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Sharia Commodities as Instruments to Break the Market Share of Sharia Banking
Sharia Commodities as Instruments to Break the Market Share of Sharia Banking
Thursday, 21 July 2022

Indonesia, as a country with the largest Muslim majority population in the world, continues to prepare strategic steps in anticipating the development of the world's sharia economy. The increasing number of the middle class and the increasing Islamic passion of the Muslim community have become the main capital for the development of Islamic economics and finance in Indonesia.

As has happened in other countries, the locomotive of the Islamic economy is the financial sector, particularly banking. In Indonesia, Islamic banks were born after the issuance of Law No. 7 of 1992 concerning banks based on the principle of profit sharing, which was later revised by Law No. 10 of 1998 concerning Amendments to Law No. 7 of 1992 in the form of a bank operating with sharia principles. Currently, the practice of Islamic banks refers to Law no. 21 of 2008 concerning Islamic Banking.

However, the relatively slow growth of the Islamic banking market share in Indonesia has made Indonesia as a Muslim-majority country still lagging behind other countries that have adopted the Islamic financial system in banking.

Financial product innovation is the main point in the development of the Islamic banking industry, of course the development must be supported by the competence of human resources who, apart from being reliable, adhere to sharia principles. Islamic banks must have innovative products that are increasingly diverse in order to develop properly. Innovations must also be made so that Islamic bank products are not monotonous and dominant with certain contracts amidst varying market needs.

"One of the product innovations that has not been optimally utilized by Islamic financial institutions in Indonesia, especially Islamic banking, is "sharia commodities" or commonly known as "commodity murabahah" in various parts of the world. Sharia commodities are a good solution for the national Islamic banking industry in managing liquidity management. So when there is an excess of funds or a shortage of funds, Islamic banking can take advantage of sharia commodity instruments in managing their liquidity," said ICDX Head of Strategic & Development, M. Zulfal Faradis.

The increasing number of use of murabahah commodity contracts by Islamic banking in several countries has made several Islamic organizations regulate murabahah commodity contracts, the following are statements made by several Islamic organizations so that murabahah commodity contracts are in accordance with sharia principle standards:

From statements and standards issued by several Islamic organizations that focus on Islamic economics and finance, several countries use their respective Commodity Exchanges to facilitate murabahah commodity contracts. As commodity futures exchanges and clearing institutions that have obtained permission from the Commodity Futures Trading Supervisory Agency (BAPPEBTI) - Ministry of Trade to organize the Sharia Commodity Murabahah Market, ICDX and ICH are now the first Commodity Exchanges and Clearing Houses to facilitate sharia commodity contracts for Islamic financial institutions especially Islamic banking for their needs.

In March 2022, ICDX and ICH officially cooperated with the sharia business unit of PT Bank CIMB Niaga Tbk (CIMB Niaga Syariah) related to sharia commodity transactions in the context of Auto iB Indirect Subrogation Financing, which is a joint financing product for the transfer of murabahah financing receivables. vehicles (cars and motorcycles) owned by Multifinance Companies to Banks based on Sharia principles.

“After 11 years since Fatwa: 82/DSN-MUI/VIII/2011 was issued, finally Indonesian Islamic banking can utilize sharia commodities as product innovations. The collaboration between ICDX and ICH with Bank CIMB Niaga Syariah marks a new era for the Indonesian economy where the Commodity Exchange for the first time collaborates directly with banking institutions in facilitating market needs. As we know that Indonesia is a country with the largest Muslim population in the world, this is expected to provide benefits for the development of Indonesia's sharia economy and even the world," added Zulfal.

In accordance with the provisions of the MUI DSN Fatwa No. 104/DSN/-MUI/X/2016 concerning subrogation based on sharia principles, the transfer of murabahah financing receivables is carried out through a buying and selling process (ba'i) with payment instruments (tsaman) using goods (sil'ah). The goods that become the means of payment are in the form of commodities whose procurement is carried out through the Commodity Exchange appointed by BAPPEBTI, the Ministry of Trade, namely ICDX and the settlement of transactions is carried out by ICH.

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