Islamic Economics is not just Sharia Finance

After the mid-20th century, there were results of ijtihad scholars who considered that
interest instruments in the world's financial system were usury, a very big sin for Muslims.
These results became a turning point for the creation of various aspects of life that are more
Islamic in the economic field. The development of a banking system based on profit sharing
is an initial breakthrough for the establishment of Islamic economic development in the
world because it is considered in accordance with the teachings of the Prophet Muhammad
and is far from usurious elements.

Although various financial institutions that implemented a profit-sharing system existed in

the 1960s, it can be said that the development of Islamic economics in the modern era has
only been carried out massively since the inauguration of the Islamic Development Bank
(IDB) by the Organization of the Islamic Conference (OIC) in 1975. IDB is an institution which
has a focus on developing the Islamic economy through the field of development for all OIC
members. After this historic incident, the Islamic economic system which was reflected in
the existence of various financial institutions, especially banking, began to be widely
developed in various countries, especially countries that have a majority Muslim population.

In Indonesia itself, the development of the Islamic economy can be said to have formally
started after Bank Muamalat Indonesia, as the first profit-sharing bank, officially operated in
1992. At the beginning of the second decade of the 21st century, there were many Islamic
commercial banks (BUS) which were also followed by various the opening of a sharia
business unit (UUS), a sharia people's financing bank (BPRS), as well as a sharia savings and
loan cooperative or BMT which were also present to support the implementation of various
financial systems that are considered more Islamic in Indonesia. The term Islamic economics
or Islamic finance looks more popular in Indonesia than the words Islamic economics or
Islamic finance in Indonesia, because at the time of its introduction, Islamic economics
practitioners and academics in Indonesia chose to use the term sharia which was considered
more moderate at that time.

In Indonesia, based on data from the Financial Services Authority (OJK) at the end of 2017,
the development of various Islamic financial institutions in Indonesia recorded encouraging
numbers with 13 Islamic commercial banks, 21 Islamic business units, and 167 BPRS. This
achievement is very encouraging when compared to the previous 14 years, which only
recorded 2 sharia commercial banks, 3 sharia business units, and 81 BPRS. The encouraging
development of Islamic financial institutions does not mean that it is not accompanied by
criticism, one of which is related to the notion that "in practice, Islamic banks cannot be
100% sharia".
The criticism that arises in Islamic economics is not only on how the Islamic financial system
should be implemented so that it is not merely labeled as Islamic but has zero essence, but
there is a more important criticism to immediately find a solution, namely the view that
Islamic economics is only limited to Islamic finance and cannot open space to discover how
Islamic economics really is. This statement is in accordance with the results of the analysis of
Islahi (2013) which states that the development of Islamic economics is hampered, one of
which is because Islamic economics academics are too focused on the development of
Islamic finance alone, even though finance is only one part of the big cake that should be
presented by Islamic economics.

In the midst of the ongoing development of Islamic finance, Islamic economics academics
should try even harder to open up a more comprehensive Islamic economic development
space. Basically economics is the science of how to choose the optimal way of allocating
limited resources, therefore where there are activities to make choices, that's where the
concept of economics can be applied. The presence of Islamic economics with a more
integral development is expected to be able to answer various problems in various fields of
socio-economic life.

The concept that Islamic economics is not just the creation of a sharia financial system can
be seen from the thoughts of Chapra (2000) which states that there are 4 steps in
formulating Islamic economic policies, namely:

1) study the actual conditions that are happening

2) identify how the ideal conditions must be achieved

3) compare ideal conditions and actual conditions and why there is a difference between the
two conditions

4) formulate strategies that can bring actual conditions closer to ideal conditions

Through these four points, it can be seen that the scope of Islamic economics is various
problems in the broad economic or social field. As long as there are problems that are
contrary to conditions that should be according to Islamic teachings, that is where Islamic
economics can contribute in formulating various strategies to get closer to more Islamic
teachings. Thus, Islamic economics is not only related to the discussion of Islamic finance
alone, but there is a lot of space that can be explored and found a solution based on the
framework of Islamic economics thinking.

In developing Chapra's 4 stages of Islamic economic policy formulation (2000), Susamto

(2015) emphasizes that with this scheme, various economic concepts can be said to be
Islamic as long as the concept is based on the Islamic World View, ideal conditions according
to Islamic teachings, and is able to help the community to transform the economy they are
living into a better system.
It must be admitted that the presence of Islamic finance in the world has become a pioneer
for the development of Islamic economics in various fields of economics and various
countries in the world and Islamic finance must continue to be developed in order to create
a better system and be able to improve people's welfare. However, Islamic economics
should not only concern itself with discussing the financial sector alone. There are many
other aspects that can be dissected from the perspective of Islamic economics as the
concept described by Chapra (2000) and strengthened by Susamto (2015). With a more
comprehensive concept of thinking, various economic and social problems such as
eradicating corruption, poverty alleviation, state taxes, and so on can become objects for
Islamic economics in finding solutions to these problems.