Re: Why do US officials say such things in Pakistan?
Thank you. No problemo.
Re: Sharia and Economy split from: Why do US officials say such things in Pakistan?
The only economic activity going on today that is strictly guided by shariah under formal multinational shariah regulatory bodies (rather than the words of some random paindu village mullah) is Islamic banking... which is booming.
Re: Sharia and Economy [split from: Why do US officials say such things in Pakistan?
The only economic activity going on today that is strictly guided by shariah under formal multinational shariah regulatory bodies (rather than the words of some random paindu village mullah) is Islamic banking... which is booming.
Rightly observed, though it is booming not because of its economic superiority or role in boosting the economy of a country but because it has appeal to a targeted crowd. Its just another product offered by investment companies for a specific crowd. It is helping otherwise many muslims who do not become part (or keep their potential participation minimal) of the economy integrate into it. If you have a acccount as simple as a checking account in any bank, you are already contributing your money to the economy and it is in circulation.
Re: Sharia and Economy [split from: Why do US officials say such things in Pakistan?
Rightly observed, though it is booming not because of its economic superiority or role in boosting the economy of a country but because it has appeal to a targeted crowd. Its just another product offered by investment companies for a specific crowd. It is helping otherwise many muslims who do not become part (or keep their potential participation minimal) of the economy integrate into it. If you have a acccount as simple as a checking account in any bank, you are already contributing your money to the economy and it is in circulation.
It goes deeper than that. The existence of a strong and well regulated multinational shariah-compliant Islamic banking network is leading to the slow birth of a well-regulated shariah compliant economy in the middle east and east asia (Malaysia and Indonesia).
Companies can leverage shariah-compliant Islamic Investment Banks to raise shariah-compliant debt to finance their shariah-compliant business, raising additional funding through issuing shariah-compliant stocks.
The recent exponential growth of Islamic investment banking over the past 15 years is making possible a revolution in shariah economics that is, for the first time, creating a shariah economy under multinational regulation by maulvis who have studied both the Islamic and Financial academic traditions.
Re: Sharia and Economy [split from: Why do US officials say such things in Pakistan?
It goes deeper than that. The existence of a strong and well regulated multinational shariah-compliant Islamic banking network is leading to the slow birth of a well-regulated shariah compliant economy in the middle east and east asia (Malaysia and Indonesia).
Companies can leverage shariah-compliant Islamic Investment Banks to raise shariah-compliant debt to finance their shariah-compliant business, raising additional funding through issuing shariah-compliant stocks.
The recent exponential growth of Islamic investment banking over the past 15 years is making possible a revolution in shariah economics that is, for the first time, creating a shariah economy under multinational regulation by maulvis who have studied both the Islamic and Financial academic traditions.
I am no big economist (I'm a software person) however if you don't mind would love to discuss this further.
What is the primary role of a bank in a society and how is it different from that of an Islamic bank. Most people think that a bank provides services to safeguard their money or assets. This is true to some extent however this is not why banks exist today in a country's economy, as far as I understand. They provide investment services and counseling. For instance, as far as my knowledge goes, what many people do not realize the primary role of a bank is to circulate money in the economy. This happens when you deposit your money into a bank, it goes to a large pool of money of which some is kept in the reserve based on a federal or state charter. The rest of the money is used for provide investment loans to potential businesses after assessing their risk factor. The interest earned by those loans on the money you deposited is what generates profits for the banks and keeps it running. So in essence the bank is taking your money and plugging it into the economy elsewhere, where it would generate more economic activity versus it becoming stagnant if you just held on to it.
Now wouldn't an Islamic bank do the exact samething, its banking paradigm would not be much different. What does it do differently, if it is also giving money for investments in an economy. Yes it may only lend for legitimate businesses, like you won't get loans from an Islamic bank for running a casino or other haram things but the paradigm for circulating money in the economy would not be different. How would it generate its profits to sustain its banking services?
Re: Sharia and Economy [split from: Why do US officials say such things in Pakistan?
The only economic activity going on today that is strictly guided by shariah under formal multinational shariah regulatory bodies (rather than the words of some random paindu village mullah) is Islamic banking... which is booming.
Maddy you have a point bud!
I think you are trying to say that Sharia if presented by sane people can get a hold in the world. It is the other type of Sharia shoved down by Ben Ladens that is bad.
And I agree.
On the matter of Islamic banking, US resident has a point as well. See these "Islamic banks" charge service fee for giving out loans. The "Un-Islamic banks" call the same thing interest. Both the fee and the interest rates are linked with the Federal reserve (or EU bank) prime rate.
Now you can charge the "service fee" over time or upfront, it still is calculated using the same compound interest formula (or a similar equation). If the islamic banks go too high compared to prevailing rate, then they will lose the client. If on the other hand they charge too low of an interest rate, then bunch of non-Muslims will take loans and invest in regular banks and keep the difference.
This is what we know as Global economy, where financial systems have to be similar, otherwise they will not survive.
Peace.
Re: Sharia and Economy split from: Why do US officials say such things in Pakistan?
Islamic banks don't really work with interest - they work with profit/loss sharing ratios. They have operate similarly to interest, giving returns on deposited assets, but the difference is that the financial risk is split between the two parties when an profit/loss ratio is applied.
Islamic banks present on the surface a face similar to conventional banks - but behind the scenes, the ownership of assets, the split of returns and losses, and other financial and regulatory details are different.
The example of Islamic banking shows that shariah compliant economics is not that different from conventional economics. However, differences exist which are important from a religious perspective.
A simple example is a form of Islamic house mortgage.
In a conventional mortgage, you may borrow $100,000 to buy a $100,000 house. The house belongs to you legally from Day 1, the money is secured against this asset that you own. The bank charges you interest on the borrowed money, and so you may end up paying back $125,000. You generally don't have a fixed interest rate for the whole loan - you have a rate that is locked for a period of up to several years, or you have a variable rate mortgage. So you don't really know exactly how much you'll pay back.
However, Islam prevents you from making profit from a loan - it counts as Riba.
So how could an Islamic bank turn a profit? The bank would use it's own money to buy the $100,000 house, and then allow you to move into the house that it now owns. The agreement between you and the bank is that every month, you will hand over to the bank a certain amount of money that will build up over the years. Once this sum reaches $100,000, it will be used to buy the house from the bank at the price of $100,000.
However, since you are living in the bank's house, you will also have to pay it rent each month, for it is your landlord. By the time the amount you save each month reaches $100,000, you may have paid the bank $125,000 in rent. hence the total amount the bank receives is $125,000
In other words, despite the ban in interest, you can still provide a financial service in a profitable, interest-free way. Allah SWT has seen fit to give us loopholes in his mercy :) . Let us use them, Aameen.
Re: Why do US officials say such things in Pakistan?
so just because "they" think it is we should discarded any idea of "sharia" in our country? nice.
yes because there are many people in pakistan who think the sharia practiced in saudi arabia is the correct one
and thus the endless babble on which sharia is correct
the best way to avoid all this is to go secular
Re: Sharia and Economy [split from: Why do US officials say such things in Pakistan?
..... but the difference is that the financial risk is split between the two parties when an profit/loss ratio is applied.
However, since you are living in the bank's house, you will also have to pay it rent each month, for it is your landlord. By the time the amount you save each month reaches $100,000, you may have paid the bank $125,000 in rent. hence the total amount the bank receives is $125,000
In other words, despite the ban in interest, you can still provide a financial service in a profitable, interest-free way. .... Aameen.
There is no loss in the above Islamic example. It is a gauranteed profit of 25K over the life of the loan.
As I said these are just word plays. Inside it is the same banking system.
However if you are happy with the word play, that's great.
And Summa Ameen!
Re: Sharia and Economy [split from: Why do US officials say such things in Pakistan?
Thank you for taking the discussion further. The PLS aspect of Islamic banking is not yet in full swing and it is only applicable if you are depositing the your money into an Islamic bank with the intention of making an investment. Here lies a difference, whether the money you deposit in an Islamic bank is to be treated as a loan to the bank or an investment amount. The PLS only applies to the investment amount whereas if you are acting as a lender to the bank by making a deposit then your capital should remain interest-free and guaranteed. On the other hand if you are acting as an investor with the financier using the expertise of the bank to invest the money then your capital is not guaranteed and the in case of a loss the bank bares none of it, its all your capital that goes. Incase of a profit they also share the profits. There profit covers their expenses to provide the investment services but in case of the loss, you loose out but they do not. So the PLS is still one-sided when it comes to losses. This is what I understand thus far. The bank is providing investment servicing which can bring you profit and loss but in reality they are not sharing the profit loss with you in totality.
The mortgage example you gave is one of the most popular trends in Islamic home financing. Rent-to-own is what it can be summarized as, and it is quite appealing to many but I did not see how it changed my rights on the investment in anyway. Renting and owning are two different concepts. Renting means you are paying for the usage of something and its maintenance costs are not your concern whereas if you own something then you are liable to maintenance costs of it as well. Incase I am renting the banks house, the bank should provide the same maintenance services as other market rental properties are provided with. This should not be my burden to bare. If the proportion of rent I have paid is considered as some percentage share in the house then I should have ownership of it, meaning in the event of failuire to further pay the remaining portion I should still retain the ownership of what I have paid for. This would mean division of the assets. This interchange of intention that it remains rent and becomes ownership is not correct. This ambiguity makes it no different than if I had secured a mortage from a conventional bank because they will keep the principal amount I have paid in the event I fail to make further payments (this is the same as calling it renting during the process until I’ve finished payments). In either case I loose ownership of the house. Will the Islamic bank forgoe the remaining amount of rent needed to gain complete ownership of the house? If yes, then this is the only factor that makes it better than conventional loans because then I would not be liable to the remaining principal balance on the house, which would get usurped once the house is sold. If no, changing the terminilogy and operating under the same end-user terms does not make it Islamic at all IMO.
Re: Why do US officials say such things in Pakistan?
Are you talking about Economy or Government System. I think you are very confused. Irresepctive of government system, the economy of western countries is much better than muslim countries. If you disagree on this, then no point me going forward with any arguments.
If not, then my next point be, why you think converting to Christanity would make you economically properous. What does bible has to do with economy. answer: nothing. The people who helped develop economic infrastructure, were hardly religious. However they were smarter than the rest.
Solution is to get educated about the world economics and do not mix it with your faith.
Re: Sharia and Economy split from: Why do US officials say such things in Pakistan?
Maybe we could start a couple of more threads...one on Morality and one on Enviromental Change and one on Social Welfare and lets see what Shariah System scores on those areas as compared to secular govr. systems.
Economy is only one aspect of the society, and though Economy is the topic of this thread, we have no right whatsoever to make a judgement on what Government System is best based on just one aspect of the society.
PS. Shame on those who have made fun of Islam and its System of Government, and have as a result apostated, and Shame on the Moderators for being totally unconcerned regarding those posts.
Re: Sharia and Economy split from: Why do US officials say such things in Pakistan?
This is a great topic!
I believe that Sharia Complaint Banking is still nascent considering the potential in the Muslim majority areas of world.
Mad Scientist did a great write up on the mortgage side of Sharia Compliance. I would like to add a few words regarding investments.
I know a London based fellow who used to work for Goldman Sachs, but he is now operating a sharia compliant fund which (ma'shallah) has done quite well. Although we don't talk business his investment philosophy is very much grounded in the value approach towards investing. He does not invest in companies engaing in haram activities such as gambling, alcohol, or XXX oriented products. Furthermore, he has invested in places like Lebanon, Iran, and Sudan -- areas where western fund managers have traditionally shunned due to high risk. As I am sure the economics oriented readers will recognize: High risk = high returns if invested properly.
On a personal note, as a conservative Muslim who hopes to do well in life, I do not see following the sharia as an impediment towards economic and material success. After all, our great Prophet (PBUH) was a merchant par excellence. Also many Muslims have done well in life without abandoning their religious duties.
In my family, we have a tradition of pooling our funds together to buy houses, start business, with loans at zero interest. Ofcourse we also rely on each other for economic support. Due to my fathers support of his brothers, I can go to any major city in Europe and find a place to stay with family. Likewise, we have had family members work in my fathers businesses that he is running. Our tribe has done well (with the grace of Allah) despite coming from a humble origin.
Re: Sharia and Economy split from: Why do US officials say such things in Pakistan?
No response to what I put out … sniff!!!
Re: Why do US officials say such things in Pakistan?
Are you talking about Economy or Government System. I think you are very confused. Irresepctive of government system, the economy of western countries is much better than muslim countries. If you disagree on this, then no point me going forward with any arguments.
Since other people are really discussing the topic of thread I will not respond to your post as it will lead to tangents of all sorts.
Re: Sharia and Economy split from: Why do US officials say such things in Pakistan?
Peace All
Bro Sharaabi you got any of that tonic me thinks I'll be needing some!
Islamic Banking ... yuk ... Where is the compassion?
Dissing Shari'ah? ...
...
Just a thought ... I'm writing a book with a friend of mine, inshaAllah we will cover aspects in it which deal with these topics ... it is based on the reconciliation of technology with tradition. How technology can be used to improve our understanding of faith and facilitate the welfare of others on a global scale. Hopefully, it will outline the inherent problems in trying to mimic the "success" of the West.
Pray Allah (SWT) guides us ...
Re: Sharia and Economy [split from: Why do US officials say such things in Pakistan?
Inshallah!
Please share excerpts or what in that book entangles with this topic, if you would please. And no copyright arguments …
Re: Sharia and Economy split from: Why do US officials say such things in Pakistan?
I think sharia will simply be a fatal impediment for progress in the modern world. Islamic codes were devised for a very different time when almost none of contemporary facets of life existed - pluralistic global society, electronic communication, universal education, healthcare etc. Women then were treated less than men. Under those primitive conditions some amount of codified protection thru riba might have been attempted. However it didn't work then and it has no chance now.
But that might just as well be a non-starter. Islamic societies need to modernise, not revert further back in evolution.
Re: Sharia and Economy split from: Why do US officials say such things in Pakistan?
I think sharia will simply be a fatal impediment for progress in the modern world. Islamic codes were devised for a very different time when almost none of contemporary facets of life existed - pluralistic global society, electronic communication, universal education, healthcare etc. Women then were treated less than men. Under those primitive conditions some amount of codified protection thru riba might have been attempted. However it didn't work then and it has no chance now.
But that might just as well be a non-starter. Islamic societies need to modernise, not revert further back in evolution.
Re: Sharia and Economy [split from: Why do US officials say such things in Pakistan?
As always you don’t have a clue what you are saying.
Islamic codes were not devised for a different time necessarily, its Islam was revealed when the cultural codes of society were quite different from today.
Pluralistic global society - I agree there were very few prospects of this because travel and trade was not on the same economic scale as today. However Islam does not stop you from living with others or having trade relations with them. As it was centuries ago, I think it is still the same today, cultural haughtiness is what prevents this. Muslims countries have economic relations with countries all over the world. Do you think the US people do not resent their jobs going offshore or immigrants coming and working here while many of them are jobless. If the government stops providing welfare you will see just how quickly the model of pluralistic tolerance here changes. Islam is more about ethics less economics.
Electronic communication - How does Islam become an impediment here. Does Islam say not to use telephones, internet, video conferencing etc. All these means of communication are widely spread throughout muslims countries and their businesses.
Universal education - What is there in Islam that does not concern universal education, please elaborate. Islam gives everyone their due rights, be just with everyone, honor your agreements etc. These are all universal values if I am not mistaken. Islam does not say to stop the pursuit of worldly sciences, do it but stay within the ethical limits and necessities.
Healthcare - Again what impediment is Islam producing here. I think muslims would want to be just as healthy as others. Islam has nothing against medicines or excercise. Do you want to discuss insurance?
Status of women - Islam primarily promoted the status of women when it was revealed. Given the norms centuries ago, it came and set a trend to alleviate the status of women. it did not make it stagnant. And that trend has continued unabated in many societies now, not all muslim though. If you consider women observing hijab as oppression then I think you have other issues. Yes there is cultural violence in many muslims countries, honor killings and other abuses but they are more out of ignorance and illiteracy, less to do with Islam.
Please expand this discussion and come up with some real stuff for once that we can talk about. If you want to talk, bring references from Quran and then we’ll talk for real or stop posting hogwash.