Indonesia Conference Directory

Finance is the weakest part of Muslim community since the financial sector is apparently dominated by non-Muslim. The sharia banking so far has not quite successful in helping Muslim-s to develop their businesses. Worse, for so many years, they have been trapped onto borrowing loan from loan sharks or depended on the middlemen who controls land, funding, logistic, transport, pricing, quality grading, fertilizers and seedling for rural farmers who becoming labor in producing commodities. Base on statistical data, most of the Muslim are poor and live in rural areas; isolated from economic activities and financial services, and therefore has limited power of influence. They depended on government grant aid, subsidy, and this condition has not been changed since colonial era. About 70 percent of Indonesian – mostly Muslim - still has no bank accounts, and the role of Micro Finance Institutions (MFIs) and rural bans (BPR) so far has been limited and therefore financial inclusion is a big issue. This situation needs to be addressed and Indonesian government established a Financial Inclusion Agency in 2017 with target to cover those 70 percent unbankable population by 2019. But, coordinating 10 government agencies was not easy and so far, no one is certain where the progress at. Telecommunication technology, on the other hand, expanding rapidly and covering wider areas, including those isolated rural areas - the home of farmers and women micro enterprises. They are now able to communicate with external parties, get the latest information and find out what the customer needs. They can now have access to financing (and to transport and logistics companies and the buyers/traders, SMEs and supermarket and hotel chain), increase certainty and reducing their dependency to the middlemen and loan sharks, as they are now able to contact finance services and customer directly. This is where FinTech becoming an important partner. The problem having to go to bank branches to apply for loan, leaving their family for a day trip to closest bank branch, and have to go through cumbersome documentation and time consuming with no guarantee they can get credit approval: is now solved by FinTech. With speedy process 24 hours 7 days per week, instant approval based on big-data and social-media profiling for KYC and credit scoring, and everything is now possible via mobile applications. It is very important for Muslim community to use this opportunity to participate in financial technology, cutting the banking back-log or middlemen charges, by direct access to funding source and their customers, with short period of time, wider access and lower cost. With FinTech crowdfunding or P2P lending and digital supply chain, hopefully they can be free from vicious cycle of finance. It will improve financial inclusivity and empowering women and Muslim communities enabling them to work collaboratively with better supply chain higher and value. Apart from that, digital finance can also be used for social and religious purpose, better access to health and educational services; but also to meet their obligation like paying zakat and shadaqa.