Islamic Shariah Bank

The Islamic Shariah Bank providing a service of the collection of money, the channelization of money, selling, purchasing, insurance and so on. The selling and purchasing is basically done by the method of barter/transfer of property. The Bank decides its profit in the initial transaction, and includes the profit together with the real price. And the value of property in transaction will be adjusted according to the form of payment and the period of giving a payment, this system is also commonly known in Islamic Banking as murabahah, salam and istishna’.

In this article, I would like to draw my attention the point of Selling and Purchasing in Islamic way and Selling and Purchasing according to credit system.

Trading and purchasing in according to Islamic law (Shariah) and in according to Credit System.

وَأَحَلَّ اللَّهُ الْبَيْعَ وَحَرَّمَ الرِّبَا

“And Allah has permitted selling and purchasing and ban the riba” (Al-baqarah 2:275)

Islam allow the selling and purchasing publicly, and the Ulama (Islamic Scholars) also allows the selling and purchasing by credit system, among those ulamas who allow this type of selling and purchasing are Syaikhul Islam Ibnu Taimiyah, Imam Ibnul Qoyyim, Syaikh Abdul Aziz bin Baz, Syaikh Muhammad bin Sholih Al Utsaimin, Syaikh Al Jibrin and so on. But the Islamic Scholars agreed that the selling and purchasing are not at all free, there are certain rules must be followed during the transactions, here are some important points to notice during the transaction in according to Islamic law:

1. The payment can be paid later after the transaction

a. This is based on Qur’an
O you who believe! When you contract a debt for a fixed period, write it down (Al-Baqarah : 282)

b. Based on Hadith:
From Aisyah R.A said, Truelly that Prophet PBUH purchased a food from a Jew and he give a payment later, Prophet Give his iron clothe for the guarantee of payment. (Bukhari and Muslim)

2. Secondly, to add price after transaction is permitted due to an early of payment and due to a credit payment.

a. This is based on the Qur’an:
O you who believe! Eat not up your property among yourselves unjustly except it be a trade amongst you, by mutual consent. (An-Nisa’: 29)

Thus, it’s explained that all transaction as long as it is done by mutual consent is permitted.

b. Based on Hadith:
“During the prophet PBUH visit to Madina and the traders are selling the fruits with pay early trading for a period of one year or two years, the prophet PBUH said: “Whoever sale and purchase in paid early trading, should be in a equal dosage, and obvious weight and until the clear period of time”. (Bukhari and Muslim)

From the above proof of hadith, it is clear that prophet PBUH allowed the pay late trading with the clear passage of time, and with the clear weight and dosage, and it is also prevail for the credit system trading as well as cash payment trading.

3. The Proof of Consensus (Dalil Ijma’)
Muslim scholars agree that the trading by credit system with different price is permitted, among the scholars who agree with this argument are:

1. Syaikh Bin Baaz
When was questioned regarding on a legal to sell a sack of sugar and other things at 150 Riyals by credit. In which the value is equal to 100 riyals in cash sale. Then he remarks:
“The transaction of money in this way is allowed, furthermore the muslim is getting use of this transaction, and according to the consensus it is allowed to do a transaction among them in such a way, and it is not a riba.” (Ahkamul Fiqh, Syaikh Abduloh Al Jarulloh, Page: 57 – 58)

2. Syaikh Muhammad Shalih Al Utsaimin
He remarks on his book Al Mudayanah Page 4 “kinds of debt and trust”

Someone wanted to buy a commodity but he wasn’t have a money in cash to pay, he decided to buy a commodity and the money will be paid after period of time, with a condition that a price will be more higher then that if he pay it in cash. And this kind of transaction is allowed.
Presume: Someone buy a house for him self or for rent with a sum of 10.000 Riyals by a late fee till one year, in which if he could pay it in a cash it will cost only 9000 riyals, or if someone wanted to buy a car for him self or for rent with a sum of 10.000 riyals by a late fee till one year, in which if he could pay it in a cash it will cost only 9000 riyals.

Allah said in Qur’an:
“O you who believe! When you contract a debt for a fixed period, write it down.” (Al-Baqarah verse: 282)

Someone wanted to buy commodities but the fee would be paid in a fixed period, as he wants to sell those commodities.
Presume, someone buy a wheat and will pay the fee in a fixed period, but the price is higher then that if he buys it in cash, according to Syaikh it is allowed based on the qur’an above. And these kinds of transaction are also allowed by Syaikhul Islam Ibnu Taimiyah, based on the Qur’an and Sunnah and proof of consensus by scholars. (Majmu’ Fatawa 29/498-499)

4. The Proof of Measurement (Dalil Qiyas)
There is similarity between a credit fee and early payment fee, both of this transaction is allowed by Prophet Muhammad PBUH assuming that both of this transaction is late in receiving their fee or commodity. But, incase of early payment fee the money will be paid in advance but a commodity will be received later, similarly in case of credit fee the commodity is received in advance but the fee will be paid later. The different of both is in early payment fee the price will be less expensive then the credit fee.

5. The Proof of Benefits (Dalil Maslahat)
Transaction by credit system is benefit for both the seller and the buyer. The buyer will be benefited by gradually paying the money with a fixed period and the seller will be benefited by increasing the price, this kind of transaction does not contradict in Shariah (Islamic Law), because it is based for the benefits of ummah.

Syaikh Bin Baz agrees with this kind of transaction, in which both seller and buyer are having benefits, both of them like it and no one is loss. (Ahkamul Ba'i, Syaikh Jarulloh, page. 58).

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Indonesia - why there is no recession in the world's leading Muslim economy

Following the election of US President-elect Barack Obama there is likely to be a slow recovery in confidence in the United States financial and banking system. A recession is unavoidable in the US and EU, but with only a downturn in developing countries. This crisis of confidence in the Western banking and financial system comes during the dying days of the most unpopular American presidency in living memory. Financial mismanagement and weak regulatory frameworks have devastated the US economy, making the rich richer and the poor poorer. Two million Americans may lose their homes. Millions in the US and Europe will lose their jobs.

Yet the devastating legacy of the Bush presidency leaves open great opportunities for Indonesia, the Muslim world and the developing countries of the South.

Indonesia can play a key role in leading the Muslim world toward economic recovery, and help minimize the impact of global recession.

First, by managing its national economy to maintain growth, demand, imports and exports. The nominal Gross Domestic Product for 2009 is projected at $547 billion. Indonesia is already in the top 20 economies of the world.

Indonesia is currently overtaking Belgium and Sweden. It will soon overtake Turkey, the Netherlands and Austria as it enormous size, resources and population come into play. It is a strong candidate to join the top 10 economies in the world within two decades.

Second, by mobilizing investment for oil, gas, energy projects, biofuels, infrastructure (roads, railways, ports), manufacturing and retailing sectors. It needs over $40 billion for electricity alone, to finance an additional 40,000 MWe of power by 2025. Indonesia will become a nuclear power, and plans four power stations. Total foreign investment needed overall during the next 15 years exceeds $100 billion.

Investment is still coming from the US and EU (including Eastern Europe) but increasingly from the BRICs (Brazil, Russia, India and China), and also from Asia-Pacific Economic Cooperation countries like Canada, Japan, Korea, Taiwan, and from Association of Southeast Asian Nations member states (including Brunei, Malaysia, Philippines, Singapore, Thailand). Investment is also coming in greater volume from the Gulf Arab states, Israel and South Africa.

Third, Indonesia can help lead Muslim economies by using its economic size and prestige as a member of the United Nations Security Council to join Brazil, Russia, India, China and Southern countries to bring about changes in policies and in the balance of power in world organizations dealing with trade, finance and development, especially the World Bank, the International Monetary Fund (IMF) and World Trade Organization (WTO).

Indonesia has major reservations about the IMF following its own experience in 1998. German Finance Minister Peer Steinbrueck said that the world should not slip into creating a shadow world economic government run by an inner IMF council. Indonesia is also tired of being kept on the fringes in the WTO.

Asia and Southern countries want a new deal. Muslim countries collectively represent an increasingly important source of capital, while Western liquidity has partly dried up. Muslim economies represent important investment sources as well as investment destinations. The collective size of Muslim economies represents significant demand for Western goods and services, relatively unaffected by the recession in the West.

Indonesia can still deploy export credits, sovereign funds, Islamic finance and other non-traditional financial sources, such as environmental funds and carbon credits. Despite the global downturn Indonesia is still pulling in some bank finance.

A $140 million syndicated loan for Excelcomindo for telecommunications expansion was announced recently. Low-cost airline Lion Air is buying 12 Boeing 737 planes even though the required local cash contribution for the last four has risen to 30 percent. Lion Air will use its own cash to carry on expanding. St. Miguel Corp. of the Philippines is competing with a US-led consortium to clinch a $1.3 billion coal supply deal, to buy PT Bumi Resources from Bakri Brothers. There is money here and money coming in.

Standard and Poors is holding Indonesian credit ratings stable and its credit rating may even be raised. Singapore could slip into recession but Indonesia will not, and the reason is mostly sheer size plus improved financial and economic management.

Indonesia is in a key position as the largest Muslim country in the world with a population of 230 million and a land area of 1.9 million square kilometers.

The Indonesian Gross Domestic Product was $843.7 billion in terms of purchasing power and $432.9 billion in terms of official exchange rates in 2007. It has fixed foreign investment of $57.6 billion and holds $9 billion of investment in other countries. It has more than 3,500 millionaires holding over $100 million each, of whom 70 percent live in Jakarta.

Its current economic growth is 6.5 percent and may fall below 6 percent in 2009 due to reduced exports. Government will stimulate growth using the national budget which already reached $100 billion in 2008. Government is confident it can hold growth at 6 percent. The World Bank has set aside a $2 billion standby loan for 2009 only to be triggered if growth falls below 5.8 percent.

In 2007 Indonesian exports were $118 billion and imports $86 billion, a trade surplus of $32 billion, and foreign exchange reserves as of this month were $50 billion.

Indonesia has already lost some jobs in sectors like textiles. Some exports to the US and Europe fell in the fourth quarter. The stock market, government bonds and the national currency also fell in value during the global financial crash in the first week of October.

The government launched a securities buy-back program spearheaded by state-owned enterprises and defended the rupiah currency by intervening in the currency market via the Bank of Indonesia. The government also took steps to increase liquidity and focused on getting inflation under control and on maintaining growth.

The government has increased guarantees on personal deposits to 2 billion rupiahs ($190,000), which covers 100 percent of deposits for over 99.7 percent of 81 million bank accounts.

Indonesian banks are strong, with adequate reserves, low non-performing loans and almost no exposure to subprime losses. Only a small group of investors lost money on Lehman-related instruments purchased via international banks.

The Indonesian inflation rate is declining from a high of 12 percent to maybe 9 percent by January with reductions planned to between 9 percent and 7 percent for the rest of 2009. The bank rate is being stabilized at 9.5 percent after six months of consecutive rises. It will be held for a while and then reduced to 7.5 percent in 2009.

Indonesian bonds are recovering from their recent nose-dive and the stock market is stabilizing. Local economists say the stock market was over-valued and more normal values and returns will be restored as part of the local share trading cycle.

The government is now focusing on trying to mobilize its massive $115 billion dollar national budget for 2009, up from $100 billion in 2008, to push projects and overall spending forward and help substitute local demand for declines in exports, with every hope of keeping economic growth for 2009 at between 5.5 and 6.0 percent.

Despite the collapse of the Bank of Indonesia subsidiary Indover Bank in the Netherlands, there is no sovereign default. Indonesian Finance Minister Sri Mulyani Indrawati and the new central bank governor, Boediono, have taken a stand against previous mismanagement.

In contrast to the kid-glove treatment of failed bankers and financial managers in the West, who took imprudent and possibly illegal risks, the Indonesian government is directing the work of its Corruption Eradication Commission and Corruption Court against corrupt central bankers and parliamentarians who took bribes.

The Indonesian government also says it will pursue legally those who misused its name and dragged it into the Indover collapse, by implying there were sovereign guarantees backing Indover borrowing when there were none. It also intends to pursue allegations of short trading and fraudulent practices in the stock exchange.

Indonesia lost 10 years as a result of the 1998 banking crash when it put its fate in the hands of the IMF, which initially failed to understand local strengths and exaggerated local weaknesses. An historical photo shows President Suharto sitting at his desk, signing his own political death-warrant while the IMF representative stood over him, as he signed the IMF agreement.

A lot has changed between the Asian banking crash of 1998 and the Wall Street crash of 2008. The economic balance of power in the world has changed and the balance of global power has shifted to the South and East. British Prime Minister Gordon Brown recognized this when he urged the Gulf states and the G20 to help stabilize the world economy.

In the 1998 bank crash Indonesia had no freedom and no choice. This time in 2008 Indonesia has freedom and is stronger, and can chose to tread its own path. Hopefully its greater strength and determination will inspire Muslim and Southern countries not to panic in the face of recession in the West, but to work together to avoid the spread of recession to the South and to build and strengthen a new world economic order.

Terry Lacey is a development economist who writes from Jakarta, Indonesia, on modernization in the Muslim world, investment and trade relations with the European Union and Islamic banking. This article is published with permission from the author.

Source: The Daily Star

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Prayer (Salat) Idul Adha in Mecca

Idul Adha mubarak to all Muslim all over the world, the video below showing the prayer or salat of Idul adha in Makkah, where the hajis (pilgrimage) do worship to Allah together leaving their attributes their positions and their castes, all of them are the same in the eye of Allah.

سبحان الله والحمد لله و لا إله إلاالله والله أكبر

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Trade and Business Ethics in Islam

Islam is revealed to the mankind for their blessing (rahmatan li al-‘alamin). This brings a consequence that every single Muslim is an agent for a social interaction and change towards establishing a prosperous society in the world as well as in the hereafter (al-qasas: 77). The notion of falah or sa ’adah in Islamic economics derived from this version of the Qur’an as found in the bulk of economics literature makes the material purposes of economic and business activities integrated with attaining the spiritual heights in the hereafter, as an ultimate aim.

This notion may also be associated with the notion of amanah, as propounded by Hasan. for instance. He accentuates the conversion through the amanah concept from ambitious attainment of a Muslim in socio-economic activities into a spiritual height by achieving eschatological welfare in the hereafter. In relation to macro-perspective, the notion of ethics may be defined as equal to honourable moral precept, which illustrates the mission of the Prophet (pbuh) being sent to the world. He said:

“Truly, I was sent only to perfect the honourable moral.”

Elaboration of this perspective of ethics is generally found in the works below category of economic theory and methodology. Under this category, economic behaviour is also discussed. There are teens of studies found in the database under consideration. Among those literature, ethics is well elaborated in Naqvi’s Ethics and
Economics (1981) and Islam, Economics and Society (1994).
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Is it true Pakistan terrorize the Terrorist?

By Romi Adetio S

Graduate student of Aligarh Muslim University, India.

After the previous condemnation of the terrorist from the Non-Islamic alignment countries such as western people including America, they put ahead onto the region of Pakistan, Afghanistan and other Islamic countries, and notice that these areas are the base activities of the terrorism.

Pakistan under Pervez Musharraf who is an ideal man and obviously being under pressure from America for the link of terrorism in the country, becoming much more secular and behaving harshly to any groups who were proclaiming for jihad, without being consider their mission.

The present event in Islamabad about Lal Masjid where the hostages were inside mostly students, women and children, and the dispute between the government army with the head of jamiah, is one of the government respond to support America, and to my view Parvez opinion to pressure the “terrorist” who are settling inside Lal Masjid by attacking the mosque is totally fatal, there will be so many innocent people who are mostly students will be died. The gunfire attack to the mosque will never be convenient to any Muslim, they won’t allow the “house of God” to be fired, and it could be only done by negotiation or others.

I would like to say Government of Pakistan action is mostly limited by America; it is not enough to collect the information come from the American intelligent only; it should have a proof and the sequence in the reality. Has it really have action to terrorism, it is not enough to proof that a person has a link to terrorism by hearing from his delivery to a wake “jihad”, Jihad in Islam has a deep meaning, and different understanding, is it enough to proof the terrorist by looking at the availability of guns, and pistol in some one house?

You would never know the real till you know that he has done that action, I can say how narrow the thinking of that person who says that any people who do a “jihad” activity is terrorist? Not at all, even many students doing a “jihad” by learning the Islamic law, and Islamic traditions, let me explain what the meaning of “jihad” is:
Jihad derived from Arabic word means Struggle, Struggle in Islam is to be struggle in their live, struggle to strengthen their Iman, struggle for live barely for Allah.
So, has “Jihad” means terrorism? I really don’t feel convenient with the situation in Pakistan, and the unwise action done by the government of Pakistan. We all hope every thing will be cured soon, the right is right and the wrong is wrong.

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Sense of Believe in Pilgrim

The last basic principle of Islam is to perform Pilgrim (Hajj) to those who are capable. The people who wanted to perform this pillar will be traveling from their homeland to Mecca with iman in their body. I am one of the people who had performed this pillar, from India I have straight intention for performing a hajj, I took flight from India and thus I arrived on the land of Arab, then we were brought to Indonesian Consulate General, where we clean the body and dress an Umrah clothe, and perfumed it. We leave from Jeddah to Mecca after Isha Prayer, on the way we saw the plateau and stone hills we keep pronouncing the praise to Allah almighty on our way, which make our iman far stronger then before.

Mecca is the city of Prophet Muhammad PBUH and his birthplace; I came closer to Masjidil Haram and pray in my hearth before stepping inside masjid. My eyes, ears, and body couldn't talk nor saying anything when I saw Ka'bah with my own eyes, then I am whispering; this is the place where the direction of Kiblah and the people from many parts of the world are praying toward this sacred thing. And nothing I found in it except the big house covered by the black clothe with the calligraphy writing stitched on it. I read some Arabic words to give praise of His greatness and omnipotent. I started thawaf rounding the Ka'bah with praying and praise upon Allah the almighty for seven times, finally I came to the small circle crack on the corner of Ka'bah to kiss a sacred stone hajarul aswad, there are a peaces of stone, I didn't see there is a danger for me and to other people came from the stone, then I lower my nose till it touch it, and pray for the goodness for me, family and Muslims.
Maqam Ibrahim is the step of foot of prophet Ibrahim, the founder and the first human who led down the foundation of Ka'bah and building. I pray behind it, to follow the prophet act, also it is compulsory to pray sunnah behind it after thawaf.
To believe Him but not to believe His creation, sometimes the pilgrimages unconsciously or consciously had done Syirik to acknowledge another god besides Allah, and it is ultimately condemned in Islam. Touching Maqam Ibrahim and wiped off to the face several times, with intention of getting blessing from it, many other things which have been done by the pilgrimage that followed others without acknowledging the meaning and the source of it.
Sya'i is to walk by reading Arabic word contents of praying and praise upon Allah between Saffa and Marwah for seven times back and forward, as the prophet Muhammad PBUH had done it before. The story of Sya'i is narrated to the Prophet Ibrahim's wife, Siti Hajar, she and her son Ismail in that time walking and running in small steps for several times between saffa and marwah to find the water, finally Allah presented them the water from the food step of Ismail, the water come out from the earth, which is known as Zam Zam. The water continuously flowing till now, giving the advantageous to the Arabs and their land.
Pilgrimage have to brought a peaces of stone and to throw it to jamarat in Mina, the side place out of Mecca, the stone should be thrown by the pilgrimage on their own or by some one others, however, it must follow the practice which had done by the prophet. But, during the practicing there are a number of pilgrimages who are innocently throwing a thing other then stone, such as a shoe, shock, wood, etc. and they were throwing the stone with an anger and some rudeness words, they were claiming that they are throwing a jinn or shaitan. But exactly it is not, it is just a big stone which is called jamarat and the pilgrimage had not to show a kind of anger or other abusing words but they ought to say Bismillahi Allahu Akbar in the name of Allah the almighty. Obviously the meaning of throwing the stone by mentioning the praise upon Allah is to accustom the pilgrimage to the saying of praising upon His greatness, as the obligation between creatures to his creator.
Hajj is to perform religious duties, the action is by visiting the holy places and to invest the whole body and property to Him alone and confessing the sins and to be sincere in every acts merely for Him. On the occasion of Hajj there will be no compare between a rich and a poor, a strong and a weak, a black skin and white, a king and a slave. Every human being is same in front of Him, each one are wrapped only by white clothe to cover their 'aurat or privy parts. Thus Islam taught every Muslims to be equal to others and to disregard the dignity as a big thing in this world, because the human are a small thing their head couldn't touch the sky and grab the whole earth in their hand. And finally all of them will be returned to their source.
With the passing of years the development is took place and the human increasing further and further, which will require the larger space for the pilgrimage in performing the hajj and avoiding the massive and unexpected substance which may occur due to the small space in performing hajj. Related to this matter there are many controversial opinions from the ulama or the scholars commenting on this matter, such as Sya'i on the second floor of masjid, mabit, to remain a night at a place, and many other matters. Sya'i at the second floor of masjid to my opinion is allowed, due to the insufficient place around ka'bah, furthermore, in the second floor the space is larger and the distance is more far to that of around ka'bah. While, mabit, to remain a night at a place called Mina, with the insufficient place to stay inside Mina, the ulama has decided in expanding the boundary, so that, the pilgrimage do not worry of remaining outside the previous boundary during the prophet time, because it is also important to avoid the inconvenient due to the massive place.
Finally, the reward for Muslim who had done pilgrimage is nothing save Jannah or paradise. The Muslim who had done the last pillar of Islam should keep in mind that they had completed the whole five pillars of Islam, now, the only believing on the oneness of Allah and always asking forgiveness whenever the irreligious action and the whisper of Shaitan hindering. Allah has mentioned in the Qur'an:
"And O my people! Let not my Shiqaq (enmity, anger and opposition) cause you to suffer the fate similar to that of the people of Nuh or of Hud or of Salih, and the people of Lut are not far off from you!
"And ask forgiveness of your Lord and turn unto him in repentance. Verily, my Lord is Most Merciful, Most Loving." (Hud 89-90).

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Source of Emergent of Islamic Economic

Created By: Romi Adetio Setiawan

Student of BA (hons) Aligarh Muslim University, India.
Sources of Emergent of Islamic Economic

There are two factors led to the emergent of Islamic Economic in this Modern Era:
1. The background of religion, to hinder "Riba" and hold up the "sodaqah".
2. The emergent of surplus income from Oil Exporting Countries of the Middle East and the Islamic country which is led to the need of institution to keep their fund.

In Indonesia where the Muslim is the majority, the term of Islamic Economic has been prevailed since 1991, and it has a large response to the society. This system was implemented in the Banking system and other economic activities as well, such as Business Insurance, Multi-Level Marketing Business, and in a large scale of demand marketing.

With the begin of Jakarta Islamic Index, the investors will not face a complexity to invest their money in Islamic way, the system of Shari'ah has influenced many instances in Indonesia, meanwhile yet several people still misgiving in understanding the Islamic Shariah.

As far as the majority of population is concern in the Islamic country, it is necessary for the government to implement the Islamic Shariah wholly, and keep up on the existing in normalizing the economic of the country.

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