ICIEC strengthening Indonesia’s trade, investment and sustainable growth through Shariah-compliant risk solutions

ICIEC has long since been investing in Indonesia and helping its economic development, through Shariah-compliant insurance coverage and business commitments. As the country’s influence within the region grows, ICIEC’s Dr. Khalid Khalafalla makes an argument for why continued investment within Indonesia is the right move.

Indonesia, Southeast Asia’s largest economy continues to play an increasingly important role in regional and global trade and investment. With a GDP exceeding $1.4tn and an ambitious vision under the Golden Indonesia 2045 agenda, the country is investing significantly in infrastructure, industrial downstreaming, renewable energy, digitalisation and higher value-added manufacturing.

Supported by a large domestic market, abundant natural resources and a growing industrial base, Indonesia remains an attractive investment destination. As the country advances its development priorities, sustainable financing and effective risk mitigation will be increasingly important in mobilising private capital.

A longstanding track record in Indonesia

As a member of the Islamic Development Bank (IsDB) Group, the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC) has been a longstanding partner in Indonesia’s economic development. Indonesia has been a member of ICIEC since 24 April 1993. From inception through 31 December 2025, ICIEC has provided approximately $2.16bn in insurance coverage supporting trade and investment related to Indonesia, benefiting businesses, financial institutions, investors and international partners across a broad range of sectors. This includes around $360m supporting exports from Indonesia, $860m supporting imports of strategic goods into the country, and $936m supporting investments in Indonesia.

Through these interventions, ICIEC has supported 182 entities involved in cross-border trade and investment related to Indonesia. This extensive engagement reflects ICIEC’s role not only as a risk mitigation provider, but also as a development partner helping businesses and financial institutions manage commercial and political risks, enhance transaction bankability and mobilise financing.

Delivering results under the Indonesia MCPS

The IsDB Group’s Member Country Partnership Strategy for Indonesia (2022–2025) provided an important framework for strengthening cooperation between the IsDB Group and Indonesia.

During the MCPS period, ICIEC exceeded its original business commitment by supporting approximately $566m in approved business, equivalent to around 142% of the program target. Approximately 40 Indonesian entities benefited from ICIEC support through export financing, import financing and investment-related operations.

The impact of this partnership can be seen in several key transactions. Through strategic partnerships with Indonesia’s national export credit agencies, Indonesia Eximbank and Asuransi Asei Indonesia, ICIEC provided reinsurance capacity supporting approximately $95m of Indonesian exports, representing ICIEC’s own contribution to the transactions.

ICIEC also provided approximately $172m in political risk insurance supporting inward investment in Indonesia’s critical minerals sector, including nickel-related investments. This support helped mitigate political risks associated with long-term investment in a sector central to Indonesia’s industrial downstreaming and electric vehicle ambitions.

In addition, ICIEC provided credit support for approximately $110m of financing arranged by its sister entity, the International Islamic Trade Finance Corporation (ITFC), enabling Indonesian corporate exporters to access Shariah-compliant financing from ITFC. The transaction also illustrates the value of the One Group approach, combining the financing and risk-mitigation capabilities of IsDB Group entities to provide more integrated solutions for Indonesian businesses.

Together, these transactions demonstrate how ICIEC’s reinsurance, political risk insurance and credit enhancement capabilities can be combined with national export credit agencies and IsDB Group entities to de-risk transactions, strengthen financing capacity and mobilise additional trade and investment financing for Indonesia.

Supporting Indonesia beyond the MCPS

ICIEC’s longstanding engagement with Indonesia also extends beyond the MCPS period, supporting strategic infrastructure and economic development across different sectors.

ICIEC has supported Indonesia’s digital transformation. In 2020, the Corporation provided EUR50m ($58m) in insurance cover for a telecommunications project aimed at expanding 4G network coverage, particularly in underserved and rural areas. The broader investment programme was expected to expand reliable voice and data coverage to approximately 90% of Indonesia’s population, helping reduce the digital divide and support wider participation in the country’s growing digital economy.

This transaction illustrates how ICIEC’s risk mitigation solutions can support investment in critical infrastructure while contributing to greater connectivity and access to the digital economy.

Facilitating trade and strengthening financial institutions

Trade remains central to Indonesia’s economic growth, from exports of commodities and manufactured goods to the import of machinery, equipment and other strategic inputs required by its expanding industrial base. For businesses engaged in cross-border trade, financing can be constrained by buyer and counterparty payment risks.

ICIEC helps address these constraints by providing risk mitigation that enables banks and other financial institutions to extend financing with greater confidence. By sharing commercial and political risks, ICIEC can help unlock additional financing for Indonesian exporters and importers, strengthen international trade relationships and support the flow of strategic goods across borders.

This role is particularly relevant as Indonesia moves further into higher-value manufacturing and industrial downstreaming. By working alongside Indonesian banks, international financial institutions and export credit agencies, ICIEC can help mobilize financing that supports both Indonesia’s domestic development priorities and its growing participation in global supply chains.

Advancing Islamic finance and the halal economy

Indonesia is one of the world’s leading Islamic finance markets and continues to strengthen its position as a global halal economy hub. ICIEC complements these ambitions through Shariah-compliant insurance solutions that facilitate cross-border trade and investment while meeting the requirements of Islamic financial institutions.

A practical example is ICIEC’s re-takaful cooperation with Indonesia Eximbank. In April 2024, ICIEC signed a Quota Share Retakaful Treaty with Indonesia Eximbank to support the launch of its Export Credit Takaful programme. The arrangement provides re-takaful expertise and capacity, helping Indonesian businesses access financing from Islamic financial institutions that require Shariah-compliant insurance.

This collaboration demonstrates how ICIEC can connect credit insurance capacity with Islamic financing, helping expand the availability of Shariah-compliant solutions for Indonesian exporters.

Promoting South-South and Intra-OIC Trade

As one of the largest economies among Organisation of Islamic Cooperation (OIC) member states, Indonesia plays an important role in promoting South-South cooperation and greater economic integration.

ICIEC supports this objective by facilitating trade and investment between Indonesia and other OIC member countries across Asia, the Middle East and Africa. Through its network across member states, ICIEC helps reduce commercial and political risks that can constrain cross-border transactions, enabling Indonesian businesses to expand into new markets and strengthening economic linkages across the OIC.

Looking ahead

Building on more than three decades of engagements, ICIEC remains committed to deepening its partnership with Indonesia as the country continues to advance investment in infrastructure, industrial downstreaming, critical minerals, renewable energy, digitalisation and other priority sectors.

This direction is closely aligned with ICIEC’s Corporate Strategy 2026–2030, which places greater emphasis on delivering development impact at scale, strengthening strategic partnerships and mobilising additional financing through ICIEC’s credit enhancement and risk-sharing capabilities.

Through innovative Shariah-compliant trade credit and political risk insurance solutions, ICIEC will continue to work with Indonesian institutions, IsDB Group entities, development partners and international investors to de-risk strategic transactions, strengthen their bankability and mobilize additional financing in support of Indonesia’s development priorities.

As Indonesia advances toward its long-term development ambitions and strengthens its role as a major regional economy and leading OIC member state, ICIEC stands ready to remain a trusted partner in supporting bankable trade and investment opportunities and contributing to sustainable, inclusive and resilient growth.