Fitch Ratings sees continued growth in Indonesia's Islamic finance industry for the second half of 2026 until next year, according to a recent release.
The sector's strategic role for the government and strong operating environment have pushed the market to above $200 billion as of May, Fitch said.
The country will continue to be one of the largest global issuers of sukuk, with Islamic banks posting market growth potential amid the Muslim-majority demographic and a large underbanked population, Fitch said.
The government has carried out efforts to anchor growth, such as a 150 million rupiah cap on registration fees for sukuk, lower reserve requirements for Islamic banks, and exclusivity in receiving Hajj pilgrimage cost deposits.
Sukuk made up 33% of Indonesian debt issuance in the first five months of 2026, with outstanding growth at 13% outpacing bonds at 6.3%, Fitch said.
Islamic banking assets exceeded 1 quadrillion rupiah at the end of the first quarter, accounting for 8% of system financing.
Fitch expects sector assets to expand by about 10% in 2026 amid consumer financing growth, financial inclusion efforts, and product innovation such as bullion banking.