Entries in English and Malay (Bahasa Melayu)

Monday, 25 March 2013

Islam and Consumerism

Consumerism is spreading like a plague in today’s culture. People are transformed into tireless shopping machines whose lifestyles are centered on malls, sales, and new offers. In the words of  Tyler Durden, from Fight Club, the movie:  
"We’re consumers. We are by-products of a lifestyle obsession. Murder, crime, poverty, these things don’t concern me. What concerns me are celebrity magazines, television with 500 channels, some guy’s name on my underwear”.

In the pre-Islamic era, also known as Jahiliyyah (period of ignorance), the Arabs were known for worshipping multiple idols, magnifying their dads and forefathers, adopting all their belief system, in addition to tribalism, racism and sexism. The Qur'an and the message of Prophet Muhammad (peace and blessings be upon him) were revealed not only to solve those problems but also to provide guidance that fits all problems of humanity.
Nowadays, we are experiencing a newer version ofJahiliyyah that is centered on celebrities dictating our lifestyles (replacing idols and the forefathers), using women as sex-objects in advertising (which might not be so different from burying them alive), and the most important ritual that takes place at the temple of consumerism (malls): Shopping!

The H&H perspective (Halal /Haram)
I know that many people expect answers about every single matter from an H&H (Halal and Haram) paradigm. If you are one of them then you may not want to continue reading this article because you will not find what you are looking for.

Instead, we will try to examine the etiquette of spending and dealing with money in Islam, and hence will leave the H/H answer up to you, based on YOUR understanding of YOUR situation. 

BEWARE from Omar’s Stick
Jaber ibn `Abdillah narrates that `Umar ibn Khattab saw some meat in his hand. `Umar immediately asked: "what is this, Jaber?" 
Jaber replied: I was craving for meat, so I managed to buy some. (It looks like meat was such a luxury item at that time, something we don’t think about these days).
`Umar said: So are you going to buy whenever you crave for something, Jaber? Don’t you fear that the following verse might apply to you:
{And the Day those who disbelieved are exposed to the Fire [it will be said], "You exhausted your pleasures during your worldly life and enjoyed them …} (Al-Ahqaf 46:20)
While some people will counter this argument by quoting the hadith:
“Allah loves to see the traces of His blessings on His slave” (Tirmidhi)
It is interesting to note another narration of this hadith, which is preceded by the following:
“Enjoy eating and drinking without excessive spending and showing off, because Allah loves to see the traces of His blessings on His slave”(Narrated in Al-Mustadrak )

Keeping up with the Joneses
This is a well-known idiom in many parts of the English-speaking hemisphere, which refers to always comparing what you have (house, car, backyard, clothes, etc…) with what your neighbors, the Jones, own.
After starting as a comic strip holding the same name in 1913, this slogan redefined one of the pillars of modern consumerism: shopping and spending to show off and to compete with others, regardless of whether you need the goods or even if you can afford them  in the first place.

In the age of social media and satellite channels, the Jones need not to be your next door neighbors, they might be a random family living on the other part of the world. They are definitely not happy with what they have (if they really own it) and are trying to compete with their own version (or perception) of the Jones family, and this infinite loop continues endlessly. 
No one can claim that the modern capitalism invented envy, which is a trait that existed in human beings since their creation, since the famous story of Habeel and Qabeel (Abel and Cain) (Al-Ma’idah 5:27-31).
In addition, greed was built into the creation of Adam himself (Ta-Ha 20:120). However, there is a big difference between having a negative trait that you recognize and try to cure and fight, and having this trait control your life, dictate the way you identify yourself and you look to others.
Therefore,“Keeping up with the Joneses” defines a culture of consumerism. The consumerism culture is becoming like a fire that is continuously ignited by the fuels of greed and envy.

Rich man with one garment
An interesting long story is narrated in Sahih Al-Bukhari about Ka`b ibn Malik, a rich companion who did not join the Prophet (peace and blessings be upon him) during the expedition of Tabuk. To make a long story short, he was boycotted by the Muslims for fifty days, and no one was allowed to talk to him until further instructions are revealed from Allah in his matter.
 After this lengthy period of living alienated from the Muslim society, Allah accepted the repentance of Ka`b (At-Tawbah 9:118) and the Prophet (peace and blessings be upon him) informed the Muslims about the happy news. Now listen to Ka`b himself, narrating how he got the good news:While I was praying Fajr that morning on the rooftop of my house, I heard a man shouting on the top of Mount Sil`: ‘O Ka`b ibn Malik, rejoice!’I fell prostrate, and I knew that relief had come. The Prophet had announced my forgiveness during Fajr. A man came riding on a horse to bring me the news, but the voice of the other man on the mount has reached me first. So when I saw that man I gave him my garment as a way to thank him, and I had only one garment. So I borrowed an outfit and rushed to meet the Prophet (peace and blessings be upon him) 
While this story has lots of benefits and wisdom to learn from, it sheds the light on one important aspect in the life of the Companions, particularly the rich ones: They did not have a closet full of clothes and had to stand up next to it for half an hour to decide what to wear! Ka`b was known to be rich, and you may refer to the early part of this long story in Sahih Al-Bukhari for more information.
However, it was a well-known practice for them not to buy clothes more than their need (because of their proper understanding of Islam).
We really have to reframe our mindsets on how we define our needs, our budget, and our spending, if we want to achieve something in this world or in the afterlife.

(On Islam / 24 March 2013)

Alfalah Consulting - Kuala Lumpur:
Islamic Investment Malaysia:

Pakistan as a leader in Islamic banking and finance

In recent years, Islamic banking and finance in Pakistan has experienced phenomenal growth. Islamic deposits – held by fully-fledged Islamic banks and Islamic windows of conventional banks – at present stand at 9.7% of total bank deposits in the country: meaning that every 10th rupee is now being deposited in an Islamic bank account.

Similarly, assets managed by banks offering Islamic financial services are 8.6% of total banking assets in the country. Net Islamic savings and investments are 8.19% of the total savings and investment in the banking sector in Pakistan.
Total Islamic banking assets in Pakistan stand at Rs837 billion ($8.5 billion), which is only a fraction of the total global Islamic financial assets of $1.631 trillion. Once considered a global powerhouse for Islamic financial thinking, Pakistan is now far behind a number of other countries, which have expended more energy into developing the Islamic banking and finance sector. London-based Edbiz Consulting has recently released a ranking of the top 10 countries in Islamic banking and finance on its Islamic Finance Country Index (IFCI). The ranking is presented in the table.
According to the IFCI, Iran has remained the number one market for Islamic banking and finance, primarily because its entire banking and finance sector is operating under Shariah law. But this cannot be the only reason, as the only other country with all of its banking and finance in compliance with Shariah, Sudan, stands only ninth. Pakistan, the third country that adopted a policy of Islamisation of banking and finance in the 1980s, stands just eighth – one point above Sudan.
Malaysia, on the other hand, has emerged as a true global leader in Islamic banking and finance. It has consistently stood at number two since the creation of the index in 2011. Committed to developing Islamic banking and finance as a strategic economic tool, Malaysia has this year enacted a new comprehensive law, the Islamic Financial Services Act 2013, which is coming into force from May this year.
The Government of Pakistan has given the Islamic banking project to the State Bank of Pakistan (SBP), the central bank, which has very ably helped Islamic banking and finance grow by issuing guidelines to conduct Islamic banking business, and regulating and supervising the institutions offering Islamic banking and finance.
The government, however, has failed to develop the country as a centre of excellence for Islamic banking and finance, despite it having a number of strengths especially in ensuring Shariah authenticity of financial products. While countries in the Gulf Cooperation Council are involved in controversial practices like tawarruq (a financial transaction done through a series of commodity trades) and, likewise, Malaysian institutions are engaged in transactions based on bai’ina (sale and buyback) and bai’dayn (discounted trading in debt), Pakistan maintains a very strict view on Shariah matters, and the SBP has ensured that no controversial practices creep into the country’s Islamic banking and finance sector.
It was because of this strict Shariah supervision and control by the SBP (along with the Shariah advisory board of a Pakistani Islamic bank, BankIslami) that BankIslami won the prestigious Shariah Authenticity Award at the Global Islamic Finance Awards held in Kuala Lumpur in November 2012. This strength in Islamic banking should be further developed to make Pakistan as a centre of excellence for Shariah authenticity in the global industry.
After a lull of about four years following the inception of the global financial crisis, different countries have already started seeking a greater share in the global Islamic financial services industry. While Malaysia stood firm during the crisis, and rightfully claims to be the global leader in Islamic banking and finance, there are other countries that are reclaiming their share of leadership in the industry. Sheikh Mohamed bin Rashid alMaktoum, the Ruler of Dubai and vice president of the UAE, has affirmed that Dubai has all the ingredients of becoming a regional hub for Islamic banking and finance. The Bank of London and the Middle East, an Islamic investment bank in the UK, has recently claimed that Britain could do a lot more to become a European centre of excellence for Islamic banking and finance. Other financial centres like Hong Kong and Singapore have once again started positioning themselves to claim their share of the industry. It is, therefore, the right time for Pakistan to start highlighting strengths of its Islamic banking sector that at present comprises five fully-fledged Islamic banks and thirteen conventional banks with Islamic windows/branches.
One obvious way for Pakistan to claim a role in the global Islamic financial services industry is to deepen its domestic Islamic banking and finance sector. Given that this is election year in Pakistan, it will certainly be a good strategic move by a political party to put Islamic banking and finance on top of its election manifesto. While the Jamaat-e-Islami is a natural candidate, it will only benefit other mainstream political parties to start owning Islamic banking and finance. While outsourcing the ownership of the Islamic banking project to the SBP has worked so far, it will certainly benefit the government even more if it starts owning and hosting the project in Islamabad.

(The Express Tribune / 24 March 2013)

Alfalah Consulting - Kuala Lumpur:
Islamic Investment Malaysia:

Gold as a currency in Islamic finance?

Many advocates of Islamic banking suggest using gold as a replacement for the money created through the interest rate mechanism. This is an interesting proposition, especially in the context of Malaysia where the state of Kelantan has already started using gold and silver coins as a potential replacement for the federally issued legal tender of currency notes and coins.
It is important to assess its economic implications with respect to growth and overall economic activity in the country.
Americans find it difficult, and painful, to revert to the gold standard for reasons peculiar to the US economy, but these limitations are not relevant to Malaysia.
In Malaysia, the government can experiment with the gold currency by limiting the use of gold and silver coins issued by the state governments for investment purposes only. This will allow people to buy gold and silver coins through paying in ringgit providing an alternative tool for saving on a long-term basis, even if gold and silver coins are not treated as legal tender.
Furthermore, the Malaysian government can use Islamic banking as a tool to introduce gold deposits for customers who would like to save for the long term. In fact, Bank Negara Malaysia (BNM) may continue to issue coins like Kijang Emas bullion coins and distribute them through Islamic banks.
At present, Malayan Banking Bhd (Maybank) designates 32 branches to sell Kijang Emas bullion coins, but an extended programme may be rolled out with the help of Islamic banks in the country.
While Islamic banks could be allowed to use gold deposits (by way of selling gold for cash), they must return the depositors’ gold if the latter wish to redeem after a specified time period. Alternatively, the gold deposits must be kept for safe custody, in which case the depositors must be willing to pay a safe custody fee to the banks.
This alternative arrangement will also have a dampening effect on the ability of the Islamic banks to extend credit to their customers as they will not be able to use the depositors’ gold (by selling it for cash) to offer financing to those who may need it. This will, in turn, have implications for economic growth.
If Islamic banks are reluctant to offer gold deposits, the government may use the likes of Lembaga Tabung Haji and similar institutions to allow Muslims to save in gold and silver. It is expected that an overwhelming demand for the proposed gold deposits will compel Islamic banks to start offering such deposits out of market pressure.
Radical idea
If the introduction of gold coins in the states of Kelantan and Perak proves successful (which appears to be the case so far), monetary authorities, that is, BNM, may consider using gold coins to bring about monetary reforms in the country. Indeed, advocates of monetary reform have long advocated a return to the gold standard. Some prominent economists, like Nobel laureates Robert Mundell and James Robertson, have written extensively on the benefits of returning to the gold standard.
In the context of Islamic banking and trade, the likes of the former prime minister, Dr Mahathir Mohamad and activists like Tarek El Diwani, have been influential figures in advocating the introduction of gold dinars and replacing the fractional reserve-based banking system.
While it may take some time for BNM to expand its Kijang Emas bullion coins issuance, the increasing demand for Islamic banking in Malaysia (25% of the country’s financial sector’s assets derive from Islamic banking) offers Islamic banks a window of opportunity to exploit the trend by offering bullion-based investments to those who consider gold coins to be more syariah-compliant than conventional money created through an interest-based credit system.
If the gold deposits look like a radical idea, there are some other more acceptable ideas floating around.
James Fierro of Recipco Holdings Ltd has for some time been advocating for an international currency based on the excess capacity the world’s businesses have at any given point in time. This concept has similarities with the gold dinar in the sense that both the currencies are based on the real value of goods and services they represent (gold dinar representing the intrinsic value of the gold, and the Recipco’s proposed currency representing the value of goods and services excessively produced by businesses).
As these ideas are seen as radical by many, including Islamic bankers, it is important that the governments take a proactive role in implementing these proposals. As the government of Malaysia is spearheading an initiative to develop tools for liquidity management for Islamic banks, gold dinar and the issuance of a currency based on excess capacity may not be entirely abstruse concepts.

(F.M.T News / 18 March 2013)

Alfalah Consulting - Kuala Lumpur:
Islamic Investment Malaysia:

Latest Posts

Upcoming Events on Islamic Finance, Wealth Management, Business, Management, Motivational

Alfalah Consulting's facebook


Alfalah Consulting is NOT providing any kind of loan to finance project etc and asking for a fee. If you've received any email claiming to be from Alfalah Consulting, offering loan to you, please ignore it or inform us for further actions. Our official email is If you've received an email from, that's NOT from us. Be cautious!