. International Journal of Economics and Financial Issues ISSN: 2146-4138 available at http: www.econjournals.com International Journal of Economics and Financial Issues, 2018, 8(4), 250-255. International Journal of Economics and Financial Issues | Vol 8 • Issue 4 • 2018250 Product Design Mall of Islamic Microfinance Institutions Supporting Economic Empowerment Islamic Boarding School Indonesia (Case Study Islamic Boarding School Abdussalam) Anas Alhifni1*, Nurul Huda2, Muslich Anshori3, Biyati Ahwarumi4 1Airlangga University, Lecturer of Islamic Economics Faculty Djuanda University, and currently completing Ph.d Islamic Economics Airlangga University, Indonesia, 2Senior Lecturer of Faculty of Economics, Yarsi University, Indonesia, 3Faculty of Economic and Busines, Airlangga University, Indonesia, 4Postgraduate Airlangga Universiuty and Lecturer Institutions of Boarding School Sunan Drajat, Indonesia. *Email: anas.alhifni@unida.ac.id ABSTRACT Islamic Boarding School in Indonesia currently has many economic sectors including Islamic microfinance services such as Baitul Mal Wat Tamwil (BMT) one of Islamic Boarding School Abdussalam. The purpose of this study is to find out how the design of mall products that can be applied by Islamic microfinance institutions to support economic empowerment Islamic Boarding School. Research method in this research use qualitative approach with descriptive technique. Data collection techniques use observation, interview and focus group discussion to determine the right product design and in accordance with the condition of sharia micro finance institution in Islamic Boarding School. The results of this study indicate that the product design that can be developed by BMT Barokah Abdussalam is the design of cash waqf mall products with two approach models and Zakah infaq sadaqa mall product with two approach models, and from both models can be applied if BMT can optimize the source of social funds so that it can distribute the fund is one of them through the development of product design proposed in this research. The results of this study can be applied by other Islamic Boarding School who have sharia micro finance institutions and has the same criteria with Islamic Boarding School Abdussalam. Keywords: Product Design, Islamic Microfinance, Empowerment Islamic Boarding School JEL Classification: I125, G23, DO2 1. INTRODUCTION Sharia microfinance institutions in Indonesia are growing very rapidly, there are some problems faced by Islamic microfinance institutions such as lack of qualified human resources and operational support facilities so that services to the public are not yet optimal, lack of human resources due to the low knowledge of the management of the institution, and the weakness of the institution’s human resources in the field of product innovation (Sudarsono, 2003; Hamdan, 2012; Kholis, 2012; Salem, 2013). The institute is not only in the wider community but also in Islamic Boarding School, one of them is in Islamic Boarding School Abdussalam, Islamic Boarding School has several sectors such as agriculture, plantation, animal husbandry, trade and financial services, Baitul Mal Wat Tamwil (BMT) Barokah Abdussalam, some of the problems faced by Islamic Boarding School such as the lack of capital for the development of all sectors, so that the existence of Islamic microfinance institutions can be utilized properly, but it is difficult to materialize because the existing financial products are very limited and is still a product that is individual and not can be directly utilized by each sector. Based on the above background, the research question in this research is how the proposed mall product design can be applied by Islamic microfinance institution in Islamic Boarding School Abdussalam and can support economic development in Islamic Boarding School. 2. LITERATURE REVIEW Islamic Boarding School has a special characteristic that is different from the others, Islamic Boarding School has a central Alhifni, et al.: Product Design Mall of Islamic Microfinance Institutions Supporting Economic Empowerment Islamic Boarding School Indonesia (Case Study Islamic Boarding School Abdussalam) International Journal of Economics and Financial Issues | Vol 8 • Issue 4 • 2018 251 figure that is highly respected and obeyed the Kiyai, the existence of chaplain can give a big influence to students and the community, especially in understanding the science and entrepreneurship of soul entrepreneurship, it becomes an asset especially in the development of Islamic Boarding School which has a very large population of student (Hakim, 2003; Fauzan, 2006). Islamic Boarding School also has formal and informal education institutions, a large number of student can influence the increasing demand for goods and services, especially in meeting the needs of student both for learning and daily consumption (Fauzan, 2006; Adikrishna, 2011; Tan, 2014; Thahir, 2014). Islamic Boarding School Abdussalam has the first two main sectors of the economic sector (trade, farming, plantation, agriculture and services), both education formal sectors, from both sectors the economic sector is a sector that has economic potential which is very large if it can be managed properly. The Sharia Micro Finance Institution in Indonesia is a financial institution consisting of Sharia Financing Savings and Loan Cooperatives (KSPPS), Sharia Financial Services Cooperatives (KJKS), and BMT, all of these institutions are self- productive enterprises and investments to improve the quality of economic activity, or may be referred to as institutions providing storage, financing, and payment services for services transactions aimed at middle and lower income groups and small entrepreneurs on the basis of helping and managing based on sharia principles Salidin, 2000) in this research is sharia micro finance institution in the form of BMT. The main concept of BMT is to conduct coaching and financing in accordance with the principles of sharia in all economic activities, especially in supporting the economic activities of middle and lower society (Sudarsono, 2003; Romdoni, 2008). The characteristics of LKMS according to Salidin (2000. p. 71) are as follows: 1. Business-oriented, seeking joint profit, increasing the most economic utilization for members and their environment. 2. Not a social institution, but can be utilized to streamline the use of zakah, infaq, sedaqa (ZIS), and waqf. 3. Growing from the bottom based on the participation of the surrounding community. 4. Owned jointly and controlled by a small community of the BMT environment itself, and not the property of a particular person. 5. Prioritize savings rather than borrowing. To optimize the function of BMT as a sharia microfinance institution needs to continue to develop its products so as to provide greater financial access to the middle and lower society. According to Kotler (2000. p. 382) there are several stages in product development: 1. Appearance of ideas The search for ideas can be obtained through research, consumer observation, managerial thinking and so on. 2. Screening ideas The resulting ideas are then filtered and discuss their weaknesses and strengths. 3. Development and presentation of concepts The ideas that have been filtered are then presented in clear and systematic concepts to make it easier to understand. 4. Development of marketing strategy The existing product in the form of a concept must then be made a marketing strategy of the product and determine the market segmentation of the product. 5. Business analysis After the company has developed a business strategy, management can evaluate the achievements of the strategy that has been made before. 6. Product development The next stage is product development on R & D or product in physical form (if the product is in physical form). 7. Testing the market This stage when the product is given the brand, packaging and program on consumer responses 8. Stages of commercialization Stages of launch, at this stage the company is obliged to determine when, who and how the product is marketed. 3. RESEARCH METHODS This research uses the qualitative approach, with descriptive analysis technique to describe mall product design that can be applied, as for data collection technique using interview, focus group discussion and nonparticipant observation. Focus group discussion technique is used to determine the conformity of product design with the condition of Islamic Boarding School Abdussalam so that the proposal of each product can be applied directly by BMT Barokah Abdussalam to support economic empowerment in Islamic Boarding School. 4. RESEARCH RESULTS Product development is always done by the company to the existence of the company (Kotler, 2000. p. 374), one of the goals in product development is to meet the needs of consumers who are not satisfied, and provide wider access (Buchori, 2001. p. 101). As explained by Kotler (2000. p. 382) there are eight stages in product design, but in this study, the product design developed focuses on the third stage of idea generation, idea filtering, development and presentation of the concept of each proposed product to be able to implement in BMT Barokah Abdussalam. The results of the FGD have been conducted by researchers with the Chairman of BMT (Marsud, M.Pdi), manager (Ghazali, S.Pdi) Supervisor (Anis Hifni, M.Pdi, KH Hafiluddin Muhammad Yusuf), Islamic Boarding School Abdussalam (Utsman Hasan), Syafi’i and Selamet Widodo), Islamic economists (T. Rifqy Thantawi, M.Si, Sofian Muhlisin, LLM, Rully Trihantana, S.Si., M.Si), a supervisor from the Cooperative Office Kab. Kubu Raya (Syahid, MM), and IT Ussi experts (Alif Sukanah, SE) and researchers. The results of the FGD resulted in several proposals of product design that could be applied by BMT Barokah Abdussalam in supporting the economic empowerment of Islamic Boarding School Abdussalam after going through several stages as above: Idea generation, idea filtering, development and presentation of the concept of each proposed product. Alhifni, et al.: Product Design Mall of Islamic Microfinance Institutions Supporting Economic Empowerment Islamic Boarding School Indonesia (Case Study Islamic Boarding School Abdussalam) International Journal of Economics and Financial Issues | Vol 8 • Issue 4 • 2018252 In general, mall products are products that have a social purpose because the funds come from social funds such as ZIS and wakaf, there are several product designs that can be designed by BMT to optimize social funds fund, especially in empowering Islamic Boarding School, will clearly be discussed as follows: 1. Mal products using Waqf Cash Waqf is the restraining of treasures that can be utilized (Zuhaili, 1989), waqf is also an instrument that can be utilized by Islamic Boarding School in increasing the empowerment of Islamic Boarding School and the surrounding community, the role of waqf as education development has been developed since Umayyah dynasty although not yet tangible places of special education such as Islamic Boarding School (Alhifni, 2017). Things to consider in waqf is the values maqashid shari’ah, waqf must give a real impact, especially in the fulfillment of three needs namely dharuriyat, hajjiyat and tahsiniyat. Currently under development is cash waqf and productive waqf used as an empowerment instrument as implemented in Islamic Boarding School Darut Tauhid (Alhifni, 2017) The existence of waqf as an empowerment instrument can be utilized optimally, empowerment can be explained as a process to powerless or the process of empowerment (power/ability) to the helpless party (Sulistyani, 2004. p. 25). Empowerment process, student have the power to act effectively to change life and environment for the better (Alhifni, 2017). Muhammad (1997) explains that his law allowed, by making the dinar as a venture capital and then the profits distributed to mauquf ‘alaih. The opinion of some scholars of the Syafi’i school of thought also allows the money waqf (Kasdi, 2016). In the development of cash waqf has been developed in Indonesia one of them in financial institutions and educational institutions because it is very easy to be accessed by the community. Haura et al. (2015) Indonesia has a huge potential of cash waqf and can be managed by BMT. The management of waqf money in BMT involves 3 parties namely the Ministry of Cooperatives and SMEs, Indonesian Wakaf Board (BWI) and BMT, in this case who act as nazir is BMT. Regulation of the Minister of Religious Affairs No.4 of 2009 on the Administration of Wakaf Money Registration, in it mentioned the existence of Sharia Financial Institutions Receiving Moneywomen (LKS-PWU). So that rules can be justified if BMT manages money waqf (Ascarya, 2015; Fanani, 2011). Ascarya (2015) proposed a model that integrates between waqf and Sharia microfinance institutions. Mannan in Haura et al. (2015) initiated the money waqf by establishing Social Investment Bank Limited in Bangladesh which is packaged in Cash Waqf Certificate instrument mechanism. This model is considered very appropriate to realize social welfare and help stimulate economic growth at the bottom of the community. Products empowerment using cash waqf is a product that can be developed by BMT as well as can perform BMT function as a baitul mal institution that can act as a nazir waqf. Clearly, the flow of its application can be explained in the following explanation: a. Implementation of cash waqf in BMT Barokah Abdussalam BMT Barokah Abdussalam enrolls to BWI as nazir manager of money waqf, to grow the interest of BMT members to the waqf, need to be made some strategies.Firstly socialization about cash waqf to all members of BMT (community), both specify the amount of cash waqf that can be used as a program to optimize the collection of cash waqf, the third provide ease of payment such as ball picking system, payment can be done in formal education, can be done cutting the savings with a light nominal, so that all stakeholders feel given the ease in distributing property in the form of wakaf property, the fourth selection of assets to diversion money wakaf must be really productive such as agricultural land, plantation, animal husbandry, educational facilities, trade and others, so there is a special attraction for wakif to channel funds. The funds collected from cash waqf are channeled to productive sectors such as agriculture, plantation, livestock, and trade, on the supervision of BMT as a Nazir, so that BMT can ensure that waqf asset runs productively. b. Benefit of cash waqf For BMT and Islamic Boarding School Abdussalam 1. Benefits for BMT Barokah Abdussalam 2. Getting a chance as a nazir of a waqf 3. Getting a source of capital more easily and efficiently 4. BMT can manage the funds for the purchase of productive assets that can be utilized BMT and Islamic Boarding School 5. Increasing the role of BMT as an ummah empowerment institution (especially Islamic Boarding School Abdussalam) c. Benefit for Islamic Boarding School Abdussalam 1. The problem of limited facilities and infrastructure can be overcome. 2. The problem of limited capital for economic sector development of Islamic Boarding School can be overcome. 3. Islamic Boarding School get assistance in the form of productive assets that can be managed properly, the form of assets can be in the form of agricultural assets, plantation, animal husbandry, trade and educational facilities. 4. Providing opportunities for student community to play a larger role so as to increase the independence of Islamic Boarding School and the community. 5. Increasing public trust in Islamic Boarding School d. Cash Waqf Scheme as an Economic Empowerment Instrument Islamic Boarding School Through BMT 4.1. Model I Cash Waqf Next is the second model, the second model difference with the first model, the second model is more flexible and easier to apply and more profitable, especially in maintaining the sustainability of BMT and all economic sectors in Islamic Boarding School Abdussalam. The model is as shown in Figure 1. 4.2. Model II Cash Waqf [Figure 2] Both models can be applied if they meet the following conditions: 1. The cash waqf funds have been collected, this is very important because the model will not work if the Waqf funds are not collected, so it is necessary to make an efficient and easy-to-use fund-raising strategy as described earlier. 2. Supported by competent human resources both BMT human resources and human resources sector. For the readiness of this human resources, BMT can cooperate with universities Alhifni, et al.: Product Design Mall of Islamic Microfinance Institutions Supporting Economic Empowerment Islamic Boarding School Indonesia (Case Study Islamic Boarding School Abdussalam) International Journal of Economics and Financial Issues | Vol 8 • Issue 4 • 2018 253 especially in providing knowledge training on the management of waqf funds and waqf assets, so that the human resources can manage it well and can be justified. 3. BMT must be able to determine the assets that can truly be productive and ensure the sustainability of these assets well. One of the requirements for the management of waqf is the waqf property should not be reduced and traded, so that needed human resources that can analyze well in determining the productive waqf assets. 4. Using a good and transparent administrative system, the use of modern administration is needed to safeguard the nazir and maintain the wakif trust in BMT as a Nazir, BMT also needs to make periodic reports not only submitted to Indonesian Waqf Board and Department of Cooperatives but also delivered on wakif. 5. Managed with the principle of helping and prioritizing the interests of the ummah above personal interests. 2. Mal products using ZIS Figure 1: Model 1: Cash Waqf as an Instrument of Economic Empowerment Products Synergize Islamic Boarding School through Baitul Mal Wat Tamwil (BMT). (a) BMT get permission from BWI and Dinas Koperasi as a nazir waqf money, (b) Wakif pays waqf funds on BMT, (c) Nazir (BMT) channeled the Waqf funds to productive assets (estate and agricultural land), (d) The result of utilization of productive waqf property is channeled as a form of business capital in the sector (livestock and trade), (e) The results of capital utilization managed by the livestock and trade sectors are then paid on the BMT as a Nazir, (f) Nazir (BMT) distributes waqf funds along with the results of the utilization of such funds on formal productive education assets and non-formal education facilities Islamic Boarding School, (g) The result of utilizing waqf asset is stored in BMT as a waqf nazir to be used as the next productive waqf development, (h)BMT reports the management of cash waqf that has been administered to Indonesian Waqf Board and Department of Cooperatives Source: Research data is processed Figure 2: Model II: Cash Waqf as an Instrument of Economic Empowerment Products Synergize Islamic Boarding School Through Baitul Mal Wat Tamwil (BMT). (a) BMT get permission from BWI and Dinas Koperasi as a nazir waqf money, (b) Wakif pays waqf funds on BMT, (c) zNazir (BMT) issued the waqf funds on productive assets (estate and agricultural land, (d) The results of utilization of productive waqf property stored in BMT, (e) BMT provides business capital in the form of musyaraka contracts on livestock and trade, (f) Livestock and trade sectors pay borrowed funds from BMT along with revenue sharing from the fund manager, (g) Nazir (BMT) issued other waqf funds along with the results of the utilization of such funds on the productive assets of formal education facilities and education nonformal, (h) The result of utilization of waqf asset is stored in BMT as a waqf nazir to be used as waqf development, (j) BMT reports the management of cash waqf that has been managed to Indonesian Waqf Board and Department of Cooperatives Source: Research data is processed Alhifni, et al.: Product Design Mall of Islamic Microfinance Institutions Supporting Economic Empowerment Islamic Boarding School Indonesia (Case Study Islamic Boarding School Abdussalam) International Journal of Economics and Financial Issues | Vol 8 • Issue 4 • 2018254 Zakah means sacred, blessed, grown, and praiseworthy (Zuhaili, 1989. p. 498) Zakah is the act of transferring wealth from Muzakki to the mustahiq group, so Zakah is closely related to economic empowerment because it is also a transfer of economic resources (Rifqi, 2006. p. 2). Zakah is one of the empowerment instruments applied by Rasulullah SAW as head of state, in its current development, acting as amil Zakah not only government, even many financial institutions like BMT, the educational institution like Islamic Boarding School acting as LAZ (amil Zakah institution) one of them BMT Barokah Abdussalam. The existence of BMT Barokah Abdussalam as a sharia microfinance institution that manages ZIS funds must be able to channel the funds on target and according to its allocation so as to give better impact especially in supporting the empowerment in Islamic Boarding School Abdussalam. a. Implementation of ZIS in BMT Barokah Abdussalam BMT Barokah Abdussalam has received permission from the Office of Cooperative District. Kubu Raya in 2014 as an Islamic microfinance institution that can manage ZIS fund, interview result and observation of researcher indicate that until now there is no member, outside party or institution that channel ZIS fund through BMT Barokah Abdussalam, so there is no fundraising from fund The ZIS. There are several strategies that can be implemented by BMT Barokah Abdussalam to give interest to members, institutions, companies to channel their zakat funds through BMT, first to cooperate with Islamic Boarding School to publish an appeal of students, teachers, alumni, guardian of all economic sectors to distribute ZIS funds through the BMT, both cooperate with members who have ushaa or business to distribute ZIS funds through BMT, the third appealed to all members of the BMT to channel ZIS funds through BMT, the four in cooperation with companies and educational institutions, the fifth doing promotion through the media on line. The distribution can be distributed in several forms such as scholarships for student, assistance for members who are included in the eight categories of ashnaf, the use of infaq and shadaqah funds as a subsidy of financing margins on the economic sector of Islamic Boarding School Abdussalam, the development of formal and informal education facilities and infrastructure, and so on adjusted to the conditions of BMT and Islamic Boarding School during the distribution of zakah funds are still in the criteria of eight ashnaf. b. The Benefits of ZIS For BMT and Islamic Boarding School Abdussalam 1. Benefits for BMT Barokah Abdussalam a. Getting a chance as an ‘amil b. Obtain sources of capital funds that can be used as a supporter of economic empowerment of the ummah c. Increasing the role of BMT as an ummah empowerment institution (especially Islamic Boarding School Abdussalam) 2. Benefit for Islamic Boarding School Abdussalam a. The problem of limited facilities and infrastructure can be overcome. b. The problem of limited capital for economic sector development of Islamic Boarding School can be overcome. c. Islamic Boarding School get assistance in the form of productive assets that can be managed properly, the form of assets can be in the form of agricultural assets, plantation, animal husbandry, trade and educational facilities. d. Providing opportunities for santri community to play a larger role so as to increase the independence of Islamic Boarding School and the community. e. Increasing public trust in Islamic Boarding School and BMT Barokah Abdussalam. 3. ZIS Scheme as an Economic Empowerment Instrument Islamic Boarding School Through BMT. The first model focuses on empowerment using zakat funds, while the second empowerment focuses empowerment using infaq and shadaqah funds, clearly, both models can be explained in the following figure. 4.3. Model I ZIS The second model focuses more on empowerment using infaq and shadaqah funds, ii to facilitate the allocation of funds, because the funds can be allocated in accordance with the desired BMT. The model is as shown Figure 3. 4.4. Model II ZIS [Figure 4] Both models can be applied if they meet the following conditions: 1. ZIS funds have been collected, this is very important because the model will not work if the ZIS funds are not collected, so it is necessary to make an efficient and easy ZIS fund collection strategy as described earlier. 2. Supported by competent human resources both BMT Human Resources and Islamic Boarding School. For the readiness of this human resources, BMT can cooperate with universities especially in providing knowledge training about ZIS fund governance, so that the human resources can manage it properly and can be justified. Figure 3: Model I: Empowerment Using Zakah Fund. (a) Muzakki paid Zakah on Baitul Mal Wat Tamwil (BMT) Barokah Abdussalam, (b) BMT Barokah Abdussalam distributes Zakah funds in the form of consumptive such as scholarship, teacher salary and social assistance for members who fall into the category of eight ashnaf, (c) BMT Barokah Abdussalam distributes Zakah funds in a productive form such as giving member business capital, and student business capital so that the fund can be productive, (d) To ensure the funds can be channeled properly and can be productive, BMT Barokah Abdussalam needs to do coaching regularly, (d) BMT Barokah Abdussalam reported the management of Zakah funds at the Cooperative Office of Kubu Raya Regency periodically Source: Research data is processed Alhifni, et al.: Product Design Mall of Islamic Microfinance Institutions Supporting Economic Empowerment Islamic Boarding School Indonesia (Case Study Islamic Boarding School Abdussalam) International Journal of Economics and Financial Issues | Vol 8 • Issue 4 • 2018 255 3. The BMT should be able to determine that those receiving Zakah funds are properly included in the eight ashnaf as the main condition in the disbursement of zakat funds. 4. Using a good and transparent administrative system, the use of modern administration is needed to maintain Muzakki’s trust and maintain Muzakki’s trust in BMT as’ amil. BMTs also need to make periodic reports not only submitted to the Cooperative Service but also delivered to Muzakki. 5. Managed with the principle of helping and prioritizing the interests of the ummah above personal interests. 5. CONCLUSION As the result of the research shows that product design that can be developed by BMT Barokah Abdussalam is the design of cash waqf mall product with two model approach and prod ZIS mall with two approach model, and from both models can be applied if BMT can optimize the source of social fund so it can distribute the fund is one of them through the development of product design proposed in this research. 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Figure 4: Model II: Empowerment Using Zakah Fund. (a) Muzakki paid Infaq and Shadaqah on Baitul Mal Wat Tamwil (BMT) Barokah Abdussalam, (b) BMT Barokah Abdussalam distributes Infaq and Shadaqah funds in consumptive forms such as scholarships, teacher salaries, and assistance to loyal members, (c) BMT Barokah Abdussalam distributes Infaq and Shadaqah funds in the form of productive capital such as providing business capital for members and students, in some financing schemes, namely trading scheme (subsidized margin), cooperation scheme (subsidized basic financing), rent lease scheme (subsidized rent) development of learning facilities and infrastructure and economic sector equipment as well as infrastructure sector development, (d) To ensure the funds can be channeled properly and can be productive, BMT Barokah Abdussalam needs to do coaching regularly, (e) BMT Barokah Abdussalam reported the management of Zakah funds at the Office of Cooperatives Kab. Kubu Raya regularly Source: Research data is processed