Fatwa on Islamic Capital Market

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.