REPUBLIKA.CO.ID, SINGAPORE -- Muslim countries in the world have their own microfinance institutions (LKMS) as a manifestation of principles of Islamic economics system.

Even so, affordability LKMS only dominated by three countries, namely Indonesia, Bangladesh, and Afghanistan, with 80 percent penetration.

Director of International Islamic Law & Finance Centre Singapore Management University Andrew White said from the three countries, Indonesia is the leader of LKMS application on an institution known as Baitul Maal Wat Tamwil (BMT).

"Indonesia is the best in the world in Islamic microfinance," he said at a seminar entitled 'Poverty Alleviation through Islamic Microfinance: The BMT model in Indonesia' organized by the International Islamic Law & Finance Centre Singapore Management University, Singapore, Friday (25/10).

The event was attended by the Executive Committee of the Council of the Association of Indonesian BMT and all participants from academia and the general public in Singapore.

In line with Andrew, Singapore Ambassador to Kuwait Zainul Abidin Rasheed also appreciates the role of BMT in Indonesia, particularly in terms of poverty reduction and finance expansion to micro and small and medium enterprises (SMEs).

"The best example of Islamic microfinance is BMT model of Indonesia," Rasheed said.

For the record, majority of BMT in Indonesia has two background in its establishment and activities, such as micro-finance institutions and the Islamic financial institutions.

BMT run two types of activities, namely baitul maal and baitul tamwil. As a baitul maal, BMT activities executed without profit orientation. In this case, BMT distributed funds from charity, donation and part of BMT profit to those who have a right and need.

Then, as a baitul tamwil, BMT serves as sharia-based financial institution which makes efforts to raise and distribute funds based on Islamic principles.

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