The Challanges of Islamic Bank for Accelerating the Growth of Micro, Small and Medium Enterprises (MSMEs) in Indonesia

Abstract

Islamic banking has a huge role in accelerating the growth of Micro, Small and Medium Entrerprises
(MSME)s in Indonesia. The largest Muslim population in Indonesia is one factor for the development
of MSMEs. This paper explains how the Problems and Challenges of MSMEs in Indonesia;
Development of MSMEs in Indonesia; Relationship Between Islamic Bank and MSMEs in Indonesia;
The Role of Islamic Bank for Development MSMEs; and The Challanges of Islamic Bank for
Accelerating the Growth of MSMEs in Indonesia. The end of this paper, the authors offer solutions to
Islamic banking challenges in accelerating the growth of MSMEs such as: First, to improve
mudhorobah and musyarakah financing schemes to accelerate and develop MSMEs in Indonesia;
Secondly, to reduce the dependence on the use of Murabahah contract products that are consumptive
and targeted middle and upper only, Third, improve the financing scheme Qordhul Hasan contract by
cooperating against Islamic social institutions, such as BAZNAS, BAZDA, LAZ, BWI, and Mosque,
etc by maximizing the utilization of zakat funds, infaq, alms, waqf which has been only consumptive.
Fourth, the cooperation of linkage program to BPRS and BMT so that the funds channeled can be
directed to remote areas and on target. Fifth, coaching, mentoring, and mentoring to BPRS, BMT,
MSMEs business practitioners, and Islamic social institutions in order to develop funds that are stored
productively. Sixth, allocate Hajj and umroh investment funds to MSMEs business practitioners.