16.8.05
notes on the independence day (2)
This year I decided not to decorate the neighborhood for our Independence day. I may not want to take the initiative to arrange some games for the children tomorrow. Maybe i'm being most cruel with this decision. Some of them came over last Sunday, asking about another war of es mambo, like last year, and two years ago. Actually, I challenged them: if you all have something in mind and prepare to sweat it, I'll take part. Nobody came up with an idea. I have learned today's children are so fond of getting instant stuff. They are getting more deprived of those do it yourself things. (I wonder when we learned that instant gratification would not get us them very far?) So, we probably won't do anything planned this year. We'll see...
notes on the independence day
seventeenth of august independence day tends to inundate me with waves of feelings inside more than my own birthday would. i know not exactly why, but it's becoming well confirmed with most current repetitions.
today's Kompas, the leading national newspaper, features several stories surrounding the commemoration of indonesia's 60th anniversary. what is so special this year? it features "portraits" of a decaying nation. it probably wants to show and testify how after 6o years of Independence indonesia does not fare well. the bitter reflection is shown in some titles:
"Democracy without Democrats; The State's Gross Neglect over the People's Future; To Rebuild the Waning Bargaining Power; The Always-Rocked RI's Sovereignty; Involution towards a Colonialized Nation; Agriculture, the Unloved Stepdaughter; Education without Visions; Indonesia's Manufacture, A Fragile Sand Castle; The Asian Young Tiger's Asleep; A Toothless Tiger in the Region.
meanwhile, the Post writes strongly about the Wasted 60 Years. talk about painful articles that have been made of tears! we've got flooded today. yet, despite everything, happy anniversary! there's so much to fix. no other choice; we must get better together!
today's Kompas, the leading national newspaper, features several stories surrounding the commemoration of indonesia's 60th anniversary. what is so special this year? it features "portraits" of a decaying nation. it probably wants to show and testify how after 6o years of Independence indonesia does not fare well. the bitter reflection is shown in some titles:
"Democracy without Democrats; The State's Gross Neglect over the People's Future; To Rebuild the Waning Bargaining Power; The Always-Rocked RI's Sovereignty; Involution towards a Colonialized Nation; Agriculture, the Unloved Stepdaughter; Education without Visions; Indonesia's Manufacture, A Fragile Sand Castle; The Asian Young Tiger's Asleep; A Toothless Tiger in the Region.
meanwhile, the Post writes strongly about the Wasted 60 Years. talk about painful articles that have been made of tears! we've got flooded today. yet, despite everything, happy anniversary! there's so much to fix. no other choice; we must get better together!
15.8.05
sharia gets more attractive?
(Translated from KONTAN Tabloid, no. 45, Year IX, 15 August, 2005 Edition)
Sharia Gets More Attractive: Three Foreign Investors Interested in entering Islamic banking
After commercial banks, now Islamic or sharia banks are being pursued by foreign investors. Recently, JBIC, the Kuwait Financial House and the Commerce international Merchant Bankers Berhard, made their start to enter this anti-interest banking business.
Silently, the prestige of sharia based finance draws attention. Not only more and more clients and debtors have become attracted by the Islamic banks, but the same enthusiasm has also oozed to foreign investors. By the end of last July, three foreign investors such as the Japan Bank for International Cooperation (JBIC), the Kuwait Finance, and a Malaysian Bank visited Bank Indonesia (BI). "They have interest in entering the sharia business in Indonesia," said Deputy Director of Sharia Banking at BI, Edy Setiadi.
If this is true, they may follow the earlier footsteps taken by those entering through Bank Muamalat Indonesia (BMI). After its IPO in May 2005, the composition of BMI stockholders underwent a total change. Besides the ADB, Bank Boubyan (Kuwait's SOE bank), and a consortium of three investors from Saudi Arabia (Atwil Holding Ltd, MNF Holding and IDF Investment Foundation) are now sharing the ownership of BMI. The majority of owners of this first Indonesia's Islamic bank are with foreign investors.
The fact shows that the development of Islamic banks in Indonesia has been more outstanding. According to data from the central bank, the total assets has increased fast. In 2003, it stood at Rp 7.9 trillion; in 2004, it became Rp 1.5 trillion. Meanwhile, by March this year, it already touched Rp 17 trillion. Their financing and third party funding have been as impressive. By March this year, the Islamic banks channeled financing of Rp 12.48 trillion worth. Third-party depositors' funds hit Rp 12.8 trillion, from Rp 11.8 trillion in 2004.
From New Establishment to Acquisition and IPO
The central bank offers various ways to investors. Those aiming for fast establishment, said Edy, may resort to acquisition of general banks. The moment has arrived for this. Sooner or later, the central bank's regulation stipulating that general banks ought to strengthen their capital up to Rp 80 billion by 2007 and Rp 100 billion by 2010 will find investors to fulfill the requirement. Moreover, according to BI data, some 30 banks need fresh capital for that purpose. Once the investors enter the general banks, "They can convert into sharia banks,"said Edy. Acquisition would exempt them from having to start from scratch; and would only require them to develop the banks.
In addition, they can start by establishing general banks based on the Islamic Law in Indonesia, for which they will have to reach further down the pocket. Establishing a new bank these days requires them to have a deposit of by Rp 3 trillion.
Another option is by just opening a branch in Indonesia, as what Citibank and HSBC did. "The cost is far lower than starting a new one,"continued Edy. Yet another alternative offered by the central bank is through IPOs of sharia banks, precisely as some foreign BMI stockholders did.""They can enter through the market,"said Edy.
Sukasah Syahdan, a researcher with JBIC, acknowledged that the head quarters is interested in investing money in Islamic banks in Indonesia. However, the pattern would not precisely resemble any option offered by the central bank. The reason is that, "We look into possibilities of co-financing, providing cheap financing funds, such as through two step loans,"said Sukasah, who joined the delegation of JBIC Tokyo led by the Director General of Project Finance, Ryuichi Kaga, in a meeting with the central bank. This mode is not especially developed in Indonesia, but not impossible. "It actually classifies as a pattern of mukayadah (loan), whereby JBIC can act as a shahibul maal (owner of fund),"said Edy.
Despite the interest, according to Sukasah, JBIC is now thoroughly studying the prevailing regulations. Sukasah said that there were some sharia regulations in Indonesia that are different from the ones practiced in other countries. The decision based on fatwa (edicts) by the National Sharia Council for sharia instruments, for example, are nationally binding and applied. In other countries, such as Singapore and Middle East, each bank can issue its own fatwa. "It's applicable only to the banks and their clients,"said Sukasah.
Different from the case in these two countries, in Malaysia, the sharia Council resides within the central bank. So, "All the decisions therefore will comply with the banking regulations,"he continued. Meanwhile, the sharia council in Indonesia is under the Indonesia's Ulema Council (MUI), "It can happen that the rules will be different from the banking regulations,"said Sukasah.
Then, how about the Kuwait Financial House and Commerce? According to Edy, they seem to be still studying the nooks and crannies of the sharia business in Indonesia. The central bank was hopeful that the two institutions would eventually place capital by establishing new Islamic banks. The thing is that, despite the fast growth, in quantity there are still only 3 Islamic banks in Indonesia, the 16 others still take the form of business units [of commercial banks]. To grow even faster, "We want to see the number increase," said Edy.
Sharia Gets More Attractive: Three Foreign Investors Interested in entering Islamic banking
After commercial banks, now Islamic or sharia banks are being pursued by foreign investors. Recently, JBIC, the Kuwait Financial House and the Commerce international Merchant Bankers Berhard, made their start to enter this anti-interest banking business.
Silently, the prestige of sharia based finance draws attention. Not only more and more clients and debtors have become attracted by the Islamic banks, but the same enthusiasm has also oozed to foreign investors. By the end of last July, three foreign investors such as the Japan Bank for International Cooperation (JBIC), the Kuwait Finance, and a Malaysian Bank visited Bank Indonesia (BI). "They have interest in entering the sharia business in Indonesia," said Deputy Director of Sharia Banking at BI, Edy Setiadi.
If this is true, they may follow the earlier footsteps taken by those entering through Bank Muamalat Indonesia (BMI). After its IPO in May 2005, the composition of BMI stockholders underwent a total change. Besides the ADB, Bank Boubyan (Kuwait's SOE bank), and a consortium of three investors from Saudi Arabia (Atwil Holding Ltd, MNF Holding and IDF Investment Foundation) are now sharing the ownership of BMI. The majority of owners of this first Indonesia's Islamic bank are with foreign investors.
The fact shows that the development of Islamic banks in Indonesia has been more outstanding. According to data from the central bank, the total assets has increased fast. In 2003, it stood at Rp 7.9 trillion; in 2004, it became Rp 1.5 trillion. Meanwhile, by March this year, it already touched Rp 17 trillion. Their financing and third party funding have been as impressive. By March this year, the Islamic banks channeled financing of Rp 12.48 trillion worth. Third-party depositors' funds hit Rp 12.8 trillion, from Rp 11.8 trillion in 2004.
From New Establishment to Acquisition and IPO
The central bank offers various ways to investors. Those aiming for fast establishment, said Edy, may resort to acquisition of general banks. The moment has arrived for this. Sooner or later, the central bank's regulation stipulating that general banks ought to strengthen their capital up to Rp 80 billion by 2007 and Rp 100 billion by 2010 will find investors to fulfill the requirement. Moreover, according to BI data, some 30 banks need fresh capital for that purpose. Once the investors enter the general banks, "They can convert into sharia banks,"said Edy. Acquisition would exempt them from having to start from scratch; and would only require them to develop the banks.
In addition, they can start by establishing general banks based on the Islamic Law in Indonesia, for which they will have to reach further down the pocket. Establishing a new bank these days requires them to have a deposit of by Rp 3 trillion.
Another option is by just opening a branch in Indonesia, as what Citibank and HSBC did. "The cost is far lower than starting a new one,"continued Edy. Yet another alternative offered by the central bank is through IPOs of sharia banks, precisely as some foreign BMI stockholders did.""They can enter through the market,"said Edy.
Sukasah Syahdan, a researcher with JBIC, acknowledged that the head quarters is interested in investing money in Islamic banks in Indonesia. However, the pattern would not precisely resemble any option offered by the central bank. The reason is that, "We look into possibilities of co-financing, providing cheap financing funds, such as through two step loans,"said Sukasah, who joined the delegation of JBIC Tokyo led by the Director General of Project Finance, Ryuichi Kaga, in a meeting with the central bank. This mode is not especially developed in Indonesia, but not impossible. "It actually classifies as a pattern of mukayadah (loan), whereby JBIC can act as a shahibul maal (owner of fund),"said Edy.
Despite the interest, according to Sukasah, JBIC is now thoroughly studying the prevailing regulations. Sukasah said that there were some sharia regulations in Indonesia that are different from the ones practiced in other countries. The decision based on fatwa (edicts) by the National Sharia Council for sharia instruments, for example, are nationally binding and applied. In other countries, such as Singapore and Middle East, each bank can issue its own fatwa. "It's applicable only to the banks and their clients,"said Sukasah.
Different from the case in these two countries, in Malaysia, the sharia Council resides within the central bank. So, "All the decisions therefore will comply with the banking regulations,"he continued. Meanwhile, the sharia council in Indonesia is under the Indonesia's Ulema Council (MUI), "It can happen that the rules will be different from the banking regulations,"said Sukasah.
Then, how about the Kuwait Financial House and Commerce? According to Edy, they seem to be still studying the nooks and crannies of the sharia business in Indonesia. The central bank was hopeful that the two institutions would eventually place capital by establishing new Islamic banks. The thing is that, despite the fast growth, in quantity there are still only 3 Islamic banks in Indonesia, the 16 others still take the form of business units [of commercial banks]. To grow even faster, "We want to see the number increase," said Edy.
the truth about GAM
an eastern asian colleague wondered about this unfolding deal between the government of indonesia and the gam movement and said he could use my opinion about it. after trying to crack my brain, i realized there was not much inside, and so i finally gave up. i could not answer and felt deeply sorry for not being able to estabish an opinion. for isn't it terrible to have no opion about something that has ended many lives, ravaged homes and families, and many tears are still being cried?
he asked why not. i added because i didn't know which one to believe; which one the more credible. i remember reading an article not so long ago in Inside Indonesia, a journal published in australia, which sounded very sympathetic to the acehnese. i have heard a lot from some friends about the sufferings caused by the military rules in aceh. i have also read articles on some gam members firing bullets to armies working on the tsunami victims. two or three friends of mine even suggested they didn't mind aceh becoming an independent country--like timor timur, as long as they have a real lasting peace that they may deserve. very humanitarian, of course, if one could assure peace would perch on this rencong land.
but who could do that, and for how long? most of us fear that peace is but a brief pause between two guerilla wars. the most crucial problem to most civilians is this: which story is true? which truth to believe? i guess it would be easier to most people speak about the reconstruction efforts in the wake of the disaster. there sure is a whale of problems there, but the situation is much clearer. in regard to aceh and gam, none has been able to show their credibility. not even the local nor international media.
besides, about 3 weeks ago i had a chance to interview a former governor of jakarta. an aging, retired general, still rich after all this time. (this country is run by the military--and the mafia, in case you don't know.) i'd heard he was in the know about the development with gam-ri. i asked him the same question about indonesia and gam? he said he didn't know, and guestimated that noone really knew about it. for a meeting proving disappointing, why should i be quoting him now? heck, he practically knew next to nothing. but i was glad he was no longer a governor, and appreciated his honesty. anyway, the point is this: without credibility, even a perceived one, one oughtta button his or her lip. shut up. poffa be. end of post.
he asked why not. i added because i didn't know which one to believe; which one the more credible. i remember reading an article not so long ago in Inside Indonesia, a journal published in australia, which sounded very sympathetic to the acehnese. i have heard a lot from some friends about the sufferings caused by the military rules in aceh. i have also read articles on some gam members firing bullets to armies working on the tsunami victims. two or three friends of mine even suggested they didn't mind aceh becoming an independent country--like timor timur, as long as they have a real lasting peace that they may deserve. very humanitarian, of course, if one could assure peace would perch on this rencong land.
but who could do that, and for how long? most of us fear that peace is but a brief pause between two guerilla wars. the most crucial problem to most civilians is this: which story is true? which truth to believe? i guess it would be easier to most people speak about the reconstruction efforts in the wake of the disaster. there sure is a whale of problems there, but the situation is much clearer. in regard to aceh and gam, none has been able to show their credibility. not even the local nor international media.
besides, about 3 weeks ago i had a chance to interview a former governor of jakarta. an aging, retired general, still rich after all this time. (this country is run by the military--and the mafia, in case you don't know.) i'd heard he was in the know about the development with gam-ri. i asked him the same question about indonesia and gam? he said he didn't know, and guestimated that noone really knew about it. for a meeting proving disappointing, why should i be quoting him now? heck, he practically knew next to nothing. but i was glad he was no longer a governor, and appreciated his honesty. anyway, the point is this: without credibility, even a perceived one, one oughtta button his or her lip. shut up. poffa be. end of post.
2.8.05
indonesia's islamic banking: draconian tasks ahead
I have been one acquainted and attracted by it. But without further ado, let me be just straightforward. While I am convinced that Islamic banking has been here to stay not only in Indonesia but also in the world, I also believe that unless more political support is rendered, its beauty will eat itself to maintain the current subsistence level. Islamic banking does need political support at an extent greater than or beyond what most scholars like Dawam Raharjo thinks. Rahardjo's excellent views, as traceable in some Islamic banking literature at home, have been based on historical accounts, going back to the struggle to establish the sharia in Nusantara. In a changing Indonesia, however, the arguments are insufficient. After Indonesia's Reformasi, the political constellation, players, and "rules of the game" in Indonesia has been so much altered with something resembling nothing that anyone knows of. The interplays of political forces and ensuing conflicts are something that neoliberalism has so far tended to ignore or belittle. Globally, the old political structure post the cold war, too, has crumbled. The world is increasingly becoming an unstable ground.
From philosophical perspectives, Islamic banking has yet to be capable of justifying itself that it is not merely a "newly-found" variant of banking as a discipline. Its banning of interest is indeed beautiful, but the fact that Islamic banks do resort to commercial interest rate in the determination of their own profits and in offering attractive shares for third party funds (TPFs) seems rather pitiably inconsistent. At the moment, I have been tempted to "surmise" that, until Islamic banking has a sharia-compliant yield curve of its own, and if this hedonic benchmarking is still used, Islamic banks are morally sanctioned to offer higher profit rates to tPFs while smaller shares of interest for themselves. Should this sound unattractive, part of the "untractiveness" for the banks' shareholders should be offset by the "purity" or tabarru' concepts designed for the hereafter. Besides, the banks can also play the mudharib part if they aspire for higher profits. I have been led into thinking this also because the ownership accountability of a great many Islamic banks has been an issue rarely addressed, unlike commercial banks. Individual shareholders are hardly if ever involved in decision making, because part of the chunks lies in the hand of ALCO meeting, the rest to the sharia board. Thus, the roles of more legitimate and more transparent Islamic banking managers and the national sharia jurists are critical for the success of Islamic banking, both as a discipline and as an institution. No room, really, for complacency.
From philosophical perspectives, Islamic banking has yet to be capable of justifying itself that it is not merely a "newly-found" variant of banking as a discipline. Its banning of interest is indeed beautiful, but the fact that Islamic banks do resort to commercial interest rate in the determination of their own profits and in offering attractive shares for third party funds (TPFs) seems rather pitiably inconsistent. At the moment, I have been tempted to "surmise" that, until Islamic banking has a sharia-compliant yield curve of its own, and if this hedonic benchmarking is still used, Islamic banks are morally sanctioned to offer higher profit rates to tPFs while smaller shares of interest for themselves. Should this sound unattractive, part of the "untractiveness" for the banks' shareholders should be offset by the "purity" or tabarru' concepts designed for the hereafter. Besides, the banks can also play the mudharib part if they aspire for higher profits. I have been led into thinking this also because the ownership accountability of a great many Islamic banks has been an issue rarely addressed, unlike commercial banks. Individual shareholders are hardly if ever involved in decision making, because part of the chunks lies in the hand of ALCO meeting, the rest to the sharia board. Thus, the roles of more legitimate and more transparent Islamic banking managers and the national sharia jurists are critical for the success of Islamic banking, both as a discipline and as an institution. No room, really, for complacency.
thoughts from a fancy car
Last Friday I caperoned a senior economist from Japan and another Japanese guy from Tokyo. Was sitting next to Pak Arifin, an Indonesian driver, in one of the two mercedes tigers belonging to his office. We were on our way to the biggest noodle producer in Indonesia.
The four of us I'm sure disliked almost every minute of this travel, albeit maybe for different reasons. The two Japs looked horrified at the traffic jam, the typical variant we Jakartans have to put up with every day on the way to offices or homes. Pak Ali was perhaps too focused driving to notice this for fear of hitting or being hit by another vehicle. As for me, I perhaps belong to a group of few people who get disturbed by travelling in fancy cars in this seemingly rich metropolitan. It often gives a pang in the heart, contributing to the mockery against the poor evidently abundant in the metropolitan. True, the majority of us are poor; anyone can check the statistics. But oh yes, there are all kinds of fancy cars in Indonesia: Jaguar, Bentley, Rolls Royce, Porche, you just name it. The owners must belong to the filthy rich. I know not who they are, but every thinking layperson can come up with reasons how they got the money, which in short commands contempt, not respect, at least from me. (Duh; this is no jealosy for God's sake. Most of them are either crooked businesspersons, lawyers, or parliamentarians.)
The time was nearing half past 4 pm. This senior economist, whom I have known for some time, blurted:
"My country, Nad, is having a mind boggling growth problem. The last decades have seen Japan's economy in the down. Consumption has contributed some 60% of our economy. Thing is, the young generation in our country do not want to buy cars."
How so unlike Indonesians, I thought. He continued. "Car sales have been very low back at home. The young save money, unlike the older generation. We need consumption to invigorate the economy, you see. Once the older generation perishes, I don't know what's to become of Japan."
In the meantime, the jam was developing even more dreadfully. Our appointment was 16:30. I took a long breath to signify we just failed to be be punctual. From the darn car we couldn't help not smelling the occassional traffic carfumery usurping in, mostly from the Japanese cars that ambushed us from the four directions.
The other Jap spoke in agreement. Yes, it's true; very tough, ne.
But you can't mean that's the main cause, can you M---- san? Are you seriously meaning Japan's economic woe has been caused by plunging consumption? Come on. We are are talking about our consuming folly here; about the paradox of savings. The investment-saving curve may be true in mathematical equations, but economics is never mathematics as life is never an equation. Too many variables are ignored under the ceteris paribus. We know it but tend to forget it when we need it the most. Believe this: consumption will never cease, because there is no limit to human needs and wants. Economic growth is only a method we are capable to measure development successes or failure; we know from the start it is never accurate. Human logics has no way to know it. I think basing economic growth on consumption is one of the most damaging errors in contemporary economic theories. Think of yourself, or your own family. Can you face the future by consuming? It doesn't matter how much you make in a month, but how much you save! How can you blame the younger generation for saving their money? Any nation is essentially nothing but a bunch of its people. Like you and your families. The problem with most of the people out there is this, Mr. senior economist: they cannot save!
Well, that was about my self righteous thought. I kept the whole paragraph for myself. To the two nervous looking Japs I commented: "Well, that's an interesting phenomenon, M------ san."
When we got there, we were handsomely late for almost an hour.
The four of us I'm sure disliked almost every minute of this travel, albeit maybe for different reasons. The two Japs looked horrified at the traffic jam, the typical variant we Jakartans have to put up with every day on the way to offices or homes. Pak Ali was perhaps too focused driving to notice this for fear of hitting or being hit by another vehicle. As for me, I perhaps belong to a group of few people who get disturbed by travelling in fancy cars in this seemingly rich metropolitan. It often gives a pang in the heart, contributing to the mockery against the poor evidently abundant in the metropolitan. True, the majority of us are poor; anyone can check the statistics. But oh yes, there are all kinds of fancy cars in Indonesia: Jaguar, Bentley, Rolls Royce, Porche, you just name it. The owners must belong to the filthy rich. I know not who they are, but every thinking layperson can come up with reasons how they got the money, which in short commands contempt, not respect, at least from me. (Duh; this is no jealosy for God's sake. Most of them are either crooked businesspersons, lawyers, or parliamentarians.)
The time was nearing half past 4 pm. This senior economist, whom I have known for some time, blurted:
"My country, Nad, is having a mind boggling growth problem. The last decades have seen Japan's economy in the down. Consumption has contributed some 60% of our economy. Thing is, the young generation in our country do not want to buy cars."
How so unlike Indonesians, I thought. He continued. "Car sales have been very low back at home. The young save money, unlike the older generation. We need consumption to invigorate the economy, you see. Once the older generation perishes, I don't know what's to become of Japan."
In the meantime, the jam was developing even more dreadfully. Our appointment was 16:30. I took a long breath to signify we just failed to be be punctual. From the darn car we couldn't help not smelling the occassional traffic carfumery usurping in, mostly from the Japanese cars that ambushed us from the four directions.
The other Jap spoke in agreement. Yes, it's true; very tough, ne.
But you can't mean that's the main cause, can you M---- san? Are you seriously meaning Japan's economic woe has been caused by plunging consumption? Come on. We are are talking about our consuming folly here; about the paradox of savings. The investment-saving curve may be true in mathematical equations, but economics is never mathematics as life is never an equation. Too many variables are ignored under the ceteris paribus. We know it but tend to forget it when we need it the most. Believe this: consumption will never cease, because there is no limit to human needs and wants. Economic growth is only a method we are capable to measure development successes or failure; we know from the start it is never accurate. Human logics has no way to know it. I think basing economic growth on consumption is one of the most damaging errors in contemporary economic theories. Think of yourself, or your own family. Can you face the future by consuming? It doesn't matter how much you make in a month, but how much you save! How can you blame the younger generation for saving their money? Any nation is essentially nothing but a bunch of its people. Like you and your families. The problem with most of the people out there is this, Mr. senior economist: they cannot save!
Well, that was about my self righteous thought. I kept the whole paragraph for myself. To the two nervous looking Japs I commented: "Well, that's an interesting phenomenon, M------ san."
When we got there, we were handsomely late for almost an hour.
how MUI got slammed for "opening the gate"
Scholars and activists issued a joint statement on Monday condemning the MUI for undermining the principles of nationhood and democracy. "The issuance of the fatwas shows how weak the concepts of nationhood and democracy are in this country. The association also urged SBY to be proactive in maintaining pluralism. For more info visit today's Post or read Rei's comment below in the previous post on the same issue.
1.8.05
august 1, 2005
farewell august 1, 2005. just want to thank you god, before it's over. she finally joined the real world today, our only daughter. my wife and I had been senewen, but everything seemed fine. may you bless her with lots of days like this for as long as she lives.
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