1. Introduction

This paper aims to describe an urgent condition which is the reason for the necessity or not the need to carry out systematic and comprehensive compilation of various written regulations in the field of Islamic economic law, so that it becomes one of the elements in (national) legislation.

The idea towards the codification of sharia economic law received the attention of various parties, especially those interested in and observers of sharia economic law, so that this topic intends to discuss the extent to which thoughts of codifying Islamic economic law can be implemented within the framework of the national legislative system.

Some objective facts of the application of sharia economic systems that encourage the need for the establishment of sharia-oriented economic law fundamentals can be stated by mentioning some historical developments as follows:

2. Historical Development of Sharia Economic Application

According to Frank E Vogel & Samuel L. Hayes, who discussed Islamic law and finance, the initial thought of Islamic finance was not an invention (invention) of this century, which was marked by an Islamic political movement initiated by extreme thinkers (extrimist political movement), but rooted from the commands of the Qur’an and the Hadith of the Prophet Muhammad (PBUH), as well as the thought that inspired the formation of Islamic law in the field of marriage. Over the course of centuries, the ancient financial practices adopted in Islamic countries adopted a system imposed by the colonial forces with regulations established by Western powers. With such a strong influence from Europe, most Islamic countries adopted a banking system and business practices that were dominated by the Western system. It can be said that the beginning of the implementation of the Islamic financial system of the modern period is now happening along with the independence of Islamic countries after the Second World War. [1]

Based on existing records, the first Islamic financial institution was the Mit Ghamr project which was founded in Egypt in 1963, which was immediately followed by the Nasser Social Bank in 1971. The founding of the Islamic Development Bank (1973) initiated by the Islamic Conference Organization (OIC), which the shares are partly held by the government and partly by the private sector, are the building blocks of the modern banking system. Encouraged by the desire to break away from Western-dominated politics and culture and the desire to implement something based on Sharia principles, in various countries, several banks have been established based on Sharia principles.

The idea of ​​an Islamic economic system departs from the concerns of the Islamic world regarding the application of the interest system to conventional banks which some Muslims consider to be included in the category of usury. Therefore, in the 70s, when for the first time thought emerged about the Islamic economic system in the International Conference on Islamic Economics in Mecca in 1976. [2]

Institutions offering Islamic financial services began to emerge in the 1960s remotely, but the Islamic banking and financial movement gained momentum of growth with the establishment of the Dubai Islamic Bank and the Islamic Development Bank based in Jeddah in 1975. In its evolutionary process, the initial theoretical model of The two-tier mudaraba was developed into a versatile model that allows Islamic Financial Institutions (IFIs) to conduct trade and financing businesses to benefit and distribute the same share to depositors / investors. To complete the Islamic financial cycle, institutions began to emerge that offered Takaful services in 1979 as a substitute for the modern insurance system. [3]

In addition to the increasing involvement of Shariah experts, the creative work of research institutions such as IRTI (IDB), and the issuance of Sharia Standards by AAOIFI (Bahrain) which provides a foundation for financial discipline that is starting to develop, the participation of major world banking institutions such as HSBC, BNP Paribas and Citigroup in the year The 1990s provided the driving force to transform from a small scientific discipline into a global industry. The establishment of the Islamic Financial Services Board (IFSB) in 2002 which functions as an institution that determines Islamic financial standards that paves the way for Islamic Finance as a globally acceptable proposition. It provides encouragement for the promotion and standardization of financial operations from the Islamic Financial Institution (IFI) which includes consultations between regulatory authorities and international financial institutions. The emergence of sukuk as an investment and liquidity management instrument in the past six years has not only tended to complete the investment cycle in a financial structure that is starting to grow, but also provides a driving force for its development with great potential before it. [4]

3. Development of Sharia Legislation in Legislation

From the time of the proclamation until the 1990s, the word sharia was considered taboo to be included in the treasury of the legislation. The stigma of sharia in political and legal discourse is probably due to a phobia (concern) that the implementation of sharia will lead to the formation of an Islamic state, or at least “the obligation to carry out Islamic Sharia for its adherents”, as stated in the Jakarta Charter. However, with the development that occurred in the final fragment of the New Order regime, the government and national legal political policy began to be “tolerant” with the word, so that the sharia stigmatization was slowly erased.

Based on the investigation (provisional) at the Directorate General of Laws and Regulations of the Ministry of Law and Human Rights, there are currently 108 legislation (Laws, Government Regulations, Presidential Regulations, Presidential Decrees, and Bank Indonesia Regulations

The implementation of business activities based on Islamic economic principles achieved significant developments to be observed, at least from the aspect of legislation. In this case, the establishment of sharia legislation in the banking, judicial, securities and limited liability company regulations will be stated.

  1. The pioneering of the national level (financial) implementation of sharia began with the establishment of Bank Muamalat Indonesia, which explicitly provides banking operational services with a profit sharing system (mudharabah). The operation of the Islamic banking system obtains a legal basis of Law Number 10 concerning Amendment to Law Number 7 of 1992 concerning Banking. Then reinforced by Law No. 23 of 1992 concerning Bank Indonesia as amended by Law No. 3 of 2004 concerning Bank Indonesia, which allows the application of monetary policy based on sharia principles. Both of these laws become the legal basis for national banks to implement a dual banking system, namely the use of conventional and sharia banking that runs in parallel. [5] The development of Islamic banks can increase the resilience of the national banking system, but on the other hand, it can bring consequences to legal conflicts caused by the principle differences between the legal provisions applicable to conventional banks and Islamic banks. [6] Considering the breadth of the substance of Islamic banking (for example, licensing, ownership, legal entity form, organizational structure, capital management, type of business activities, bank confidentiality coverage, bank health assessment, sharia supervision, financial markets, money market instruments, liquidation and criminal sanctions) , Dhani Gunawan concluded that the existence of Islamic banking requires a strong legal basis in the form of laws. [7]
  2. On May 7, 2008, Law No. 19 of 2008 concerning State Sharia Securities (SBSN) as a legal basis for the development of Islamic financial instruments. With the recognition of the SBSN as an alternative instrument for financing the state budget, the national legal system has provided a legal basis for efforts to mobilize public funds broadly based on sharia principles. The effort to develop the financing instrument aims to: (1) strengthen and improve the domestic sharia-based financial system; (2) broadening the financing base of the state budget; (3) creating a bench mark of Islamic financial instruments in both domestic and international Islamic financial markets; (4) broadening and diversifying investor base; (5) developing alternative investment instruments for both domestic and foreign investors seeking sharia-based financial instruments; and (6) encouraging the growth of the Islamic financial market in Indonesia. [8] SBSN (Sukuk Negara) which are securities based on sharia principles, so that various forms of sukuk contracts are known in sharia economics (ijarah, mudharabah, musyarakah, istishna ‘, etc.) can be applied based on Law No. 19 of 2008.
  3. The development of business activities based on sharia principles conducted by limited liability companies is one of the reasons for the replacement of Law No. 1 of 1995 concerning Limited Liability Companies with Law No. 40 of 2007. Limited companies that carry out business activities based on sharia principles, in addition to having a Board of Commissioners must have a Sharia Supervisory Board (DPS), which is appointed by the General Meeting of Shareholders (GMS) at the recommendation of the Indonesian Ulema Council. DPS has the duty to provide advice and advice to the Directors and oversee the activities of the Company in accordance with sharia principles. [9] DPS as a corporate organ that accompanies or complements the Board of Commissioners is tasked with supervising so that the company’s activities do not carry out business activities that are contrary to Islamic economic principles (eg the prohibition of usury – interest money or returns obtained from the use of money to get money – speculation – elements of speculation, gambling , and the attitude of chance – and gharar – elements of uncertainty, among others, with submission, quality and quantity.
  4. In line with the development of sharia legislation above, legislation in the field of the judiciary also needs to “adapt”. UU no. 7 of 1989 concerning Religious Courts was amended by Law No. 3 of 2006. One of the juridical considerations for the amendment is the “expansion of the authority of the Religious Courts” on the grounds “in accordance with the development of the law and the needs of the community, particularly Muslim societies.” Thus the scope of the jurisdiction of the Religious Courts covers the fields of marriage, inheritance, wills, grants, endowments, zakat, infaq, shadaqah, and sharia economics. [11][11]

4. Islamic Economics Compilation – MA Regulations

3. Thought and Urgency of Legal Codification

  • Definition of Codification

In Latin, code or codex means “a systematically arranged and comprehensive collection of laws [12] which means a complete set of legal rules arranged systematically. So codification (codification, codificatie,) means the act or work of codifying or compiling laws or regulations into a book of law systematically (to systematize and arrange (laws and regulations) into a code). [13]

Fockema Andreas defines that the codificatie is: “Het samensellen en invoeren van systimatisch ingerichte wetboeken (codices) voor rechtsgebieden van enige omvang. [14]” (compile and bring regular and systematic entry into the law in the field of law with a scope of voor rechtsgebieden van enige omvang. broad).

M.J. Koenen and J.B. Drewes defines codificatie as vereniging van verschillende voorschriften tot een wet; het opstellen van een wetboek [15] (integrating various regulations into a law; compiling a book of laws).

Henry Campbell Black interprets that:

– codification is the process of collecting a and arranging systematically, usually by subject, the laws of a state or country, or the rules and regulations covering a particular area or subject of law or practice …. The product may be called a code, revised code or revised statute. [16] (the process of systematically compiling and compiling state laws or regulations and regulations covering a particular field or subject (content) of law or practice, which is usually according to its subject (content).

– code as a systematic collection, compendium or revision of laws, rules, regulations. A private or official compilation of all permanent laws in force consolidated and classified according to subject matter [17] (a set, compendium, or systematic legal revision. Private or official compilation of all permanent applicable laws that are consolidated and grouped according to their contents. code (among other things) means the law book (wetboek).

From the various quotations above, it can be concluded that codification is the process of collecting and systematically compiling various laws, regulations or regulations in certain fields determined by the state. The product of codification activities can be in the form of a legal book (wet, code).

How to distinguish between codification and compilation (compilation)? Technically juridical of the two terms is rather difficult to distinguish. However, by paying attention to the definition of compilation it can be seen that the word means “a bringing together of pre-existing statements in the form in which they appear in the books, with the removal of sections which have been repealed and the substitution of amendments in arrangement designed to facilitate their use . ”[18] (bringing together existing laws in the format that appears in the book, by removing parts that have been revoked and replacing them from changes with arrangements designed to facilitate their use). So compilation is carried out against various pre-existing rules (preexisting statutes) by explaining which part (article or paragraph) has been revoked following its substitution (replacement).

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Did the codification or compilation make an entirely new law or regulation? From the various definitions above it can be seen that the codification is not basically making new laws or regulations but rather collecting and compiling existing regulations in a particular field systematically. But in historical perceptives, as will be explained below, there is the impression that codification means forming a law or regulation.

  • The Origins of the Codification

Codifying the law is one of the activities of legal development that refers to legal products of the 18th and 19th centuries, which were marked by the birth of the Napoleonic Codification followed by various codifications in Germany, the Netherlands, Italy, and Indonesia. However, the actual activities of legal scientists in the field of codification have existed since the time of the Roman Empire, long before Christ.

In the philosophy of natural law with the background of Plato and Aristotle, there is a theory that the power of a king is based on an agreement made with the people, in essence the people are willing to give up their rights to the king, after they agreed first (pactum subjectivity). Before the agreement was made, they agreed in advance that their rights had been handed over to the pactum unionists. Before the understanding of natural law was developed by Hobbes, Locke and Rousseau who were often respected as the father of verdragstheorie, the common law that shaped the law by emphasizing the moral, political, and sociological factors or conditions of society. Religious and agrarian Rumawi Laws as outlined in juridical normative, in the sense that law is seen as the norm. From beginning to end, the development of Rumawi law was based on codification, that is, which began with a codification called twaalftafelen (table or stone of twelve laws) and ended also with a codification called Corpus Iuris Civilis. [19]

According to Djoklosoetono, the largest codification in the history of law that has no equal up to now, occurred due to the existence of two standal strata called Res Mancipi and Emancipatio, which were realized with a group (group) of patebiers and plebeyers funds that were always in conflict because there were no similarities between the people (standen) called Res Mancipi and Emancipatio. right. The patriciers are in control.

Codification of “Material” Law of Sharia Economics

(1) Historical Background of Legal Codification

(2) Codification of Islamic Law

[1] Frank E Vogel & Samuel L. Hayes, Islamic Law and Finance – Religion, Risk, and Return, (The Hague, Kluwer International, 1998), hal. 4 – 5

[2] Marulak Pardede & Ahyar, Problem Dual Banking System, dalam Buletin Hukum Perbankan  & Kebanksetralan Vol. 3 – 1 April 2005, hal. 13

[3] Muhammad Ayub, Understanding Islamic Finance, A – Z Keuangan Syariah, penerjemah Aditiya Wisnu Abadi, (Jakarta: Kompas Gramedia, 2009), hal. Xxvii – xxviii

[4] Ibid

[5] Pasal 1 angka 3 UU 10/1998

[6] Dhani Gunawan Idat, Analisis Yuridis Pembentukan Undang-Undang Perbankan Syariah, dalam Buletin Hukum Perbankan dan Kebanksentralan, Vol. 3 – 1 April 2005, hal. 2 – 3

[7] Ibid, hal. 11

[8] Penjelasan Umum alinea 2 UU 19/2008.

[9] UU 40/2007, Pasal 109, ayat (1), (2) dan  (3)

[10] Penjelasan Umum, alinea dua, UU 3/2006.

[11] “Pasal 49 UU 3/2006.

[12] The  American Haritage Dictionary, hal. 287

[13] The American Haritage Dictionary, hal. 287

[14] Juridisch Woordenboek, 97

[15] Wolters’ Woordenboek Nederlands, hal. 263

[16] Black’s Law Dictionary, hal. 232

[17] Black’s Law Dictionary, hal. 232

[18] Black’s Law Dictionary, hal. 258

[19] Djokosoetono, Ilmu Negara, Catatan Kuliah yang dihimpun oleh Harun Alrasid, 2006, hal. 146 – 147.


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