The Role of Law in Sharia Economic Development

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By:

Team of Hukumindo

Previously, the Hukumindo.com platform has talk about "How To Legally Adopt a Child in Indonesia?" read also "Who's Legally Represents The Company In Indonesia?" and on this occasion we will discuss about The Role of Law in Sharia Economic Development. 

Major Muslim Population 

The total Muslim population in Indonesia is 87.2% of the population. With this amount, Indonesia has enormous potential to develop the Islamic finance and economic sector that can contribute to achieving financial inclusion targets including the development of Islamic finance.[1] In other words, the great potential of the sharia economy is based on the majority population in Indonesia who embraces Islam.

Sharia Economic Development in Indonesia

Currently, Indonesia has risen to rank 4 out of 5 in the world in terms of developing Islamic finance after Malaysia, Saudi Arabia and the United Arab Emirates. Meanwhile, Islamic financial assets in Indonesia are ranked 7th in the world with total assets of US$99 billion.[2] According to Prof. Dr. Edy Suandi Hamid, M.Ec Chancellor of the Widya Mataram University (UWM), the development of the Islamic economy has experienced significant development although it is relatively slow compared to when it first emerged in the 1990's. The Islamic economy is mostly concentrated in the financial sector which will slow down if it is not supported by the real sector. The challenges in developing a sharia economy will be easier to overcome if there are serious efforts from all stakeholders. The Islamic Economic Community (MES) must of course be at the forefront of giving ideas and unraveling existing problems.[3]

Sharia Economic Sectors

Some of the opportunities identified as enablers in the development of Islamic finance include the growth of social finance through zakat and waqf, tokenization of sukuk, digitalization and development of Islamic Fintech, sharia financial regulation and impact investment (ESG).[4] 

"The real sector needs to be encouraged so that it goes hand in hand with the monetary sector in developing the sharia economy. The implementation of sharia economy is not only at the level of large corporations, but also at the people's economy to the bottom tier. From existing developments, including a digital-based creative economy, sharia economy does not lagging behind in its digitalization implementation,” explained the Chair of the DIY MES Expert Council--Prof. Dr. Edy Suandi Hamid, M.Ec.[5]

The Role of Law in Sharia Economic Development

To support the sharia economy and finance ecosystem, it is necessary to integrate every element that supports the sharia economy which is reflected in a strong sharia economic ecosystem. In addition, for the development of the halal industry to support the national economy, regulatory support and government incentives are needed to encourage the development of the halal industry. [6] Prof. Edy explained that steps are needed as an effort to develop the sharia economy, including building theories and policies, encouraging a strong legal umbrella, disseminating and promoting sharia economics.[7] 

 

In conclusion, the author would like to convey that behind the huge potential for Islamic economic growth in Indonesia, it is necessary to support a legal sub-system as a supporter. And if you have any issue with this topic, contact us, feel free in 24 hours, we will be glad to help you.

*) For further information please contact:

Mahmud Kusuma Advocate

Law Office

Jakarta - Indonesia.

E-mail: mahmudkusuma22@gmail.com

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Reference:

1. "Potensi Besar Ekonomi Berbasis Syariah Indonesia", Kementerian Koordinator Bidang Perekonomian Republik Indonesia, Diakses pada tanggal 8 Desember 2021, https://ekon.go.id/publikasi/detail/2943/potensi-besar-ekonomi-berbasis-syariah-indonesia

2. Ibid.

3. "Perkembangan Ekonomi Syariah Indonesia: Perlu Akselerasi Baru", new.widyamataram.ac.id., Diakses pada tanggal 8 Desember 2021, http://new.widyamataram.ac.id/content/news/perkembangan-ekonomi-syariah-indonesia-perlu-akselerasi-baru#.Ya_-T9JBxdg

4. Op. Cit., Kementerian Koordinator Bidang Perekonomian Republik Indonesia.

5. Op. Cit., new.widyamataram.ac.id.

6. Op. Cit., Kementerian Koordinator Bidang Perekonomian Republik Indonesia.

7. Op. Cit., new.widyamataram.ac.id.