TheJakartaPost

Please Update your browser

Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.

Jakarta Post

Combining 'waqf', fintech and venture capital

  • Fauziah R Yuniarti and Hasan Alatas

    -

PREMIUM
Jakarta   /   Tue, September 5, 2017   /  01:40 pm
Combining 'waqf', fintech and venture capital Small and medium enterprises (SMEs) participate in an expo at the Jakarta Convention Centre in Jakarta. (Kompas/Heru Sri Kumoro)

Contributing 60 percent to the gross domestic product (GDP) and 97 percent to the national workforce, small-and medium-scale enterprises (SMEs) are the backbone of the Indonesian economy. Despite their crucial roles, SMEs are still facing persistent issues.

The first issue is that SMEs have limited access to finance. Until 2014, from nearly 60 million SMEs, only 30 percent had access to finance — 23 percent from banks and 7 percent from non-bank financial institutions (NBFIs). Asymmetric information between borrowers and lenders is the major impediment of this terrible condition. 

Having no collateral and financial statements — two common tools to overcome asymmetric information — stifles SMEs’ access to finance.

To surpass this issue, Islam offers an abundance of potential social funds calledwaqf (Islamic end...

Disclaimer: The opinions expressed in this article are those of the author and do not reflect the official stance of The Jakarta Post.