SWOT Analysis of Baitul Maal Wat Tamwil Beringharjo Yogyakarta

Alvien Nur Amalia

Department of Islamic Financial and Banking Management, STIE Indonesia Banking School, Jakarta Selatan, Indonesia

alvien.amalia@ibs.ac.id

Keywords: BMT Beringharjo, Strenghts, Weaknesses, Opportunities, Threats.

Abstract: The Baitul Maal Wat Tamwil (BMT) as an Islamic microfinance becomes an alternative for people who are

unbankable. But many BMTs bankrupted and failed, because of various things such as mismanagement,

lacked funds and human resources. One of the successful examples of BMTs that are able to survive and

sustain is BMT Beringharjo Yogyakarta which has been in operation for 23 years. This paper aims to know

what are the basic things that BMT Beringharjo had done to survive and sustains using qualitative SWOT

analysis. The results: Strengths: The BMT has a material and non-material things, management using

planning, organizing, actuating and controlling (POAC) rules, have qualified resources and have a good

brand image. Weaknesses: lack of innovation and try to avoid bad work culture. Opportunities: market

penetration is still open and the digital era. Threats: the pricing battle from the competitors. BMT

Beringharjo must have a comparative advantage and turn threats into opportunities.

1 INTRODUCTION

Number of poor people in Indonesia is 27.76 million

in September 2016 or about 10 percent of the total

population of Indonesia (www.bps.go.id). Poverty is

also caused by the inability of the people to create

their own business. One of the reason is the absence

of capital. In general, poor people difficult to obtain

loans, especially from banks. This is because they

belong to the category of the unbankable group. This

group is getting attention from the government so

becomes the target of the financial inclusion

programme (Drissi and Angade, 2017).

One form of inclusive financial is microfinance

institutions. This institution is a "banking" for the

poor. Under Law No. 1 (2013), microfinance

institutions (MFIs) are specialized financial

institutions established to provide business

development services and community

empowerment, either through loans or financing in

micro-scale enterprises to members and

communities, saving management, or providing

consultancy services business development that is

not for profit. The goal of an MFI is to help increase

the income and welfare of the community, especially

for the poor and/or low income. Drissi and Angade

(2017) also explained that Islamic microfinance

institution as a carrier of financial inclusion service

that must be supported to remain to survive and

sustain.

In Indonesia, there is a type of Islamic MFIs, its

name is Baitul Maal Wattamwil (BMT). The

uniqueness of this institution is not only as a profit-

oriented institution but also a non-profit oriented

institution. BMT plays a role in improving the

standard of living of the poor people, by helping

them financing for capital or additional business

capital, with the pattern of cooperation and business

partnership (Yusuf, 2014). Therefore, BMT is a

solution to the limitations of banking access for

micro, small and medium enterprises. BMT also

plays a role in eliminating the practice of usurer that

using the poor as a target. This practice happened in

the market, in remote villages (Yusrialis, 2014).

BMT can also have good performance if managed

well, this is shown by Inayati et al. (2014) stated

that BMT Usaha Gabungan Terpadu (UGT) Sidogiri

has positive value on the calculation of Economic

Value Added (EVA), that means, the BMT can

create added value. This happens because the value

of net profit after tax has a significant increase

compared with the cost of capital, this increase

indicates that BMT UGT Sidogiri has a good

performance.

Rahman and Dean (2013), Wulandari and

Kasssim (2016) argued that most of the Islamic

microfinance institutions include the BMT have

Amalia, A.

SWOT Analysis of Baitul Maal Wat Tamwil Beringharjo Yogyakarta.

In Proceedings of the 1st International Conference on Islamic Economics, Business, and Philanthropy (ICIEBP 2017) - Transforming Islamic Economy and Societies, pages 729-733

ISBN: 978-989-758-315-5

729

some problems such as poor market penetration, low

sustainability, high transaction costs, low efficiency

and have not been effective in alleviating poverty.

For example, Koperasi Jasa Keahlian Teknosa was

the first pioneer of BMT in Indonesia. This

cooperative was founded by activist Masjid Salman

Institute Teknology of Bandung (ITB) in 1980. This

cooperative officially changed its operational

activities into BMT Teknosa in 1984. Unfortunately,

in 1989 BMT Teknosa closed its business due to

missmanagement, they had high non-performing

finance (NPF) (Sakti, 2013).

Furthermore, Hamzah et al. (2013) found some

BMTs failed and bankrupted due to lack of quality

human resource and lack of special rules for

governing the BMT. They suggested to give the

education and training process for the employees

and make special regulations for BMT governance.

Nugroho (2014) also argued that one of the

challenges for the future BMT is about

developments and changes in the needs of low-

income people. BMT must innovate and if necessary

will do the transformation.

One of a success BMT in Indonesia is BMT

Beringharjo Yogyakarta. This BMT has been

operating for 23 years and never used banking for

funding, but in 2006 and 2014 got revolving funds

from the Ministry of Cooperatives, each amount was

Rp 1 and 8 billion. In the beginning of the operation,

its capital only Rp 1 million but in 2017, its already

has assets Rp 148 billion. In addition, BMT

Beringharjo has 17 branch offices in five provinces,

with a total of employees is 140 persons and total its

membership is 10 thousand people (Kontan.co.id,

2017).

The contribution of the study is to fill the gap,

between the failed and success BMT. It is important

to learn about how a BMT or Islamic microfinance

can survive and sustain. BMT Beringharjo can be a

role model for learning and developing of other

BMTs or Islamic microfinance. This BMT has a

good strategic management so can prove its

existence until now. Therefore, the paper will

discuss BMT Beringharjo's strategic management

using SWOT analysis.

2 LITERATURE REVIEW

2.1 Baitul Maal Wat Tamwil (BMT)

In Arabic terms, Baitul Maal wat Tamwil (BMT) is a

combination of Bait al-Mal, which means are social

institution, and Bait at-Tamwil, which means are

profit-oriented financial institution. BMT is a micro

financing institution that only exist in Indonesia.

Operational activities of BMT similar to Islamic

Cooperatives these are collect funds from its

members and distribute it again with various forms

of products with the aim of earning profit. Different

from Islamic Cooperatives, BMT also collecting

funds from zakat, infak, shodaqoh and wakaf

(ZISWAF) and distributing the fund to the poor and

needy. Zakat is the certain percentage of the wealth

that must be distributed by the moslems to the

mustahiq, people who are entitled to get social funds

based on Islamic Shari'a. Infak is all kinds of

expenditure of moslems for their self, family, or

society. Shodaqoh is the spending in the way of

Allah, charity does not have to be money and wakaf

is holding and utilizing the property or wealth of

moslems which the owner has handed over to the

other. So, BMT has two basic operational activities

these are as a profit and non-profit financial

institution (Kasdi, 2016).

Today, the operational legal basis of BMT is

Law No.1 of 2013 about Micro Finance Institutions.

Based on the Law, firstly, BMT can become

cooperatives with the legal basis of Law no. 25 of

1992 on cooperatives. Secondly, BMT can become a

company with the legal basis of Law no. 21 of 2011

on the Financial Services Authority (Masyithoh,

2014).

2.2 SWOT Analysis

SWOT analysis is an extension of Strengths,

Weaknesses, Opportunities, and Threats. This

analysis is a basic element in the preparation of

strategic choices that combine elements of the

strengths and weaknesses of an organization with the

opportunities and threats that exist in its

environment (Ruocco and Proctor, 1994). In the

qualitatif SWOT analysis, there are two factors;

internal factors and external factors. Internal factors

are analyzed using Strengths and weaknesses

strategy, while external factors use strategy

Opportunities and Threats. Common questions asked

in analyzing Strengths, Weaknesses, Opportunities

and Threats are (shahzadtc.com, 2016):

2.2.1 Strengths

 What are the advantages of having?

 Have you done well?

 Is there access to relevant resources?

 What are our strengths according to others?

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2.2.2 Weakness

 What can be improved?

 Have you done well?

 What should be avoided

2.2.3 Opportunities

 Where and what are the exciting opportunities

in your market?

 Is there a new trend in the market?

 Can a managed organization predict new

opportunities in the future?

2.2.4 Threats

 What obstacles are facing?

 What has the competitor done? Does this

suppress organizational development?

 Are there any changes in products and services

due to specific specifications of the work

performed?

 Are the required specifications for your work,

product or service changing?

2.3 BMT and SWOT Analysis

Ginting and Sudrajat (2014), examined BMT

development strategy in Medan by using SWOT

quantitative analysis. The results that should be

developed are: developing a bookkeeping system in

accordance with the Islamic system and more

transparent with sharing system, utilizing the

network of Islamic banks, improve facilities and

infrastructure of systems information and technology

Hidayah (2015) examined the condition of BMT

Bina Ihsanul Fikri (BIF) in Kota Gede Yogyakarta.

This study used a quantitative SWOT analysis. The

result showed that BMT BIF in competitive

condition and had high market growth.

Tribuana (2016) examined the financing of BMT

Al-Falah to traders in the Sumber market. This

research was a qualitative research and used SWOT

analysis.The result of this research was BMT Al-

Falah had strength: good operational management,

professional human resources, reputation, and

missions vision were measurable. But the weakness

of BMT Al-Falah was the lack of socialization about

empowerment and flexibility of financing

application.While the opportunity BMT Al-Falah:

more maximize empowerment program, especially

in the Sumber market. The threat of BMT Al-Falah:

competitor and financing risks. Therefore BMT Al-

Falah must have some strategies: more innovative in

making financing programs, more socialization

about financing and do more prudential principles.

Mahri et al. (2016) tried to find the best models

to empower the business sector through BMT. 10

BMTs are used to be sampled and analyzed using

SWOT analysis. The empowerment model is divided

into three groups. The research result indicates that

BMT in the second group already does economic

empowerment, but not yet perform in the social

function. Some BMTs have the potential to be

developed but lack of qualified human resources.

3 METHODS

This research is a qualitative research using primary

data by interviewing the General Manager of BMT

Beringharjo Yogyakarta and secondary data from the

other relevant sources. BMT Beringharjo

Yogyakarta was selected as a sample because of its

ability to survive and sustain. Qualitative SWOT

analysis is used to analize the strength, weakness,

opprtunity and threats in the BMT Beringharjo.

4 FINDING AND DISCUSSIONS

Head Office BMT Beringharjo is located at West

Ringroad Banyuraden Kaliabu Gamping Sleman

Yogyakarta. In 2001, Dompet Dhuafa Republika

invested to this BMT and got revolving fund from

the Ministry of Cooperatives in 2006 and 2014. The

latest, BMT Beringharjo has assets of Rp. 148

billion and has been operating for 23 years. BMT

operates based on the merchant community in the

Beringharjo market Yogyakarta Based on SWOT

analysis, this chapter will discuss the analysis of

strategies required by BMT Beringharjo. These

strategies include aggressive, competitive,

conservative and defensive strategies.

4.1 Strengths

BMT Beringharjo has a financial benefit that can be

seen from its return on equity about 15-20 percent

per year. This means that every Rp 1 invested by

shareholders (BMT members) will earn Rp 0.15 to

0.20. Another benefit is non-material profit, BMT

feels happy because of reward from Allah with the

Islamic economic da'wah and the empowerment of

micro small seller program. Islamic economic

da'wah program makes the public know if usury is

haram, including interest. The empowerment

program makes BMT members more prosperous

because of their economies condition are better than

before.

SWOT Analysis of Baitul Maal Wat Tamwil Beringharjo Yogyakarta

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The process of managing BMT refers to the rules

of POAC (Planning, Organizing, Actuating and

Controlling). Planning is done by creating a strategic

plan for all activities (programs) every three years,

both financial and non-financial programs.

Organizing is done by creating a detailed

organizational structure and doing the job

evaluation. Actuating is done by routine monthly

coordination each work unit. Controlling is done by

making a written report, both financial and non-

financial programs and the presence of internal audit

supervision.

One of the important resources in the

management of BMT is the human resource. The

management did open recruitment by "below and

above" system. That means job vacancy information

is disseminated simultaneously to the wide people

using specialized media such as leaflets, posters,

banners, billboards or social media.

The advantages of BMT according to others:

have a brand, human resources, and governance.

BMT Beringharjo has been operating for 23 years,

meaning that people are familiar with the name of

BMT Beringharjo. BMT human resource is suitable

for its needs, so can work with the maximum. The

existence of POAC rules in the management means

BMT has good governance.

4.2 Weaknesses

One of the things that need to be improved is

innovation. Currently, innovation in BMT

Beringharjo is low in both products and services. A

monotonous product or service will create saturation

and no longer attractive to BMT members. It needs a

breakthrough to create an innovation by training and

benchmarking to others who are considered qualified

in a particular field. Another thing to avoid is bad

work culture (prejudice to others). It will raise

suspicion so there is no longer a sense of

togetherness and mutual help in work units and

BMT will be affected with this condition.

4.3 Opportunities

The Beringharjo market placed in an area of 2.5

hectares with 600 sellers. They occupy 5441 stalls.

The average number of visitors to the Beringharjo

market is around 16,000 person each day. This

market also became one of the tourist destinations in

Yogyakarta, because of historical factors and also its

location near Malioboro area. This situation makes

BMT Beringharjo has the opportunity for wider

market penetration. In addition, the needed of capital

by the seller remain high because of crowded

visitors in the market, makes BMT has an

opportunity to supply the fund to the seller.

This section must be in two columns. Another

opportunity is era 4.0. Currently, the industry is

facing a 4.0 era that requires industry players to

change manufacturing processes by integrating

online-based systems within a production chain. The

microfinance industry is expected to be flexible

faced this condition. BMT Beringharjo as an

Islamic microfinance sees era 4.0 as an opportunity

to improve innovation. There are several things that

can be done such as digitization in its products and

annually member meeting (Rapat Anggota Tahunan/

RAT) online where in this RAT system can be held

by using digital media.

4.4 Threats

Today, there are around 40 BMTs and 4000

microfinance institutions in Yogyakarta that actively

serve some products. This fact makes the

competition between BMT and microfinance

institutions have started high. BMT Beringharjo also

felt the consequences of the condition, because of

pricing battle happened.This situation makes BMT

Beringharjo disturbed, because of its revenue will

decline. In addition, BMT Beringharjo product must

be changed due to the cheap credit business from the

competitors. This situation makes BMT Beringharjo

create a more interesting product. Addition

supervision of the new product is required to avoid

problems in the future.

5 CONCLUSIONS

BMT Beringharjo success to survive and sustain up

to the moment by doing some basic things that are:

 Having a comparative advantage. BMT

Beringharjo has a comparative advantage as a

BMT that specifically serve the market seller,

make it as a market specialist and becomes its

uniqueness compared with other BMT;

 Redefine existing threats and turn them into

opportunities. Product innovation is needed by

BMT Beringharjo to deal with existing threats,

by making products with cheap margin.

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