Sharia Banking has financed Micro, Small, and Medium Enterprises (MSMEs) up to IDR 71 trillion until January 2021, despite decreasing the proportion of financing by 7 percent. IDR 71 trillion of Sharia Banking financing is channeled through MSME products, such as working capital financing, investment financing, multi-use financing, rent/release-based financing, and cash management, with wholesale and retail as its largest channels (48.59 percent).

It was confirmed by Banjaran Surya Indrastomo, Chief Economist PT Bank Syariah Indonesia Tbk, on a webinar held by the Center of Islamic Business and Finance School of Business and Management Institut Teknologi Bandung (CIBF SBM ITB). These actions are implemented by collaborating with Islamic Microfinance Institutions to achieve MSMEs empowerment. 

Move up

Bank Syariah Indonesia (BSI), together with Islamic Microfinance Institutions, strives to achieve MSMEs empowerment by increasing financing, strengthening product services, and strengthening competencies of Islamic Microfinance Institutions (LKM/S). As we know, MSMEs contribute to Indonesia’s National GDP by 61 percent or 65.46 million. 

These BSI’s efforts are aligned with its initial reason of establishment, which is for Indonesia’s MSMEs. Bank Syariah Indonesia, a newly merged bank in February 2021, has the vision to move up the class, winning the national and international competitions amongst banks. This vision is strived to be achieved by upholding three main strategies to be an internationally recognized bank, i.e., beyond organic, beyond Indonesia, and beyond banking.

“This strategy aims to make Syariah Banking in Indonesia more than just a mere bank, but also a friend or even best friend for customers on spiritual and social life with offered technology as a complete sharia solution in the mobile-banking,” said Banjaran.

Other than that, this strategy also aims shariah banking to be the dominant capitalization bank not only in Indonesia, but also beyond Indonesia, as the shariah banking has become in equal position with the big commercial banks in Indonesia. Bank Syariah Indonesia’s commitment for Indonesia are realized by community-based distribution, islamic boarding school based distribution, and mosque environment based distribution, distribution to MSMEs assisted by ministries/state-owned enterprises/institutions/local governments, and by the cooperation pattern of Mudharabah, Musyarakah, Murabahah with the integrated state-owned company. These are proven by the distribution of IDR117,3 billion with islamic boarding school-based financing on 2019-2021. In addition, mosque-based environmental financing has been disbursed during 2020-2021 with an outstanding 40 billion.

BSI’s specific target of micro partnership patterns, with 9.5 percent portfolio financing of BSI, starts with BSI as an incubator by facilitating people’s business credit and non-people’s business credit payment, providing training for micro customers, and organizing training program of Go-digital MSMEs with E-Commerce (shoppe). This will be followed by pushing existing big customers and state-owned companies, which can be the off-taker of the existing people’s business credit customers.

Lastly, BSI will collaborate with institutions, state-owned companies, the community, and off-taker for delivering people’s business creditor and non-people’s business credit finances. With the collaboration between stakeholders (government, regulator, business owner, and financial institutions), BSI hopes that this program will help Indonesia’s MSMEs grow and support BSI in reaching its vision to level up internationally.

Written by Student Reporter (Tjia Alphani, Entrepreneurship 2022)