Indonesia is staging its second annual Islamic Finance Conference (IAFC) in Yogyakarta, with the main agenda of using sharia financing to fight poverty and inequality.

The two-day event was opened by Finance Minister Sri Mulyani Indrawati on Wednesday and is slated to feature numerous programs, including seminars and forums for young economists, to facilitate experts as they exchange their knowledge and experience on the issue.

“With this event, we have a forum to groom young economists to gain skills and methodologies about Islamic financial instruments," Sri Mulyani said during the opening ceremony.

Sri Mulyani recalled the first instalment of the event, which took place as Indonesia held the annual Islamic Development Bank (IDB) conference.

She said that his year’s conference would focus on the benefits of Islamic instruments, such as zakat (Islamic tax) and waqaf (Islamic endowment), in overcoming social problems.

“Islamic financing is ideal for eradicating poverty and providing more equality, because it has risk sharing and asset based principles. Islamic financing also has social instruments, such as zakat and waqaf, that can be utilized to help the poor,” she explained, adding that these facilities have not been used to their full potential because Muslims still prefer to pay their zakat to nearby mosques or Islamic preachers.

"The use of waqaf assets is still limited to schools, mosques and cemeteries. If the waqaf can be used for more productive sectors, such as agriculture, it will have more value," she said. (bbn)