The Need for Accounting Information System to Facilitate Partnership Contracts in Islamic Microfinance Institutions: The Case of Baitul Maal wa Tamwil (BMT) in Indonesia

Abstract

The development of Small and Medium Enterprises (SMEs) in Indonesia showed a tendency has increased along with improvement of the national economy. Indonesia together with India and China are the three countries in the world who have the highest economic growth within the last 3 years. However, SMEs are still confronted with basic problems such as the limited access to the sources of financing from formal financial institutions, particularly from the banks. This problem causes them to rely on informal sources of financing. Currently, the informal financial institutions are more striking among SMEs because it is more flexible, for example in terms of requirements and the amount of loans that are not as tight as banking. This makes informal financing institutions increasingly popular among small and medium entrepreneurs. One of them that is quite close with SMEs is Islamic Microfinance Institutions or commonly known as Baitul Maal wa Tamwil (BMT). However, both the BMTs and SMEs have difficulties in cooperating each other mainly related to the mastery of information technology to improve efficiency in managing transactions under Shariah (islamic law)-based business contracts. Therefore, the authors urge that the need for accounting information systems to facilitate the contracts. This paper aims to discuss the urgency of drafting a framework for information systems for BMTs to support the operations of partnership contracts. This paper proposes the use of Open Source Software (OSS) as the basis for developing a system that is technically cheaper, more efficient and easy to implement. 1. INTRODUCTION The last decade, the Small and Medium Enterprises (SMEs) becomes the new prima donna in Indonesia especially after the economic crises 1997-1998 ago where unemployment increased significantly. BPS data for 2008 shows the number of SMEs develop into 51.26 million and capable of providing national contributions amounting to 52.7% or about IDR 2,609.4 billion of a total of IDR 4,954 trillion. The sector is able to provide employment for 90.9 million people or 94.4% of the total national workforce. As the form of support for the existence and development of SMEs, the government passed the SME Act number 20 year 2008. Article 7 of that act specifically gives a mandate to the Central Government and Local Government to grow the business climate by menetepkan legislation and policies related to the following aspects: (a) funding, (b) facilities and infrastructure, (c) business information (d) partnership, (e) licensing business, (f) opportunities, (g) trade promotion, and (h) institutional support. Although the role of SMEs strategic enough in the Indonesian economy, but business competition and the dominance of large companies that use high-tech and modern infrastructure, making the position of SMEs is not easy to expand the business (Wahid and Indarti, 2007). Wahid and Indarti (2007) further explained that the majority of SMEs in Indonesia are still run their business by traditional means including in the areas of production, administration, and marketing. The problems faced by SMEs actually are not limited to the things mentioned above. More than that, SMEs also face a complex challenge includes limited access to capital, access to market information, availability of raw materials, low quality of human resources, low quality financial management, and the weak of institutional support from government, and low community commitment to consume/use the products of SMEs. However, this paper is focus on two things: limited access to capital and the low quality of financial management. The limited access to capital faced by SMEs is usually happen since the absence/lack of collateral. Therefore, the financial institutions, both banks and non-banks, are reluctant to provide financing because the business risks that could not be predicted. The other reasons for the financial institutions are that the SMEs do not have adequate financial administration due to factors such as: (a) weak procurement of technology, (b) felt no need to administer business because of the small-scale enterprises, and (c) cost / high investment for financial management and use of technology (See Wahid and Iswari, 2007). McChlery et al. (2003) argued about the factors that determine the acceleration of the implementation of a financial management system in the SME sector includes: (a) a computerized accounting system so as to produce periodic financial reports; (b) there is a strong commitment from the owner/manager to perform technological transformation, (c) adequacy of qualifications of the internal accounting staff, (d) proactive attitude from external accountants, and (e) of the pressure from finance providers (banks or financial institutions, non-bank). On the other hand, very few businesses can operate without the assistance or cooperation with the banking sector (Perry and Coetzer, 2009). Similarly, SMEs are in need of access to capital from the banking sector. Nevertheless, the banking sector has a very strict system that not infrequently make it difficult to meet the requirements of SME management in particular guarantee the availability of data assets and business prospects. The consequence,