The Maslahah Principle against Sharia Financial Technology in
Indonesia
Fiska Silvia Raden Roro, Abd Shomad
Faculty of Law, Universitas Airlangga, Surabaya, East java, Indonesia
Keywords: Maslahah Principle, Sharia, Financial Technology.
Abstract: The principle of maslahah is applied particularly in cases that have not been regulated by the Qur'an, the
Sunnah (the teachings and practices by Prophet Muhammad), or qiyas (analogy method in Islamic
jurisprudence). Maslahah is the concept in shari'ah (Islamic divine law) regarded as a basis of law. It forms a
part of extended methodological principles of Islamic jurisprudence (usul fiqh). The application of the concept
has increasingly become important since contemporary legal issues have arisen in the modern times. Sharia
financial technology is one of the new legal issue in recent years. By focusing on profit-loss sharing principles
Islamic financing has the potential to prompt more financing by small and medium sized enterprises (SMEs)
to start their businesses. The adoption of sharia financial technology (hereinafter referred to as fintech) is in
line with government initiatives working to address barriers to SME growth, such as limited access to
financing or lack of sufficient collateral for loans. The government believes Islamic finance will bring many
benefits for both Muslims and non-Muslims due to it aims. There are several challenges and risks in the sharia
financial technology industry. The legal problem in this article is that all fintech in Indonesia has only one
door to entry, namely by registration through only one platform fintech transaction: lending service based on
information technology. It has been enacted by the Financial Services Authority regulation (POJK) No.
77/POJK.01/2016. Vice versa, in Islamic law perspective, al-qardh (lending) is not categorized as a business
transaction. Taking a profit in lending transactions is prohibited (haram). In fact, until June 10, 2018, the
number of fintech listed on the the Financial Services Authority consisted of 63 conventional fintech and 1
sharia fintech (in the near future there will be four financial technology companies-based lendings that run
the principles of sharia in the process of filing a registered permit).This fact means that sharia fintech
companies candidate are inevitably forced have to register with the Financial Services Authority as lending
service platforms. This article will analyze this legal problem under the maslahah principle. This principle
indicates prohibition or permission of a thing or a deed according to necessity and particular circumstances,
on the basis of whether it serves the public interest of the Muslim community (ummah). The concept is
acknowledged and employed to varying degrees depending on the jurists and schools of Islamic jurisprudence.
1 INTRODUCTION
Since February 24, 2016, the government has
launched "Indonesia: The Digital Energy of Asia,"
therefore, the government has set a number of
policies, among others, targeting the growth of the
technopreneur sector with a target of reaching e-
commerce transactions of 130 billion USD by 2020.
A strategic plan is to focus on SMEs and engage them
in national economic development as well as
facilitating access to funding for the digitization of
SMEs and pioneering companies through People's
Business Loans. This program has been supported by
the Financial Services Authority/Otoritas Jasa
Keuangan (hereinafter referred to as OJK) with the
issuance of OJK Regulation (hereinafter referred to as
POJK) No. 77 /POJK.01/2016 regarding Lending
Service based on the Information Technology at
December 28, 2016.
Financial Technology is present for providing
ease of financial services to consumers or society
without the worry of the fintech system organized by
fintech actors. Every officially registered fintech
actor will be arranged by related institutions such as
the Ministry of Communication and Information
Technology (Kemenkominfo), OJK and Central
Bank of Indonesia (hereinafter referred to as BI).
OJK has done the testing against fintech actors using
Roro, F. and Shomad, A.
The Maslahah Principle against Sharia Financial Technology in Indonesia.
DOI: 10.5220/0007538501110120
In Proceedings of the 2nd International Conference Postgraduate School (ICPS 2018), pages 111-120
ISBN: 978-989-758-348-3
Copyright
c
2018 by SCITEPRESS – Science and Technology Publications, Lda. All rights reserved
111
a regulatory sandbox method which is contained in
the PBI (BI), PADG (Rules of Governor Board
Members) and POJK (Regulation Financial Services
Authority) regarding fintech, as well as technically
reinforced by regulation which made Kemenkominfo
in the Law of Electronic Information Technology. On
-to-
customer is lent money as a reward for interest
payment and capital repayment from time to time.
Peer-to-peer lending rules are expected to increase
the confidence of investors through lending service
based on fintech with the aim of assisting the
proprietors of SMEs to gain funding to expand their
business. The information technology based on
lending service, which is better known as financial
technology (hereinafter referred to as fintech) is one
alternative platform of investment based on digital
technology that can be used as loans to SMEs. Based
on Article 1 point 3 of POJK No. 77 /POJK.01/2016,
the information technology based on lending service
is the implementation of financial services to arrange
a meeting among lenders with the recipient of the
loan in order to construct a lending agreement in
rupiah currency directly through electronic systems
by using the Internet network. This platform is
generally to support the development of microcredit
or SMEs in capital and investment. The method of
the information technology based on lending service
is expected to be a solution for SMEs and new start-
up businesses. The concept related to lending based
fintech, or debt based on fintech is this term
commonly called a peer to peer lending scheme or
person to person
1
.The activities of lending and
borrowing service providers act as intermediary
institutions. The disadvantage is that the lending
based fintech system is considered to lack legal
protection because there is no requirement for
collateral as in banking
2
.
The fintech company makes products divided into
categories, such as e-money, loan-based crowd
funding or lending, pledge, payment, reward and
donation-based crowd funding, financial planning,
capital market, Internet banking, and comparison of
financial services products. However, OJK still builds
regulation only limited to a "lending service-based
fintech" scheme which is similar to "peer-to-peer
lending"/"loan- ereinafter
referred to as P2P lending).
Currently OJK only uses P2P lending service
regulation on fintech. In the other words, OJK
provides regulation in order to register, to manage, to
monitor or to control the fintech model with a P2P
lending system only, whereas there are many kinds of
platform of fintech type. P2P type is faux pas par
excellence in fintech in perspective of economic
liberalism and capitalism due to it being the most
popular in public demand and more profitable or low
in risk. This type of fintech has a function as an
intermediary for those who want to lend money and
those who need to borrow money. The fintech model
brings economic and social impacts globally in
financing and lending matters
3
. This platform is
easier than a bank mechanism/procedure for the
person or community to apply lending/financing, as a
bank mechanism is more complicated and difficult for
the community, especially for the startup
business/SMEs.
Moreover, the OJK regulation is still applicable to
the common fintech, not for sharia fintech. This is a
major obstacle to sharia fintech related to registration,
regulation and supervision considering sharia fintech
is highly demanded by the Muslim majority of
Indonesia. Recorded shariah bank financing and
sharia business unit amounted to Rp 282.1 trillion as
per February 2018. OJK records the value fell 1.3%
compared to year-end (year-to-date/ytd) of Rp 285.7
trillion. Fintech has disbursed loans of Rp 4.47 trillion
as of March 2018. In total, the financing of the Islamic
finance industry is much higher than fintech.
However, loan growth is much faster for fintech, i.e.
74.6% ytd
4
.
This article will analyze several rules in sharia
financial technology by maslahah principle. This
principle indicates prohibition or permission of a
thing or a deed according to necessity and particular
circumstances, on the basis of whether it serves the
public interest of the Muslim community (ummah).
The concept is acknowledged and employed to
varying degrees depending on the jurists and schools
of Islamic jurisprudence (mazhab).
2 MATERIALS AND METHODS
The material on the main issues of this paper is an
analysis of the application of maslahah principle in
shariah financial technology in Indonesia. The
deductive method is applied by outlining the rule of
Lending Based Financial Technology Service
Number 77/POJK.01/2016, which is associated with
the facts and maslahah principle. This paper uses a
conceptual approach. This approach is intended to
obtain a comprehensive review of sharia law in
analyzing the financial technology service in
Indonesia under maslahah principle in order to
empower SMEs.
ICPS 2018 - 2nd International Conference Postgraduate School
112
3 DISCUSSION
3.1 The Utility of Fintech
Digital technology as disruptive innovation has
penetrated many aspects of life. The digital revolution
takes place in all business sectors, including the
financial sector. The existence of fintech then crushed
the conventional finance industry and revolutionized
the workings of traditional financial institutions. An
innovation successfully transforms an existing
system or market, introducing practicality,
accessibility, convenience, and economical cost,
known as disruptive innovation. Initially, this term
was first made by Clayton M. Christensen and Joseph
Bower in 1995. "Disruptive Technologies: Catching
the Wave", Harvard Business Review (1995). Fintech
is a logical consequence of this disruption. Fintech
brings a new platform of capital and investment, it is
a more practical, quick and easy mode for consumers
to access products and different types of financial
services.
Fintech has several important roles in the
developing of entrepreneurship and financing and it
has contributed to the economic growth through the
creation of new and increasing flows of credit to
SMEs and other users in the real economy. Several
benefits of fintech include: it has strong ties to
innovation and breakthroughs, provides cheaper
access to capital, it helps fill the gap left by the banks,
it offers convenience, and geographical boundaries
are removed 5.
The standard in measuring utility principles is "the
greatest happiness for the greatest numbers". This
standard was born out of the will of economic
liberalism (laissez faire) by Jeremy Bentham.
Bentham believed that when individuals who make
up society are happy and rejoicing, then the whole
country will enjoy happiness and prosperity. Bentham
argued that the main duty of government is to increase
the happiness of society by developing the pleasures
that can be enjoyed by society, in addition to creating
security and reducing misery6.
Khan, in Hasan, argued that the concept of utility
involves value judgment; it regards desires as the best
criterion for the formation of preferences, and does
not distinguish them from needs. In Islamic
economics maslahah is a more objective concept for
analyzing the behavior of economic agents7.
Benefits are clearly seen from a peer-to-peer
lending scheme. The benefits of peer-to-peer lending
initially are to combat capital problems. By this
scheme, the current capital problem is no longer a big
problem, because websites that provide solutions for
loans have started to appear. A person or SME
entrepreneur can more easily borrow money from
P2P lending-based fintech websites. The P2P
lending-based fintech website gets the capital from
investors from the whole world without any partition
of each state and it regulations.
These days, all of the economic trend is
Islamizing the existing platform, so it very often
encounters difficulties in the application of principles
and their application in the viewpoint of Islamic law.
For every product or service, which arises from
economic liberalism and capitalism, due to demand
of the Muslim community, all of the products and
services are labeled as shariah/Islamic products or
services and sometimes without complying to shariah
principles.
3.2 Sharia Fintech Needs Policy,
Supervision and a Comprehensive
Regulatory Framework
Fintech is an innovative service, which is no doubt
expected to contribute to the expansion and growth of
the Islamic finance institutions, which can lead to a
better service or maslahah. The crucial issue is
whether fintech based on lending service and
structures is not an alternative to Islamic finance but
a new phenomenon within Islamic finance. Fintech
based on lending service is currently forced to go
through the only one door to fintech operations based
on sharia principles, although in sharia principles it is
clearly not allowed to take profit of lending
transactions. The determination of maslahah in the
fintech world is a very risky issue. It is not even clear
how fintech innovation platforms relate to Muslim
needs. As such, the regulatory framework that covers
Islamic fintech should be there in addressing
consumer protection and market conduct issues.
The current registration procedure of sharia-based
fintech is still the same as the conventional fintech.
OJK itself is concocting regulations related to sharia-
based fintech lending as a renewal of the POJK 77 of
2016. In the other word, nowadays sharia fintech is
forced to be registered on the peer-to-peer lending
mechanism and it is forced to be governed by general
economic principles that are not adherent to sharia
principles. It is clear that in its implementation it will
be unsuitable or likely to violate the principles of
sharia. The form of surveillance on fintech in general
is clearly different from the supervision on the fintech
of sharia.
In types of fintech of a lending-based service, the
backer is entitled to regular compensation and is
The Maslahah Principle against Sharia Financial Technology in Indonesia
113
entitled to recover funds, which is already provided
within specified deadlines. By definition based on
Imam Wahjono, 8 a peer-to-peer lending service has
the same mechanism as a lending service platform in
a conventional bank. P2P lending or commonly
referred to as social lending or person-to-person
lending and is a form of debt fintech. P2P lending
provides a facilty for someone who wants to borrow
money from someone who has never met them
directly before. On the other hand, the investor can
lend to someone who they never knew before and the
information is only based on the credit record of the
borrower. In this type of fintech, the backer is entitled
to regular compensation (as well as interest) and is
entitled to recover funds already provided within
specified deadlines.
Based on the above description, clearly that this
type of P2P lending fintech involves interest/ usury
(riba) to gain profit and is definitely not allowed or is
unlawful law in an Islamic perspective. However,
some argue that this type can be allowed if it meets
certain conditions. Generally fintech-based loans or a
fintech lending service, such as bank lending
mechanisms. The risk of return of this type is high,
therefore the prospective lender is very cautious,
though usually promising additional loan allowance
is very attractive. The sharia fintech requires the
Sharia Council to ensure that Islamic law takes place
and is implemented in this regard.
In this case, the author's analysis of a fintech
lending-based/debt-based service is based on Ibn
Qudamah's opinion. He explained that Ibnul Mundhir
then he gives the borrower a condition for additional
or reward, then borrow and make it in such a way,
by Ubay bin Ka'ab, Ibn 'Abbas and Ibn Mas'ud that
they forbid from any form of accounts receivable with
profit. Accounts payable include contracts that help
and seek rewards for helping others. But if helping is
the purpose, why even look for profit; this is outside
the intention to lighten the burden of others.(Al
Mughni, 6: 436).
Under maslahah principle, in order to run its
business curently, PT Ammana Fintek Syariah has
officially registered in the OJK list as a fintech-based
lending service. Even though fintech is based on
lending services it is not in line with sharia principles,
PT Ammana Fintek Syariah is the first fintech based
on sharia principles which is listed in OJK with a P2P
lending platform. The other is a sharia unit in PT
Investree Radhika Jaya, this unit as the only peer-to-
peer financing that has received a letter of
recommendation for the appointment of a shariah
expert team from the National Sharia Council and has
been recorded in the Directorate of Non-Bank
Financial Institutions Sharia Financial Services
Authority (IKNB OJK).
In international monitoring bodies and policy
recommendations regarding the global financial
system, the Financial Stability Board (FSB) divides
fintech into four categories based on the type of
innovation: 9
First, payment, clearing and settlement. This is a
fintech that provides payment system services, both
held by the banking industry and conducted by Bank
Indonesia such as Bank Indonesia Real Time Gross
Settlement (BI-RTGS), BI National Clearing System
(SKNBI) to BI Scriptless Securities Settlement
System (BI-SSSS). For example, Kartuku, Doku,
iPaymu, Finnet and Xendit.
Second, e-aggregator. This fintech collects and
processes data that consumers can use to help make
decisions. This start-up provides product
comparisons ranging from prices, features to benefits.
For example, Cekaja, Cermati, KreditGogo and
Tunaiku.
Third, risk management and investment. This
fintech provides services such as robo advisor
(software that provides financial planning services
and e-trading and e-insurance platforms. For
example, Bareksa, Cekpremi and Rajapremi.
Fourth, peer-to-peer lending (P2P). This fintech
brings together lenders (investors) with loan seekers
on one platform. Later the investors will get interest
from the loaned funds. For example, Modalku,
Investree, Amartha and KoinWorks.
Sharia fintech only has been enacted in guidance
of the National Sharia Board through Fatwa DSN-
MUI No.117/2018. In this Fatwa MUI, the definition
of financing services based on information
technology under sharia principles is the
implementation of financial services based on sharia
principles, which bring together or connect financiers
with financing recipients in order to built financing
contracts through electronic systems by using the
Internet. Sharia fintech, especially peer-to-peer
lending service as it is regulated in OJK regulation
No. 77/2016 is more appropriately referred to as P2P
to sharia principles. Both PT Ammana Fintek Syariah
and the sharia unit in Investree are registered with
OJK as a part of a lending service based on
information technology, which is based on sharia
principles. Both provide financing services for
venture capital or legitimate funding based on sharia
rules and regulations. By using a halal and profitable
ICPS 2018 - 2nd International Conference Postgraduate School
114
peer-to-peer financing scheme, borrowers who need
financing and lenders who want to get paid for their
funding will be brought together in a single facility
called the marketplace. Moreover, both expect to
develop SME business growth by meeting the
financing needs and financing of lending without riba
in accordance with sharia principles while supporting
the growth of a sharia economy in Indonesia.
Due to the absence of law regulating the provision
of Islamic/sharia fintech, thus the definition of it
specifically has not been found in the regulation of
Indonesia. Meanwhile, based on Article No.1 verse
(25) of the shariah law, on the definition of
funding, the provision of funding or a bill which is
considered to be similar to that is in the form of:
1. Profit share transaction in the form of
Mudharabah and Musyarakah
2. Renting transaction in a form of ijarah or ijarah
muntahiya bittamlik
3. Trade transaction in a form of accounts receivable
murabahah, salam, istishan,
4. Lending transactions in a form of accounts
receivable qardh
5. Service renting transaction in a form of ijarah
6. Multi-service transaction. Many fintech products
and procedures seem to be not in full compliance
with formal requirements of uqud/aqad (Islamic
contract law) in general and shariah nominate
contracts in particular. The fundamental issue is
the reliability of information on a fund-seeking
project in general and on its shariah qualities in
particular. For Instance, a Muslim investor has to
be sure that
equity or lending platform, as well as the use of
the funds by the borrower(s) are under shariah
compliance. For example, supervision of fintech
regulations for conventional fintech will not be
sufficient for Islamic schemes where the shariah
compliance of contracts and the use of funds are
essential for the lender/investor.
Besides the lack of regulations, which is a need
policy, and a comprehensive regulatory framework,
moreover, sharia fintech needs to be supervised.
Regarding the legal protection of the sharia
fintech system, it is related to the government's
supervision of the lending service based on the
fintech system itself. Supervision must be carried out
by the authorized institution so that there is no
overlapping in carrying out the supervisory function.
Regarding supervision in the field of financial
technology, there is still a lack of regulation so that
the coordination system between Central Bank of
Indonesia (hereinafter referred to as Bank Indonesia)
and the OJK has not been realized because until now
there are no legal instruments governing the formal
framework (both at the level of general policy makers
and at the technical level) in order to support the
supervisory task related to the course of crowd
funding activities. The UK regulatory body for
technology-based financial services is called the
Financial Conduct Authority (FCA), while in
Singapore it is called the Singapore Monetary
Authority (MAS). Strictly speaking, the British
Financial Organizing Authority stated on its official
website that the regulated Internet business model
activities only deal with loan-based crowd funding
platforms (loan-based crowd funding): also known as
'peer-to-peer lending', and investment-based crowd
funding (investment-based crowd funding) and FAC
does not regulate donation-based crowd funding
(donation-based crowd funding) and pre-payment or
rewards-based crowdfunding10.
The fintech service platform is differentiated on
the purpose of the activity. If it is intended to be built
on an ijarah contract that aims to carry out activities
primarily related to financing services, the financing
services authority is the institution authorized to
monitor it. This has been regulated in Article 6 of Act
Number 21 of 2011 concerning the Financial Services
Authority (State Gazette of the Republic of Indonesia
of 2011 Number 111, Supplement to the State Gazette
of the Republic of Indonesia Number 5253), that the
financial services authority carries out the task of
regulating and supervising the activities of financial
services in the banking sector, financial services
activities in the capital market sector, and financial
services activities in the insurance sector, pension
funds, financial institutions and other financial
services institutions. The OJK functions to organize
an integrated system of regulation and supervision of
all activities within the financial services sector. OJK
has authority in the field of regulation and
supervision. In the field of supervision, OJK
supervises and protects consumers in the banking
sector, capital market, and Non-Bank Financial
Industry (IKNB), provides and/or revokes business
licenses, approves or determines dissolution, gives
written orders to financial service institutions and
appoints site managers sharia fintech service web and
is authorized to set administrative sanctions. In the
task of bank supervision there is coordination
between Bank Indonesia and OJK. Bank Indonesia
exercises its authority in the field of the macro-
prudential, and OJK in the field of micro-
prudential.11
Supervisory agencies will be different if an
Islamic fintech service binds itself to a tabarru
contract, in which the main activity is donation-based
The Maslahah Principle against Sharia Financial Technology in Indonesia
115
crowd funding and the position of the funder is a
donor, not a capital provider. If the funds raised in
fundraising are a donation based on fintech, it is very
possible if the funds are included in the category of
zakat, infaq and sadaqah. Related to the management
of zakat regulated by the Law of the Republic of
Indonesia Number 23 of 2011 concerning
Management of Zakat (State Gazette of the Republic
of Indonesia Number 115 in 2011, Supplement to the
State Gazette of the Republic of Indonesia Number
5255), hereinafter referred to as the Zakat
Management Law, the supervisory function is on the
National Zakat Board/Badan Zakat Nasional
(hereinafter referred to as BAZNAS). In this case, the
Government carries out regulatory control duties, and
BAZNAS is the executing agency. The reason for the
government designing BAZNAS as a non-structural
government institution whose membership consists
of elements of society and government, is that its
nature is not lost. To assist BAZNAS in the
implementation of collecting, distributing and
utilizing zakat, in the community it is possible to
create Amil zakat agencies (Lembaga Amil Zakat).
Every LAZs must obtain permission from the
government. Zakat finance is not included in the
reports it. The state has an interest in facilitating
Muslims in fulfilling the obligation of zakat, but not
taking advantage of the people's funds. Strictly
speaking Article 1 jo Article 5 of the Zakat
Management Law states that BAZNAS is an
institution that carries out zakat management
nationally, domiciled in the capital city of the country
and is a non-structural government institution that is
independent and responsible to the President through
the Minister.
Nur Aqidah Suhaili 12 stated that in Islamic
crowd funding it can apply waqf as an object of
fundraising, if so, then the supervisory function
related to waqf is regulated in Article 34 jo Article 36
of Law Number 41 of 2004 concerning waqf (State
Gazette of the Republic of Indonesia of 2004 Number
159, Supplement to the State Gazette of the Republic
of Indonesia Number 4459) hereinafter referred to as
the Waqf Law. The provisions in the Waqf Law
stipulate that the authorized institution in the land
waqf field is the National Land Agency. Authorized
institutions in the field of waqf of movable objects
other than money are agencies related to their main
duties. Agencies that are authorized in the field of
waqf of movable objects other than unregistered
goods are the Indonesian Waqf Board (Badan Wakaf
Indonesia).
When the distribution of results and achievements
related to the fulfillment of the contract is not
appropriate, then the liability efforts and sanctions are
the answer to the legal protection of Islamic fintech.
In the national legal system as a consequence of
Article 1367 Burgerlijk Wetboek states that everyone
must be responsible for persons or objects under his
control. As outlined earlier, that crowd funding
systems that depend on the Internet are subject to the
Act of Electronic Technology Information Law
(hereinafter referred to as ETI Law), but in this ETI
law there is no explicit provision if the principle of
liability is adopted. The ETI law states that parties
that conduct electronic transactions must act under
the good faith principle, and among them three forms
of liability, namely (i) liability for errors (liability
based on fault), (ii) liability for negligence
(negligence) or (iii) principle of liability without error
(strict liability).
3.3 Sharia Fintech Under Maslahah
Principle
Mazhab Maliki fully supports the al-maslahah al-
mursalah principle. It is in line with maqasid al-
shariah and it brings justice to people in society. Five
main objectives of shariah (maqasid al-shariah) are i)
hifzu al-din (protection of religion); ii) hifzu al-nafs
(protection of life); iii) hifzu al-mal (protection of
wealth); iv) hifzu al-aql (protection of intellect); and v)
hifzu al-nasl (protection of progeny). By protecting
these five maqasid it leads to serve the public interest as
against individual interest. Again by protection of the
maqasid it would lead to mutual and peaceful
coexistence in the society. On the other hand, without
protecting it, it will lead to chaos in the society and the
whole nature
13
. Al-
straightness of a path, justice and balance, and a
epitomizes the teachings of Islam, which establishes a
set of norms, values, and laws that govern every single
aspect of life. Marwa referred to Laldin & Furqani, that
belief system, the concept of morality and ethics, the
relationship between God and humans, and established
14
.
-maslahah is an Islamic philosophical
other words, it means if any decision is taken which
ICPS 2018 - 2nd International Conference Postgraduate School
116
has no reference in the Quran and Sunnah it is
acceptable in Islamic philosophy as it brings benefit
for the people in the society as long as it is not
different way, in utility principle which it measures
and is relative
depending on the subject matter. But in Islam when
something is fixed by shariah (the Islamic law) as a
principle it must be followed, take it for granted, no
matter if it brings good for a majority of people or
not.
Islamic jurisprudence has developed a special
applying it in unprecedented situations. Classic
Muslim jurists have divided maslahah up based both
on its role in society and its relation to the Quran and
Hadith. There are three categories of maslahah:
necessities, needs, and embellishment. maslahah are
also divided into three categories: ones that the
explicitly dismiss or cancel, and ones that they do not
mention at all. The method of considering maslahah
in decision-making can be summarized in two steps:
first step is that maslahah should promote one or all
not cause the loss of a bigger utility or result in great
harm 15.
Achsien and Purnamasari describe how
sharia/Islamic fintech is perceived as value oriented,
where it should meet the maqasid (purposes or goals)
of sharia. Maqasid is to accomplish maslahah
(benefit). Maqasid are the preservation of (1)
religion, (2) life, (3) lineage, (4) intellect, and (5)
property. Islamic fintech is constructed through
concepts such as equity, justice, human dignity,
freedom of enterprise, and moderation, with the
ultimate objectives of utilizing economic and
financial resources to satisfy the material and social
needs of all members of the community16.
Due to language, language utility means
usefulness, helpfulness or advantage, then this makes
an opinion that equates to the utility principle with
mashlahah, but if you look deeper there is a
difference between the two. Differences in maslahah
and utility include: a) the concept of maslahah is
satisfaction is individualistic, but maslahah not only
can be felt by the individual but can also be felt by
others or a group of other people or society. c) the
problem is relatively more objective because it is
based on an objective consideration (the criteria of
halal or good) so that an economic thing can be
determined whether to have maslahah or not. While
utilities are based on more subjective criteria, they
may therefore differ from one individual to another.
d) the individual's problem is relatively consistent
with the social problem. In contrast, individual
utilities are often opposed to social utilities. e) if the
goals of maslahah are for all the parties in a business
transaction, then all economic activities of society
both consumption, production, and distribution will
achieve the same goal, namely prosperity. This is in
contrast to the utility in conventional economics, for
example from a consumer perspective they measure
it from the satisfaction of the consumer. While from
the perspective of an entrepreneur, it is measured
from the level of success to achieve optimum profit
so different goals are achieved17.
Sharia fintech created on the basis of the
incoherent methodology do not really exhibit the
Islamic ethical framework of commercial contracts
and the objectives of shari'ah. This is in line with
the maslahah theory indicates good ground of
philosophical discussions laid down by the classical
jurists such as al-Ghazali and al-Shatibi. However, to
apply the theory in the Islamic banking and finance
matters, there is a need to develop a distinctive
method to ensure its application does not deviate
from the original concept. It is observed that the
significant impact on an Islamic framework for sharia
fintech. Jalil19 believes that maslahah analysis
should be carried out prior to performing the
commercial and national profitability analysis of the
project. In order to develop sharia fintech, it is
necessary to establish cooperation between Islamic
countries at the international level and it is also
necessary to accelerate the initiative of the
preparation of the guidelines and such cooperation
would give birth to a detailed Islamic framework for
a sharia fintech benchmark or evaluation. The
be the starting point of the project evaluation
framework from the Islamic perspective without
infringing sharia compliance.
Shariah fintech as a new alternative financial
model has the potential areas that can be
implemented, even though OJK has not yet provided
the regulation, which is in accordance with the sharia
principle. Several objectives of fintech comply with
the maslahah principle including: (i) To provide an
avenue to increase the size, and stabilize the stream
of funds that can be channelled for profit of business
or social programs. (ii) To promote improved social
The Maslahah Principle against Sharia Financial Technology in Indonesia
117
outcomes and economics income for SMEs by
directly linking funders to them through online. (iii)
Providing an accountability and transparency
mechanism of business because this transaction is
supervised globally (iv) Providing a halal financing
service of funding and lending without riba or other
transactions which are contrary with Islamic law (v)
Providing a simple mechanism financing service and
reducing complicated mechanisms (vi) reducing the
intervention of government policy (such as in the
lending mechanism in conventional banks). These
objectives and areas of implementation of sharia
fintech comprehensively matched the elements
related to the maqasid al-
Actually, the sharia fintech can be said to be a model
that epitomizes the ethical and moral framework of
Islamic law. As a new alternative financing model, it
is still in its developmental stage but is steadily
attracting interest from institutions around the world.
Unfortunately, OJK is considered slow in responding
to building a sharia fintech system, mechanism and
its supervision. Fintech is not growing from Islamic
institutions or Islamic banks, but through fintech,
potentially Muslim finance can be increasingly faster
and more solid. Therefore, OJK needs to establish the
sharia fintech system, which is including regulation
under the sharia principle, provide sharia
transactions, its mechanism and supervision. If OJK
has provided regulation, which is specially based on
fintech in sharia, every party can be fulfilling the
maqasid al-
renouncing its business side and investment
elements.
It should be the implementation of peer-to-peer
lending based on financial technology that is allowed
in an Islamic perspective if this P2P transaction is
without using interest. How that is done is actually
through a sale contract. So, this is a P2P crowd
funding for asset finance, using a contract from
Islamic finance called Murabahah. In order to use this
Murabahah contract, it must be done in a way that is
sharia-compliant. This contract will be between the
crowd, the platform, and an SME. So, a peer-to-peer
lending service is different from peer-to-peer crowd
funding or peer-to-peer financing. Therefore, in
Indonesia the National Sharia Board in February has
enacted guidance or fatwa through Fatwa
Ref.#117/DSN-MUI/II/2018 regarding financing
service based on information technology under sharia
principles. This fatwa guidance uses the term
law perspective, al-qardh (lending) is not categorized
as a business transaction and it is not
allowed/prohibited to take a profit in a lending
transaction. In fact, until June 10, 2018, there is one
sharia fintech that has been registered with OJK (in
the near future there will be four financial
technology-based companies lending that run the
principles of sharia in the process of filing a
registered permit). This fact means that sharia fintech
company candidate are inevitably forced to have an
obligation to register with the the Financial Services
Authority as a lending service platform.
In order not to hesitate in the formation of the
contract, then any business innovation that develops
at this time must first be reviewed in relation to the
validity of the contract that is made. Attachment to
Islamic law applies to both Muslim and non-Muslim
parties who voluntarily submit themselves to Islamic
Law on contracts or sharia contracts that have been
made. In a business transaction, the principle of kafah
is needed, which means that from the beginning of
the contract signing to the end of its implementation,
it submits itself to the sharia, including the instrument
of settlement of the dispute in the event of a sharia
economic dispute in the future. Internet technology
has changed the mechanism of business transactions
and created new forms of business innovation and has
new characteristics that are very different from the
characteristics of previous forms of business
transactions. Starting from the harmony and the terms
of making a contract, the type of contract that will be
made, until the dispute resolution process (from
beginning to end) is expected not to violate sharia
compliance and not be categorized as a
prohibited/forbidden transaction. In other words, the
formation of a business innovation contract,
including Islamic crowd funding is obliged to heed to
sharia rules ''alasy syai 'far'un' an tashuwwurihi",
which means that a legal assessment of a problem
departs from the description of something.
Daud Ali concluded that the word "Islam" derived
from the word "salima" contained the meaning of
peace, prosperity, salvation of surrender (self), and
obedience. Every person who conducts sharia
financial transactions or every Muslim business actor
is ordered to carry out the principles of Islamic law in
a complete manner (kafah). This kafah principle
underlies the birth of adherence to sharia principles
as a whole in every activity of muamalah. Islamic
crowd funding itself is categorized as a furu (branch)
legal problem in muamalah fiqh, so that the contracts
that are born on sharia fintech must be in line and in
accordance with the Islamic Shari'ah, are not
permitted to violate the norms of command and
prohibition set by Allah Subhanahu Wa Ta' ala. The
ICPS 2018 - 2nd International Conference Postgraduate School
118
Koran explicitly calls on believers to carry out the
principles of Islamic law as a whole, without
discriminating between one teaching and another,
without distinguishing whether it is related to aqidah,
worship or muamalah. Allah ta'ala said:
"O ye who believe! Enter into the whole of Islam, and
do not obey the steps of shaitan. Surely Satan is a real
-Baqarah: 208).
Sutan Remi Sjahdeini expressed the opinion of
Lee and Delta regarding the principles of sharia
therefore, cannot be introduced merely by eliminating
riba but only by adopting the Islamic principles of
social justice and introducing laws, practices,
procedures and instruments which help in the
maintenance and dispensation of justice, equity and
Some argue that this type can be allowed if it
meets certain conditions. This type is called using the
mudharabah or qiradh contract, which means that the
owner of the money surrenders or lends money to the
entrepreneur, trading, while the profits are shared and
divided according to the collective agreement as
stated in the business plan while campaigning.
According to Sentot Imam Wahjono,21 generally
crowd funding loans are called peer-to-peer (P2P)
lending, such as lending in bank mechanisms in
general. The lending-based fintech requires the
Sharia Board to ensure that Islamic law occurs and is
implemented in this matter. The fintech mechanism
service in a question is a business characterized by (i)
halalan thoyyibah (does not contain elements of pork,
blood, death, liquor, and categorized as uncertain
(gharar) and doubtful (mu'tasabihah) including
manufacture,, sale, distribution and collection) not
from theft, robbery, corruption, or income derived
from sources that are prohibited by religion and
official government regulations) and profits derived
from halal money, (ii) profits from the business are
ascertained to come from halal money (money
channeled by lenders is a potential source that comes
from the lawful and good, not from the results of
theft, robbery, corruption, or income derived from
sources that are prohibited by religion and official
government regulations).
The opinion above is different from the opinion
of the authors; halalan thoyyibah means that the
project or business offered is justified (halal) by
Islamic law and good. In this case, the analysis of
researchers related to a lending-based/debt-based
fintech service is based on the opinion of Ibn
Qudamah which states that:
Meaning: "Ibnul Mundzir said: The scholars
agreed that if someone lends money then he gives the
borrower money for the existence of an addition or a
gift, then he borrows and gives in such a way, the
additional take here is usury." It was narrated by
Ubay bin Ka'ab, Ibn 'Abbas and Ibn Mas'ud that they
forbade the form of debts with benefits. Because the
debt owed in jurisprudence is called qardh, where
qardh is included in the tabarru contract, which aims
to gain reward for helping others.
Lending transactions are built on qardh contracts
where the aim of the lenders is to gain the benefits in
the afterlife (akherat), and not to gain for profit in the
world. Borrowing and lending contracts, such as
lending-based fintech service or peer-to-peer lending
has additional profits there, then the contract category
contains elements of usury. This contract is
unlawful/not permissible in Islamic law because
qardh is not included in a contract or a business
agreement that aims to generate profits or for
commercial purposes. Qardh is included in a tabarru
contract, which has the aim of giving something or to
lend something. From the description above it is clear
that this type of peer-to-peer lending service based on
financial technology platform involves interest and it
is certainly not allowed or is illegitimate from an
Islamic perspective.
4 CONCLUSIONS
To sum up, the sharia fintech platform is designed to
comply with the sharia principles and in accordance
with Quran and Hadith. Sharia fintech in Indonesia is
still regulated by general rules, which are not fully
compliant with Islamic principles. As a business
transaction, sharia fintech cannot be categorized as a
lending service based on the fintech platform in
common due to there being usury in its transaction.
Moreover, the sharia fintech needs supervision under
the institutions that actually apply sharia principles.
Considering the maslahah principle, currently some
sharia fintech/sharia units in conventional fintech
have taken the risk and have officially registered their
business as fintech based on lending services in order
to operate the business. Even though there a few
terms and mechanisms that are still contrary to the
The Maslahah Principle against Sharia Financial Technology in Indonesia
119
sharia principle, for instance sharia fintech use the
financing platform not the lending service platform and
it is not gaining profit for the lending (there is no usury).
So that it is a duty for OJK to control the fintech as an
infant industry and build some regulation not only for
fintech based on a P2P lending service but also for
other platforms, especially sharia fintech, including
its protection, its supervision and also for its dispute
resolution. The maslahah principle which is
implemented in sharia fintech still has to heed the
applicable terms in the Quran and Hadith.
Regarding the globalization and economic ASEAN
community, there is an opportunity to realize the state
owned Islamic finance by the regulation and the role of
the government to intervene in the policy side. The
government action is allowed by sharia principle as long
as it creates maslahah for the community and it is aligned
with the community theories. Related to Indonesia as a
global player in Islamic finance in the world, it will give
a lot of beneficiaries for local economic activity, Islamic
education, Islamic business and the stability of financial
conditions
22
. OJK is expected immediately to establish
the sharia fintech system, which is including regulation
with the sharia principle, providing sharia transactions,
its mechanism and supervision.
REFERENCES
Abdullaah Jalil, 2006. The Significances Of Maslahah
Concept And Doctrine Of Maqasid (Objectives) Al-
Muamalat and Islamic Finance Research (JMIFR), Vol.
3.
Akhmad Ghozali Amrulloh, Pandangan Regulasi
Penggunaan Sistem Peer To Peer Lending Pada
Financialtechnology,https://www.academia.edu/
35712904/Pandangan_Regulasi_Penggunaan_Sis
tem_Peer_To_Peer_Lending_Pada_Financial_Technol
ogy.
Amir Shaharuddin, 2010. Maslahah-Mafsadah
Islamic Banking Products ,International Journal of
Business and Social Science,Vol. 1 No. 1; October.
Anita Rahmawaty, 2011. Ekonomi Mikro Islam, Kudus:
Nora Media Enterprise.
Hazim H. Alnemar, 2017. Utilitarianism in Classic Islamic
Jurisprudence,Journal of Islamic Studies and Culture,
Vol. 5(1), June.
https://keuangan.kontan.co.id/news/ojk-aset-bank-
syariahtumbuh-2065-per-februari-2018.
Iggi H. Achsien and Dien L. Purnamasari, 2016. Islamic
Crowd-funding as The Next Financial Innovation in
Islamic Finance: Potential and Anticipated Regulation
in Indonesia, EJIF European Journal of Islamic
Finance No.5,June.
Lucky Nugroho, Tengku Chandra Husnadi, Wiwik Utami,
and Nurul Hidayah, Maslahah And Strategy To
Establish A Single State-Owned Islamic Bank In
Indonesia,Tazkia Islamic Finance and Business Review
Volume 10.1
Md Abdul Jalil, Naail Mohammed Kamil & Muhammad
Khalilur Rahman ,2014. The Greatest Good For The
Greatest Number Of People: An Islamic Philosophical
Analysis , e-Bangi,Journal for Social Science and
Humanities, Vol. 9, No. 2 (2014) 014-023, ISSN: 1823-
884x.
Peter Mahmud Marzuki, 2005. The School of
Jurisprudence, Paper in Jurisprudence Workshop,
Faculty of law, Airlangga University, 4 Agustus.
Saadiah Mohamad ,View point Is Islamic Finance, Social
Finance? ,Journal of Emerging Economies and Islamic
Research. Vol. 2 No.2.
Sentot Imam Wahjono, 2017. Islamic Crowdfunding: A
Comparative Analytical Study On Halal Financing,
Proceeding Global Conference on Business and
Finance,Las Vegas, Nevada, USA, January 2-5.
Sjahdeini, Sutan Remi, 2010. Perbankan Syariah: Produk-
Produk dan Aspek-Aspek Hukumnya,
Jayakarta Agung Offset, Jakarta, h.146.
Syed Marwa, 2015. Social Impact Bonds in light of
Maqasid al-
Economics, Banking and Finance, Vol-11, No. 4,
OctoDec
ICPS 2018 - 2nd International Conference Postgraduate School
120
