The Debtor of Riba : M. Gunawan Yasni

The Debtor of Riba

THE WEB OF RIBA AND ITS SOLUTION

PROLOGUE

Among the countries of South dubbed the Asian Tigers, Indonesia can now be called the Asian Mouse, which used to be respected by its peers, and have been transformed to a mouse which lives off the remains of consumptions of its neighboring countries and the world at large. The meat consumed the the Economic Tigers and the remains consumed the the Economic Mouse is packaged in the form of riba, which at its basic core will worsen the condition of Indonesia itself. There are no sustenance that are halalan thayyiban to sustain the Tiger of the Mouse in order to fully develop.

Allah has stated in Al Qur’an surah Al Baqarah ayat 275-276; 278-279:
“Those who eat Riba (usury) will not stand (on the Day of Resurrection) except like the standing of a person beaten by Shaitan (Satan) leading him to insanity. That is because they say: “Trading is only like Riba (usury),” whereas Allah has permitted trading and forbidden Riba (usury). So whosoever receives an admonition from his Lord and stops eating Riba (usury) shall not be punished for the past; his case is for Allah (to judge); but whoever returns [to Riba (usury)], such are the dwellers of the Fire - they will abide therein. Allah will destroy Riba (usury) and will give increase for Sadaqat (deeds of charity, alms, etc.) And Allah likes not the disbelievers, sinners.”
O you who believe! Be afraid of Allah and give up what remains (due to you) from Riba (usury) (from now onward), if you are (really) believers. And if you do not do it, then take a notice of war from Allah and His Messenger but if you repent, you shall have your capital sums. Deal not unjustly (by asking more than your capital sums), and you shall not be dealt with unjustly (by receiving less than your capital sums).”

MARSHALL PLAN VS RIBA DEBT

The United States of America provided aid Western Europe after World War II through its Marshall Plan, where the countries repay America’s generosity with goods they produced for several years afterwards. What is conducted by the US at the time can be considered As-Salam scheme (In-Front Payment Sale), where the aid is paid in front for goods needed by the American people for the next several years. Marshall Plan revived Western Europe’s industry and stimulated factories to produce certain goods for the US, whereas the United States can concentrate to produce other types of goods.

While studying at University of Indonesia Faculty of Economics, the author was taught that Marshall Plan was hailed by Indonesia’s economic and finance ministers and advisors, better known as the ‘Berkeley Mafia’ for they graduated from the University of California Berkeley, as the justification for the government strategy of constant borrowing from western countries with soft terms (represented by IGGI-Inter Governmental Group on Indonesia). The practice continued with the next cabinet through CGI- Consultative Group on Indonesia, World Bank, IMF - International Monetary Fund, and other institutions. Marshall Plan as applied by the US to Western Europe is clearly different to the interest bearing loans to Indonesia stated above. Marshall Plan contains the substance of As-Salam, one of the key concepts of Islamic-based economy, whereas interest bearing loans is the opposite.

Western Europe continues to grow after receiving the US aid through Marshall Plan. On the other hand, interest (riba) bearing loans packaged in the form of bilateral aid was responsible for Indonesia’s perceived high growth. This growth was deceptive, as it is susceptible to outside influences due to its dependence to other countries. We witnessed that Indonesia was overburdened by those loans and open to influences by the western countries who provided those loans. This influence was not confined to economics, but also extend to political and government administration as well.

ISLAMIC BASED ECONOMY

Islamic Based Economy (IBE) has established that interest (riba) is unacceptable, while profit/revenue sharing based on risk sharing (muqaradhah / mudharabah) and independence in fulfilling one’s need are acceptable and encouraged.

States Allah SWT & Hadits Rasulullah Muhammad SAW :
“Allah has permitted trading and forbidden Riba (usury)” (Q.S.: Al Baqarah:275).

From Suhaib Ar Rumi r.a. : Rasulullah Muhammad SAW has stated “There are three things which holds blessing : deferred purchase and sale, muqaradhah (mudharabah), the mixing of flour with grain for household usage, not for sale purposes” (H.R. Ibnu Majah).

The riba economy upon which Indonesia’s economy is based has turned Indonesia into a high-cost economy. This can be avoided were Indonesia to adopt the principles of Sharia Economics.

The graphs below will clarify profit / revenue sharing in Islamic Based Economy will result in a better economies of scale compared to conventional economic system as measured in the microeconomics scale :

Explanation of the graphs above:

Profit sharing will render the total revenue curve (profit sharing) – TRp to slightly deviate from starting TR semula after Equilibrium (Break Even Point) where Total Revenue – TR is the same as – TC.

Revenue sharing will render the total revenue curve (revenue sharing) – TRr to rotate to the right of starting TR semula so that Equilibrium (Break Even Point) of revenue sharing – Er will shift to the right of starting E.

Interest / riba will cause the fixed cost curve (interest) – FCi to shift upward from starting FC so that total cost curve (interest) – TCi will also shift upward from starting TC; this will result in Equilibrium (Break Even Point) interest – Ei to shift to the right from starting E.

On all Q;
: Total Cost profit / revenue sharing – TCp,r < Total Cost of interest – TCi; Equilibrium (Break Even Point) of profit sharing – Ep l < Equilibrium (Break Even Poin) revenue sharing – Er and Equilibrium (Break Even Poin) interest – Ei; Profit sharing operates with much better economies of scale compared to revenue sharing and interest.

When applied, profit / revenue sharing will drive effectivity and efficiency of the domestic economy. Effectivity and efficiency of domestic economy will increase the volume of transaction of goods and services domestically. The growth of domestic goods and services transaction will lead to an economically independent country.

ECONOMIC INDEPENDENCE

A Self-sufficient economy or independent economy should be the main objective of developing countries in their efforts to achieve sovereignty in economics. Economic independence does not mean withdrawing from trade of goods and services, and the international economy. Transactions in goods and services with international economy is conducted to fill gaps in products that cannot be produced domestically, not through artificial demands by criminal deeds (collusion, corruption, and nepotism).

In previous CGI conferences, the scheme to put Indonesia into the category of less developed countries, so that it may receive haircut of foreign debt up to 80% of outstanding debt. This is possible and has been done to several countris in Latin America (one example is Brazil). Indonesia did not have the resolve to demand the same treatment to the international board, with the reasoning that the country is still able to pay its debts and did not want to lose the current investors in Indonesia, eventhough the total investment of current investors are far less than the amount of riba debt that the country will receive. With the same reasoning, Indonesia continues to seek loans from International Monetary Fund (IMF) and the World Bank who are controlled by wester countries. Indonesia continues to pursue riba based financing as a solution to economic problems which were caused by riba debts in the first place.

The tsunami disaster in Aceh and North Sumatra has hit Indonesia hard and received the sympathy of the world. However, the disaster was not enough to prompt the government to ask for reduction of debt. The government did not even agree to moratorium (delay of debt payment) which were offered by lender countries. In fact, government officials made a series of announcements which were controversial and dismayed the Author, among others :
“Indonesia’s current account can still pay principle payment plus interest!”
“Indonesia’s currency reserve is enough to anticipate debt payment!”
And so on …

In response, the author states the following :
“Indonesia will never know when it will be able to pay its debts!”
“If calculated, it is possible that riba payments is more than principle debt payment.!”
And the two reasons above is enough to put Indonesia in the condition Gholabatud Dayn (Unpayable Debts) … or as many Muslims pray “Allaahumma na’udzubika min … Gholabatud Dayn … wa Qohrir Rijaal!” In english translation: “Yaa Allah we seek Your Proctection from … unbearable debt … and ruthless tyrant!”

It is time for us to try to get out from this satanic circle by stating taubat nasuha. Stop all efforts to receive riba debts from western countries. Forge better relations with countries that have a strong muslim population and close in spirit with Indonesia. Promote investments in Indeonsia by applying the principles of Islamic Based Economy.

CLOSING THOUGHTS

It is not unreasonable to think that Islamic Based Economy will continue to grow, judging from the many areas of the world which demand autonomy to conduct their economic activities according to Islamic Sharia. Islamic based economy is the application of Islamic Sharia to the economy. IBE is established as contribution to the development of Indonesia’s economy to be more in line with sharia principles, with the strong relationship between the financial sector to the real sector withouth resorting to riba. Insya Allah, this effort will result in great benefit for all parties concerned.

DIPOSTING OLEH Reza Agusti | May 22, 2008

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