Transactions in Islam

Assalaamu'alaikum wa rahmatullah

I just returned home from USM Penang and arrived here in KL just after 'Asr time. I had submitted my thesis. Anyway, for postgraduate students who take full-time classes we actually have to write a five chapters mini-thesis other than hundreds or maybe thousands of weekly assignments. I shut myself down for about a year since the Gregorian New Year 2013 after my thesis being rejected for about.... Well, I do not know how many times.

For this time, I wish that they could accept my thesis and let me go through the candidature as a master graduate student. I did not sleep for about a week to manage my thesis right. Grateful to both sisters, Aida and Premawati. Because they contacted me and reminded me to the thesis, so I came to realize that I had wasted my time in the campus for another three years of my life just after I graduated from undergraduate class. Six years as a higher institution student, plus with my schooling times. I am not trying to brag myself but one could compare our maturity with those who had started their working life since after their schooling times or after their undergraduate times. We could analyze the situation better and not just working for the sake of saving our ass. We learned to be compassionate to other beings and feel others' sufferings.

Well, tonight I am connecting myself with the mosque again which is the al-Najah Mosque at the religious primary school in Precinct 9. I just love that imam guy. I feel connected spiritually to him and also some other guys but only specific people. It is like being connected to another brother when seeing him or other specific people. Coincidentally, there was a religious lecture related to communal activity component in Sharia Islamiyah or the Way of Islam. The ustad talked about the interest or in Arabic we call it as al-Ribaa. This is quite interesting because I learned about this but I had forgotten, lol. 

Basically, there are six matters which is mentioned in a Hadith I guess reported by Abu Sa'id al-Khudry r.a as interest matters. They are:

1. Gold 

2. Silver

3. Wheat grain

4. Dates

5. Salt

6. Barley

Well, because this country and most regions in South East Asia are following the jurisprudence of imam al-Shafi'ie rahimahullah then I am offering him my honor, love and respect. I will just mention about his method of jurisprudence other than my family in majority follows his method. In modern days, there are matters subjected to interests such as money and they are reasoned through a process known as deductive analogy by jurisprudence scholars. Not by commoners.

The imam al-Shafie jurisprudence method categorized interests into three categories:

1. Ribaa' al-Fadhl

2. Ribaa' al-Nasee'at

3. Ribaa' al-Yad

The adherents of Hanbali jurisprudence usually would follow the method of Ibnu al-Qayyim and other scholars from the particular school of jurisprudence where they recognize two categories of interests in transaction. It is not a problem at all but do not impose the method on others like they do not have their schools of jurisprudence or scholars of jurisprudence. 

I guess these are the summary for basic things in our daily transaction whether with money or barter system. These form the basis of our financial law and economic system where Islam is not based on any Enlightenment products from European continent but it is an "Enlightenment" product from Arabian Peninsula where the people there were regarded as barbarians although it is perhaps an overgeneralization by Orientalists or Western academicians.

I just read some books written in Malay language from our library in Hamzah Sendut USM. I guess I took two books about tariqas in South East Asia and one is the Book of Aphorism written by Ibn Athaillah al-Sikandari and compiled again by Sheikh Fadlullah al-Haeri of Karbala. The book about tariqas among them is known as the "Syariah: Ilmu Fekah Menurut Tarekat Qadiriyah" or "Sharia: Jurisprudence according to Qadiri Lineage" written by Haji Abu Bakar Aceh and published by Pustaka Aman Press. Another one is the "Tarekat Ahmadiah in Malay World" but I cannot remember the author's name and publication. Qadiri lineage is actually my paternal family lineage but we had forgotten and leave the practices behind when our elders passed away. My father was not properly educated (religiously speaking) and I am lamenting him because he is unfortunate. Basically I have some basic knowledge about the Qadiri lineage where I just look at the contents and I could elaborate them again from my basic understanding of Islam. Some of the practices I had already get from elders at our "centers" when I was little child. I am just referring to the book as to recall my memories back while waiting the time to take the bus to return to Kuala Lumpur. Did not have much time to xerox the book and violating the publication copyrights because I was rushing with thesis submission and others.

Tomorrow will be my first day working in an organization. It is just a contract based job but anything will do because I need some experience in working areas and getting used to whatever that I had left before. Thank you brothers and sisters for visiting this humble site. I am grateful for brothers and sisters prayers.

Sealed with prayers for mercy, peace and love, amin!        

Theory of Regional Economic Integration

Assalaamu'alaikum wa rahmatullah

Economic Theories of Regional Integration

We have four pages of readings here and it is written by Alexis Iche. The agreement in Treaties of Rome 1957 on the premise of economic integration could be channeled for a political aim as to keep people in the Union more closer. In theory, economic benefits from regional economic integration would convince the citizens of Europe that deeper political links between member states would receive similar benefits. In order to analyze the economic rationale behind EU programmes such as the Single Market Programme (SMP) or Economic and Monetary Union (EMU), one needs to understand fundamental concepts and theories used to justify regional economic integration and problems associated with theories.      

Types of Integration

This was outlined by Dutch economist, Jan Tinbergen (1954). He outlines two distinct types of economic integration:

1. Negative Integration

Elimination of obstacles to the free movement of goods and factors of production (FOP). Example is the removal of tariff barriers such as quotas or non-tariff barriers such as differing standards between member states.

2. Positive Integration

The replacement of various national rules with one set of EU rules. Adoption of common policies. Example such as Common Commercial Policy (CCP).

Stages of Economic Integration

Regional economic integration is a gradual process. It exists in several forms. Economist such as Bela Balassa (1950) defined it as the progresses through various stages as it moves towards more integration. Example is EU itself as it developed from from a Free Trade Area (FTA) toward a full economic and monetary union. Integration is an ongoing process. It has its own in-built momentum. Each further step creates problems that can be solved only by deeper regional integration. This phenomenon is also known as spillover.    

Stage One - Free Trade Area

It is exclusively focused on trade in goods while services, labor and capital remained restricted. Tariffs i.e import taxes imposed on foreign goods are abolished within the group. Each members of this area keeps its own external tariffs policy toward the rest of the world. Such example is North American Free Trade Area (NAFTA).  

Problem is that in an FTA, member country keeps its own external tariff on goods from outside the area. Once these goods are inside the area, they can move freely around without any tariff. Example, in an FTA between Sweden and Finland, if Sweden has lower tariff than Finland on product or good such as coffee, companies in Finland will import coffee through Sweden in order to pay lower tariffs.

Solution as to avoid this condition, the FTA needs to move into a customs union with a common external tariff (CET).    

Stage Two- Customs Union

It is exclusively focused on trade in goods while services, labor and capital still remained restricted. Tariffs are abolished within the group. A CET is established for the group. Example for this is European Economic Community (EEC) 1957-1958.

Problem is that CU eliminates tariffs and quota restrictions (tariff barriers) but still allows non-tariff barriers such as differences in technical standards, health and safety requirements which hinder free trade.

Solution for this would be, non-tariff barriers should be eliminated through mutual harmonization of product recognition. 

Stage Three - Common Market

It has all properties of the previous customs union. Free movement of FOP such as goods, capital, labor and services between all members of the group. Example is European Community or currently European Union (1987-1999). 

Problem with this is that, to achieve complete free movement, the last non-tariff barriers must be eliminated which is the differences in currencies of member states. This is due to that, exchange rate (ER) does not reflect the 'true' price of goods and it acts as non-tariff barriers. 

Solution, they have only one option which is to adopt a common economic policy. It includes some form of common or coordinated fiscal policy. This would permit fiscal transfers from regions experiencing positive growth to regions suffering from negative growth in order to maintain stability of the system.   

Stage Four - Monetary Union

It has all properties of the previous common market. It is just a prolongation of the previous stage. At this stage, the member states adopt common currency. Example is EU member states who adopt euro since 1999 until present. I guess Denmark and United Kingdom have opt out from monetary union and they still use their own currencies. 

Problem about this, in the past, strains between different economies caused by different growth rates. These floating exchange rates allowed national central banks to set individual interest rates. They are suited to the needs of their economies. In a monetary union, exchange rates irreversibly fixed, and the other adjustment mechanisms such as movement of capital and labor may be insufficient to counterbalance tensions in the system caused by different growth between countries.    

Stage Five - Economic Union

It is a continuation of previous stage. Common economic policies, coordination and harmonization on fiscal issues (single policy for the entire zone) are established. 

There is no good example available between equally sovereign nation-states. The relationship between individual US states may be the nearest example. 

Problem for this, the loss of control over economic and monetary policy is a serious loss of sovereignty for member states. 

Solution, there is a need to find new balance between nation-states' sovereignty and their economic powers or to integrate further into a small political union modeled on already existing federal states such as Germany.

The further regional integration progresses, the more its economic developments clash with individual political prerogatives of member states. This is true with regard to issues such as monetary policy, taxation and all forms of redistributive policy. They are issues connected with a state's raison d'etre. The result is, while further economic integration leads to a need for more political change, member states are reluctant to yield the sovereignty necessary to move to the next level of integration.  

Sealed with prayers for mercy, peace and love amin! 

Islamic Banking System

Assalaamu'alaikum wa rahmatullah

Evil Period

This period is again period of evil. I read Hindu and Buddhist scriptures when I was a young secondary school kid and I found they talked about evil period after the righteous cycle of period. I had mentioned before I don't think like normal kids when I was a little kid. It makes me difficult to mingle with people around even with adults and for now I have to seclude myself from "normal" Muslims because I don't want their aqeedah to be harmed. I love my brothers and sisters I don't want my brothers and sisters being tormented that always make me always sacrificing myself for everyone around me. Those scriptures basically mention that things which are righteous being seen as evil while evil things being seen as good. The same thing about our Path being blackened and tainted by the cycle of period.

So, I am trying to fight the current as a lay man and spreading wide His "True" teachings through our Sacred Path and through His Holy Light. I beg my beloved brothers and sisters to please help me. Please be the soldiers of Allah. We don't slaughter or hurt people, plants, nature or animals when being His soldiers. We spread knowledge and awareness to people so everyone will be saved from diseases of evil. Please spread the knowledge of Shariah Islamiah to those who are still not aware about it and to those who are interested may Allah purify everyone's heart. 

Sharing

In this post I just wanted to put on this article about Islamic Banking in our country. I believe other countries with Muslim population such as Saudi Arabia also having this. Please stop talking about Muslim countries. I know few movements like Hizbut Tahrir also talk about this but I never bother to listen to them as I believe His Will is the Truth. No Muslim countries in this world for the time being. People of Shariah branches of science never believe in Muslim or Islamic countries. There is no such thing because an Islamic or a Muslim country is a sacred country nearest to His Kingdom. Try asking the jurists in Shariah court and you'll get the same answer. I talked with them and my father always doing interview with the ex-mufti in Kuala Lumpur for example with Hashim Yahya and he brings me with him. My father is not a religious person. I cry and pray for him everyday because he listens to things but he does not understand anything. It is not his fault. He was not properly educated and is not fortunate. I try to memorize Quran for my parents, grandparents and my brothers and sisters. I wanted to save them if they can't save their own selves.   

I read this article written in a Malay newspaper written by Prof. Muhammad Azam Muhammad Adil from Center for Islamic Thought and Understanding, Universiti Institut Teknologi Mara, Shah Alam - Malaysia. It was published in Utusan Malaysia religious reading section around 16th of February 2012. So any brother or sister doing researches on economic angle of Shariah, I assure you don't hesitate to use this source in this post. I put the source here as to make it easier for you to do researches and begin to implement them in your organizations. This is sincerely dedicated to Allah apart of my personal record. It talks about how far Islamic banking system in Malaysia serves its goal to protect the welfare and the interest of its customers?

History of Islamic Banking System - Malaysia

Islamic banking system in Malaysia had begin with the establishment of Malaysian Islamic Banking Corporation Limited (BIMB). It was granted license by the government in order to implement the business according to Shariah Islamiah and operating as a bank.

As compared to Tabung Haji which has its goal to assist Muslims in Malaysia to save their money to perform Hajj pilgrimage, Islamic banking system in Malaysia offers schemes without usury covering the wadi'ah (saving account), mudharabah (investment), bai' bi thaman and murabahah for car and housing loan or deferred payment sale. 

In the beginning, the concept of non-usury or non-excessive interests facing many problems and obstacles. People were still complaining that the charges taken by the banking system such as the car and housing loan was still high but after many researches done it is now growing better and better after 30 years of its implementation.

Islamic banking system with non-usury concept is now developing with its expansion into conventional banking counters known as Islamic Windows. It begins since 1993 at the time European Union gets its current name through Mastricht Treaty, lol. Later in 1999, Mua'malat Banking Corporation was established. Since 2003, many conventional banks were also opening their own sub-companies based on Islamic Banking system. 

While local banks were competing among each other, two Middle East banks had penetrated Malaysia through their branches in the mid of 2000. Those banks are the al-Rajhi and Kuwait Finance House (KFH). I have a saving account in al-Rajhi too. All of the people at home supporting this bank because it's from our land of origin and it makes us easier when we go for pilgrimage in Saudi. I know one of Arab descent of Kedah who was the officer in Kajang branch of Selangor and we talked for few hours after I registered the account around the end of 2003. They said that statistics show that customers' acceptance to these two banks were quite satisfying. Even non-Muslims are also opening their saving accounts there. So, these two banks from Middle East had also become apart of the scene in the banking landscape in Malaysia.

These two banks of Middle East introduced new concepts or methodologies in providing loan for customers such as Musharakah Mutanaqisah (home financing) and Tawarruq to replace local system of Bai' al-'Innah (sale and buy back contract) and Bai' ad-Dayn (buying with loan). These new concepts take more reasonable payment profits as compared to older concepts used in local Islamic banking system.

When looking back at the definition of Shariah, it literally means straight path which brings everyone toward the source of the water. Philosophically, it means a stream which brings a human to a system that will make them happier and feel at peace in the world and the hereafter (physically and spiritually). A holistic system of life in its approach and goal. As a technical term, Shariah refers to a system revealed by Allah/The God through His revelation and divine inspiration which covers the components of creed, morality and civilization and jurisprudence or legal. It is not about a court which prosecute adulterers (or if some people love sex so much until they don't care about the place to screw up or screwing all over the place even in front of the public for exhibition like animals) or a court which plucks out the eyes of women who talk with an unknown man. This is not Islamic concept at all like has been propagated in the West by irresponsible medias! The prosecution of adulterers came from Hebrew Torah if people wanted to talk about stupid racist things in the past. The plucking of human eyes came from Hindu tribal man-made laws. Now I am an Orthodox Muslim and I talk as a civilized man. It does not mean that I am looking down at Orthodox Jews or Orthodox Hindus instead I highly respect their culture, customs and faiths.

So, anything which complies within the technical term meaning of the Shariah are acceptable and could be practiced as to show how flexible it is. European Union has several treaties and their member states' policies also have to comply within the Union framework. So, does the Shariah. There are also member states who don't care about the treaties and they joined the European Union simply because few personal reasons. So, does the Muslims and they interpret the revelation according to their worldview and region. 

In our Path, Allah has revealed the Creed, the Morality and Manners and the Legal basis for us to be integrated as our Way of Life. So, any subject matter or mawdhu' of our daily life and activities must be in accordance to the Shariah. Is it so hard to be understood?! I think this is just a simple thing as compared to what I have to learn again in part of European Union. It is so chaotic and the Union itself is originated from world wars remnants and period. I hate wars and I love peace! 

I am trying to simplify the article on the goal of the Shariah in banking system. Hope I have some space and time for this. I believe it is very important for lay men to always be informed about the Shariah as we are facing slanders from every corner. Insha Allah, we will try to finish the article through His Will.

Sealed with prayers for mercy, peace and love amin!