Yogyakarta—When talking about Islamic finance today, the vast majority of Moslems particularly Indonesian might only consider Islamic banking as the financial institution that can represent the whole system. In fact, there are rapidly growing institutions providing financial services to people who are in the low-middle class income based on Islamic contracts (akad), well known as Baitul Māl wa at-Tamwīl (BMT). This institution has been a unique one as it could possibly combine the Baitul Mal (Asset side) resulted from Islamic social finance with Baitul Tamwiil (Liabilities domain) in the single model. It can also be argued such an institution is essentially Indonesian model of Islamic microfinance.

“The aforementioned statement is a background why the young Islamist Economist should learn more about BMT as a main part of Islamic Finance in general,” said Jamil Abbas, MBA., Director of Perhimpunan BMT Ventura when delivering "Expert Lecture on Islamic Microfinance", Wednesday (13/12). He stressed that there is indeed the difference between Islamic Bank and Islamic Microfinance—BMT, as the former has gained full access to those who are in the high-middle class economy while the poor households have been a major customer of the latter.

“If you, Islamic economic students, think Islamic finance is all about Islamic banks, you may be needing to learn more. First and foremost, you must look carefully at BMT, the Indonesian microfinance model which there have been more and more countries trying to adopt. Recently, Islamic Development Bank (IDB) that now has a considerable concern about the poverty reduction has attempted to do so since it regarded that it will be insufficient to eradicate the poverty by resting heavily on Islamic Banks,” Abbas explained. He added, saying: “BMT is the biggest Microfinance institution Indonesia has which offers financial services to the poor and helps tackle the economic problems they encounter, there are millions of BMT and the number is likely to grow in the future. This is why, as I mentioned earlier, IDB and other foreign institutions have been interesting to learn this model and attempt to implement it in their countries.”

One main system adopted in BMT that might not yet be implemented in Islamic Banks is integrating Islamic social finance which consists of zakah, waqf, Infaq and shadaqah and Islamic commercial domain to be in a coherent system. Abbas emphasized: “BMT is rooted in two phrases; Baitul Maal and Baitul Tamwiil. The Baitul Maal is asset side that can be collected from social finance, not restricted to third party fund and then those funds will be extended in the real and productive sector through financing and other products in Baitul Tamwil domain, which is the commercial finance.” [Aw]

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