Indonesia is one of the countries that implement Sharia economics. According to data from the Ministry of Finance, Indonesia is ranked fourth among countries adopting Sharia economics, such as Malaysia, the United Arab Emirates, and Saudi Arabia.
Therefore, Bank Indonesia initiated the development of a new policy framework, which was presented jointly with the UGM Faculty of Law on Thursday (October 5) under the theme “Bank Indonesia’s Sharia Policy in the Fields of Economics, Finance, and Payment Systems.”
“Sharia banks differ from other banks in terms of their social function. Besides the potential of conventional banks to engage in usury, which is prohibited in Islam, Sharia banks are an alternative,” said Dr. Yulkarnain Harahap, Islamic Law Department lecturer at the UGM Faculty of Law.
“Their social function lies in disbursing non-profit funds, such as alms, donations, and grants, to organizations managing zakat.”
As a country with the largest Muslim population, Indonesia must facilitate its people’s religious needs within its system.
Despite its long-standing implementation, Sharia economics still needs to be reintroduced to the public. Given that the zakat system in Sharia economics differs from the taxation system, it requires awareness and individual willingness to give.
This is where Bank Indonesia plays a role in emphasizing the importance of Sharia economics.
Dr. Harahap added that Bank Indonesia cannot solely manage the Sharia economic system; it requires the involvement of zakat institutions, almsgiving organizations, and others within the community.
Puji Lestari from the Sharia Economics Department at Bank Indonesia also concurred. She mentioned the need for integration between commercial and social finance.
“Bank Indonesia establishes integration between the two, for instance, by encouraging banks to act as nazir (waqf recipients). Historically, this role has been held by non-financial institutions. We are jointly promoting this with the relevant authorities,” she said.
“In general, Bank Indonesia’s role is to monitor and regulate Indonesia’s economic dynamics, especially in the financial sector. The central bank’s objectives now include implementing and setting macroprudential policies, maintaining sustainable monetary policies, and regulating payment systems.”
“From a Sharia perspective, this needs to be examined; what are the challenges and obstacles?”
Macroprudential incentives are policies designed to support the recovery of economic sectors by providing incentives to banks that lend to or finance priority sectors.
“In terms of the domestic market, there is indeed an increasing demand for halal products due to people’s increased awareness of the importance of halal products. On a global scale, it is about how we can dominate the global Sharia market. It turns out that countries worldwide compete to dominate it,” Puji Lestari added.
Three areas in the Sharia economy sector improved throughout 2020-2023 were the low growth of Sharia businesses, the small share of Sharia financing, and the lack of economic literacy in promoting a halal lifestyle. These three aspects are expected to yield significant results in 2024.