Developing a Computer Simulation Based Approach to Simulate Potency of Islamic Voluntary Sector to Alleviate the Poverty in Indonesia Using System Dynamics Methodology

Dian Masyita ()
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Dian Masyita: Department of Management and Business, Faculty of Economy, Padjadjaran University

No 200703, Working Papers in Business, Management and Finance from Department of Management and Business, Padjadjaran University

Abstract: This research tries to find out the potency of Islamic Voluntary Sector as financial instrument to alleviate the poverty in Indonesia. This research also tries to offer a computer simulation based approach design of the cash waqf fund management system and zakah fund as a part of Islamic Voluntary Sector in a system dynamics model. Using the system dynamics methodology, we try to know the structure of the cash waqf funds management system and simulate the behaviour of cash waqf and zakah fund. Zakah and Cash Waqf fund are expected to become the alternative instruments for the poverty alleviation programs in Indonesia. These programs require huge amount of fund that cannot be provided thoroughly by the government. Therefore, development of the voluntary sector for such a program is inevitable. In the Islamic sosio-economic concept, there are some sources of social fund that are economically and politically free of charge, namely cash waqf and zakah, infaq and shodaqah. In this research we focus in Cash Waqf Management and Zakah fund. In these concepts, Nadzir collects the fund from Waqif and invest the money in the real sector (mainly Small & Medium-sized Ventures) and in any syariah-based investment opportunities and Amil also collects the fund from Muzzaki. Amil will distribute all of Zakah fund for Mustahiq and Nadzir will then allocate all profits and returns gained from the investments to any poverty alleviation programs to enhance the quality of poor people’s life, such as free education and health service, cheap basic food, etc. Not just like Amil, who is allowed to distribute all of zakah fund, Nadzir is obliged to maintain the amount of fund in such a way that it does not go below the initial amount. Therefore, Nadzir not only should be highly capable, but also needs a financial institution, which has been proven to be experienced, highly capable and effective in helping Micro and SMEs development efforts, since such a microfinancing program is considered as the most vital portfolio in the poverty alleviation program. Therefore, it’s necessary to design an instrument which is able to control the cash waqf management.

Keywords: the cash waqf fund; zakah fund; portfolio investment; microfinance; poverty alleviation; system dynamics (search for similar items in EconPapers)
JEL-codes: G0 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2007-03, Revised 2007-03
References: View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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