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Economics and Business Vvolumeolume 2,1, Number 1,2, Decemberjune 2019 2018 Muhammadiyah International Journal of ISSN: 2685-7405 Economics and Business VVolumeolume 2,1, Number 1,2, DecemberJune 2019 2018 http://journals.ums.ac.id/index.php/mijeb THE DISTINCTION BETWEEN SHARIA MARKET AND THE IMPACTS OF AFTA-COMMON EFFECTIVE PREFERENTIAL CONVENTIONAL MARKET: A STUDY ON INDONESIA STOCK TARIFFS ON THE TRADE DIVERSIONEXCHANGE AND TRADE CREATION OF SYNTHETIC RUBBER AND FACTICE FROM OIL IN INDONESIA Yadi Nurhayadi and Rito Universitas Muhammadiyah Prof.Faizal DR. Hamka Amir and (UHAMKA) Idah Zuhroh – Faculty of Economics and Business Jl. RayaUniversitas Bogor Muhammadiyahkm 23 no. 99 Jakarta Malang Timur Corresponding author: [email protected], Raya Tlogomas 246 Malang [email protected] [email protected], [email protected] Abstract The present study investigates the differencesAbstract between Islamic Economic System and Conventional RubberEconomic and System its products that supposedly are one of lead the to exported the differences commodities between listed sharia in Indonesia’smarket and tenconventional primary exportedmarket. Through commodities bivariate (Ministry and multivariate of Trade 2015). analysis, Different regression, from other correlation, rubber products,and determination the import oftests synthetic were carried rubber out and to identifyfactice from the effect oil have of conventionalincreased significantly market on sharia since themarket. establishment Analysis wasof thedone AFTA-CEPT based on the withdata ofapproximately Indonesia Stock 7 thousand Exchange registered from December products 2006 in the to MayInclusion 2017, ListThe (IL)data inconsisted 2002. This of Jakarta study aimedStock Exchangeto analyze (JSX)the competitiveness Composite Index of synthetic(Indeks Harga rubber Saham and factice Gabungan, from oilIHSG), among Jakarta the members Stock Exchange of AFTA Liquid countries Index and (LQ45), analyze Jakarta the impacts Islamic of Index trade (JII), creation and Indonesiaand trade diversionSharia Stock on theIndex implementation (ISSI). The results of the showCEPT-AFTA that IHSG on andsynthetic LQ45 rubber have aand significant factice oil positive from Indonesia,correlation particularlywith JII or ISSI. in the While 11 countries IHSG and of LQ45 origin are of classifiedimports during as the theelements period offrom conventional 2001 to 2013market, by JIIusing and a ISSIgravity are model, the representation which was analyzedof Sharia using market. static It indicatesdata panel. that Based sharia on market the results and ofconventional RCA (Revealed market Comparative are both present Advantage), with the thesame competitiveness character. In other of synthetic words, sharia rubber market and factice is still oilinfluenced from Indonesia by banking is very interest low among rate and four speculation. ASEAN countries, To confirm while this Thailand finding, is the listtop ofexporting issuers on countriesIDX, LQ45, in ASEAN JII, and ISSIregion. was The examined results ofand the the panel specific data analysissharia issuers showing were variables compared which with have non- positivesharia issuers, influence therefore are Indonesia’s the classification real GDP of and IHSG real andGDP LQ45 of the as countryconventional of origin market of imports, is corrected. while variablesBased on withthe results negative of theeffect analysis are economic of regression, distance correlation, and Indonesia’s determination, real exchange and investigation rate compared of tothe the collected country data, of origin a model of ofimports. sharia marketThe implementation stability is formulated. of AFTA-CEPT brought against trade diversion and creation of synthetic rubber and factice oil from Indonesia will have impacts on theKeywords: existence Bivariateof trade creation Analysis, because Multivariate part of the Analysis, domestic Stabilityproduction Model, of synthetic Sharia rubber Market, and facticeConventional oil from Market. Indonesia will be replaced with imports from member countries and there is no trade diversion. Introduction in the capital market can also be invested in other Keywords:As the countryAFTA, gravitywith the model largest, synthetic Muslim rubber Sharia and securities,factice from i.e., oil, sukuk trade andcreation, Sharia trade mutual populationdiversion in the world, Indonesia is a prospective funds (Indonesia Stock Exchange/IDX, 2017). market for the development of Islamic financial At the same time, the conventional stocks Introductionindustry. In fact, it has been initiated in Indonesia Figureon the 1,IDX even can though be considered there was a non-compliantslight decrease into sinceThe 1992, flow with theof establishmentgoods and services of the foremost between 2008Islamic due laws, to the including global economythose listed crisis. in Jakarta The worldStock countriessharia commercial in the lastbank, decade i.e., Bankhad Muamalatincreased importExchange value (IHSG) index andtends Jakarta to be Stockhigher Exchange than the significantly.Indonesia. Subsequently, This was proventhe Indonesian by the increasecapital exportLiquid valueIndex because(LQ45). import These valueconventional has additional stocks ofmarket the export has been and enriched import byvalue Jakarta index Islamic around Index the componentor securities in allow the cost the practicesof trade transportation. of usury (referring world(JII) as between the first 2001 Islamic and 2013,stock whichindex listedis shown on thein to conventional bank interest rate fluctuations) Indonesia Stock Exchange (IDX) which launched as well as businesses that involve gharar on 3 July 2000, and followed by the Indonesia (speculation), maisir (gambling) and non-sharia- Sharia Stock Index (ISSI) launched on 12 May compliant activities (e.g., conventional banking, 2011. In addition, Islamic or Sharia investment liquor industry, and tobacco industry). 70 1 Muhammadiyah International Journal of Economics and Business, Volume 2, Number 1, June 2019 The distinction between Sharia and purchased shares in the FTSE Global Islamic and conventional stocks or securities will basically DJIMI indices were different from their indices lead to the differences in the fluctuations of their counterparts, both in the short-run and long-run. values. In order to ascertain the difference, the The hypothesis assumed that ethical screening bivariate and multivariate regression analysis might lead to increased screening and monitoring using a quantitative approach and the correlation costs, availability of a smaller investment universe, and determination analysis between Islamic stock and restricted potential for diversification. In and conventional stocks can be done. Furthermore, particular, ethical screening was inclined to to confirm the equations and the results of eliminate large firms from the investment universe quantitative analysis, it is necessary to qualitatively and as a result remaining firms tended to be examine the investors’ opinions and behavior smaller and had more volatile returns. In fact, in investing in Sharia or conventional stocks/ the findings indicated that ethical screening does securities in the capital market. The measures to not have an adverse effect on the global Islamic unveil the differences between Sharia markets Index performance. Generally, this study rejected (represented by stock transactions or Sharia the assumption that Islamic investment offered securities) and conventional market (represented inferior investment performance compared to by stock transactions or conventional securities) unscreened portfolios (Hussein, 2005). is enclosed in a study directed at revealing Sharia Achsani, Effendi, and Abidin (2007) studied market stability model. the Islamic stock markets of the USA, Canada, the Many studies have investigated the UK, Japan, Asia Pacific, Indonesia and Malaysia. distinction between Sharia capital market and The correlation coefficient method, granger- conventional capital market, the volatility of the causality test, and vector autoregressive were Sharia capital market, and the link between the employed. While there are strong correlations global Sharia capital markets. Such studies are the between Islamic stock indices, the spatial effort to reaffirm the consistency of Sharia market relationship of Islamic markets also positively to exclude usury system (i.e., the fluctuations influences its degree of relationship; which is on interest rates in conventional banks), gharar asymmetrical with each other. (speculation), maisir (gambling), and other non- Aziz and Kurniawan (2007) empirically sharia-compliant activities. They include the tested the Kuala Lumpur Sharia Index (KLSI) studies carried out by Hakim, Rashidian, Hussein, and the Jakarta Islamic Index (JII). This study Achsani, Effendi and Sclip. Some of the findings analyzed the indices of KLSI and JII that explain of those studies indicated the linkage between the descriptive statistics, tested the stochastic Sharia market and conventional market, yet some properties of the data series by using unit root, reported the opposite result. and performed GARCH test with the aim of Hakim and Rashidian (2004) compared assessing the volatility of the existing data. This Sharia stocks on the Dow Jones Islamic study concludes that the index volatility depends Market Index - US (DJIMI) with conventional on the market players. As long as the investors are stocks on the Wilshire 5000 Index (W5000). still in large quantities yet the Islamic paradigm is It used cointegration analysis and multivariate
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