MICRO-CREDIT FINANCING (AR-RAHNU) IN SOUTH EAST ASIA: A REVIEW

The existence of the Islamic pawnbroking scheme known as Ar-Rahnu is one form of microfinancing. This micro financing scheme (Ar Rahnu) provides a cash loan facility that is Syariah compliant,fast, and convenient compared to other financial institutions. This study intended to examine thedevelopment of micro financing (Ar-Rahnu) among several South East Asian countries (Malaysia,Indonesia, Brunei, and Thailand). It applied the document analysis method for collecting primary data, whilesecondary data were based on the history of financing in several South East Asian countries that hasimmensely helped the local community and fulfilled its needs. Findings show that Ar-Rahnu wasimplemented in Malaysia more than 20 years ago with the formation of Muasassah Gadaian IslamTerengganu (MGIT), followed by Permodalan Kelantan Berhad (PKB), Ar-Rahnu YaPEIM (YayasanPembangunan Ekonomi Islam Malaysia) and banking institutions, such as Ar-Rahnu Bank Rakyat, ArRahnu Agro Bank, Ar-Rahnu Bank Islam and many more. In Indonesia, Perum Pegadaian, which wasformed in 1990, manages pawnbroking services. It introduced an Islamic pawnbroking scheme known asAr-Rahn in 1999 and sent its staff to Malaysia to learn about the Ar-Rahnu scheme in Malaysia. In Brunei,the Ar-Rahnu scheme was introduced by Bank Islam Brunei Berhad (BIBD) in 1996 with the aim of helpingsociety to receive financial assistance faster and in a Syariah-compliant manner. Whereas in Thailand, theIslamic Savings Cooperative of Pattani Limited, which was formed in 1987, had implemented Syariahcompliant financial principles. The society’s warm response there shows that the financing scheme (ArRahnu) has been welcomed by the local population.