Vehicle sales in Indonesia continue to rise year on year making Indonesia the largest car market in South East Asia with 70% of such purchases on finance. Recent regulatory changes which have served to increase the minimum down payment on car purchases to 30% have encouraged multi finance companies to turn to Islamic funding sources. Shariah lending for car loans is therefore expected to increase by 30% per annum for the coming years, outstripping the 23% for the industry as a whole and making a significant contribution to increasing Islamic banking assets in Indonesia.

Bank Muamalat has cemented a key position in Indonesia’s shariah consumer vehicle financing market through strategic alliances with major multi finance players with such loans accounting for 25% of the bank’s total consumer financing in 2012. The Automuamalat product has thus proved highly popular among Indonesian consumers having become renowned for granting swift loan approvals within one day. Customers can choose to purchase a new or second hand car with the financing facility available for 5 years under the shariah principle of murabaha (purchase and sale).

Shariah vehicle financing will continue to play a central role in Bank Muamalat’s retail shariah financing portfolio and contribute to the overarching strategy to improve asset quality. The bank will also continue to extend its financing distribution channels through further alliances with multi finance partners in order to expand its customer base.

Shariah pension financing represents a new aspect of Bank Muamalat’s strategy within the retail segment as a niche, high growth area. Having been appointed to be the organiser of pension payments for civil servants by PT Taspen Limited, Bank Muamalat developed a tailored product for this service namely iB Muamalat Pension Financing which was launched at the end of 2012. Further to this, the bank also launched the iB Multifinancing product to complete its current suite of shariah consumer financing products for the Indonesian market.