Secretary General (Sekjen) of the Indonesian Association of Islamic Economists (IAEI) and Director General of Fiscal Balance of the Ministry of Finance, Astera Primanto Bhakti, gave a Guest Lecture at Sunan Ampel Surabaya State Islamic University and inaugurated a number of Commissariats in East Java during the visit of the IAEI Central Leadership Board in East Java on Thursday (11/8).
The Secretary General of IAEI in his presentation said that climate change is a common issue of global concern. The year 2021 shows that the earth's average temperature has increased by 0.08°Celsius per decade since 1880, making it the sixth warmest year on record (Global Climate Report). The impact on the economy can be in the form of business disruption, increased energy prices, increased food prices, decreased asset values and so on. In the financial context, climate change poses new risks for financial institutions that can affect asset values and credit risk.
The Sustainable Development Goals (SDGs), which are also in line with sustainable principles in Sharia economic development, are a global action plan agreed by world leaders, including Indonesia, to end poverty, reduce inequality and protect the environment. Sharia economics is also not anti-growth or de-growth which believes that the sustainability of the earth has consequences for the level of world economic development (negative growth). Rather, Islamic economics believes there is a point of healthy growth where economic development can be sustainable with the preservation of nature through changes in the mentality of consumption and production and technological assistance.
In his presentation, the Secretary General of IAEI explained, the maqasid shari'ah perspective makes us know that many policies have been carried out by the Indonesian government in accordance with the spirit of Islam even though they do not use the sharia label. In the 2030 Nationally Determined Contribution (NDC), Indonesia is committed to reducing carbon emissions by 29% by its own efforts by 2030. The government also continues to encourage the transition to a sustainable green economy through the APBN and APBD. APBN/APBD is one of the sources of domestic funding for climate mitigation and adaptation. Both in the form of APBN / APBD spending, Financing, Transfers to Regions and Village Funds (TKDD), and Carbon Taxes.
Although conceptually Islamic economics is very supportive of the green development transition, instrumentally it must be proven that the role of Islamic economics in supporting the transition. Indonesia is one of the leaders in terms of issuing Green Sukuk, Islamic blended finance, and also Green Municipal Sukuk. Since 2018, Indonesia has been one of the active leaders in innovating sukuk issuance both globally and domestically. Even in November 2019, Indonesia became the first to issue Retail Sukuk that can be accessed by domestic retail investors. Indonesia also continues to innovate by 'marrying' Islamic commercial finance and Islamic social funds, one concrete form is the issuance of Cash Waqf-Linked Sukuk (CWLS). One scheme that has not yet been implemented but is very possible is the issuance of green sukuk by the regions, which is given considerable space in the Law on Central and Regional Financial Relations (HKPD Law).
Sustainability is an integral aspect of Islamic economics. Existing development needs to focus on improving economic welfare, while also being environmentally friendly and delivering social justice. The government continues to encourage sustainable economic development in various ways, including budget politics. However, synergy and innovation from many parties are needed to realise sustainable development in accordance with the principles of Sharia economics.
