RESULTS AND DISCUSSION
A. History
of Sharia Economic Law in Indonesia
Before
the Dutch colonial imposed its legal politics in Indonesia, Islamic law first
had an advantageous position among the people at that time. Islamic kingdoms
that once stood in Indonesia implemented Islamic law in their respective
territories (Sarif, 2013).
�Because the majority of Indonesian
people adhere to Islam, the Islamic archipelago kingdoms since the 13th
century, including Samudera Pasai,
Aceh, Demak, South Kalimantan, South Sulawesi, and
Maluku are most of Indonesian archipelago, the tradition of Islamic law has
been used as the only law (Ismail, 2015) One of the laws that it
enforces is the law of engagement (akad) covering
various kinds of agreements such as buying and selling, accounts payable, mudharabah, lending and borrowing, safekeeping, iflas (bankruptcy), peace, as well as engagements arising
from unilateral actions such as endowments, testaments, gifts, as well as
several aspects of the engagement that arise from unlawful acts, such as ghashab (unlawful possession of other people�s property).
During
the Dutch colonial era, Islamic law was still valid as an awareness of being
Muslim and Islamic law had increased its acceleration, the concept of Islam
became a factor of social integration that gave group identity and fostered a
sense of togetherness.
Gradually
the Dutch colonial government through the VOC in 1799 began to get rid of
Islamic law as part of strengthening its power to colonize Indonesia. Several articles
have also been regulated in order to narrow down Islamic law, one of which was
in 1937 the issuance of Staatsblaad No. 116 and 638
which narrow the competence (authority) of Religious Courts (Sarif, 2013).
The
position of Islamic law which regulates sharia economic law after Indonesia�s
independence has become stronger, without being linked to customary law. �Indonesian
legal system does not specifically regulate engagement law nationally, but
Islamic engagement law can apply on the basis of recognition by differentiation
or through a choice of law at the will of the parties at the time of
transaction as regulated in Law no. 30 of 1999 concerning Arbitration and
Alternative Dispute Resolution.��� (Mardjono, 2000).
Sharia
(Islamic) engagement law in the last decade of the last century was pushed to
develop along with the appearance of Islamic financial and business
institutions, especially Islamic banks which made it the basis for footing. The
form of sharia (Islamic) engagement has been formalized into Bank Indonesia
Regulation No. 7/46/PBI/2005 concerning the collection and distribution of
funds for banks carrying out sharia-based business activities. In this aspect,
the application of Islamic law in the field of engagement is a necessity and
Reality demands to provide a reference basis for sharia business and economic
operators which has become a reality in this country.
In
general, various sharia-based banking practices are implemented by Islamic
banks and conventional banks through their sharia outlets. This banking practice
briefly is like the practice found in conventional banking, but the method is
carried out in a way that is in accordance with Islamic principles.
B. Definition
of Islamic Bank
Islamic
banks in general are banks whose operations are based on sharia principles. The mention of
Islamic Banks
Has many names
including Interest-Free Banks, Interest-Free Banks, Bank without usury (Lariba Banks),
and Sharia Banks (Farouk, 2008).
According to the Law of Indonesia
Republic No. 10 of 1998, regarding amendments to Law no. 7 of 1992 concerning
banking that commercial banks are banks that carry out business activities
conventionally and or based on sharia principles which in their activities
provide services in payment traffic. While the definition of sharia principles
itself is a rule based on Islamic law (Kansil & Kansil,
2002).
Islamic banks prohibit usury in all types
of transactions; business activity is based on equality. Fairness and transparency;
the establishment of mutually beneficial partnerships; as well as the necessity
of halal business profit income. In its regulation, Islamic banks also issue
and administer zakat to help develop the community environment (Ibi et al., 2001).
C. Functions
and Roles of Islamic Banks
In carrying out its intermediation
function, Islamic banks are based on the principles of Islamic law. The roles
and functions of Islamic banks are as follows: (Arifin, 2007) Sharia Banks collect funds
from the public or the business world with savings (mudharabah)
and demand deposits (wadiah) schemes, and distribute
them to the real sector, b) In the world of entrepreneurship, Sharia Banks are
places of investment (both capital funds and investment account funds) by using
investment tools that are in accordance with sharia, c) Offering various
financial services on a wage basis in a contract of representation or rental,
d) There is social allocation, including loans,
virtue, zakat, and other social funds in accordance with Islamic teachings.
D. Objectives
of Islamic Bank
The establishment of Islamic banking is
intended to provide services and products that are based on Islamic sharia
principles. Islamic banks are investment and business activities in Islamic
financial institutions that are recommended.
E. Legal
Basis of Islamic Banking
اَلَّذِيْنَ
يَأْكُلُوْنَ
الرِّبٰوا
لَا يَقُوْمُوْنَ
اِلَّا كَمَا يَقُوْمُ
الَّذِيْ
يَتَخَبَّطُهُ
الشَّيْطٰنُ
مِنَ الْمَسِّۗ
ذٰلِكَ بِاَنَّهُمْ
قَالُوْٓا
اِنَّمَا
الْبَيْعُ
مِثْلُ الرِّبٰواۘ
وَاَحَلَّ
اللّٰهُ الْبَيْعَ
وَحَرَّمَ
الرِّبٰواۗ
فَمَنْ جَاۤءَهٗ مَوْعِظَةٌ
مِّنْ رَّبِّهٖ فَانْتَهٰى
فَلَهٗ مَا سَلَفَۗ
وَاَمْرُهٗٓ
اِلَى اللّٰهِ ۗ وَمَنْ عَادَ فَاُولٰۤىِٕكَ
اَصْحٰبُ
النَّارِ
ۚ هُمْ فِيْهَا خٰلِدُوْنَ
Means:
Those who consume usury cannot stand
except as one stands who is being beaten by Satan into insanity. That is
because they say, �Trade is like usury.� But Allah permitted trade and has
forbidden usury. (QS. Al-Baqarah:27������
Means:
From Ibn Mas�ud
ra that the Messenger of Allah cursed the eater of usury, the one who feeds,
the two witnesses and the recorder. (HR Muslim).
F. Positive
Legal Basis
1) Law
No. 7 of 1992
The stipulation of Sharia Banking
Regulations, namely Law No. 7 of 1992 as a commercial bank and a people's
credit bank, became an effective way for some Muslims who were anti-usury, so
Bank Muamalat Indonesia (BMI) was established on May
1, 1992 with an initial capital of IDR
106,126,382,000,00. Law No. 7 of 1992 does not comprehensively mention the
establishment of Islamic banks or profit-sharing banks in its articles, through
the deregulation that has been given the government gives free choice to the
public in interpreting the intent and content of these regulations.
2) Law
No.10 of 1998�
The revision of Law No. 7 of 1992 to Law
No. 10 of 1998 provides firmness in its existence and increases the role of
Islamic banks in accommodating the aspirations and needs of the community.
From this regulation, the national bank is expected to lead
in its function of collecting and
distributing public funds with the
priority of cooperatives, small and medium entrepreneurs and all levels
of society without discrimination. Law No. 10
of 1998 in its regulation provides options for people
who intend to establish a bank based on Sharia
principles, Conventional Commercial Banks also allow to
add outlets that specifically carry out activities
based on Sharia principles.
3) Law No.23 of 2003
Law No.23 of 1999 concerning Bank Indonesia
provides the task of preparing
regulations and supporting facilities for Sharia-based bank operations as well as the implementation of a dual bank system.
4) Law No.21 of 2008
Important points in Law No. 21 of 2008: (a) the obligation to include
a �sharia� label for
Islamic banks. Conventional
commercial banks (BUK) which have a sharia
business unit (UUS) are required
to include a sharia label after the bank�s name
(article 5 no.5). (b) the existence of sanctions
for controlling shareholders who do not pass the
fit and proper test from Bank Indonesia (article 27). (c) Religious Scholars Indonesian Council is the only
sharia decision holder. The product of Bank Indonesia regulations
(PBI) related to Islamic banks is the
result of the adoption of
the translation of the Religious
Scholars Indonesian Council
decision. In the framework of preparing
the PBI, Bank Indonesia formed
a sharia banking committee consisting of elements from
Bank Indonesia, Ministry of
Religion, and elements of the
community with a balanced composition and with expertise
in the field of sharia (article
26).
G. Comparison of Conventional
Economic Theory and Islamic Economic Theory
Discussions about modern economic systems focus on two
major systems; market capitalism and guided socialism.
Capitalism is a system based on
voluntary exchanges in a free market. Meanwhile,
socialists try to overcome the
problems of production, consumption, and distribution through planning or command. It
should be understood that the two major
systems in the modern economy do not mean making a dichotomy or bipolarization. The two systems are two extreme points
on a spectrum of ideas. In its
implementation, the economic system rolled out by
countries in the world is currently
on the spectrum.
�Then, where is Islamic Economics?� The discussion regarding Islamic economics and its
relation to socialism or capitalism
is not about �whether Islamic economics is capitalism or
socialism.� Rather it is �where
is it on
the spectrum?� Is there a differentiation from what is
offered by Islamic economics compared to the two
systems, and how Islamic economics can work? Islamic economics is a branch of science
that studies methods in understanding and solving economic
problems based on the teachings
of Islam. Human ethics and society based
on the teachings
of Islam is what is then
referred to as Islamic rational behavior which will be
the basis for the formation of
an Islamic economy (Arifin, 2007).�
Things related to
the comparison of Islamic economic theory and conventional
economic theory have differences and similarities that are quite interesting to discuss.
H. Paradigm of Conventional
Economic System and Islamic
Economic Theory of Capitalist Economy
The ideology
of capitalism refers to the
views of Adam Smith (1729
AD-1790 AD) which focuses on a market economic
system, also called a liberal economic system. The principles of capitalist society
according to Adam Smith�s classical theory include the principle of
private property, free competition and the profit motive. Shows that
the concept of �capitalism� is a system that
is explicitly characterized by the rule of
�capitalist�. Furthermore,
modern capitalism as described
by sociologists; Light, Keller, and Calhoun
adopt other assumptions, namely capital accumulation and the creation
of wealth. This is a development
of classical capitalism which is hedonistic-personality or individualism. The capitalist system is built on
three basic frameworks. The first is the limitation
of goods and services which
have implications for human needs. This means that
goods and services have limitations
to meet complex
human needs and are continuously increasing in quantity. Second, is the value
of an item produced, this is the basis of
economic research. Third, is the
price and the role it
plays in production, consumption and distribution. Price is a controlling tool in a capitalist economic system (Ulfa, 2010).
I. Socialist Economic Theory
Studying capitalist economic
theory will certainly have implications for socialist economic theory which is
intended to implement regulations in the economic system
or theory that intends to
obtain a better distribution than capitalist theory. The basic strategy of a socialist economic system is to act
by a central democratic authority, and to it
the acquisition of a more equitable
production of wealth than is
currently operating (capitalist). According to Joad, various
efforts that socialism recommends to society are: (1) The abolition of private
ownership of the means of
production. (2) The nature and extent of
industry and production serve social needs and
not the profit motive. (3)
In capitalism the driving force is
personal profit. This will be replaced by
the social service motive.
The socialist
system and ideology have a differentiation with the capitalist economic system. Socialist ideology seemed dominant in the 19th century. At that time, socialists
confronted the views of Liberalism
due to the
injustice suffered by society because
of the Capitalist
economic system and the various
problems that occurred in it. According to Taqyuddin
quoted by Abdul Aziz, there are three principles in the Socialist school that distinguish it from previous
economic schools, namely: (1) Realizing real equality. (2) Eliminate
individual ownership (private
property) in whole or in part. (3) Organize production and distribution collectively (Ulfa, 2010).
J. Islamic Economic Theory
Islamic economics is different
from the Capitalist and Socialist systems and at the
same time it is not a synthesis
of these systems. The Islamic economic system is a formulation
based on the Islamic view of life. Islamic economics must be realized in the economic cycle
at all levels
of society. the government does not dominate an authoritarian economy like socialist/commonism.� There are three major streams of
Islamic economic system, namely:
a) Madzhab Baqir is
of the view
that increasingly complex economic problems arise due to an
unequal and unfair distribution, the case is
caused by an economic system
that exploits the strong against
the weak. Therefore, economic problems arise not because of limited
resources, but because of unlimited
human greed.
In line with
that, this school rejects all theories developed
by conventional economics. Instead, this madhhab assembles
new theories in economics that are excavated and deduced
from the Qur�an and As-Sunnah.
b) The Mainstream Madzhab is of
the view that economic problems
arise due to limited resources
faced with unlimited human wants. This madzhab of
thought on economic issues is almost no
different from conventional economic views. Scarcity of resources is
the cause of economic problems.
The figures of this madzhab include
M. Umar Chapra, M.A. Manan, M. Nejetullah
Siddiq, and others, the majority of
whom work at Islamic Development Bank (IDE);
c) Critical alternative madzhab include Timur Kuran,
Muhammad Arif, and others. This school criticizes
the two previous
schools of thought. Madzhab Baqir is criticized
as a school that claims to have
discovered something new that has been
discovered by others. In a sense, eliminating the old theory and
then formulating a new theory. Then,
he criticized the mainstream madzhab as an adoption of
neoclassical economics by eliminating usury variables and giving rise
to zakat and intention variables. This madzhab is
a critical school of thought. They are of the view
that critical analysis is not only aimed at
socialism and capitalism, but also at Islamic economics. They believe that Islam must be true, but
Islamic economics is not entirely true because
some of it
is the result
of human interpretation of Qur�an and
As-Sunnah, so the truth value
is not absolute. According to the
critical school of thought, propositions
and theories formulated by Islamic economics must always be tested
for validity as they are applied to conventional economics (Aziz,Maria Ulfa,2010).
The principle of Islamic economics is a noble goal
based on the search for
ma�isyah (life) in order to seek God�s
fortune which is carried out
in a halal and thayyib way. According to Murasa Sarkaniputra quoted by Abd. Aziz, the paradigm of
Islamic economics becomes concrete in the vision of a person who only produces
halal and thayyib (good) commodities and in achieving income he does not carry out profit maximization. These three new paradigms
will change people to carry
out daily muamalah aimed at achieving
the pleasure of Allah (Ulfa, 2010).
The Cause
of the Lack
of Public Interest in Partnering with Sharia Banking
The main principle of Islam
as a way of life is monotheism.
The first revelation that came down
was Surah Al-Alaq verses 1-5, in which the philosophical foundations of life were laid. That Allah SWT is the creator of
all that exists, Allah SWT is Most Noble and
Allah SWT is All-Knowing of all things.
Humans are creatures that are explicitly referred to as the creation of
Allah SWT. Humans are commanded
to always read in the name
of Allah SWT (Rahmawati & Karim, 2016). In organizing life, Islam has provided perfect guidance in various fields with the aim
of benefiting. One of them is
in the economic field. Islam has noble and superior teachings for managing the
economy in life (Chapra, 2001). All aspects related to the
basics of the economy are regulated by Qur�an.
The methods and techniques of economic
activity will continue to develop
according to the progress of
the times, such as Islamic financial institutions which continue to experience
challenges in developing them.
Regarding the public
still being reluctant to access
banking products and services, a solution must be
explored on an ongoing basis for stakeholders. Looking at the
market share of Islamic banking in the range of
6.5%� a problem that
needs to be decided accelerated.
Islamic economics is a guide given by
Allah SWT to humans to achieve justice,
prosperity. When the understanding of Muslims, including
in Indonesia, has not been realized
as expected, what happens is that
the loyalty of Islamic banking customers will not develop well. The Islamic banking system is still not remarkably
familiar to the public, especially
assuming that there are many weaknesses in Islamic banking operations, making most people not make Islamic banking an option.
However, this is not the main factor about the
reluctance of customers to choose
Islamic banking. However, the strategy of
Islamic banking in winning the hearts of
the market is still considered
weak. Islamic banking is not so familiar
or considered new, it should
be able to
set a strategy to win the hearts
of the people.
One of the customers� interests in conventional roles is to pursue
high interest rates. Therefore, providing benefits to Islamic banking customers in the form of profit sharing is a strategy
that must work well. Customers
also consider that in terms of
the profit margin of murabahah products, for example, they
are considered higher compared to conventional
bank interest profits, it is necessary
to conduct studies and policies
so that they
can be more
competitive considering the market share
comparison of Islamic banking is far
behind with conventional banking.
Based on Worldpopulationreview
data in 2021, Indonesia is a population
with the largest number of Muslims in the
world, which is a market that
has the potential to realize various
Islamic economic activities.
Referring to data from the Directorate
General of Population and Civil Registration
(Dukcapil) of the Ministry of
Home Affairs, total population of Indonesia is 272.23 million in June 2021, and as many as 236.53 million people (86.88%) are Muslims.� However, the dominance of
Muslim population in Indonesia is
not proportional to the growth of
sharia transactions. This is clear
from the statement by the
President Director of PT Bank Syariah Indonesia Tbk or
BSI, Hery Gunardi who stated
that in Indonesia, of the approximately 180 million Muslim population, only 30.27 million were customers of Islamic banks as of November 2020.� This statement shows that the market
potential of Islamic banks is large
and has not been fully exploited. Sharia transactions that are still minimal in
Indonesia show that Islamic
banking has not become a market leader.
Based on the
Global Islamic Economy Indicator
(GIEI), Indonesia is in 4th position
in the resilience of the sharia
economy in facing the pandemic. The COVID-19 pandemic has brought down the economies
of many countries.
The Financial Services Authority (OJK) recorded total Islamic financial assets of IDR 1,885.65 trillion as of June 2021. Sharia shares are not included in the calculation. Teguh Supangkat,
deputy commissioner of banking supervision
I of the Financial Services
Authority, explained that Islamic financial assets consist of the Islamic capital market of IDR 1,137 trillion, Islamic banking of IDR 631 trillion, and the
sharia non-bank financial industry (IKNB) of IDR 116 trillion. �There has been a significant increase from year
to year since
2017,� said Teguh at 2021
Islamic Finance Summit, Wednesday
(30/9).
Although it has increased,
based on the report of
the National Committee and Islamic Finance (KNKS) the market share of
Indonesian Islamic banking over the
last 20 years has only been in the
range of 5%, although stakeholders have made various
efforts through policies to increase
market share in accordance with targeted.�
The implementation
of the Islamic economic system in Indonesia has become pros and
cons in society. It is proven
that sharia-based institutions are increasingly becoming a trend. However, Islamic banking also has many challenges
along the way. There are several factors causing the lack
of interest of the Indonesian people to use
Islamic banking services. These challenges include:
K. Society Assumes Related
Not Synchronized Between the Concept of
Islamic Banking and Implementation.
Many people still
doubt the sharia and assume
Islamic banking is the same as conventional
financial institutions. With the view,
for instance, that the application
of murabahah system is considered
to be no
different from the interest rate
applied by the conventional system, even the
profit margins received by Islamic banking are more expensive. Another view is
that Islamic banking is only for
Muslims. In fact, it is a commercial
institution that serves all levels
of society.� Ahmad Buchori, Head
of Department of Islamic Banking at the
Financial Services Authority, also
said that there was an
assumption that Islamic banks were not as complete,
modern, and as good as conventional banks which had an impact
on the small
number of Islamic bank customers, including services and products.� These views have an
impact on customers to be
neutral in partnering with financial institutions. On the other hand, sharia
banking outlets which are still limited in various regions make it
a weakness in socializing the existence of
sharia banking.
L. Limited Human Resources
The increasingly
rapid performance of Islamic financial institutions does not go hand in hand
with the preparation of human resources that are able to accommodate
two different sides so that
they become a synergistic whole. So far, most
of the practitioners
of Islamic finance are those who have
sufficient competence in conventional economics, but in sharia science
(the application of ushul fiqh
and fiqh muamalah) it is still
considered extremely limited.
The appearance
of a gap between demand and availability
of human resources is one focus
of the problem, this is not caused
by the minimal amount of output
from universities, but the problem is that practitioners
from Islamic financial institutions are not only those with marginal competence but the human resources needed are who have more competence
than just bankers.
Managerial and accounting
are skills that will figure out
their role in the development of Islamic financial institutions. even though there are so many graduates
from these study programs, the skills
they have are still weak. The need for quality
human resources is a challenge that must be answered
for academics and the world
of education. Understanding the quality of human resources which is still minimal, especially related to the competence
of sharia economics will increase the enthusiasm
for sharia economics from various elements to take part
in providing solutions. One
of them is
developing the discipline of Islamic economics education.�
The limitations
of qualified human resources in the field of sharia
and the economy
have so far
been overcome in an inappropriate way, namely placing
employees who do not meet the
qualifications which have an impact
on services to customers that
are not optimal.
M. Still Limited Office Network
Indonesia has a very wide area. However, the number
of sharia offices running to remote areas
is still very minimal. It is proven that
sharia banking services in general are only available in big cities. The limited number of branch offices,
sub-branches, cash offices, and Automated
Teller Machines (ATM) is one of
the reasons why customers find
it difficult to reach sharia
banking services.
Rizqullah, a BNI Syariah practitioner admits, �One of the obstacles to
the growth of Islamic banks is the limited
network.�� The government is the
main actor in efforts to overcome the
limitations of the Islamic bank office network that can
reach people in various regions. On the other hand,
technological advances have helped the
limited number of office networks
such as the presence of digital Islamic banks such as Aladin Syariah
bank.
The Islamic finance industry has been digitized according to the
progress of the times which
provides easy access for the
public in transactions, as said by the
Secretary of the Daily Executing
Body (BPH) of the National Sharia Council - Religious Scholars Indonesian Council (DSN-MUI),
Prof. Jaih Mubarok.�
This triggers the Islamic economy and finance to
grow larger which implies a cooperation between Islamic banking and halal business.
N. Political Islam in Indonesia which is not optimal yet
The role
of Islamic politics has a dominant influence in realizing the existence
of a sharia economy, for example
in (1989-2000) there were only
2 BUS, 1 UUS, and 79 BPRS with
assets still around 1.5 trillion.� Meanwhile, post-reform, for example in the period 2000�2015 until January
2014, the number of Islamic banking institutions became 11 BUS, 23
UUS, 151 BPRS with total assets
reaching 500 trillion plus
892 billion. This contrasting growth difference is due
to the political
and economic factors of the
Indonesian government, which
in the second period of regulation
more accommodated the Islamic economic system. Another example, before the reform era, when Islamic politics did not take an
ideal role in government, would affect the
fate of Islamic financial institutions. The establishment of Islamic banking cannot be separated from
the suspicions of one of
them by the
New Order rulers in the
1970s and it is believed that
there was suspicion in realizing the Jakarta Charter. This has implications for government policies that do
not allow the establishment of these institutions.
The profit-sharing and fairer
distribution system of the Islamic banking system is one of
the reasons the New Order government has not given permission. This is contrary
to the legislation
in force in No. 14 of 1967,
CHAPTER I, Article 1, which
does not allow the operation of
banks without credit interest.
One of
the goals of establishing a bank is to provide
easy access to MSMEs and
small people. But the government
is currently feeling increasingly secular in its policies, such as the merger policy of state-owned Islamic banks consisting of BRI Syariah (BRIS), BNI Syariah (BNIS), and Bank Syariah Mandiri (BSM) to
become Bank Syariah Indonesia (BSI) where Muhammadiyah as one of the Islamic organizations in Indonesia has reviewed
this policy with a request that 60% of the
financing is in favor of MSMEs
because the BSI regulations are mostly in favor of large
corporations which this is contrary
to the mandate
and ideology of the Muhammadiyah organization which is more in favor
of MSMEs and populist programs.��
Bank Syariah Indonesia as
stated in the regulation of Bank Indonesia only pursues the
target of disbursement of 20%, this regulation
is still extremely low if
we look at
the achievement of BRI Syariah distribution which reached 46% before the merger. Sharia Bank assets that touch the
figure of IDR 239 trillion, of which
the total financing disbursed was IDR 156.5 trillion. So, Bank Indonesia regulation which only gives 20% or around IDR 31 trillion to Micro
Small Medium Enterprises shows
that it is
more in favor of large corporations
that are given financing of IDR 125 trillion.
Most of the
absorbed workforce, which is around
120 million, is the contribution of Micro Small
Medium Enterprises as well as their
role in the Indonesian economy which reaches
60%. But the policy in disbursing large financing is given by
corporations. This should be a future
evaluation that the 5th precept of Pancasila provides a corridor to be
more in favor of people and
the community, namely Social Justice
for all Indonesian People.�
Hidayat Nur Wahid, Deputy Chairman of Indonesian People�s Consultative Assembly (MPR RI), said that the
market share of Islamic banking was only at
6.81%, then 9.10% for
Islamic financial inclusion,
and the level of Islamic financial literacy was at
8.93%. These data show that small communities
have not received much touch from
Islamic banking.
Good regulation will
certainly accelerate the development of the Islamic economy. The position of legal institutions must continue to
be strengthened with comprehensive foundations and regulations in the context of accelerating
sharia economic growth in Indonesia. However, due to the
constraints of political Islam in Indonesia, which
has experienced ups and downs, it
has hampered the process of designing
regulations. The existence of Law No. 41/2004 concerning waqf, Law No. 19/2008 concerning
State Sharia Securities (SBSN) and
Law NO. 21/2008 concerning Islamic banking, it is
considered that there are still few regulations that accommodate Islamic economics, for example regulations on microfinance institutions such as Baitul Mal wa Tamwil (BMT), sharia insurance, and corporate sukuk which are still burdened with double
taxation.
The challenges
of Islamic economics in the institutional realm are truly diverse, including the absence of
an umbrella organization (APEX) for Islamic microfinance institutions. The
non-existent Islamic Financial Services Authority. All needs of Non-Bank Sharia Financial Institutions (LKS) need to be strengthened
by the existence
of facilities from credible Financial Institutions (LK), and strengthening of the Non-Bank Sharia Financial Institutions (LKS) Bureau at the Capital Market Supervisory Agency (BAPEPAM). In addition, a special work unit in the field of
sharia that does not yet exist
at Bank Indonesia has an influence on various
policies that are not
optimal. Various policies that are not in favor of the small
community or the sharia economy
are because the politics played by Muslims in this
country have not been maximized.
O. Dominance of Conventional
Economics
The dominance
of conventional economics over modern economic thought has become a very advanced and
sophisticated scientific discipline, it must be admitted
that conventional economics has provided rapid progress in human life materially, initially the economic
revolution had an impact on human welfare, the development
of means of communication and increasing the ability to
exploit natural resources.
The standard of living among the
working class is higher than
if they depended
solely on agriculture. But along the way,
conventional economics failed to maintain
its ideals. The gap between the rich
and the poor
is getting bigger, and has implications for the gap between developed and developing
countries as well as causing high inflation
and unemployment.
Although it has caused
injustice, the grip of the hegemony
of conventional economics has been extraordinarily strong, so that efforts
to realize Islamic economics have met many challenges.
In addition, the national banking sector which is
not competitive in its competition with foreign banks in Indonesia has an impact on
the consumer side, which on
average is from the lower
middle class. This makes it
difficult for people to get
out of poverty.
The initial presence of Islamic banking was intended to
be the main solution. But apparently
also cannot do much. Examining
data from the financial services authority in a snapshot of the market
share of Islamic banking, the position
in December 2020 touched
6.51%, an increase from the previous
year�s position in June 2019 which touched 5.95%. President Jokowi
Dodo in his speech at the inauguration of Bank Syariah Indonesia at the State Palace stated, �Although the market share
of the Islamic finance industry lags behind compared
to conventional banks in the country,
this condition becomes the ammunition
for Islamic banks in the future� (Butar-Butar, Fachrudin,
& Silalahi, n.d.).�� President�s statement is reinforced by
data from the Financial Services
Authority, where until the end of
2020, the distribution of Islamic commercial bank financing in Indonesia grew 9.5% on an annual
basis. This growth is above the
national banking industry financing growth which was
minus 2.41% (Rahmah, Syafroni, &
Suntoko, 2021). This value
is only able
to provide a small contribution compared to conventional
banking.
The development
of Islamic banking is basically an
integral and important part so that
its role cannot be separated
from the development of the Islamic economy. Islamic banking will not succeed if there
is no support
from all elements of the
nation. Bank Indonesia Deputy
Governor Dody Budi Waluyo also
explained that the challenges still faced by
the Islamic economy in
Indonesia are: First, �limited capital
of Islamic financial institutions in expanding the range of
financing and funding for business
actors with lower costs is
still an obstacle. Second, accelerate the development of sharia product innovation, our sharia products need to be
more varied and market friendly.
Third, Dody said it was important
to continue to encourage the
development of human resources in the Islamic economic sector. The reason is that
human resources are needed who can manage
exceptionally large people's funds. Fourth, according to him, infrastructure
limitations in the Islamic economy and finance
also need to be overcome
so that Islamic financial services, including the use
of technology, can be further
expanded.� he said in a
video conference, Monday
(5/10/2020).
P. The Right Formulation
in Developing Indonesian Islamic Banking
Various complex problems
in Islamic financial institutions,
of course, this is not a reason
not to develop. Every good and
right effort will pay off.
Workable solutions include:
Q. Realizing Islamic economic politics
Islamic economic politics is an effort
to maintain the continuity of human life to
achieve prosperity, justice, and enlightened
happiness. The perception of some people
who interpret politics will lead
to practical politics must be
clarified. Practical politics that justifies
many ways to win power
is quite different from Islamic economic politics. Realizing the political
economy of Islam is an order from
Allah SWT to humans as caliphs in bringing benefit.
Islamic economic politics is often called
Siyasa Maliyah. In the editorial, namely tadakhkhu ad-daulah (state intervention). State intervention in Ash-Shadr�s view is a state
that intervenes in economic activities to ensure the
adaptation of Islamic law which has implications
for the economic
activities of the community.� Policy (political will) towards Islamic financial institutions is the main determinant in the future. A set of policy makers
and managers are in the legislative, judicial, and executive
positions. The development process and efforts
to achieve justice, democracy and prosperity need to consider
the various aspirations of the people that
are in harmony with the national development
goals, namely the development of the Indonesian people as a whole and the development
of the Indonesian people to create
a prosperous, just and prosperous society that is
equitable, both materially and spiritually based on Pancasila and the 1945 Constitution of the Republic of Indonesia. Development is a
multidimensional process that
involves fundamental changes
in social structures, social behavior and national institutions.�
The importance
of Muslim scholars so that they
can be in legislative, judicial, and executive positions
will have implications for accelerating juridical support for strengthening
the sharia economic system in Indonesia. In organizing a just and prosperous Indonesian economy, it is
stated that the positive economic
law is based
on Pancasila and the 1945 Constitution articles 27, 33 and 34 which are in line with Islamic values. The principles of Islamic Economics cannot be separated from
the basics of Islamic law, namely the Qur�an,
Sunnah, Ijmak, qiyas and ijtihad.� Islamic
law actually develops along with the times
in responding to various complex problems. Dr. Murniati Mukhlisin, M.Acc
stated that if Islamic economics wants to be
maximized in its development, like it or not, Muslims
must understand Islamic economic politics.��
R. The Concrete Role of Sharia
Economics�
The system
offered by Islamic banking will have
a good impact if in its application
it upholds the concept of
sharia. Sharia banking activities are monitored by the
government (Bank Indonesia), and
the Sharia Council in a strict and systematic manner, seeing that several sharia
banking institutions have been running
independently of the regulations and there are no
strict sanctions when their operational
aspects deviate from sharia provisions.
the absence of firm and
systematic action has led to many
Islamic banking practices that are not following the concept and
do not have an impact on
welfare or benefit for the
people, it is estimated that
such banking practices have been carried out
by almost 75% of banks claiming
sharia in Indonesia.�
So, the existence of systematic
regulations will make Islamic banking have high credibility.
On the other hand, the implementation
of the Islamic finance sector is oriented towards
the real sector, especially among the lower middle
class with the hope of
minimizing the gap between the real sector and the
monetary sector. Orientation to the real sector, has a high influence on fair and
equitable economic growth.
Islamic financial institutions such as banks must
also continue to improve their
human resources by providing conditions to continue to
improve their skills, motivation, and knowledge through
various trainings, Islamic studies and so
on outside of working hours.
Islamic banking may also
need a door to door strategy
in adding new customers by providing
more comprehensive education to prospective
customers, especially education on the
importance of participating in advancing the Islamic economy, education that is no less
important is to explain explicitly
about product advantages because customer understanding in this case is
usually constrained by the limited
time of service
(customer service) due to queues,
various understandings of customers, in the sense that
not all customers understand because banks often explain
things that are ambiguous or give
rise to many
interpretations.
S. Effective marketing strategy
The trend
of sharia diction that is
increasingly familiar in various countries including Indonesia, such as sharia banking, sharia hotels, the increasingly important halal-haram labeling requires wisdom in thinking and putting aside
the emotional aspect. Customers must be one
of the priorities
in getting good service. The professionalism of Islamic financial institutions is an absolute must
in maintaining credibility.
Islamic bank practitioners must
be able to
convince Muslims that Islamic banks are better. �Good, modern, fast service will provide
a change for the better. In terms of meeting
the increasingly diverse needs of
consumers, Islamic banking provides a variety of products. Technology and information that are increasingly advanced are tools that must be
functioned in facilitating consumer needs as well as being the
attraction of Islamic banking. Attractive products that are varied, competitive, and adapt to
the needs of the community
have made Islamic banking grow significantly.
The rapid advancement of technology and
information has also made Islamic banking able to build
relationships with Islamic financial institutions around the world
and collaborate in various benefit programs. �
CONCLUSION
Islamic economics is the best formulation in reviving
the economy in Indonesia when the challenges of the conventional economy are
not able to bring prosperity, and have caused many
problems. The hegemony of the conventional economic system which is
extraordinarily strong has clouded the public�s view of the primacy of the
Islamic economic system, one of which is Islamic banking which has received
less interest from the Indonesian people, who in fact are most Muslims. The
factors that cause these problems, people assume that there is no
synchronization between the conception of Islamic banking and implementation,
limited human resources, especially practitioners who master modern
banking/economics, and understand fiqh (sharia).
Office network services that are not evenly distributed over the breadth of Indonesia,
the dominance of sophisticated and
modern conventional economics
have provided rapid progress, one of which
is in the field of informatics.
The dimness of Islamic politics is an
obstacle in carrying out its operations
because it must go through
various complicated bureaucracies.
Some of these obstacles require stakeholders to carry out
the right strategy so that
the sharia economy in Indonesia can bring fresh air to the economy
at every level of society. Among
the strategies and formulations that can be
implemented include realizing superior Islamic economic
politics so that state intervention
in economic activities does not get out
of the corridor
of Islamic law that brings justice
and prosperity, realizing the concrete
role of sharia
economy will have a good impact
if in its application upholds the concept of
sharia. , and effective marketing strategies through various sectors including attractive product variations according to the
needs of the community and
the times, friendly and modern services, sharia expo programs, utilization of information technology facilities, and office network expansion greatly affect customer growth rates due
to close services. with the community being
a suitable alternative, the village community
does not really care about the
name of banking,
but the community
needs banking services that can
reach easy access with the
availability of offices in small towns and of
course credit sharia banking bell so that
it does not lose in terms of service
and product innovation with conventional financial institutions.
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