Economics of Souvenirs (part 1)

Indonesia is known for great variety of authentic culinary products and handicrafts. Each city in Indonesia offers its own unique and diverse oleh-oleh for visitors to bring home. Food, clothing and handicrafts are among the more popular souvenirs.

Medan in North Sumatera is famous for cakes like bingka ambon, bolu and passion fruit extracts. Home based industry is the main producer of these products. Among the famous names are Zulaikha, Pohon Pinang and Noerlen.

In West Sumatera, kripik balado (spicy cassava chips) are the more common souvenir from Padang and Bukit Tinggi. Prepared or cooked food like rendang is also a popular oleh-oleh among local visitors to Padang. The foreigners, especially from Malaysia and Singapore, normally carry home Padang’s famous fabric of songket and mukena with embroidery.

In Semarang, it is customary to visit Padanaran Street and drop by in one of the many shops that sell bandeng presto, wingko, or lunpia (the more famous one is Mataram street). We will find that those leaving Semarang will bring along boxes of the above and the aircraft will produce distinctive aroma of roasted fish and oily lunpia.

When in Makassar, markisa juice and cooked crab is now common oleh-oleh for local visitors. Apart from food items, Makassar is also home to the famous minyak tawon and silk fabric.

Banda Aceh is home to ayam tangkap, fried chicken mixed with some herb leaves that produce a disctinct taste and aroma. People leaving Banda Aceh also bring home bag or peci with traditional Gayo embroidery or known as sulam Aceh.

Malang is my favourite. Apart from green and fresh apple, Malang is also famous for chips or crackers made from variety of fruits. Crackers (kripik) made of apple, jack fruit, mango and banana can be found easily aorund Malang.

Do you have a favorite place and souvenir of your own. Please share in the Comments section. ***

The Ironies of Indonesia - #1 Merpati

Yesterday an aircraft crashed near the coast of Papua and killed 27 passengers an crew. The aircraft belongs to struggling Merpati Nusantara Airlines, a state owned company. Until today, rescue team is still trying to evacuate the remaining bodies and the black box from the sea, after managed to recover 16 bodies yesterday.

What not known to many is the aircraft is manufactured by Chinese manufactured and it has not passed any of the aircraft safety standard.

Ironically, Indonesia is the largest single user of the aircraft. Merpati is doom to failure from the start. The aircraft purchase was part of the deal, GOI made when it seek Chinese help to finance Indonesia's problem with electricity shortage.

I say this was a bad deal, and deadly too. 

Is there a future for Islamic Economics in Indonesia? - part 2

The third panelist in the ISEFID Seminar Series was Dr. Irfan, who is Head of Islamic Economics, Faculty of Economics and Management, Bogor Institute of Agriculture (IPB). He championed the idea of integrating Islamic economics to national economic development strategy.

He observes that zakah is among the potential source of income for the country. It has capacity to alleviate poverty and also contribute to long term fiscal sustainability. This can be done by treating zakat as part of the nation's budgetary revenue system. The 'fourth' component, as he called' will provide the nation with secure funding each year, from its own willing citizens, in addition to tax revenu.

He assured that zakah will not distort tax generation. On contrary, zakat will increase tax revenue as has been proven in Malaysia where zakat is tax deductible. This is true because compliance rate in tax reporting is high when zakah is used as a base. 'People will never cheat in their zakah calculation', he reasoned.

The final panelist to speak was Unpad's economist Dr. Erie. He presented an interesting study on bank customers' understanding and willingness to take risk in banking transactions. He found that Islamic banks' customers have a better understanding with risk involved in banking. They are also more adaptable to risk and understand the notion of 'high-risk high-return' very well.

While, customers of conventional banks are not really keen to accept risk; they are much more risk averse when it comes to banking.

This illustrates that Islamic banking is supported by kind of customers who are willing to transact in a risky but understandable banking transactions. Consequently, Islamic bankers need to facilitate this risk taking attitude with adequate IT infrastructure and highly capable human resources. Because these customers are simply not willing to just sit still and wait for the interest.

Overall, the discussion and explanations provided by the four panelists are insightful and delightful. They clearly have demonstrated that there are indeed new perspectives in the growing discourses of Islamic economics in Indonesia. ISEFID exhibits an ability to respond well to all kind of challenges this country is facing. Congratulations! ***

Is there a future for Islamic Economics in Indonesia?

I asked that to four panelists from ISEFID - a think tank yesterday at a seminar hosted by Paramadina Graduate Business School and ISEFID in Jakarta Central Business District.

The first to respond was Dr. Masyhudi from Muhammadiyah University in Yogyakarta, who was up beat and explain two things that need fixed before any meaningful contribution made by Islamic economics: human resources and purpose (maqasid).

Capable human resources remain the main bottleneck for development and significant progress in most fields of Islamic economics, even in banking and finance that have shown tremendous lead compared to other fields, ie. zakah/public finance and political economy. Understanding of maqasid or general purpose of economic economic activities from shariah view points is also important. Without such understanding, the direction we're taking will meet the same fate as other systems.

The second panelist is a good friend of mine Dr. Raditya from Unair, Surabaya. He is confident that Islamic finance is here to stay. He reiterated that Islamic finance & banking in Indonesia has taught a lesson or two for the overall banking industry on good governance and better customers's money (liquidity) management, especially during the crises of 1997/98 and 2008/09.

But he cautioned. Successful implementation of Islamic finance requires an adequate information technology platform, especially for accurate distribution of shared risk and returns; prevention of risk and moral hazard; and ensure justice for all market participants.

So far so good. How about voluntary sector? We'll continue tomorrow. Meanwhile, if you have any comments, feel free to ask in the 'Comments' section.***

Crises Years

1997-98: South East Asia and part of East Asia (in fact, only South Korea) suffered enduring years of financial crisis where banks collapsed and financial system breaks down. Interestingly, regimes also collapsing; Soeharto stepped down and Malaysia’s Deputy PM was fired (allegedly for moral misconduct and partly for his opposition to currency control imposed by the PM).

2008-09: US and most of Europe suffered from the largest financial crisis since Great Depression. Few big names in Wall Street and Lombard’s called bankruptcy; AIG, Lehman Brothers.

2011: Middle East. All politically driven; but since the region is home to 80% of oil reserve in the world, the impact is worldwide and economical.

Ready for more, world?***