Source: Halal Times

JAKARTA – Indonesia is taking decisive action to cement its role as a dominant force in the global Islamic economy. The world’s most populous Muslim nation recently announced the restructuring of its National Committee for Islamic Economy and Finance (KNEKS) into a more powerful entity known as the Islamic Economy Agency (BES). This strategic reorganization, unveiled during the presentation of the 2024-2025 State of Global Islamic Economy Report in Jakarta on July 8, 2025, represents a significant step toward enhancing Indonesia’s competitiveness in the international halal marketplace.

From Committee to Agency: A Strategic Evolution

The transformation from KNEKS to BES marks a crucial evolution in Indonesia’s approach to Islamic economic development. While KNEKS, established through Presidential Decree No. 91 in 2016, has successfully coordinated various stakeholders in developing the country’s Islamic finance sector and halal industry, the new agency is designed to be more agile and comprehensive in its operations.

Former Vice President Ma’ruf Amin, who has been instrumental in driving this change, highlighted the urgency of the transformation. The restructuring has received backing from President Prabowo Subianto, demonstrating the highest level of government commitment to this initiative. The BES is envisioned as a central coordinating body that will synchronize efforts across multiple sectors to drive innovation and strengthen economic resilience within the Shariah-compliant framework.

Indonesia’s Rising Global Standing

The timing of this transformation is particularly significant given Indonesia’s impressive performance in global Islamic economy rankings. The nation currently holds the third position in the 2024-2025 State of Global Islamic Economy Indicator, trailing only Malaysia and Saudi Arabia. This achievement reflects years of strategic policy implementation and institutional development, including the creation of the Halal Product Assurance Agency (BPJPH) in 2019 and the formation of Bank Syariah Indonesia (BSI), which ranks among the world’s top 10 Islamic banks.

The journey to this position began with the Indonesian Islamic Economics Master Plan (MEKSI) 2019-2024, launched under former President Joko Widodo’s administration. This comprehensive plan facilitated coordinated development across various sectors including halal tourism, modest fashion, and Islamic finance, propelling Indonesia from 10th place in global rankings a decade ago to its current prominent position.

Core Objectives of the New Agency

The Islamic Economy Agency will focus on six primary areas to advance Indonesia’s Islamic economic agenda:

Policy Innovation Enhancement: The agency will develop new regulatory frameworks to support Islamic financial technology and establish halal industrial zones, creating a more conducive environment for Shariah-compliant business operations.

Cross-Sector Collaboration: By bringing together government institutions, industry associations, and academic institutions, BES aims to create a unified ecosystem that maximizes synergies across different sectors.

Halal Industry Expansion: The agency will work to broaden halal certification processes and establish Indonesia as the premier global destination for halal products and services.

Financial Inclusion Improvement: Particular attention will be paid to increasing access to Shariah-compliant financial services, especially in rural and underserved communities where financial inclusion remains limited.

Digital Platform Development: The agency will promote the growth of Shariah-compliant e-commerce and digital payment systems, targeting younger consumers who are increasingly digital-native.

MSME Empowerment: Small and medium enterprises will receive enhanced support through education, financing options, and digital tools to help them participate more effectively in the halal economy.

Addressing Current Challenges

Despite Indonesia’s impressive progress, several challenges require attention. Islamic financial literacy remains relatively low at 39.11% as of 2023, with even lower rates in rural areas. Financial inclusion for Islamic banking services stands at just 12.88% in 2023, highlighting significant room for improvement. The fragmentation of existing programs has also created inefficiencies in efforts to boost literacy and inclusion.

The BES will address these challenges through coordinated efforts with various ministries, the National Research and Innovation Agency (BRIN), and organizations like the Indonesian Association of Islamic Economists (IAEI). The ambitious goal is to achieve a 50% Islamic economy literacy rate by the end of 2025.

Leveraging Digital Innovation and International Partnerships

Indonesia’s strategy includes significant emphasis on digital transformation. The country has developed innovative platforms such as the Sharia Online Trading System (SOTS) and has fostered partnerships with major e-commerce platforms like Bukalapak and Tokopedia. These initiatives align with global trends toward ethical and sustainable finance.

International cooperation is also expanding, with recent agreements such as the halal cooperation deal with New Zealand facilitating easier export procedures for Indonesian halal products. The country’s focus on combining halal certification with strong sustainability credentials positions it well for international markets, particularly in Saudi Arabia, Malaysia, and the UAE.

Future Prospects and Global Ambitions

The establishment of BES supports Indonesia’s ambitious goal of becoming the world’s leading Islamic economy by 2028 or 2029. With a population exceeding 280 million and a growing middle class, Indonesia is uniquely positioned to capture a significant share of the global Islamic economy, which is projected to surpass $3 trillion in the coming years.

The upcoming Halal Indo 2025 exhibition, scheduled for September 2025, will serve as a major platform to showcase Indonesia’s capabilities as a global halal hub. This event will highlight the country’s commitment to creating a modern and sustainable halal ecosystem.

Building a Collaborative Framework

Success of the new agency will depend heavily on collaboration among various stakeholders. Key organizations including the Sharia Economy Society (MES), Indonesian Association of Islamic Economy Experts (IAEI), Bank Indonesia, the Ministry of Finance, and the Indonesian Council of Ulama (MUI) will play crucial roles in policy development and implementation.

Educational initiatives are also being strengthened through partnerships with leading universities such as Universitas Indonesia and Universitas Gadjah Mada, ensuring the development of a skilled workforce capable of competing in the global Islamic economy.

Conclusion

The transformation of KNEKS into the Islamic Economy Agency represents more than a simple organizational restructuring—it signals Indonesia’s serious commitment to Islamic economic leadership on the global stage. By addressing existing challenges while leveraging the country’s strengths in digital innovation, international partnerships, and sustainable practices, Indonesia is positioning itself to play an increasingly dominant role in the rapidly expanding global halal market.

As the BES begins its operations, the world will be watching to see how effectively Indonesia can execute its vision of becoming the premier destination for Islamic finance and halal products. With strong government support, comprehensive policies, and a clear strategic direction, the foundation is in place for Indonesia to achieve its ambitious goals in the global Islamic economy.

Original article:

halaltimes.com. (n.d.). Indonesia Transforms KNEKS Into Key Islamic Economy Agency. Retrieved July 25, 2025, from https://www.halaltimes.com/indonesia-transforms-kneks-into-key-islamic-economy-agency/