ISLAMIC ECONOMIC an overview Savoy Homann Bidakara Hotel Bandung, 15 Februari 2013
Dr.Muhammad Syafii Antonio,MEc Member of National Economic Council Rector of Tazkia University College, Chairman of Tazkia Group ,Global Shariah Advisor in Dubai and Kuala Lumpur.
Muhammad Syafii Antonio (Nio Gwan Chung) Personal and Educational background • Born in Sukabumi Indonesia, May 12 1967 • Converted to Islam in the end of 1980s • Graduated from Faculty of Shariah University of Jordan (1990), • Islamic Studies Program Al-Azhar University Cairo (1990), • Master of Economics International Islamic University, Malaysia (1992), • Doctorate in Micro Finance University of Melbourne,Australia (2004) Responsibilities • Board of Islamic Banking Expert, Central Bank of Indonesia • Board of Commissioner Bank Syariah Mega Indonesia • Board of Shariah Bank Syariah Mandiri • Advisor to Board of Director Bank Muamalat Indonesia • Board of Shariah Takaful Islamic Insurance • Board of Shariah PNM Holding (state-owned company) • Deputy Chairman Masyarakat Ekonomi Syariah • Chairman of BATASA TAZKIA Consulting
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Publication (9 books) • Bank Syariah dari Teori ke Praktek (Islamic bank from theory to practice) • Bank Syariah Wacana Ulama dan Cendekiawan (Islamic bank: a discourse of scholars & jurists) • Bank Syariah bagi bankir dan Praktisi (Islamic banks for banker and financial practitioners) • Bank Syariah untuk Umum (Islamic bank for public) • Wawasan Ekonomi Islam (Horizon of Islamic economics) • Arbitrase Islam di Indonesia (Islamic arbitration in Indonesia) • Zakat Kaum Berdasi (Zakat of Muslim professionals) • Apa dan Bagaimana Bank Islam (What and How Islamic Bank is) • Sistem Operasional Bank Islam (Operational System of Islamic bank)
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WHY SHARIAH SHARIAH IS AN INTEGRAL PART OF ISLAM
REMINDER: PART OF THE WHOLE Islamic
Bank is not Islamic Finance Islamic finance is not Islamic Economics Islamic Economics is not Islamic Economy
Isamic
Economy is not ISLAM
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REMINDER
Those are only part of ISLAM as a Comprehensive Way of Life
Muhammad Syafii Antonio
ISLAM A COMPREHENSIVE WAY OF LIFE ISLAM
SYARIAH
AQIDAH MUAMALAH
IBADAH
SPECIAL RIGHTS
CRIMINAL LAWS
AKHLAQ
PUBLIC RIGHTS
CIVIL LAWS
INTERIOR AFFAIRS
EXTERIOR AFFAIRS
INTERNATIONAL RELATION ADMINISTRATIVE
ECONOMY
CONSTITUENCY
FINANCE
LEASING
INSURANCE
BANKING
MUTUAL FUND
Source Az-Zarqa’ (1959), al-Fiqh al-’Am; al-Fiqh al-Islami fi Tsaubi al-Jadid. (edited)
VENTURE CAP
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COMMERCIAL CONTRACTS UNDER MUAMALAH Contracts
mubadalah
akind
wadiah
different
amanah
guarantee
Wadiah
Yad Amanah Money
Shirkah
W
W
money
comdty
Sharf
Barter
Comdty w comdty
mortgag e
Debt transfer
Rahn
Hiwalah
Yad Dhamanah
Comdty
sulh
izdn
- Tahkim - Sulhu - I’qalah - Qismah
Muhafadhah ala al hukuk
•- Ta’addi, Ghasb, Ihtikar - Hajr, Taflis - Isa - Luqtah
Kafalah - Wakalah Jualah Musaqah, Muzarah Mugharasah Istisna
Dhamanah
Commo dity with money
(Joint Venture) Musharakah
(Trust Financing) Mudharabah
Shirkah
- Mutlaqah - Muqayyadah
sale (Buyu)
Leasing (Ijarah)
- Murabahah
-Ijarah
- B. Salam
- Ijarah wa Iqtina
- B. Istishna
-S. Mufawadhah -S. inan -S. Wujuh -S. Abdan/A’mal Musharakah Mutanaqisah
- B. tawarruq
General Scheme of Islamic Banking Financial Market Treasury Deposit
Current & Saving Deposit
Bonus
Trade based Financing
Margin/Mark-Up
Sale
Pool of Fund
Investor
Fee Based
Entrepreneurs
Real Econ omy
Investment
Investment
Time Deposit Islamic Bank
Sharing
Investment based Financing
Sharing
Social Fund
Poor People
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WHY SHARIAH SHARIAH IS FULFILLING OUR FAITH OBLIGATION
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Exodus
22:25 (New International Version)"If you lend money to one of my people among you who is needy, do not be like a moneylender; charge him no interest.
Leviticus 25:36 (New International Version) Do not take interest of any kind from him, but fear your God, so that your countryman may continue to live among you.
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Income from loaning money, usually called usury in the scriptures, generally signifying unlawful or unjust rates.
Exodus.22:25 Leviticus.25:36-37 Deuteronomy.23:19-20 Nehemieh.5:1-13 Psalm.15:15 Prov.28:8 Isaiah.24:2 Ezekiel.18:8,9,13,17 Ezekiel.22:12
WHY SHARIAH SHARIAH IS GROWING RAPIDLY
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DEVELOPMENT OF THE ISLAMIC FINANCE INDUSTRY & ISLAMIC CAPITAL MARKETS
Islamic finance has followed in the wake of innovations in the global financial services industry
A natural progression of the Islamic finance industry
competitive retail offerings sophisticated corporate banking products innovative project finance solutions 2000’s 1990’s 1980’s
1970’s commercial banking
commercial banking project finance & syndications
commercial banking project finance & syndications equity Ijarah
commercial banking project finance & syndications Equity & Funds Ijarah sukuk structured alternative assets
2005 on ward commercial banking project finance & syndications Equity & Funds Ijarah sukuk structured alternative assets liquidity management tools
Source: IIFM
Wide Variety of Products Infrastructure investments
Equity
Venture Capital/ private equity
Leasing Sukuk Property Commodity Morabahas
Trade Finance
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THE GLOBAL ISLAMIC FINANCIAL INFRASTRUCTURE Infrastructure Bodies: AAOIFI – Accounting and Auditing Organization for Islamic Financial Institutions IFSB – International Financial Services Board
To establish, develop and promote Islamic Financial Market
IIFM*
IFSB*
Governance IIFM – International Regulatory Islamic Financial Standards Market IRTI – Islamic Research and Training Institute
AAOIFI*
IIRA Rating IFI & Islamic Finance Instruments
GCIBFI
LMC Market Maker for Islamic secondary market instruments
Accounting Arbitration Centre – and AuditingUnder Formation Standards Other NBFI:
IRTI*
To promote Islamic research and training`
Arbitration Centre* Dispute Settlement
To enhance market understanding of Islamic finance
GCIBFI – General Council for Islamic Banks and Financial Institutions IIRA – International Islamic Rating Agency LMC – Liquidity Management Centre Regulators – Central Banks, Monetary Agencies, Securities Commissions etc.,
Source:Modified from Ijlal (2006)
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ISLAMIC ASSET MANAGEMENT The
Islamic Asset Management Market is currently $52 billion vs. $22 trillion invested in the conventional Asset Management market (Source: Ernst and Young) 21
MARKET POTENTIAL AHEAD Moody’s
Investors Service (2010) predicts that the Islamic Finance Industry can reach $5 trillion by 2015 A
great opportunity for Investors, Governments and Financial Institutions
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Sukuk issuance in Europe Europe
France
Germany
Italy
Turkey
UK
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2
5
Number of active Institutions offering Sharia’a Finance *
23
3
1
2
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Corporate Sukuk issued *
P
P
P
P
Government Sukuk issued *
P
P
P
-
$22,561 m
$18,950 m
-
26%
-2%
Number of Islamic Banks *
Total Sharia’a compliant Assets – Islamic Financial Institutions* Growth of Islamic Financial Institutions from 2009 to 2010 *
$42,779 Unknown Unknown m
10%
Unknown Unknown
ENGLAND
Five Islamic banks, one Takaful company, more than 15 conventional financial institutions offering Islamic financial products.
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FRANCE:
Discussion at the highest level of the state on the strategy and the necessary steps to introduce Islamic finance. Talks about the licensing of an Islamic bank.
ITALY
Conference organized by the Osservatorio Del Mediterraneo focusing on the opportunities for Italy.
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GERMANY
€100 million Sukuk issued by the State of Saxony-Anhalt rated «AA-» and matured on Aug. 13, 2009.
SWITZERLAND
Several Swiss banks offering private banking and Sharia compliant wealth management (local banks and affiliates of Gulf banks).
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A significant number of European banks are active in the structuring of Sharia compliant transactions In the Gulf Cooperation Council countries and Asia.
AUSTRALIA, MUSLIM COMMUNITY COOPERATIVE AUSTRALIA (MCCA)
MCCA is among the first and largest Islamic financial service provider. MCCA has a huge lending potential, with long waiting list customers, but lacks of source of funding.
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WHY SHARIAH SHARIAH IS A COMPREHENSIVE LIFE STYLE
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ROLE OF ISLAMIC BANKING
Economic Growth
Islamic Bond Islamic Insurance Islamic Mutual Fund Islamic Banking Islamic Capital Market Islamic Finance Company Islamic Social Funds (ZISWaf)
Real Economic Activities
Poverty Alleviation
Reducing Unemployment
Financial System Stability
WHY SHARIAH SHARIAH MEANS HALAL
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Muhammad Syafii Antonio
HALAL - HARAM Alcohol Pig Dead meat
DZAT
EARNING
HARAM
HUKM
corruption Manipulation Gambling
SPENDING
Mubadzir
TRANSACTION
Riba Gharar Maysir
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MISCONCEPTION OF HALAL Halal dzat
Halal hukm
The Real halal
WHY SHARIAH HALAL FINANCE IS CRISIS RESILIENT
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ISLAMIC BANKING AND GLOBAL CRISES
.
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While the conventional financial system is relying under the pressure of global financial crisis, the Sharia banking industry is benefitting from it and expects to continue its fast-paced growth in the years to come.
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21
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ISLAMIC BANKING AND ASIAN FINANCIAL CRISIS 43
Normal Condition
SAVER
BUSINESS
Bank 8%
15 %
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Economic Crisis
SAVER
BUSINESS
Bank
20-70 %
20 %
Negative spread of -50 percent
Who shall pay the loss Bank,
if profit remains
Bank’s
paid up capital
Go
to the Government as Lender of Last Resort
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BAIL OUT 1997 S/D 2000
1998
177 Trillion (USD 17 billion)
1999 – 2000
Budget 1998/1999 : 263,8 Trillion ( USD 26 billion) 1999/2000 :
±
650 Trillion (USD 65 billion)
218,2 Trillion (USD 21 billion)
WHY SHARIAH SHARIAH IS PRO-SMALL N MICRO BUSINESS
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Global Poverty Eradication through Micro Finance, Micro Trust Fund and Micro Insurance
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Risk Protection/ Social Security
Menabung/Sa Saving ving
Commercial Pembiayaan/ Pembiayaan/ Financing Financing Financing
Risk Protection/ Social Security
Saving
Commercial Financing
Micro Credit
Shadaqah/ Charity
BAYTUT TA’MIN
BAYTUL MAAL
Micro Pinjam/Credit Pinjam/Credit Pinjam/Credit Credit
Shadaqah/Charity
Islamic Financial Institution for the SME Empowerment
Economic Wellbeing of SMEs
BAYTUT-TAMWIL LKM, BMT, BPRS
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ISLAMIC MICRO FINANCIAL INSTITUTIONS (IN INDONESIA) No .
Institutions
Islamic
Conventional
1.
Islamic Rural Bank (BPRS)
152
Over 20,000
2.
Islamic Cooperative (BMT)
3000
Over 20.000
Over 50
Almost in every suburb of major cities
Micro Finance 3. initiatives (LKMK)
Lingkages of Islamic Small and Micro Finances Case of Indonesia Public Depositors : Individual and Institution
Comercial fund
BPRS
BMT BPRS
BPRS
ICB
BMT
BMT BMT
BPRS Subsidized fund PNM
Various Dept
Dept Of Finance
BI
Dept Of Coop
BEPPENAS
LOCAL NGOs
INT’L NGOs
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SHARIAH FOR U.S. SOCIETY
ISLAMIC FINANCE PROVIDERS IN TH U.S
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Islamic Windows Islamic Mutual Fund
Zaad
fund Amanah fund Islamic Dow Jones
Islamic Chamber of Commerce Credit Unions
U.S. TREASURY EFFORTS IN ISLAMIC FINANCE Conducted a collaboration with harvard Islamic finance forum. Appointed scholar-in resident to advice strategies and matters on Islamic finance at national level.
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BIG OPPORTUNITY IN ISLAMIC INSURANCE Wide market Almost needed by every body Home and during travel Kind,teens,adult and pensiuns Car Health House
Investment
opportunity in Shariah Mutual Funds Shariah
compliant Socially responsible investment More safe Higher return
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WHY SHARIAH SHARIAH COULD PROMOTE A BALANCE OF SUCCESS
WHAT KIND OF SUCCESS DO YOU WANT ?
Short Term VS. Long Term
Duniawi VS. Ukhrawi
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Spiritual
Intellectual
Financial
Balance of success Physical
Emotional
Social
Wassalamuallaikum Warahmatullahi Wabarokatuh
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