More Islamic banks needed to promote Moslem entrepreneurs
JAKARTA (JP): Indonesia needs to set up more interest-free Islamic banks to help promote Moslem entrepreneurs and allow them to compete better with the powerful conglomerates, noted economist Sri Bintang Pamungkas says.
Bintang, who is also a member of the House of Representatives of the United Development Party (PPP) faction, accused the government of neglecting the needs of Moslem entrepreneurs and catering the needs of a few big businesses.
He suggested that to remedy this, the government needed to convert up to five state banks to be ran along the Islamic banking principles that do not charge interests on loans.
His proposal was made during a seminar organized by the University of Attahiriyah to discuss alternative sources of funds for Islamic activities, including for enterprises run by Moslems.
Seven government banks are among the largest in Indonesian banking. They are BNI 1946, BDN, BBD, BRI, Bank Eksim, Bapindo and BTN.
Bintang said some 200 conglomerates jointly account for around 80 percent of the country's gross national product.
Moslems, in contrast, play such a marginal role in the country's economy that, even if they join forces, they will not be able to compete against the big and powerful businesses, he said.
"They will be like snails trying to compete against foxes," he said.
Bintang said Moslem entrepreneurs either do not enjoy access to state funds like the conglomerates do, or are reluctant to avail themselves of them because they believe that interest payments are illegal.
Chairman of the Jakarta Preacher Corps H.A. Sumargono during the seminar said there is still a raging debate among Moslem scholars about whether or not interest payments on loans are haram (forbidden by religion). On the other hand, experts say banks cannot run without charging interest on loans.
The Bank Muamalat Indonesia, founded three years ago, found a way around this dilemma by introducing the profit sharing scheme. It is the first Islamic bank set up in Indonesia.
Difficulties
Sumargono said that while Bank Muamalat's presence was welcome, it has yet to reach the grassroots level of Moslems with most of the funds going to medium and big enterprises. "When small-scale entrepreneurs come to the bank, moreover if they wear a sarong and Moslem cap, the bank's staff will look the other way."
M. Syafii Antonio of the Bank Muamalat denied that there was a policy of not helping the small entrepreneurs but he admitted that his bank has had difficulties in channeling funds to small companies because they are mostly incapable of managing the money.
Syafii said his bank alone could not solve all the economic problems of the Moslem community.
He stressed that the objective of the bank was to pave the way for more banks operated along the Islamic profit-sharing principles.
Bintang in his presentation proposed four schemes which can be developed to promote the Moslem's economy. They are joint-venture funding, muzarokah management, small and medium Business Administration (SMBA) and profit-sharing banking system.
Joint-venture funding is a type of giving helping hands from big companies to small and medium ones. Muzarokah is a system allowing landowners, who are mostly poor, to own shares in companies which use their plots for business sites.
"A clear example of this is when the people who owned plots along Jl. MH Thamrin and Jl. Jend. Sudirman were forced to sell their land cheaply. If the government had the political will to defend the poor, it would have used muzarokah system by involving them in the development of the city, so that they could also enjoy the fruits of development," Bintang said.
SMBA is an institution to provide assistance to small and medium business companies to find alternative funding. (11)