Why Did Baitul Maal wa Tamwil (BMT) Discontinue The Linkage Program with Islamic Bank? A Case Study in Indonesia Muhammad Nafik Hadi Ryandono, Denizar Abdurrahman Miraj
Universitas Airlangga
Abstract
Linkage program between BMT and Islamic bank was held by Ministry of Cooperatives in Indonesia since 2009. Bank Indonesia (BI) stated that this linkage program was a relevant strategy to achieve more inclusive financial system through optimizing the role of Islamic banks and potential of BMT who handled Small and Micro Enterprises (SMEs). But in the implementation, this program could only absorb around 58,5% of BMT institutions (BI, 2012). It caused by the consequences of linkage: even though BMT got funding from Islamic banks, but the rate of return they should pay is more expensive then they borrow to BMT member. So that, BMT products become more expensive also then it will push the SME doers as the end user. This study aims to determine the reason why did BMT decide to discontinue the linkage program with Islamic Bank. This study used a qualitative approach and single-case studies as the strategy. Primary data collected by in-depth interview, while secondary data obtained from the annual financial statements of BMT. The explanation building was used as the technique of analysis by explaining the results of in-depth interviews, in order to know the reason of BMT to stop linkage program. The results showed that the BMT option to stop the linkage program is not just because of expensive rate of return and other operational aspects only. The biggest point of decision is because of there is a difference of aqad applied in linkage program which is it was not accordance with mudaraba system contract.
Keywords: BMT, Islamic Bank, Linkage Program, Financial Inclusion.
