CHAPTER 01 INTRODUCTION
4. USUL AL-FIQH APPROACH
Usul al Fiqh are a body of principles of interpretation by the help of which the mujtahid is able to derive the law from the detailed evidence in revealed sources and ijtihad sources. It faces the same methodology to the Islamic economic ethics jurisprudential approach mention earlier. Looking at the original five, we would recognize that to protect the environment is a major aim. For if the situation of the environment keeps deteriorating, there will ultimately be no life, no property and no religion. The environment encompasses the other aims of the Shari'ah. The destruction of the environment prevents the human being from fulfilling the concept of vicegerency on earth. Indeed, the very existence of humanity is at stake here. Excessive pollution might lead to sterility, deformities, abortion and chronic diseases. As far as protecting the mind or reason, the highly polluted industrial cities might not see the sun for long days resulting in deep depressions which affects the person's ability to rationalize properly. Certain radiation might also destroy the brain.
The attempt to protect the property will also be in vain in the context of a highly polluted environment. There are already many rivers and lakes that are considered dead with no marine life.
This is a direct result of acid rain which destroys also forests. These forests and water sources form the natural habitat of many species; their death means the possible extinction of some of the Signs pointing in the direction of God. To consider the protection of the environment as one of the major aims of the Shari'ah, it will hopefully enable a neo-model of maqâsid Sharî‟ah a chance to be advanced as an alternative to the already existing western model which is the primary source of pollution.
5. „ULUM AL-QURAN AND AL-HADITH APPROACH
Al-Quran and Al-Hadith give high attention to the environment. So many parable taken from the nature and even the name of Surah taken from the name of animals (Al-Baqarah, Al-An‟am, Al-Fil and Al-Adiyat), insects (Al-Nahl, Al-Naml and Al-Ankabut), plant (Al-Tin), mining (Al-Hadid) other natures (Al-Ra‟d, Al-Zariyat, Al-Najm, Al-Fajr, Al-Syams, Al-Lail, Al-dhuha, Al-Asr and Al-Thur) and the places (Al-Balad, Al-Ahqaf, Al-Hajr and Al-Kahfi). All these name have an implication of raising awareness to oneself so that he tied to the nature and take care the environment. There is some repetition of concepts and Quranic verses in exploring Islamic teachings on the environment.
However, each brings a slightly different perspective to bear and each repetition helps to reinforce the core ideas and clarify them further.
103 General prepositions means all general principles that are supported by the shariah whether directly or indirectly
104 Khan Nyazee, Imran Ahsan, Islamic jurisprudence (Kuala Lumpur: The Other Press, 2003) 31.
105 al- Qaradawi Yusuf, Panduan memahami syariat (1998) 27-28. Tajdid al-fiqh wa tatwiruhu developed through legal determination and ijtihad revival.
106 al- Qaradawi Yusuf, al-Sunnah masdaran lil-ma'rifati wal-hadarah (Cairo: Dar al-Shuruq, 1977) 286.
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“The Analysis of Inter-influence among Global Islamic Index, Regional Islamic Index, Macroeconomics Variables and Indonesia Islamic Index (Case Study of Jakarta Islamic Index
(JII), Period 2010 – 2014)”
SUSILO NUR AJI COKRO DARSONO [email protected]
MASYHUDI MUQOROBIN [email protected]
ABSTRACT
The purpose of this study is to examine the relationship among Global Islamic Index, Regional Islamic Index, Macroeconomics Variables and Indonesia Islamic Index. The global islamic index is Dow Jones Islamic Market Index. The Regional Islamic Index is FTSE Bursa Malaysia Hijrah Shariah Index. The macroeconomics variables such as exchange rate, consumer price index, money supply and Bank Indonesia interest rate. The Indonesia Islamic Index is Jakarta Islamic Index. The methodology used in this study is Cointegration test to find the long-run relationship among these variables, furthemore Vector Error Correction Model (VECM) were used to find any short-run relationship among these variables. The period of this study is January 2010 to December 2014. The result showed that there is cointegration (long-run relationship) among JII, DJIM, FHSI, M2 and BIR.
The VECM estimation result show that in the short term, JII influenced by DJIM and M2 positive significantly. Meanwhile, FHSI, EXRATE, CPI and BIR negatively significant influence JII.
Keywords: Islamic Stock Market, Jakarta Islamic Index (JII) Dow Jones Islamic Market Index (DJIM), Cointegration, VECM.
INTRODUCTION
Capital market defined as a market for any long-term financial instruments (securities) which can be traded, in term of bonds or equities, either issued by government, public authorities or private company. Most countries around the world has capital market, it is because capital market drives the economic and financial condition in a country (Husnan, 1998). Capital market also as an indicator of economic growth. The volatility of index in a country can be read as a reflection of economic situation in that country. Beside that, capital market plays role as an investment tool that is useful for economic development. According to Widoatmodjo (2009), it is integrated with the function of capital market such as; first, capital market serves as an alternative for a company's capital resources. The capital gained from the public offering can be used for the company's business development, expansion, and reinvestment. Second, Capital Market serves as an alternative for public investment. People could invest their money according to their preferred returns and risk characteristics of each instrument such as stocks, bonds, mutual funds and securities. Capital market becomes a modern indicator of a country. It means, a country can be categorized as modern country if their capital market is developed.
The growth of middle-up income of Muslims in around the world cause the increasing of islamic financial market demand. Islamic financial market becomes an alternative for financing and Halal investment instrument (Setiawan, 2005). The rise of islamic financial market attracts many investors and financial institution to develop islamic financial instrument. It is because islamic economic system offering fair and justice in the economy. Not only Muslim countries which developing the Islamic economic system, but also non Muslim countries have high interest to take the opportunity in Muslim market which is more than 28,26% from the total population around the world (Muslim Population). Islamic capital market offers investment regarding to Islamic investment principles. The difference between conventional investment and islamic investment such as, the conventional investment defines investment as the total income subtracted by total consumption and saving for maximizing returns. Then, the islamic investment explains investment as a part of wealth that consists of return and social value (Karim, 2007).
The increasing of Islamic Economic and Finance development in Indonesia, make Indonesian Stock Exchange interest to develop their product in Shariah-compliant. In 3 July 2000, PT.
Bursa Efek Indonesia in coorporation with PT. Danareksa Investment Management (DIM) established stocks index based on Shariah-compliant which is Jakarta Islamic Index (JII). This index is expected to be the barometer of Shariah-compliant stocks and further develop of Islamic Capital Market in Indonesia. Jakarta Islamix Index (JII) consists of top 30 stocks in several main sectors including
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agriculture, mining, chemical, consumption, property, infrastructure, utility, transportation and trades which passed from output screening mechanism based on shariah criteria.
200 300 400 500 600 700
I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV
2009 2010 2011 2012 2013 2014
JII
Figure 1.1: The pattern movement of Jakarta Islamic Index (JII)
Along this 6 years since 2009 until 2014, Jakarta Islamic Index has experienced excellent performance. In the first quarter of 2009, JII only reach 213 points and in the last quarter of 2009 JII reach 417 points. It show that in one year the index increasing significantly. In the last quarter of 2013, JII reach 585 points, it is decreasing from the quarter 2 in 2013 which can reach 680 points. This situation happened because of Rupiah depreciate to Dollar in the last quarter of 2013. Jakarta Islamic Index (JII) is increasing from the first quarter of 2014 and has the highest points, 690 points in the third quarter of 2014.
According to Robert ang (1997), the volatility of index influence by many factors such as the changing of interest rate, global economic situation, condition of politic in a country and domestic economic condition. Beside these factors, the investor behavior will also give impact to the movement of stock index.
The global islamic stock market which used as a proxy is Dow Jones Islamic Market Index.
In 1999, Dow Jones established the Shari‘ah-compliant indexes which called Dow Jones Islamic Market Indexes. The Dow Jones Islamic Market Index (DJIM) was the first attempt by any global index provider to create a measurement tool for Shari‘ah-compliant investors and to reduce the research costs of ascertaining and measuring Shari‘ah-compliance by creating a global universe of Shari‘ah-screen companies approved by a Shari‘ah supervisory board. As the first such index and due to its unique characteristics, the DJIM has become the initial standard of Shari‘ah-compliant investing in Muslim countries, offering incentive for companies to meet the standards of Dow Jones Indexes‘
DJIM methodology screens to be included in a high-profile Shari‘ah-complaint index. So, today Dow Jones Islamic Market Indexes becomes the Global Index reference for the Islamic Capital Market around the world.
In Asia regional index, Islamic capital market in Malaysia is one of the most popular reference for Islamic capital market. On 22 January 2007, FTSE Bursa Malaysia Hijrah Shariah Index (FHSI) was launched in response to increasing interest in Shariah-compliant investment. This index was the joint initiative between FTSE, Bursa Malaysia and Yasaar Ltd, the leading global Shariah consultancy. FTSE Bursa Malaysia Hijrah Shariah consists of 30 companies which had pass the screening methodology from Malaysia Shariah Advisory Council (SAC).
In the preparation of Asean Economic Community (AEC) 2015, industry in Indonesia is growing up. The company active to do export and import. One of the most important things to make the export and import work is the currency as a tool of transaction. The currency that commonly used in international trade is US Dollar. For the company who do export and import actively, the stability of