Islamic Banks in Indonesia Need to Incentivise to Remain Competitive Against Conventional Banks: Bank Permata

The Head of Bank Permata’s Sharia Business Unit, Herwin Bustaman, has stated that Islamic banking and finance institutions in Indonesia could raise their competitiveness via a number of incentives, one of them is taxes. For example, the enactment of Law Number 42 of 2009 with regard to Value-Added Tax has brought the Shariah financing tax in par with conventional taxation. Why it matters?

There is increasing demand in the industry for more incentives from Islamic banking institutions, especially those that favour the end consumer. Current incentives include down-payments for Islamic mortgage loans that are 5% lower than the down-payments required in conventional banking. This has inevitably successfully increased the housing credit share in the Islamic...