SGIE, Spirit of Indonesia's Acceleration as the Qibla of the World Islamic Economy?
Prof. Dr. Muhammad Said
In the vice presidential (cawapres) candidate debate, Friday, December 22 2023, one of the candidates used the word SGIE, which stands for State of Global Islamic Economics, as a question for his political opponent. Regardless of the public's assessment of the use of the term SGIE, the positive thing is that it is hoped that political will will make the potential of the Islamic economy better as an instrument of national economic growth and equality as well as national economic resilience.
Globally, based on the SGIE report released by DinarStandard in Dubai, United Arab Emirates on March 31 2022, the Islamic economy in Indonesia remains in fourth position after Malaysia, Saudi Arabia and the United Arab Emirates out of 81 countries. SGIE predicts that in 2021 Muslim consumers will spend USD2 trillion on food, medicine, cosmetics, fashion, travel and media. This expenditure reflects growth of 8.9% year on year and is even predicted to reach USD 2.8 trillion in 2025 with a cumulative annual growth rate (CAGR) of 7.5%.
SGIE also estimates that sharia financial assets will reach USD3.6 trillion in 2022, and are estimated to reach USD4.9 trillion in 2025 (State of the Global Islamic Economy Report 2022, dinarstandard.com). This data informs that Indonesia's sharia economic and financial potential is currently in fourth place at the global level. Ideally, Indonesia, as a country with a majority Muslim population, is in first position.
On the other hand, the data visualizes that the acceptability of the global economic and financial industry towards the Islamic economic system is good. This acceptance cannot be separated from the large contribution made by the perpetrators and confirms that the Islamic economy is all inclusive, suitable for all levels of society with different religions, languages and nations because it can fulfill the duality of human needs, physical and spiritual.
This re-integration is important to restore the spirit of human duality that has been lost since the renaissance movement in Europe in the 17th century, which placed religion as a domain of personal needs, and cannot be used as a moral standard in public development. As a result, humans in the process of development lose their value orientation and become deterministic and mechanistic creatures and experience split personalities.
Islamic economics supplies the crisis of spiritual values in modern economic development through governance of production, distribution and consumption behavior based on religious ethics and morality. This attraction is a unique strength of the Islamic economic system so that state leaders, academic entrepreneurs, researchers and wider stakeholders accept and develop it.
The Indonesian government has made strategic leaps in developing this economic system and is determined to make Indonesia the world's sharia economic center even though its development is still faced with complex challenges. The strategy of converting a number of regional banks into sharia banks, and the merger of several government banks into Bank Syariah Indonesia (BSI) has been carried out, but has not been able to shift the turnover of sharia banks beyond 10%.
On the other hand, ideally the majority of Muslims in Indonesia have not made a maximum contribution to the development of the Islamic economic system. Institutionally, Islamic banks in Indonesia are likened to buses with lots of people but few passengers. This condition is not by design but a number of factors hinder it. A number of factors including public trust, human resource potential, weak digital skills, out-of-date legal status of the Islamic economy are considered as limiting factors.
This factual condition requires a transformation of the bureaucratic governance of sharia financial institutions in the midst of the massive digital technology discussion that is occurring. Digital technology is the door to better sharia business transformation, becomes an instrument for strengthening the national economy, and makes Indonesia a beacon for the world's sharia economic direction.
Digital technology, including blockchain, which in the Wikipedia Dictionary is defined as a digital data storage system with cryptographically connected records so that every transaction with Bitcoin will be recorded automatically on the public blockchain. Blockchain is interpreted as a list of blocks that will continue to grow where each block is connected to the hash of the previous block.
The use of technology that is oriented towards broad benefits is in line with the muamalat principle which gives authority to actors who "know better about your world affairs". Expressions of the use of digital technology for innovation and transformation receive wide scope as long as consideration prioritizes greater benefits.
Blockchain technology contains broader instrumental benefits in terms of accelerating the expansion of the sharia business market segment, simplifying the bureaucracy of financial transactions, and improving better service (excellent service), increasing operational efficiency and effectiveness, reducing administrative costs, as well as efficient verification and validation process times.
Apart from being in line with the muamalah principle, a number of technological functions are also in line with the principle values of good corporate governance. As with Islamic banks, the Islamic capital market and its derivatives such as Islamic crowdfunding and P2P lending are helped by the application of blockchain technology.
Crowdfunding in Wikipedia's sense is a system of funding a business that involves the general public. Funds are mobilized from the community to realize business plans that are built or developed. Crowdfunding has a simpler working network, just through a special website or social media.
Apart from that, Islamic social financial institutions such as waqf gain huge benefits through the use of blockchain technology. This technology has become an instrument for business transformation, as experienced by the sharia start-up company Amanah which successfully obtained US$ 10 million for the waqf platform. The potential of Islamic social finance is dedicated to economic, social, educational and external sector development which is the goal of sustainable development today.
As a closing statement, we have high hopes that the use of the term SGIE in the national leadership candidate debate will be a starting point for strengthening the technological atmosphere for the transformation of sharia business as a fundamental national economy and the world's direction for the sharia economy in the new leadership era from 2024 onwards. The huge potential of the Islamic economy has the potential to become an alternative source of financing for mega projects that are not met by limited APBN funds.
Poverty reduction and alleviation as an economic development dilemma is very fundamental because this community is of concern to the state which is vulnerable to being brainwashed and exploited by irresponsible parties for interests that endanger the state's ideology and the stability of national resilience.
Policy recommendations for future national leaders are to continue development that provides broad benefits for society which has been running well for the better, strengthening technological capacity evenly throughout Indonesia by adding a larger internet quota, utilizing digital technology in the area of public financial services, so that it can suppressing the rate of corruption which has become an extraordinary crime in this country, strengthening the potential of sharia economic human resources, especially halal auditors, in responding to Law No. 33 of 2014 concerning halal product guarantees which regulates the rights and obligations of business actors to guarantee consumer protection.
Apart from that, the legal standing of sharia economics and finance requires a spirit of renewal to be in line with the dynamics and demands of the times, as well as strengthening and equalizing education and digital literacy, as well as accelerating the fulfillment of human resource shortages in the sharia economy in order to accelerate Indonesia's position as the fourth strongest economic country in the world. . Lastly, strengthening vocational education as a very strategic instrument in preparing skilled, professional and competent human resources and opening up space for the birth of productive young entrepreneurs.
The author is from the BNPT Expert Group, PPSA 23/21 Lemhannas Alumni, the GMNI Alumni Forum Expert Council, and Professor of UIN Syarif Hidayatullah Jakarta. The article was published on SINDOnews.com, Tuesday 26 December 2023.