Islamic economics and finance is not just name of the few structures but they are system of life where good your deeds and intentions are counted. To have valid contract, structure must have Halal source of income, and its substantial income should not be coming from Haram (Prohibited) income. The product must satisfy Shariah compliance through out the product life cycle and not only the structure. The guarantees must come from Halal sources and rent must also come from Halal sources and not from Haram income.
The product must satisfy following requirement.
o Maqasid al Shariah
o Conditions of contract
Islamic Economic System
Islamic economics is based on the Shariah. The basic objectives are to ensure general human well-being and socio-economic justice.
THE DISTINCTION BETWEEN CONVENTIONAL AND ISLAMIC THEORIES
The Role of Moral Values
While conventional economics generally considers the behavior, tastes and preferences of individuals as given, Islamic economics does not do so. It places great emphasis on individual and social reforms through moral uplift.
The Importance of the Hereafter
The Hereafter is a concept which is completely ignored by conventional economics, but it is one which is greatly emphasized by Islam. Because of their innate goodness, human beings do not always try to serve their self-interest.
MAQASID E SHARIAH- the Objectives of Shari'ah
Maqasid al-Shari'ah that is, the objectives of Shari'ah can be defined as below:
· Maqasid al-Shari'ah comprises those benefits/welfare/advantages for which Allah has revealed His Shari'ah.
· Maqasid al-Shari'ah aims at the attainment of good, welfare, advantage, benefits, etcetera, and warding off evil, injury, loss, etcetera, for the creatures. (All this in Arabic terminology can be stated as Masalih al-'Ibad.)
Shari'ah aims at the welfare of the people in this life and in the life hereafter, and for this purpose it has advised the people to adopt such means and measures suggested by it (Shari'ah) as may result in advantage benefit/well-being to them and may ward off evil/injury/loss, etcetera, from them, not only in this world but also in the world hereafter. Same is the philosophy behind His commands and the worships prescribed for His creatures.
Shari'ah Approves of Good and Forbids Bad:
The main objectives of the Shari‘ah are to ensure that human life is based on ma’rufat (good) and to cleanse it of munkarat (evils). It does not, however, limit itself to an inventory of good and evil deeds; rather, it lays down an entire scheme of life whose aim is to make sure that good flourishes and evils do not destroy or harm human life.
The Shari‘ah shapes Islamic society in a way conducive to the unfettered growth of good, righteousness and truth in every sphere of human activity. At the same time it removes all the impediments along the path of goodness. And it attempts to eradicate corruption from its social scheme by prohibiting evil, by removing the causes of its appearance and growth, by closing the inlets through which it creeps into a society and by adopting deterrent measures to check its occurrence.
Ma’rufat
The Shari‘ah divides ma’rfat into three categories: the mandatory (fard and wajib), the recommendatory (mandub) and the permissible (mubah).
The observance of the mandatory is obligatory on a Muslim society and the Shari‘ah has given clear and binding directions about this. The recommendatory ma’rufat are those which the Shari‘ah expects a Muslim society to observe and practise.
Munkarat
The munkarat (the things prohibited in Islam) have been grouped into two categories: things which have been prohibited absolutely (haram), and things which are simply undesirable (makruh).
Muslims have been enjoined by clear and mandatory injunctions to refrain totally from everything that has been declared haram. As for the makruh, the Shari‘ah signifies its disapproval either expressly or by implication, giving an indication also as to the extent of such disapproval.
Aims of Shari'ah Unchangeable
The aims and objectives of Shari'ah are everlasting and unchangeable. They are set by Allah and their application or interpretation is not left to the sweet will of any person or class.
The Definition Of Gambling ( , )
Every transaction that is based on one party's gain and another's loss, or if the transaction is obscure, is called 'gambling' ( , ) in the terminology of the Sharee'ah. In Arabic, it is referred to as Qimaar and Maysir . Since one party gains and the other loses, it falls under the definition of gambling. Gambling, therefore, can take countless different forms. In every era and every different land gambling is practised in a variety of different ways. A special way of gambling existed among the Arabs. This particular method of gambling has been referred to in the Holy Qur'aan as Maysir and Azlaam .
The Prohibition of Gambling
Islam, the all-embracing religion, not only displayed its just and moderate systems in beliefs and devotion, but also in economics and social orders. This just religion could not tolerate the unjust seizure of another person's wealth (through games of chance) which resulted in crippling the poor even more and strengthening the rich by accumulation of wealth without any effort nor could it tolerate the collection of a large amount from the poor and making it one person's property without any lawful religious reason. Consequently, gambling was declared unlawful.
In the beginning of Islaam when the Holy Prophet sallallahu alayhi wasallam was asked aboutalcohol and gambling, this verse was revealed, They ask thee concerning wine and gambling. Say: In them is a great sin and some benefit for men. The sin is greater than the benefit. (2:219) This verse is indistinct regarding the lawfulness and unlawfulness of wine and gambling. Some high-ranking Sahaabah radhiyallahu anhum understood from this verse that these things are undesirable and detestable. They began abstaining from these things immediately. Generally, the people participated in gambling and wine drinking, since a clear ruling declaring the unlawful and Haraam was not revealed and since there had been no definite decision from the Holy Prophet sallallahu alayhi wasallam . Then this verse of Soorah Maa'idah was revealed, O you who believe! Intoxicants and gambling, (dedication of) stones and arrows are abomination of Shaytaan’s handiwork: Abstain from it so that you may prosper. Shaytaan's plan is (but) to excite enmity and hatred between you, with intoxicants and gambling, and binder you from the remembrance of Allah, and from prayer: Will you not then abstain? (5: 90,91)
Islamic Commercial Law -Legality of Cause, Object and Consideration
The need to respect the precepts of Islam also results in rules concerning the cause (sabab) of the contract, as well as assets that are its objects and the consideration payable in respect of them.
Legality of Cause
The underlying cause must be lawful. A useful definition of cause can be found in the law, the ‘direct purpose aimed at by the contract’. So a contract to buy grapes is invalid if the underlying cause of entering into the transaction is to make wine.
Legality of Object
The object of the contract must be legal (mubah), ie:
- Beneficial; examples of assets which are not beneficial include vermin and animals not useful for hunting;
- Capable of being traded; examples of assets not in this category include public property (a mosque, or assets subject to a waqf), and birds not yet caught;
- Capable of being delivered; an asset not capable of being delivered is a beam in the roof of a house which cannot be removed without harming its structure;
- Lawful; wine, pork, blood and idols are examples of forbidden commodities (most schools prohibit the sale of dogs, apart from hunting dogs).
Legality of Consideration
The consideration must also be legal. For example, one cannot pay for goods with wine.
Prohibited Matters in Business Transactions
So far we have focused on one aspect of the business ethics – guidelines prescribed by Islam for conducting business transactions. Another aspect of business ethics is the various forms of unethical business practices a Muslim businessman must avoid in his business dealings. Some of these prohibited and undesirable business practices are as follows:
Dealing in Prohibited (Haram) Items
Dealing in unlawful items such as carrion (dead meat), pigs and idols is strongly prohibited in Islam. Likewise, trading in pork or intoxicants and sale of idols and statues is not permitted in Islam. A verse of the Holy Qur’an says:
Forbidden to you [for food] are: dead meat, the blood, the flesh of swine and that on which name of other than Allah has been mentioned. (5:1)
The Holy Qur’an also says: O you who believe! Intoxicants and gambling [dedication of] stones and [divination by] arrows are an abomination of Satan’s handiwork: so avoid it in order that you may prosper. (5:90) The Prophet (sws) is also reported to have said; Allah and His Messenger made illegal the trade of alcoholic liquors, dead animals, pigs and idols. (Bukhari, No: 2082) The Prophet (sws) also said; If Allah makes something unlawful, he makes its price also unlawful. (Ahmad, No: 2546)
Sale of Al-Gharar (Uncertainty, Risks, Speculation)
1.1. Arbitrarily Fixing the Prices
1.2. Hoarding of Foodstuff
1.3. Exploitation of one’s Ignorance of Market Conditions
Dubai World Sukuk and Nakheel Sukuk
The company which has its substantial income coming from Casino’s, Alcohol, and Prostitution can issue sukuk and guarantee it. Where whole company philosophy and business model is based on Haram income can issue Shariah compliant product. In this situation not only the issuer but also Shariah Scholars are at fault.
“Dubai world Sukuk and Nakheel Sukuk are not Shariah Compliant and Islamic”
Just by saying Sukuk and Structuring it like Sukuk, it can not become Shariah Compliant. The Shariah Scholars who certified it are answerable Here and Hereafter for promoting Haram in the name of Halal.
The company which has its substantial income coming from Casino’s, Alcohol, and Prostitution can issue sukuk and guarantee it. Where whole company philosophy and business model is based on Haram income can issue Shariah compliant product. In this situation not only the issuer but also Shariah Scholars are at fault.
“Dubai world Sukuk and Nakheel Sukuk are not Shariah Compliant and Islamic”
Just by saying Sukuk and Structuring it like Sukuk, it can not become Shariah Compliant. The Shariah Scholars who certified it are answerable Here and Hereafter for promoting Haram in the name of Halal.
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