Islamic finance industry in Indonesia is very concerned in the field of microfinance. This is due to the desire of all stakeholders in Indonesian Islamic financial Shariah to create inclusive economic means can be reached by all parties. In the 2008 crisis, Indonesia is saving the SME sector. The Indonesian economy is actually saved by the common people. in fact they are the ones who drive the real economy in Indonesia
With such determination, Islamic financial institutions in Indonesia is not only banks, insurance and capital markets but also there BMT (Baitul Mal wa Tamwil). BMT is a typical Islamic financial institutions from Indonesia. BMT in Indonesia is not under the monetary authority but under the cooperative department. BMT is a cooperative legal entity. Cooperatives are open so that anyone can set up a BMT.
BMT term began to be heard in early 1992. Term arises from the initiative of a group of activists who later founded BMT Bina Insan Kamil in jalan pramuka sari II Jakarta. After that comes the Islamic Microfinance training conducted by the Assessment Center and Small Business Development (P3UK), in which the figures are the founders P3UK BMT Bina Insan Kamil.
The initial concept of the BMT begins from Sharia Thesis, “Can the concept of Maal and Tamwil combined into one?” They are Complementary. Maal is taken from ZIS used as security for the financing of 8 groups that are eligible to receive zakat (ashnaf). In short, zakat is used as a productive fund while Tamwil is a pure business and a clear transaction. Obligations and rights of use is pure business.
Baitul Maal Wat Tamwil actually two institutions into one, the Baitul Maal and Baitut Tamwil which each have different principles and products despite having a close relationship in creating an economy that is equitable and dynamic.
In summary P3UK (1994) describes the principles and core products of Baitul Maal wat Tamwil are as follows:
Baitul Maal is having principles as a collector and distributor of zakah, infaq, and Sadaqah. Baitul Maal accepts and seeks funding in the form of zakat, infaq, and charity, and also receives funds in the form of donations, grants, or endowments and social funds. Distribution of funds should be specific, especially funds from zakat, as defined in the text to 8 asnaf while other social funds can be used for the development of the poor, the development of educational institutions, mosque or any operational costs in social activities.
Principles and core products of Baitut Tamwil
Baitut Tamwil principle is not much different from that used principles of the Islamic Bank. There are three principles are carried out by BMT in its function as Baitut Tamwil, namely: Principles for profit sharing, Principle of sale with profit (mark-up), and also non-profit principle.
Indonesia is said to have become the country with the largest Islamic Micro Finance in the world. The reason, Indonesia has had 5500 BMT with the number of outlets by 22 thousands. With a membership of around 762 thousand members and total assets reached Rp 5 trillion to Rp 8 trillion. There 600.000 SMEs, 200.000 Cooperatives and 5500 BMT in Indonesia. According to BI research, assets of 100 BMT in Indonesia could reach 10 trillion.
ABSINDO (Indonesia BMT Association) often gets requests from foreign governments to initiate the concept of Islamic microfinance like BMT in their country. The countries include Egypt and Thailand. The state government wants to revive Islamic microfinance in their country and called on Indonesia as a teacher.
The economists team from Chicago also very keen to imitate and apply the concept of BMT in the country. And, because of that, One of BMT expert and also Indonesian Islamic economist, Adiwarman Karim, was invited to speak about Indonesian BMT in the presence of respectable forum on the International Conference on Islamic Economics IV, in late August 2000 in the UK.
BMT is very instrumental in alleviating poverty in Indonesia. While many families in Indonesia are living below the poverty line, BMT will play a role. By empowering the SMEs that need capital to grow its business, it is also expected that Islamic economics solution can be felt by every community.