Constitutional Justice Saldi Isra reading out the Court’s legal considerations at the ruling hearing for the judicial review of Law No. 19 of 2008 on Sovereign Sharia Securities, Wednesday (11/30/2022). Photo by MKRI/Ifa.
Wednesday, November 30, 2022 | 15:29 WIB
JAKARTA (MKRI) — The judicial review petition of Article 25 of Law No. 19 of 2008 on Sovereign Sharia Securities (SBSN) and its elucidation was rejected by the Constitutional Court (MK). The Decision No. 100/PUU-XX/2022 was read out by Chief Justice Anwar Usman alongside seven other constitutional justices on Wednesday, November 30, 2022. “[The Court rejects the Petitioner’s petition in its entirety,” he said.
Sukuk or sharia bonds are financial instruments in the form of securities that serve as proofs of ownership of assets, whether tangible or intangible and project contracts for certain activities that require the issuers to pay profit sharing income to the holders and repay the sukuk by agreed dates of maturity. Sukuk have different characteristics from conventional bonds, in that the issuance of transactions to the delivery of proceeds activities must be in accordance with sharia principles, and transactions carried out by the parties must be fair, lawful, thayyib (justified), beneficial, and must be free from various prohibited elements, including usury, maisir (gambling), and gharar (ambiguity). Therefore, the Court asserted in its legal considerations read out by Constitutional Justice Saldi Isra, the issuance of state sukuk or SBSN must comply with sharia principles.
“The purpose of issuing the state sukuk is to collect public funds outside of taxes to finance national development programs. It is not only beneficial for the country but also for citizens because it can be used as investment while supporting the government to complete national development programs,” Justice Saldi said.
Therefore, he added, in order to provide a legal basis for the Government in issuing sukuk and to support the development of Islamic finance, the Government then formed the SBSN Law, which specifically regulates the issuance and management of state sukuk or SBSN.
“The SBSN Law will serve as a legal basis for the issuance and management of state sukuk or SBSN as well as provide legal certainty for people who will use state sukuk as investment based on sharia principles, where the rights of Indonesian citizens, especially those who are Muslim, in carrying out its economic system refer to the Qur’an, the hadith, and ijma’ (consensus) and are more protected by the state,” Justice Saldi explained.
Also read: Ambiguity of Sharia Principles and MUI’s Legitimacy Questioned
Phrase ‘Sharia Principles’
The Court asserted that general sharia principles in financial transactions prioritize ta’awun (partnership); benefits; tawazun (unity and mutual cooperation); mutual ridha (consent), and rahmatan lil ‘alamin (benefits for everyone). Therefore, Justice Wahiduddin added, the phrases ‘sharia principle’ and ‘sharia principles’ refer to the same thing, one singular while the other plural.
The plural ‘sharia principles’ is also used in the Implementing Regulations of the SBSN Law—Article 17 paragraph (1) letter e of the Regulation of the Minister of Finance No. 118 of 2008 on the Issuance and Sale of State Sharia Securities through Bookbuilding Method in the Domestic Primary Market stipulates that issuing and selling SBSN through bookbuilding must include a statement on the conformity of SBSN with sharia principles. Therefore, the phrases ‘sharia principle’ and ‘sharia principles’ in Article 25 of the SBSN Law do not conflict with Article 28D paragraph (1), Article 28E paragraphs (1) and (2), and Article 29 paragraphs (1) and (2) of the 1945 Constitution, because the entire Law is the state’s effort in fulfilling its obligations relating to the citizen’s constitutional rights as mandated by the 1945 Constitution.
“Moreover, the phrase ‘sharia principles’ in Article 25 of Law No. 19 of 2008 does not render the Petitioner unable to exercise his constitutional rights as guaranteed by Article 28D paragraph (1), Article 28E paragraphs (1) and (2), and Article 29 paragraphs (1) and (2) of the 1945 Constitution. The Petitioner can still carry out financial transactions by purchasing state sukuk in accordance with sharia principles as an implementation of Article 28D paragraph (1), Article 28E paragraphs (1) and (2), and Article 29 paragraphs (1) and (2) of the 1945 Constitution,” Justice Wahiduddin said.
Also read: Advocate Revises Legal Standing in Case against SBSN Law
At the preliminary hearing on Wednesday, October 19, 2022, Rega Felix, an individual citizen, argued that his rights had actually and could potentially be harmed by the enactment of Article 25 of the SBSN Law and its elucidation, which he claimed had allow the Government to cherry-pick sharia principles. This, he alleged, had eliminated his right to worship according to his faith and to fair legal certainty over sharia principles. He argued that the phrase ‘sharia principles’ in Article 25 of the SBSN Law was ambiguous.
He argued that the meaning of ‘sharia principles’ based on the elucidation to Article 25 of the SBSN Law (“The institution with authority to determine fatwa in the area of sharia is the Indonesian Ulema Council (MUI) or any other institution as appointed by the Government”), refers to the number of institutions authorized to determine sharia principles. This shows that the plurality of sharia principles is determined by the plurality of the authorized institutions.
He added that the ambiguity in the Government’s logic shows that it does not want to lose control over the people’s religious beliefs and made it so that people would not be confused about choosing a fatwa institution, the determination of sharia principles on sharia banking to be done by the MUI. Meanwhile, the Government is free to appoint the fatwa institution. This is contrary to the principle of equality before the law as referred to in Article 28D paragraph (1) of the 1945 Constitution.
Therefore, in his petition, the Petitioner requests that the Court declare the phrase ‘sharia principles’ in Article 25 of the SBSN Law not legally binding as long as it does not mean ‘sharia principles’ and the phrase ‘or any other institution as appointed by the Government’ not legally binding conditionally as long as it is not interpreted as ‘the authority of the Indonesian Ulema Council as an institution authorized to stipulate fatwas in the field of sharia is temporary until the establishment of a state institution authorized to stipulate sharia principles in the field of sharia economics.’
Writer : Utami Argawati
Editor : Lulu Anjarsari P.
PR : Fitri Yuliana
Translator : Yuniar Widiastuti (NL)
Translation uploaded on 12/1/2022 11:35 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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