The Future Strategy of Islamic Bank in Indonesia

An undergraduate Thesis Proposal Submitted in Partial Fulfillment of The Requirement for Undergraduate Thesis
By : Nurul Hawadiya (#12207427) Date : July 23, 2010/07/22 Academic & Technical Supervisor : Prof. TSUKADA Shunsho Email : Hawanu07@apu.ac.jp

1. Background
Nowadays, the Islamic finance industry is growing very fast worldwide. Syariah bank consists of 300 financial institutions in and outside the Muslim world. It was made to develop financial product that meet religious requirement for Muslim. Islamic financial institutions have taken the form of commercial banks, investment and finance companies, insurance (takaful) companies, and financial service companies. The banking models that they follow are private institutions in a conventional economy (as in the GCC and the west), attempts at national Islamic banking systems (as in Sudan, Iran and Pakistan), and duals banking models (as in Malaysia, Indonesia and the UAE). They also take different forms: wholly Islamic institutions, Islamic subsidiaries of conventional banking groups, and Islamic banking windows within conventional bank. Indonesia as a republic country with a large majority of Muslim population has different development of Islamic finance compare to other Muslim majority country. Unlike Malaysia, Islamic finance in Indonesia is still young and in the growing stage. Many Indonesian began to adapt and become more interested in Islamic banking. Because of the growing market of Islamic finance, many Islamic subsidiaries of conventional banking groups was established in Indonesia such as HSBC Amanah, Bank Negara Indonesia Syariah, Bank Mandiri syariah, Bank Bukopin Syariah, etc. But the problem that currently occurs Indonesia is conventional bank has stronger influence than Islamic bank. As The Deputy Senior Governor Bank Indonesia, Anwar Nasution said that Islamic banking only represented 1 percent of the Banking shares in Indonesia, setting the alarm bell that the efforts to promote Islamic banking in this country may be failing to reach it

targets. Government is promoting Islamic banking and Syariah laws in several areas in order to give the government a pro-Islam image, Amin said. He also mentioned that the reason why Islamic banks are disregarded by the people is due to the lack of trust rather than to the slow process of giving away licenses to establish new Islamic banks. Due to the problem, my purpose of the research is to propose the future strategy for Syariah bank in order to compete with conventional bank and also gain trust from the people. There is no doubt that Islamic banking has contributed significantly to strengthen the country's economy and I believe that Islamic banking in Indonesia will grow faster and through applying a good strategy, Islamic bank will gain the trust from Indonesian people and can make a large contribution to countrys economy.

2. Research Objectives
This research aims to:

Identify the Islamic banking in Indonesia which includes the history of

Islamic bank in Indonesia, Indonesias Islamic banking policy, the system of Islamic bank in Indonesia, the contribution of Islamic bank for the economic performance of Indonesia.

Analysis study of Bank Syariah Bukopin (one of the private Islamic

subsidiaries of conventional banking in Indonesia).

Propose a future strategy of Syariah Bank in Indonesia. 3. Research Methodology

The level of this research is exploratory research and the objective is to gather preliminary information that will help to define the problem and suggest hypothesis. The type of the research is qualitative with the main question of what are the future strategies of Syariah bank in Indonesia to compete with conventional bank. I will establish the validity and reliability by analyzing the reliable information in media, field study in one of the syariah bank in Indonesia and hold an interview with an expert of Syariah Bank in Indonesia. In detail, below is the source of information that I will use. Sources of Information : University library books. Research work and academic journal. Internet website. Guidance from university supervisor.

Method of Analysis of Collected Information : Firstly, I will gather all of the information from website, academic journal, interview and books and study deeper about the information which I get. Secondly, I will generate the model, theories and hypothesis. Then find tools and methods for measure of validity of collected information. Finally, List evaluations of results and conclude.

4. Significance of The Report

It is important to undertake this research to the success of Islamic banking in Indonesia which is still young and growing. Also it can be beneficial for the further consideration of the future strategy of Islamic bank in Indonesia and useful to formulate the strategy for Islamic bank to compete with the conventional bank.

5. References List
Munawar, Iqbal., & David T.Llewelly . (2000). Islamic Banking and Finance. UK: Edward Elgar Publishing Limited. Kazi,Mahmood. (2006, 01 01). Diverse Fortune For Islamic Banking in Indonesia. Retrieved from www.islamonline.net/English/News/2003-10/10/article04.shtm J.Thomas Lindbald . (2000). From Java Bank to Bank Indonesia. Netherland: Leiden University. Wouters, Paul.(2008). Islamic Banking in Turkey, Indonesia and Pakistand. Turkey:Bener Law Office. Bank Indonesia Website. (2008). History of Bank Indonesia : Institution [Data file]. Retrieved from http:// www.bi.go.id/.../MicrosoftWordHistoryofBankingPeriod19531959.pdf Bank Indonesia Website. Indonesia Islamic Banking Outlook 2010. Retrieved from http:// www.stas.ac.id/modules/download_gallery/dlc.php?file=165

6. Time Table

April-July 2010 :Thesis Proposal

AugustOcotber 2010: Doing research and writing thesis

November: Finish Writing Thesis and revise thesis

December 17 2010: Thesis Submission