Unfinished journey (57)

Unfinished journey (57)

(Part fifty-seven, Depok, West Java, Indonesia, 10 September 2014, 7:11 pm)

The development of Islamic economics, including banking and insurance system recently developed by leaps and bounds, even Companies in Britain did not want to miss with many establishing Islamic banks. So also in Indonesia is not only state-owned bank but conventional banks were busy establishing Islamic banks.

Saudi Arabia accounts for 77% of GCC takaful contribution

GCC gross takaful contribution is estimated to reach around $8.9 billion in 2014 from an estimated $7.9 billion in 2013, according to EY’s latest report, Global Takaful Insights 2014.

The report forecasts a continued double-digit growth momentum of the global takaful market of approximately 14 percent from 2013 to 2016 and expects the industry to reach $20 billion by 2017. This is against a backdrop of continued buoyancy in the estimated $2 trillion global Islamic finance markets. The Gulf Cooperation Council (GCC) countries and Association of Southeast Asian Nations (ASEAN) markets are likely to maintain their current growth path in the next five years, subject to their economic growth.

The global takaful industry continues to gain market share across several high value rapid-growth markets, which still show significant untapped potential. Within the Gulf region, Saudi Arabia accounts for the majority of the total gross takaful contribution at 77 percent, followed by UAE, which accounts for 15 percent. The rest of the Gulf countries account for just 8% of gross takaful contributions.

Islamic Bank of Britain

Saudi Arabia will likely remain the core market of Islamic insurance business, commanding approximately half (48 percent) of the global contributions while UAE, Qatar and more recently, Oman, continue to set the pace for the development of takaful products in the Middle East and West Asian markets. Turkey and Oman are new entrants to the takaful industry, offering strong first mover advantage to takaful operators, whereas established takaful markets in Africa like Sudan, offer great prospects for efficient replication across new African markets endorsing Islamic finance.

Abid Shakeel, senior director of EY’s Global Islamic Banking Center, says: “The continued strong growth of the much larger Islamic banking sector will help sustain the progress of the takaful industry. The rapid-growth markets, particularly UAE, Malaysia and Indonesia, are key markets to watch as they improve on market practices, widen distribution channels and strengthen the regulatory front. The low insurance penetration rates, on average just 2%, across key Muslim rapid-growth markets signify a huge opportunity and growth potential for takaful products, particularly in the areas of family takaful and medical insurance.”

Given the strong underlying market opportunities, a competitive market environment and strategic regulatory reforms, it is vital that the takaful industry addresses key challenges to achieve a sustainable takaful ecosystem.

Among the GCC countries, competition, operational issues and the lack of qualified talent continue to be impediments. Profitability of takaful companies has been threatened not just by undifferentiated strategies but also by the lack of uniform regulations that will allow them to operate across different models. Undifferentiated business strategies mean most takaful operators are competing intensely and this is likely to squeeze out the under-performers.

With strong competition from conventional incumbents, takaful operators are likely to continue their struggle in the medium term, although some will look at alternative customer segments and explore merger options. In striving for scale and profitability, operators are looking at structural transformation around risk, pricing and cost efficiencies.

The industry needs to re-examine its strategies, operations and regulations in order to gear itself up for further growth and a sustainable ecosystem. Success needs to be measured in profit, not market share and those who continue to do what they’ve been doing in the past will struggle with profitability.

Abid said: “To continue to grow and improve profitability, the industry needs to re-set its strategic direction according to emerging customer trends. In the face of a competitive landscape, large takaful operators are developing segmentation strategies to allow them to refine their product offerings and match them to customers with a propensity to buy. Success for smaller operators will be to accelerate their digital capabilities for sales and service with the aim of reducing their operational costs. These principles apply to both personal lines as well as commercial lines and have proven to be critical strategic decisions by the more advanced insurance industry. The industry should also gear up for new solvency, accounting and regulatory reforms. These, coupled with the support of regulators in nurturing growth through stronger focus on the standardization of regulatory and Shariah framework, will provide a strong roadmap for the industry as a whole to build a sustainable and thriving ecosystem.”

“With the high potential of the internationalization of takaful, the urgency to grow and push for regional champions within high-growth and stable regions is greater than ever. This will allow the industry to leap into the next level to realize its global market potential and position it as a strong ethical-based alternative to conventional insurance,” added Abid.

Islamic economics in the world

From Wikipedia, the free encyclopedia

This is a sub-article of Islamic economic jurisprudence and Muslim world.

Islamic economics in practice, or economic policies supported by self-identified Islamic groups, has varied throughout its long history. Traditional Islamic concepts having to do with economics included

zakat - the "taxing of certain goods, such as harvest, with an eye to allocating these taxes to expenditures that are also explicitly defined, such as aid to the needy."

Gharar - "the interdiction of chance ... that is, of the presence of any element of uncertainty, in a contract (which excludes not only insurance but also the lending of money without participation in the risks)"

These concepts, like others in Islamic law and jurisprudence, came from the "prescriptions, anecdotes, examples, and words of the Prophet, all gathered together and systematized by commentators according to an inductive, casuistic method." [1] Sometimes other sources such as al-urf, (the custom), al-'aql (reason) or al-ijma (consensus of the jurists) were employed.[2] In addition, Islamic law has developed areas of law that correspond to secular laws of contracts and torts.

Main article: Early reforms under Islam

Some argue[who?] early Islamic theory and practice formed a "coherent" economic system with "a blueprint for a new order in society, in which all participants would be treated more fairly". Michael Bonner, for example, has written that an "economy of poverty" prevailed in Islam until the 13th and 14th centuries. Under this system God's guidance made sure the flow of money and goods was "purified" by being channeled from those who had much of it to those who had little by encouraging zakat (charity) and discouraging riba (usury/interest) on loans. Bonner maintains the prophet also helped poor traders by allowing only tents, not permanent buildings in the market of Medina, and not charging fees and rents there.[3]

Social responsibility in commerce[edit]

Social responsibility in commerce was stressed in Islamic sociology. The development of Islamic banks and Islamic economics was a side effect of this sociology: usury was rather severely restrained, no interest rate was allowed, and investors were not permitted to escape the consequences of any failed venture—all financing was equity financing (Musharaka). In not letting borrowers bear all the risk/cost of a failure, an extreme disparity of outcomes between "partners" is thus avoided. Ultimately this serves a social harmony purpose. Muslims also could not and cannot (in shariah) finance any dealings in forbidden goods or activities, such as wine, pork, gambling, etc. Thus ethical investing is the only acceptable investing, and moral purchasing is encouraged.[citation needed]

Legal institutions[edit]

See also: Sharia and Fiqh

Hawala agency[edit]

Main article: Hawala

The Hawala, an early informal value transfer system, has its origins in classical Islamic law, and is mentioned in texts of Islamic jurisprudence as early as the 8th century. Hawala itself later influenced the development of the agency in common law and in civil laws such as the aval in French law and the avallo in Italian law. The words aval and avallo were themselves derived from Hawala. The transfer of debt, which was "not permissible under Roman law but became widely practiced in medieval Europe, especially in commercial transactions", was due to the large extent of the "trade conducted by the Italian cities with the Muslim world in the Middle Ages." The agency was also "an institution unknown to Roman law" as no "individual could conclude a binding contract on behalf of another as his agent." In Roman law, the "contractor himself was considered the party to the contract and it took a second contract between the person who acted on behalf of a principal and the latter in order to transfer the rights and the obligations deriving from the contract to him." On the other hand, Islamic law and the later common law "had no difficulty in accepting agency as one of its institutions in the field of contracts and of obligations in general."[4]

Waqf trust[edit]

Main article: Waqf

The waqf in Islamic law, which developed in the medieval Islamic world from the 7th to 9th centuries, bears a notable resemblance to the English trust law.[5] Every waqf was required to have a waqif (founder), mutawillis (trustee), qadi (judge) and beneficiaries.[6] Under both a waqf and a trust, "property is reserved, and its usufruct appropriated, for the benefit of specific individuals, or for a general charitable purpose; the corpus becomes inalienable; estates for life in favor of successive beneficiaries can be created" and "without regard to the law of inheritance or the rights of the heirs; and continuity is secured by the successive appointment of trustees or mutawillis."[7]

The only significant distinction between the Islamic waqf and English trust was "the express or implied reversion of the waqf to charitable purposes when its specific object has ceased to exist",[8] though this difference only applied to the waqf ahli (Islamic family trust) rather than the waqf khairi (devoted to a charitable purpose from its inception). Another difference was the English vesting of "legal estate" over the trust property in the trustee, though the "trustee was still bound to administer that property for the benefit of the beneficiaries." In this sense, the "role of the English trustee therefore does not differ significantly from that of the mutawalli."[9]

The trust law developed in England at the time of the Crusades, during the 12th and 13th centuries, was introduced by Crusaders who may have been influenced by the waqf institutions they came across in the Middle East.[10][11]

After the Islamic waqf law and madrassah foundations were firmly established by the 10th century, the number of Bimaristan hospitals multiplied throughout throughout Islamic lands. In the 11th century, every Islamic city had at least several hospitals. The waqf trust institutions funded the hospitals for various expenses, including the wages of doctors, ophthalmologists, surgeons, chemists, pharmacists, domestics and all other staff, the purchase of foods and drugs; hospital equipment such as beds, mattresses, bowls and perfumes; and repairs to buildings. The waqf trusts also funded medical schools, and their revenues covered various expenses such as their maintenance and the payment of teachers and students.[12]

Classical Muslim commerce[edit]

This article duplicates, in whole or part, the scope of other articles. Please discuss this issue on the talk page and conform with Wikipedia's Manual of Style by replacing the section with a link and a summary of the repeated material, or by spinning off the repeated text into an article in its own right. (May 2013)

During the Islamic Golden Age, guilds were formed though officially unrecognized by the medieval Islamic city. However, trades were recognized and supervised by officials of the city. Each trade developed its own identity, whose members would attend the same mosque, and serve together in the militia.

Technology and industry in Islamic civilization were highly developed. Distillation techniques supported a flourishing perfume industry, while chemical ceramic glazes were developed to compete with ceramics imported from China.

The systems of contract relied upon by merchants was very effective. Merchants would buy and sell on commission, with money loaned to them by wealthy investors, or a joint investment of several merchants, who were often Muslim, Christian and Jewish. Recently, a collection of documents was found in an Egyptian synagogue shedding a very detailed and human light on the life of medieval Middle Eastern merchants. Business partnerships would be made for many commercial ventures, and bonds of kinship enabled trade networks to form over huge distances. During the ninth century banks enabled the drawing of a check in by a bank in Baghdad that could be cashed in Morocco.[13]

The concepts of welfare and pension were introduced in early Islamic law as forms of Zakat (charity), one of the Five Pillars of Islam, since the time of the Abbasid caliph Al-Mansur in the 8th century. The taxes (including Zakat and Jizya) collected in the treasury of an Islamic government was used to provide income for the needy, including the poor, elderly, orphans, widows, and the disabled. According to the Islamic jurist Al-Ghazali (Algazel, 1058–1111), the government was also expected to store up food supplies in every region in case a disaster or famine occurs. The Caliphate was thus one of the earliest welfare states, particularly the Abbasid Caliphate.[14]

Age of discovery[edit]

Main article: Islamic geography

During the Islamic Golden Age, isolated regions began integrating into a geographically far-reaching trade network. Muslim Traders and explorers travelled over most of the Old World,[15] covering significant areas of Asia and Africa and much of Europe, with their trade networks extending from the Atlantic Ocean and Mediterranean in the west to the Indian Ocean and South China Sea in the east.[16] This helped establish the Islamic Empire (including the Rashidun, Umayyad, Abbasid and Fatimid Caliphates) as the world's leading extensive economic power in the 7th-13th centuries.[15]

Arabic silver dirham coins were being circulated throughout the Afro-Eurasian landmass, as far as sub-Saharan Africa in the south and northern Europe in the north, often in exchange for goods and slaves.[17] In England, for example, the Anglo-Saxon king Offa of Mercia (r. 757-796) had coins minted with the Shahadah in Arabic.[citation needed] These factors helped establish the Islamic Empire as the world's leading extensive economic power throughout the 7th–13th centuries.[15]

Agricultural Revolution[edit]

Further information: Arab Agricultural Revolution

During the Arab Agricultural Revolution, a fundamental transformation in agricultural practice tied in with significant economic change. This transformation involved diffusion of many crops and plants along Muslim trade routes, the spread of more advanced farming techniques, and an agricultural-economic system which promoted increased yields and efficiency. In addition to significant changes in economy, population distribution, vegetation cover,[18] agricultural production, population levels, urban growth, the distribution of the labour force, and numerous other aspects of life in the Islamic world were affected.[19]

The economic system in place in Muslim areas during this time incorporated reformed land ownership rules and labourers' rights, combining the recognition of private ownership and the rewarding of cultivators with a harvest share commensurate with their efforts also improved agricultural practices. The cities of the Near East, North Africa and Moorish Spain were supported by highly structured agricultural systems which required significant labor inputs. Such regional systems were often significantly more productive than the agricultural practices in most of Europe at the time which relied heavily on grazing animals and systems of fallowing.

Bank Syariah

The demographics of medieval Islamic society varied in some significant aspects from other agricultural societies, including a decline in birth rates as well as a change in life expectancy. Other traditional agrarian societies are estimated to have had an average life expectancy of 20 to 25 years,[20] while ancient Rome and medieval Europe are estimated at 20 to 30 years.[21] Conrad I. Lawrence estimates the average lifespan in the early Islamic Caliphate to be above 35 years for the general population,[22] and several studies on the lifespans of Islamic scholars concluded that members of this occupational group enjoyed a life expectancy between 69 and 75 years,[23][24][25] though this longevity was not representative of the general population.[26]

The early Islamic Empire also had the highest literacy rates among pre-modern societies, alongside the city of classical Athens in the 4th century BC,[27] and later, China after the introduction of printing from the 10th century.[28] One factor for the relatively high literacy rates in the early Islamic Empire was its parent-driven educational marketplace, as the state did not systematically subsidize educational services until the introduction of state funding under Nizam al-Mulk in the 11th century.[29] Another factor was the diffusion of paper from China,[30] which led to an efflorescence of books and written culture in Islamic society, thus papermaking technology transformed Islamic society (and later, the rest of Afro-Eurasia) from an oral to scribal culture, comparable to the later shifts from scribal to typographic culture, and from typographic culture to the Internet.[31] Other factors include the widespread use of paper books in Islamic society (more so than any other previously existing society), the study and memorization of the Qur'an, flourishing commercial activity, and the emergence of the Maktab and Madrasah educational institutions.[32]

Islamic capitalism[edit]

Main article: Islamic

A number of concepts and techniques were applied in early Islamic commerce, including bills of exchange, forms of partnership (mufawada) such as limited partnerships (mudaraba), and early forms of capital (al-mal), capital accumulation (nama al-mal),[33] cheques, promissory notes,[34] trusts (see Waqf), transactional accounts, loaning, ledgers and assignments.[35] Organizational enterprises independent from the state also existed in the medieval Islamic world, while the agency institution was also introduced.[36][37] Many of these early concepts were adopted and further advanced in medieval Europe from the 13th century onwards.[33]

A market economy was established in the Islamic world on the basis of an economic system resembling merchant capitalism. Capital formation was promoted by labour in medieval Islamic society, and financial capital was developed by a considerable number of owners of monetary funds and precious metals. Riba (usury) was prohibited by the Qur'an, but this did not hamper the development of capital in any way. The capitalists (sahib al-mal) were at the height of their power between the 9th–12th centuries, but their influence declined after the arrival of the ikta (landowners) and after production was monopolized by the state, both of which hampered the development of industrial capitalism in the Islamic world.[38] Some state enterprises still had a capitalist mode of production, such as pearl diving in Iraq and the textile industry in Egypt.[39]

During the 11th–13th centuries, the "Karimis", an early enterprise and business group controlled by entrepreneurs, came to dominate much of the Islamic world's economy.[40] The group was controlled by about fifty Muslim merchants labelled as "Karimis" who were of Yemeni, Egyptian and sometimes Indian origins.[41] Each Karimi merchant had considerable wealth, ranging from at least 100,000 dinars to as much as 10 million dinars. The group had considerable influence in most important eastern markets and sometimes in politics through its financing activities and through a variety of customers, including Emirs, Sultans, Viziers, foreign merchants, and common consumers. The Karimis dominated many of the trade routes across the Mediterranean, Red Sea, and Indian Ocean, and as far as Francia in the north, China in the east, and sub-Saharan Africa in the south, where they obtained gold from gold mines. Practices employed by the Karimis included the use of agents, the financing of projects as a method of acquiring capital, and a banking institution for loans and deposits.

Islamic socialism[edit]

Main articles: Islamic socialism and Bayt al-mal

Though medieval Islamic economics appears to have somewhat resembled a form of capitalism, some arguing that it laid the foundations for the development of modern capitalism,[42][43] Others see Islamic economics as neither completely capitalistic nor completely socialistic, but rather a balance between the two, emphasizing both "individual economic freedom and the need to serve the common good."[44]

Abū Dharr al-Ghifārī, a Companion of Prophet Muḥammad, is credited by many as the founder of Islamic socialism.[45][46][47][48][49] He protested against the accumulation of wealth by the ruling class during ‘Uthmān's caliphate and urged the equitable redistribution of wealth.

The concepts of welfare and pension were introduced in early Islamic law as forms of Zakat (charity), one of the Five Pillars of Islam, during the time of the Rashidun caliph Umar in the 7th century. This practiced continued well into the era of the Abbasid Caliphate, as seen under Al-Ma'mun's rule in the 8th century, for example. The taxes (including Zakat and Jizya) collected in the treasury of an Islamic government were used to provide income for the needy, including the poor, elderly, orphans, widows, and the disabled. According to the Islamic jurist Al-Ghazali (Algazel, 1058–1111), the government was also expected to stockpile food supplies in every region in case a disaster or famine occurred. The Caliphate is thus considered the world's first major welfare state.[14][44]

The Prophet Muhammad himself advocated common ownership, reportedly saying according to Ibn Abbas that "Muslims are partners in three things, water, herbage and fire" in the modern day terms this can probably be applied to water, food, energy, fuel, oil and gas.

Industrial development[edit]

Muslim engineers in the Islamic world were responsible for numerous innovative industrial uses of hydropower, early industrial uses of tide mills, wind power,and fossil fuels such as petroleum. A variety of industrial mills were used in the Islamic world, including fulling mills, gristmills, hullers, sawmills, shipmills, stamp mills, steel mills, sugar mills, tide mills, and windmills. By the 11th century, every province throughout the Islamic world had these industrial mills in operation, from al-Andalus and North Africa to the Middle East and Central Asia.[50] Muslim engineers also employed water turbines, and gears in mills and water-raising machines, and pioneered the use of dams as a source of water power, used to provide additional power to watermills and water-raising machines.[51] Such advances made it possible for many industrial tasks that were previously driven by manual labour in ancient times to be mechanized and driven by machinery instead in the medieval Islamic world. The transfer of these technologies to medieval Europe later laid the foundations for the Industrial Revolution in 18th century Europe.[50]

Many industries were generated due to the Muslim Agricultural Revolution, including astronomical instruments, ceramics, chemicals, distillation technologies, clocks, glass, mechanical hydropowered and wind powered machinery, matting, mosaics, pulp and paper, perfumery, petroleum, pharmaceuticals, rope-making, shipping, shipbuilding, silk, sugar, textiles, weapons, and the mining of minerals such as sulfur, ammonia, lead and iron]. The first large factory complexes (tiraz) were built for many of these industries. Knowledge of these industries were later transmitted to medieval Europe, especially during the Latin translations of the 12th century, as well as before and after. The agricultural and handicraft industries also experienced high levels of growth during this period.[16]

In Islamic governments such as the Fatimid Caliphate, the tax collection, rather than being wasted on temples or courts, was invested industrial development, such as the Fatimid government's investment in the textile industry. In addition to government-owned tiraz textile factories, there were also privately owned enterprises run largely by landlords who collected taxes and invested them in the textile industry.[52]

Labour force[edit]

See also: Female Labor Force Participation Rate in Majority Muslim Countries

The labor force in the Caliphate were employed from diverse ethnic and religious backgrounds, while both men and women were involved in diverse occupations and economic activities.[53] Women were employed in a wide range of commercial activities and diverse occupations[54] in the primary sector (as farmers for example), secondary sector (as construction workers, dyers, spinners, etc.) and tertiary sector (as investors, doctors, nurses, presidents of guilds, brokers, peddlers, lenders, scholars, etc.).[55] Muslim women also held a monopoly over certain branches of the textile industry,[54] the largest and most specialized and market-oriented industry at the time, in occupations such as spinning, dyeing, and embroidery. In comparison, female property rights and wage labour were relatively uncommon in Europe until the Industrial Revolution in the 18th and 19th centuries.[56]

The division of labour was diverse and had been evolving over the centuries. During the 8th–11th centuries, there were on average 63 unique occupations in the primary sector of economic activity (extractive), 697 unique occupations in the secondary sector (manufacturing), and 736 unique occupations in the tertiary sector (service). By the 12th century, the number of unique occupations in the primary sector and secondary sector decreased to 35 and 679 respectively, while the number of unique occupations in the tertiary sector increased to 1,175. These changes in the division of labour reflect the increased mechanization and use of machinery to replace manual labour and the increased standard of living and quality of life of most citizens in the Caliphate.[57]

An economic transition occurred during this period, due to the diversity of the service sector being far greater than any other previous or contemporary society, and the high degree of economic integration between the labour force and the economy. Islamic society also experienced a change in attitude towards manual labour. In previous civilizations such as ancient Greece and in contemporary civilizations such as early medieval Europe, intellectuals saw manual labour in a negative light and looked down on them with contempt. This resulted in technological stagnation as they did not see the need for machinery to replace manual labour. In the Islamic world, however, manual labour was seen in a far more positive light, as intellectuals such as the Brethren of Purity likened them to a participant in the act of creation, while Ibn Khaldun alluded to the benefits of manual labour to the progress of society.[54]

By the early 10th century, the idea of the academic degree was introduced and being granted at Maktab schools, Madrasah colleges and Bimaristan hospitals. In the medical field in particular, the Ijazah certificate was granted to those qualified to be practicing physicians, in order to differentiate them from unqualified quacks.[58]

Urbanization[edit]

There was a significant increase in urbanization during this period, due to numerous scientific advances in fields such as agriculture, hygiene, sanitation, astronomy, medicine and engineering.[citation needed] This also resulted in a rising middle class population.[59]

As urbanization increased, Muslim cities' growth was largely unregulated, resulting in narrow winding city streets and neighborhoods separated by different ethnic backgrounds and religious affiliations. Suburbs lay just outside the walled city, from wealthy residential communities, to working class semi-slums. City garbage dumps were located far from the city, as were clearly defined cemeteries which were often homes for criminals. A place of prayer was found near one of the main gates, for religious festivals and public executions. Similarly, Military Training grounds were found near a main gate.[citation needed]

While varying in appearance due to climate and prior local traditions, Islamic cities were almost always dominated by a merchant middle class. Some peoples' loyalty towards their neighborhood was very strong, reflecting ethnicity and religion, while a sense of citizenship was at times uncommon (but not in every case). The extended family provided the foundation for social programs, business deals, and negotiations with authorities. Part of this economic and social unit were often the tenants of a wealthy landlord.

State power normally focused on Dar al Imara, the governor's office in the citadel. These fortresses towered high above the city built on thousands of years of human settlement. The primary function of the city governor was to provide for defence and to maintain legal order. This system would be responsible for a mixture of autocracy and autonomy within the city. Each neighborhood, and many of the large tenement blocks, elected a representative to deal with urban authorities. These neighborhoods were also expected to organize their young men into a militia providing for protection of their own neighborhoods, and as aid to the professional armies defending the city as a whole.

The head of the family was given the position of authority in his household, although a qadi, or judge was able to negotiate and resolve differences in issues of disagreements within families and between them. The two senior representatives of municipal authority were the qadi and the muhtasib, who held the responsibilities of many issues, including quality of water, maintenance of city streets, containing outbreaks of disease, supervising the markets, and a prompt burial of the dead.

Another aspect of Islamic urban life was waqf, a religious charity directly dealing with the qadi and religious leaders. Through donations, the waqf owned many of the public baths and factories, using the revenue to fund education, and to provide irrigation for orchards outside the city. Following expansion, this system was introduced into Eastern Europe by Ottoman Turks.

While religious foundations of all faiths were tax exempt in the Muslim world, civilians paid their taxes to the urban authorities, soldiers to the superior officer, and landowners to the state treasury. Taxes were also levied on an unmarried man until he was wed. Instead of zakat, the mandatory charity required of Muslims, non-Muslims were required to pay the jizya, a discriminatory religious tax, imposed on Christians and Jews. During the Muslim Conquests of the 7th and 8th centuries conquered populations were given the three choices of either converting to Islam, paying the jizya, or dying by the sword.

Animals brought to the city for slaughter were restricted to areas outside the city, as were any other industries seen as unclean. The more valuable a good was, the closer its market was to the center of town. Because of this, booksellers and goldsmiths clustered around the main mosque at the heart of the city.[citation needed]

By the 10th century, the library of Cairo had more than 100,000 books, while the library of Tripoli is said to have had as many as three million books. The number of important and original Arabic works on science that have survived is much larger than the combined total of Greek and Latin works on science.[60]

Classical Islamic economic thought[edit]

To some degree, the early Muslims based their economic analyses on the Qur'an (such as opposition to riba, meaning usury or interest), and from sunnah, the sayings and doings of Muhammad.

Early Islamic economic thinkers[edit]

Al-Ghazali (1058–1111) classified economics as one of the sciences connected with religion, along with metaphysics, ethics, and psychology. Authors have noted, however, that this connection has not caused early Muslim economic thought to remain static.[61] Iranian philosopher Nasir al-Din al-Tusi (1201–1274) presents an early definition of economics (what he calls hekmat-e-madani, the science of city life) in discourse three of his Ethics:

"the study of universal laws governing the public interest (welfare?) in so far as they are directed, through cooperation, toward the optimal (perfection)."[62]

Many scholars trace the history of economic thought through the Muslim world, which was in a Golden Age from the 8th to 13th century and whose philosophy continued the work of the Greek and Hellenistic thinkers and came to influence Aquinas when Europe "rediscovered" Greek philosophy through Arabic translation.[63] A common theme among these scholars was the praise of economic activity and even self-interested accumulation of wealth.[64]

Persian philosopher Ibn Miskawayh (b. 1030) notes:

"The creditor desires the well-being of the debtor in order to get his money back rather than because of his love for him. The debtor, on the other hand, does not take great interest in the creditor."[65]

This view is in conflict with an idea Joseph Schumpeter called the great gap. The great gap thesis comes out of Schumpeter's 1954 History of Economic Analysis which discusses a break in economic thought during the five hundred year period between the decline of the Greco-Roman civilizations and the work of Thomas Aquinas (1225–1274).[66] However in 1964, Joseph Spengler's "Economic Thought of Islam: Ibn Khaldun" appeared in the journal Comparative Studies in Society and History and took a large step in bringing early Muslim scholars to the attention of the contemporary West.[67]

The influence of earlier Greek and Hellenistic thought on the Muslim world began largely with Abbasid caliph al-Ma'mun, who sponsored the translation of Greek texts into Arabic in the 9th century by Syrian Christians in Baghdad. But already by that time numerous Muslim scholars had written on economic issues, and early Muslim leaders had shown sophisticated attempts to enforce fiscal and monetary financing, use deficit financing, use taxes to encourage production, the use of credit instruments for banking, including rudimentary savings and checking accounts, and contract law.[68]

Among the earliest Muslim economic thinkers was Abu Yusuf (731-798), a student of the founder of the Hanafi Sunni School of Islamic thought, Abu Hanifah. Abu Yusuf was chief jurist for Abbasid Caliph Harun al-Rashid, for whom he wrote the Book of Taxation (Kitab al-Kharaj). This book outlined Abu Yusuf's ideas on taxation, public finance, and agricultural production. He discussed proportional tax on produce instead of fixed taxes on property as being superior as an incentive to bring more land into cultivation. He also advocated forgiving tax policies which favor the producer and a centralized tax administration to reduce corruption. Abu Yusuf favored the use of tax revenues for socioeconomic infrastructure, and included discussion of various types of taxes, including sales tax, death taxes, and import tariffs.[69]

Early discussion of the benefits of division of labor are included in the writings of Qabus, al-Ghazali, al-Farabi (873–950), Ibn Sina (Avicenna) (980–1037), Ibn Miskawayh, Nasir al-Din al-Tusi (1201–74), Ibn Khaldun (1332–1406), and Asaad Davani (b. 1444). Among them, the discussions included division of labor within households, societies, factories, and among nations. Farabi notes that each society lacks at least some necessary resources, and thus an optimal society can only be achieved where domestic, regional, and international trade occur, and that such trade can be beneficial to all parties involved.[70] Ghazali was also noted for his subtle understanding of monetary theory and formulation of another version of Gresham's Law.

The power of supply and demand was understood to some extent by various early Muslim scholars as well. Ibn Taymiyyah illustrates:

"If desire for goods increases while its availability decreases, its price rises. On the other hand, if availability of the good increases and the desire for it decreases, the price comes down."[71]

Ibn Taymiyyah also elaborated a circumstantial analysis of the market mechanism, with a theoretical insight unusual in his time. His discourses on the welfare advantages and disadvantages of market regulation and deregulation, have an almost contemporary ring to them.[72]

Ghazali suggests an early version of price inelasticity of demand for certain goods, and he and Ibn Miskawayh discuss equilibrium prices.[73] Other important Muslim scholars who wrote about economics include al-Mawardi (1075–1158), Ibn Taimiyah (1263–1328), and al-Maqrizi.

Islamic countries

Riba[edit]

Main article: Riba

The common view of riba (usury) among classical jurists of Islamic law and economics during the Islamic Golden Age was that it is only riba and therefore unlawful to apply interest to money exnatura sua—exclusively gold and silver currencies—but that it is not riba and is therefore acceptable to apply interest to fiat money—currencies made up of other materials such as paper or base metals—to an extent.[74]

The definition of riba in classical Islamic jurisprudence was "surplus value without counterpart." When "currencies of base metal were first introduced in the Islamic world, no jurist ever thought that paying a debt in a higher number of units of this fiat money was riba" as they were concerned with the real value of money rather than the numerical value. For example, it was acceptable for a loan of 1000 gold dinars to be paid back as 1050 dinars of total equal mass. The rationale behind riba according to classical Islamic jurists was "to ensure equivalency in real value" and that the "numerical value was immaterial." Thus an interest rate that did not exceed the rate of inflation was not riba according to classical Islamic jurists.[75]

Ibn Khaldun[edit]

Main articles: Ibn Khaldun and Muqaddimah

See also: Asabiyyah

Statue of Ibn Khaldoun in Tunis

When civilization [population] increases, the available labor again increases. In turn, luxury again increases in correspondence with the increasing profit, and the customs and needs of luxury increase. Crafts are created to obtain luxury products. The value realized from them increases, and, as a result, profits are again multiplied in the town. Production there is thriving even more than before. And so it goes with the second and third increase. All the additional labor serves luxury and wealth, in contrast to the original labor that served the necessity of life.[76]

Ibn Khaldun on economic growth

Perhaps the best known Islamic scholar who wrote about economics was Ibn Khaldun of Tunisia (1332–1406),[77] who is considered a forerunner of modern economists.[78][79] Ibn Khaldun wrote on economic and political theory in the introduction, or Muqaddimah (Prolegomena), of his History of the World (Kitab al-Ibar). In the book, he discussed what he called asabiyya (social cohesion), which he sourced as the cause of some civilizations becoming great and others not. Ibn Khaldun felt that many social forces are cyclic, although there can be sudden sharp turns that break the pattern.[80] His idea about the benefits of the division of labor also relate to asabiyya, the greater the social cohesion, the more complex the successful division may be, the greater the economic growth. He noted that growth and development positively stimulates both supply and demand, and that the forces of supply and demand are what determines the prices of goods.[81] He also noted macroeconomic forces of population growth, human capital development, and technological developments effects on development.[82] In fact, Ibn Khaldun thought that population growth was directly a function of wealth.[83]

Although he understood that money served as a standard of value, a medium of exchange, and a preserver of value, he did not realize that the value of gold and silver changed based on the forces of supply and demand.[84] He also introduced the concept known as the Khaldun-Laffer Curve (the relationship between tax rates and tax revenue increases as tax rates increase for a while, but then the increases in tax rates begin to cause a decrease in tax revenues as the taxes impose too great a cost to producers in the economy).

Ibn Khaldun used a dialectic approach to describe the sociological implications of tax choices, which is now of course part of economics:

"In the early stages of the state, taxes are light in their incidence, but fetch in a large revenue...As time passes and kings succeed each other, they lose their tribal habits in favor of more civilized ones. Their needs and exigencies grow...owing to the luxury in which they have been brought up. Hence they impose fresh taxes on their subjects...and sharply raise the rate of old taxes to increase their yield...But the effects on business of this rise in taxation make themselves felt. For business men are soon discouraged by the comparison of their profits with the burden of their taxes...Consequently production falls off, and with it the yield of taxation."[page needed]

This analysis anticipates the modern economic concept known as the Laffer Curve.

Ibn Khaldun also introduced the labor theory of value. He described labor as the source of value, necessary for all earnings and capital accumulation, obvious in the case of craft. He argued that even if earning "results from something other than a craft, the value of the resulting profit and acquired (capital) must (also) include the value of the labor by which it was obtained. Without labor, it would not have been acquired."[78][page needed]

His theory of asabiyyah has often been compared to modern Keynesian economics, with Ibn Khaldun's theory clearly containing the concept of the multiplier. A crucial difference, however, is that whereas for John Maynard Keynes it is the middle class's greater propensity to save that is to blame for economic depression, for Ibn Khaldun it is the governmental propensity to save at times when investment opportunities do not take up the slack which leads to aggregate demand.[85]

Another modern economic theory anticipated by Ibn Khaldun is supply-side economics.[86] He "argued that high taxes were often a factor in causing empires to collapse, with the result that lower revenue was collected from high rates." He wrote:[87]

"It should be known that at the beginning of the dynasty, taxation yields a large revenue from small assessments. At the end of the dynasty, taxation yields a small revenue from large assessments."

Post-colonial era[edit]

During the modern post-colonial era, as Western ideas, including Western economics, began to influence the Muslim world, some Muslim writers sought to produce an Islamic discipline of economics. In the 1960s and 70s Shia Islamic thinkers worked to develop a unique Islamic economic philosophy with "its own answers to contemporary economic problems." Several works were particularly influential,

Eslam va Malekiyyat (Islam and Property) by Mahmud Taleqani (1951),

Iqtisaduna (Our Economics) by Mohammad Baqir al-Sadr (1961) and

Eqtesad-e Towhidi (The Economics of Divine Harmony) by Abolhassan Banisadr (1978)

Some Interpretations of Property Rights, Capital and Labor from Islamic Perspective by Habibullah Peyman (1979).[88][89]

Al-Sadr in particular has been described as having "almost single-handedly developed the notion of Islamic economics" [90]

In their writings Sadr and the other Shia authors "sought to depict Islam as a religion committed to social justice, the equitable distribution of wealth, and the cause of the deprived classes", with doctrines "acceptable to Islamic jurists", while refuting existing non-Islamic theories of capitalism and Marxism. This version of Islamic economics, which influenced the Iranian Revolution, called for public ownership of land and of large "industrial enterprises", while private economic activity continued "within reasonable limits." [91] These ideas helped shape the large public sector and public subsidy policies of the Iranian Islamic revolution.

In the 1980s and 1990s, as the Iranian revolution failed to reach the per capita income level achieved by the regime it overthrew, and Communist states and socialist parties in the non-Muslim world turned away from socialism, Muslim interest shifted away from government ownership and regulation. In Iran, it is reported that "eqtesad-e Eslami (meaning both Islamic economics and economy) ... once a revolutionary shibboleth, is indubitably absent in all official documents and the media. It disapperared from Iranian political discourse about 15 years ago [1990]." [89]

But in other parts of the Muslim world the term lived on, shifting form to the less ambitious goal of interest-free banking. Some Muslim bankers and religious leaders suggested ways to integrate Islamic law on usage of money with modern concepts of ethical investing. In banking this was done through the use of sales transactions (focusing on the fixed rate return modes) to achieve similar results to interest. This has been criticised by some western writers as a means of covering conventional banking with an Islamic facade.

Contemporary economics[edit]

See also: Female labor force in the Muslim world and Islamic economics in Pakistan

In modern times, economic policies of the 1979 Islamic Revolution in predominately Shia Iran were heavily statist with a very large public sector, and official rhetoric celebrating revolution and the rights of the dispossessed, although this tendency has faded over time.[92] In Sudan, the policies of the National Islamic Front party dominated regime in the 1990s have been the reverse, employing economic liberalism and accepting "market forces in the formulation of state policies." In Algeria, Jordan, Egypt, and Pakistan, Islamist parties have supported populist policies, showing a "marked reluctance to adopt austerity policies and decreased subsidies." [93] In recent years, Turkey had a rapidly growing economy and became a developed country according to the CIA.[94] Indonesia, Saudi Arabia and Turkey are members of the G-20 major economies.

In 2008, at least $500 billion in assets around the world were managed in accordance with Sharia, or Islamic law, and the sector was growing at more than 10% per year. Islamic finance seeks to promote social justice by banning exploitative practices. In reality, this boils down to a set of prohibitions—on paying interest, on gambling with derivatives and options, and on investing in firms that make pornography or pork.[95]

Another form of modern finance that originated from the Muslim world is microcredit and microfinance. It began in the 1970s in Bangladesh with Grameen Bank, founded by Muhammad Yunus, recipient of the 2006 Nobel Peace Prize.

Land reform[edit]

One issue "generally absent" from contemporary Islamist economic thought (with the exception of Sayyid Qutb) and action "whether moderate or radical" is the question of agrarian reform. Opposition to agrarian reform even played a role in Islamist uprisings (Iran 1963, Afghanistan, 1978).[96] At least one observer (Olivier Roy) believes this is primarily because it would "imply a reexamination of the concept of ownership", and in particular "throw into question the Waqf, endowments whose revenue ensures the functioning of religious institutions."[96] In the Islamic Republic of Iran, for example, waqf holdings are very large (in Khorasan Province, "50% of the cultivated lands belong to the religious foundation Astan-i Quds, which oversees" the Imam Reza shrine in Mashhad).[96] Thus questioning waqf property would mean questioning "the foundation of the financial autonomy of the mullahs and mosques", particularly among Shia Muslims.[96]

Islamic economics

Indonesian From Wikipedia, the free encyclopedia

Islamic economics is a social science that studies the economic problems of the people who dilhami by Islamic values ​​[1]. Islamic economic or cooperative economic system distinct from capitalism, socialism, and the welfare state (Welfare State). Islam is different from capitalism as opposed to the exploitation of labor by capital owners are poor, and prohibits the accumulation of wealth [2]. In addition, the glass eyes of Islamic economics is a suggestion that the demands of life at the same time has the dimension of worship is applied ethics and morals in [3].

Islamic economic differences with conventional economics [edit | edit source]

The main article for this section are: Economic sharia economics vs. conventional

The economic crisis that often happens suspected was the work of the conventional economic system, a system that puts the interest as an instrument provitnya. In contrast to what is offered Islamic economic system, with provitnya instruments, namely sharing system.

Islamic economic system is very different from the capitalist economy, socialist or communist. Islamic economics nor be in the middle of the third economic system. In contrast to the more individual capitalist, socialist who gives almost all the responsibility to its citizens and communist extremes [1], the Islamic economic and trade perkhidmatan set form that can and can not be traded [4]. Economics in Islam must be able to provide for the welfare of the whole society, providing a sense of justice, togetherness and able to provide greater opportunities for every business

The hallmark of Islamic economics [edit | edit source]

Not much is mentioned in the Qur'an, and only the basic principles course. For reasons that are very precise, the Qur'an and Sunnah lot about how Muslims should behave as producers, consumers and owners of capital, but only a little about the economic system [5]. As revealed in the above discussion, in Islamic economics should be able to provide greater opportunities to every business. In addition, Islamic economics emphasizes four properties, among others:

Unity (unity)

Balance (equilibrium)

Freedom (free will)

Responsibility (responsibility)

Humans as a representative (khalifa) of God in the world is not likely to be individualistic, because all the (wealth) which is in the earth belongs to God alone, and a man is his confidence in the earth [2]. In carrying out economic activities, Islam strongly forbids usury activities, which in terms of language means "excess" [6]. In the Qur'an Surah Al Baqarah verse 275 [7] mentioned that people who eat (takes) Riba [8] can not stand but rather as the establishment of the person who possessed the devil because of (pressure) mad disease [9]. Their circumstances are such that, is because they say (argued), actually buying and selling the same as usury, but Allah has permitted selling and forbidden usury ...

The purpose of Islamic economics [edit | edit source]

Islamic Economics aims to provide alignment for the life in the world. Islamic values ​​is not solely just for the life of Muslims alone, but all living creatures on earth. Islamic Economics is the essence of the process of fulfillment of human needs based on Islamic values ​​in order to achieve the goal of religion (Falah). Islamic Economics into grace the entire universe, which is not limited by economic, social, and political culture of the nation. Islamic Economics is able to capture the phenomenon of community values ​​so that the journey without leaving the source of the economic theory of Islamic law, can be changed.

Economic Development in the Islamic World and Indonesia

PART I

      A. INTRODUCTION

             Today economic life has become the standard of individual and collective life of a nation-state. The advantages of a country is measured by the level of economic progress. The size extremely materialistk keberhasilanmenjadi degrees. Therefore, the economics become very important to the life of a nation. However, the economics expert stated that the caliber Masrhal kehdiupan the world is controlled by the two major powers; economic and faith (religion), just that economic power is stronger than the influence of religion. [1]

             While the development of Islamic economics lately so rapidly, both as a science and as an economic system has received a lot of positive response at the global level. Thus, in three decades is progressing, both in the form of academic study at the State University and private, and operational practices.

             Islamic Financial System is part of the broader concept of Islamic economics. The Islamic financial system is not just a commercial transaction, but it must have been up to the financial institutions to be able to compensate for the demands of the times. The form of the financial system or financial institution in accordance with the principles of Islam is free from the element of riba. Financial contracts that can be developed and can replace usury system is a mechanism that shirkah: Musharaka and mudaraba (profit sharing).

             The development of Islamic banking and finance industry recently experienced a very rapid progress, such as Islamic banking, Islamic insurance, modalsyariah market, Islamic mutual funds, Islamic bonds, mortgage sharia, Baitul Mal wat Tamwil (BMT). Similarly, in the real sector, such as the Sharia, Sharia Multi Level Marketing, etc..

             In the form of practice, Islamic economics has evolved in the form of institutions such as banks, BPRS, Sharia Insurance, Pawn Sharia, Shariah Capital Markets, with Sharia bonds and mutual funds, pension fund Shariah, Shariah Microfinance Institutions, Islamic financial institutions as well as public institutions such as zakat and waqf management institutions.

             The development of Islam in Indonesia Economic app itself starting from the founding of Bank Muamalat Indonesia in 1992, the legal basis of Law No. 7 of 1992 on banking, which has been revised by Law number 10 of 1998 [2] .Next successively present several laws as a form of government support for the economic advancement of the application of Islam in Indonesia.

             Seeing this rapid development, then this must be addressed carefully and thoroughly so that this development does not end up with a stagnant, of course, the quality of human resource development is one important indicator of the economic growth of Islam.

B. Formulation of the problem

             Based on the above background, then there is a problem formulation that can be taken as a study in this paper include:

1 How perkembagan Islamic world economy?

2 How does the analysis of the development of Islam in the world?

3 How is the development of Islamic economics in Indonesia?

4 How does the analysis of economic developments in Indonesian Islam?

C. Purpose

             Based on the background and formulation of the problems described above, then this paper were made with the aim of:

1 To determine the development of Islamic economics in the world as well as its analysis.

2 To determine the economic development of the past in Indonesia as well as analysis.

CHAPTER II

DISCUSSION

A. Economic Development in the Islamic World

             Islamic economics is a science that can not be denied is a science that is growing and becoming Islamic economic movement since a quarter century ago. However, a shift in the orientation of economic thought integral to the movement of the abolishment of the Khilafah in 1924.

             Sendri banking practice, at the time of the Prophet and the Companions has occurred because there has been lembag-institutions that carry out major operational functions of banking, namely:

1. accept deposits;

2. lend money or provide financing in the form of Mudharabah, Musharaka, muzara'ah and musaqah;

3. provide shipping services or transfer money.

             The terms of fiqh in this field also appear and are supposed to influence the technical terms of modern banking, such as the term qard which means loan or credit into English credit and the terms of engagement suquq plural suq in Arabic literally means the market shifted into a medium of exchange and transferred into the English with little change into check or checks in French.

             The functions that are typically performed by banks today have been implemented since the time of the Prophet until the Abbasids. The term is not well known banks that era, but the implementation of the functions have been implemented in accordance with the Shariah contract. It functions at the time of Rsulullah carried out by one person who performs a single function. While at the time of Abbasid, these three functions are already carried out by a single individual. Banking developed after the emergence of various types of currency with precious metal content is varied. Thus, diperluan special skills for those who deals in exchange of money. So those who have special expertise is called naqid, Sarraf, and jihbiz which later became the forerunner of the practice of currency exchange or money changer.

             The role of bankers during the Abbasid became popular in the reign of Caliph al-Muqtadir (908-932). Meanwhile, SAQ (check) is widely used as a medium of payment. History of Islam pebankan Saefudaulah al-Hamdani noted as the first to publish a check for clearing purposes between Baghdad, Iraq with Alepo (Spain). [3]

             Seeing the importance of the banking institutions stood the movement of modern Islamic financial institution that first appeared in Egypt, because of fears the regime when it will see it as a fundamentalist movement. This pioneering leader Ahmad El Najjar effort, taking the form of a savings bank based on profit sharing (profit sharing) in the town of Mit Ghamr in 1963 This experiment lasted until 1967, and when it has stood 9 banks with a similar concept in Egypt.

             These banks, which do not charge or receive interest, most of the efforts invested in the trade are still in the same state, in 1971, Nasir Social Bank was established and declared itself as an interest-free commercial bank. Although not mentioned in the deed of establishment of religion or reference to the Islamic Shari'a. Seeing this dicetuskanlah idea about the concept of Islamic economics in the international world that began to emerge in the 70s. This effort is the implementation of the sessions of the Minister of Foreign Countries Organization of the Islamic Conference in Karachi-Pakistan, December 1970 Consolidation heart OIC member countries to Islamize the country's economy is growing after each third Islamic Economic Conference held in Islamabad Pakistan in March 1983 [4]

             The emergence of modern Islamic economics on the international stage, beginning in the 1970s were marked by the presence of contemporary Islamic economists, such as Mohammad Abdul Mannan, M. Nejatullah Shiddiqy, Kursyid Ahmad, An-Naqvi, M. Umer Chapra, etc..

             This began forming in line with the Islamic Development Bank (IDB) which was then established in 1974 sponsored by the countries which are members of the organization of the Islamic conference, although the bank is the main inter-governmental bank aimed at providing funds for development projects in member countries . IDB provides fee-based lending services and profit-sharing for these countries and explicitly declare themselves based on Islamic sharia.

             Across other countries in the period of the 1970s, a number of Islamic-based bank then appears. In the Middle East, among others, stood Dubai Islamic Bank (1975), Faisal Islamic Bank of Sudan (1977), Faisal Islamic Bank of Egypt (1977) and Bahrain Islamic Bank (1979). He is the Asia-Pacific, Phillipine Amanah Bank was established in 1973 by presidential decree, and in 1983 stood Malaysia Muslim Pilgrims Savings Corporation that aims to help those who want to save money for a pilgrimage.

             Western reaction to the excessive advantage of the capitalist economic system, after the collapse of the socialist economic system in the 1980s also encouraged the strengthening trend that puts the Islamic economic system as an alternative outside the capitalist economy.

             As a result, the Islamic economic institutions are emerging, since the establishment of the Islamic Development Bank in Jeddah in 1975. This is not just happening in the Middle East region, but also outside the region.

             This is further reinforced by the publication of an article published by zonaekis.com, stating the fact that:

"When the economic crisis hit the world two years ago, the Islamic banking savior. This system became a major growth area for international financing. Indeed assets represent only about 2 percent to 3 percent of global financial assets, or nearly 1 trillion dollars, but grew an average of 25 percent each year. Now many countries are competing to become the global center of Islamic finance. London is far ahead compared to New York: a beacon of Islamic economics in Europe. [5] "

             Islamic economic system as an alternative choice because the Islamic economic system is different from systems of the economy. The purpose of Islamic economics is not solely on the material, but covers various aspects like-: welfare, a better life, give very high value to the brotherhood and socio-economic justice, and demanding a balanced satisfaction, both in the material and spiritual needs for of all mankind. In other words, in the case of Islamic economics injection dimension of faith in any human decision.

             Even today, a number of Islamic government has established the Department or Faculty of Islamic Economics at their universities, even started clicking Islamkan pebankan their institutions. Movement of Islamic economics is an effort to establish an Islamic Economic System (SEI) which covers all aspects of the economy as defined by Umer Chapra in, The Future of Economics. However, nowadays it seem that Islamic economics is synonymous with the concept of Islamic banking and financial system. [6]

             This trend is influenced by several factors: First, the main concern and prominent Muslim clerics and scholars are nonribawi transactions as directed Quran and Sunnah; second, the oil crisis of 1974 and the events of 1979 and courage Zakki Sheikh Yamani, Saudi Arabian Oil Minister, to perform embargo of oil as a weapon to press the West in supporting the Palestinian cause. This action appears to have two blades. First, the West realized the power of the Islamic world that could threaten Western economic life; second, the sale of the Islamic world real oil has given rise to the financial strength of Islamic countries in the Middle East, North Africa and Southeast Asia. Countries that became the State of petro dollars that raises thought to "play" their money through Islamic financial institutions.

             Accompanying the objective conditions on the development of thinking in the field of Islamic economics become more motivated movement SEI development and growth along with other factors that preceded it, namely:

· First, have terumuskanya theoretical concept of Islamic Bank in the 1940s

· Second, the birth of new ideas and mendidirikan Islamic Bank in the State Conference decision-Islamic countries of the World April 1968 in Kuala Lumpur;

· Third, the birth of the Islamic countries are abundant petro dollar. Thus, the establishment of Islamic banks become a reality and can be implemented in 1975 [7]

Ø Analysis

             With the rapid growth of Islam in the world, as well as with the crisis in major countries such as: USA, France, England, Spain, and others, it will reinforce the mistrust of the system of capitalist economic systems for which they profess. This is where the Islamic economy can take the momentum of economic behold only Islam that can save the economic system that is more uncertain at the present time.

B. Economic Development of Islam in Indonesia

             Global Islamic Finance Report 2011 recently published in London interesting to observe. With the method of factor analysis was initiated by the Kaiser-Meyer-Olkin, observations in 36 countries with eight variables, composed of Islamic Finance Country Index. According to this index, Indonesia ranks first among the countries of non-Muslims and ranked fourth among all countries. Overall, Iran is ranked first followed by Malaysia and Saudi Arabia ranked second and third.

             This is not surprising because these three are a country that claims to be an Islamic state. Iran is a country that prohibits any financial institution in the country nonsyariah. Malaysia is very ambitious with a variety of government incentives. Meanwhile, Saudi Arabia is not much different from Iran and Malaysia in the development of sharia finance industry.

             Capacity of Indonesia's economy is much larger than Malaysia, Iran, and even Saudi estimated to put Indonesia is the only country that is supposed to represent the values ​​of Islamic economics in the world's top five economies in the next two decades. Four other countries are China, India, the European Union, and the United States.

             It is estimated that Indonesia will be the center of some of the industry's sharia. First, kosher food and beverage industry. Currently halal standard Indonesian Ulema Council (MUI) has been widely adopted in various countries that are trading partners of Indonesia. Secondly, the Muslim fashion industry / Muslimah. Talents and creativity of the nation in the creative industries is difficult to surpass other countries. Third, the media industry with relevant material sharia. Indonesian population size and creativity programs become the main pillar of the industry. Fourth, consumer retail industry and micro enterprises will also be the center of the world.

             The crisis now engulfing the euro zone and the United States must be observed by both in developing the Islamic finance industry in Indonesia that Islamic economics does not just become another name on the same system. Not merely to justify a formal fiqh without understanding the intent of the intrinsic values ​​of Islamic economics. [8]

             Then if we trace the historical roots of Islamic economic thought and aktivits Indonesia can not be separated from the early history of Islam in this country. Even the Islamic economic activity in the country is inseparable from the conception of a lingua franca. According to the experts, why is the language Malay Archipelago, is because the Malay language is a language that is popular and used in a variety of commercial transactions in the region. Economic actors were dominated by the Malays that are identical to those of Islam. Malay language has many words that come from Arabic. This means much influenced by Islamic concepts in economic activity. It can be concluded that the Islamic economic activity but has no formal robin diffuses terceriman Malay culture as the language. However, specific studies on institutions and Islamic economic thought seems no one in particular and serious meminatinya. Therefore, it seems to us is the effort and the dominant motion for the enforcement of Islamic law in the context of political and legal life. Although never born Jakarta Charter and failed to take place, but for Islamisation in terms of enforcement of Islamic law in Indonesia never subsided

             Thought and Islamic economic activity in Indonesia late 20th century is more oriented towards the establishment of Islamic banking and financial institutions. One of the co-operative movement pilihanya is considered in line or not contrary to Islamic law. Therefore, the cooperative movement is well received by the students and boarding school. [9]

             In Indonesia alone, thinking towards the Islamic economic system has historically been rooted since the period of independence. However airings need for Islamic banking institutions in the midst of contemporary economic practice can not be separated from the development of thoughts and ideas about the concept of Islamic economics. This phenomenon is characterized by the establishment of associations supporting Islamic economics (IETC) in Jkarta on November 23, 1955, which was followed by the formation of the committee in various regions and other cities to establish branches. The ideas and concepts can be realized only recently, namely the establishment of Bank Muammalat originated from Indonesia (BMI) which operated from May 1, 1992 even though the seeds of economic thought and Islamic finance has emerged long before that time. During the 1990s the development of Islamic economics in Indonesia is relatively slow. But in the 2000s there was a wave of rapid growth ditinjan of the asset growth, turnover and jaringa office banking and Islamic financial institutions. At the same time also began to appear higher education institutions that teach Islamic economics, although in very limited quantities, among others STIE Sharia in Yogyakarta, IAIN-SU in Medan, STEI SEBI, STIE Tazkia, and the UI is opened concentrations PSTTI Economics and Finance Islam, in 2001 [10]

             In the financial and banking sector alone during the period of 2012 to the 2013, the Indonesian Islamic banking had a tough challenge to begin to feel the impact of slowing growth in the world that result perekononomian Indonesia's economic growth is not as high as expected, although Indonesia is among countries that are still experiencing steady economic growth in the world. In addition, other factors such as the impact of the decline in deposits, among others, due to the withdrawal of funds from Islamic banking Hajj is also one of the things that had an impact on the growth of Islamic banking. Therefore, the growth of Islamic banking assets are not as high as the growth in the same period in the previous year. As of October 2012 the growth of Islamic banking assets reached ± 37% (yoy) and total assets to ± Rp179 trillion.

             Nonetheless Bank Indonesia predicts growth of Islamic banking in 2013 continue to experience relatively high growth ranged between 36% - 58% (pessimistic scenarios - optimistic). While the Indonesian economy in the next year are still experiencing high growth in the range of 6.3% - 6.7%.

             Then the development of the number of Islamic Banks (BUS) and Islamic Business Unit (UUS) until October 2012 did not change, however, increase the amount of office network. Although the number of BUS (11 pieces) and UUS (24 pieces) are the same, but the service needs of the community of Islamic banking is becoming increasingly widespread, as reflected in the increase of the previous branch office as much as 452 to 508 office, while the Branch Office (KCP) and the Office Cash (COW) has increased by 440 offices in the same period (October 2012, yoy). Overall the number of Islamic banking office which operates until the month of October 2012 compared to the previous year increased from 1,692 offices to office 2188. [11]

             In order to still grow and develop Islamic banking, the focus will be on the Islamic banking development policy in 2013 on the following matters:

§ Financing Islamic banking is more directed to the productive sector and the wider community,

§ Development of products that better meet the needs of society and the productive sector,

§ Transition supervision while maintaining the continuity of the development of Islamic banking,

§ Revitalization increase synergies with the parent bank and

§ Improved education and communication with the continued support capacity building of Islamic banking in the productive sector as well as communication "parity" and "distinctiveness"

             Meanwhile, in the non-financial side, the Islamic finance industry is one part of the building of Islamic economics. Similar to conventional economics, Islamic economics building is also recognize aspects of macro and micro economics. However, more important than that is how people can behave like sharia economy in terms of consumption behavior, giving behavior (generosity), and so on. Conduct of business of Muslim entrepreneurs were included in the objectives of Islamic economics movement in Indonesia.

             Although it looks a bit slow, but the non-financial economic activity is also growing. This marked the increasing public awareness of Islamic consumer behavior, increasing the level of generosity that is characterized by increased zakat, infaq, waqf, and alms collected by agencies and institutions managing these funds.

Incentives

             Islamic economic developments in Indonesia can not be separated from some of the driving factors. Simply put, it dkelompokkan factors into external and internal factors.

             External factors are the cause of that comes from abroad, such as the development of Islamic economics in other countries, both Muslim majority or not. These countries have developed Islamic economy after the onset of awareness of the need for a new identity in their economies. This awareness then 'endemic' to other countries and finally get to Indonesia.

             While internal factors include the fact that Indonesia is destined to become the country with the largest Muslim population in the world. This fact raises awareness on the part of scholars and practitioners on the need for an economic economics in accordance with Islamic values ​​are run by the Muslim community in Indonesia.

    In addition, political factors also play. The improved "relationship" Islam and the country towards the end of last millennium bring fresh air to the economic development of the Islamic principles.

Increasing the diversity of the community is also a driving factor of economic berkembangan sharia in Indonesia. The emergence of the middle class and the educated urban Muslims carry religious spirit and new hope for the Islamic finance industry. They have no awareness that religion is not just prayer, fasting, and worship other mahdah alone. However, religion should be applied kafah (holistic) in every aspect of life including the berekonomi.

The next factor is the experience that the Islamic financial system looks strong enough to face the financial crisis in 1997-1998. Islamic banks are still able to stand firm when the "storm" that hit and knocked out the financial industry in Indonesia.

             In addition, factors also helped raise business rationality of Islamic economics. For those groups of people who simply can not accept the Islamic financial system based on emotional ties (personal attachment) to Islam, became the driving factor of their profits to plunge into Islamic business.

Implications For National Economic Perkembagan

             There are at least 3 things that the Islamic economic contribution to the national economy:

· First, Islamic economics contributed to the development of the real sector. Prohibition against bank interest and speculation require funds managed by Islamic financial institutions channeled to the real sector.

· Secondly, Islamic economics Islamic finance industry through taking part in attracting investment into Indonesia, particularly from Eastern countries-middle. The existence of Islamic investment opportunities in Indonesia, has attracted investors from countries petro-dollars to invest in Indonesia. Their interest continues to grow and our country that it does not seem ready to accept their presence due to a variety of 'acute illness' is not investor-friendly, such as complexity of the bureaucracy, the safety factor, corruption, and so on.

· Third, the movement of Islamic economics economy encourage ethical behavior in Indonesian society. Islamic economics is economics in favor of the truth and justice and reject all forms of economic behavior is not as good as the system of usury, speculation, and uncertainty (gharar).

Ø Analysis

             Although Islamic economics rather "late" developing in Indonesia, but the current state of the economy certainly Islam will be able to develop quickly. Plus when the crisis hit the United States and Europe, Islamic banks are even more "immune" to it.

             Even so, judging from history to the present. Islamic economic develop very slowly in Indonesia. This is because the government is less serious in developing Islamic economics itself, such as:

§ kink-belitnya birokarasi in terms of investment in the field of Shariah

§ Not to support the situation to invest in sharia, and

§ Government does not fully trust that Islamic banking is still putting funds state and local budgets in conventional banks, even the haj funds were placed in conventional banks of course embracing system of usury.

             Seeing the Malaysian government that dare poured substantial funds in sharia banking, as well as taking -kebijakan policies that encourage the growth of the institution, so that the growth of Islamic financial institutions in Malaysia to grow quite significantly in recent years. Indonesian government should be able to learn from neighboring countries. If only the government's "bold" to put funds in the state budget as well as Budgets sharia banking, the authors believe that the growth of Shariah banking market share will rise quite significantly.

REFERENCES

Abu Su'ud, Mahmud, Khuthut ra'isiyyah fi` al-Iqtisha`d al-Isla`miyy, Maktabat al-mana`r al isla`miyyah, Kuwait, 1968.

Haron, Sudin, Islamic Banking: Rules and Regulations, coney Publications, Petaling Jaya, 1997.

Javed Ansari, Islamic Economics between neoclassical and Structuralists: Reports from Islamabad in the Islamization of Economics: a sketch of Economic Evaluation and Prospects of Islamic Movement, PLP2M, Yogyakarta, 1985.

Karim, Adiwarman, Bank Islam, Fiqh and Financial Analysis, The International Institute for Islamic Though, Indonesia, Jakarta, 2003.

________, History of Islamic Economic Thought, IIIT Indonesia, Jakarta, 2003.

Rahmani, Timorita Yulianti, "Islamic Banking in Indonesia (Studies Regulations, Legislation) ', Journal of Research in Social Sciences Phenomena, Vol. 01 # 2, New York: Research Institute of UII.

Remy, Sutan Syahdeini, Islamic Banking and Banking Law Tata Kedudukanya in Indonesia, Graffiti, Jakarta, 1999.

Islamic Banking Outlook 2013, Bank Indonesia, 2012

The position of Zakat In Islam

by

Shaikh Abdullah bin Abdul al-Azhim Khalafi

Zakat is one of the pillars of Islam and one of the obligations. From Ibn 'Umar anhuma, he said that the Prophet sallallaahu' alaihi wa sallam said:

بني الإسلام على خمس, شهادة أن لا إله إلا الله وأن محمدا رسول الله, وإقام الصلاة, وإيتاء الزكاة, وحج البيت, وصيام رمضان.

"Islam is founded on five pillars, which bear witness that there is no deity that has the right diibadahi correctly but Allah and Muhammad is the messenger of Allah, establish the prayer, remove zakat, pilgrimage to the House, and fasting in Ramadan." [1]

And has been mentioned in tandem with prayers in eighty-two verses.

Prompts For Removing Zakat

Allah the Exalted says:

خذ من أموالهم صدقة تطهرهم وتزكيهم بها وصل عليهم إن صلاتك سكن لهم والله سميع عليم

"Take alms of their wealth in order to cleanse and purify them, and berdo'alah for them. Indeed do'amu it (grow) peace for their souls. Allah is Hearer, Knower. "[At-Tawbah: 103]

And also the word of His Exalted:

وما آتيتم من ربا ليربو في أموال الناس فلا يربو عند الله وما آتيتم من زكاة تريدون وجه الله فأولئك هم المضعفون

"And something usury (optional) that you provide in order to grow a human treasure, then do not increase in the sight of God. And what do you give a charity that you intend to obtain the pleasure of Allah, then that is people to double (reward). "[Ar-Rum: 39]

It was narrated from Abu Hurayrah radi anhu, he said, "The Prophet sallallaahu 'alaihi wa sallam said:

من تصدق بعدل تمرة من كسب طيب ولا يقبل الله إلا الطيب, فإن الله يتقبلها بيمينه ثم يربيها لصاحبها كما يربى أحدكم فلوه حتى تكون مثل الجبل.

"Those who give alms to the size of a palm seed from a lawful source and Allah does not accept except from a good source, God receives the alms with his right hand, and then develop it for the charity of God as any one of ka-ian developing colt , until finally (reward) to be like a mountain. "[2]

Threat For Those Who Will not Eject Zakat

Allah the Exalted says:

ولا يحسبن الذين يبخلون بما آتاهم الله من فضله هو خيرا لهم بل هو شر لهم سيطوقون ما بخلوا به يوم القيامة ولله ميراث السماوات والأرض والله بما تعملون خبير

"And let not those who hunks with treasure that God has given them of His bounty think that it is good for their stinginess. Actually stinginess it is bad for them. Treasure which they will be worn bakhilkan later in his neck in the Day of Judgment. And Allah belongs all legacy (existing) in the heavens and on earth. And Allah knows what you do. "[Ali 'Imran: 180]

It was narrated from Abu Hurayrah radi anhu, that the Prophet sallallaahu 'alaihi wa sallam said:

من آتاه الله مالا فلم يؤد زكاته, مثل له يوم القيامة شجاعا أقرع له زبيبتان يطوقه يوم القيامة, ثم يأخذ بلهزمتيه -يعنى شدقيه- ثم يقول: أنا كنزك, أنا مالك, ثم تلا هذه الآية: ولا يحسبن الذين يبخلون بما آتاهم الله من فضله

"Whoever is given wealth by God's gift, and he does not give charity treasure, then later on the Day of Resurrection his wealth will be realized in the form of a snake which has the two could then worn around his neck, and the snake was biting two bones of the lower jaw, and said , 'I was simpananmu treasure.' "Then the Messenger read the verse," And let not those who hunks with treasure that God has given them of His bounty think ... '"[3]

And also the word of God:

والذين يكنزون الذهب والفضة ولا ينفقونها في سبيل الله فبشرهم بعذاب أليم يوم يحمى عليها في نار جهنم فتكوى بها جباههم وجنوبهم وظهورهم هذا ما كنزتم لأنفسكم فذوقوا ما كنتم تكنزون

"... And those who store gold and silver, and not menafkahkannya in the way of Allah, then Tell them a painful torment. On the day of golden pe-shelf heated it in the Hell Jahannam, and burnt forehead which they lived, stomach and back them (and say)-they told me, 'This is your treasure that you keep for yourself, then feel the current (due to ) what you save. '"[At-Tawbah: 34-35]

It was narrated from Abu Hurayrah radi anhua, he said that the Prophet sallallaahu 'alaihi wa sallam said:

ما من صاحب ذهب ولا فضة لا يؤدى منها حقها إلا إذا

كان يوم القيامة, صفحت له صفائح من نار فأحمي عليها في نار جهنم فيكوى بها جنبه وجبينه وظهره, كلما بردت أعيدت له, في يوم كان مقداره خمسين ألف سنة, حتى يقضى بين العباد, فيرى سبيله إما إلى الجنة وإما إلى النار. قيل: يا رسول الله! فالإبل? قال: ولا صاحب إبل لايؤدى منها حقها, ومن حقها حلبها يوم وردها إلا إذا كان يوم القيامة بطح لها بقاع قرقر أوفر ماكانت لا يفقد منها فصيلا واحدا تطؤه بأخفافها وتعضه بأفواهها, كلما مرعليه أولاها رد عليه أخراها في يوم كان مقداره خمسين ألف سنة, حتى يقضى بين العباد فيرى سبيله إما إلى الجنة وإما إلى النار.

"It is not a property which has deposits of gold and silver, and he does not fulfill zakat, then on the day of Resurrection will be laid her on the metal plates that had been heated in Hell Jahannam Hell, then the slab disetrikakan in the stomach, forehead and back. When was the cold, the slab is reheated. This happened on the same day length as fifty thousand years, until the day of judgment between the servants, after which he will see his way, whether to Heaven or to Hell. No one asked, 'O Messenger of Allah, what about those who have camels?' He said, 'So it is with those who have a camel and not fulfill its obligations, and including the obligations to be issued is milk when milked in the milking period, then Judgement day later spread to those terrain collected her everything he had from the animal, to which was weaned, and all animals are stepped and took a bite, when the first has been passed by the next resume. This happened on the same day length as fifty thousand years, until the time when the day of judgment between the servants, after which he will see his way, whether to Heaven or to Hell. '"[4]

Legal Persons Not Removing Zakat

Zakat is one of the obligations that have been agreed upon by scholars and has been known by all the people, so he was one fundamental thing in religion, which if any one of the Muslims who deny its obligation, then he has come out of Islam and killed in an infidel, unless he new to Islam, then he dimaaf-right due to ignorance of the law.

As for those who do not want to remove it with still believes his duty, then he is a sinner because of his attitude, but this does not remove it from Islam and a judge (ruler) should take the zakat by force [5] and half of his property as punishment for his actions. It is based on the hadith Bahz bin Hakim, from his father, from his grandfather, he said, "I've heard Ra-sulullah sallallaahu 'alaihi wa sallam said:

في كل إبل سائمة, في كل أربعين ابنة لبون, لا يفرق إبل عن حسابها, من أعطاها مؤتجرا فله أجرها, ومن منعها فإنا آخذوها وشطر ماله عزمة من عزمات ربنا تبارك وتعالى, ولا يحل لآل محمد منها شئ.

"At every 40 camels were released to feed themselves, zakat Bintu a labun (children aged female camel in its third year). Should not be separated from the herd of camels was to reduce the zakat calculation. Whoever took it with the hope of reward, then he will get a reward and those who refuse to remove it, then we'll take it along with half of his property because it is one of the obligations of Allah. And charity is not lawful to be eaten by the family of Muhammad in the slightest. "[6]

If a people refuses to remove it even though they still believe they have the duty and the power to ban people picked it up from them, then they should be fought until they release it, based on the words of the Prophet sallallaahu 'alaihi wa sallam:

أمرت أن اقاتل الناس حتى يشهدوا أن لا إله إلا الله وأن محمدا رسول الله, ويقيموا الصلاة ويؤتوا الزكاة, فإذا فعلوا ذلك عصموا منى دماءهم وأموالهم إلا بحق الإسلام وحسابهم على الله.

"I have been commanded to fight against people until they bear witness that there is no God who is entitled diibadahi correctly but Allah and Muhammad is the messenger of Allah, establish the prayer, and pay zakat. If they had done that, then they have to protect his property from me except blood and because there is a right (law) of Islam, being-the reckoning them back to God. "[7]

And from Abu Hurayrah radi anhu, he said, "Whenever the Prophet had died, then during the caliphate of Abu Bakr, there are some pagan Arabs had (at the time of Abu Bakr wanted to fight them), then 'Umar said to him,' How would you combat human? In fact, the Prophet sallallaahu 'alaihi wa sallam has said,' I am commanded to fight against people until they say there is no God who is entitled diibadahi correctly except Allah. And whoever said it, then he has to protect his life and property from me except for Islamic rights and reckoning them back to God. "Then Abu Bakr said, 'By Allah, I will fight anyone who differentiate between the prayer and charity, true charity is rights were taken from the property. By Allah if they prevent me from taking a female goat kids when they first turn it over to the Prophet sallallaahu 'alaihi wa sallam, surely I will fight them because their attitude is.' After that 'Umar said,' By Allah, after Allah enlarges the heart of Abu Bakr to combat them, then I believe the truth of this. '"[8]

Who Removing Compulsory Zakat?

Zakat is obligatory upon every Muslim that independence, which has a property that has to nisabnya and have passed one year (haul), except zakat plants, so he issued at the time of harvest if it has to nishabnya, as Allah says:

أفغير الله أبتغي حكما وهو الذي أنزل إليكم الكتاب مفصلا والذين آتيناهم الكتاب يعلمون أنه منزل من ربك بالحق فلا تكونن من الممترين

"And He it is who makes the gardens and were not berjunjung berjunjung, palm trees, the plants are a variety of fruit, olives and pomegranates similar (shape and color), and not the same (it seems). Eat of the fruit (a variety that) when they bear fruit, and tu-naikanlah right at harvest day (with dikeluar-the zakat); and do not exaggerate. Verily, Allah does not love his people exaggerated. "[Al-An'am: 141]

[Copied from the book Al-Sunna wal Wajiiz FII Fiqhis Kitaabil Aziiz, Author Shaikh Abdul Azhim Badawai bin al-Khalafi, Indonesia Guide Fiqh Complete Edition, Translators Team Tashfiyah LIPIA - Jakarta, Ibn Kathir Library Publishers, Printed in Ramadan 1428 - September 2007M]

_______

footnote

[1]. Has passed on the Book thaharah takhrijnya.

[2]. Muttafaq upon: [Shahiih al-Bukhari (Fat-hul Baari) (III / 278, no. 1410) and this is lafazhnya, Shahiih Muslims (II / 702, no. 1014), Sunan at-Tirmidhi (II / 85, no. 656), Sunan an-Nasa-i (V / 57).

[3]. Saheeh: [Shahiih Sunan an-Nasa-i (no. 2327)], Shahiih al-Bukhari (Fat-hul Baari) (III / 268, no. 1403).

[4]. Saheeh: [Shahiih al-Jaami'ish Shaghiir (no. 5729)], Saheeh Muslim (II / 680, no. 987), Sunan Abi Dawood (V / 75, no. 1642).

[5]. Fiqhus Sunnah (I / 281).

[6]. Hasan: [Shahiih al-Jaami'ish Shaghiir (no. 4265)], Sunan Abi Dawood (IV / 452, no. 1560), Sunan an-Nasa-i (V / 25), Ahmad (al-Fat-hur Rabbaani (VIII / 217, no. 28)).

[7]. Muttafaq upon: [Shahiih al-Bukhari (Fat-hul Baari (I / 75, no. 25)) is lafazhnya, Shahiih Muslim (I / 53, no. 22).

[8]. Muttafaq upon: Shahiih al-Bukhari (Fat-hul Baari (III / 626, no. 1399-1400)), Shahiih Muslim (I / 51, ​​no. 20), Sunan Abi Dawood (IV / 414, no. 1541) , Sunan an-Nasa-i (V / 14), Sunan at-Tirmidhi (IV / 1 (17, no. 2734). (Continoe)