Risk Mitigation of Covid-19 Pandemic in Baitul Maal Wat Tamwil

Abstract

Maintaining Baitul Maal Wat Tamwil (BMT) sustainability as an Islamic microfinance institution is very important because it can reduce poverty and increase economic growth. However, institutions usually face challenges, like the COVID-19 pandemic, which negatively impacts their sustainability. Therefore, the only way to keep such institutions functional and ensure financial progress is by practising risk management. Qualitative studies performed to analyze the lenitive effects of the risk management practices undertaken by BMT Maslahah Pasuruan and East Java due to the COVID-19 pandemic. Data collection conducted using interview techniques, documentation, and FDG (Forum Group Discussion). The results show that BMT has taken preventive steps in managing the risk. They optimized their marketing funding strategies to balance their outflows and members and cut down their cost, therefore overcoming financing inflow. Placement and distribution carried out selectively, using the suitable method and reserve losses on default debtors to avoid serious risks.

Surviving amidst pandemic: Indonesian Islamic microfinance experience

“…IMFIs are among the financial sectors that suffered the pain of the pandemic crisis. Indonesian IMFIs have found a number of issues during the crisis such as the rising of NPF and the decline of profit in BMT Maslahah Pasuruan (Aisyah et al, 2021). Similarly, BMT Makmur Sejahtera, BMT Amanah Indonesia, and BMT Adam have recorded a decreasing profit throughout the pandemic time followed by a weakening of other their financial performances (Herlangga, 2021;Masrul and Huda, 2021).…”

“…The agility of a number of Indonesian IMFIs leads them to a steady financial performance during the pandemic crisis. A number of pieces of literature stated that there are five among seven IMFIs in Tangerang City have performed passably during the COVID-19 period assessed by their non-performing financing ratio, liquidity ratio, and profitability ratio (Aisyah et al, 2021). Other than those IMFIs, several Indonesian IMFIs have been performing steadily in other regions such as BMT Cahaya Mentari, BMT Tumang, and BMT Kaliwungu.…”

“…Among them are BMT Mekar Dakwah, BMT Al-Fath, BMT Syirkah and BMT Mandiri Jaya. These solid financial performances are derived from their robust regulation and team which take them to good adaptation during the crisis (Aisyah et al, 2021).…”

“…The above results are based on the literature depicted in Table 2. (Herlangga, 2021) 1-3 (Aisyah et al, 2021) 1-3 (Safitri et al, 2021) 4-10 (Billah, 2021) 1-3 (Masrul and Huda, 2021) 1-3…”

The Performance of Sharia Financing Amid the COVID-19 Pandemic in Indonesia

“…At the beginning of 2020, the world was shocked by the coronavirus which has spread globally and Indonesia is no exception. The coronavirus brings many negative impacts on individuals, society, and also companies [1]. The community who were peaceful became anxious, panicked, and scared.…”