The development of the Islamic economy over the past decade has continued to show steadily improving performance.
According to the 2025 Indonesian Islamic Economics and Finance Review (KEKSI) report by Bank Indonesia (BI), released last February, the contribution of the halal value chain (HVC) sector to the national gross domestic product (GDP) rose from 25 percent in 2024 to 27 percent in 2025. This increase is supported by the growth of the HVC’s strategic sectors by 6,21 percent in 2025, up from 4 percent the previous year.
BI data also shows that this HVC growth is dominated by three key sectors: halal agriculture and food and beverages, Muslim friendly tourism, and Muslim fashion. This growth is supported by strong consumption, price stability, and continuously improving investment in the halal sector.
It is no surprise, then, that our halal exports are increasing, as evidenced by the performance of halal food and beverage exports, which reached USD53,4 billion, with imports totaling USD23,05 billion. This situation results in a surplus in Indonesia’s trade balance.
Similarly, the performance of the Islamic finance sector also shows an upward trend. For example, Islamic banking financing grew by approximately 9,66 percent. This growth is supported by robust financing for the HVC sector, demonstrating that the ecosystem linking the real sector and the Islamic finance sector is becoming increasingly robust. Halal food and beverages and Muslim friendly tourism are two sectors where Islamic banking financing grew by around 20 percent.
Additionally, the performance of the Islamic social finance sector, particularly zakat, infaq, sadaqah, and waqf (ZISWAF) as well as other religious social funds (DSKL), also showed encouraging developments.
Zakat collections have surpassed the Rp41 trillion mark in 2024, an increase of 26,9 percent from the previous year’s collection of Rp32,3 trillion. Meanwhile, cash waqf collections have also surpassed the Rp3 trillion mark in the same year.
Specifically regarding State Budget (APBN) financing, the outstanding value of State Sukuk (SBSN) as of 2025 reached Rp1.703 trillion, or approximately 20 percent of total government securities issuance. Meanwhile, the outstanding value of Cash Waqf-Linked Sukuk (CWLS) stood at Rp1,47 trillion in 2025.
Product and Policy Innovations
Given the performance outlined above, it can be concluded that the development of Islamic economic and financial instruments is on the right track. However, efforts to strengthen inclusive and equitable Islamic economic development must continue.
Currently, there is a significant gap between the state’s revenue capacity and the scale of development financing required, particularly in achieving the Sustainable Development Goals by 2030. Therefore, a number of innovations need to be continuously developed.
At a minimum, two innovations are required. These were discussed in detail at the Islamic Economics Symposium in Surabaya organized by Syarikat Islam and the OJK East Java (3/7).
The first innovation involves increasing public participation in financing various strategic national development projects by modifying the Public Private Partnership (PPP) scheme into a Public Community Fund Manager Partnership (PCFMP) scheme, utilizing Sharia contracts such as profit sharing agreements (mudharabah and musyarakah).
This is urgently needed because, until now, opportunities have been limited to large companies, both domestic and foreign. Under the PPP scheme, the government provides guarantees and support in the form of guarantees through PT Penjaminan Infrastruktur Indonesia (PII), the Viability Gap Fund (VGF)—government funding to ensure a project’s financial viability—Availability Payment (AP)—the government pays the operator periodically if services meet standards—and support for construction or land.
The proposed modification involves giving community fund managers (PDM) the opportunity to participate in various strategic projects, such as waqf institutions, fund managers of Islamic civil society organizations (ormas), university endowment funds, and others. In fact, if necessary, this could be done through a retail scheme that allows individuals to invest directly via a Special Purpose Vehicle (SPV) established by the government, state owned enterprises (BUMN), regional-owned enterprises (BUMD), or sharia compliant companies. In practice, these PDMs can act directly as operators or establish SPVs, either as subsidiaries or by collaborating with other operators.
The question is, why go through this scheme? The answer is that this scheme offers greater potential returns to Sharia investors, albeit with higher risks. In the Sharia economy, the higher the risk, the higher the potential return. High risk, high return. In addition to returns, this scheme can serve as an alternative Sharia investment instrument for the public, thereby ensuring economic justice. From the government’s perspective, it will expand the variety of investment schemes and attract more investors.
Next, the second innovation involves strengthening the waqf sector, which is increasingly integrated with the Islamic business sector. This strengthening is achieved through two main channels.
The first channel involves developing a guarantee system and asset development for waqf, either through the Deposit Insurance Agency (LPS) or a specialized institution established to provide guarantees and manage waqf assets.
The second channel is by making strategic waqf projects the underlying assets for the issuance of CWLS or even conventional SBSN, both retail and non-retail. This approach will expand the growth of productive waqf assets, as currently only 9 percent of waqf assets are economically productive.
These two innovations are believed to open new avenues for the development of new growth sources for a national economy that is more equitable, inclusive, and sustainable. (IAAS/KQA)
Prof Irfan Syauqi Beik
Dean and Professor, FEM IPB University
