Lecture by Minister of Finance of Indonesia, IU Mulani Indra

Introduction

• Expressed gratitude to Allah Almighty
• Acknowledgement of global economic challenges post-COVID-19
• Persistent global economic challenges and uncertainties

Global Economic Context

• IMF projection: stagnant global growth
• Challenges: geopolitical tensions, supply chain disruptions, commodity price volatility
• High inflation rates especially in Western countries
• Stronger US dollar causing capital outflow from developing/emerging countries
• 1997 ASEAN financial crisis and reforms
• Other challenges: climate change, technology advancements, demographic shifts

Importance of Islamic Finance

• Islamic finance growth: $4.5 trillion USD in 2023
• Significant reforms in Middle Eastern countries (Saudi, UAE, Qatar, Malaysia)
• Potential for Islamic finance to foster inclusivity and quality growth
• Synergy with Sustainable Development Goals (SDGs)

Indonesia's Economic Journey

• Resilient economy amidst global financial crises (1997, 2008, 2015, COVID-19)
• Robust growth trajectory: exceeding 5% over a decade
• Domestic demand remains strong; household spending resilient and inflation controlled
• Positive indicators: reduced unemployment and poverty rates
• Substantial reforms post-1998 crisis: regulatory frameworks, fiscal policies, economic transformation

Fiscal Prudence and Management

• Prudent fiscal policies: 3% deficit rule and 60% debt-to-GDP ratio
• Quick recovery post-COVID-19: fiscal deficit below 3% after 2 years
• Strong investor confidence in government bonds
• Projected economic growth: 5.1%

Legal and Regulatory Framework

• Comprehensive reforms in financial and regulatory sectors
• Introduction of various laws: Islamic banking, capital market, sovereign bonds, zakat, wakaf, and insurance

Islamic Finance Instruments

• Development of sovereign sukuk market
• Introduction of Green Sukuk (since 2018)
• Project-based Sukuk for infrastructure
• Diversification and innovation in sukuk (green, social, sustainable bonds)
• Retail sukuk market growth with younger generations
• Integration of social and commercial finance

Collaborative Efforts for Islamic Economic Development

• Importance of partnerships and collaborations globally
• Reinforcement of network among academics, practitioners, and innovators
• Indonesian commitment to strengthen Islamic Development Bank
• Training programs for enhancing expertise in Islamic finance

Closing Remarks

• Importance of stakeholder cooperation in structural reforms
• Emphasis on good governance, ethical conduct, and fostering sustainable economic growth

Key Takeaways:

• Indonesia's resilient economic model and consistent reforms
• Significant growth and potential of Islamic finance
• Need for global cooperation in fostering inclusive and sustainable economic growth.

Quotes:

• “Islamic finance aligns with sustainable development goals”.
• “Collaboration and cooperation are crucial for fostering greater financial inclusivity”.
• “The spirit of Islamic finance promotes just, equitable, and sustainable development”.