FACULTY OF ECONOMICS UNISSULA ‑ SEMARANG
FACULTY OF ISLAMIC AND BUSINESS UIN SUNAN KALIJAGA ‑ YOGYAKARTA
INSTITUTE OF ISLAMIC BANKING AND FINANCE IIUM ‑ MALAYSIA
The Role of Zakah and Islamic Financial Institution into Poverty Alleviation and
Economics Security
SEMARANG, NOVEMBER 18–19
TH2015
No ISBN: 978‑602‑1154‑24‑1
No ISBN: 978‑602‑1154‑24‑1
i
FACULTY OF ECONOMICS UNISSULA ‑ SEMARANG
FACULTY OF ISLAMIC AND BUSINESS UIN SUNAN KALIJAGA ‑ YOGYAKARTA
INSTITUTE OF ISLAMIC BANKING AND FINANCE IIUM ‑ MALAYSIA
ii
Assalamualaykum.Wr.Wb
Wassalamualaykum.Wr.Wb
As a steering committe of 3rd ASEAN INTERNATIONAL CONFERENCE ON ISLAMIC FINANCE (AICIF-2015), firstly I would like to say “Thank You Very Much” to all parties for their enermous effort toward the detailed arrangement for hosting this conference.
The 3rd AICIF is organized by Faculty of Economics - Sultan Agung Islamic Unisversity (UNISSULA), Faculty of Islamic Economics and Busisness - State Islamic University Sunan Kalijaga Yogyakarta (UIN Yogyakarta), and Institute of Islamic Banking and Finance – International Islamic University Malaysia.
The conference is aimed to discuss “Role of Zakah and Islamic Financial Institution into Poverty Alleviation and Economoics Security”. Islamic financial institution, such as Islamic banking, Islamic unit trust, Islamic insurance, etc..
has growth very fast for last decade. They become important part relating to the efforts improving the quality of life of the society as well as relieving the society from the riba trap. In the context of recent economy, the Islamic financial institutions as economy pillar continues to chalange effort of poverty alleviation.
Conference aims to bring together researchers, scientists, and practitioners to share their experiences, new ideas and research results in all aspects of the main conference topics.
Furthermore, I would like to extend my gratitude to authors who submitted their papers to AICIF 2015 conference and also reviewers for their contribution and effort to excellent conference proceeding.
Finally, for all of you, welcome to AICIF 2015. I hope you will enjoy the conference and have a nice time during your stay in Semarang Indonesia.
Regards,
3rd AICIF 2015 Steering Committe , Dean
Faculty of Economics
Sultan Agung Islamic University Indonesia.
Olivia Fachrunnisa, PhD
FOREWORD
iii TABLE OF CONTENT
i ii iii Key Factors Affecting Credit Risk In Indonesian Islamic Banking
Yono Haryono Noraini Mohd. Ariffin Mustapha Hamat
1
Efficiency Of The Banking Sector In Malaysia Fekri Ali Shawtari
Mohamed Ariff
2
The Role Of Relational Capital In Increas ing The Collection And Distribution Of Zakah To Eradicate Poverty In Central Java
Heru Sulistyo
3
Creating Sustainable Competitive Advantages And Improving Salesperson Performance Through Intelligence, Emotional, And Spiritual Quotients And Selling Abilit y Of Smes In Central Java Province
Asyhari
Sri Hindah Pudjihastuti Dian Marhaeni Kurdaningsih
4
Woman’s Portrait in the Chain of Poverty: Looking at Early Marriage from Gender and Sexuality Perspectives
Inayah Rohmaniyah
5
Angels: Islamic Bank Of Health Maya Indriastuti
Luluk Muhimatul Ifada
6
Child Labor in Indonesia: Education and Health Consequences Sunaryati
7
Determinants Of The Factors That Cause Abandoned Housing Projects: A Study Of Home Buyers Of Islamic Home Financing In Malaysia
Dzuljastri Abdul Razak
8
Corporate Governance And Capital Structure Analysis At Islamic Bank In Indonesia
Mutamimah
9 EDITORS
FOREWORD
TABLE OF CONTENT
iv
The Effect Of Investment Decision, Funding Decision And Dividend Policy On Corporate Value
Dista Amalia Arifah Siti Roifah
10
Mobile Payment System Framework Based On Gold As A Measurement Of Value
Bedjo Santoso
Ahamed Kameel Meera Salina Hj. Kasim
Khaliq Ahmad
11
Corporate Financing Behaviour Of Shariah Compliant E50 Smes.
A Panel Data Approach Of GMM Razali Haron
12
Crude Palm Oil Market Volatility: Pre And Post Crisis Periods Evidence From Garch
Razali Haron
Salami Mansurat Ayojimi
13
Legal And Regulatory Framework Of Islamic Banking In Libya - Regulatory Authority, Licensing Of Islamic Bank, Shariah
Governance And Dispute Resolution Zainab Belal
Rusni Hassan
14
Developing a Comprehensive Performance Measurement System for Waqf Institutions
Nazrul Hazizi Noordin Siti Nurah Haron Salina Kassim
15
Improving Financial Education To The Poor At The Bottom - Of Pyramid: The Role Of Social Finance Vis A Vis Financial
Institutions Laily Dwi Arsyianti Salina Kassim
16
Regulatory Framework Of Islamic Banking In Afghanistan:
A Cursory Overview Mohsen Abduljamil Khan Rusni Hassan
17
v
Efektivitas Transmisi Kebijakan Moneter S yariah Jalur Pembiayaan
Rizqi Umar
Muh. Ghafur Wibowo Abdul Qoyum
18
The Environmental Development Model For Poverty Eradication Through Corporate Social Responsibility (CSR) Program
Abdul Hakim
19
The Role of Bank as Waqf Institution to Promote Indonesian Agricultural Sector
Faaza Fakhrunnas
20
The Analysis Of Profit Equalization Reserve (PER) In Income Smoothing Of Islamic Banking
Prima Shofiani Arief Bachtiar
21
The Analysis Of Determinants Selected Corporate Governance Attributes And Company Attributes On Financial Reporting Timeliness In Indonesia (Evidence From Sharia Security List The Period Of 2009-2013)
Ifa Luthfiana Iwan Budiyono Nyata Nugraha
22
The potential role of Social Impact Bond (SIB) as a financial tool that can help address the issues of poverty and socio-economic security
Syed Marwan Mujahid
23
Zakat Productive: Transforming Mustahiq To Muzakki Musviyanti
Fibriyani Nur Khairin
24
The Ways To Increase Shareholders Wealth In Indonesia Sharia Stock Index
Naqiyyah
Nunung Ghoniyah
25
Accountability Of Fund Management In Mosques, Kalimantan Timur, Indonesia
Yunita Fitria
Ahmad Zamri Osman Zaini Zainol
26
vi
Intellectual Capital And Performance Of Islamic Banks Hendri Setyawan
Tri Dewi Jayanthi
27
Risk Management And Management Accounting Parctice Of BPRS In East Java
Ulfi Kartika Oktaviana
28
Using ZIS (Zakat Infaq Shodaqoh) Institution to Expand Access to Renewable Energy Services In Indonesia
Aji Purba Trapsila
29
Collabrate Farmer Association Based Production House and Baitul Maal Wat Tamwil : Increasing Farmer Productivity
Through Optimalization ZIS Funding and Sharia Finance Product by Farmer (Walfare Farmer) CardScheme
Rifaldi Majid Evita Meilani
30
Workplace Spirituality and Employee Engagement for Islamic Financial Institution: A Conceptual Model
Olivia Fachrunnisa
31
Transformation Of Charities By Islamic Social Movements In Yogyakarta, 1912-1931: A History Of Islamic Wealth
Management Ghifari Yuristiadhi
32
Customer Interaction Management Capabilities And Market Intelligence Quality For New Product Performance
Tatiek Nurhayati Hendar
33
Assessing The Appropriateness And Adequacy Of The Provision For Housing Under The Haddul-Kifayah For Asnaf Faqr And
Asnaf Miskin
Khairuddin Abdul Rashid Sharina Farihah Hasan Azila Ahmad Sarkawi
34
An Overview Of Corporate Governance Practices Of Selected Islamic Banks: Case Of Rhb Islamic Bank, Masraf Al Rayan And European Islamic Investment Bank
Zainab Belal Lawhaishy Mustapha Hamat
35
vii
Asnaf Of Zakat: A Comparison Between Zakat Regulations In Wilayah Persekutuan And Selangor Darul Ehsan
Aznan Hasan
Nurun Nadia Binti Mohamad
36
Review of the Theory and Practice of Islamic Banking in Indonesia
Ibnu Haitam
37
Zakatable Items: A Comparison of Definition between Syeikh Yusuf al-Qardawi and States Enactments in Malaysia
Aznan Hasan
Raja Madihah Binti Raja Alias
38
Shariah Committee Composition In Malaysian Islamic Financial Institutions: Post Implementationof The Shariah Governance Framework 2010 And Islamic Financial Services Act 2013 Muhammad Issyam b. Itam@Ismail
Rusnibt. Hassan
39
Interpretation Of Integrated Zakat And Tax: Review Of Planned Behavior Theory
Agus Setiawaty Fibriyani Nur Khairin
40
Financial Consumer Protection: An Exploratory Study On Islamic Financial Services Act 2013 (IFSA), Bnm Regulations And Other Relevant Statutes
Norzarina Nor azman Sabarina Abu Bakar
Solara Hunud Abia Kadouf Rusnibt. Hassan
MuhammdIssyam bin Itam@Ismail
41
Zakat Houses For Asnaf Faqr And Miskin: Are Houses Appropriate And Adequate?
Khairuddin Abdul Rashid Azila Ahmad Sarkawi Sharina Farihah Hasan Srazali Aripin
42
[Re] Defining Mudharabah Financing Musviyanti
Salmah Pattisahusiwa
43
viii
Analysis Influence Of Difference Perception Between Shari’a Banking With Consumer Perception Towards Customer’s Purchase Intension Shari’a Banking in Semarang
Sri Rahayu Tri Astuti
44
Marketing at the Bottom of Pyramid: Cultural Ethnic Linkage to Islamic Microfinance Sales Promotion Scheme
Permata Wulandari Salina Hj. Kassim Liyu Adikasari Sulung Niken Iwani Surya Putri
45
Zakat As Social Function Of Shariah Banking Related To SMEs Empowerment For Poverty Alleviation
Mispiyanti Junaidi
46
Holistic View On Malaysian Islamic Interbank Money Market: A Critical Assessment
Buerhan Saiti
47
The Role Of Islamic Work Ethic, Spiritual Leadership And Organizational Culture Toward Attitude On Change With
Organizational Commitment And Job Involvement As Mediator On Bank Pembiayaan Rakyat Syari’ah (BPRS) Indonesia
Haerudin Bedjo Santoso
48
Implementation of Good Corporate Governance In Indonesian Islamic Banking
Ro’fah Setyowati Bedjo Santoso
49
Ascertaining Transparency And Accountability In The Practice Of Assessment Of Claims For Loss And Damage In Contractor’s All Risks (CAR) Takaful
Puteri Nur Farah Naadia Bt Mohd Fauzi Khairuddin Abd. Rashid
50
Market Reaction Toward Default Notice Of Islamic Bonds In Indonesia
Wuryanti Kuntjoro Happy Sista Devy
51
The Role Of Religiosity And Manifest Needs To Increase The Productivity Of Human Resources
Arizqi
Heru Sulistyo
52
ix
Islamic View On The Gold As Money Bedjo Santoso
Salina Hj. Kasim Mustofa Omar
53
The Prospects Of Islamic Banking In Higher Distance Education In Baskara
Rini Febrianti
Nadia Sri Damajanti
54
Entrusting Zakah (Alms) Administration To The Government: A Review Of Historical Study And Shari’ah Perspective
Abdulsoma Thoarlim Mursalin Maggangka
Mohamamed Muneer’deen Olodo al Shafi’i
55
Protecting Zakat And Waqaf Assets Through Takaful Puteri Nur Farah Naadia Mohd Fauzi
Khairuddin Abd. Rashid Azila Ahmad Sharkawi Sharina Farihah Hasan Srazali Aripin
56
Cooperative Takaful as a New Operational Model: A Conceptual Study
Azman bin Mohd Noor Olorogun, L.A
57
Perceived Fairness in Islamic Home Financing: Selection between BBA and MM
Mohamed Imtiyaz Salina Kassim
58
Ict Creative Industry Development : Sinergized Approach Mutamimah
Mustaghfirin Mustafa
59
The Effect Of Inflation Rate, Liquidity Ratio, And Interest Rate On Investors Reaction With Share Investment Risk As
Intervening Variable (Empirical Studies On The Jakarta Islamic Index)
Yonimah Nurul Husna Imam Setijawan
60
x
Analyzing The Effect Of Debt Level And Book Tax Differences On Persistent Earnings (Empirical Study on Manufacturing Company listed on the Indonesia Stock Exchange in the period of 2011-2013)
Guntur Prasetya Lulu M. Ifada
61
The Effect Of Soundness Of Banks Use Risk Based Banking Rating Method On The Financial Performance Of Islamic Banks Shintya Dewi Adi Putri
62
Organizing Optimization Of Social Insurance Agency (BPJS) Based On Public Satisfaction In Central Java
Alifah Ratnawati Yusriyati Nur Farid Noor Kholis
63
Effect Of Green Supply Chain Management Practices On Supply Chain Performance And Competitive Advantage
Osmad Muthaher Sri Dewi Wahyundaru
64
Testing The Effect Of TQM On The Islamic Microfinance
Institutions Performance Using Partial Least Squares Approach Hamzah Abdul Rahman
Abdo Ali Homaid Mohd Sobri Mina
65
The Perception And Interest Of Teachers On Islamic Bank Any Meilani
Isnina Wahyuning Sapta Utami
66
Implementing Corporate Social Responsibility (CSR) Program Through Zakat Model
Damanhur
Umarudin Usman
67
Improving Competitive Advantage Of Small And Medium Enterprises Through Green Competence And Green Image Sri Ayuni
Abdul Hakim
Agus Wachyutomo Heru Sulistyo
68
Allocation Fiscal Balance Transfers Local Goverment From The Central Government To The Prosperity For Ummah
Khoirul Fuad
69
xii
IMPLEMENTATION OF GOOD CORPORATE GOVERNANCE IN INDONESIAN ISLAMIC BANKING
Ro’fah Setyowati*, Bedjo Santoso**
*) Department of Law Diponegoro University Semarang, **) Ph.D Candidate IIBF-IIUM and Department of Economics UNISSULA SEMARANG
Abstract— Good corporate governance (GCG) is a system of organizing and conducting enterprise to create value-added (value added) to all stakeholders. This concept was emphasized in two areas, namely, first, the importance of the right to obtain a true and accurate information on time and, second, the duty of companies to do disclosure (disclosure) is accurate, right time, transparent to all the information industry performance, ownership, and stakeholders. There are four main components needed for the concept Corporate Good governance, namely fairness, Transparency, accountability, and responsibility. The fourth component is crucial for the implementation of the principles of Good Corporate governance consistently proven to improve the quality of the company. Of all the above, raised a number of knots that Islam requires the user BANKING consumer protection as conventional. Protection intended to be separated into general and specific protection. General protection means that the user needs with the needs of Islamic BANKING conventional user. While the specific coverage requirements, only for the consumer BANKING Islam. Things changed in view of the Islamic BANKING users have different needs, relating with confidence that the basis for their use of Islam as well as institutional BANKING Islam has principles that must be applied and monitored in the against sharia compliant .
Keywords— Islamic Banking, good corporate governance, implementation.
I. INTRODUCTION.
Good Corporate Governance (GCG) is an institution of management procedures with a specified standard in the nation. Good Corporate governance is fundamentally a part of the effort to create a healthy BANKING. Because the term and concept has been used consistently in a variety of different countries, so in this description shall be noted separately by health of BANK. With the existence of Good Corporate Governance in the Islamic Bank will provide a great sense of security for users, so as not to hesitate to take advantage of the financial administration of the Bank. It was very necessary for the economic development, especially Indonesia which currently is expanding Islamic Bank to follow the economy sustain the nation.
II. INDONESIAN'S POSITION IN THE LOWEST ORDER OF APPLICATION OF GOOD CORPORATE GOVERNANCE ON ISLAMIC BANKING.
In Asian countries, the implementation of corporate governance is an important part of economic reforms are absolutely necessary to overcome the economic crisis. This matter is strong evidence that a country with good governance will survive when the country faces economic crisis. Most Asian countries at this time have begun to accept and realize that they need a repair or reform in the market, enterprises, and their government.
The level of investor protection in Indonesia is the lowest in Southeast Asia. It is because of practical matter GCG in Indonesia has not fully implemented by public enterprises. As a result the board grader (ratings) has put Indonesia on the international community under the order. Report on Corporate governance by CLSA (2003) put Indonesia in order to bottom with a score of 1.5 Action problems of jurisprudence, 2.5 for institutional and cultural mechanisms of corporate governance, with a total score of 3.2. Indonesian scores is four in 2004, it is better than 2003, but the fact still remains at the bottom of the order of the other Asian countries. Other Asian countries, among others, Singapore, Hongkong, India, Indonesia, Korea, Taiwan, Thailand, Phiilipina, and China.
The important Factors caused the low performance of Indonesia are law enforcement and corporate governance culture that still at the lowest point in the other countries that are growing in Asia.. Assessment conducted by CLSA based on external factors to weigh 60% compared with the internal factors that are given weight only 40%.
III. IMPLEMENTATION STRATEGY : GOOD CORPORATE GOVERNANCE IN INDONESIA.
The above facts show that the implementation of GCG in Indonesia requires serious attention and a comprehensive approach and the rule of the more real action. Implementation of GCG is necessary in global era. Since, competition among enterprises in this time is much higher than before. GCG implemented in the company is one of the critical indicators to investors in choosing investment purpose. Survey adopted by the World Bank - McKinsey Consulting Group indicates that foreign investors from Asia, Europe, and U.S are agree to provide premium 26% - 28% of the Indonesian company. It has effectively implemented the practice of GCG. GCG comprises closed or opened company, non-profit or profit company. By general literature assumed that only open company to be subject of analysis.
However, looking at the situation this time, the implementation of GCG will not effectively without the efforts of the public sector. It is because that pre GCG is important in the implementation of the present mapping. World Bank policy recommendation of ROSC was doing the mapping. Here are some key recommendations of the World Bank: Minorities shareholders should be given voting rights in the process of nomination of Commissioners and members of
director, such as by give the rights to shareholders without having to violate provisions minorities’ one share one vote.
1. Public enterprises are recommended to have the nomination and remuneration committee. This recommendation is governed by guidelines and nomination of committee “remunasi formation”. This matter must be supported by Capital Investment Institution (Bapepam) and Jakarta Stock Exchange (BEJ). They have authority to issue and rules requiring for public companies to have a nomination and a committee of remunasi.
2. Recommended for adoption of international standards in financial reporting.
ACCOUNTING standard financial statement should be in line with international accounting standards (IAS).
3. Steps forward to protect the minority shareholders.
4. Strengthen market surveillance by ‘Bapepam’ and ’BEJ’. Development of market surveillance can be done through the development of human resources and information technology. Bapepam and BEJ need to be integrated their systems control, and it is need to be supported by professional human resources.
5. Confirm the legal responsibility of accountants. Accountants suggested that the public laws program strengthens the legal responsibility of accountants, in particular related to the third party and to allow the legal claim against the accountants where there is clear fraud or negligence.
6. To shorthand annual report submission period. The period is 120 days, and since 2003 has been reduced to 90 days.
7. Clarify the rights and accountability Independent Commissioner. In company law, the role of Independent Commissioner should be in line with the commissioner.
8. Further developing guidance on the independent commissioner. This was related to the Business of the role, duties, and accountability of independent Commissioners.
9. That there is a clear summary of the transactions that have the impact of interest for the director. Impact of interest situations should set the guidelines of conduct (code of conduct) enterprise.
Based on the awareness of the importance of GCG practices in various fields, and learn from the experiences of other Asian countries, as well as the fact that Indonesia is still in serious condition due to the economic crisis that has been ten years, the government indeed had to make many efforts in order to respond the demand.
All the efforts applied in the framework of socialization and implementation of GCG in Indonesia from the decision of the Minister GOVERNMENT COMPANY encourage the implementation of GCG in particular for GOVERNMENT COMPANY, capital market regulation in the field and independent institutions such as the Governance Committee of National Policy (KNKG). While the regulator, such as Bank Indonesia, Ministry of Finance has set a target is a GCG created as part of the creation of value-added of the Indonesian Financial System.
Private sector or multi-range of industries in Indonesia were not left behind in supporting and strengthening the implementation of GCG, one to perform a comprehensive transformation that touches all the personal from top level management to the lowest level and to include aspects of cultural GCG owned enterprises.
Indonesian’s Commitment to Improve GCG.
Several Indonesian commitment to improve the GCG can be shown with the following activities:
a. It has formed the National Committee on Corporate Governance Privacy (KNKCG) by “Minister of economic and finance. Act No:
KEP/31/M.EKUIN/08/1999 the formation of the next issue guidelines KNKCG GCG Indonesia.
b. This time the National Policy Committee was established governance (KNKG) instead of the letter KNKCG Minister of Economic, No:
KEP/49/M.EKON/11/2004. Sub-Committee consisting of Public Enterprises and the Sub-Committee.
c. Decision of the Minister of Administrative GOVERNMENT COMPANY No. Kep-133/M-PGOVERNMENT COMPANY/1999 the formation of the Audit Committee for GOVERNMENT COMPANY.
d. Distribution Letter of ‘Bapepam’ Chief No. Se-03/PM/2000 the Audit Committee which contains the Audit Committee call for the need of each individual Emitting.
e. Government Company Regulation NO : PERMEN-05/MBU/2008 About General Guidelines for Procurement of Goods and Service implementation GOVERNMENT COMPANY.
f. Government Decision No : 09A/MBU/2005 About & Proper Fit Assessment Process Test Candidate Members Director GOVERNMENT COMPANY.
g. Letter of No Distribution Minister GOVERNMENT COMPANY. No. 106 / 2000 and the decision of the Minister GOVERNMENT COMPANY No.
23 of 2000 - to arrange and formulate the development of good corporate governance practices in the company Ltd.
h. Minister Decision KEP-117/M-MBU/2002 GOVERNMENT COMPANY No. Kep-117/M-MBU/2002 on the Application of Good Practice on Corporate governance GOVERNMENT COMPANY.
i. Bank Indonesia Regulation (PBI) Acc. GCG 8/4/PBI/2006 of the page with PBI No. 8/14/GCG/2006.
Meanwhile the private sector has been encouraged to have good commitment.
This fact are the evidences:
a. In 2000, the Jakarta Stock Exchange (now Bursa Efek Indonesia) use the results of Director of ‘PT Bursa Efek Jakarta’ No. Posting Rules Kep- 315/BEJ/062000 case No effect. IA, which, among other duties are arranged on the Independent Commissioner, Audit Committee, gave an active role in the Industrial Secretaries obligation of information disclosure and require enterprise information appears to convey the material and relevant.
b. Birth of Forum for Corporate governance in Indonesia (FCGI).
c. The birth of Indonesian Institute for Corporate governance (IICG) d. The birth of Indonesian Institute for Corporate Directorship (IICD)
e. Birth of the Board of Commissioners and the Director of Indonesia (LKDI) which among other activities provide forums to discuss various matters LKDI as legal responsibility for the Commissioner and Director, clean money laws etc.
f. The birth of Indonesia Corporate Secretary Association (ICSA) g. The birth of the Association of Audit Committee of Indonesia (IKAI) h. Birth of Internal Auditors Association (AAI)
i. Birth clinic GCG Indonesian Chamber Trade and Industry (Kadin).
j. Annual Report Award k. Various awards of the GCG
Next enter the evaluation, the level needs to be done on a regular basis from time to time to measure the effectiveness of the implementation of GCG was done by requiring the parties to do independent audit and scoring on the practical implementation of the existing GCG. There are many consultants that can provide such audit services, and in Indonesia there are several companies that make scoring. evaluation in the form of assessment, audit or scoring can be done such as mandatory as applied in the range GOVERNMENT COMPANY.
Evaluation can help companies map the return conditions and situations as well as access to enterprise in the implementation of GCG to be working on improvements that need to be based on recommendations given. Moreover, the parameters in the implementation of GCG, has three core point, namely :
a. Compliance (adherence) is the extent to which the company has complied with existing rules to meet the principles of GCG;
b. Conformance (relevance and completeness) the extent to which the company has attitude according to various aspects of the principle elements of GCG and equipment to meet the needs of the implementation of GCG.
c. Performance (performance) is the extent to which the industry has been showing proof (evidence) which shows that the company has obtained substantial benefits from applying the GCG principles in the industry.
Some existing activities, the overall corporate governance practices primarily in Indonesia is divided into three activities. First, set a national policy. Second, complete the regulatory framework. Thirdly, based on private sector initiative . National Policy Committee Corporate Governance (KNKCG) in the beginning 2005 at the National Committee to change the governance policy GCG has issued guidelines in June 2001. The guidelines followed by the publication Guidelines GCG Bank Indonesia (CENTRAL BANK),
Guidelines for the audit committee and guidelines for independent commissioner in 2004. All publications are considered necessary to provide the mold in the implementation of GCG. Government shall make special networking with the business community to do socialization and implementation GCG. The two important key sectors are he GOVERNMENT COMPANY and Capital Market has been a concern of the government.
Meanwhile, in the framework of regulations there are some rules associated with the GCG and legal reform in general, namely Law No. 10 of the Bank of Indonesia Year 1998, the Anti Corruption Law of 1999, Law of Business Competition in 1999, and the Legal 2003 GOVERNMENT COMPANY.
BANKING Law, the principles also regulate aspects of the GCG, such as governance structure, governance process and outcome governance. Structure governance that consists of: First, increase competence and integrity through banking management test the feasibility and propriety of owners, the shareholders of the operator, Commissioner Hall, director, and executive offices in management activity of BANKING . Second, management independent of BANKING, where the members of the house of commissioners and the director cannot have a social relationship or a scam to contact the commissioners and the hall director or a shareholder in the company of other operators. Third, the standard implementation of internal audit functions of public BANKING.
BANKING is required to show compliance director responsible for compliance with the regulations is BANKING. Process governance consists of risk management and internal operations. Implementation of risk management required for BANKING to implement risk management.
Outcome of the governance, Bank Indonesia has issued several regulations, among others, transparency about the Banking financial condition and increase the role of external auditors. BANKING is required to disclose non-performing loan, shareholder and operator affiliation , and risk management practices in financial reporting.
The application of the principles of GCG in Indonesia itself is influenced both by cultural factors as well as historical. The second aspect was a union that cannot be separated, and have close relation with social elements. These factors are a significant obstacle for the government to adopt various policies. Complexity and diversity of Indonesian society is also another factor in creating problems or face- concept of good management or supervision.
Would be better understood with the background culture that Indonesia is very diverse and therefore in applying the principles included in the scope of LB and replaced legislative act regulations, a variety of approaches are needed. LB Indonesia community need means law to give bail, while the government also has prompted many parties to adopt the principles of GCG. In addition, the introduction of the doctrines of law of the company will be among the efforts by various professional . Although various efforts have been adopted, but the concept cannot be said to have been effectively applied in across Indonesia.
IV. INDONESIAN’S BANK AND GCG STRATEGY TO STRENGTHEN ENFORCEMENT AND RESTRUCTURE IN LAW
In addition to the above legal culture, for the low application of GCG in Indonesia is about the implement the law (law enforcement). Indonesia does not lack the legal product. In real terms the GCG was there, but still spread in various legislative Act rules are: Capital Market Law, Law and Regulation, BANKING Act, etc. However, implementation by the authority, as Bank Indonesia, Bapepam, IBRA, Ministry of finance, GOVERNMENT COMPANY, Nevertheless, justice is still very weak.
In relating with the matter, law enforcement affect the realization of GCG.
Law enforcement in Indonesia is still not reflect the overall protection and are not in favor of the sense of justice as people expected. Many legal problems, for example, in some cases supporting liquidity BANK Indonesia (BLBI), which resolved with a political approach rather than through a legal approach. In other words, the political interests is dominant in Indonesia.
This has given the concept of legal culture, it was important for the developing countries. These countries often take the code or code-law system, western legislative act in the countries, in an effort to modernize the local legal framework. Furthermore, problems emerge when the impact of transplant law with local legal culture. If the local legal culture does not accept the structure of the foreign legal system or law that is taken, it is imported from foreign legal system cannot be applied appropriately.
Related to the experience of the principles of GCG in Indonesia, shows that the legal culture that influenced the action is related to corporate governance is the concept of cultural sociology ‘Patrymonialism’ stated by Weber with reference to the system patriarchy relationship, where my father not only has power in family life but also in the social context, LB, or political. Some practitioners say that
patrymonialism provide many aspects of life in Indonesia, including the development of the implementation of GCG in Indonesia. So it is possible that the patrimonial likely effect on corporate governance in Indonesia.
Specific implementation of GCG principles in BANKING, BANK Indonesia (BI) has made a policy program known as Architecture Bank Indonesia (API) in which the objects found in nature to-three, from six items to be obtained is relevant to the implementation of GCG in order to strengthen the internal situation of the national BANKING. In the same case, Tjager (2003) states that the necessary regulations GCG-cutting nature, such as among BANKING to a mold for BANKING managers in managing their enterprises in accordance with the principles of GCG. Furthermore, to establish the role of Bank Indonesia in the implementation arrangements of the world GCG BANKING, should be developed a directed strategy to encourage healthy BANKING internal governance and a conducive external environment in which nothing instrument terms with respect to the implementation of GCG principles.
As such, this role should be optimized through the use of Bank Indonesia Regulation required the National Bank to implement the GCG. It was already filled with the formulation of Bank Indonesia Regulation No..: 8/4/PBI/2006 About Implementation of Good Corporate governance for banks. This step is important to practice as the regulations issued by Bank Indonesia to implement the principles of GCG was once hidden and not systematic due to spread in other regulations, such as the transparent risk management, compliance, audit function arrangements, and so on.
With the existence of these regulations, Bank Indonesia should follow the policy of mechanism for monitoring to ensure that the rules in actual practice.
This matter can be practiced along with steps to optimized the role of the arrangement, i.e. by making rules and regulations directed to optimizing the role of surveillance practiced by the BI, among other.
With the existence of these regulations, Bank Indonesia should follow the policy of monitoring mechanism to ensure that the rules in actual practice. This matter can be practiced along with steps to optimized the role of the arrangement, i.e. by making rules and regulations directed to optimizing the role of surveillance practiced by the BI, among others:
a. Compulsory national BANKING GCG to measure performance in self assessment and the results of the self assessment periodically reported to the BI. This was adopted in order to help enterprises understand the condition of GCG, GCG to identify areas are still poor, and improve the weak areas that still appear to be an awareness of attitudes towards implementation BANKING GCG;
b. BANKING requires a practice to combine information about GCG in a BANKING (what belongs to shitty, bad, moderate, good, good one, or given any sort) in financial reporting. Thus, all stakeholders or
shareholders know how GCG implemented in a BANKING, which means to increase transparency through disclosure.
V. CONCLUSION
Of all the above, raised a number of knots that Islam requires the user BANKING consumer protection as conventional. Protection intended to be separated into general and specific protection. General protection means that the user needs with the needs of Islamic BANKING conventional user. While the specific coverage requirements, only for the consumer BANKING Islam. Things changed in view of the Islamic BANKING users have different needs, relating with confidence that the basis for their use of Islam as well as institutional BANKING Islam has principles that must be applied and monitored in the against sharia compliant .
corporate governance (GCG) is a system of organizing and conducting enterprise to create value-added (value added) to all stakeholders. This concept was emphasized in two areas, namely, first, the importance of the right to obtain a true and accurate information on time and, second, the duty of companies to do disclosure (disclosure) is accurate, right time, transparent to all the information industry performance, ownership, and stakeholders. There are four main components needed for the concept Corporate Good governance, namely fairness, Transparency, accountability, and responsibility. The fourth component is crucial for the implementation of the principles of Good Corporate governance consistently proven to improve the quality of the company.
So, Good Corporate governance is a form of public protection for consumers Islamic BANKING basically intended to protect the business user community.
Given the Bank as a business institution that is dependent on consumer confidence. In addition, the consumer confidence is very important, because BANKING institutions have a very big role in a country's overall economic activity. Therefore, the question of maintaining the trust of the user community is what's important is for each country, which is essentially the same form of consumer protection in general BANKING.
Awareness is the foundation for the country's role in providing consumer protection through the frame of BANKING ACT. After the experience of the financial crisis and the subsequent BANKING a multidimensional crisis, Indonesia has formulated various regulations required for the business user community to recover the BANKING industry. However, to date, the crisis has not finished and many are still many problems that need solutions quest. This was due to many factors which affect, among others, weak supervision, the legal culture of a society that does not support, legislative act rules are not coordinated and systematic.
Therefore, it can be said that the implementation of the Good governance Corporate BANKING Islam as the fulfillment of user rights to the first three, and
the rights to nine if the reference to the rights of users, as uploaded by the consumer protection laws. Specifically with respect to this information, Bank Indonesia also has a provision as contained in the rules of Good Corporate governance. Efforts to support these things, then legislative act regulations in respect of health BANKING made include a various forms, whether in the form of law, government regulation, results of the President, Bank Indonesia Regulation, Bank Indonesia and Distribution Letter of Bank Indonesia Director decision.
Observe the understanding that, although not all the legislation that was enacted, but in view of its requirements were very broad, it is still necessary legislative framework BANKING act others to support Islam.
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