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?
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 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.
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! ***
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! ***
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