Thursday, April 28, 2011

Elements of the Islamic Economic System

I would like to share a small fraction of the book Interest Free Islamic Banking (Lariba Bank : Foundation for a United & Prosperous Community) by Dr. Yahia Abdul Rahman. This is a actually a very brief and basic explaination to understand Islamic economy.

First of all, we have to know that money is not looked as a commodity that commands a price, that is called interest in the riba system. Money does not reproduce and give birth to money. Money is a means of transacting business and is used to measure the efficiency of doing a business. Monetary policy is based on actual achievement of economic growth and productivity, not on perceived future rates of growth, since the future is only known to God.

So here are the following elements regarding Islamic economic system :


Islam requires every individual to work and to produce. Prophet Muhammad saw teaches : "Never be lazy and helpless". There is no good in an individual who does not want to produce and earn money. And it is known that the unproductive hand is an unclean impure hand. Products should be useful and not harmful as defined in the Quran and the Shariah.


In its efforts to do away with classes in the society based on wealth and affluence, and reshaping it through distribution into an intergrated society, Islam makes the following points :

  • God owns wealth, power and natural resources. The individual or the instituition is appointed by God as a trustee and custordian to manage them. 

  • Every being, human or not, has a minimum reuirement to be able to live in dignity. This should be provided by the government to anyone who cannot meet his/her own needs.

  • Islam respects private property and the right of ownership is protected.

  • The system is paid back and balanced out through the act of Zakah (alms giving is an essential part of the system and faith). If this source is not enough, the Islamic government would apply a temporary tax to the rich and affluent to balance the budget as a religious duty (Fardhu Kifayah). Zakah is spent by the Islamic government to be distributed to the poor, the needy, the traveller (wayfarer), administrators and to help the oppressed indebtors to pay off their debts. Where muslims live under a non-Islamic government, Zakah must still be collected from the muslims and spent for the good of society.

  • The individuals are trained to feel socially responsible for others in the community. He/she cannot enjoy life while others not.

  • The government is responsible for the basic needs of every citizen. These are food, shelter, clothing, education and heath care.

  • The only road to richness and to achievement is hard work and assumption of risk. It is not through inheritance. That is why Islamic lawa (by a detailed description in the Holy Quran Chapter 4) defined how exactly the estate should be distributed after death. No one can make a will that attempts to alter the predefined distribution rates. In addition, if one wanted to include inhis/her will a payout to others outside what the law requires, this is limited to a maximim or 1/3 of the total estate. This way money is always distributed and trickled down through the system every time it is accumulated, not through inheritance taxes to the government but through direct distribution to those who are entitled to it, hence reducing the government burden and waste. 

Islam preaches moderation and a balanced pattern of consumption. Islam is the way of life. Over-consumption and spending in the wrong way (bribery, illegal profits, etc) are condemned as the work of satan and not allowed. Everyone is trained to plan for the future and to be careful. The story of Prophet Joseph is an important lesson in long-range planning.


Human nature, if untamed, is characterized by selfishness and greed. Islam focuses on training the individual spiritually and ethically to suppress selfishness and greed and to promote goodness. 


Thursday, April 14, 2011

Perdagangan bebas bukan pilihan yang tepat

Agungkah dasar perdagangan bebas berlabelkan pasaran terbuka tanpa campur tangan daripada kerajaan? Kapitalis yang dikatalis oleh Adam Smith melalui idea-ideanya nyata mempunyai pengaruhnya yang tersendiri. Begitu juga, setelah peristiwa "Great Depression", Keynesian mengemukakan teori yang melibatkan campur tangan kerajaan dalam struktur pasaran, juga mempunyai pengikutnya yang tersendiri.

Melihat kepada isu ini, dasar perdagangan bebas mempunyai satu prinsip yang jelas iaitu 'free enter and exit'. Mudah untuk masuk dan mudah untuk keluar. Konsep mudah ini bukan didasari oleh faktor keinginan untuk masuk dan keluar oleh seseorang peniaga, sebaliknya adalah didasari kepada faktor 'survival of the fittest' sebagaimana yang menjadi laungan slogan dan idea teori sosial Darwinism.

Liberalisasi walaupun baik dalam erti meningkatkan persaingan, sebaliknya menjadi parah sekiranya persaingan itu hanya didominasi oleh syarikat-syarikat besar. Pasaran terbuka yang benar-benar terbuka tidak akan menjadi terbuka kerana dominasi syarikat besar yang mampu menawarkan harga yang lebih rendah menenggelamkan syarikat-syarikat kecil dan sederhana. 

Perlu difikirkan semula, sekiranya kerajaan ingin melaksanakan dasar perdagangan bebas. Dari sudut penjanaan ekonomi bersifat pengantarabangsaan, mungkin ini adalah cadangan yang baik. Tetapi, belum tentu cadangan ini adalah baik, kerana dalam ekonomi penuh dengan asumsi-asumsi yang berkecenderungan untuk salah jangka.

Hal ini perlu dilihat melalui kaca mata maqasid syariah. Isu sosial harus dipertimbangkan. Isu kebajikan peniaga-peniaga kecil harus dinilai. 

Mohd Hasbullah Mohamad Faudzi
Kuliyyah Ekonomi dan Pengurusan Sains
Universiti Islam Antarabangsa Malaysia

Monday, March 21, 2011

Women Participation In The Economy of Malaysia

 In Malaysia, among all sectors of the economy, the manufacturing sector has recorded the highest growth rate during the last two decades. The financial services and the government are major employers of women and women account for about 60 percent of the total labour force in these sectors. At that time, the manufacturing sector is the single largest employer of women followed by community, public, social services, trade and agriculture. Today Malaysian women have been able to move into relatively better paying opportunities in other sectors.

p/s : Sorry I didn’t manage to find the latest statistics of employment of women in various sectors. I strongly believe the percentage is increasing rapidly in community, public and social services.

Causes and Effects of the Increase of Women in the Workforce

The increase in the labour force participation rate of women in Malaysia could to a certain extent be explained by the decline in fertility rate. The decline in fertility rate could in turn be traced to the rise in the average age at marriage thus reducing the span of active reproductive life. Malaysians as a whole have been opting to marry later in life. Young male adults' age at marriage increased from 28.2 years in 1991 to 28.6 years in 2000, while for females the increase was from 24.7 years to 25.1 years over the same period. Furthermore, the proportion of never-married people aged twenty to thirty-four increased from 43.2 percent in 1991 to 48.1 percent in 2000. Among females between the ages of twenty and twenty-four, 68.5 percent were single in 2000, compared to only 60.2 percent in 1991. Similar patterns were observed for both men and women between the ages of twenty-five and thirty-four (Department of Statistics 2001; Tan and Jones 1990). This tendency to postpone marriage until later in life is most evident among men and women who are urban dwellers and have relatively high levels of education. This phenomenon of marrying later in life corresponds to the decline in the average number of children in Malaysian families as well. In 1974, for example, the average number of children born to a Malay and Chinese Malaysian household, respectively, was 4.2, while Indian households averaged 4.6 children. By 1988 the average had declined to 3.6 for Malays, 3 for Chinese Malaysian and 3.3 for Indian Malaysian.

The highest female labour force participation is within the age group of 20 to 24, coinciding with the end of schooling age and before the age of marriage. Hence the age of marriage together with fertility bears a relationship with female labor force participation. The increase in the female labor force participation may be attributable to improving economic incentives in employment and policies favoring the employment of women. In addition, the combined effects of improved maternal and child health care, access to family planning services, increased years of schooling, leading to a rise in the average age at marriage, have allowed women to take advantage of the increased employment opportunities. Postponement of marriage and longer intervals between children, has enabled more women of all ages to enter and remain in the workforce.

While the participation rate for the age group 15-19 years declined between 1982 and 1993, due to increased enrollments in secondary school, the other age groups of 20-24 years increased their participation. The decline in the participation rate after the age of 24 is related to marriage and the start of an active reproductive life. There are no significant additional incentives for women to re-enter the labor force at a later age, which is why there is no rise in participation among women over 40 years. However, despite the decline in the participation rate from over 60 percent of women in their early 20s, to about 30 percent for women over the age of 50, over 40 percent of women in Peninsular Malaysia remain in the workforce over the course of their reproductive lives.

Female labour force participation also seems to be related to the attitude of the family towards women.  A study of selected successful career women in Malaysia, for example, revealed that changing attitudes of parents and husbands towards a more positive trend were perceived to be related to higher educational attainment of women which in turn could influence women's participation in the labor force. The importance of the attitudinal factor is further substantiated by a study of rural women's economic participation, which found that women whose husbands have less traditional orientation towards gender roles were less burdened with domestic work. With the decrease in domestic responsibilities of women resulting from an increase in spouses sharing domestic work, women could spare more time for economic activities.

While Malaysian women have benefited from increased employment opportunities in the private sector, these have been concentrated in low skill, labour-intensive jobs requiring little job training or previous experience and, consequently, they are the most vulnerable to fluctuations in demand. As a result, they have the least bargaining power which results in wage discrimination in the private sector. In fact, America is also facing the same problem of gender discrimination in terms of position and wage. Other reasons associated with gender discrimination in employment are the nature of women which can be barriers in profession (temporary withdrawal for giving birth, emotional, etc) and underestimation to their capability.

In order to protect women against gender based on disadvantage in the context of the economic crisis, it is important to provide support for skills development for retrenched women workers, skills improvement for low level women workers, entrepreneurship development and access to labour market information. To maintain Malaysia's competitive edge, there is a need to reduce its dependence on foreign labor and promote gender equity policies in order to: 
•  assist re-entry of women who have taken time off for childcare (e.g., skills upgrading or retraining programs, access to child care, and flexible work hours); 
•  ensure equal pay for equal work;  
•  encourage young women to select studies leading to higher-skilled and better-waged
jobs through vocational counseling; and provide management training for women at
supervisory levels.

Personal Point of View

Now that I have been sharing this article edited from a few sources, I come to think that women participation in economy, in general, has its own pros and cons. From Islamic perspective, creating an ideal worklife is to have the husband and wife to work together (can’t find solid quotation from any figures but the theory do exist). However, obviously the reality is not going as easy as we think. Women involvement in labour force is often associated with moral issues. The failure to balance their career and personal life and to obey the decent work ethics cause instability in marriage, consequently may explain the rising divorce rate, although it can be the same mistakes for husbands. The collapse of family structure is certainly a major issue in the future, as it affects the development of human capital. In conclusion, women cannot run away from their original roles of managing the family life.

However, if women work for self satisfaction from their achievement through promotion and increase in wage (the feeling of rewarded), there is no doubt that they should be allowed to participate in labour force actively. Every individual should be treated fairly equal regardless  of what gender they belong to. They stay at home,and  they might get nothing from the husbands, even a small compliment for keeping the house clean and manicured. Lack of confidence, the feeling of not contributing and dependancy are some explaination for them to seek for jobs.

However, the most important thing here is women do actually contribute to the economy growth. So we should encourage women not only to earn their own incomes, but to think independently and free themselves from lame perception. They can actually contribute in many wider aspects beside offering their labour skills, for example in academical and management sector. 

Hasanah Mahmud
Cambridge A-Level
Kolej Yayasan UEM

Sunday, March 20, 2011


There can be a lot of confusion between the ‘administration’ and ‘management’ of businesses. In the practical world of business, they are very similar, and generally have identical functions and responsibilities. Many may think that administration is more about paper-pushing and clerical work, while managementis more about authority and decision-making. However, unless clearly defined by a particular company, business management and administration are generally the same.
Professionals in management are vital to any business or organization. These managers are relied upon to establish and implement policies, as well as strategies. Additionally, they are expected to help people involved in the organization, work for a common goal, in the most effective way possible. These professionals have studied management degree programs, which have helped them become effective managers.
Management degree programs prepare individuals for planning, managing, organizing, and running the essential procedures and tasks of organized bodies, such as companies or firms. Courses also include many aspects that are vital to any business, such as communications, production, logistics and purchasing, the quantitative methods of accounting, administrative practices, decision-making, marketing, information systems, and human resources management, and so forth. They also handle training of the workforce.
The degree primes any person for entry-level management positions, like supervisor, assistant manager, group leader, project manager, or office manager. The areas or fields of work is broad, as one can work in advertising, finance, benefits administration, insurance, human resources, wholesaling, retailing, communication, and transportation.
A degree in Business Administration, on the other hand, exposes students to a selection of core subjects. It also allows students to focus on a special academic area. The core subjects normally include: Business law and ethics, accounting, finance, economics, marketing, management information systems, organizational behavior and management, operations management, strategic management, and operations research.
Seemingly, even the specialized subjects in Administration courses are very similar to that of Management. The prospective jobs and responsibilities are fairly the same as well. Business Administration degree programs allow students to become experts in areas of accounting, finance, entrepreneurship, management, marketing, business computer applications, and business economics.
If there is any distinction between the two degrees, it will be the broader scope of Business administration, as it concerns itself with the management and performance of the operations of a company. Business Administration has various departments, like accounting, marketing, management, and finance.
1. Business Administration degrees are normally broader in scope, and management can be considered as part of its extensive scale.
2. Business administration degrees offer a balanced mix of clerical, operations, and management skills, while Management degrees, although they have aspects of clerical and operation subjects, are more about the management of human resources and personnel operations.
3. In reality, the lines are blurred when it comes to potential jobs and responsibilities, as both degrees can be for the same positions.


teikyo university

Thursday, February 10, 2011

Great Inflation in 2030?

Population is shrinking nowadays. It is shrinking in term of rate of birth, not the additional people who are born and die. I just finish my reading, a book written by George Friedman entitle The Next 100 years, who makes a prediction about what will happen in this century. One part of the discussion in that book is about the baby boomer and population shrinkage.

The decline of the rate of the population depends on the educational system and the mentality of the people. For instance, 30 or maybe 40 years ago, people married in the early age; around 15 or 16 years old, because they did not need to follow the educational system that have been fixed like nowadays. Many of them did not go to school to study, and some of them were primary level of studies that could make them merely read, write and calculate numbers, but not in detail. It was very rare at that time to have people who were well-educated, proceeded their studies in the next level; due to the effect of colonialism which wanted to discourage the knowledge from being spreading among the people who were under their power.

Therefore, instead of having education, they became a worker (for man) at that early age which raise their maturity of thinking; to survive and to have something to eat. For a girl, they had been developed to do a lot of homework, to be more feminine and 'mother'. The responsibility that they learnt from the process of real life (working situation) increase their maturity, then would lead to their marriage. This early marriage then, would lead to the born of a lot of child (logically); by using the assumption, everything is equal (ceteris paribus) while the main variable is the years that they live.

George Friedman in his writing insists that the quantity of the children at that time was a blessing as the society was agricultural-based society. Thus, they needed a lot of workers to work or run their land. As the society develop, having a lot of children became a problem as the lifestyle and life-budget became unstable, due to the more spending was needed compared to the wages or salaries especially in industrial-based society and services-based society. The rule of the world, such as the stricter laws imposed to forbid child labor in the industries and every child need to go to school until some age, put a burden into the family. Instead of having children to lend a hand to them, now, they need to support them financially to fulfill the need of the rules of the society. In this case, in my own opinion, the laws imposed to prevent child labor must be seen into two aspects; negative and positive. The positive effect is it will prevent the exploitation of child as they are paying less amount rather than adult (capitalist system emphasizes on the profit rather than social welfare). However, the negative effect is more worst! As the family does not have money to support their children to study, while the laws do not allow them to work, they will be a load for that family.

Anyhow, this is the view from the eye of the capitalism. However, through this consciousness, people are having family planning in order to cope with this situation which actually result in the problem of human resources in a long term. There is a forecast (the word prophecy is something that I do not like to use here), where this world will face economic crisis around 2030 regarding to the shrinkage of population. As the life of people will be extended due to the development of sciences or consciousness about the importance of health, there will be a lot of old people; the pension people. The amount of them cannot be balanced with the workforce who are entering the service or job industries.

Then, how could this affect the economy? The old people, as they are not working anymore, they do not contribute for the expansion of economy due to the concept of productivity as they are out of labor force. However, their consumption is high, and the young people who are just entering the job industries could not afford to fulfill this demand. Therefore, from my point of view, there will be a chaotic inflation which I believe it is demand-pull inflation.

As I said before, this is from the view of capitalism. I still read some ideas from Umar Chapra in his book entitle Islamic Monetary System to gain some understanding about how the Islam look at this situation. Insya Allah, after I finish my reading, I will discuss it in my next post.

Mohd Hasbullah Mohamad Faudzi
Economics and Management Sciences
International Islamic University Malaysia

Thursday, January 13, 2011


Salam, after some discussion in facebook, I was told to go on deeper with the economics issues related to the Opium War(perang candu) or we call as AHEN SENSOU(阿片戦争) in Japanese language. It touched me inside how the circulation brings a very big impact economically. I won't touch more on the movement of the Opium War but more on what value can we take from this WAR.. Before the agreement made between three countries, as usual British and China did well in importing as well as exporting their goods. British with her wool-made products and China with her tea; amusingly ranked for a great fond in British men. I see immaculately impact on what's happening now, just switch on the TV and you'll see how ancient Chinese drama brings up your interest in their drinks' culture. It went on so well till British got an idea how to regain the money they've invested with a great amount to China. It ruined all the circulation when first time British used her colonized country, India in disturbing the circulation with a smooth method.. What you think of?

         British had led India to ran a very strategic method by doing a import-export trading with China and in the same with British as well. India started her trading with the first-killer enemy in Malaysia, which was OPIUM. China became so addicted to this things and finally made herself importing with a great scale. The money passed to China from British reverted back to British in a wink of eyes. I love and hate these strategies and method respectively.. How you think is what you are.. British has shown how the strategics method would the invested money back BUT it's a suffer for China.. The addiction to Opium has brought China to kept importing opium from India and as usual the goods from India being imported by British ... That was so cool if you slowly think.. PEOPLE CAN MANIPULATE ECONOMICS with just creating a system.. That's why Adam Smith said that the bubble graph of economics is controlled by a cannot-be-seen hand which is God's hand. You just bring a pencil, make a sketch and do the plan.. That's the only way how econs being manipulated. I can just say economics is about speculation.. No matter how far it runs, people can manipulate it just by speculation..

           And this what had happened in Opium war. The speculation made by British ruined up China and as well as India.


Economics student of
Teikyou University ,
hachiouji campus

Thursday, January 6, 2011

Penetapan Gaji Minimum : Untung atau satu kerugian?

Model Baru Ekonomi (MBE) menekankan kepada tiga perkara iaitu berpendapatan tinggi, keterangkuman dan kemampanan dalam usaha untuk meningkatkan kualiti hidup rakyat. Sasaran untuk menjadikan Pendapatan Kasar dalam Negara per Kapita, daripada USD 7000 (dalam konteks sekarang) kepada USD 15 000 pada tahun 2020. Ini merupakan satu usaha yang cukup perlu diberi penekanan dalam usaha untuk memastikan kelangsungan matlamat.

Penetapan Gaji Minimum

Satu perkara yang perlu diberi perhatian di sini adalah berkaitan dengan konsep penetapan gaji minimum, sama ada ini merupakan satu kerugian mahupun keuntungan. Perbezaan pandangan berkaitan dengan perkara ini berlaku antara majikan dan kerajaan, dalam erti kata yang lain, kerajaan cuba bersikap menjadi menjaga kebajikan, sedang majikan pula mempertimbangkan kesan dari sudut keuntungan.

Perlu diambil perhatian, dalam konteks sektor swasta, kadar gaji ditentukan melalui kuasa pasaran iaitu melalui kaedah permintaan dan penawaran. Sebaliknya tiga cara diguna oleh kerajaan untuk menetapkan gaji iaitu melalui kuasa pasaran, perjanjian bersama dan Majlis Penetapan Gaji.

Apakah penetapan gaji minimum ini akan membawa kebaikan, keuntungan atau kerugian? Dalam konteks survival ekonomi sedia ada sekarang, penetapan gaji minimum ini pada pandangan penulis, akan menyulitkan operasi kewangan syarikat-syarikat yang terpaksa bersaing hebat antara satu sama lain. Kelembapan ekonomi sekarang akan menyebabkan berlakunya satu krisis yang sudah pasti tidak akan dinafikan, iaitu krisis pembuangan pekerja disebabkan syarikat-syarikat ini tidak mampu untuk membayar gaji pekerja. Maka, secara logiknya, pengangguran akan semakin bertambah.

Manakala dari sudut kebajikan, cadangan ini merupakan satu cadangan yang cukup baik terutama dalam membicarakan tentang tanggungjawab sosial dalam usaha untuk meningkatkan tahap dan taraf kehidupan rakyat. Cuma, perlu diingatkan, pada pandangan penulis, pelaksanaan gaji minimum, perlu diambil kira juga dari sudut faktor geografi atau kawasan. Kuasa membeli pengguna dengan pendapatan RM1000 sebagai contoh di Kuala Lumpur, tidak sama dengan kuasa membeli pengguna dengan pendapatan yang sama di Kuala Terengganu.

Dalam hal ini, siapakah yang untung? Siapa pula yang rugi?

Persoalan dan Pandangan

Penswastaan dan liberalisasi ekonomi, dengan pengawalan, mungkin merupakan satu langkah yang terbaik. Saya berpandangan, penetapan gaji minimum yang ingin dilaksanakan oleh kerajaan perlu mengambil kira prestasi kebanyakan syarikat. Dari sudut pandang kebajikan manusia, perkara ini dapat mengelakkan penindasan daripada berlaku kepada pekerja, namun sekiranya perkara ini menjadi satu beban kepada majikan, apa pula kesannya kepada pekerja-pekerja ini dalam jangka masa yang panjang?

Begitu juga, penyelarasan juga perlu dilakukan kepada pekerja yang bekerja sementara, apakah mereka juga terlibat dalam penetapan gaji minimum ini? 

Pandangan penulis, penulis beranggapan, seeloknya, kadar gaji itu ditentukan sendiri oleh majikan dan pekerja berhak untuk memilih dan menerima tawaran antara majikan-majikan tersebut. Seeloknya, dalam tempoh ketidakstabilan sekarang, biarkan sahaja persaingan untuk mendapatkan pekerja melalui penawaran gaji berlaku, supaya perkara itu sendiri yang membaiki keadaan ekonomi dan perkembangan syarikat.

Lebih saya bimbang, penetapan gaji minimum ini, ada unsur-unsur menjadi 'hero' rakyat!