Sunday, 24 April 2011

Idea of investing

Bismillahirohmanirohim (In the name of Allah, the Most Merciful and the Most Compassionate)

When we use the word investment, it usually projects a succesful way for the future. Investment are usually associated with business investor, corporate people. How often we see that business investments assure the return on the profit of investments with certain amount of interest. In Islam interest are prohibited and through the development of Islamic banking, investments without interest are made possible. Sometimes these return on investment (without interest) have fixed percentage of rate which might look like interest. As a muslim we should always be aware on the differences between these two because of the similiarity we (muslims) might be doing the prohibited.

When should one start to invest? As I mentioned earlier, investments are always associate themselves with successful or high profit return. Therefore we usually think that it is safe to venture into these investments with having minimal funds. We have this mentality whereby to secure our financial future or after retirement, we need to invest. I am not trying to imply that investing is a dangerous thing to do. Investments will be beneficial if it is done in a proper manner. By investing, it also benefits the economy because of the circulation of wealth.

These business are usually run by a person or a group that have the idea and managing capabilities but do not have suffucuent funds to run the business. Therefore investor helps in initiating a business which consequently help the economy. (Surah al-Imran verse 180) "And let not those who hoard up that which Allah has bestowed upon them of His bounty think that it is better for them. Nay, it is worse for them. That which they hoard will be their collar on the Day of Resurrection. To Allah belongs the inheritance of the heavens and the earth. Allah is well aware of what you do."

As a middle income earners, the income are usually just enough to pay the bills. Some people starve themselves to fork out money (take a loan) to invest in order to secure the financial future. This, in my opinion is a very dangerous thing to do because the reality of investing failing. Hence, financial future are not secured and also ending up with debts. These debts will then force people to work outside their own field (ordinary way/qualification) and will be a forced labour just to cover their bills. This will effect on the productivity as people with certain expertise working with a non-related expertise.  It will also effect on the morality of workers as people are often not happy with their job. Their unhappiness will gradually make them feel morally down and will make them turn to any sort of way to gain more money without considering if it is halal (permissible) or haram (prohibited). This will then cause further damage to the economy.

Back to the question of when should a person invest? It is best for a person who are wealthy to invest and not the middle earners. Those who are wealthy should invest appropriately (within the laws of Islam) to avoid negative effect to the economy. Those wealthy should also not demand their return on investments if the business aquire loss for they are responsible for their own investment. If the wealthy investor have the right to get an amount of profit, it is only fair for them also to acquire the loss. Their loss will not have any burden as it is not based on debts. This is what spending wisely means and not spendthrift.

We should only invest when we have EXTRA MONEY and not do any loan for investments. We have witnessed that Portugal, United Kingdom and etc have debts worth billions due to investment/bad investments which have a chain reaction to one another causing debts everywhere around europe/world. Therefore it is only wise to invest when there are often resources and not invest when there are limited resources which causes for them to seek loan for investing.

It is wise to do trading when investment is not possible. But trading will only be possible when there are capable investor. This is what circulation of wealth means in Islam. HELPING EACH OTHER! Rather than spending lavishly on luxury cars,handbags or golds, ir should be invested appropriately. We need to understand our individual role in order to improve the economy. Spend wisely and not spendthrift. This refers to a previous entry which include the verses of the Holy Qur'an on circulation of wealth. It does not always mean that we just need to sadaqah (give charity) to circulate wealth, investing appropriately in the laws of Islam is also another way to circulate wealth.

Thursday, 21 April 2011

Spendthrift or spend wisely

Bismillahirohmanirohim (In the name of Allah, the Most Merciful and the Most Compassionate)

Surah Al-Jumu'ah verse 11 "Yet no sooner than they saw some trading or amusement, they flocked to it and left you standing by yourself. Tell them: "That which is with Allah is far better than amusement and trading. Allah is the Best Provider of sustenance." "
Although this incident refers to a trading caravan which had arrived in Madinah from Syria exactly at the time of Friday Prayer, it indicates a kind of weakness of faith or their wilful preference for worldly benefits over the Hereafter. Even though we are encouraged to earn an income, we should not be obsessed with it (or be materialistic) and should live according to Islamic principles of circulating the wealth.

Ferrari 430 in my neighbourhood in Malaysia
It is evident that we see today some of us live luxurious life. Some who are wear handbags that might worth millions, some who upgrades their luxury cars just to make it look "nice" or to showoff.  The wealth is then not being circulated but is being stucked to the rich. Although the money is being transferred from one to another in the transaction (of buying the handbag/spending on the car), the asset/entity is stucked to that particular rich person. This will be a sort of symbol where "I" (the rich person) can afford and "you" can't! Gradually this will come to a stage where it is provoking the poor. Therefore it is advisable for a muslim not to spend extravagantly according to the verse of the Holy Qur'an "(The true servants of the Merciful One are) those who are neither extravagant nor niggardly in their spending but keep the golden mean between the two;" (Surah al-Furqan verse 67). "Do not keep your hand fastened to your neck nor outspread it, altogether outspread, for you will be left sitting rebuked, destitute. (30) Certainly Your Lord makes plentiful the provision of whomsoever He wills and straitens it for whomsoever He wills. He is well-aware and is fully observant of all that relates to His servants." (Surah Bani Israil verse 29). The Arabic idiom 'to keep one's hand fastened to one's neck denotes' miserliness and 'to outspread it, altogether outspread' denotes extravagance according to Sayyid Abul A'la Mawdudi.

Pininfarina near my neighbourhood in the UK
"Allah has favoured some of you with more worldly provisions than others. Then those who are more favoured do not give away their provisions to their slaves lest they become equal shares in it. Do they, then deny the favour of Allah?" (Surah Al-Nahl verse 71) In this verse, people are reminded of an actual fact of life where they do not share their wealth even if it is not theirs (which has been bestowed upon them by God). This verse supports the the symbol of "I" (the rich person) can afford and "you"(the poor) can't because of their fear of being equalled to the poor. This also leads to these certain group of people who believe that they deserve more to be protected (i.e gated community, bodyguards and etc) because they consider themselves better or richer.

We need to remind ourselves that the economy revolves around everyone, not only leaders even though leaders are given the authority/power. By spending appropriately it does not only benefit individuals but the performance of the country will be improved. Ibn Khaldun explains that over indulgence of materialism causes people to abandon religion resulting in the disintegration of a nation and government.

Let us remind ourselves that we have obligations to fulfil and should always look at the bigger picture (the whole community) rather from a narrower persepective (individual).

Surah Bani Israil verse 26 "Give to the near of kin his due, and also to the needy and wayfarer. Do not squander your wealth wastefully"

Thursday, 14 April 2011

Applying Ibn Khaldun's theory on the consequence of PTPTN

Bismillahirohmanirohim (In the name of Allah, the Most Merciful and the Most Compassionate)

From my perspective, there are a few problems on the implementation of PTPTN (tertiary student loan). First, they try to portray themselves as Islamic by posting this hadith on their website: Narrated Abu Huraira : The Prophet salallahualaihiwasalam said, "Whoever takes the money of the people with the intention of repaying it, Allah will repay it on his behalf, and whoever takes it in order to spoil it, then Allah will spoil him." If I am not mistaken (if I am wrong I do apologise) they also have quoted verses from the Qur'an in their letters to 'scare' those who loaned from them so that they would get the repayments back. They (PTPTN) quoted verses like, "Believers! Fulfil (all) obligations. ..." (Surah al mai'dah verse 1) "Believers, why do you not profess that which you do not practise?" (Surah al-saff verse 2) "... And fulfil your covenant, for you will be called to account regarding the covenant." (Surah bani isra'il verse 34) or " And fulfil the covenant which you have made with oaths after having firmly made them, and after having firmly Allah your witness. Surely Allah knows all that you do." (Surah al-nahl verse 91) How often do we get contracts today with the sentence Bismillah?

Islam do not only revolve on these certain verses and the teachings are not one verse doctrine. The Qur'an has many verses and these other verses cannot be neglected as it is part of Islam. Here are some other verses that opposes the conduct of PTPTN. "As for those who devour interest, they behave as the one whom Satan has confounded with his touch. Seized in this state that they say: "Buying and selling is but a kind of interest," even though Allah has made buying and selling lawful, and interest unlawful.". (surah Al-Baqarah verse 275) Even though PTPTN quotes the hadith above, they have avoided this particular verses of the Holy Qur'an by charging interest of 3% and now apparently 1%. They have deceived the people by claiming or portraying themselves as Islamic by quoting the said hadith.

Furthermore, there is another verse which says "But if the debtor is in straitened circumstance, let him have respite until time of ease; and whatever you remit by way of charity is better for you, if only you know." (Surah Al-baqarah verse 280). As soon as completing the studies, student often receive letter from PTPTN stating the amount needed to be repaid without even taking consideration if the student is employed or not. For those who have loaned for years will also be blacklisted from going out of the country until they have repayed their loan. If they plan to travel out of the country, they would then have to pay back ALL of the loan INCLUDING INTERESTS/USURY.

Another verse that should be taken into consideration, "Believers! Do not devour one another's possessions wrongfully; rather, let there be trading by trading by mutual consent; and do not kill yourselves. Surely Allah is ever Compassionate to you." (Surah al-nisa verse 29) The expression "wrongfully" embraces all transactions which are opposed to righteousness and which are neither legally or morally reprehensible. "Mutual consent" means that the exchange should be free of undue pressure, fraud and deception. All this is not my own interpretation of the verse. It is the interpretation of a scholar Maulana Sayyid Abul A'la Mawdudi. Therefore, a contract with interest is definitely devouring another's possession "wrongfully"!

PTPTN should not portray themselves as Islamic or use hadith because they are only contradicting themselves, preying on students who are lack exposure on business or contractual knowledge.

In the UK, there are student loans. The loan does consist of interest due to no prohibition from their "religion" or due to secularism, they are more considerate on certain things. Having said that, the way the repayments are being 'collected' are determined by certain circumstances. Such as below:
1. After completing studies, repayment of the loan is applicable only AFTER the student is being employed and their annual income has to be above certain amount (ie £15,000 per annum). Therefore, if the student is working part-time or working with an income below the amount, the student IS NOT required to pay anything unless they chose to do so themselves.
2. After 10-15 years, if the loan has not been repaid, the loan will be cancelled off. It means that loaners do not need to repay anything due to not having/getting the appropriate job.

Number 1 is vital and is in line with surah al-baqarah verse 280. Number 2 is not really important to be implemented in the contract from an Islamic point of view because there are possibilities of student having the 'niyah'/intention of not repaying the loan even before signing the loan contract. However, if PTPTN is willingly to implement it (number 2) onto their contract, then there should not be any problem.

With the current situation, PTPTN is not being Islamic in their implementation and it lures students/former students into 'forced labour'. This is because 'loaners' feel the need to get any job just to pay their loan. The job opportunity is not really helping the student to get their ideal job and therefore have no choice but to accept any jobs available to pay the bill. Ibn Khaldun has his own theory on the consequence of forced labour. "If they are obliged to work outside their own field and are used for forced labour unrelated to their (ordinary way/profession/qualification/desire) making a living, they no longer have any profits and are thus deprived of the price of their labour, which is their capital (asset). They suffer, and a good deal of their livelihood is gone, or even all of it. If this occurs repeatedly, all incentive to cultural entreprise is destroyed, and they cease utterly to make an effort. This LEADS TO THE DESTRUCTION AND RUIN OF CIVILISATION."

The point of bringing this matter up is not to say that PTPTN has no rights in claiming back their loans. But in fact, the way they are using Islamic quotes make it sound as if Islam only revolves around the particular Qur'anic verses/Hadith when in actual fact, there are other ways on how PTPTN can do to reclaim their loans back (for instance to not charge any interest etc). So, it is not a great step to use Islamic quotes when they themselves aren't Islamic about the loan contract. If PTPTN drags on with their actions, it does not benefit Malaysia with more intellectuals but in fact creating more intellectuals not working in their field which will have an negative impact on the economy. When there is an impact on the economy, gap between rich and poor will be great, the poor will be enslaved and will then rebel. This is when there are protests, riots and we will see everything start from scratch again.

Monday, 11 April 2011

Political heirachy


Politic is always a hot topic in Malaysia and there are always arguments on how the governance of the country should be implemented. Most of these arguments or discussions are usually based on logic and human intellectual. Rarely do we turn to our religion for guidance on this matter.

It is obvious that the political system that is currently being implemented are borrowed from the West, consequently we find ourselves partially at lost in East meets West. What benefit has the borrowed system contribute to the country? Does the system that seperates religion from its administration fruitful towards the community? This is one of the example why there are misunderstanding and conflict between the communities, the failure on the economy and business transactions. The purpose of a religion is to give guidance to mankind and most of us are taken back that religion is only for spiritual needs and not the way of life.

Is there a political system of Islam? Through my limited knowledge and research there is an ideal political hierachy in Islam. I beg for Allah's mercy and forgiveness if I have interpreted wrongly, Allah knows best!
  1. Firstly, Tawhid, the absolute Oneness of Allah subahanawata'ala as Divine Entity and Lord (rabb). The absolute sovereignity of Allah and exclusiveness of revelation (wahy) as the source of legislation.
  2. The importance of the unity in Ummah and the uniqueness in its character and meaning.  
  3. The concept of vicegerency (khilafah), the dignity of humanity and that which distinguishes humanity from the rest of creation
  4. Shari'ah scholars who are represented by a group of knowledgeable scholars to help and monitor the community that all the actions are within the permissible boundaries of Islam.
Although this model might be common, other models often projects that there is a leader who has absolute power to run the country and take the Almighty Allah out of the equation.  Though implementing this model, there are other issues that need to be addressed which is mainly on electing the khilafah. In a way there is no need for an opposition party because of the importance on realising the function of mankind (which is to serve Allah). Through this belief, individuals will not be selfish or prioritise themselves ahead of Allah. We have witnessed that having different parties often becomes chaotic and creates division within the community. When it comes to electing a leader, major campaigns are needed and riots are always thrown against each other. Surah al hujurat verse 9: " If two parties of the believers happen to fight, make peace between them. But then, if one of them transgresses against the other, fight the one that transgresses until it reverts to Allah's command. and if it does revert, make peace between them with justice, and be equitable for Allah loves the equitable." By doing campaigns, it requires a lot of money and energy which often needed very fast. This is where the corruption and oppression comes in order to gain more money fast and man are being used as forced labour. According to Ibn Khaldun when forced labour reaches its optimum level a dynasty or empire will crumble and fall. During campaigns a leader will usually tell what he could offer to the people and insults and mock at the opposition. This will break down the moral values and respect that we have for each other and will often spark a fight and division within the community. Does all this reflects the moral values and teachings of Islam?

Surah al-nisa' verse 135: "Believers! Be upholders of justice, and bearers of witness to Truth for the sake of Allah, even though it may be against yourselves or against your parents and kinsmen, or the rich or the poor, for Allah is more cconcerned with their well-being than you are."

The reason to put Allah at the top of the heirachy is because He is the absolute superior to us and also because of this verse "Nay surely man transgresses (7) for he believes himself to be self-sufficient." (surah al alaq verse 6-7) "Those who turn from remembering Me shall live lives of misery" (surah ta ha verse 124)

Since Malaysia is borrowing a system that belongs to the west, I would like to compare the religion of the west(which are commonly associated with Christianity) and the ruling of their country. This is however not an attack towards Christianity rather a criticism on secularism. The Malaysian system have been obstructing the nature of the religion Islam. The borrowed system views on religion treats Islam as any other religion, and therefore it shoud not differ in any significant way from the Christianity in Europe, in the sense that the church was duty-bound to stand in the way of progress. From this perspective, human development and progress only became possible after the split between church and state. Thus, it is inconceivable that a Westerner (western system) could imagine a link between knowledge and religion, to say nothing of accepting the concept of basing the humanities and social sciences on religion or giving them a religion perspective.

Surah al nisa verse 59: " Believers! Obey Allah and obey the Messenger, and those invested with authority among you; and then if you were to dispute among yourselves about anything refer it to Allah and the Messenger if you indeed believe in Allah and the Last Day; that is better and more commendable in the end"

A verse that explains on the current topic/entry : "Have you not seen those who claim to believe in the Book which has been revealed to you and in the Books revealed before you, and yet desire to submit their disputes to the judgement of taghut (authorities who decide independently of the law of Allah), whereas they had been asked to reject it. Satan seeks to make them drift far away from the Right Path." (surah al nisa verse 60)

The main intention of this entry is to make it clear that Malaysia currently are not even close in representing themselves as a Muslim country. Therefore when a political person/leader makes a statement, it rarely seeks/consults the opinion of the Shari'ah scholars which consequently makes their statements contradicts and go against the teachings of Islam. When such statements are made, it gives a bad reputation to Islam which is against the hadith narrated Abu Musa that when Allah's Messenger salallahualaihiwasalam sent him and Mu'adh bin Jabal to Yemen, he said to them, "Make things easy for the people (treat the people in the most agreeable easy way), and do not make things difficult for them, and give them glad tidings, and do not repel them (i.e TO MAKE THE PEOPLE HATE GOOD DEEDS AND TO RUN AWAY FROM ISLAM), and you should both work in cooperation and mutual understanding, obey each other." [Sahih Bukhari]. Even though it is difficult to entirely change the system, there should at least be an effort to achieve the system that Islam prescribes us. My previous entry on how Islam derives its laws. Last but not least a hadith concerning leaders "All of you are leaders, and all leader will be questioned on their leadership." [Sahih Bukhari] Allah knows best!