We may be familiar with conventional economic systems but do you know what makes the sharia economy different? The economic system of sharia provides a compromise between capitalism and socialism. Therefore, the sharia economic system applies the principles of goodness from these two economic systems.
The Islamic economic system is a new industry that has successfully gained traction at the global level. If you look at the system, particularly Islamic finance, it is based on the principles of Islamic law (Shariah) and prohibits interest-based transactions, speculation and gambling. Islamic finance promotes risk sharing, ethical investment and social responsibility.
Indonesia’s Sharia Economy Master Plan
As a country with the biggest Muslim population in the world, Indonesia has enormous potential to develop the Islamic economy. This country has long been trying to improve its sharia economy and is starting to see significant developments especially during President Joko Widodo (Jokowi) era.
With this reason, the future president and vice president Prabowo Subianto–Gibran Rakabuming Raka are committed to continuing the sharia economic and optimizing sharia economics program of the era of President Jokowi as a new motor for economic growth in Indonesia.
During the previous presidential debate, Gibran also touched on the State of Global Islamic Economy (SGIE), an indicator in sharia economy issued by Dinar Standard. He explained that in developing sharia economics the government needs to know the achievements of various countries in the world in the field of sharia economics, each of which has its own parameters.
For your information, the President of the Republic of Indonesia, Joko Widodo launched the Indonesian Sharia Economic Master Plan 2019-2024 a few years ago at the Office of the Ministry of National Development Planning, Central Jakarta. The master plan recommends four main steps and strategies as breakthrough steps and acceleration of domestic sharia economy growth. Here is the list.
1. Halal Value Chain
An inventory and mapping of obstacles to sharia economy development needs to be carried out by evaluating previous targets and achievements. For example, the main mission was to make Indonesia the center of world halal producers. Unfortunately, there are two main issues to achieve this mission, such as Halal Industrial Area and halal certification.
Even though Halal industry area has been established, the level of occupancy is still an issue which has an impact on the lack of its activity. Therefore, the formation of halal industry areas to support the domestic halal industry has not had enough visible impact. Therefore, the involvement of stakeholders, especially the private sector in bringing in investors and bringing halal industry to life, is necessary.
The second issue is the acceleration of halal certification. According to the Indonesia official, the first step is to strengthen the halal value chain by focusing on sectors that are considered potential and highly competitive.
But, considering the fact it is necessary to reconsider and re-measure the targets and timelines that have been set by the government, especially the halal certification targets at the micro and small business level.
The main target set is to accelerate certification in the upstream and raw materials sectors because products at the small business level depend on these two sectors. If both have been certified, it will be easier for small private businesses to apply for a halal self-declaration and achieve the national halal certification target.
2. Sharia Finance
Strengthening the sharia financial sector with a master plan that was outlined in the previous master plan for Indonesian Sharia Financial Architecture (SFA) and refined into the master plan.
There is a need to pay attention to the development of the sharia financial sector as a driving force for the sharia economy. Programs to increase sharia financial market share should not be limited to sharia banking consolidation actions, but also to penetration and inclusion in the wider community.
Therefore, more than one large Islamic bank is needed to increase competitiveness in the industry so that the products and services offered to the public are more competitive and efficient. A few of the many issues above need to be paid attention to and included in the preparation of the second volume of Indonesian Sharia Economic Master Plan 2024-2029.
The preparation of the next master plan is the first step in maintaining the continuity of the vision and mission of Indonesian sharia economy in the previous plan. Therefore, this regulation needs to contain strategies and priority programs for sharia economic development in Indonesia for the next 5 years and become the main reference for sharia economic stakeholders.
3. Strengthening the Small, Local Business Owner
Indonesia is famous for its economic strength that is supported by small and medium scale local business. They are the reason why the country’s economy has survived multiple global crises.
Therefore, it is not surprising that the government makes local entrepreneurs a priority in the sharia economy master plan, especially making them the main driver of the halal value chain.
4. Strengthening the Digital Economy
With more than 270 million of population, Indonesia has become a new digital economy power not only in South East Asia but in Asia. Recently, online trading, especially e-commerce, has started to replace traditional trade in Indonesia.
The reasons why the governments want to focus on the digital economy especially trade (e-commerce, market place) and finance (financial technology) so that it can encourage and accelerate the achievement of other strategies.
Those are the following information regarding Indonesia’s estimated plans for the sharia economy in the hands of the elected president, Prabowo. Considering its massive potential, we only hope that future master plans will give even greater positive impact. So, let’s just wait for the results.
