Indonesia’s vision and rising position
As the world’s largest Muslim-majority country, Indonesia is helping to shape the bright future of the global Islamic economy.
The State of the Global Islamic Economy Report 2020/2021 estimates total Muslim spending in 2019 was about $US2.2 trillion and will rise to $US2.4 trillion by 2024. Indonesia has massive potential as a key player, particularly in the global halal industry, but it must take strategic action.
In 2018, Indonesia outlined its vision to become a leader in the global Islamic economy. This plan was further developed in the Indonesian Sharia Economics Masterplan 2019-2024 which aimed to achieve four goals: 1) increase the scale of sharia businesses; 2) lift Indonesia’s ranking in the Global Islamic Economy Index (GIEI); 3) increase the country’s economic independence; and 4) boost the welfare of Indonesians.
Since introducing the plan, Indonesia has proudly watched its GIEI ranking jump six places in two years – from 10th (2018) to 4th (2020) – as greater government support and a rising awareness among the public and the media helped shift consumer attention to the Islamic economy.
Assessing factors such as knowledge, awareness and governance, the 2020 Islamic Finance Development Indicator (IFDI) placed Indonesia in second position. Indonesia’s success in nurturing its blossoming Islamic finance ecosystem also awarded it the silver medal in the Global Islamic Finance Report (GIFR) 2020. Such impressive recognition proves Indonesia is on the right track to achieve its “Masterplan” vision.
However, the path still has many obstacles. For instance, the 2019 Financial Services Authority (OJK) showed Indonesia’s Sharia Financial Literacy Index was a measly 8.93%. Another survey in 2019 by Bank Indonesia found similarly low numbers (16.3%). Clearly, Indonesia must do more to improve public awareness about Islamic economic and finance literacy.
So, creating a brand to better communicate Islamic economic values – and what they bring to both Indonesia and the world – will be a great way to increase awareness and unify efforts. This is the purpose of the Islamic Economy brand.
Inauguration of the Islamic Economy brand
The final brand design was the result of a competition held at the 7th Indonesia Sharia Economy Festival (ISEF) 2020. The ISEF was a collaboration between Bank Indonesia and the National Committee on Sharia Economics and Finance (KNEKS) which attracted a total of 16 government leaders and more than 700 candidates. The winning Islamic Economy logo was finally inaugurated by President Joko “Jokowi” Widodo and launched the National Cash Waqf Movement.
The brand represents a national movement and will be used by all ministries, institutions and stakeholders engaged in Islamic economics and finance activities. A special guidebook also assists anyone using the brand so they can increase awareness about the Islamic Economy as a joint movement striving for people’s welfare. The brand is a new identity for Indonesian workers aiming for excellence at the global level.
Urgency of the Islamic Economy brand: A marketing perspective
Branding is the process of giving a consumer the right meaning about a specific organization, company, product or service. A brand can trigger certain associations, such as quality, tastes or design, and can even evoke emotional reactions.
The most basic element of a brand is identity – what the brand is and is not. Inspired by the Islamic phrase rahmatan lil alamin, the Islamic Economy brand carries the tagline “Value for All,” which underlines a deep embrace of inclusivity and describes how the movement will contribute to the prosperity of all Indonesians, regardless of faith.
The Islamic Economy brand also highlights how the Indonesian government has shifted to view the whole Islamic economy as holistically integrated and the importance of its support for the halal industry, Islamic social finance and other subsectors. Finance Minister Sri Mulyani Indrawati said the government’s efforts to promote, accelerate, expand and integrate the Islamic economics and finance sector will contribute to national economic resilience.
The brand’s marketing strategy uses the model of umbrella branding (family branding) in which a single name is used to represent multiple related products. In this case, the Islamic Economy brand covers everything from halal cosmetics and pharmaceuticals, Muslim-friendly tourism, Islamic banking and finance to halal food, modest fashion and social finance.
Umbrella branding was first introduced by economist Birger Wernerfelt (1988) who noticed that consumers tend to pool their experiences of multiple products to infer their quality. Researchers Erdem and Sun (2002) also found evidence of spill-over effects for umbrella brands due to advertising. The recent merger of three Islamic banks into PT Bank Syariah Indonesia Tbk (BSI) has increased awareness of how Islamic banking might help in the recovery of the Indonesian economy after Covid-19. It is hoped that umbrella branding may transport people’s positive views about BSI and other Sharia companies to create a single huge brand equity. This will build towards Indonesia’s goal of becoming the center of the global Islamic economy.
Umbrella branding is a way for products or services planned for the future to piggyback on existing brand awareness (Sullivan, 1990). It also enhances marketing programmes while increasing demand for new products (Erdem, 1998). In other words, this strategy may be crucial in lifting people’s interest in new products like cash waqf.
The way forward
The Islamic Economy brand shows strong commitment from the government to lift Indonesian awareness and accelerate the integration of the entire economy and finance sectors.
But implementing umbrella branding and achieving Indonesia’s “Masterplan” vision will require close coordination between the government, regulators, industry players and civil society. As the new brand logo can be used by any ministry, institution or stakeholder in the Islamic economy, it will require a consistent communication theme.
So, setting up an Integrated Marketing Communications (IMC) process will be a vital element in building the brand (Madhavaram, Badrinarayanan & Mcdonald, 2013). The American Marketing Association defines an IMC as “a planning process designed to assure that all brand contacts received by a customer or prospect for a product, service or organization are relevant to that person and consistent over time.”
An IMC can deliver a consistent message about a unified drive in the Sharia economy. To do this, Kitchen and Schultz (2000) identified four stages of an IMC process: tactical coordination of promotional elements, redefining the scope of marketing communications, application of information technology and the financial and strategic integration.
The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of their respective institutions.
About the Authors
Anya Safira is a lecturer at the Faculty of Economics and Business Universitas Indonesia, teaching Islamic Marketing courses. She is an NZAID Scholar who received a Master of Commerce (in Marketing) degree from Victoria University of Wellington. Her thesis discussed Islamic perspectives on advertising.
Fadhil Akbar Purnama is currently a Sharia economy and finance analyst at Bank Indonesia. He is an LPDP awardee who holds a Master of Islamic Finance and Management degree from Durham University Business School, and has extensive work experiences in various national and international institutions, always in the Sharia economy and finance sector.