LPPI establishes center to standardize Islamic finance

In conjunction with several foreign institutions, the Indonesian Banking Development Institute (LPPI) has established a body to regulate Islamic finance laws and provide certification programs for professionals.

The body, the International Center for Development in Islamic Finance (ICDIF), will also provide education, training and fee-based consultancy on Islamic finance for local and foreign professionals and institutions.

Speaking at the inauguration of the ICDIF in Jakarta on Wednesday, central bank governor Boediono shared his hope for Indonesia to become a center for Islamic finance studies in Asia.

"I can say that Indonesia currently has good momentum to become the center for Islamic finance, as the House of Representatives issued last week a new Islamic banking law providing a legal basis that will support investment in the industry," Boediono said.

Bank Indonesia-owned LPPI, which provides training for the banking industry, first established a Sharia directorate in 2004 to offer training for professionals in Islamic finance.

In developing the ICDIF, the LPPI has collaborated with the Islamic Development Bank (IDB), the University of Kuwait and the Malaysia Islamic Banking and Finance Institute, and will continue to work with the institutions to provide future educational and training programs.

IDB economist Mohammed Obaidullah, who was also present at the inauguration, said Indonesia's experience in micro financing would support rapid development of Islamic banking and finance in the country.

The IDB, he said, expected Indonesia, through the establishment of the new body, to become a model for other countries in developing Islamic finance.

ICDIF director for sharia Arie Mooduto said several government and private institutions from the Philippines, Korea, Egypt and Maldives were among those seeking training and consulting services on sharia at the center.

"Their interest is a result of the fact that centers like the ICDIF are still very limited in the world," Arie told the Post.

Training human resources is crucial to developing a strong Islamic finance in Indonesia as most professionals are used to systems implemented by conventional banks, Arie said.

According to the central bank, Indonesia's sharia banks require 30,000 employees to support its target of 5 percent market share by the end of this year.

source: Jakarta Post | June 2008