Sharia based economics in support of Indonesia’s sustainable agricultural sector

Abstract

Agricultural sector plays an important role in Indonesian economic growth. The problem in the agricultural sector is among others the issue of capital for farmers. Sharia funding can be another option or as an alternative to financing in the agricultural sector. With the concept of interest free, the profit is based on profit sharing carried out after the transaction period ends. The formulation of this research problem is how the prospects and implementation of Sharia funding in the agricultural sector. The research method is empirical juridical. The results of the study showed that the agricultural sector was known to be quite risky, resulting in low financial institution funding commitments. Credit programs using the interest system show unsatisfactory results. As a result, this can lead to new problems such as increased farmer debt and bad credit. Conclusion of the study Sharia funding is prospective to strengthen capital in the agricultural sector. In its implementation, several types of cooperation can be carried out such as joint ventures, forms of partnerships, general trading, and agribusiness operational cooperation. Suggestions in this study are the intensive socialization of Sharia funding is needed as an alternative funding for the agricultural sector.