Bukalapak to add Sharia-compliant investing feature, taking digital islamic finance closer to mainstream

Sharia financial service complies with Islamic law that prohibits interest fees and use of funds that are contrary to Islamic values

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Bukalapak to add Sharia-compliant investing feature, taking digital islamic finance closer to mainstream

Indonesian e-commerce and financial services platform Bukalapak plans to launch a Sharia-compliant investment feature this year. It will allow users to invest and seek funding in accordance with Islamic principles, which include the prohibition of interest fees and investing into businesses that aren’t in line with Islamic values, such as alcohol and gambling.

According to the company’s co-founder and president, Fajrin Rasyid, Bukalapak will collaborate with several institutions, both from Islamic banking and other Sharia fintech platforms.

“Almost all of our initiatives require partners as we don’t have capabilities in the investment and funding field. So, collaboration is the best solution,” Rasyid said to local media.

One of the companies that will potentially collaborate with Bukalapak is Dana Syariah Indonesia, a company that provides Islamic financing services and investment for business owners and individuals. It aims to benefit users through profit sharing, not interest fees like regular fintech platforms. The institution also screens all businesses and individuals who seek funding on the platform. However, Dana Syariah Indonesia currently only conducts financing for property projects.

The partnership will allow Dana Syariah Indonesia’s products to be accessed through the Bukalapak app. “We have talked with several parties, including Dana Syariah, we are analysing it at the moment. But, it is still in development,” Rasyid continued.

Bukalapak would be the first major e-commerce company in Indonesia to offer Shariah-compliant financing on its platform.

Digital innovation will continue to unlock growth opportunities in the Islamic finance sector. According to EY’s Banking in Emerging Markets GCC FinTech Play 2017 report, the Islamic fintech industry could disrupt traditional Islamic banking and has the potential to draw in 150 million new Islamic banking customers by 2021. The Islamic fintech market requires collaboration between startups and established Islamic finance institutions. The potential partnership between Bukalapak and Dana Syariah Indonesia can contribute to the development of Islamic digital financing in Indonesia, and could bring what’s still just a fringe trend, for now, closer to the mainstream.

Editor: Nadine Freischlad