Expanding Access to Islamic Finance for SMEs in Indonesia: Creating a Pilot Assessment Tool

The objective of this project was to systematically analyze the current status of Islamic financial services in Indonesia and to create a strategy for expanding access for under-served markets, with particular focus on small and medium-sized enterprises (SMEs) as defined by Indonesian standards, through Islamic finance products and services in Indonesia. In addition, the work was intended to create a tool with two interlinked components – (i) the assessment on access to Islamic finance for SMEs, and (ii) the strategic framework for expanding access through Islamic finance.

• Pilot tool for conducting access to Islamic finance assessments and to providing a strategic framework for policy recommendations to improve access to finance through Islamic finance products and services.

• Comprehensive assessment of the Islamic financial markets in Indonesia and the potential for increasing access to finance through Islamic financial institutions, products, and services.

• Strategic framework for improving the Islamic finance environment and institutions to enhance access to finance for SMEs in Indonesia.

• Concrete concepts for the WB to facilitate the creation of a new pilot Islamic financing vehicle to expand access for SMEs based on the assessment tool.

• Dissemination and consultation workshops in Indonesia with the key stakeholders, such as policymakers in the central bank, Ministry of Finance, financial regulatory bodies and market participants, such as banks, insurance companies, and investment funds, and businesses and business associations.