This study confines on the relevance of Islamic economy to global trade, investment and industry in Muslim Filipino areas. It is useful, valuable and a reference material in the formulation of economic policies, plan and strategies.
Much of the literature on Islamic economics in the realm of distribution has so far been mainly concerned with questions relating to interest. Rent and, at times, wages have also been discussed. But the subject of profit continues to remain in a state of almost total neglect. References to it have made occasional appearance in the discussions on mudarabah or the principles of trade. The present paper, therefore, makes a preliminary attempt to look at profit theory from the Islamic viewpoint.
This paper presents a critical assessment of the widely discussed concept of Islamic Economics. The two different interpretations of Islamic economics as the study of the functioning of an interest-free economy and the validity of moral values in the economy are discussed. It is shown that none of these interpretations can help to create an acceptable foundation for an Islamic economics. Far away from laying the foundation for such an economics the question is raised how an Islamic economy would function, based on the Islamic principle of controlling the Nafs. Microeconomics and macroeconomics of such an economy are analysed and its special features are compared to an economy functioning on the basis of laws devised by the conventional economic analysis.
Events of the last few years have forcefully shown the Muslim world’s resentment of the West’s power, influence and encroachment on its way of life. That power is nowhere more evident than in the finance arena, where Western banks and financial markets dominate but contradict strikingly with traditional Islamic beliefs. Over the past 25 years, however, a non-violent challenge to that dominance has been building.
Describing the Islamic financial system simply as ‘interest-free’ does not do justice to the system. Promotion of entrepreneurship, preservation of property rights, transparency and the sanctity of contractual obligations, which are crucial to any sound financial system, describe its essence. Today, Islamic financial and banking activities have reached an impressive size of over US$250bn, as compared to a meagre US$6bn in the early 1980s. Market participants and policy makers are increasingly paying attention to its potential and how to take advantage of the opportunities presented.
In 2006, Standard & Poor’s introduced the S&P Shariah indices. Shariah is Islamic canonical law, which observant Muslims adhere to in their daily lives. Shariah has certain strictures regarding finance and commercial activities permitted for Muslims. Over the last few years, the demand for Shariah compliant financial products has increased.