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🇮🇩 Indonesia /Economy & Trade

Indonesian academics propose debt-free Islamic economic model for development

From Republika · () Indonesian

Translated from Indonesian, summarized and contextualized by DistantNews.

At a glance

News Named sources Context piece
  • Indonesian academics propose an Islamic economic model to finance development without relying on debt.
  • The model emphasizes optimizing productive assets, zakat, and public participation for state finance.
  • Artificial intelligence could enhance transparency and combat corruption in economic governance.

Indonesian academics are advocating for an Islamic economic framework as an alternative to debt-financed development. At the Society for the Advancement of Socio-Economics (SASE) 2026 conference in France, Dr. Any Setianingrum from YARSI University presented a paper proposing a public finance architecture based on redistribution, not debt. This model aims to strengthen state finances by optimizing domestic resources.

Setianingrum's framework, titled "Redistribution as Governance: An Islamic Framework for Sustainable Public Treasury," focuses on ensuring wealth circulates within society through fair redistribution mechanisms. "Redistribution should not just be charity or social activity, but a primary indicator of governance in a country or institution," she stated. This approach views redistribution as a core part of economic governance that promotes equitable development benefits.

Redistribution should not just be charity or social activity, but a primary indicator of governance in a country or institution.

— Dr. Any SetianingrumExplaining the role of redistribution in the proposed Islamic economic framework.

The model suggests leveraging productive assets, zakat (obligatory charity), and waqf (endowments) as funding sources to reduce reliance on debt. Setianingrum also called for embodying Islamic economic values like transparency, accountability, and minimal conflict of interest in government, business, and financial institutions. She stressed the need for fairer financing, particularly supporting micro, small, and medium-sized enterprises (UMKM).

Furthermore, the proposal includes using artificial intelligence (AI) to bolster economic governance transparency. AI could help detect conflicts of interest, irregularities, and corruption, thereby improving the implementation of moral principles in the economy. The SASE conference, a global academic forum, saw participation from Indonesian universities including YARSI, Universitas Indonesia, Gadjah Mada University, and the Bandung Institute of Technology.

If we talk about Islamic economics, we are actually talking about the global community. Islamic values are universal.

— Dr. Any SetianingrumHighlighting the universal applicability of Islamic economic principles.
DistantNews Editorial

Originally published by Republika in Indonesian. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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