Photo: Indonesians pass through a sterilisation booth as they enter a mosque in Malang, East Java, on April 3, 2020, amid the spread of the novel coronavirus. Novanta/Shutterstock

Islamic Finance

Indonesia’s national Islamic economy committee budget slashed, plans suspended as gov't focuses on COVID-19

JAKARTA – Indonesia’s National Sharia Economy and Finance Committee (KNEKS) will suspend non-urgent programs this year after its budget was slashed by a third as the government allocates resources to fight COVID-19.

KNEKS Director of Education and Research, Dr. Sutan Emir Hidayat, told Salaam Gateway the most expensive project in his department was slashed first.

“In my department for example, although everything is already settled for the new data center, including user interface, the design, the data from almost each region except Jakarta and East Java, for the Shariah economy report, we will hold it until the last month of this year or even a couple of months after.”

KNEKS will focus on helping the government fight the COVID-19 pandemic instead of fully implementing plans to develop the Islamic economy this year, said Dr. Sutan.

Other plans put on hold are the development of halal industrial estates to attract more businesses and increase halal exports, research in halal applied sciences to trigger more R&D activities, and a branding exercise to position Indonesia’s Islamic economy externally, according to Dr. Sutan.

“In addition, KNEKS will return to its main job and function as the institution to give recommendations or policy frameworks for both government and private sector through white papers,” he said.

The committee will conduct a series of webinars focused on the impact of COVID-19 on the Islamic economy.

KNEKS will also engage Indonesians to participate more in Islamic social finance by promoting Shariah-compliant fintechs such as LinkAja Syariah.  

“As a national institution that deals with the Sharia economy, we should be able to show that the Sharia economy and finance are able to provide solutions during this current situation,” said Dr. Sutan.

“It’s time to mobilize microfinance, Islamic social funds, Islamic commercial finance, and other charity funds.”

KNEKS is partnering with national zakat body BAZNAS, the Ministry of Religious Affairs, and the World Zakat Forum for its next webinar.

Indonesia’s government has set aside 405.1 trillion rupiah ($24.65 billion) out of the state budget as a support and stimulus package to help the economy through the COVID-19 outbreak. It has re-allocated and re-focused 95.5 trillion rupiah from ministries and other government institutions as part of efforts to fund the package.

(Reporting by Yosi Winosa; Editing by Emmy Abdul Alim

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