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Sunday, 12 July 2009

Indonesia: Advantages of Shariah Economy

Bandung. Vice presidential candidate Boediono stepped up to a food stall in a bazaar organized by students from the Bandung Institute of Technology last month and asked the price of something on display. “Thirty-three dirhams, sir,” replied the student vendor.

Of course, the former central bank governor had no such Middle Eastern currency, the only currency used for all transactions at the bazaar. No problem. A money changer was available there to convert his rupiah into dirhams.

Boediono, Susilo Bambang Yudhoyono’s running mate, did not end up buying the food, but he got the message: the bazaar’s organizers, comprised of students from the university, also known as the ITB, and activists from the nearby Salman Mosque, wanted him to experience a Shariah-based economy.

ITB student Arif Budianto, one of the organizers, said the group wanted to promote a Shariah economy in Indonesia because, as he put it, “Shariah economy is the best solution to the present economic problem, packed with an excessive poor-rich gap, market volatility and speculation.”

In a truly Islamic economy, the value of the currency is determined by the currency itself. The dirhams and dinars used are coins made of pure silver and gold, the value of which determines their exchange value. In a liberal economy, by contrast, the value is determined by monetary policy and markets.

Arif and his activist friends presented Boediono with the message, because, while the candidate does have a personal commitment to Islam, “he has been very involved in the capitalist economic system.”

Early in the election campaign season, there had been fear-mongering directed against Yudhoyono and particularly Boediono that they were capitalist neo-liberals, more interested in market forces and so-called foreign interests than grass-roots issues such as people’s welfare.

However, as the People’s Consultative Assembly (MPR) Speaker Hidayat Nurwahid pointed out, it was during Yudhoyono’s presidency and Boediono’s recent term as Bank Indonesia governor that regulations on Shariah banking and Shariah obligations were born.

Also during his term, Boediono issued hundreds of Shariah bank licenses.

“Accusations that Yudhoyono and Boediono are proponents of neo-liberalism are baseless,” Nurwahid said.

The chairman of the West Java chapter of the Prosperous Justice Party (PKS), Ahmad Syaikhu, said that during Boediono’s time at the central bank, Shariah banking boomed and Islamic bonds were introduced in the Indonesian stock market.

One of the other ITB bazaar organizers from Salman Mosque, Zaim Saidi, said he and his friends would continue to develop the Shariah-inspired system throughout the country.

“The time has come for Indonesian Muslims to abandon the usury economy and get back to the use of the dinar and dirham,” he said.

“We receive many requests from other regions to set up this kind of market.”

But to Budi Rustandi, a student from Bandung’s State Islamic University, the label “Islamic” was not a priority.

“What is more important is the substance,” he said.

“If an economic system can bring justice, equality and a healthy life to society, I would regard it as ‘Islamist’ though other people might call it ‘neo-liberal’ or ‘capitalist.’

“But if an economy brings injustice, inequality and manipulation, I would deny it even though it is named ‘Shariah’ or ‘Islamic.’ ”

(Jakarta Globe)

Islamic finance links:
Islamic finance consulting and training (GlobalPro Consulting- Kuala Lumpur,Malaysia)
Islamic finance consultant and trainer (Ahmad Sanusi Husain-Kuala Lumpur,Malaysia)

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