Productive Waqf as a Saviour Amid the Fuel Price Storm

Every time the fuse of fuel prices is lit, a time bomb called food inflation almost certainly explodes at the grassroots level. Amid the turmoil of the mighty US dollar exchange rate and the surge in global energy prices, our domestic economic structure is once again being tested at its most vulnerable point: the security of the people’s plate of rice. Ride-hailing drivers shout because their incomes have decreased. Housewives scream due to the rise in all basic necessities for survival. And students simultaneously demonstrated in several cities rejecting the fuel price hike and scrutinising the management of the state budget (Republika, 22/6/2026).

However, if we critically dissect the anatomy of this crisis, the jump in food prices on the consumer’s dining table is often not directly proportional to the welfare received by farmers in the fields. There is a chronic structural distortion that conventional monetary instruments have failed to resolve, namely the oligopolistic grip of the informal supply chain, commonly referred to as middlemen or rent-seekers. The increase in fuel prices always becomes the perfect justification for rent-seekers to unilaterally multiply their profit margins. Logistics and transportation costs do indeed rise, but the pressure imposed on end consumers and the cut in purchase prices at the farm level often far exceed the real economic calculation of operating a container truck.

This is where a classic instrument of Islamic economics—specifically the transformation of Productive Waqf—must shift from mere theological discourse to an offensive public policy strategy. Productive waqf possesses a unique characteristic not owned by corporate capital schemes or any banking system: it is perpetual and has a zero per cent cost of capital.

To see this urgency, we must look at real data on the ground. Logistics costs in Indonesia are historically among the highest in Southeast Asia, ranging from 14 per cent to 20 per cent of GDP. When the price of subsidised and non-subsidised fuel creeps up, the transmission of its impact to volatile food inflation occurs within days. Reports from the Central Statistics Agency (BPS) consistently show that the transportation expenditure group and staple food commodities are the main contributors to the new poverty line in Indonesia every time an energy price shock occurs.

Yet, why is the supply chain so fragile? Our downstream food distribution is controlled by a layered middleman scheme—starting from harvesters in the fields, local collectors, wholesale market middlemen, to retail traders. Commodities like rice or chillies must pass through 5 to 7 distribution stages before reaching the hands of a housewife. This is where the exploitation lies: farmers are pressured with the lowest possible purchase price because they lack the capital to hold their harvest or rent their own transportation, while consumers are forced to buy at sky-high prices due to the bloated logistics costs accumulated along the middleman chain.