Amid global financial disruption and rapid digital innovation, the relevance of the Sharia economic system is often called into question. In fact, this system, which prioritizes risk-sharing, has proven to be more robust and resilient than debt-based systems.
The Dean of the Faculty of Economics and Management (FEM) at IPB University, Prof Irfan Syauqi Beik, explained that the Islamic economy is built upon three main approaches: the faith-based (normative-theological) approach, the scholarly (scientific-academic) approach, and the practical (empirical-practical) approach.
“The relevance of Islamic economics is not determined by fleeting trends, but by the values of truth rooted in revelation and the maqashid al-sharia (objectives of Islamic law) to achieve justice, blessings, and the well-being of humanity,” he said.
From a practical perspective, he acknowledged changes in consumer behavior due to the emergence of fintech, neobanks, and decentralized finance. Therefore, he argued, the speed of innovation is the key to ensuring Sharia products can compete.
Four Steps of Transformation
To address these challenges, he emphasized the need for four transformation agendas. These transformations include a shift from mere compliance (compliance-based) to tangible impact (impact-based), from a product-oriented approach to an ecosystem-oriented one, from imitation to innovation, and from local leadership to global leadership.
Globally, the potential of the Islamic economy is highly promising. According to Bank Indonesia (BI) data, global Islamic economic transactions are projected to reach USD2,77 trillion by 2025. Meanwhile, global Islamic banking financial assets are growing rapidly, reaching USD4,3 trillion by 2024.
Furthermore, Prof Irfan highlighted the significant potential of Islamic social finance instruments at the national level, such as zakat and waqf. Currently, zakat expenditures have reached Rp41 trillion, and cash waqf collections have recorded an increase of up to Rp3 trillion between 2021-2025.
“Although the growth is significant, we have only tapped into a small fraction of the total potential available. There remains a significant gap between the high level of financial literacy and the low inclusion index in society,” he explained.
Data from the Financial Services Authority (OJK) and a Bank Indonesia survey indicate that Islamic financial literacy stands at between 48 and 50,18 percent. However, the inclusion index has only reached 12 to 13 percent. This means, Prof Irfan explained, that many people understand the concept and have the intention, but have not acted on it because they are unaware of the distribution mechanisms.
To address this gap, Prof Irfan urged the public to be more discerning in selecting and channeling their social funds through credible, official institutions.
“If we are serious about managing this potential of social funds, which amounts to Rp500 trillion, through impactful programs, then the Islamic economy will become even stronger in supporting economic balance, both at the national and international levels,” he concluded. (*/Rz) (IAAS/WSG)
