Paper Money? Let’s Get Real, Says Local Entrepreneur

When asked to explain why he does what he does, Zaim Saidi points to a song, “Kisah 8 Dirham” (“The Story of 8 Dirhams”) by Gita Gutawa.

The tune tells of the Prophet Muhammad going to the market with eight dirhams, or silver coins. Along the way, he gives away six dirhams to the needy and uses the last two to buy new clothes.

“The point is, the price for new clothes was two dirhams,” Zaim said after playing the music video in his office in Depok.

Since today one dirham is worth around Rp 67,000 ($7.50), he said, it means you can still buy new clothes for two dirhams.

That stability in value is one of the main reasons Zaim works to promote a Shariah-based economy that uses gold and silver coins for trade.

“I believe the current economic system based on paper money as a medium of exchange will soon collapse,” he said.

Zaim, 49, believes that because paper money is just that — paper — it amounts to nothing more than the zeroes that are printed on it. The intrinsic value of dinars and dirhams, on the other hand, preserves them from inflation or devaluation, unlike paper money.

“With paper money, the material itself is worthless,” he said. “Gold and silver are different.”

In 2007, Zaim founded the Wakala Dinar Dirham Nusantara network, which lets people exchange their rupiah for gold and silver coins.

To date, the organization operates more than 100 outlets across the country with more than 10,000 dinars and 35,000 dirhams distributed.

For Zaim, it’s not just about economics. Islam teaches its followers to trade voluntarily in a halal and fair way, he said.

“Fair is when you trade a goat for something with value,” he said. “Gold and silver have value, paper money is a certificate confirming your debt. And it’s definitely not voluntary because we are forced to use paper money by the government.”

Distributing Wealth

The use of gold and silver in modern-day trading, in fact, is not unheard of. Last year, Malaysia’s Kelantan state adopted dinars and dirhams as an alternative currency to the ringgit.

In 2009, Zaim founded the Dinar-Dirham Entrepreneurs Network, or Jawara.

“It’s a network of traders that accepts gold and silver coins as a medium of exchange,” Zaim explained. “There are now about 300 stores.”

Wakala also holds “Market Day” festivals where people can experience trading with gold and silver coins.

“In Bandung, West Java, for instance, every week people hold the Market Day Festival,” Jawara chairman Abdarrahman Rachadi said.

In the capital, the event is held once a month, at Al-Azhar Mosque in South Jakarta.

“We are also trying to establish ‘Jawara Kampongs.’ It’s basically a village where there are more than five shops accepting dinars and dirhams,” Abdarrahman explained.

Two of the most active Jawara Kampongs are in Cilincing, North Jakarta, and Tanah Baru, Depok.

Farhaz Daud, head of South Jakarta’s Jawara network and the owner of a guesthouse and batik boutique on Jalan Setiabudi, said there had been a recent jump in the number shops that accept dinars and dirhams in his area since December.

“We already have 70 members, from minimarkets to drugstores,” Farhaz said.

Sahlan minimarket in Tanah Baru also accepts dinars and dirhams. From outside it looks like just an ordinary minimarket, but the store operates in conjunction with Jawara, which means customers can spend their gold and silver coins there.

“Yes, we accept payments in dirham and dinar,” said Angkih, who works at the store.

When asked what a single silver coin could buy, Angkih offered a five-kilogram pack of rice.

“With the current silver price, one dirham equals Rp 66,000. The rice costs Rp 53,000,” she said. “You can receive the change in rupiahs or dirhams, or you can buy other things to round out your purchase.”

According to Yanto, another employee, every morning the owner of the shop sends them a text message informing them of the price of gold and silver.

“We also receive our salary in the form of dirham and rupiah,” Yanto added.

When asked whether he ever used the coins for shopping, Yanto said he would rather save.

“I’m saving for the future,” he said with a smile.

Will It Thrive?

Given gold’s reputation as a lucrative business and a safe investment, plus the Islamic values with which it is connected, Zaim hopes the dinar and dirham idea will be adopted by many people, especially Muslims.

“But it’s for everyone really,” he said. “People should have gold and silver for their future’s sake.”

Muhammad Iqbal, 45, who started his own dinar business, called Gerai Dinar, agreed.

“The first crisis in 1997 had me searching for ways to avert future ones,” he said.

Gerai Dinar was established in 2007. In addition to gold dinars, it also provides entrepreneurial courses. “Gold is safe, but it’s better if you turn your money into a business asset,” Iqbal said.

Gold also appeals to Goldameyer Mektania, but she said she preferred bullion to coins.

“Since my goal is to invest, it’s better if I buy bullion rather than coins. Coins still feel like money, so I might in the end spend it,” said Goldameyer, 25.

Muhammad Ainur Rofiq also likes gold.

“I heard about dinars and dirhams, but I’m still not sure about how it works. I would be interested, though,” said the 31-year-old.

Financial planner Muhammad Teguh too sees possibilities in dinars and dirhams.

“They are ideal as a medium for exchange, but of course they have their own disadvantages and impracticalities,” he said.

Riawan Amin, chairman of the Islamic Banking Association of Indonesia (Asbisindo), said he appreciated Zaim’s efforts to promote dinars and dirhams for use in transactions.

“But of course without it being accommodated by the central bank their effort will have no significant macro contribution,” he said.

Berly Martawardaya, an economist at the University of Indonesia, said the use of gold and silver as a currency would reduce the government’s control over the country’s economy.

Like the government, the International Monetary Fund, of which Indonesia is a member, prohibits the use of gold as a currency, Riawan said.

Riawan said he feared that even if people did start to buy dinars, it wold only be to keep them, not to use as a regular currency in everyday life. “And that is not Islamic,” he said.

Another obstacle for dinars and dirhams is the Currency Law, which prohibits the use of any currency other than the rupiah.

The law was put into effect in May with the aim of strengthening the rupiah’s value against foreign currencies.

“Making gold and silver a means of exchange may put the rupiah in a difficult position,” Riawn said.

“But if you just pay gold coins as an exchange for a bag of rice, it can simply be seen as a trade of commodities.”

Source: Jakarta Globe