Economy Opinion

Theory Financial Capability in Doing Loan

noreply@blogger.com (Economy Opinion) — Mon, 07 Jan 2013 04:54:00 +0000

Foreword

Although various attempts have been made to repair the various regulations and rules, but still there are many concerns about the effectiveness of regulations and rules in creating equitable development results by the government. There are three main functions of government in the development of the other functions of the allocation, distribution and stabilization functions, which support each other and maintain and improve the sustainability of development, therefore, the birth of the regional autonomy law is the embodiment of the three functions, which aims to provide funding to local authorities at the same time, to overcome the limitations of the funds needed for the provision of public services (Musgrave and Musgrave,1993:3-15).

One form of authority and financing local governments will be able to overcome the limitations of development finance authority to make loans given. Although lending area is still controlled by the center or center must consent, but at least the loan is an alternative source of local revenue. According to the Devas (1989; 222) there are three main factors controlled central government borrowing;

- Lending sector as a whole needs to be controlled, because it primarily

deals with monetary policy to rein in inflation;

- In order to avoid local government mired in financial difficulties,

because the loan is used to cover routine expenses;

- The central government wants to keep control of capital expenditure

patterns of local governments.

This difference led to economic progress is uneven across regions, which investments tend to go to areas that are already economically developed and have adequate infrastructure, rather than to the area and the potential of natural resources and limited infrastructure. As a result, the area that has the potential of natural resources but limited infrastructure will be very difficult to develop and explore their potential. According to Santoso (1995:19) said that in the era of globalization, each region will be able to compete between the region to other local governments in improving the sources of funds for regional development.

Growth and Fiscal Autonomy

According to the classical theory of economic growth citing quoting Boediono (1999:9), which was pioneered by Adam Smith in his book "The Wealth of Nations 1776", stated that the sources of growth in national production consists of the growth of labor and capital, improved efficiency in the use of capital by labor through specialization and technological progress and international trade to expand markets. Furthermore, according to Adam Smith in his book "The Wealth of Nations 1776" citing posts Arsyad (1997:51), the greater the stock of capital, the greater the possibility of specialization and division of labor that will increase the productivity per capita, which will produce output. So economic growth shows the extent to which economic activity would generate additional income in a given period.

Based on this theory, because of differences in natural resources and human resources between regions, will cause the difference in growth between regions. For areas with natural resources such as oil and natural gas tends to have a fairly high growth rate (Syafrizal, 1997:27-38).

In general, regional growth policy is the result of a combination of central government policy with local government, but in this case higher government holds power over local government, so that the dominant policy of the central government over local government (Nazara, 1994:19-36). The implications of the policy embodied in the fiscal balance between central and local government, that affect development activities in the area, because there are areas that have the potential of natural resources which is pretty much, but not fully enjoy the results of its resources.

According Devas (1989:179), central and local financial relationship involving the division of responsibilities for carrying out certain activities between levels of government and the distribution of revenue sources to cover expenses due to these activities. The main objective relationship between the center and regions to achieve a balance between the potential and the distribution of resources according to the role played by local government.

Mahi says (2000:56) that to determine the availability of funds among local governments use the principle of regional needs through the distribution functions (affairs) are reflected in the policy of regional autonomy, in which regulates the division of authority between the central government as well as financing and local government.

Public Borrowing

According Simanjuntak (2000:15) there are two views expressed on the public debt, which has different ideas from each other. Classical flow states, that public borrowing would hinder development, because it is non-productive public spending, while according to the Keynesian school states that public credit can serve as a base amount of money in circulation and can increase productivity, because debt can help to achieve economic transformation in the following way;

- Cover the shortage of human resources and capital in the short term;

- Increasing economic activities Strategic;

- Improving government performances is positively;

- Provide resources that allow carrying out structural reform its economy.

From the second view shows, that the loan can be allowed as long as it is used to cover the shortage of funds and the things that are productive, that can directly generate revenue for the region, such as establishing market, terminals and hotels (Devas, 1989:221). In general, the wisdom to make the loan, a local government policy, but in this case, higher government holds power over local government, for local government loans will be available if approved by the central government. This meant that government borrowing should be arranged on activities that can drive revenue, so the area will be able to pay back loans made. Thus, how much debt do not become a problem area; throughout the region have the ability to pay.

Author: Nataluddin

Economic Developmet "1999"

Gadjah Mada University

Investment and Growth Theory

noreply@blogger.com (Economy Opinion) — Thu, 03 Jan 2013 01:08:00 +0000

Foreword

The economic development of a region is essentially a series of activities carried out consciously and continuously to achieve a better state simultaneously and continuously. Within that framework, as well as to spur economic development and equitable development results in order to improve the welfare of the people in a fair and equitable manner.

Todaro (1997: 18) states that the public sector (government) should be recognized and trusted to assume a greater role and a more decisive effort in the management of the national economy / area. Local Government as policy makers in the next area will prefer to adopt development policies that are tailored to the characteristics of the potential of the area itself, certainly claim to be the introduction of potential areas of economic growth for regional development.

Nopirin (1999: 275) in a perfectly competitive market system as described by the power of Adam Smith's invisible hand, the allocation of resources will be ensured efficiently without government interference. But in certain matters showed that the market mechanism has the disadvantage of failing to achieve an efficient allocation where it is due to such externalities, monopoly and public goods.

Samuelson and Nordhaus (1996: 49-50) states that the ideal economy is an economy that applying market mechanisms. This means that the way the economy fully into the market authority because only the market mechanism that can allocate resources efficiently.

High economic growth is needed to accelerate changes in the structure of the local economy towards a balanced and dynamic economy characterized by strong industry and advanced, a strong agricultural base and has a balanced growth in various sectors. Economic growth is also necessary to mobilize and spur development in other areas as well as the main force of development in order to increase household incomes and tackle social and economic inequality.

Previous Research

Kim (1997:156) in his research on the role of the public sector in some areas in economic growth in Korea, using regression concluded that the role of local government in regional economic growth is very important and significant. Income taxes and non-tax areas has negative and significant impact on regional economic growth, while investment and government consumption have a significant positive effect of higher.

Miller and Russek (1997:222) examine and test on the fiscal structure of local and national economic growth concludes that the local and national taxes greatly affect economic growth if the revenue is used to fund public services.

The Role of Government (Public Sector) in the Regional Economy

Regional economic development is a process where the local government and community groups to manage existing resources and establish a partnership between local government and the private sector to create something new employment field and promote the development of economic activities in the region. Regional development is essentially an integral part of national development, then in the implementation of regional development policy will not detached from national development.

Efforts to spur economic growth in the region has been implemented in the form of subsidies and tax relief and incentives for backward areas. As policies and efforts made by the central government in both economic development activities that have been achieved and efforts are still in progress, the role of the government in the economy Badung is giving stimulants and further encourage community economic growth.

According to some theories of growth can be said that economic growth can be measured by the increase in national income that is reflected in the value of GDP or GDP when in the area from year to year. To obtain the rate of real economic growth (real) then the increase in GDP / GDP is measured GDP / GDP based on constant prices.

The Theory of Economic Growth

Understanding the economic growth has been formulated by many different viewpoints by economists. Boediono (1999:1) argues that economic growth is the increase in output per capita in the long run. The emphasis here is on the process because it contains elements of change and indicators of economic growth seen in quite a long period of time.

Growth theories are generally divided into two groups approach the classical approach pioneered by Adam Smith, David Ricardo and Arthur Lewis, and modern embraced by Keynes (Harrod-Domar), Neo Classical (Solow-Swan). According to Adam Smith's theory of growth in Boediono (1999:7), process of economic growth in the long run involves two main aspects: the growth of total output in the form of natural resources, human resource and capital stocks.

Revenue and Regional Economic Growth

Revenue consists of the remaining balance in the year ago, revenue, tax revenue and non-tax revenues, donations and assistance and loans. The largest revenue collected through tax revenues will reduce the purchasing power resulting in lower economic growth.

Public Investment and Economic Growth

Government investment in this area is expressed in development spending can affect economic growth. Funds are used to empower a variety of economic resources to promote equity and income per capita. Fund development is also one of the inputs to produce outputs.

Government Consumption and Economic Growth

Government consumption expenditure is measured by expenditures. Routine expenditure has a role and a function quite large in supporting the achievement of development goals even if these expenses are not directly related to the formation of capital for the purpose of increasing production, but rather support the government and increase the range and quality of services.

Labor Force and Economic Growth

Human resources is one factor in the dynamics of long-term economic development along with science, technology resources and production capacity. Population growth and labor is considered as a positive factor in stimulating economic growth.

Large amount of labor can increase the number of productive means. With the increase in labor productivity is expected to increase production, which will increase the GDP anyway.

Private Investment and Economic Growth

The role of the private sector in regional economic activity is to invest principally either area or regional level, so as to spur economic growth. The development of private investment depends on the facilities and services provided by government, of infrastructure that stimulate in order to attract foreign and domestic investors.

Effect of Government Spending Against Regional Growth

noreply@blogger.com (Economy Opinion) — Wed, 02 Jan 2013 07:46:00 +0000

Author: Sri Palupi

Economic Development

Gadjah Mada University

2000

The Role of Government in the Economy

An ideal economy, perfectly competitive setting in which the allocation of resources derived from voluntary exchange of goods and money market rates would result in a maximum quantity of goods and services from all available resources in the economy to the Minister for the Economy. But in the reality of everyday, the market is not always present in his form ideal. In practice, market economy often entwined pollution and monopolization in line with soaring inflation or unemployment, n practice also, the distribution of income in society laissez-faire very uneven. To overcome these weaknesses the government took an important role in the economy. According to Samuelson (1997) outlined the government has three main functions, namely;

(1) Improve the efficiency,

(2) create equity and justice, and

(3) promote economic growth and maintain macroeconomic stability

Good government should always strive to improve market failures, for example by preventing monopolies and negative externalities (e.g. pollution) in order to achieve efficiency. The government must also fight for equality through taxation and redistribution of income for a particular group or community. The government should use the tax, spending and monetary policy to achieve economic stability and growth, reduce the rate of inflation and unemployment, and spur overall economic growth. But, while assessing the role of government in addressing economic problems, Also to look out for the possibility of government failure which can lead to more severe problems.

According to Jones (1996) the role of government can be classified into two, namely direct and indirect. Direct control of them is a matter of government revenue and expenditure. While the controls are not directly related to issues such as inflation, the rate of economic growth, the unemployment rate and the exchange rate.

Government Expenditure Policy

There are various instruments used by the government to influence the economy, one of them is spending or government expenditure. In the development model of the development expenditure which was developed by Rostow and Musgrave (Mangkoesoebroto, 1999) that in the early stages of economic development, percentage of government investment to total investment is huge. This is caused because at this stage the government should provide infrastructure. Role of government remains the intermediate stage because of the greater role of the private sector is much cause market failure.

However, according to Hyman (1999.397) there is a thing that a major problem in the state, namely in terms of distribution used in financing costs for the provision of public goods within the community. There is no way that you can give satisfaction to all levels of society. Taxation as a major component of financing is one of the impact of political impact and efficiency of the market mechanism.

In the context of developing economies, the role of fiscal policy is to stimulate the rate of capital formation. Fiscal policy also plays an important role in the development plan of the least developed countries. In the planning, a balance must attain both in real terms and in terms of money. In other words, physical plan must be tailored to the financial plan. Implementation of the financial plan and the achievement of balance in real terms and obviously a lot depends on the financial fiscal measures (Jhingan, 473).

Regional Economic Growth

Understanding economic growth is often distinguished from economic development. Economic growth is intertwined with the increased production of goods and services in economic activities, while development implies a broader. The development process includes a change in the composition of production, changes in patterns of use (allocation) of resources among the production sectors of economic activity, changes in the pattern of distribution of wealth and income among the various groups of economic actors, changes in the institutional framework in the life of society as a whole (Djojohadikusumo, 1994).

However, economic growth is a key feature in the development process, this is necessary due to the fact the population increases. Population growth by itself will increase the need for food, clothing, shelter, education and health services (Djojohakusumo, 1994).

The existence of a close link between economic growth and development, also point in the history of the emergence of theories of economic development. According to Todaro (1998) in the economic development literature after World War II, there are five main approaches in the schools of thought about the theories of development the linear model of gradual growth, structural development model, a model of international dependency, neoclassical counterrevolution free markets, and endogenous growth models.

Gradual linear growth model emphasizes on the understanding that the development process is a series of successive stages of economic growth, and also highlighted development as a combination of savings, investment and foreign aid. One of the stages that must be passed is the take-off stage, which marked by the mobilization of savings described by the mo-del Harrod-Domar growth. The model was developed further structural change and international dependence more on the differences between the two ideological differences.

Growth model developed in the next stage is the neoclassical growth model, where the Solow growth model into pillars. Solow found that output growth comes from three factors; increase in the quantity and quality of labor (through population growth and the improvement of education), additional capital (through savings and investment) and technology improvements. Most of the growth comes from the things that are exogenous or processes that are independent of technological progress (Todaro, 1998).

Weaknesses found in neoclassical theory is that the impact of technology cannot be fully controlled by economic factors, resulted in the emergence of a new growth model that endogenous growth. This model is still based on a model developed by the neoclassical, but contrary to the opinion of the neo classical, endogenous growth models recognize and encourage the active participation of the government in managing the economy.

Blakely (1994) also noted the importance of the role of government, by suggesting a number of factors that influence regional development. These factors are natural resources, labor, capital investment, entrepreneurship, transportation, communication, industry composition, technology, export markets, the international economic situation, the capacity of local governments, government spending and support development.

Members of the Economic Crisis in Europe

noreply@blogger.com (Economy Opinion) — Mon, 31 Dec 2012 22:39:00 +0000

Economic crisis in the European continent after the crisis that hit America. Market participants gave a negative sentiment toward the European continent. The crisis caused by the budget deficits in the European continent is growing and could almost be said to fail to pay. The crisis in the American continent to make the Euro zone economies affected.

Europe's crisis is a crisis caused by budget deficits in several countries in continental Europe. Starting from the Greek government deficit was followed by several other euro zone countries. Opinion growing that Greece is a cause of the economic crisis in. Opinion growing that Greece is a cause of the economic crisis in Europe. According detik.com European crisis that began with the Ireland According detik.co European crisis that began with the Ireland. Ireland developed country and has the government's budget is financed by debt. Budget which is owned by the Irish government as loan debt comes from loans "subprime mortgage", when the housing market experienced a saturation point it directly affected the Ireland. To cover the government debt, the bank cannot provide a new debt.

Greece is a problem for euro zone. According Nurlaila Lela Wati in "The Greek Crisis and Its Impact on Indonesia's Economy Saying" Greece is a country that has experienced several budget deficit. The budget deficit occurred in the time of King Dionisus Elder Elder who took office in 407-367 BC. The story of the failure of Greece to manage fencing continues until the Modern world. Greek 1843 budget deficit for the first time in the modern era. To cover the debt due to the budget deficit in 1843, Greece took steps to debt to Russia policy, France and the UK. This is not the first time Greece had a deficit budget in the modern era. When a massive economic depression, Greece is one of the countries hit by the impact of depression tersenut that occurred in 1860, 1894, 1932 and the latest that hit the economy in 2007. Greece joined to use the value of the Euro January 1, 2000.

The main purpose of determining the value of the euro currency is to bring together the economic potential of the countries sharing the existing European region. Expected with currency union could make the European economy could increase. Regional economic integration can be realized through cooperation among states and institutions form one of which is the European Union. The euro came into force on January 1, 1999 when the economic crisis in the Asia Pacific Hit and January 1, 2002 was introduced to the public banknotes and coins. Some countries that use the euro currency values can be seen in the table below.

Table 1

European Members that Use the Euro Currency

Country	Date	Country	Date
German	1 Januari 1999	Portugal	1 Januari 1999
Ireland	1 Januari 1999	Spain	1 Januari 1999
Netherlands	1 Januari 1999	Greece	1 Januari 2001
France	1 Januari 1999	Slovenia	1 Januari 2007
Luxembourg	1 Januari 1999	Cyprus	1 Januari 2008
Austria	1 Januari 1999	Malta	1 Januari 2008
Finland	1 Januari 1999	Slovakia	1 Januari 2009
Belgium	1 Januari 1999	Estonia	1 Januari 2011
Italy	1 Januari 1999

Source: Wikipedia

With the incorporation of the value of the currency can be expected to boost the economy of the member countries. The use of the euro may also provide some additional cost efficiencies loss arising from exchange rate differences, besides that the euro currency could be expected to be the standard international currency in the global investment.

Table 2

Development GDP growth, Inflation and Unemployment Prior to Using the European Currency (percent)

Country	Growth GDP				Inflation				Unemployment
Country	1995	1996	1997	1998	1995	1996	1997	1998	1995	1996	1997	1998
German	1.67	0.79	1.73	1.86	2.00	0.63	0.26	0.58	8.10	8.89	9.80	9.19
Ireland	9.63	9.45	10.91	7.80	3.03	1.03	4.37	7.23	12	11.69	10.19	7.69
Netherlands	3.11	3.40	4.27	3.92	2.06	1.29	2.63	1.91	7.19	6.40	5.5	4.40
France	3.96	3.56	6.20	5.03	1.23	1.46	0.91	1.03	11.80	12.39	12.60	12.10
Luxembourg	1.43	1.51	5.93	6.49	2.33	2.98	-1.87	-0.41	2.90	3.29	2.5	2.79
Austria	3.99	3.99	3.90	4.52	1.813	0.811	-0.22	0.32	3.70	4.09	4.19	4.19
Finland	3.96	3.56	6.20	5.03	4.52	-0.36	1.99	3.41	15.30	14.39	12.60	11.99
Belgium	2.38	1.42	3.73	1.92	1.22	0.37	0.87	1.87	12.5	13.80	12.69	14.30
Italy	2.88	1.13	1.86	1.44	4.92	4.79	2.56	2.66	11.69	11.89	12	12.10
Portugal	4.28	3.68	4.40	5.13	3.42	2.34	3.92	3.79	7.19	7.30	6.90	4.90
Spain	2.75	2.41	3.86	4.46	4.93	3.45	2.38	2.48	22.70	22	20.60	18.60

Sumber: World Bank

From the above table we can see how the growth of the countries in continental Europe prior to using the Euro. Of the three variables presented above (GDP growth, Inflation, and the total unemployment) of tahun1995 to 1998. Germany is one of the initiators of the Euro currency was formed it can be seen how the growth of GDP, stable inflation, and the total number of unemployed an average of 8%. German is one of the initiators of the Euro currency was formed it, we can see how the GDP growth, stable inflation, and the total number of unemployed an average of 8%.

Table 3

Development of GDP growth, inflation and unemployment before using the European currency(percent)

Country	Growth				Inflation				Unemployment
Country	1999	2000	2001	2002	1999	2000	2001	2002	1999	2000	2001	2002
German	1.87	3.05	1.51	0.01	0.19	-0.67	1.12	1.43	8.39	7.69	7.80	8.60
Ireland	9.91	9.29	4.79	5.87	4.78	7.01	6.48	5.01	5.80	4.30	3.70	4.19
Netherlands	4.68	3.94	1.92	0.07	1.77	4.12	5.09	3.82	3.59	2.70	2.09	2.59
France	3.29	3.67	1.83	0.92	0.17	1.57	2.01	2.21	12	10.19	8.60	8.69
Luxembourg	8.42	8.44	2.51	4.09	5.32	2.01	0.07	2.07	2.40	2.29	1.79	2.59
Austria	3.53	3.68	0.857	1.69	0.28	0.91	1.87	1.23	3.70	3.5	3.59	4
Finland	3.90	5.32	2.28	1.83	0.93	2.60	3.01	1.27	10.10	9.69	9.10	9
Belgium	3.53	3.66	0.80	1.35	0.31	1.97	2.05	2.00	8.60	6.59	6.19	7.5
Italy	1.45	3.65	1.86	0.45	1.79	1.94	2.87	3.20	11.69	10.80	9.60	9.19
Portugal	4.07	3.91	1.97	0.76	3.29	3.25	3.57	3.74	4.40	3.90	4	5
Spain	4.74	5.04	3.66	2.71	2.62	3.39	4.19	4.35	15.60	13.89	10.5	11.39

Source: World Bank

After using the euro currency can be expected growth in Europe has increased from before to use the value of the euro currency. The table above we can see how the economic indicators of the countries that joined the euro currency. In economic indicators use the value of the Euro is looking real results yet. Relationships difference between before and after using the euro currency have not looked at all.

Chart 1

Euro Currency Movements 2004-2011

Sumber: Google Finance

Table 4

Euro Exchange Rate to Other Currencies

Currency	1999	2000	2001	2002	2003	2004	2005
Pound S	0.65	0.60	0.62	0.62	0.69	0.67	0.68
US Dollar	1.06	0.92	0.89	0.94	1.13	1.24	1.24
Ind Rupiah	8,386	7,736	9,167	8,785	9,685	11,127	12,072
Japanese Yen	121.3	99.47	108.6	118.0	130.9	134.4	136.8
Singapura Dollar	1.80	1.59	1.60	1.69	1.97	2.10	2.07

Source: Eurostat

One of the main causes of the euro zone currency crisis is no set standard criteria that have been agreed upon. Based on criteria agreed upon is where government debt should not exceed 60% of GDP at the end of fiscal year, government fiscal deficit should not exceed the predetermined threshold of 3% of GDP.

Table 5

The Growth of Government Debt European Union (percent)

Country	2004	2005	2006	2007	2008	2009	2010	2011
German	-3.8	-3.3	-1.6	0.2	-0.1	-3.1	-4.1	-0.8
Ireland	1.4	1.7	2.9	0.1	-7.4	-13.9	-30.9	-13.4
Netherlands	-1.7	-0.3	0.5	0.2	0.5	-5.6	-5.1	-4.5
France	-3.6	-2.9	-2.3	-2.7	-3.3	-7.5	-7.1	-5.2
Luxembourg	-6.5	-7.9	-9.4	-5.1	-3.7	-4.6	-4.4	4.3
Austria	-4.4	-1.7	-1.5	-0.9	-0.9	-4.1	-4.5	-2.5
Finland	2.5	2.9	4.2	5.3	4.4	-2.5	-2.5	-0.6
Belgium	-0.1	-2.5	0.4	-0.1	-1.0	-5.5	-3.8	-3.7
Italy	-3.5	-4.4	-3.4	-1.6	-2.7	-5.4	-4.5	-3.9
Portugal	-4.0	-6.5	-4.6	-3.1	-3.6	-10.2	-9.8	-4.4
Spain	-0.1	1.3	2.4	1.9	-4.5	-11.2	-9.7	-9.4

Source: Eurostat

The table above illustrates how the government's financial deficit in the various member countries of the euro zone. Fiscal deficit has been instituted should not exceed 3% of GDP akantetapi decree was violated by several member states of the European Union that led to the financial crisis lasts. To cover the budget deficit caused by budget, member states continue to debt. The table above illustrates how the government's financial deficit in the various member countries of the euro zone.

Table 6

The Budget Deficit of the European Union Member Governments

Country	2001	2002	2003	2004	2005	2006	2007	2008	2009	2010	2011
German	59.1	60.7	64.4	66.2	68.5	68	65.2	66.8	74.5	82.5	90.5
Ireland	35.2	32	30.7	29.5	27.3	24.6	25.1	44.5	64.9	92.2	106.4
Netherlands	50.7	50.5	52	52.4	51.8	47.4	45.3	58.5	60.8	63.1	65.5
France	56.9	58.8	62.9	64.9	66.4	63.7	64.2	68.2	79.2	82.3	86
Luxembourg	6.3	6.3	6.1	6.3	6.1	6.7	6.7	14.4	15.3	19.2	18.3
Austria	66.8	66.2	65.3	64.7	64.2	62.3	60.2	63.8	69.2	72	72.4
Finland	42.5	41.5	44.5	44.4	41.7	39.6	35.2	33.9	43.5	48.6	49
Belgium	106.5	103.4	98.4	94	92	88	84	89.2	95.7	95.5	97.8
Italy	108.2	105.1	103.9	103.4	105.7	106.3	103.3	106.1	116.4	119.2	120.7
Portugal	53.8	56.8	59.4	61.9	67.7	69.4	68.4	71.7	83.2	93.5	108.1
Spain	55.6	52.6	48.8	46.3	43.2	39.7	36.3	40.2	53.9	61.5	69.3

Source: Eurostat

The table above illustrates the growth of the debt of member countries that joined the EU in. Debt-added growth in member countries of the European UNI break the 2-digit or agreements that exist within the European Union. Luxembourg is a member of UNI European countries have added debt under a single-digit increase. This indicates that the European Union has financial problems. Judging from the growth of GDP, countries that joined the European Union has a very high growth prior to the economic crisis in the euro zone.

Tabel 7

European Economic Growth Forecast

Coutry	2004	2005	2006	2007	2008	2009	2010	2011	2012*	2013*	2014*
German	1.2	0.7	3.7	3.3	1.1	-5.1	4.2	3	0.8	0.8	2
Ireland	4.4	5.9	5.4	5.4	-2.1	-5.5	-0.8	1.4	0.4	1.1	2.2
Netherlands	2.2	2	3.4	3.9	1.8	-3.7	1.6	1	-0.3	0.3	1.4
France	2.5	1.8	2.5	2.3	-0.1	-3.1	1.7	1.7	0.2	0.4	1.2
Luxembourg	4.4	5.3	4.9	6.6	-0.7	-4.1	2.9	1.7	0.4	0.7	1.5
Austria	2.6	2.4	3.7	3.7	1.4	-3.8	2.1	2.7	0.8	0.9	2.1
Finland	4.1	2.9	4.4	5.3	0.3	-8.5	3.3	2.7	0.1	0.8	1.3
Belgium	3.3	1.8	2.7	2.9	1	-2.8	2.4	1.8	-0.2	0.7	1.6
Italy	1.7	0.9	2.2	1.7	-1.2	-5.5	1.8	0.4	-2.3	-0.5	0.8
Portugal	1.6	0.8	1.4	2.4	0	-2.9	1.9	-1.6	-3	-1	0.8
Spain	3.3	3.6	4.1	3.5	0.9	-3.7	-0.3	0.4	-1.4	-1.4	0.8

Source: Eurostat

European member states would be expected to experience relatively little growth in 2014. Luxembourg which has a budget deficit and debt are relatively small growth predicted to be relatively small growth of below one per cent. This is because the member states of the European Union have an impact on defaulted debt.

Development of the Country's GDP and Inflation in Post-Crisis East Asia Pacific Economic Asia, Europe and America

noreply@blogger.com (Economy Opinion) — Sat, 29 Dec 2012 03:17:00 +0000

There are some interesting lessons about the financial crisis in East Asia Pacific. Before the financial crisis that hit East Asia Pacific, East Asia Pacific region is one of the most have a great potential of the economy. Southeast Asia (Indonesia) has a nickname as the "Asian Tigers" before the crisis came the East Asia Pacific region. The crisis that struck in 1997 has killed the economy of East Asia Pacific region itself (Southeast Asia). Many companies are experiencing financial difficulties due to the closure and the wave of rising unemployment in Southeast Asia. The decline of the East Asia crisis Pacific continue to improve. Build a system that has been damaged due to the financial crisis to economic crisis in the European Union and the United States.

The economic crisis in East Asia Pacific region began in 1997 in the State of Thailand, where in the June 1997 value of the currency and the value of stock markets in Thailand has decreased. In 1995, Thailand experienced a growth rate of 9% and on 14 to 15 May 1997 occurred speculation massive and currency values Thailand (Bath) fall in the market. After Thailand affected by the crisis due to the speculation of the currency and weaken the value of the currency in one after another by the Philippines. To maintain the stability of the Philippine currency (Peso) Philippine central bank authorities raised interest rates from 15% to 24% in one night. Followed by Hong Kong, South Korea, Malaysia, Indonesia, Singapore, and Laos. Malaysia is the fastest country in dealing with the crisis in East Asia for refusing cooperation with the IMF package and the crisis in Indonesia is not only hurting the economy, social and security, too distracted (Read More: 1997 Asia Financial Crisis).

Chart 1

GDP Growth and Inflation in East Asia Pacific

Source: World Bank

Tabel 1

GDP Growth in East Asia Pacific 1990-1999(annual %)

Coutry	1990	1991	1992	1993	1994	1995	1996	1997	1998	1999
Indonesia	9.00	8.93	7.22	7.25	7.54	8.40	7.64	4.70	-13.12	0.79
Malaysia	9.01	9.55	8.89	9.89	9.21	9.83	10.00	7.32	-7.35	6.13
Vietnam	5.105.10	5.96	8.65	8.07	8.84	9.54	9.34	8.15	5.76	4.77
Philippines	3.04	-0.58	0.34	2.12	4.39	4.68	5.85	5.19	-0.57	3.08
China	3.80	9.20	14.20	14.00	13.10	10.90	10.00	9.30	7.8	7.6
Thailand	11.17	8.56	8.08	8.25	8.99	9.24	5.90	-1.37	-10.51	4.44

Source: World Bank

The above graph that describes the relationship between GDP and inflation when the economic crisis hit East Asia and the Pacific. GDP experienced negative growth (-1.06%) while 1.57% Inflation rate according to the world bank report. In Asia Pacific, Indonesia Inflation accounts for East Asia and the Pacific region of negative GDP. China one of the countries that are not directly affected by the economic crisis in East Asia and the Pacific. In the Middle of the economic crisis in East Asia Pacific, China GDP growth are positive although down from last year.

Table 2

Inflation GDP Deflator in East Asia Pacific 1990-1999(annual %)

Coutry	1990	1991	1992	1993	1994	1995	1996	1997	1998	1999
Indonesia	7.72	8.83	5.36	8.88	7.78	9.70	8.85	12.57	75.27	14.16
Malaysia	3.81	3.58	2.41	3.99	3.94	3.63	3.68	3.48	8.50	0.05
Vietnam	42.10	72.55	32.63	17.41	16.95	17.04	8.70	6.60	8.84	5.73
Philippines	12.97	16.53	7.93	6.83	9.99	7.55	7.66	6.22	22.38	6.59
China	5.84	6.85	8.24	15.12	20.61	13.74	6.44	1.51	-0.86	-1.25
Thailand	5.77	5.75	4.49	3.29	5.21	5.59	4.01	4.06	9.24	-4.04

Source: World Bank

The year 2000 was a new age for the cleanup of the economic crisis in East Asia Pacific. Heavy burden in repairing the destruction of the economy was due to the 1997 crisis. To restore public confidence in the economy, various ways the policy implemented by the government. Many policies have been taken both populist policies and populist policies that are not even in creating economic stability.

Table 3

GDP Growth in East Asia Pacific 2000-2007 (Annual %)

Coutry	2000	2001	2002	2003	2004	2005	2006	2007
Indonesia	4.92	3.64	4.50	4.78	5.03	5.69	5.50	6.35
Malaysia	8.86	0.52	5.39	5.79	6.78	5.33	5.59	6.30
Vietnam	6.79	6.89	7.08	7.34	7.79	8.44	8.23	8.46
Philippines	4.41	2.89	3.65	4.97	6.70	4.78	5.24	6.62
China	8.40	8.30	9.10	10.00	10.10	11.30	12.70	14.20
Thailand	4.75	2.17	5.32	7.14	6.34	4.60	5.09	5.04

Source: World Bank

Of the several measures taken by the government in the East Asia Pacific, could increase GDP from negative in 1998 to positive and lower double-digit inflation to single digit. The year 2000 was the year in which the country in East Asia Pacific region to clean up, where homework should be completed soon after the crisis.

Table 4

Inflation GDP Deflator in East Asia Pacific 2000-2007 (Annual %)

Coutry	2000	2001	2002	2003	2004	2005	2006	2007
Indonesia	20.45	14.30	5.90	5.49	8.55	14.33	14.09	11.26
Malaysia	8.86	-1.58	3.13	3.30	6.01	8.86	3.98	4.88
Vietnam	3.41	1.95	3.94	6.69	8.18	8.19	7.27	8.24
Philippines	5.71	5.55	4.16	3.20	5.52	5.83	4.95	3.09
China	2.06	2.05	0.58	2.61	6.91	3.93	3.79	7.60
Thailand	1.35	2.07	0.82	1.33	3.13	4.49	5.24	3.45

Source: World Bank

The crisis in the USA and Europe to bring harm to the economy of Southeast Asia and East Asia Pacific region as a whole. Crises in developed countries initially occurred in the Americas, America is a country known for having abundant capital. In 2001-2005, United hit by the crisis is prolonged. The crisis that originated from the Subprime Mortgage result of default (non-performing loans in the housing sector) and this kind of company bankruptcies. European crisis caused by the threat of default on European countries; Greece, Ireland, Portugal, and Greece.

Table 5

GDP Growth in East Asia Pacific 2008-2011 (Annual %

Coutry	2008	2009	2010	2011
Indonesia	6.01	4.63	6.20	6.46
Malaysia	4.83	-1.51	7.15	5.08
Vietnam	6.31	5.32	6.78	5.89
Philippines	4.15	1.15	7.63	3.91
China	9.60	9.20	10.40	9.30
Thailand	2.48	-2.33	7.81	0.08

Source: World Bank

Many analysts say that Southeast Asia will grow even slightly slowing. As quoted from VOA Indonesia "Shining in the East Asian Companies Corporate Global Crisis". She Southeast Asia are expected to increase by 16.2 percent in quarterly profit. Differences with China and the Asia Pacific region such as Australia which depends on the purchasing power is now very weak. Economic growth in the region is expected to be driven by domestic consumption, driven by fiscal spending, private investment and increased wages. Economic growth in South East Asia will grow 6.5% in 2011 and that number is the highest number since 1996, quoted from the BBC (Indonesia's economy grows at fastest pace in 15 years).

Tabel 6

Inflation GDP Deflator in East Asia Pacific 2008-2011 (Annual %)

Coutry	2008	2009	2010	2011
Indonesia	18.15	8.27	8.11	8.40
Malaysia	10.39	-5.99	4.08	5.46
Vietnam	22.14	6.03	11.86	20.86
Philippines	7.55	2.77	4.22	4.06
China	7.80	-0.59	6.68	7.75
Thailand	3.93	1.95	3.66	4.23

Source: World Bank

It is the growth of the East Asia Pacific region, when the crisis hit the region. Where GDP has decreased to a negative growth and double-digit inflation. Having passed the crisis in the region, disaster came from the Americas and Europe which is the country forward. Financial difficulties default problem has destroyed the continent of Europe and the United. East Asia Pacific region can still grow slowly as it gets lessons from previous crises in 1997.

Efficiency and Effectiveness of Financial Management System

noreply@blogger.com (Economy Opinion) — Thu, 27 Dec 2012 18:57:00 +0000

In a country with vast areas requires a system of good governance. The system is highly required at least by two things: one as a tool to implement a variety of public service in various areas, both as a tool for local communities to participate actively in determine the direction and how to develop their own standard of living in harmony with the opportunities and challenges faced in the corridors of national interest.

In order to run the administration, community service and development, the government is essentially carries three main unctions, namely:

- Allocation functions, including economic resources in the form

of goods and services for the community;

- Distribution function of development;

- Stabilization function which includes, defense and monetary

economics.

One important aspect of the implementation of regional autonomy and decentralization must be carefully regulated is a matter of financial management and the local budget (Budget). Where budget is an annual financial discretion of local government which is based on statutory provisions in force, and various other considerations with a view to the preparation, monitoring, control and evaluation of regional revenue budget expenditure is easy to do. On the other hand the local budget may also be a means for certain parties to see or know the local capacity both in terms of revenue and the expenditure side while from the regular budget is one alternative that can stimulate continuity and consistency in the overall development towards achieving the mutually agreed goals. Therefore, a routine activity to be carried out is one aspect that determines the success of the development.

Development of the budget, especially in the area of income can be a basis for planning short-term (one year) with the assumption that growth will happen in the next year is relatively equally. Revenue is a reflection of the economic potential of the region, for it is no exaggeration when the central government made the PAD as a major criterion in granting autonomy.

In order to achieve local autonomy and decentralization wide, real and responsible financial management areas needed economic, efficient, effective, transparent and accountable. Elements of local financial management is required to control the financial policy area covers
- Accountability;
- Value for money;

- Honesty in managing public finances;

- Transparency;

- Control;

In the framework of public accountability, local governments to optimize budgets done efficiently and effectively to improve the welfare of the community. Experience shows that during the financial management area is still alarming. Budget spending areas especially areas not able to act as an incentive to push the pace of development in the area. In addition, are common complaints relating to the allocation of the budget that does not comply with the requirements and reflect the priorities as well as less economic aspects, efficiency and effectiveness.

Viewed from the aspect of the community with an increase in public welfare services and the better it can increase people's demands for good government, it is a challenge for the government to work more efficiently and effectively, especially in providing service to the entire community. In support of excellent service improvement should be supported by the funding of the apparatus, where it should be supported by the original receipt acceptance especially areas.

According to Jones and Pendlebury (1996: 53) is the local budgets of local government plans are realized in cash during the period (one year). The budget is used as a tool to determine the amount of spending, aid decision-making and development planning, authorizing expenditure in times to come, resource development of standard measures to evaluate performance and as a tool to motivate employees and equipment coordination for all activities of the various units.

According to Baridzwan, (1998: 3), understanding the system is a framework of procedures interconnected prepared in accordance with a comprehensive scheme, to carry out an activity or a major function of an organization, while procedures that are interconnected prepared in accordance with the overall scheme is a sequence of clerical work, usually involve multiple people in one or more sections, designed to ensure uniform treatment of the transactions that occur in an organization.

Local financial management means taking care of and managing the area itself is based on the principles according to Devas, et al (1989: 279-280) are as follows;

- Accountability

- Able to meet financial obligations

- Honesty

- Effectiveness and efficiency

- Control

Author: Supratman

Graduates Master in Development

Economics at Gadjah Mada University

(1999)

Fatwa on Islamic Capital Market

noreply@blogger.com (Economy Opinion) — Wed, 26 Dec 2012 16:59:00 +0000

The Law on sharia-based capital market in Indonesia has been passed by the Parliament and the Government in 2008, but the Islamic capital market in Indonesia has been running for eleven years. Beginning from the Southeast Asia financial crisis in 1997, capital market in Indonesia for the first time based syaria was launched on July 3, 1997 by Islamic Mutual Funds issued for the first time by PT. Danareksa Investment Management. (Read My Posts on; History of Islamic Capital Market in Indonesia).

At the beginning of its development, Islamic Capital Market in Indonesia does not have a specific legal basis and refers to the Law No. 8/1995 on Capital Market. It proved fatwa was first issued by the National Sharia Board Indonesian Ulema Council on Guidelines for Mutual Fund Investing for Sharia. Fatwa No. 20/DSN-MUI/IV/2001 issued by the National Council of Ulema Indonesia Sharia caused by the growing capital market products. Starting from Sharia Reksadan issued by PT. Danareksa Investment Management and there are several Islamic capital market products before Fatwa No. 20/DSN-MUI/IV/2001.

In the July 3, 2000 release by PT Jakarta Islamic Index. Indonesia Stock Exchange in cooperation with PT. Danareksa Investment Management. With the launch of the Islamic capital market products that both, without any certainty about the legal instrument in the world capital market Sharia, This can lead to deviations Shariah compliant. Indonesian Ulema Council as an organization in the field of religion which gained trust by the government to give a fatwa or Islamic foundation. The edict No. 20/DSN-MUI/IV/2001 gives rules for market participants although a little late. Certainty makes stakeholders to act decisively against the existing market players.

With the enactment of Fatwa No. 20/DSN-MUI/IV/2001 adds interest to market sharia-based capital to invest in Indonesia. Islamic capital market products in Indonesia continue to experience growth. Such as the 2003 launch of the Islamic capital market in Indonesia and in 2004 the issuance of Islamic bonds for the first time.

With the development of Islamic products in Indonesia, making the rules of the game need to be improved in the Islamic capital market. It is necessary to increase confidence in the capital market investors. There are several fatwas issued by the National Council for the Islamic Ulema Council Indonesia provide these beliefs. Eleven Fatwa issued by the National Council of the Islamic Ulema Council Indonesia in 2001-2011. Fatwa can be seen in the table below;

Table 1

Fatwa on Islamic Capital Market

Number of Fatwa	Explanation
20/DSN-MUI/IX/2001	The Guidelines of Sharia Mutual Fund Investment
32/DSN-MUI/IX/2002	Sharia Bonds
33/DSN-MUI/IX/2002	Shariah Mudharabah Bonds
40/DSN-MUI/X/2003	The Capital Market and the General Guidelines for Implementation of Sharia in the Capital Market
41/DSN-MUI/III/2004	Sharia Ijarah Bonds
59/DSN-MUI/V/2007	Conversion of Sharia Mudharabah Bonds
65/DSN-MUI/III/2008	Concerning of Sharia Preemptive Rights (ER)
66/DSN-MUI/III/2008	Sharia Warrants
69/DSN-MUI/VI/2008	Concerning of the Government Sharia Securities (SBSN)
70/DSN-MUI/VI/2008	The Method of SBSH Issuance
71/DSN-MUI/VI/2008	Sale and Lease Back
72/DSN-MUI/VI/2008	SBSN Ijarah Sale and Lease Back
76/DSN-MUI/VI/2010	SBSN Ijarah Asset To Be Leased
80/DSN-MUI/III/2011	The Implementation of Sharia Principles in The Equity Trading Mechanism at The Stock Exchange's Regular Market

Source: Indonesia Stock Exchange

Eleven years in the way the Islamic capital market in Indonesia, tidal trip Islamic capital market has passed. In 2008 an Act to regulate the Islamic capital market endorsed by the Government and Parliament. Enactment of Law no. 19/2008 on State Sharia slightly delay the course of the Islamic capital market for the past eleven years have passed. Although slightly delayed, market participants appreciate the law issued by the government and Parliament.

After Act No. 19/2008 on State Sharia Securities approved by the government and Parliament, Bapepam-LK has a very heavy duty functionality provided by the Government. Duties and powers of Bapepam-LK contained in the Ministry of Finance KMK No. 606/KMK.01/2005 is build, manage, and oversee the activities of the capital market in Indonesia, both based conventional and Shariah-based. Of its three functions are contained in the Ministry of Finance, Bapepam-LK as the ultimate authority to make rules to run all market participants(Bapepam-LK).

Bapepam-LK. IX.A.13 made first by Bapepam-LK on Issuance of Islamic Securities. Bapepam-LK until the end of 2012 has passed a law three pieces. Bapepam-LK. IX.A.14 of Agreement-Issuance of contract Used in Islamic Capital Market and the rules of the last made by Bapepam-LK on Criteria and Issuance of Sharia Securities List contained in Bapepam-LK. II.K.1. The three rules made Bapepam-LK is a duty and a responsibility given by the Government.

Islamic Banks operating in Indonesia

noreply@blogger.com (Economy Opinion) — Tue, 25 Dec 2012 11:41:00 +0000

Islamic banks in Indonesia started since 1990. For the first time the Indonesian Ulema Council conduct workshops on bank interest in Bogor 18-20 August 1990. The results of the workshop will be taken to the National Congress of the Indonesian Ulema Council 22 to 25 August 1990 in Jakarta. Read More: History of Islamic Banking in Indonesia

In the development of Islamic Banking in Indonesia begins with the establishment of Bank Muamalat Indonesia in 1992, supported by the Association of Indonesian Muslim Intellectuals. Progress Bank Muamalat in Indonesia have ups and downs. When the economic crisis hit the Indonesian nation, Bank Muamalat is the only Islamic bank based in Indonesia not affected escape from the economic crisis in Indonesia.

In the year 1999 was good news issued by the Indonesian government in the regulation of banks. Law No.23/1999 the embryo growing Islamic Bank in Indonesia to 2008, Islamic banks have their own rules to ensure the certainty of the players in the banking sector as stipulated in Law no. 21/2008

The development of Islamic banks can be seen in the table below, there are 11 Islamic Banks in Indonesia since 1999, this indicates that Islamic banks have been received in the premises.

Hopefully with the increase in Islamic Banks in Indonesia can enhance economic growth in the country

Table 1

BUS which operates in Indonesia

Name of Bank	Date of Operate
Muamalat Bank Indonesia	1 May 1992
Syariah Mandiri Bank	1 November 1999
BNI Syariah	29 April 2000
Mega Syariah Bank	25 Augustus 2004
Syariah Bukopin Bank	11 December 2008
BRI Syariah Bank	1 January 2009
Panin Syariah Bank	1 December 2009
Victoria Syariah Bank	1 April 2010
BCA Syariah	5 April 2010
Jabar Banten Bank	6 Mei 2010
Maybank Syariah	October 2010

History of Islamic Capital Market in Indonesia

noreply@blogger.com (Economy Opinion) — Mon, 24 Dec 2012 13:21:00 +0000

The concept of equitable economic continuously developed by practitioners or economists. In 1990, Islamic financial institutions began to be developed in Indonesia to date. Starting from the seminar in 1990, symposium Indonesian Ulema Council (MUI) and to the establishment of the Act 21/2008 on Islamic Banking to provide legal certainty for the actors in it.

Financial economics in Indonesia are not only banking products only, There are several kinds of financial products that are legal in Indonesia, there are several kinds of financial products that are legal in Indonesia. One is based on Islamic Capital Market. The benefits of capital market in Indonesia is very big on feel.

Islamic capital market in Indonesia began in 1997, the publication of the mutual fund for the first time by PT. Danareksa Investment Management. Jakarta Islamic Index (JII) was launched for the first time on July 3, 2000 by the Indonesia Stock Exchange working together with PT. Danareksa Investment Management. Islamic bonds first issued in September 2002 (Bapepam-LK).

PT. Indosat Tbk. The first is a company registered in the Mudaraba Sharia bonds in September 2002. To strengthen Islamic Bonds Mudaraba National Sharia Board-Indonesian Ulema Council issued a fatwa No. 32/DSN-MUI/IX/20002 about Bonds. In 2003 marked the launch of the Islamic capital market in Indonesia and Ijarah Bonds in 2004, PT. Matahari Putra Prima Tbk. for the first time issued Ijarah Bonds (Bapepam-LK).

To enhance the role of Islamic capital markets continues to increase, in 2005 Bapepam-LK designed the master plan to enhance the role of Islamic capital markets. The role of Bapepam-LK did not get here alone in increasing the role of Islamic capital market in Indonesia. in 2006 Bapepam-LK knows issued regulations No.IX.A.14 abut Akad used in the issuance of Islamic securities in the capital market and in 2007 issued regulation No. II.K.1 on Criteria and Issuance of Islamic Securities Listing. 2009 Bapepam LK LK issued two regulations. No. II. K.1 about publishing criteria DES and IX.A.13 issuance of Islamic securities (Indonesia Stock Exchange).

History of Islamic Banking in Indonesia

noreply@blogger.com (Economy Opinion) — Mon, 24 Dec 2012 12:53:00 +0000

Islamic system had begun to develop in Indonesia and the world. This system is a system that can be believed to make economic justice. Started in 1980, the Islamic financial economic studies started in Indonesia. Dawam Rahardjo, A.M. Sefudi, and Amin Aziz are some of the names associated pioneer in the discourse and the issue of the Islamic Economy in Indonesia. MUI (Indonesian Ulema Council) as an Islamic organization in Indonesia held a seminar on Bank Interest and Usury at 18-20 August 1990.

This is the origin of the formation of Islamic system in Indonesia. Results from August 18 to 20 workshops were brought to the National Assembly (General Assembly) to V in Jakarta August 22 to 25, 1990. Bank Muamalat Indonesia is the first Islamic bank in Indonesia with an initial capital of 84 billion rupees. The establishment of Bank Muamalat Indonesia is inseparable from the support of the Indonesian Muslim Intellectuals Association support (ICMI). Bank was formed on 1 November 1991 (Muamalat Indonesia Bank).
The crisis that hit South Asia Region in 1997 made Indonesia affected. Crisis stretcher made several Bank Indonesia liquidity problems. There are some banks that have in the acquisition and there are some banks that had to close his business because of the economic crisis in South East Asia Region.
When the economic crisis of 1997, Bank Muamalat is one bank in Indonesia experienced financial ratios (NPF) reached more than 60%, and recorded a loss of Rp. 105 billion. Equity Bank Muamalat as low as less than a third of the initial deposit capital (Rp 39.3 billion). June 21, 1999 (IDB) has officially become one of the shareholders of Bank Muamalat Indonesia (Muamalat Indonesia Bank)
To strengthen its existence, the government as policy makers spawned Act No. 7/1992 on banking introduce sharing system by adding a PP implementation. No.72/1992 on Bank Profit Sharing. The system used by the Central Bank as the highest national financial institutions are Dual Banking System. The crisis that hit Indonesia and Southeast Asia in general abolished the Act No. 7/1992 and replaced with the new rules, Act No. 10/1998 on Banking. Act No. 10/1998 that allows conventional banks conventional to be Islamic Bank open units in Indonesia.
Birth of Act No. 23/1999 on Bank Indonesia to clarify the duties and authority of Bank Indonesia as the responsibility for the regulation and supervision of the national banking system, including sharia. With the support of Act No. 23/1999 gave birth to the Bureau of Islamic Banking at the Bank in 2001 and then in 2004 upgraded to directorate National Banking. To reinforce the existence of Bank Indonesia in taking the responsibility for banking regulation, it gives birth to Act No. 3/2004 on the amendment of Act No. 23/1999.
Through PBI. 4/1/PBI/2002 regulating the conversion of conventional banks into Islamic banks, conversion of conventional branches into Islamic branches, cash offices Islamic conversion into Islamic branches, sub-branches opening sharia branches opening in conventional and Islamic unit in conventional branch, sub-branches opening in the branches of conventional and Islamic sharia units opening in conventional branch. In 2007 the functions of Islamic banks eased only raise funds to be able to perform an advanced financing and can perform the functions of financing and financial services. The addition of PBI no 9/7/PBI/2007 banking added role of sharia in Indonesia.
The highlight of the development of Islamic banking in Indonesia in 2008 with the publication of Act No. 21/2008 about Islamic Banking, Act generally has several objectives in terms of, ensure legal certainty for Islamic banking (stakeholders) and provide confidence for people to use Islamic products and services.

Differences with Conventional Bank Islamic Bank

noreply@blogger.com (Economy Opinion) — Mon, 24 Dec 2012 12:39:00 +0000

There was no difference in general between commercial banks and Islamic banks are visible. Broadly speaking, the differences were apparent between conventional banks and Islamic banks. The concept of interest, interest is a plus for any capital investment applied by conventional banks, however, in the Islamic concept of interest is forbidden.

The difference between Islamic banks and conventional banks in general can be seen in the table below

Table 1

Differences with Conventional Bank Islamic Bank

Islamic Bank	Conventional Bank
Based on the principle of profit sharing, sale, and lease	Using the device of interest in its operations
Doing investment activities to the halal sector alone	Doing business sector investment into Halal and Haram
Relationships with customers in the form of partnership	Relationships with customers in the form of creditor-debtor
Profit and falah oriented	Profit oriented
There is Sharia Supervisory Board which oversees the banking operations	There are no similar councils

Broadly speaking, the difference between conventional banks and Islamic banks, we can see the table above. From the above table we can see the difference between conventional banks and Islamic banks. Five differences are a starting point the development of Islamic banking in Indonesia and in the world. Developmental differences between Islamic banks and conventional banks continue to grow and form the detailed. The table below we can see the development of the difference between Islamic banks and conventional banks.

Table 2

Differences with Conventional Bank Islamic Bank

Differences	Islamic Bank	Conventional Bank
Functions and Activities of the Bank	Investment managers, investors, social, financial services.	Intermediary units, financial services.
Mechanisms and Business Objects	Anti maghrib (gambling / gambling / speculation, gharar / no element of fraud, usury, bathil / damaged, invalid).	Not firmly opposed to the gambling / gambling / speculation / gharar, riba bathil / defective.
Relationships with Customers	Partnership. Do not value-free. Money as a medium of exchange, not a commodity. Interest is prohibited in many forms. Using the principle of profit-sharing and real transactions.	Lending and borrowing. Value-free. Money as a commodity is maintained. Exchange rate as an instrument against the owner of the money that is set in advance.
Functions and Roles	Institute of intermediary. Investment Agency. Investors. The service provider payment traffic (not against the sharia). Is the policy fund, ZIS (social functioning). The relationship with clients is a partnership (investors reciprocal investment managers).	Intermediary institutions. Collector of public funds and lend it back to the community in exchange for a loan interest. Payment traffic services provider. Customer relationship with the bank is a debtor-creditor relationship.
Business Risks	Faced with the bank to the customer with the principles of justice and fairness. Do not know the difference in the likelihood of negative.	Bank risks not directly related to the debtor, the debtor risks not directly related to bank. The possibility of a negative difference between the income and interest expense.
The Monitoring System	The existence of sharia supervisory board to ensure that operations do not deviate from Islamic banks as well as the demands of morality bank managers and customers in accordance with akhlaqul karimah.	Aspects of morality are often violated in the absence of religious values that underlie its operations.
Profit Sharing	Determination of the amount ratios / profit sharing ratio at the time the contract is made with reference to the possibility of profit and loss The ratio of the results based on the amount of profit earned. For the results depend on the profits of the project being undertaken. If the business loss, the loss will be shared by both parties The number of profit sharing increased with the increase in the number of income There is no doubting the validity of the results	Determination of interest made at the time the assumption should always be profitable. The percentage based on the amount of money (capital) is desired. Fixed interest payments as promised without any consideration of whether the project runs by the customer profit or loss. Total interest payments did not increase even though the amount of profit doubled or economic circumstances are 'booming'. The existence of interest is doubtful (if not condemned) by all religions.

From these two tables are presented, Islamic banks will develop equibilirium achieve within a curve. Hopefully Islamic banks is growing and debate among economists the world can bring economic benefits to the justice

About Sharia Regulation of Indonesia Bank in 2009

noreply@blogger.com (Economy Opinion) — Sun, 23 Dec 2012 16:25:00 +0000

To strengthen of shock in Europe and U.S.A because monetary crisis. Indonesia bank was supreme institution of banking many take a policy. On the one hand to strengthen the national economy and on the one hand to strengthen the National Banking. Islamic banks have grown, to reinforce the existence of the crisis, the Bank of Indonesia has adopted a policy in 2009. The policy presented in the table below;

Table 1

Regulation of Indonesia Bank in 2009

Date	Latter of Number	Explanation
29 January	11/3/PBI/2009	About General of Islamic Bank
19 March	11/10/PBI/2009	About Shariah Unit of Activity
13 April	11/11/PBI/2009	On the Implementation of Activities Using Card Payment
23 April	11/12/PBI/2009	Electronic Money
29 April	11/15PBI/2009	On the Business Activity of Change in Conventional Bank to be Islamic Bank
4 June	11/19/PBI/2009	On Risk Management of Certification for the Management and Officers of Commercial Banks
1 July	11/23/PBI/2009	On Founding Facility in Short Term to Islamic Bank of Financing
7 July	11/29/PBI/2009	On Short-Term Funding Facility for Islamic Banks in Sharia Financing
7 July	11/30/PBI/2009	Intraday Liquidity Facility Based on Sharia
28 Augustus	11/31/PBI/2009	On Fit and Proper Test Islamic Banking and Islamic Business Units

Source: Indonesia Bank

List Fatwa on Islamic Banking

noreply@blogger.com (Economy Opinion) — Sun, 23 Dec 2012 10:17:00 +0000

To Support productivity and credibility on finance institution, Sharia Council of Indonesia Republic (DSN) has issued 43 produce of fatwa in banking institution and non-banking institutional. Fatwas can be on table following, as follows;

Table 1

Islamic Bank of Fatwa

No	Fatwa of Number	Explanation
1	01/DSN-MUI/IV/2000	Current Account
2	02/DSN-MUI/IV/2000	Savings
3	03/DSN-MUI/IV/2000	Deposit
4	04/DSN-MUI/IV/2000	Murabahah
5	05/DSN-MUI/IV/2000	Salam of Buying and Selling
6	06/DSN-MUI/IV/2000	Istitsna of Buying and Selling
7	07/DSN-MUI/IV/2000	Mudharabah Financing (Qiradh)
8	08/DSN-MUI/IV/2000	Musyarakah Financing
9	09/DSN-MUI/IV/2000	Ijarah Financing
10	10/DSN-MUI/IV/2000	Wakalah
11	11/DSN-MUI/IV/2000	Kafalah
12	12/DSN-MUI/IV/2000	Hawalah
13	13/DSN-MUI/IX/2000	Murabahah of Down Payment
14	14/DSN-MUI/IX/2000	Distribution System of Profit Sharing in Finance Sharia of Institution (LKS)
15	15/DSN-MUI/IX/2000	Business of Profit sharing Distribution Principle in Finance Sharia of Institution
16	16/DSN-MUI/IX/2000	Discount Murabahah
17	17/DSN-MUI/IX/2000	Penalties for Customers Capable of a Payment Delay
18	18/DSN-MUI/IX/2000	The Backup on Earning Assets in Finance Sharia of Institution (LKS)
19	19/DSN-MUI/IX/2000	Al-Qardh
20	20/DSN-MUI/IX/2000	Investment Guidelines for Implementation of for Sharia Mutual Funds
21	21/DSN-MUI/X/2001	Takaful General Guidelines
22	22/DSN-MUI/III/2002	Istitsna Selling and Buying of Parallel
23	23/DSN-MUI/III/2002	Piece Repayment of Murabahah
24	24/DSN-MUI/III/2002	Safe Deposit Box
25	25/DSN-MUI/III/2002	Rahn
26	26/DSN-MUI/III/2002	Rahn Emas
27	27/DSN-MUI/III/2002	Al-Ijarah al-Muntahiya bi al-Tamlik
28	28/DSN-MUI/III/2002	Selling and buying of exchange rate (al-Sharf)
29	29/DSN-MUI/VI/2002	Haji Arrangement of Payment in finance Sharia of institution (LKS)
30	30/DSN-MUI/VI/2002	Sharia of current account in payment
31	31/DSN-MUI/VI/2002	Transfer of debt
32	32/DSN-MUI/IX/2002	Sharia of bond
33	33/DSN-MUI/IX/2002	Sharia of bond Mudharabah
34	34/DSN-MUI/IX/2002	L/C Import Sharia
35	35/DSN-MUI/IX/2002	L/C Eksport Sharia
36	36/DSN-MUI/X/2002	Wad’ah Certification of Indonesia Bank
37	37/DSN-MUI/X/2002	Market the bank of interbank Based on Syari’ah Principle
38	38/DSN-MUI/X/2002	Interbank of Market invest in Mudharabah (IMA Certivikation)
39	39/DSN-MUI/X/2003	Hajj Insurance
40	40/DSN-MUI/X/2004	Capital Markets and General Guidelines for Implementation of Sharia in Capital Market
41	41/DSN-MUI/III/2000	Sharia Ijarah Bound
42	42/DSN-MUI/V/2004	Sharia Charge Card
43	43/DSN-MUI/VIII/2004	Indemnity (Ta’widh)
44	44/DSN-MUI/VIII/2004	Multi Service Payment multi Services

Source: Indonesian Ulema Council

2008 Islamic Bank Rules

noreply@blogger.com (Economy Opinion) — Sat, 22 Dec 2012 18:57:00 +0000

There are a number of Bank Indonesia in 2008, to enhance existing Islamic banking activities. In the table below have been issued by the bank PBI Indonesia Indonesian banks as policy makers.

Table 1
2008 Islamic Bank Rules

Year	PBI of Number	Explanation
30 January	10/1/PBI/2008	On Amendment PBI No. 8/5/PBI/2008 about of Banking Mediation
22 February	10/9/PBI/2008	On Amendment of Business General Bank be a BPR license in order to consolidate
28 February	10/10/PBI/2008	On Amendment PBI No. 7/7/PBI/2005 about of resolution of complaints about problems
25 September	10/16/PBI/2008	On Amendment PBI No. 9/19/PBI/2007 About of Implementation Sharia of found and distribution found and services of Islamic Bank within activity
25 September	10/18/PBI/2008	financing restructuring about of Islamic bank and activity of Shariah unit.
16 October	10/23/PBI/2008	Second of amendment PBI No. 6/21/PBI/2004 about of statutory reserves in exchange rate of several bang which implementation activity the shariah principle
16 October	10/24/PBI/2008	On Amendment PBI No. 8/21/PBI/2006 About of asset equality valuation in several bank which business activity implementation in shariah principle
20 November	10/32/PBI/2008h	About of Shariah committee in Shariah
10 December	10/36/PBI/2008	About of Shariah Monetary in Operation

Source: Indonesia Bank