The Ministry of Finance of the Republic of Indonesia (MoF), in collaboration with the Indonesian Association of Islamic Economists (IAEI), is holding the 8th Annual Islamic Finance Conference (AIFC) on October 3-4, 2024 in Jakarta. This hybrid event highlights the integration of Maqasid Sharia, which protects human life, intellect, wealth, family and religion, in public finance. Maqasid Sharia is also aligned with the three main functions of public finance in a general economic perspective, namely allocation, distribution, and stability.
At AIFC, policymakers, economists, academics and the private sector participated to discuss Islamic economics and finance. How to explore and develop the potential of public financial management for economic development in accordance with the values of Islamic teachings that are universal and equitable so as to create an inclusive and sustainable economy in the future.
This 8th AIFC carries the theme “The Role and Optimization of Islamic Public Finance: Exploring and Utilizing Potential and Innovation in Sharia Public Finance Management for Economic Development”. The Call for Papers program held in this series of events attracted more than 337 papers from national and international participants. Of these, 20 best papers were presented in parallel sessions and 10 selected papers will be published in leading scientific journals.
The opening ceremony on October 3, 2024 began with a welcome from Indonesia's Deputy Minister of Finance Thomas A. M. Djiwandono and was followed by a guest lecture from Malaysia's Second Minister of Finance Amir Hamzah Azizan. Two panel sessions followed on the topics of “Islamic Public Finance and Fiscal Policy” and “Showcase of Islamic Social Fund Development in Indonesia”.
In his speech, Deputy Minister of Finance Thomas Djiwandono emphasized the importance of new and innovative approaches in managing the economy, especially related to public finance and fiscal policy. According to him, the Islamic economic paradigm offers valuable insights and solutions in facing global economic challenges.
“I strongly believe we can learn a lot from Islamic public finance that prioritizes the principles of justice, equality, social welfare, and ethical governance. These principles should be the foundation of how we mobilize, allocate and use resources to achieve socio-economic development goals,” Thomas said.
Malaysia's Second Minister of Finance Amir Hamzah Azizan said that the MADANI Economic framework, namely Sustainability, Ihsan, Respect, Innovation, Prosperity and Trust, has been a strong foundation for Malaysia's economic performance over the past 24 years. This framework, he said, is closely aligned with Maqasid Syariah, which focuses on serving the community and steering Malaysia's socio-economic landscape towards a more inclusive and sustainable direction.
In global developments, Islamic public finance has spawned significant innovations, one of which is through sustainability linked-sukuk. Indonesia and Malaysia are pioneers in the development of Islamic financial instruments that not only serve as a source of state funding, but also provide inclusive social impact, improve community welfare, and support environmental sustainability. These innovations include Green Sukuk, Sustainability Malaysian Government Investment Issues (MGII), and Cash Waqf Linked Sukuk (CWLS).
He also invited all conference participants to jointly develop Islamic finance in accordance with the demands of the times. According to him, by adopting Islamic values that emphasize justice, ethics, and inclusiveness, we can create a more beneficial global economic and financial system, not only for the Muslim community, but also for all of humanity.
The second day of the conference began with a Keynote Speech from Indonesia's Minister of Finance Sri Mulyani Indrawati and was followed by Mr. Amer Bukvic, as Director and Resident Representative of the Regional Hub of Indonesia Islamic Development Bank (IsDB) Group. Then, followed by the main panel session discussing the Khadijah Program, a collaborative program between IsDB and the Government of Indonesia that aims to empower women entrepreneurs through integrated access to financing in the Islamic financial ecosystem.
In her speech, Sri Mulyani emphasized the importance of Islamic values being substantially applied in public finance policies.
“Islam is rahmatan lil alamin, meaning that its values are universal and relevant for all humanity. We must ensure that the basic principles of Islam, such as justice and social welfare, are reflected in public financial management, especially in the functions of allocation, distribution, and stability,” said Ms Indrawati.
He also emphasized the importance of equitable wealth distribution as the state's role in ensuring prosperity is enjoyed by all levels of society, including the most vulnerable. Fiscal policies that support fair distribution are designed to impose more obligations on the well-off and provide assistance to those in need.
Economic stability was also highlighted by Minister of Finance Sri Mulyani as an important element in maintaining the sustainability of the protection of Maqasid Syariah principles. According to her, an unstable economy can threaten people's lives, wealth and welfare. Therefore, inclusive economic growth requires efficiency in the allocation of public resources.
In addition, Sri Mulyani underlined the importance of applying the character of Prophet Muhammad SAW in public financial management, namely shiddiq (honest), amanah (trustworthy), fathanah (intelligent), and tabligh (conveying the truth). According to him, these characters should be the guidelines in managing state finances aimed at protecting families, improving the quality of human resources, and promoting public welfare.
Amer Bukvic, in his speech, highlighted the important role of Islamic financial instruments such as sukuk in building infrastructure. These instruments also support the Public Private Partnership (PPP) financing model, which is considered very important in economic development. In addition, he considered that innovations in technology such as fintech and blockchain are great opportunities to improve transparency, efficiency and scalability in the management of zakat and waqf.
According to him, digitalization through innovative platforms can change the way public resources are collected, managed and allocated, resulting in a more significant impact. “With Islamic instruments such as zakat, waqf, and sukuk, we can create more inclusive and sustainable economic growth,” he added.
This year's 8th AIFC is supported by various parties, including the Islamic Development Bank (IsDB), the National Committee for Sharia Economics and Finance (KNEKS), Universitas Indonesia (UI), and Bank Syariah Indonesia (BSI). Through the spirit of universal Islamic values, AIFC is expected to be an important platform for Indonesia to continue to lead in global Islamic finance, in line with the principle of rahmatan lil alamin.
