ISLAM AND THE ENVIRONMENT

I did my Islamic Economics paper last semester and one of the most interesting topics is on Islam and the environment. The topic really hit the right nerve as today, most people are moving towards going green. However, did we do something to really protect the environment or better known as “Mother Earth”? Or are we being a NATO – No Action Talk Only nation?

The topic was an eye opener for me – I have never been introduced to this side of Islam before, even though I am aware that Islam is not just a religion but A WAY OF LIFE (most people tend to forget that most of the time and see each aspect of Islam in isolation rather than admitting that Islam encompasses all things).

Anyway, I remembered of a story of Caliph Omar, one of the most distinguished of the Prophet's (s.a.w) companions demonstrated exceptional compassion towards animals. In fact he would deal strongly with those who overloaded their 'beasts of burden'. He would actually go to the extent of concealing himself from view and check that people were treating animals well. On one occasion he passed his hand over the wound of a camel intending to help heal the beast, saying, "I fear God may seek retributions from me for the pain you suffer”.

Man is a vicegerent on this earth, therefore, the concept of khalifah and amanah (trusteeship) comes into play here. Human stewardship of earth cannot only be about rendering judgement of truth (al-hukm bil-haqq = to judge by the truth) to humans but it is also, by extension, about being just to all inhabitants of earth, for “the earth He has spread out for His creatures (al-anam).” Therefore the earth is not only for man but also for nature, and hence true stewardship means to maintain an equilibrium between the needs of man and the rights of other creatures to live their life on this earth, for “He has set the balance that you exceed not the balance, and therefore observe the balance strictly and do not fall short thereof.”

The rise of ecological psychology in the West is in recognition that the superficial, even hypocritical, market economics and techno-scientific approaches (such as carbon trading) are not going to work. The solution is to be found at a deeper level by rekindling the innate human affinity and respect for nature that has been suppressed by two centuries of consumerist industrial civilization premised on indefinite growth, development and progress. Instead of the present-day dogmatic economic mantra of limited resources chasing after unlimited wants, a new economics of the future will have to be formulated, namely, one that is premised on the unlimited bounties of nature more than fulfilling the very limited needs of man, “for if you count the blessings of Allah, you will not exhaust them.”

ISLAMIC FINANCE CAN HANDLE GLOBAL STORM

Prime Minister Datuk Seri Abdullah Ahmad Badawi is optimistic the Islamic financial system will ride out the global economic downturn.

He said the Islamic financial system had remained unscathed by the difficulties affecting the conventional international financial system.

"This is a testament to its integrity and validity. I see Islamic finance becoming an important part of the international financial system.

"Malaysia hopes to leverage on its experience in the sector to strengthen its trade and investment ties across the globe," Abdullah said in his keynote address at the 50th anniversary of Bank Negara Malaysia on 23 February 2009.

Present were Bank Negara Malaysia Governor Tan Sri Dr Zeti Akhtar Aziz and Hong Kong Monetary Authority chief executive Joseph Yam.

Yam echoed Abdullah's view on Islamic finance, and said it was increasingly recognised as an alternative channel of financial intermediation not only within Islamic communities.

"As Governor Zeti has persuasively argued, Islamic finance encourages business activities and generates legitimate profits and rests on principles of fairness, shared risk and ethical practices. "There is, I think, much for us all to reflect on when considering how badly things have gone wrong recently in what might be called traditional finance."

Abdullah praised Bank Negara for regulating and evolving a financial sector capable of meeting economic challenges on a strong footing.

"In particular, the mobilisation of savings to fund economic activities has been a major element in sustaining broad-based economic growth.

"In this regard, I hope banks will not unreasonably curb lending and keep liquidity flowing into the economy.

"The government will continue efforts to stimulate the economy in these difficult times, but the financial sector must continue to play its role."

He stressed the need to reinvent oneself in the competitive global environment.

Economic flexibility was central to the exploitation of new areas of growth, he said.

"In addition to the rapid growth of the traditional services sub-sector, new service industries have also emerged and are growing rapidly, particularly in the areas of finance, ICT, logistics, health, higher education and tourism."

He said the progress of a nation could only be secured if there was shared prosperity.

"A crucial thrust of Malaysia's development strategy is to give equal emphasis to growth and equity.

"The public sector undertakes the role of economic recovery and the private sector takes up the role of economic growth."

(Courtesy of New Straits Times)

DELOITTE CHOOSES MALAYSIA AS ISLAMIC FINANCE HUB

Deloitte has set up an Islamic finance centre of excellence in Malaysia to provide consultation on Islamic finance for the Asia Pacific region.

This is the professional services firm's only such centre in the region and one of its three globally together with London and Dubai.

Deloitte's Asia Pacific chief executive officer Chaly Mah Chee Kheong said the company had started to build a team of between eight and 10 professionals to be based in the Kuala Lumpur office and would continue to recruit more.

"The concept of a centre of excellence will be a core of people to understand Islamic finance and all the complexities around this product," Mah said at a media conference here today.

"We have similar teams in the Middle East and London as well," he said.

Deloitte's Islamic finance specialist Daud Vicary Abdullah said the centre of excellence was complementary to Islamic banking services.

"We are not a training centre although we are prepared to train. We do business directly with clients at our level of expertise," Daud said.

"Generally we work together with them (Islamic banks). We can provide services to them because we have some expertise which banks don't have or perhaps strategically don't want to focus on and don't want to create a specialised team to do things internally," he said.

Daud also said that many traditional non-Muslim countries such as Singapore, the United Kingdom, Japan and Hong Kong have expressed interest in becoming major players in the Islamic finance industry.

"Some have even gone as far as to amend their legislations and tax regimes to accommodate requirements unique to Islamic finance," he said.

EXCERPTS OF MALAYSIA PRIME MINISTER'S SPEECH IN 5TH WIEF

Malaysia Prime Minister Abdullah Ahmad Badawi said as the conventional financing system continued to collapse, having a serious impact on the global economy, it was high time for the Muslim world to turn the "adversity into an opportunity".

"The world is beginning to appreciate the need for alternative arrangements to the current international financial system. At the same time, Islamic finance is gaining credibility as an alternative," he said.

Badawi said he believed Islamic finance had a bright future but that banking and finance standards needing harmonizing and Islamic financial products really required greater innovation. "As long as our markets remain divided by different jurisdictions and interpretations of shariah standards, Islamic finance is unlikely ever to grow beyond the shore of Muslim countries.

"It is therefore imperative for decision-makers to work hard to set up a harmonised standard which can be accepted and adhered to by the Islamic banking community as a whole," he said.

Abdullah, who is also the patron of the WIEF, said there were some encouraging signs, citing as an example, the world beginning to appreciate the need for an alternative arrangement to the current international financial system.

He said there were discussions on the need for regulations and prudence in the management of the financial system and at the same time, Islamic finance was gaining credibility as an alternative system.

"Islamic finance is fundamentally based on the principle of 'no risk, no reward'. Only those who decide to take risks will benefit," he said, adding that there was a huge departure from conventional finance where considerable gains could still be made on zero-risk.

Abdullah said such a system has opened the doors to irresponsible lending where greed has been allowed to take control, citing the sub-prime mortgage crisis as the classic case.

He said the second challenge was for Muslim countries to be continuously innovative and come up with new Islamic finance products.

"To be competitive, they need to develop products which can set themselves apart from their conventional counterparts. We need to explore ways to create attractive financial packages. Indeed this is a daunting task but I am confident that, with collective effort and dedication, this will not be beyond our means to do so," he said.

Abdullah urged Muslim countries to attract more young and bright practitioners to join the Islamic finance industry as they were crucial for developing the intellectual capacity to meet the above challenges.

"To enlarge the pool of intellectuals, Muslim countries must encourage more students to embark on professional studies in Islamic finance and more academies such as the International Centre for Education in Islamic Finance in Kuala Lumpur should be set up in Muslim countries.

"The Islamic Development Bank can also play a pivotal role here," he said.

On the global financial crisis, he said, it was obvious the conventional financial system has collapsed with serious implications on the global economy, causing numerous countries to struggle to overcome recession.

"Massive funds are being pumped in to revitalise their respective economies. We have inherited a system where people can trade what they do not own and the resulting inflationary pressures on the global market have caused immense damage to the economic well-being of the world's poor," he said.

He said such was the impact of unbridled greed in a financial system with no accountability on money lending.

"The question before us now is -- How do we turn this huge adversity into an opportunity for the Muslim world?" he asked some 1,000 participants at the forum, which ended today.

ISLAMIC BANKING ASSETS UP 23 %

KUALA LUMPUR, March 2 2009 (Bernama) -- The country's Islamic banking system continued to expand last year where assets, deposits and financing recorded annual increase of 23 %, 26.9 % and 22.5 % respectively.

Deputy Finance Minister, Datuk Ahmad Husni Mohamad Hanadzlah said total Islamic banking assets as of to date stood at RM192.8 billion, deposits RM154.6 billion and financing RM104.6 billion.

The risk rated capital ratio meanwhile stood at 15.2 % and surplus capital was RM8.0 billion as at end of December last year an net non performing loans meanwhile declined to 2.4 %.

Ahmad Husni said that Bank Negara Malaysia had taken comprehensive steps to develop the country's Islamic financial sector to ensure that it continued to contribute to the country's economic growth. The sector is well supported by prudent and progressive legislation and regulations and governed by risk based regulatory functions in line with the conventional banking system, he said.

At the international level, Ahmad Husni said Malaysia played an active role in the setting of standards for financial institutions through the Islamic Financial Services Board.