Berita

Yogyakarta—In the mainstream economic system, the commercial domain of financial system always ignores its social counterpart as the former seems to be seeking high profitability which has always been in continued conflict with the main objective of the later: triple bottom-line (outreach, sustainability and welfare impact). This condition tends to become worse when the commercial aspect is inherently unstable, vulnerable to the crisis and hence, social aspect of the conventional system which has initially aimed to help fulfill three-bottom line may certainly be operated commercially.

The previous address was delivered by Dr. Ascarya, Senior Economist of Bank Indonesia, in a Stadium General on “Implementing Integrated Islamic Commercial and Social Finance in Islamic Financial Institutions” held by International Program for Islamic Economics and Finance (IPIEF) in collaboration with Department of Economics. This agenda which had taken place in KH Ibrahim Building 6 floor on Tuesday (5/12) was attended by roughly 200 participants from both IPIEF and Department of Economics students.

Contrary to mainstream system, Islamic financial system not only does concern commercial side but also focus on the social aspect to achieve the ultimate objective of Islamic finance, namely falah (wellbeing in this world and hereafter). Emphasising the marked contrast between conventional and Islamic system, Dr Ascarya clearly stated that: “The pillars of Islamic Economics and finance encompass Islamic commercial finance (such as partnership, real activities, governance and ethical) as well as Islamic social finance such as zakah and waqf. Therefore, in a country adopting dual financial system, financial system stability could be enhanced by integrating both aspects in small/micro scale.”

“Unfortunately, in recent years Islamic commercial finance has been mimicking the conventional system by adopting fractional reserve banking system, pooling of funds and liability driven which can eventually result in the bubble, mismatch and liquidity risks and therefore has also suffered Global Financial Crisis (GFC). Such risks have always been exposed to conventional financial system,” Dr Ascarya highlighted the serious consequences that have occurred when Islamic finance does not pay much attention in zakah, waqf, infaq and shadaqah as a social finance.

He then sought to develop the alternative models explicating the integrated Islamic finance in Islamic Bank (IB), Islamic Rural Bank (IRB) and Baitul Maal wat Tamwiil (BMT). Adding the previous explanations, he suggested:” IB, along with IRB and BMT could collaborate with Zakah and Waqf Institution to collect zakat and cash waqf , while waqf of fixed assets would be collected directly by Waqf institution. Zakat could be allocated by Zakah institution to consumptive and productive programs to mustahik. In addition, direct cash-waqf would be used to build social waqf facility or productive waqf while the indirect cash-waqf could be extended to MSME financing IB, IRB and BMT or be invested in the real sector by Waqf Institution.”

Finally, he arrived at the conclusion that integrating Islamic commercial and social finance in Islamic financial institutions can be highly crucial to safeguard the whole financial system stability by maximizing the role of zakah and waqf (as well as infaq, shadaqah) in achieving micro and macroprudential objective. [Aw]