Although between 85 and 90 percent of the Indonesian population is Muslim, Islamic banking, also known as sharia banking (financing activity that is in line with Islamic principles), remains underdeveloped in Indonesia. In 2016 sharia banking assets only accounted for 5.3 percent of total assets in Indonesia's banking sector. Meanwhile in countries like Saudi Arabia and Malaysia these figures are much higher at 51.1 percent and 23.8 percent, respectively.

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As we are in the middle of earnings season, it is interesting to take a look at the January-June 2017 corporate earnings reports of Indonesia's listed companies. Something that stands out so far is the good earnings of banks and commodity-related companies (mining and agriculture). Of Indonesia's 15 biggest banks (in terms of assets) only four experienced a contraction in net profit. This good performance comes in times when credit growth has remained rather bleak in Indonesia. So where does banks' excellent profit growth come from?

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Indonesian Energy and Mineral Resources Minister Ignatius Jonan hopes to see oil production at the Banyu Urip Field, part of the Cepu Block in East Java, rise to 300,000 barrels per day (bpd), a development that would also trigger the multiplier effect for the region, he added. The Banyu Urip Field is the key oil field in Indonesia as it accounts for about 25 percent of Indonesia's total crude oil output.

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On 30 July 2017, Indonesia Investments released the latest edition of its newsletter. This free newsletter, which is sent to our subscribers once per week, contains the most important news stories from Indonesia that have been reported on our website over the last seven days. Most of the topics involve economy and market-related matters such as rupiah redenomination plans, direct investment realization in Q2-2017, the e-commerce industry, environment, and much more.

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