The Legislation of Islamic Economic Law in Indonesia: Meaning, Principles, and Its Developmental Trajectory

Abstract

Islamic Economic Law reflects the process of transforming Islamic economic norms into positive law through the gradual development of statutory regulations. This study employs a normative legal method using statutory and historical approaches to examine the dynamics of Islamic Economic Law legislation, particularly in the field of Islamic banking. The findings indicate that the transformation of Islamic banking law began with the dominance of the conventional banking system under Law Number 14 of 1967, followed by the introduction of the profit-sharing principle in Law Number 7 of 1992, the stronger recognition of Sharia principles through Law Number 10 of 1998, and the enactment of Law Number 21 of 2008 concerning Islamic Banking, which established a specific legal framework for Islamic banking operations. This development was further strengthened by Law Number 4 of 2023 concerning Financial Sector Development and Strengthening (P2SK), which supports the enhancement of the Islamic financial industry. These legislative developments demonstrate that Islamic Economic Law has undergone an increasingly robust process of institutionalization within the national legal system and has become an integral part of developing a just, inclusive, and sustainable financial system