic economy and finance, while evaluating the effectiveness of related educational programs implemented in conjunction with other relevant authorities towards greater development of the Islamic economy and Finance in Indonesia.

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