Islamic Economy Faces Moral Hazard Challenges, Says Indonesian Deputy Minister

Indonesian Deputy Minister of Religious Affairs, Dahnil Anzar Simanjuntak, has identified significant challenges facing the Islamic economy and finance industry, particularly the conflict between genuine Sharia principles and the issue of moral hazard. He stated that many entities claim to adhere to Sharia but their practices fall short of the required halal and tayyib (good) standards.

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The challenge of the Islamic economy today is the dilemma between Sharia practice on one hand, and on the other hand, moral hazard. Many today are masked by Sharia, but their practices are not Sharia.

Dahnil cited recent cases within the Islamic finance sector, such as investment fraud, embezzlement, and falsified financial reports under the banner of Sharia, like the PT Dana Syariah Indonesia (DSI) scandal. These incidents have resulted in substantial financial losses for the public and eroded trust in the industry.

He stressed that addressing these challenges requires a collective effort. Media outlets, such as Republika, play a crucial role in providing education and literacy to the public. This, he believes, can foster a more transparent industry that truly upholds the objectives of Sharia (maqasid syariah).

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The challenge now is not easy. For example, there are many cases like DSI, Hanania Travel, and other practices.

Dahnil underscored the current low point of public trust in the Sharia economy. He urged the Islamic economic community to actively work towards regaining this trust by prioritizing not just Sharia-compliant entities, but also ensuring fairness and ethical conduct in their practices. The Anugerah Syariah Republika (ASR) 2026 event, themed "Sharia for All: Beyond Profit, Toward Purpose," aims to recognize industry players who contribute to the growth of the national Sharia economy, emphasizing its role beyond profit towards broader societal benefit and sustainability.

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This is the challenge that must be solved, especially by Republika, friends in Sharia entities, so that public trust can be regained. Right now, in my opinion, public trust is at a very bad nadir. So the Sharia economy community must have the desire to restore that public trust by prioritizing, not just the Sharia entity, but the Sharia morality must be fair for its practice.