Learning Islamic Finance in Indonesia (First of 2 parts)

Tuesday, November 19, 2013
THE Al Qalam Institute for Islamic Identities and Dialogue in Southeast Asia is an institute for understanding Islam, the Muslims and peoples of Mindanao that are culturally linked to other Southeast Asian communities. This is part of the Ateneo de Davao University under its research department. As an institute, it actively contributes toward fortification of spirituality thereby strengthening a sense of belongingness to a bigger humanity and co-creating and nurturing a society founded on social justice, gender equity, multiculturalism, religious pluralism and sustainable peace and human development.

Mussolini Sinsuat Lidasan, Al Iqra, View profile.

Learning Islamic Finance in Indonesia (First of 2 parts)

Learning Islamic Finance in Indonesia (First of 2 parts)

Al Qalam Institute, in partnership with Peace and Equity Foundation, is preparing a project document that aims to create a manual to serve as guidelines for Bangsamoro Shariah Finance. This program aims to assist the proposed Bangsamoro Entity in Southern Philippines. Al Qalam and its partners are hoping that the Bangsamoro Shariah Finance Manual will help our Muslim brothers and sisters to move forward in the direction of lasting peace and sustainable progress and development in their communities. As part of the preparation, we just concluded a Shariah Finance Study Tour in Indonesia, particularly in Yogyakarta and Jakarta last November 10-17, 2013.

There were seventeen delegates who joined us in the study tour. These delegates are coming from different organizations and civil society groups in Mindanao. The names and organizations of the delegates were the following.

From Peace and Equity Foundation: Mr. Roberto Calingo, Executive Director; Mr. Martiniano Magdolot, Board Member; Mr. Alberto Roslinda Jr., finance officer; and Ms. Wilma Guinto, SDO.

From the Azatidz Council of Davao City: Ustadz Janor Balo, Ustadz Abdullah Joe Manan, and Ustadz Nolie Darindigon. From Al Qalam, we had Atty. Jamil Matalam, Joseph Germin Umadhay Jr., Mr. Harris Tanjili.

From the different organizations: Hadja Bainon Karon, Federation of Bangsamoro Women; Ms. Yolanda Nawal, Katiakap Multipurpose Cooperative; Hessam Ezrael, Al Wataniya Credit Cooperative; and Mr. Errel B. Narida, One Renewable Energy.

The whole trip was a success due to the strong support of the Consular Office of Indonesia in Davao City under Hon. Eko Hartono, Consul General.

Our first stop was to visit the Islamic University of Indonesia (UII). We were welcomed no other than the head of the university, Prof. Dr. Drs. Edy Suandi Hamid, M.Ec. Then it was followed by a series of presentations given to us by experts on Islamic Finance.

Before we proceed further, let’s discuss first the background of this project. Why do we need to study Islamic Finance?

In a policy document presented by Mindanao Development Authority, it stated a new paradigm of looking at the problem in Mindanao. It clearly made mentioned of the issue on “Perceived Suppression of Islamic Practices, Traditional Customs and Indigenous Institutions” as one of the main causes of problems in Mindanao. To quote the MINDA 2020 output:

Numerous analyses and prescriptions have been put forward to reconcile these extremes. In the 1990s, it was a popular notion that poverty lies at the root of the Mindanao peace and development challenge, prompting interventions that were dominantly economic in nature. Without underestimating the destructive impact of poverty, historical injustice is now commonly regarded as the underlying root of the Mindanao challenge. This injustice has come in various forms: social, political, economic, cultural and environmental. Thus, attainment of lasting peace and development in Mindanao must hinge on addressing and redressing these various forms of injustice.

Last October 7, 2012, President Benigno Simeon “Noynoy” C. Aquino III presented the Framework for the Bangsamoro Agreement. This framework aims to lay down the road map for the signing of the final peace agreement between the Moro Islamic Liberation Front (MILF) and the Government of the Philippines. Al Qalam Institute of the Ateneo de Davao University sees this milestone as “an enduring peace agreement between the Government of the Philippines (GPH) and the Moro Islamic Liberation Front (MILF)” and has been the long-held clamor of the people in the region.

“The decades-long conflict has taken a dizzying, ruthless and despondent toll on both fronts: more than a thousand people’s lives wasted, properties and entire communities destroyed, with a multitude of people displaced. With this framework agreement, the people of Armm hope that it will lead to a Final Peace Agreement that will ensure reforms on its political structure and bring true and lasting peace in Armm.”

The Framework Agreement (2012) outlines the general features of the political settlement between the Government of the Philippine (GPH) and the Moro Islamic Liberation Front (MILF). Crafted by the panels of the GPH and MILF, the FAB defines the structure and powers of the Bangsamoro autonomous political entity that will replace the Autonomous Region in Muslim Mindanao (Armm).

It also sets the principles, processes, and mechanisms for the transition until the regular election for the new Bangsamoro entity in 2016. It is hope that the FAB paves the way for the just resolution of the historical divide between the government and the Bangsamoro.

Al Qalam and PEF, together with their partners, believe that Islam has many things to offer in the people of Mindanao. Instead of focusing on inter-religious dialogue, Islam can give us a wholistic view of finance, economics, and human development.

Going back to our Indonesia trip, we can learn a lot from our Indonesian neighbors how they live the principles of Islam in their economics, finance, and business. But this was made possible because of the contributions of their young Muslim scholars. These scholars started their personal advocacy as early as 1900s.

Brief history about UII. In 1945, a general assembly meeting of the Masjoemi (Majelis Sjoero Moeslimin Indonesia) was held. The meeting was attended by some of the leading political figures of the day including Dr. Muhammad Hatta (the first Vice President of Indonesia), Mohammad Natsir, Mohammad Roem, and Wachid Hasyim. One of the decisions of this meeting was the establishment of Sekolah Tinggi Islam (STI-Islamic Higher School) by those leading figures, who became the institution’s founders. STI began operating on July 28, 1945 and developed into a university called Universitas Islam Indonesia (UII) on November 3, 1947 to respond to the growing demand for a higher education that integrates general knowledge with spiritual teachings.

Many students and staff members joined the Indonesian military force to repel the Dutch invasion. In the early 1950s, shortly after the war, UII had to move its classes from place to place around the city of Yogyakarta, even using part of the Sultan’s Palace and some of the faculty members’ houses as classrooms.

We also visited the Muhammadiyah univeristy. This has a very fruitful history. Wikipedia tells us that “Muhammadiyah is an Islamic organization in Indonesia. The organization was founded in 1912 by Ahmad Dahlan in the city of Yogyakarta as a reformist socio-religious movement, advocating ijtihad – individual interpretation of Qur’an and sunnah, as opposed to taqlid – the acceptance of the traditional interpretations propounded by the ulama. At the moment, Muhammadiyah is the second largest Islamic organization in Indonesia with 29 million members.[1] Although Muhammadiyah leaders and members are often actively involved in shaping the politics in Indonesia, Muhammadiyah is not a political party. It has devoted itself to social and educational activities.”

Looking at our own context, we can indeed learn a lot from the Indonesians which we share common historical roots dating as far as the Mahajapit Empire and the influence of Hinduism and Islam. We also share some common words in our languages.

(Part Two will focus on the principles and best practices in Islamic Finance.)


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