Performing the haj or pilgrimage is one of the pillars of Islam for Muslims who are physically and financially capable. It is a huge annual undertaking, especially for Indonesia with 90 percent Muslim adherence among its population of 240 million.
The government believes that managing the huge amount of funds must be the responsibility of Islamic banks instead of conventional banks. It was an opinion reiterated recently at a seminar in Jakarta initiated by the Director General of Haj and Umrah (minor haj) Affairs Anggito Abimanyu.
He said the funds reached around Rp 50 trillion in 2012. “Surely, the huge funds would be very useful to propel the Islamic economy,” he said. In addition, Islamic banks’ responsibility for overseeing the funds was in accordance with a 2008 law on the haj.
The one-day seminar, “Managing Haj Funds with Sharia Economic Principles”, was organized by the daily Pelita and sponsored by Bank Indonesia. Anggito said that efforts were underway to finalize the bill on managing haj funds in which the policy on haj funds will be separated from the haj management.
“The management of haj funds in public service agency will be conducted in a professional, accountable, transparent and trustworthy manner,” he said.
The government is striving to provide a direct investment opportunity from haj funds to raise the value, following the calculation of value gained from the placement of the funds in bank deposits and sukuk (Islamic bonds).
Under the 2008 law, haj funds cannot be used for direct investment but are only allowed to be invested in deposits and Islamic bonds. “So the regulation allows us to make a direct investment but in a limited amount,” he said.
Executive Director of Bank Indonesia’s Islamic Banking Department Edy Setiadi said in his keynote address that the central bank would coordinate intensively with the Religious Affairs Ministry to seek ways to optimalize the haj management system to be beneficial for the public and Islamic banking.
“The public can take advantage of haj savings deposited in Islamic banks for productive activities through financing by Islamic banks,” he said. The president director of Bank Syariah Mandiri, Yuslam Fauzi, disclosed that Islamic banks have conducted a discussion with the Deposit Insurance Agency (LPS) regarding the replacement of the haj funds in Islamic banks.
“The discussion is aimed to make sure that LPS can provide certainty about the insurance of the haj funds to be placed in Islamic banking institutions,” he said. According to him, the Religious Affairs Ministry drew upon the haj funds for the investment in Islamic bonds in early 2012, which led to the Islamic banking industry experiencing slow growth last year. Starting in mid-2013, the haj funds will be returned to Islamic banking in stages, he said.
Edy Setiadi also disclosed in his address the significant potential for wakaf (money for religious purposes) as alternative financing to support the fund disbursement in Islamic banking.
“If 10 million Indonesian people set aside wakaf of Rp 10,000 to Rp 100,000 each per month, then around Rp 5 trillion will be collected within a year,” he said.
Data in the International Center for Education Islamic Finance (INCIEF) shows that wakaf funds in Indonesia are currently US$1.5 million, or about Rp 11.7 billion. Indonesia lags behind other nations in the sector.
For example, Malaysia with a Muslim population of 17.3 million, collects wakaf funds of Rp 644 billion, or about 61.3 percent of its Muslim population. Funds in Turkey with a Muslim population of 73.9 million reach Rp 239 billion, or about 98.6 percent of the population. The United Kingdom, with a Muslim population of around 2.7 million, collects about Rp 31 billion in reaching approximately 4.8 percent of its Muslim population.
Edy said that Islamic banking assets in 2013 were projected to grow around 36-58 percent whether the situation was pessimistic, moderate or optimistic.
A pessimistic scenario happens when the Islamic banking expansion encountered pressures, either from internal or external factors. The internal factors include the failure to collect funding as expected and the decline in the amount of third-party funds. External factor relates to the decline in national economic performance.
Meanwhile, a moderate scenario takes into account the current acceleration of Islamic banks through continued financing expansion and the increase in third-party funds, he said.
He further said that a positive scenario happens when, for example, more new Islamic banks are opened; Islamic business units are converted to Islamic banks and conventional banks are turned into Islamic banks
(The Jakarta Post / 06 Feb 2013)
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