1. Dr Yulizar D. Sanrego, M.Ec & Team Institute for Research & Community Enpowerment (LPPM) www.tazkia.ac.id

2. 1)Overview Bank & Non-Bank Institution 2)Research Objective 3)Research Methodology 4)Problem Decomposition /Model Construction 5)Finding & Discussion 6)Recommendation PRESENTATION AGENDA

3. BANK VS MFI/IMFI The Most Regulated Institution Uncompleted Prerequisite DIFFERENT: Standard/Regulation, GCG, HR Standard DIVERGENCE SHARIA BANKING & MICRO COVERAGE 3 (Purwandono, 2011 – modified)

4. Direktorat Pasar Modal Syariah 4 THE COVERAGE OF SHARIA FINANCIAL INDUSTRY Sharia Financial Industry Finance Service Authority Cental Bank of Indonesia Ministry of Cooperative & SMEs Ministry of Finance DSN - MUI Fatwa Macro Policy Cooperative & Baitul Maal wa Tamwil (BMT) Sovereign Sukuk Negara & Tax 1. Islamic Capital Market; 2. Sharia Insurance; 3. Sharia Multifinace; 4. Sharia Pawnshop. 5. Islamic Microfinance 1. Islamic Capital Market; 2. Sharia Insurance; 3. Sharia Multifinace; 4. Sharia Pawnshop. 5. Islamic Microfinance Act No. 1 - 2013 Act No. 17 - 2012

5. RESEARCH OBJECTIVES

6.  This research is using Analytic Network Process (ANP).  ANP is a new qualitative method approach, which is non-parametric and non-Bayesian, to a decision-making process that provides a general framework in treating decisions without making assumptions about the independence of the elements at a higher level than the elements on the lower level and on the independence of the elements in a level. RESEARCH METHODOLOGY

7. 1.Priority Scale (PS) PS is a scale that shows how important an issue compared to other issues. The higher the priority number, the higher important problem needs to be solved. 2.Rater Agreement (RA) RA is the level of agreement value among respondents in assessing the problem. Priority Scale and Rater Agreement

8. RESEARCH PHASE (1) Model Construction (2) Model Quantification (3) Result Analysis

9. Decomposition Problem Figure DEVELOPMENT POLICY OF IMFS SOLUTION Establishment of Competition Restriction Regulation Establishment of Supporting Entity Regulation Establishment of Operational Standard Operational Assistance Financing Analisys and Risk Management Risk Customer Companion and Capacity Building Sharia Compliance Standard Problem Regulation of Competition Restriction Supporting Entity Regulation Operational Standard Operational Assistance Deposit Guarantee Credit Guarantee IMFS Healthy Rating Financing Ceiling Customers’ Turnover Service Coverage Financial Assistance IT Development Assistance Management Capacity Building & HR Development PROBLEM

11.  Bantuanop = Operational Assistance: Operational support that alignments of government through government programs that are allocated for development IMFS.  Rpenunjang = Supporting Regulation: Supporting regulation is a regulation relating to the establishment and regulation of supporting institutions that are needed to help IMFS to be more established, effective & efficient in their activities.  Rpersaingan = Regulation of Competition Restriction: It is legislation governing competition between IMFS with other financial institutions, especially commercial banks and other large financial institutions.  Standarop = Operational Standard: It is a wide range of technical and operational standards that are being made to maintain service quality of IMFS. IMFS Development Policy (Practitioners)

12.  Omset = Customers’ Restriction : means that there should be clear limits on competition among financial institutions regulated through the turnover of customers who obtain financing from Financial Institutions.  Plafon =Ceiling Financing : It means there should be clear limits on competition among financial institutions regulated through the amount of ceiling financing provided by Financial Institutions to customers.  S-coverage =It is the extent of coverage and the number of financial services institutions. Regulation of Competition Restriction (Practitioners)

13.  Kesehatan = IMFS Healthy : That is the agency that independently and continuously assess the health of IMFS.  Pkredit = Credit Guarantee Institution: Namely the existence of institutions that guarantee loans granted by IMFS to customers.  Psimpanan = Deposit Guarantee Institution: namely the existence of deposit insurance agency that guarantees deposits of IMFS customers. Supporting Regulation (Practitioners)

14.  Standarapmr = Financing Analysis Standard & Risk Manajement: required by IMFS because of the general analysis of financing and risk management among a IMFS with other IMFS are still different; some are already have the standards and some are not.  Standarks = Sharia Compliance Standard: which is a standard that can measure and evaluate sharia compliance of IMFS in its operations.  Standarppn = Customer Companion and Capacity Building Standard: Mentoring and coaching customers is one of the hallmarks of IMFS. The existence of mentoring and coaching clients become more strategic value. However, there is no standard mentoring and coaching for the clients among IMFS. Operational Standard (Practitioners)

15.  IT = IT Development Assistance: The use of IT in the majority of IMFS still limited. This leads to cost and inefficient management both in terms of time, effort and cost.  Permodalan = Financial Assistance: In this case IMFS not have a lender of last resort like banking industry.  Sdm = Management Capacity Building & HR Development: HR of LKMS require multi skills, in addition to skills in terms of collecting and distributing funds. Sharia knowledge and skills on coaching clients is also required. If all are covered by IMFS, it will be very expensive. For IMFS which do not have sufficient funds, automatically it will employ HR with modest quality. Operasional Assistance (Practitioners)

16.  Pembentukanrp = The establishment of Supporting Regulation  Pembentukanrpp = The establishment of Regulation of Competition Restriction inter financial institutions.  Pembentukanso = The establishment of Operasional standard.  Pembentukanbo = The establishment of Operational Assistance. The Solution of IMFS Development (Practitioners)

18.  Bantuanop = Operational Assistance : Operational support that alignments of government through government programs that are allocated for development IMFS.  Rpenunjang = Supporting Regulations: Supporting regulation is a regulation relating to the establishment and regulation of supporting institutions that are needed to help IMFS more established in their activities..  Rpersaingan = Regulation of Competition Restriction: It is legislation governing competition between IMFS with other financial institutions, especially commercial banks and other large financial institutions.  Standarop = Operational Standard: It is a wide range of technical and operational standards are being made to maintain the quality of service of IMFS. IMFS Development Policy (Academicians)

19.  Omset = Customers’ Turn-over: means that there should be clear limits on competition among financial institutions regulated through the turnover of customers who obtain financing from Financial Institutions.  Plafon =Ceiling Financing : It means there should be clear limits on competition among financial institutions regulated through the amount of ceiling financing provided by Financial Institutions to customers.  S-coverage =It is the extent of coverage and the number of financial services institutions. Regulation of Competition Restriction (Practitioners)

20.  Kesehatan = IMFS Healthy : That is the agency that independently and continuously assess the health of IMFS.  Pkredit = Credit Guarantee Institution: Namely the existence of institutions that guarantee loans granted by IMFS to customers.  Psimpanan = Deposit Guarantee Institution: namely the existence of deposit insurance agency that guarantees deposits of IMFS customers. Supporting Regulation (Academicians)

21.  Standarapmr = Financing Analysis Standard & Risk Manajement: required by IMFS because of the general analysis of financing and risk management among a IMFS with other IMFS are still different; some are already have the standards and some are not.  Standarks = Sharia Compliance Standard: which is a standard that can measure and evaluate sharia compliance of IMFS in its operations.  Standarppn = Customer Companion and Capacity Building Standard: Mentoring and coaching customers is one of the hallmarks of IMFS. The existence of mentoring and coaching clients become more strategic value. However, there is no standard mentoring and coaching for the clients among IMFS. Operational Standard (Academicians)

22.  IT = Bantuan Pengembangan IT : Penggunaan IT pada mayoritas LKMS masih terbatas. Hal ini menyebabkan biaya dan pengelolaan yang tidak efisien baik dari segi waktu, tenaga dan biaya.  Permodalan = Bantuan Permodalan : Dalam hal ini LKMS tidak memiliki lender of the last resort layaknya perbankan umum.  Sdm = Pembinaan Managerial dan Pengembangan SdM : SdM dari LKMS memerlukan multi skill, selain skill dalam hal menghimpun dan menyalurkan dana, skill tentang pengetahuan syariah dan pmbinaan nasabah juga diperlukan. Jika semua itu dibebankan pada LKMS maka akan memakan biaya yang tidak sedikit, sedangkan bagi LKMS yang tidak mempunyai cukup dana maka akan mempekerjakan SdM dengan kualitas sekedarnya. Operational Assistance (Academicians)

23.  Pembentukanrp = The establishment of Supporting Regulation  Pembentukanrpp = The establishment of Regulation of Competition Restriction inter financial institutions.  Pembentukanso = The establishment of Operasional standard.  Pembentukanbo = The establishment of Operational Assistance. The Solution of IMFS Development (Academicians)

24. Priority Values & Rater Agreement Analysis

25. Priority & Rater Agreement Value Analysis (IMFS Development Policy Problem)

26. Supporting Institution Regulation (Rater Agreement) ITEMSPRACTITIONERSACADEMICIANSTOTAL AVR R R ASPECT Health Assessor0,3910,510,451 Credit Guarantee0,2930,2330,263 Deposit Guarantee0,3220,2720,292 Rater agreement0,250,310,12

27. Regulation of Competition Restriction (Rater Agreement) ITEMSPRACTITIONERSACADEMICIANSTOTAL AVR R R ASPECT Customers’ Turn-over0,2830,4710,372 Financing Ceiling0,3810,392 1 Service-coverage0,3420,1430,243 Rater agreement0,030,730,053

28. Operational Standard (Rater Agreement) ITEMSPRACTITIONERSACADEMICIANSTOTAL AVR R R ASPECT Financing Analysis & Risk Management Standard 0,3320,3620,352 Sharia Compliance Standard0,4110,3710,391 Mentoring & Coaching Standard0,2630,2730,263 Rater agreement0,090,600,063

29. Operational Assistance (RA) ITEMSPRACTITIONERSACADEMICIANSTOTAL AVR R R ASPECT Management Capacity Building & HR Development 0,461 1 1 IT Development Assistance 0,3220,2230,272 Financial Assistance 0,2230,3220,273 Rater agreement0,250,600,043

30. Problem Solutions Analysis…. ITEMSPRACTITIONERSACADEMICIANSTOTAL AVR R R ASPECT Operational Assistance0,2330,2130,224 Establishment of Supporting Regulation 0,2240,2420,233 Establishment of Competition Restriction Regulation 0,2720,2040,242 Establishment of Operational Standard0,2810,3510,311 Rater agreement0,140,330,09

31.  Problem decomposition shows that the problem of IMFS Development from regulation and institution perspective are consist of four main clusters: No Regulation of Competition Restriction among financial institutions, No Regulation on Supporting Institution, No Operational standard & lack Operasional Assistance.  The PROBLEM of No Regulation on Supporting Institution becomes the main problem with its priority value 0,31, followed by No Operational standard (0,28), No Regulation of Competition Restriction among financial institutions (0,27) and last but not least lack Operasional Assistance(0,14)  In the cluster of No Regulation of Competition Restriction among financial institutions, competition restriction through financing ceiling is the main priority with its priority value 0,39, followed by the restriction through the turn-over with 0,37 and finally service coverage with 0,24. CONCLUDING REMARKS

32.  In the cluster whereby supporting regulation is absence, Supporting regulation in the form of health assessments become the top priority with its priority value 0.45. The second one in this cluster with considerable difference is deposit guarantee regulations with 0.29 and finally is credit guarantee regulation with its priority value 0.26.  In the cluster whereby operation standard is absence, the absence of sharia compliance standard issue is at the top priority with its priority value of 0.39. The second priority with slightly difference is the absence of financial analysis and risk management with 0.35 and finally is credit guarantee regulation with 0.26.  In the cluster whereby operation assistance is minimum, minimum assistance for human resources empowerment is at the top priority with its priority value 0.39. In the second and third priority level with a slightly different, that is sequence minimum assistance of IT with its priority value 0.27 and limited funding assistance with 0.27. Continue…..

33. The research results in the solution cluster suggests that the formation of operational standards become the first priority with its priority value 0.31, followed by the establishment of competition regulation with 0.24, supporting regulation with 0.23 and finally providing operational assistance. In general, it can be seen that the average priority values are slightly different which indicates that the all mentioned solutions have relatively the similar priority value to be further executed. THE SOLUTION….

34. ◦ The government should immediately establish operational standards (particularly sharia compliance issue) since it is urgent to be implemented as a reference for IMFS. Both respondent practitioners and academicians are agreed upon that the establishment of operational standards is the first priority followed by other solutions that have been mentioned above. RECOMMENDATION….

35. والله أعلم بالصواب جزاكم الله على حسن إهتمامكم