The judicial review hearing of Law No. 21 of 2008 on Sharia Banking taking place virtually in the Constitutional Court, Wednesday (7/6/2022). Photo by Humas MK/Ifa.
Wednesday, July 6, 2022 | 15:47 WIB
JAKARTA, Public Relations—Economist Faisal Basri estimated that national economic growth in President Joko Widodo’s second term would only reach 3.5%. Therefore, he said, the Government should not only rely on commercial banks, but also microcredit banks (BPRs) and sharia microcredit banks (BPRSs). The government, he added, must empower BPRs and BPRSs to be more effective in serving, reaching, and connecting the people to the financial sector.
The statement was made by the economist at the judicial review hearing of Law No. 21 of 2008 on Sharia Banking in the Constitutional Court (MK) on Wednesday, July 6, 2022. The case No. 32/PUU-XX/2022 was filed by PT Bank Pembiayaan Rakyat Syariah Harta Insan Karimah Parahyangan (BPR Syariah HIK Parahyangan), a sharia microcredit bank (BPRS).
“We must gather all resources; we cannot rely on commercial banks alone, but also all the potential that exists in the community, that is close to the community, we should approach and empower so they get closer and more effective in serving the people, reaching the people, connecting the people to the financial sector. This is the role of BPRs and sharia BPRs, which are actually community banks,” he said before the hearing chaired by Chief Justice Anwar Usman.
In his capacity as expert for the Petitioner, Faisal reasoned that since both BPRs and BPRSs exist among the people, they understand their customers more. “BPRs and BPRSs know [the people’s] lives, their hardships; they not only accept [applications for] and distribute credit loans, but also provide technical assistance because they can monitor [customers], since their operational scale is relatively small,” he said.
Also read: Sharia Microcredit Banks Requests Equality in Payment Financial Traffic Services
Limited Access
Faisal also said that BPRs and BPRSs, which have access to remote areas, can actually provide the people with access to finances. However, he added, Article 1 point 9, Article 21 letter d, and Article 25 letter b of the Sharia Banking Law restrict that access.
“It remains that the little people… especially the poor, the uneducated, and those living in the countryside cannot make use of BPRs and BPRSs to make their lives easier. To pay for electricity, they can’t go through a BPR or BPRS. To pay for telephone bills, they have to go to a bank, which they don’t know where. Meanwhile, nearby [BPRs and BPRSs] cannot or are not given the opportunity by law to be close to [and serve] the people,” he explained.
Also read: BPRS HIK Parahyangan Revises Petition on Sharia Banking Law
Impact on National Economy
In response to the testimony, Constitutional Justice Saldi Isra asked about the role that BPRs and BPRSs play in national economy and if the Court granted the petition, how much it would impact national economy. “Can you provide an illustration for us, if this goes according to what the Petitioner wants, how significant will it impact our economic growth? If what the Petitioner requests is granted, how much will it impact economic growth?” he asked.
In response, Faisal said that comparing the contribution of commercial banks to that of BPRs and BPRSs would not be fair because of the different treatment they receive.
“[BPRs and BPRSs] remain small because they are made to be so. So, I cannot see from a fair perspective how much their contribution is to economic growth. Even large capital might have small contribution, not to mention small [microcredit banks] that are made to remain small. They cannot provide credit loans to another province, cannot expand their businesses by acquiring other microcredit banks, cannot collect funding from the capital market,” Faisal asserted.
Indispensable
Another expert for the Petitioner, Yunus Husein, said both BPRs and BPRSs are indispensable because the scope of their services for the community is very broad, although limited. This limitation is because they cannot provide a number of services related to payment traffic.
“(BPRs and BPRSs) were not designed to be as large as commercial banks in serving a large community. They are more limited, just like community banks, but they are indispensable because they exist in remote areas across Indonesia. So, their inability of providing services to customers such as money transfer, ATM cash withdrawal, if they were asked to cooperate with commercial banks, in addition to needing a larger funding, it would not be easy. In practice it is more difficult. Only a few has done such co-branding cooperation,” said the former and first head of the Center for Financial Transaction Reports and Analysis Center (PPATK/INTRAC).
He also said restrictions on BPRs and BPRSs in payment traffic as regulated in the articles challenged by the Petitioner had been too long, thus hampering their development. “Not only they have small capital, but these restrictions also make them unable to develop well,” he said.
Yunus added that if BPRSs were allowed to participate in payment traffic, there should not be any concern that they would be like sharia commercial banks as demand-deposit banks (BPUGs) because BPRSs are not BPUGs and their activities are limited to certain payment traffic such as transfer, the National Payment Gateway (GPN), and the Bank Indonesia Fast Payment (BI-FAST).
“If sharia BPRs are allowed to participate in payment traffic, the people would save their money in sharia BPRs not only to hope for the highest return,” he said.
He also asserted that BPRSs’ participation in limited payment traffic would be necessary to maintain the continuity of the bank’s business and provide cheaper and faster services for customers or the community.
Also read: House Explains Difference Between BPRS and Commercial Banks
At the preliminary hearing, the Petitioner alleged that Article 1 point 9, Article 21 letter d, and Article 25 letter b of the Sharia Banking Law had had restricted or prohibited sharia microcredit banks from offering payment traffic services. Article 21 letter d stipulates that sharia microcredit banks cannot transfer money, either for their own interest or for the benefit of customers independently, but only through their accounts at sharia commercial banks, conventional commercial banks, and sharia business units (UUS).
The Petitioner asserted that restrictions and prohibitions on providing payment traffic services had kept sharia microcredit banks from optimally providing banking services to the public, especially to micro and small businesses to encourage sustainable national economic growth. Furthermore, Bank of Indonesia (BI) had established a National Payment Gateway (GPN) policy aimed at smooth, safe, efficient, and reliable national payment system, and at taking into account the increasing, competitive, and integrated developments in information, communication, technology, and innovations. However, Article 1 point 9, Article 21 letter d, and Article 25 letter b of the Sharia Banking Law have resulted in sharia microcredit banks unable to be directly connected to the GPN policy system. Therefore, the Petitioner requested that the a quo articles be declared unconstitutional.
Writer : Utami Argawati/LA
Editor : Lulu Anjarsari P.
PR : Fitri Yuliana
Translator : Yuniar Widiastuti (NL)
Translation uploaded on 7/7/2022 08:54 WIB
Disclaimer: The original version of the news is in Indonesian. In case of any differences between the English and the Indonesian versions, the Indonesian version will prevail.
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