The global crisis began to show off to anyone who is not prepared for it. Big banks, big corporations with a reputation for hundreds of years forced out of business. Islamic financial institutions began to receive the effects, especially those just interested in fulfilling the formalities aspects of sharia, but forget the spirit of sharia itself.
Beginning with the oil price increase due to the prolonged war, which makes the Gulf countries flooded with petro dollars. The abundance of liquidity has encouraged aggressive investment for profit. On the other hand, awareness of religious values to encourage the emergence of demand for investment products in accordance with sharia. One characteristic of Islamic investment products is the underlying asset for any financial transaction.
Well, the high demand for investment products that have this underlying asset, was greeted by large banks to design products associated with a particular commodity, such as oil, copper, gold and palm oil. Investment products known as murabaha commodity has become very popular among Islamic banks in foreign countries.
Commodity futures exchanges to get new momentum to this development. Volume of trade increased rapidly. If the oil price was at the commodity futures exchanges followed the oil price in the spot market because of the small volume, now oil prices in the spot market following the oil price in futures exchanges. This situation is further pushed oil prices skyrocketing.
The increase in oil prices skyrocketing and immediately make a flooded Gulf petro dollars, and driving up the purchasing power of this region. Property prices soared in the Gulf region because of the excessive market expectations seemed to Dubai, Qatar, and the countries of other Gulf region will be transformed into the world financial center to replace New York and London. Development of man-made islands shaped palm trees, Fajr Al Arab as the world's tallest building, the more bounce to the market expectations of high demand for property sector. Needless to say property prices in the region soared.
Although property prices to soar so high, but rising oil prices seemed to have given the purchasing power is almost unlimited. The euphoria that comes from money illusion of rising oil prices and rising property prices, encouraging the banks in the region, including Islamic banks, to disburse funding in the property sector.
When the market corrects itself and the prices of commodities, including oil prices, falling close to fair prices, all parties as if waking from a dream. Those who invest in commodity products murabaha feel confident that their investment was safe because it is fixed and guaranteed return of certain commodities, are now beginning to realize the risks that arise.
With the decline in commodity prices that are pledged as collateral, the value of goods can no longer guarantee to cover the amount of murabaha receivables, which in turn makes the measure of investment value Corrected value risk (risk-adjusted return) sag. Legally, the debt-claim his murabaha did not decline, but the risk is increased due to falling value of collateral.
When the Islamic banks which have murabaha commodity products are commercial banks, and record a collection of funds products, and when investing in commodities markets as a record of productive assets, reduction in the value of this guarantee would cause the bank should record the additional costs to meet the obligations of reserve creation of productive assets. Furthermore, bank profits will be hit.
When the Islamic banks which have murabaha commodity products is an investment bank and record it as an investment product for customers, who must bear nasabahlah increase in risk. Legally, the value of customer investments are not reduced, but the accounting of this risk increases seen in the decline in market value of investment in the customer book.
Decrease in commodity prices also resulted in correction of the property market with falling property prices, in addition to pressing the capacity of market liquidity. This situation is hitting the bank twice. First, customers began to have trouble paying property mortgage financing. Second, the value of collateral in the form of decreased property thereby increasing bank fees for setting up reserves of productive assets.
This negative impact of causing sharia banks are stuck in a mechanical formality provisions of sharia. In the formality of sharia, technical operations and product structure in accordance with sharia. However, the soul Islamic transactions are not met. First, the trading of physical commodities is much less than the volume of trade for most commodity transactions conducted murabaha not followed by delivery of goods. The existence of underlying asset of more dedicated to the fulfillment of purchase along, namely ma'kud alaih (the object of transactions), but these harmonious spirit which is intended to prevent separation (decoupling) the financial sector to the real sector are not met.
Second, soaring property prices and commodity prices beyond the limits kewajarannya an indication of market distortion. From the demand side of this distortion can be encouraged by Impulsive buying due to increased purchasing power suddenly. From the supply side, these distortions may be driven by engineering the price by a few large players in the conventional commodity market and in the property market. Engineering strength greater price when the prices in the spot market following the futures price, because the market trading volume was much smaller than the volume of futures market trading.
Third, investment in instruments in the global market especially in foreign currency will be the entrance to the global crisis to the domestic market. Islamic banks invest a lot of the instruments in the global market, will be hit worse than Islamic banks who play the market without experiencing mental domestik. Syariah sharia, muttering like a prayer uttered without feeling the presence of the Hearer of Prayer. Thankfully this did not happen in Indonesia.
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