How does the effectiveness of Central Bank Policy to maintain economic stability in Indonesia due to

Covid 19 Pandemic? How it is measured?

Poverty is a frightening macroeconomic problem in many developing countries, including Indonesia. If

these problems are not resolved properly, it will in the end lead to very serious political and social chaos.
Economic growth aims to increase community employment opportunities, increase community wages
and reduce poverty, so that people's welfare and living standards will increase. how to reduce poverty
levels are as follows:

1) Increase economic growth and are labor intensive so as to create job opportunities and increase the
income of the poor,

2) Development of human resources through the fields of education, health and fulfillment of nutrition
so that they can take advantage of the opportunities created by economic growth,

3) Providing social security to the poor so that they can benefit from economic growth and human
resource development due to physical, mental disabilities, natural disasters and social conflicts.41 Then
the World Bank added three pillars to fight poverty, namely empowerment, security and opportunity.
The following are some of the leading programs of the Indonesian government in alleviating poverty,
including the following;

i. Maintain price stability of basic necessities.

ii. Encouraging economic growth that is pro-poor,

iii. Refine and expand the scope of community-based development programs,

iv. Increase poor people's access to basic services,

v. Build and improve social protection systems for the poor.

The following are some of the efforts that Islam has to offer to alleviate poverty;

1) Work. Everyone in Islamic society is required to work. Because work is the main weapon to fight
poverty, achieve wealth and prosperity and a major factor in achieving prosperity.

2) Sufficient for weak families. It has become a basic foundation in Islam, that every individual must fight
poverty by working and trying. In this case Islam seeks to alleviate poverty and tries to prevent them
from abusive behavior, such as begging and begging. Therefore Islam has the concept of mutual
guarantee between family members and society to alleviate suffering and alleviate poverty, such as the
strong helping the weak and the rich helping the poor.

1) Zakat. Islam will not be cold and neglect those who are weak (poor). Because they have certain rights
in the wealth of the rich and have a definite share in it. Because the main goal of zakat is to meet the
needs of poor people.
2) Islamic treasury assistance funds from various sources. State assets must be managed and utilized as
well as possible for the interests of the people, not for personal interests. This wealth can be used to
improve the welfare of the community and as a source of assistance for the poor when zakat funds are
no longer sufficient.

3) Obligation to fulfill rights other than zakat. Apart from zakat, there are material rights that must be
fulfilled by a Muslim, which is a source of funds to help the poor achieve prosperity and to reduce
poverty. These rights include: the right to be neighbors, victims of the Hajj, kafarah, fidyah, al-hadyu
(sacrifices for committing violations in the haj pilgrimage), the right to provide for the poor.

4) Voluntary almsgiving and individual virtue. To reduce the level of poverty, Islam strives to cultivate a
noble, generous and generous person. A noble person is someone who likes members and likes to
donate more than what is required. A virtuous person will love others, more than himself, such a person
is full of compassion and love for others.

With these values, it is hoped that it will be able to reduce the level of poverty and the community will
be able to achieve prosperity.

The sectors most depressed due to the corona virus outbreak, according to Minister of Finance Sri
Mulyani Indrawati, are households, MSMEs, corporations, and the financial sector. The household sector
is expected to experience a significant decline in terms of consumption because people are no longer
active outside the home so that purchasing power decreases. The Micro, Small and Medium Enterprises
(UMKM) sector is under pressure due to not being able to carry out business activities so that the ability
to fulfill credit obligations is disrupted. In the corporate sector that will be most affected are
manufacturing, trade, transportation, and accommodation such as hotels and restaurants. In
corporations, there has been a decline in business performance and termination of employment and the
threat of bankruptcy. In addition, the financial sector is also under pressure, namely banks and finance
companies have the potential to experience liquidity and insolvency problems (Widyastuti, 2020).
Encouraging the optimization of banking performance, especially the intermediation function,
maintaining financial system stability and supporting economic growth, the Financial Services Authority
(OJK) has adopted a policy of economic stimulus as a counter-cyclical impact on the spread of
coronavirus disease 2019 (COVID-19). This stimulus is aimed at debtors who are affected by the spread
of the corona virus, including MSMEs. This policy includes; policies for determining asset quality and
policies for restructuring credit or financing (OJK, 2020). The Indonesian government, Joko Widodo, said
that there is a 1 year credit installment payment relief, provided that it is used for business.

Where there is a reduction in interest and a 1 year installment delay. Reducing interest and postponing
these installments can be called credit relaxation and part of the relaxation is restructuring.
Restructuring is an attempt by the Bank to save credit which the Bank is forced to do by changing the
cost composition. However, some groups, especially the banking industry, expressed their objection to
this policy.

During the Covid 19 pandemic, the economy was shaken. Business actors and the public have difficulty
paying principal installments and loan interest in banks. Not only working capital credit by business
actors, consumption credit also has problems regarding credit because people experience changes in
income, people experience difficulties in paying principal installments and credit interest. One of the
Counter cyclical policies based on the Financial Services Authority Regulation Number 11 / POJK.03 /
2020 in the world of credit is the restructuring of loans that have been affected by COVID-19, either
directly or indirectly. Credit relaxation regulates banks in Indonesia regarding the payment of loan
principal and interest. This policy applies to BUMN, BUMS and BUMD banks. The spread of COVID-19
threatens Indonesia's economic growth. One thing that cannot be separated from this pandemic is the
financial sector. Law Number 2 of 2020 and OJK regulation number 11 / POJK.03 / 2020 encourage
banking institutions to make credit restructuring policies for debtors affected by the Covid-19 pandemic.
Credit restructuring is an improvement effort made by the Bank in lending activities for debtors
experiencing difficulties in fulfilling their obligations, which are carried out, among others, through (OJK
2015):

1. a reduction in lending rates;

2. Extension of the credit period;

3. Reduction of loan interest arrears;

4. Reduction of loan principal arrears;

5. Additional credit facilities; and / or

6. Conversion of credit into temporary equity participation. Explanation of the restructuring model
(Kamello, Sunarmi, and Harianto 2014):

1. A reduction in interest rates A reduction in interest rates is expected to provide relief to the debtor so
that the amount of interest that must be paid by the debtor is smaller than the interest rate set earlier,
this is so that the income from the debtor's business can be allocated to pay part of the principal and
partly to continue and develop the business. Deeds that need to be drawn up and updated with respect
to a reduction in interest rates, namely amending the credit agreement.

2. Credit Term Extension: Credit term extension can provide an opportunity for debtors to continue their
business. Operating income that should be used to pay debts that are due can be used to strengthen the
business and within a certain period of time able to pay off all debts.

3. Reduction of Arrears on Credit Interest Rescue of non-performing loans with credit restructuring can
be done by reducing debtor's burden, namely by reducing arrears on credit interest or by eliminating all
arrears on loan interest The debtor is exempted from the obligation to pay arrears on credit interest
partly or in full. The rescue step by eliminating part or all of the arrears of loan interest is expected that
the debtor will have the ability to continue his business so that it can generate income that can be used
to pay the principal debt which is not possible to be completely written off by credit.

4. Reduction of Principal Credit Arrears Reduction of loan principal arrears is a very big bank sacrifice
because bank assets in the form of principal debt do not return and are losses borne by the bank.
5. Addition of Credit Facilities Additional credit is carried out with the hope that the debtor's business
will run again and grow so that it can generate income that can be used to repay old debts and
additional new credit. To provide additional credit facilities, a careful, accurate and accurate analysis
must be carried out with the correct calculation of the debtor's business prospects because the debtor
bears the old debt and the new debt. The addition of credit facilities is followed by additional terms so
that additional terms must be formulated in the new credit agreement. If the addition of the new facility
indicates that there is additional guarantee, then an additional guarantee must be made in the form of a
guarantee bond depending on the object that is the additional guarantee.

6. Conversion of Credit into Temporary Equity Participation Credit conversion to capital means that a
certain amount of credit value is converted into shares in the debtor company, this is called a dept
equity swap.

Regarding the amount of the share value that comes from the credit conversion depending on the
results of the agreement between the creditor and the debtor. Thus, the bank has a number of shares in
the debtor company and the debtor's debt is paid off. The number of shares owned by the bank
depends on the results of the assessment of the agreed share value. Credit restructuring is very
appropriate during the Covid-19 pandemic because it is in accordance with one of the conditions for
restructuring by Bank Indonesia Regulation Article 51 No. 7/2/2005, that is, the debtor experiences
difficulties in paying the principal and / or interest on the loan. At the time of the Covid-19 pandemic,
the government advised the public to maintain physical distancing, many companies implemented work
from home, reduced outside activities such as holidays, shopping, culinary and so on and many things
happened.

termination of employment. This impact is felt by both business actors and workers so that they
experience difficulties in making credit payments

The Effectiveness of the Regional Bank X Credit Restructuring Program during the Covid Pademi 19

The credit restructuring program is a bank policy in supporting the stimulus for economic growth, the
implementation of which still takes into account bank risk management. The thing that needs to be
considered in the restructuring process is the quality of credit that has been determined to be smooth
since the restructuring. Credit restructuring can be carried out on credit that is given before or after the
debtor is affected by the spread of Covid-19, including MSME debtors. Implementation of restructuring
(OJK 2020):

1. credit for BUK shall be conducted in accordance with Financial Services Authority regulations
concerning general bank asset quality assessment;

2. financing for BUS and UUS is carried out in accordance with Financial Services Authority regulations
concerning the assessment of asset quality for sharia commercial banks and sharia business units;
3. credit for rural banks is conducted in accordance with Financial Services Authority regulations
regarding the quality of productive assets and the establishment of allowance for earning assets losses
for rural banks; or

4. financing for BPRS is carried out in accordance with the regulations of the Financial Services Authority
regarding the quality of productive assets and the establishment of allowance for earning assets losses
of Islamic people's financing banks.

The provisions for credit must meet the following requirements: given to debtors who are affected by
the spread of Covid-19 including MSME debtors; and restructuring after debtors are affected by the
spread of Covid-19 including MSME debtors. For debtors affected by the spread of Covid-19 including
micro, small and medium business debtors a maximum ceiling of IDR 10,000,000,000.00 (ten billion
rupiah) can be based on the accuracy of principal and / or interest or margin / profit sharing / ujrah
payments (OJK 2020). The restructuring process at regional banks is in accordance with the
requirements based on the OJK circular where the customer or debtors affected by covid 19 with a
credit value below IDR 10,000,000,000.00 for informal workers, daily income, MSMEs, KUR. This policy is
only valid for a maximum of 12 months and the last time the customer and debtor submits a request to
the bank. And then the bank will again carry out the 5C analysis, namely character, capacity, capital,
collateral, conditional of economy seeing that the customer or debtor is eligible or not given a credit
restructuring. in bank area X the following scheme:

1. Customer comes to the bank to meet the account officer. The customer fills in the credit restructuring
application form on the link provided, and brings the necessary files such as a checking account for the
last 3 months, husband and wife's ID card, family card. marriage certificate, document / certificate from
the company stating that there is a reduction in income and salary slips

2. Submitting the bank to re-conduct the 5C analysis: Character is data about a prospective customer
(debtor) such as their nature and habits, Capacity (ability to return debt) is the ability of the debtor to
manage it where the indicators in this assessment are the level of education, history company, Collateral
(Guarantee) is a guarantee that can be confiscated if it is unable to pay, Capital is the property owned
and Conditional (Sikon) is considering the economic conditions related to the business project

3. Then input is carried out through the banking system.

4. After that, the authorized official is verified.

5. Submission of collateral appraisal, where the bank assesses the guarantee that has been guaranteed
by the customer and the bank analyzes the collateral is feasible or not

6. Certificate check, this is done to check with BPN whether the land or house is problematic or not, the
name of the certificate owner is the same as the customer or not.

7.Approval officials, banking officials approve the application for credit restructuring.

8.Akad, sign a new credit agreement after the credit restructuring.

Sharia Fintech Fintech is a term that is shortened from the words 'financial' and 'technology' which
means an innovation in the field of financial services. The innovations offered by Fintech are very broad
and in various segments, from B2B (Business to Business) to B2C (Business to Consumer). Fintech
influences people's transaction habits to be more practical and effective. Fintech also helps people to
more easily get access to financial products and increase financial literacy. The benefits of Fintech
greatly affect the lifestyle of the economic community. The combination of effectiveness and technology
has a positive impact on society in general. There are several benefits of having Fintech in the
community, the first benefit is that it can help new developments in the field of technology startups that
are mushrooming. This can help expand employment and increase economic growth.13 Financial
Technology is the use of technology to support financial financial transactions or activities. Financial
Technologhy is currently better known as "fintech" which is a computer program or use of other
technology to support and activate banking and financial services without direct transactions. Then 12
Lilik, Rahmawati. et al. Sharia Fintech: Benefits and Problems of Implementation in MSMEs. (Surabaya:
Journal of Masharif al-Syariah: Journal of Sharia Economics and Banking. Volume 5, No.1, 2020.
Muhammadiyah University of Surabaya. 2020 13 Quoted from https://www.finansialku.com/definisi-
fintech-adalah/, at dated June 10, 2018 AL-IQTISHADIYAH Journal of Sharia Economics and Islamic
Economic Law 74 Fintech is a business that has the goal of being a provider of financial services through
software supported by modern technology. Century 21. Previously, the term known for technology was
applied to the back-end of existing consumers, as well as was used by trading financial institutions. At
the end of the first decade of the 21st century, this term has expanded to include technological
innovations in finance, then innovations in education, financial intelligence serts, retail banking,
investment activities, and even used in cryptocurrencies such as bitcoin. The presence of fintech is able
to support the economic industry for companies that use technology that provides financial services so
that they are more efficient. It is not easy to define Fintech as a whole, because the existing definition is
flexible and can change from time to time. Because the traditional banking system is difficult to develop
due to the legacy of the operational system that is still in place. Even though there must be an effort to
innovate, then speed and have expertise in technology. The presence of fintech is generally a form of
startup business that aims to offer a system for financial companies that, but still do not optimize the
use of technology, so that they present software. 14 Fintech in Indonesia has several types, such as
startups that provide payment services, services in the form of financial research, retail investment
facilities, lending & crowdfunding, forms of financial planning (personal finance), and remittance
services. The Fatwa of the National Sharia Council of the Indonesian Ulema Council (DSN MUI) states
that information technology-based financing services for micro, small and medium scale business actors
(MSMEs) in an effort to gain access to funding quickly, easily and efficiently are currently growing in
Indonesia. Information Technology Based Financing Services Based on Sharia Principles is the provision
of financial services based on sharia principles that bring together or connect a Financing Provider with a
Financing Recipient in the framework of conducting a financing contract through an electronic system
using the internet network. Electronic System is a series of electronic devices and procedures that
function to prepare, collect, process, analyze, store, display, announce, transmit and / or disseminate
electronic information in the field of financial services. Information technology is a technique for
collecting, preparing, storing, processing, announcing, analyzing, and / or disseminating information in
the field of financial services. 15 14 Quoted from http://binus.ac.id/malang/2017/09/mengenal-fintech
-as-innovation-business-finance /, on June 10 2018. 15 Fatwa DSN-MUI Number 117 / DSN-MUI / II /
2018 E-ISSN: 2621-0274; P-ISSN: 2442-2282 Volume VI, Number II, December 2020 75 2.2. Micro, Small
and Medium Enterprises (UMKM) Kuncoro in Roswita (2017) states that there are two definitions of
MSMEs that are known in Indonesia. First, the definition of business according to law (UU) Number 20 of
2008 concerning Micro, Small and Medium Enterprises. According to this law, small businesses are
defined as independent productive economic activities carried out by individuals or business entities
that are not subsidiaries or branches of companies that are owned, controlled, or become part, either
directly or indirectly, of medium-sized enterprises. or large businesses, and meet the following criteria:
net assets of Rp. 50 million to Rp. 500 million, excluding land and buildings for business premises, or
having annual sales proceeds of Rp. 300 million to Rp. 2.5 billion. As for micro businesses, where the
business is a productive business of milli individuals or individual business entities, and meets the
following criteria: net assets of at most Rp. 50 million, or having a total turnover of at most Rp. 300
million per year. And finally medium enterprises, namely, independent productive economic
enterprises, carried out by individuals or business entities that are not subsidiaries or branches of
companies that are owned, controlled, or are part of, either directly or indirectly, with small or large
businesses. As well as meeting the following criteria: net worth Rp. 500 million to Rp. 10 billion, or
having an annual sales income of more than Rp. 2.5 billion to Rp. 50 billion.16 The role of micro, small
and medium enterprises (MSMEs) in the Indonesian economy, at least it can be seen from: (1) its
position as a major player in economic activity in various sectors, (2) the largest provider of
employment, (3) an important player

in developing local economic activities and community empowerment, (4) creating new markets and
sources of innovation, and (5) contributing to maintaining the balance of payments through export
activities (KEMEN KUKM, 2005). Micro enterprises are the largest group of business actors (96%) in
Indonesia with low income characteristics, are engaged in the informal sector and most of them are
included in the group of poor families. Even in most cases, the micro business group is still unable to
meet the basic needs for life, such as: nutrition, education, health and others. Micro enterprises have
unique characteristics and are not necessarily optimally empowered through competitive market
mechanisms. For this reason, empowerment of micro businesses needs to be established as a separate
strategy, through the development of institutional microbusiness institutions, development of
microfinance institutions and encouraging the development of rural industries.17 16 Roswita and
Ahmad Rozali. Analysis of Micro, Small and Medium Enterprises (MSMEs) Against Labor Absorption in
Indonesia. (North Sumatra: Journal of Economists, Journal of Economics and Development Studies.
2017) 17 Adnan Husada Putra. The Role of MSMEs in Development and Community Welfare in Blora
Regency. (Surakarta: Journal of Sociological Analysis (JAS) Master of Sociology Study Program, Faculty of
Social and Political Sciences, Sebelas Maret University, 2016) AL-IQTISHADIYAH Journal of Sharia
Economics and Islamic Economic Law 76 Small companies are managed or led by the company owner.
The company's organizational structure is simple and there are still many concurrent positions. The
probability of company failure is relatively high. Businesses find it difficult to develop because of the
difficulty of obtaining loans on soft terms. How to develop a small company, namely; promote a sense of
business among the community. Then provide bank credit assistance on soft terms to small
entrepreneurs. Then improve skills and expand job opportunities. Furthermore, forming and activating
small industrial centers. As well as reducing capital-intensive investment and encouraging the business
partner system of "foster father" of large to small companies. Finally, forming a business incubator to
facilitate the development of budding entrepreneurs.18 Four reasons that explain the strategic position
of MSMEs in Indonesia. First, MSMEs do not require large capital like large companies so that the
formation of this business is not as difficult as large businesses. Second, the required labor does not
require a certain formal education. Third, most of them are located in rural areas and do not need
infrastructure like big companies. Fourth, MSMEs have proven to have strong resilience when Indonesia
is hit by an economic crisis.19 Financing for retail businesses is financing that is channeled to individual
businesses or in the form of business entities that are used to support business activities. The amount of
distribution of financing provided by Islamic banks to the retail segment varies. There are several factors
that make business activities owned by individuals or business entities require retail financing support
from Islamic banks. For example, channeling financing to increase the inventory of goods needed from
the business or keeping production goods inventory at a minimum level. Usually, invoices from suppliers
of goods are faster than payments from customers. There are even some customers asking for a delay in
payment. Diversification of various businesses and products of business expansion requires a lot of new
offices or office equipment for the production of new goods. Then it is used to modernize the
equipment or equipment needed from a business. In general, retail-scale financing and financing with
productive objectives are divided into two, namely cash financing and non-cashfinancing. The financing
required for working capital (PMK) is a financing provided by Islamic banks to help the needs of working
capital for financing customers' business turnover so that the business can continue to run smoothly. In
Islamic banking, the type of working capital financing usually uses a musyarakah or mudharabah
contract, which is a cooperation contract with a profit sharing scheme. As for financing for working
capital 18 Susatyo Herlambang and Bambang Heru Wartono. Introduction to Business Science.
(Yogyakarta: Parama Publishing. 2014) 19 Sudati Nur Sarfiah, et al. MSMEs as Pillars of National
Economic Development. (Magelang: Journal of Development Economics, Tidar University. 2019) E-ISSN:
2621-0274; P-ISSN: 2442-2282 Volume VI, Number II, December 2020 77 which aims to procure goods,
such as for assets, tangible assets, so the contract that is widely used is the sale and purchase scheme
with a murabahah contract.20 It is known that the private sector is dominated by business scale micro.
This also means that there is a lot of public interest in opening a business or becoming an entrepreneur .
Next is how to make micro-scale businesses able to reach a large scale, so as to improve national
economic conditions. Based on the contribution of MSMEs to the Gross Domestic Product (GDP) of the
sector, it can be seen that the largest contribution of MSMEs is in the Agriculture, Animal Husbandry,
Forestry and Fisheries (PPKP) sector with the UMKM unit of 49.58 percent, followed by the Trade, Hotel
and Restaurant sector ( PHR) of 29.56 percent. The industry in this sector has the potential to be
developed from a micro level, and there is an opportunity to be developed into a large industry.21 The
role of financial institutions to channel assets is of course very important. Naman, the concept of Islamic
economics always requires that the movement of money flows must be followed by movements in the
real sector. In other words, transactions in the sector finance is a reflection of transactions that occur in
the real sector. This is very different from the existing concept in the conventional economic system
which places the financial market parallel to the real sector market. With this concept, it is common for
transactions in the financial sector to have nothing to do with transactions in the real sector
(decoupling). This has the potential for the same acceleration of growth in the real sector, which could
trigger the risk of a bubble. This risk is unlikely to occur in a sharia-based economic system that is
implemented correctly and istiqomah. Islamic economics emphasizes that assets have an effective role
in facilitating trade, investment, and improving social welfare for the community.22 In addition to access
to finance, MSMEs also encounter difficulties in terms of access to information. The lack of information
known to SMEs, more or less has an influence on the competition of products or services from the
UMKM business unit with other products in terms of quality. The effect of this is that there are no
products and services as a result of MSMEs to penetrate the export market. However, on the other
hand, there are also products or services that have the potential to compete in the international market
because they do not have a route or access to that market, and ultimately only circulate in the domestic
market. During its development, UMKM faces many problems which until now have not received serious
attention to solve them. This becomes an obstacle in terms of processing data on superior products
owned by MSMEs in a region. This is because the limited access to information on MSME data has
resulted in the low number of Indonesian Banker Associations and Banking Professional Certification
Bodies. Managing Sharia Bank Financing Business. (Jakarta: PT Gramedia Pustaka Utama. 2015) 21 Irfan
Syauqi Beik and Laily Dwi Arsyianti. Sharia Development Economics. (Jakarta: PT RajaGrafindo Persada.
2016) 22 Darsono, et al. The Future of Indonesian Sharia Finance. (Bogor: Tazkia Publishing. 2017) AL-
IQTISHADIYAH Journal of Sharia Economics and Islamic Economic Law 78 required data information
about MSMEs. Poor information regarding MSME data makes MSMEs unable to direct their business
development in a clear and focused manner. 2 Efforts to develop MSMEs through sharia fintech in the
midst of the covid-19 outbreak can be done collaboratively. The sharia fintech work system that relies
on online technology in its activities can be developed in the MSME sector. MSMEs are currently also
affected by covid-19, so they need partners who are able to make them survive. Sharia fintech has
partnered with MSMEs in the form of financing distribution. With the emergence of the covid-19
outbreak, sharia fintech can add to its role for MSMEs, not only in channeling financing but also
encouraging its development, especially in matters of marketing the products of its partners. Sharia
fintech can provide a marketplace for MSMEs and become a catalyst for the right products for MSMEs to
be produced amid the covid-19 outbreak.
Jurnal :

- Jurnal Hukum dan Pranata Sosial IslamVol.: 3(1), 2021, 35-66 FILANTROPI ISLAM SOLUSI ATAS
MASALAH KEMISKINAN AKIBAT PANDEMI COVID-19Fitra Rizal, Haniatul MukaromahInstitut
Agama Islam Negeri Ponorogo
- Restrukturisasi Kredit Bank Daerah X Pada Masa Pademi Covid-19Lina Maya SariUniversitas
Pembangunan Nasional “Veteran” Jawa [email protected] MusfirohIAIN
[email protected] STIE [email protected]
- Jurnal Ekonomi Syariah dan Hukum Ekonomi Syariah E-ISSN: 2621-0274; P-ISSN: 2442-2282
Volume 6, Nomor 2, Desember 2020 PENGEMBANGAN UMKM MELALUI FINTECH SYARIAH DI
TENGAH WABAH COVID-19 Trimulato Fakultas Ekonomi dan Bisnis Islam Universitas Islam
Negeri Alauddin Makassar, Indonesia
-