Halal UTM

Virtual Intelligence and Knowledge Management / 1
Professor Dr. Sabariyah Din
2 / Siri Syarahan Perdana Profesor
SIRI SYARAHAN PERDANA PROFESOR
TRADING HALAL COMMODITIES: OPPORTUNITIES AND CHALLENGES FOR THE MUSLIM WORLD
Professor Dr. Sabariyah Din
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UNIVERSITI TEKNOLOGI MALAYSIA 2006
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Trading Halal Commodities: Apportunities and Challenges / 1
SIRI SYARAHAN PERDANA PROFESOR

TRADING HALAL COMMODITIES: APPORTUNITIES AND CHALLENGES FOR THE MUSLIM WORLD by Professor Dr. Sabariah Din
INTRODUCTION
In developing the theme of my work, the topic on halal trade came to be more of a challenge rather than inspiration, because I know little Arabic, but had to use the translated versions of the major sources of this work, Al Quran (trans.Yusuf Ali) and Hadiths (Bukhari Vol 3; Muslim Vol 2 and 3; Ibn Maja Vol 2; work by Imam Al Ghazzali d. 505 A.H). I could not faithfully derive information from the economic textbooks when dealing with the concept of halal trade, nor that I find many Ulama who could confidently explain issues pertaining to halal trade within the present day e-commerce environment and the state of technology. Quranic verses have shown explicitly that riba is the opposite of trade and charity the source of prosperity (2: 275283). In addition to these verses, the narration from Jabir bin Abdullah (r.a.) on the Prophets Farewell Pilgrimage had inspired me much; according to this narration the Prophet s.a.w. gave a final reminder on riba. Thus, I conclude the terms riba and halal trade to be most important and challenging economic terminologies. In acquiring strength to explore the application of these terms I drew courage from the example of the Prophet s.a.w., who was not only eager to nurture the spiritual aspects of Islam but also equally eager to develop the Islamic marketplace wherein halal trade prevails. In this market, there was to be no cheating, hoarding, bartering or undercutting as had previously possessed in the marketplace of Banu Qaynuqa. The Prophet organised and explained the rules of business dealing and told those who listened to

pass on his teachings to those who were absent. The Prophet s.a.w. himself led journeys over the earth seeking Allahs pleasure through halal trade. I am motivated by the example of Abu Bakr Assidiq (632 634 A.D.) that on the day he was elected caliph he had planned to go to the market. His visionary leadership and trustworthiness led him to organise public finance centred upon the institution of the Baitulmal, even before the presence of any super computer. The fiscal structure is crucial in macroeconomic management which was not present in any government of the millennium. I am indebted by the behavior of Caliph Omar Al Khattab (634 644 A.D.), who kept listening to the hadith of Allahs Messenger s.a.w. while in the market, and to his dedication when he systematised the fiscal process of the Baitulmal. He also set specifications for a mode of exchange which I consider not only as a guide to Muslims in daily transactions and trade, but also to be an example of a true and guided leadership in which Iman and Amal correlates. I am also obliged to the word of the Prophet s.a.w. that one should earn out of own manual labour (Bukhari, Vol 3: 277). Having been encouraged by the above leaders, worthy of praise, until today I am not really ready to debate issues such as halal trade in a span of less than two hours. On the concept of trade, I owe understanding on a key argument of Ricardos model which my high school teacher used to repeat. This model says that, in order to gain from trade, the country should specialise in producing goods it can make relatively cheaply. Gains from free-trade have long been expounded. Even the recent U.S. Presidents policy of opening markets around the world, was based on a long history of intellectual support for free trade (The Economic Report of the President, 2005, Chapter 8). Nevertheless I wonder, with many trade regulations being imposed, why call it free trade? So I take this formidable challenge, to debate issues relating to halal trade as distinct from free trade. This work shall incorporate some major requirements in designing a framework for a halal trading system. Id like to feel as if I am leading a journey to fulfil my dream of designing such a system. My dream is that: In this system, all items traded, their handling and packaging, are halal. Trade activities are supported by a stable mode of exchange to refrain greed and exploitation. I invite you, Muslims in particular and Non Muslims in general aboard as we are about to leave our own port in Pulau Indah Halal Hub Malaysia, to Hamriyah Free Zone before cruising along the great river Nile en route to the Mediterranean coast of Muslims land. Wander about on board and check the holds to see the wide variety of halal products to be traded, following rules of Al Muamalah. Bon voyage.
In this journey, the intrepid passenger will be guided through five steps: Step 1 : Potential Halal Commodities Step 2 : A Framework For Halal Trading System Step 3 : Opportunities For Halal Trade Step 4 : Challenges Facing Halal Trade and Exchange Step 5 : Concluding Remarks POTENTIAL HALAL COMMODITIES
In relation to trade, this section briefly traces commodities (to include both products and services) likely to be offered by the Muslim World. The economic resources of the 57 member countries of the Organisation of Islamic Conference (OIC) are used as a gauge of the potential economic strength of the Muslim World. OIC statistics (Muslim Trade Directory, 2005) show that this region possesses vast land, manpower and natural resources. Over 50% of known petroleum reserves have been granted to the Muslim World. Large amounts of food and other agricultural products are currently produced in various member countries, including barley (75% of wo), dates (93% wo), livestock (40% wo), natural rubber (70% wo), tin (52% wo), natural gas, coal, and iron ore. Water and transportation resources include the strategic River Nile, which has further potential to benefit both agriculture and industry in the Sudan and Egypt. Land is another factor of production. Chad covers 1.28 million sq km. Even bigger is Indonesia (1.905 million sq km), Sudan (2.506 million sq km) and Algeria (2.38 million sq km). The Saharas area is almost 9 million sq km. The Gulf is almost 100% under Muslims jurisdiction. There are important Muslim ports in the Atlantic, Pacific, Straits of Malacca and the South China Sea. Despite their large populations Bangladesh (140 million), Pakistan (152 million), Indonesia (217 million), Egypt and Sudan combined (105 million) these countries are mainly in the low income category, with per caput income below USD 1000. By contrast per caput income in many oil exporting countries of the OIC is above or close to USD 20000. Qatar, for instance, registered 20 times the per caput income of Afghanistan (IslamicOnline.net - Contemporary Section). The abundance in manpower of the OIC countries is now reaching close to 1.5 billion (Appendix 1). Among them are Hafiiz (those who have memorized Al Quran), world class artisans and qualified Muslim jurists who could give verdicts on certain new issues relating to Muamalat (including in it: economic and banking transactions, trade, the weights and measures).

Trade value (in year 2004) within the OICs member countries reached USD621 billion (Appendix I) while trade value from the IDB in world trade (in Appendix II) was USD483 billion (7.5% share in world trade). Data also indicated that the intra-export value recorded among IDB member countries was only USD55.7 billion. With regard to halal value added services, an Islamic banking and financial system has been installed in many parts of the OIC, though the fine-tuning of this system is still underway. Also, the scope of trading facilities had been rapidly expanded to involve new technologies and the use of ICT. Malaysia for example launched the OIC network in 2002. To provide relief to member countries against foreign exchange shortages, the IDB had promoted The Import Trade Financing Operations and the Export Financing Scheme (amounting to USD1.3 billion in 2002). Trade Cooperation and Promotion Programme is to serve as part of IDBs capacity building in trade (IDB Report, 2003). A FRAMEWORK FOR HALAL TRADING SYSTEM Opportunities and challenges for the Muslim World to trade halal commodities from the abundant potential resources, center around the amal (practices) of Islamic faith. Thus in designing a framework for halal trading system, this section incorporates three major issues: The spiritual aspect: Identifying what constitutes halal trade? The operational aspect: Comparing trade based economy in the early Islamic state to the reality of presentday business and riba based economy. Finally the institutional aspects: Discussing the crucial infrastructural supports, included in it the mode of exchange that conforms to the Shariah. The Spiritual Aspect: What Constitutes Halal Trade? The Concept of Halal
The sources on what is halal are Al Quran in it (Al Quran) is guidance sure...without doubt...to those who fear God (2: 2), and the Sunnah (confirmed practice of the Prophet s.a.w.) which provide specific and clear guidance. Halal means that the Shariah has made it permissible or lawful. The ruling of halal is from the rule of Fiqh (the science of the application of the Shariah). In addition to these two major sources, halal items and services to be produced, traded and consumed are decided through Ijma (consensus), Qiyas (deduction or analogy) according to Mazhab. Fatwa (advice) of an Islamic authority is also a source of guidance or determining what is halal in terms of produce, transaction and trade.
A brief account on the concept of halal, mentioned in the Al Quran and in a number of Hadiths is presented below: Quranic verses (Surah, followed by verse number from A. Yusuf Ali, 1983) On the question of halal (food) Eat of the good things We have provided for you (2: 57). Alcohol, intoxicants, gambling and worshiping idols are impure and acts of syaitan, and are to be refrained from. (2: 219,5: 90, 91). Muslims are forbidden to eat meat other than from proper slaughtering, blood, the flesh of swine, that killed by strangling or by violent blow (5: 3,16: 115); and Lawful unto you are (all) things good and pure... (5: 4); The food of the People of the Book is lawful unto you, and yours is lawful to them (5: 5); Eat not of (meats) on which Gods name hath not been pronounced: That would be impiety... (6: 121). Hadiths (Hadiths number, quoted from M. M. Khan, Sahih Al Bukhari trans.1996 ) The Prophet s.a.w. has pointed out that both legal and illegal things are obvious and in between them are doubtful matters. Whoever forsakes those doubtful things, lest he may commit a sin, will definitely avoid what is clearly illegal ... (985: p. 464). Mankind is urged to care about the source of food and drink. Since life and animal contain blood (forbidden for consumption, as food), Islam treats meat differently from other nutrients, and Islam promotes kindness even to animals. When we take meat for food, we are required to pronounce the name of Allah when slaughtering animals, and it must be in accordance with Shariah rules (see Appendix III). Taking halal food is an act of obedience to Allah, and observing Islamic eating manners is following the Sunnah. Such rules and manners help the Muslim to perform good deeds and protect him from evil. Trade should not dearer than Allah or His Apostle Since all things are created and regulated by Allah, it is with His mercy that men could use what had been granted to them (resources and knowledge). For that reason, even when they go out to trade, they establish regular prayers and give regular charity from the gains for Allah will surely guide them to know what constitutes bil-baathil (valid as against wrongful transactions, halal or non halal commodities). Allah s.w.t also promises prosperity and blessings for those who carry out muamalat (business/trade conduct such as obedience, discipline, un-selfishness) in accordance with the Shariah.

Islam encourages trade (4: 29); while remembering Allah most, Muslims are encouraged to prosper and after the (Friday) prayer to (disperse through the land), seek of the bounty of Allah (Al Quran 2: 29, 62: 10); trade, exchange and commerce (Tijarah), should not be dearer than Allah or His Apostle (9: 24). Capital stock (Bidhaat) is for trade (12: 62); trading by sea (16: 14); men not distracted by trade from remembrance of Allah (24:37); during day time, muslims should be busy in trade (73: 7); muslims are told O ye who believe, there are indeed many among the priests and anchorites, who in falsehood. Devour the substance of men and hinder from the way of God. there are those who bury gold and silver, spend it not in the way of God: Announce unto them a most grievous penalty (9: 34; 11: 168); give away some of the good things you have earned (2: 267). God is a witness in whatever business (10: 61). In the Hadiths (Ibid,1996) In the market place of Banu Qaynuqa (Jewish market), business dealings were affected by the application of riba, exploitation and injustice (the act of transgressors) which in turn affected the values of the social system (wealth as a sign of prosperity). Thus the Prophet s.a.w. set up an Islamic market place in Madinah. In his s.a.w. actions he was a perfect example of lawful trade but he s.a.w. indicated that A time will come upon the people when one will not care how one gains ones money, legally or illegally... , engage only in lawful trade (988, p 465). Permitted sale: Selling by auction (1021, p. 478); dinar (minted gold) for dinar, dirham (minted silver) for dirham, hand to hand (1031, p. 481). Mortgage; Araya - the dates still on tree, provided they were about 5 Awsuq approx 675 kg for gold or silver (1035, p. 483); The Prohibition of Riba and Unlawful Conducts Riba was prohibited in stages (2: 275-283). The Al Quran explained explicitly the concept of riba as being distinct from trade. This is strengthened by the Prophets s.a.w. declaration during his Farewell Pilgrimage in which he reminded Muslim, of the nature of exploitation which is really intrinsic in riba. This announcement included, the remission of interest accumulated in favour of his uncle Abbas ibn Abdul Muttalib. Quranic verses
Riba: Sources in the Al Quran
Traders are instructed not to be greedy And do not eat up your property among yourselves, for vanities, nor use it as bait for judges, with intent that ye may eat up wrongfully and knowingly a little of (other peoples) ( 2:188). Those who devour riba will not stand except as stands one whom the evil one has driven to madness. That is because they say trade is like usury,but God has permitted trade and forbidden riba (2: 275); God will deprive riba of all blessing (2: 276). Muslims are urged not to grieve for avoiding riba as they had been promised with reward from God (2: 277). For those involved with riba (took more than their capital sum) take notice of war from God and His Apostle (2: 279). Islam urged the lender to grant time to the debtor who is in difficulty. Even better (if the debtor genuinely could not pay), to remit the loan by way of charity ... and on the Day of judgment be paid what it earned (2: 281). Devour not riba, multiplied and then re-multiplied (3: 130). Riba, Unlawful Acts: Sources in the Hadith Selling of mixed dates; bartering is forbidden except hand to hand no delay (997, p. 468); forbidden from taking or giving riba (998, p. 468); gharar (what is not present and Habal-il-Habala (the sale of what is in the womb of an animal) (1022 p. 478); no barter of barley for barley, gold for gold, silver for silver except hand to hand (1029, p. 481); silver for gold on credit (1032, p. 482); Al Muzabana (sale of dried dates for fresh ones or Muhalaqa (sale of wheat in ears for pure wheat 1033, p. 481), selling of fruits before their benefit is evident (1036, p. 483) or fit for eating (1037, p. 484); trading a better quality dates for dates of lower quality falls into riba al- fadl (1039, p. 484); mixing ripe and unripe dates, mixing dates with raising (1937, p. 931); All drinks that intoxicate are unlawful (1933, p. 929); drinking in silver utensil filling abdomen with hell-fire (1946, p. 933). Include in this section are uundesirable employment/transaction such as: painting of inanimate objects (1045, 488); racing (driver) (Fatwa : Islamic online.com), selling of free man (1046, p. 488); taking proceeds from selling a dog and prostitution (1048 p. 489) Before winding up this section, it should be helpful to recognise why riba is not trade. The justifications for the prohibition of riba are as follows: Riba al -fadl: In its first sense is an excess/increase amount above capital sum, after a fixed period - small or numerous forms, and is paid in direct exchange. Riba al-fadl, in the second sense, covers all spot

transactions involving unjust cash payment and unjust immediate delivery. Anything that is received as extra (in cash, goods or services) by one of the two parties to the transaction is riba al-fadl. For those who become involved with riba (take more than their capital sum) take notice of war from God and His Apostle (2: 279). Thus, the excess over what is justified by the counter-value, is what prohibited in Islam. Riba al-nasia: The term nasia comes from the root nasaa which means to postpone or wait. It refers to the time, the borrower is allowed to repay the principle plus the interest. The deferred increase of payment in time which does not bring any equivalence. Riba al-Nasia involves the stipulation of pre-determined positiveness of return in advance (such as 5% per annum fixed) of a loan, as a reward for waiting. It is in this sense that the term riba has been used in the Quran ( 2: 275), and also the riba which the Prophet s.a.w referred to when he said: There is no riba except in nasia (Muslim, vol. 3, p. 1218:.103). This form of exploitation is not permitted by the Shariah, whether in money form or non money form, no matter how small the return. The Prophet s.a.w. prohibited the taking of even a small gift, service or favour as a condition for the loan, in addition to the principal. Trade transactions must be closed in the market (payment being made in full), before the buyer and the seller depart, and no barter: barley for barley, gold for gold, silver for silver, except hand to hand (1029, p. 481). What it means is that: Ttransaction and payment should occur at the same time. The Prophet said, No deal is settled and finalized unless the buyer and the seller separate, except if the deal is optional (whereby the validity of the bargain depends on the stipulations agreed upon). This work invites traders who fear the severe punishment which Allah has promised from taking or giving riba, to consider the example of the amazing effects of riba al-nasia. Consider this: If you save RM1 a day for 60 years at 10% interest per annum, this saving is capable of generating a Future Value (FV) of: Using Interest and Annuity Table for Discrete Compounding, which is normally used in financing present day loans, at 10% annual interest (De Gamo et al. Chap. 3, p. 80) the amount will be: End of year 60 = 365 (3034. 81) = RM1 107 706 End of year 60 = 365 / yr ( F/A,10 %, 60 yrs)
In the world of Riba, any body can become a millionaire! No wonder, when you borrow, there is a saying interest can never be paid on borrowed money. How could Islam not prohibit riba? Islam is a religion of logic, adDin, a way of life not just for the individual, but for society and all creations. Allah is most knowledgeable of whats in ones heart. Is it just to receive 1 million from a tiny principle amount? Has not Allah promised to deprive riba of all blessing? To protect mankind from such a bad ending, refer to the struggle shown by the Shariah Appellate Bench of the Supreme Court of Pakistan on 14 Ramadan 1420 when The Federal Shariah Court of Pakistan had declared the laws allowing interest repugnant to Islam in 1991. That is the banning interest in all its forms and by whatever name it may be called. The verdict was argued along the lines of the Quranic statement: The non-believers say that sale is very similar to riba. (Al-Baqarah, 2: 275). After the declaration, it was said that The Federal Government of Pakistan, certain banks financial institutions filed 67 appeals against this judgment in the Shariah Appellate Bench of the Supreme Court (Abd Ghafoor, 1995). Business Conducts in Market-place Islamic market-place is totally different from the market-place Banu Qaynuqa . Allah declares not to guide the rebellious, thus love Allah and Apostle most in doing trade (9: 24). Mankind are told that real prosperity consists not in greed, but in giving (charity). Riba deprived wealth of Gods blessings. Many people think with interest (riba), one can increase ones wealth, but Al Quran says increases not with God, but that which you give in charity, seeking the countenance (face) of God. (30:39). In market-place, seek the true vision of Gods own self (didar- i-llahi) through halal trade. Business Conducts (sources in the Al Quran, Ibid, trans.) Deal not unjustly (2: 279); stand out firmly for God as witness to fair dealings; be just: that is next to piety (4: 8); in Surah Hud, the people of Madyan was called (by Prophet Shuib) to worship God, give full measure and full weight with equality (Bilqist: 11: 84, 85). Muslims must not lead a life of extravagance and must exhibit good-will, nor kill (or destroy) yourselves: for verily Allah has been to you Most Merciful (4: 29); Say not this is lawful and this is forbidden, so as to ascribe false things to God; in such falsehood ... they will have a most grievous penalty (16:116-117). Establish prayer, conduct affairs through consultation and give charity. (42: 38); deal not in fraud, such as in com-

mercial dealings, asking too much, giving short measure; spirit of injustice is condemned (83: 1-3) Hadiths on Business Operation (Ibid,1996): The seller must explain the truth about the good and the bad concerning transaction (996, p. 468); swearing, so to persuade buyer to purchase but will be deprived from blessing (999, p. 469); no Cheating (1008, p. 473); weigh and measure food stuff and be blessed; the Prophet (s.a.w.) disliked: Raising of voice in the market (1013, p. 475); When taking loan with intention of repaying it (1014 - 1015, p. 476). Do not keep animal un-milked for a long time so to get higher price (1023, p. 479); do not become an agent (buying and then selling goods away from the market to a desert dweller, without letting him know the market price) (1025, p. 479); money (gold dinar) exchange must be hand to hand (1028, p. 480); gave pre-emption ( to a partner) in selling of joint property (1042, p. 485); Allah will repay it on his behalf (1103, p. 520); keeping Promises and pay debt handsomely (1104, p. 520); do not waste wealth (1106, p. 521). At the time of drinking alcoholic drink is not a believer (1931: p. 929) While Al Quran has confirmed that riba is not trade, this section provides the atmosphere and a discussion on the macroeconomic set up of trade based as contrast to the riba based economy. Trade Based Economy of the Early Islamic State A historical account on the fiscal structure in the early Islamic state was conducted by M.L.A Bashar (1983). A summary of this work, especially in relation to trade, is referred and presented in Appendix V(a). The work traced the establishment of a Baitulmal in regulating the payment of jizyah (head tax paid by non Muslim), payment for zakat for the protection of society and Islamic government. Revenue consists of sadaqah, kharaj, custom duties, tolls collected from traders and the like (dhimmis and harbis), tax on mine and tresure, estate left by Muslim who have no heirs, property lost and found. A great deal of finance came in the form of direct transfer from the central treasury. Local authorities/provinces were directed to allocate provision to supplement central transfer for development of infrastructural programmes and social facilities. Trade coverage exThe Operational Aspect: The Trade Based vs Riba Based Economy
tended from Makkah to Chine to Atlantic and the Roman Highway. In brief, trade based economy is characterized by Islamic faith, the atmosphere of business activities, physical development and welfare during early Islam was impressive, even without banking facilities. The price offered is low, practically no inflation as goods and services are measured in real value of the commodities and paid in actual gold coins / silver. The receipts were reported to be in circulation but were later consficated, as such trade is considered illegal. With respect to the types of coin in circulation in the early Islamic state, reference to the word dinarrin could be traced in the Al Quraan: Among the people of the Book are some who if entrusted with a hoard of gold, will pay it back. Other who if entrusted with a single dinar will not repay it unless thou constantly stoodest....(4: 75). In a commentary, the word dinar is translated to be silver coin which was used by the Romans as equivalent to denarius (silver coin). It was said to be current during the time of our Apostle s.a.w.(A Yusuf Ali, Ibid, p. 142). In the Hadiths, the early mode of exchange include six items: Dates, barley, wheat, salt, gold and silver. Dinar (minted gold), dirham (minted silver) and copper coins were used. Yusuf cited the word dinar as equivalent to penny, in the English Bible. Hence the abbreviation of penny is d = denarius, a silver coin in the later Roman Empire. Free Trade, International Currencies and the Exchange Rate The riba based economy is supported directly by the idea of free trade. Gains from free-trade is rooted in a basic economic law: The principle of comparative advantage, which had long been expounded by Ricardo. The principle states that in order to gain from trade, a country should specialise in producing goods it could make relatively cheaply. Under this model, every country would prefer to gain from terms of trade (the price of traded products). To gain from trade, the exporting countries would want to receive more for the products it sells than it receives locally. This is where the concept of equivalent value of trade had somewhat been distorted. Also in trade there is always an element of risk. On top of that they are trade restrictions/regulations imposed, and are within the network of bilateral or multi-lateral trade. Trade measures can be in the forms of import quota, tariff etc. To facilitate gains from trade, the Bretton Wood Agreement was signed in 1944. The Agreement determined the principle for the rate of exchange of international currencies (fixed exchange rate system). In 1945, the US Congress established a gold exchange standard and two new international organisations: The IMF and the World Bank (Na-

tional Mining Assoc. 2003). The value of USD1 was fixed at 1/35 ounce of gold or USD35 per ounce of gold. The new standard involved the obligation of member countries through Central Banks to convert foreign official holdings of their currencies into gold at par values. That is the Central Banks are required to deposit gold reserve to back the currencies they printed. The gold standard provided an automatic adjustment mechanism for eliminating payments imbalances between member countries; that is deficits were financed by outward gold transfers, reduced the money supply, thereby deflated the domestic price level making imports relatively cheaper. Surpluses were financed by inward gold transfers and more money could be supplied. The holder of bank note could convert the note into gold at a guaranteed price. In 1961 the London Gold Pool was formed and agreed to trade gold at USD35.0875 per ounce. Americans were forbidden to own gold abroad or at home. On August 15, 1971 US terminates gold trading, thereby ending conversion of foreign officially held dollars (non convertible) into gold. From that date, imports were paid in currencies of the exporters and currencies are bought and sold in a foreign exchange market, just like commodities. Under Smithsonian Agreement signed in December, the same year, US devalued the dollar by raising the official dollar price of gold to USD38 per fine troy ounce (1 troy ounce =1.097 ordinary ounces). Finally in 1973, all currencies were allowed to float freely, to mark the total withdrawal of the gold standard. The withdrawal of the Bretton Wood Agreement means that the dollar could be printed, free from gold deposit. Under Smithsonian Agreement signed in December, the same year, US devalues the dollar by raising the official dollar price of gold to USD38 per fine troy ounce. Finally in 1973, all currencies were allowed to float freely, to mark the total withdrawal of the gold standard. This is more than a bonus to the Central Banks Reserve, when USD was made an international currency to facilitate trade. These roles are listed in Appendix V. In the US, the interest rate (riba) is determined by the supply and demand for the USD. Central banks are required to maintain a balance (International Reserve, IR in USD) instead of gold reserve, Special Drawing Rights deposited at the IMF, to be used for international payments (i.e. import bills). The IMF data (2002) showed that Japan, China and Taiwan were in the lead holding their IR to support 11-17 months of their imports. Can the USD be printed to finance trade deficit? Fiqures in Appendix VII(a) explains the countrys balance of payments (BOP) being used as a measure of the flow of supplies, or the demands for foreign currencies. This measure is comprised of the current account and
capital account. The current account incorporates trade in goods and services, net investment income and net transfers. When import from countries of the Muslim World increases, trade balances will decrease, leading to the fall in the value of domestic currencies abroad. The capital account depicted in Appendix VII(b) includes portfolio flows such as purchases of bonds and equities or direct investment activities. Capital flows are also important movers of exchange rates at least for short and medium term horizons. There are two types of participants shown in the capital flow sector: The international investors and the currency speculators. Note that when import increases (shown in Appendix VII(a)), international investors (in Appendix VII(b) tend to shift capital due to interest rate differentials, while currency speculators shift capital depending on the current spot rate and the expected rate in the future. Capital would flow out of domestic market when capital rate of return is low. It also shows that the money will be shifted out of the domestic market when spot rate is low. Under the balance of payments method, an exchange rate is correctly valued when the net inflow (outflow) of foreign exchange from the current account matches the net outflow (inflow) of foreign exchange from the capital account. Based upon the current account model, countries with trade surpluses are expected to experience an appreciation of their currencies. Appendix VII(c) indicates the relationship between current account trends and trends in exchange rates for the major currency pairs (currencies of the Muslim World with USD and Euro or Yen). Thus countries which run current account surpluses have excess demand for their products (i.e. demand for their currencies), which should drives the value of the currencies higher (appreciates). This opposite holds true as well for deficit nations. The USD instead of being printed to finance the war, could also be manipulated to reduce trade deficits. This stems from the fact, that the Federal Reserve Bank can intervene directly in the foreign exchange market: Buy or sell USD to smooth out the exchange rate, adjust purchasing power parity (equal value of money; move USD), or adjust interest rate parity (equal rate of return; move capital). Comments on the sustainability of the dollar to facilitate trade rest on the fact that with the enormous US deficits (amounting to USD417 billion in 2001), the deflating USD would threaten to drag all currencies into another inflationary cycle. This monetary measure could also pull other nations to bare the loss of holding the USD since the world had witnessed the impact of SARS outbreak on the dollar value. This event alone has led many countries including China to perfect the exchange rate mechanism.

Now, the dollar and Euro could be purchased to buy and sell products in an international market. These currencies of course will continue to be engulfed in instability caused by interest rate (riba) movements when initially, paper money was intended to serve as a medium of exchange, later as a store of value, a standard for deferred payment (riba al-nasia ), and finally now, being traded as a commodity. Liberalization and Globalisation Trade liberalization to strengthened the support for free trade. At the earlier stage, globalisation was about the transfer of economic ideologies (such free trade) across the borders of national economy. The aim of trade liberalisation is to abolish import duties, tariff and subsidies so that price of imports or exports would be lowered, thereby greater chance to increase the volume of trade. For the Muslim World, trade liberalisation through the lowering of export price does not guarantee the gains from free trade. The situation for high technology economies even after trade liberalisation seemed to gain from free trade. Weidenbaum (Economic Report of the President, 2005; Chart 8-1, p. 178) indicated that the US engineering and architectural services alone have grown by almost USD25 billion in 1989 compared to a USD10 billion imports over the same period. This finding claims that, contrary to the theory, the increase in imports as a percentage of gross domestic product (GDP) has not led to any significant trend in overall unemployment rate. This new service may not have been envisioned in the time of Ricardo but certainly adds another aspect to the long history of strong academic support for free trade. Be it free trade, liberalization or globalisation, these are instruments of the imperialists to control world market to their advantage. On this note, many economists criticized trade liberalization policy/globalisation as trying to lock nations into expensive bottlenecks of development. The Euro for instance was greatly financed by Petro-dollars that were held as assets by the wealthy Muslims. Thus through free trade concept, large capital surplus of the Arab countries had voluntarily been shifted to the West, instead of investing within the capital market of the Muslim World. Globalisation had not only directed trade from the Muslim World away from generating the Islamic investment climate, but had dictated the management of speculative investment capital in Muslim countries. This financial management of course was driven by interest rate instability, leaving more debts being created out of deposits from the Muslim World.
Comments on the rule that other nations must demand USD rest on the fact that now the US has an enormous deficit, leading to the depreciation of its currency, which in turn pulled other nations to bare the loss of holding the USD. How could one not to feel obliged to understand where riba based economy would lead the globe to? Vadillo claimed the dollar crisis has originated from the riba itself. He calculated that the crisis would be responsible for the bubble of 160 trillion USD, representing 40 times more than the value of world trade out of tangible product traded over a year period. Debates due to the depreciating dollar do not change free trade policy. This situation is presented in Appendix IX where the International Monetary Fund (IMF) is shown to allow member countries (including the Muslim World) to borrow funds (quoted in USD) to finance development, and then place their proceeds on a free market. This is done through increasing debt on a massive and unprecedented scale as has occurred in many third world countries. The production of goods can also be facilitated by foreign direct investment (FDI), which means increasing trade and employment, advocated through globalisation. In the case of rich Muslim countries, free trade has led to the influx of oil dollars, which are locked in western banks, hindering the circulation of Islamic loans for production purposes in many parts of the Muslim World. Since the aim of free trade is to abolish import duties, tariffs and subsidies, the price of products from the Muslim World would be lowered, greatly increasing the volume of trade, but what about the value of trade? At the same time many high technology economies can gain from trade. This serious problem of free trade goes like this: First, the difference in production technology between two trading partners (the Muslim World and high technology economies) causes different prices to prevail in the two countries before they open their borders to trade. Next, an arbitrage opportunity occurs when there are different prices for the same product. Buyers and sellers of course could take advantage of short-term price differentials. Supported by the presence of a free-floating exchange rate regime, the arbitrage opportunity can again be adjusted. That is when prices increase or inflation occurs, currencies will be depreciated - see Appendix VII(c). When asked: Who then are the winners in this economic ideology? The answer may just be those individuals who gained from riba. The rest have witnessed the dust from the collapse of the Berlin Wall. Thus far, this work has shown that, even without banking facilities, trade based economy was impressive. The management of Baitulmal is crucial. The physical development and welfare were from central and provincial transfers. Market and trade were supervised in accord-

ance with religious requirements, with payment made in gold, silver/ copper, generally hand to hand. On the other hand, in the riba based economy, the government is shown to initially have had a strong control over what went on in the banking system, in trade and in the market. The banking system deals with paper money and when the bubble of prosperity comes tumbling down, the wealth ends up even more concentrated in the hands of a few, including bankers. Features for Halal Trade The following features should provide a framework for a halal trade system:
In the midst of riba based monetary and fiscal instruments in todays trade activities, halal industry requires support in various forms. These requirements will be presented in the form of opportunities and challenges in the next two sections. OPPORTUNITIES FOR HALAL TRADE
Provision of halal products clean and pure. Regulating Islamic (Shariah) rules on production, processing and trade. The setting up of authorities that would supervise production, market and trade activities. Provisions of market and trade facilities: Islamic marketplace (Vadillo, p.108 - 114), packaging, storage, communication and transportation services. The Prophet s.a.w has made it clear that the marketplace was to be a space, freely accessible to everybody, with no divisions, and where no taxes, levies or rents could be charged. The market according to the Prophet s.a.w, should follow the same sunnah as the mosque: Who gets his place first has the right to it, until he gets up and goes back to his house or finishes his selling (Ibid, 2002, p.147). The setting up of the Baitulmal to regularize collection and distribution of revenues. The use of halal mode of exchange, Islamic Banking and Finance, Value Added Services: Mohsin (1986) states that riba is not necessarily associated with banking, for riba was present long before the establishement of banks. Although the prohibition of riba is binding, many Islamic banks and financial institutions have grown steadily.
In the first section, this work has shown that Muslim World has been granted vast resources and a large market numbering above 1.5 bil-
lion people. The intra-OIC linkages (see Appendix I) are marginal and, in the main, OIC countries are tightly linked with the West. Many trade opportunities are open to Muslims. Over 1400 years ago, Islam already set standards relating to trade including delineation of prohibited good and services, good and pure, exact weight and measure, business conduct that is blessed, permitted modes of exchange, and conditions of loans. All of the above are stipulated in the Quraan and Sunnah for Muslim to practise. As a general guide line in commodity trading, Fiqh scholars have widened the range of commodities allowed as means of exchange from the six commodities (gold, silver, dates, barley, wheat, and salt) mentioned in the hadith (narrated by Umar al Khattab: Sahih Bukhari, 1019: p. 477) and Ubadah ibn as-Samit, Sahih Muslim, 3798: Book 9). Thus the exchange is permitted on the ground that it is between two same commodities, equal in weight/measure and hand to hand, or between a commodity and one having the general attributes of the six forementioned - that is presumably a stable value and low perishability. When items of exchange are of different commodities, exchange as we like, but hand to hand. To be blessed, traders are asked to measure foodstuff (Sahih Bukhari, 1015: p. 476). Judging from the pattern of intra-trade in Appendix I, one can conclude that the Muslim countries by far are tied to West rather than supporting each other in developing an environment for fair trading. Although doing business with the non-Muslims is not prohibited, Muslims are commanded to be united. Should the need arise for Muslims to trade with the non Muslims, trade is condered halal if it conforms to the Shariah. Thus it is imperitive that Muslim World improve intra trade. The reason why priority must be given to carrying out business among Muslims before Non Muslims is merely because conformance to the Shariah cannot be expected from the non Muslims; the reason is just that Muslims are told in the Al Quran, not to laugh at people, as it may be that the latter are better, nor to defame, nor be sarcastic to each other. Muslims are asked to avoid suspicion, spy not, nor speak ill of each other behind their backs. Would any of you like to eat the flesh of his dead brother?, but fear god is oft-returning, most Merciful (49: 1113). From the business practices shown by the Prophet s.a.w in the past (truthful, perfect weight and measure, spot trading, eliminating unjust exchange etc.), many Non Muslims would want to have business ties with the Islamic market, as the market is characterised by the Islamic faith and is not solely for worldly gains - these are the characteristics which the Muslim World must show to the world at large.

Opportunities for intra-trade in the Muslim World should flourish out of these activities: Islamic legal entities, new economic set up, new educational institutions. Imagine at the airport or train stations where people are heading to many different directions; Islam guided them to go just on the opposite direction, still packed with 1.8 billion people wanting to buy and sell. One can witness to the history of Islamic trade activities, to believe that the non-Muslims, on the opposite direction would be eager to join the Islamic way of doing business, because the trade is free from unlawful conducts. The call for Muslims to improve intra-trade has been made many times over. In the recent OIC trade conference, participants were again reminded to improve the intra-trade within the Muslim World. Soon after that, at the MIHAS 2005 Halal Trade Expo, held in Kuala Lumpur, the Message from the Prime Minister claimed that this Expo opened a window of opportunity for the Halal products and services market, providing local companies the chance to establish crucial contacts with potential partners. (Key note Address, MIHAS 2005, p. 2). For the above reason, it has been long overdue for Muslims to be ready with not just the economic set up that might support halal trade, but more of activities and value added services to sustain halal trade: The commercial Rules/law, an internationally recognised standards on Islamic accounting etc. Since the halal market has not been fully exploited, there are plenty of opportunies to be tapped at various stages: Production stage: Halal products (from food to non food and sevices), farming, as against genetic farming, production processes, slaughtering services. Marketing stage: Halal packaging and storage, product information, halal standard, port services, transportation, joint venture companies. Halal services and value added service: Trade financing and leasing, exchange, legal service, trade regulations, trade missions and other trading instruments. Data management: Publication, trade analysis and market information.
Every trader normally expects a handsome return when trade is closed. With the dollar depreciating in value, what choice do traders have? The Euro, the Yen or the gold? What is the Muslim World doing? Halal Hub: A Malaysian Vision This section outlines the products and services which Malaysia has initiated: The institutional set up of the Halal Hub as the Malaysian
vision for this industry, the internationally recognised Halal Standards and the circulation of the gold dinar to facilitate and improve intra-trade within the Muslim World. Malaysia could be said to possess a comparative advantage with respect to the halal food industry. Thus the Malaysian Agricultural Policy visualise to become a Regional Hub for halal food production. Halal trading in Malaysia is supported by the provision of macro infrastructure in the form of a strong institutional set-up important for the realisation of this vision. Halal industry is governed by the Trade Description Act 1972 comprising two Orders: Trade Description Order (The Usage of Halal), and Food Labelling, 1975. Later and within the context of available technology, various Malaysian government agencies have provided facilities and support for the growth of halal industry. To name the few: The Ministry of International Trade and Industry Malaysia (MITI), MIDA, Department of Standards (DSM, SIRIM), Ministry of Health, MATRADE, Small and Medium Industries Development Corporation (SMIDEC), Ministry of Entrepreneurship. When it comes to the consumption of halal food especially meat based products, Malaysia took the initiative to cater (meat) products of good and pure, directly from the Islamic slaughtering houses to countries such as Saudi Arabia, UAE, Egypt and Iran. The sources of meat supply to this region was said to come mainly from non Muslim countries such as Brazil, Ireland, China, India. Currently, agencies such as state governments, statutory bodies and private companies in Malaysia play a role in promoting the food industry including beef products. These include: Pulau Indah Halal Hub, Free Trade Zones equipped with slaughterhouses (Perak Meat Corporation Sdn Bhd, Kedah Aman, PKN Selangor), Halal Food Park for SME of the PKN Melaka, and Negeri Sembilan, and Prima Agri-Product in Pahang). Sources from MITI have recorded total trade for processed food as RM11.9 billion in 2004. Malaysia has also formed a working group with several Asean countries to look into global issues such as the accreditation for halal food and registration list on halal preservatives. Internationally recognised Halal Standard In consonance with the duty of the above working group, a halal certifying body should come under the umbrella of a recognized international Islamic organization so as to avoid doubt in the mind of the consumer. In view of the growth of the halal industry, Malaysia has taken the opportunity to institute a halal certification system. JAKIM/JAIN is currently entrusted to issue the Halal Certificate and to monitor the

operations relating to halal production such as handling and packaging. Also at the moment, products from overseas are certified halal by bodies accredited by JAKIM and other related Malaysian government bodies such as the Department of Veterinary Services, Food Safety and Quality Division, Ministry of Health, Malaysia, which is responsible for issuing the Hazard Analysis Critical Control Point (HACCP) Certificate. Malaysia intends to use the Malaysian Standard for Halal Certification MS 1500:2004 to create synergy and as a benchmark for a Global Halal Standard not only for the production, handling and packing for food but also for pharmaceutical, cosmetics and preservatives. The use of gold as a mode of exchange Any economy needs an accounting system for the exchange of commodities. Money plays the mediator role, to facilitate trade and to keep track of the value of economic exchanges. Al-Quran undertook to mention the use of dinar (Surah Ali Imran: 75) or gold as a medium of exchange. The use of gold as a medium of exchange is essential to guard against excess over what is justified by the countervalue. In this sense, the fuqaha had not confined Riba al-fadl only to the six commodities. The specific weight of a dinar: It is of 22 k (917) gold equivalent to 4.25 grammes. Dirham is a specific weight of pure silver equivalent to 3.0 grammes. Umar al Khattab established the standard relationship between based on their weights: 7 Dinar equivalent to 10 Dirhams. Dirham of the Shariah is 7/10 of a dinar/mithqal of gold. The weight of a mithqal of gold is seventy two grains of barley (Ibn Khaldum in Muqaddimah, mentioned in Vidallo, p. 91) From the early Islamic state (beginning A.D. 700), Muslims used gold coin or silver coin to perform the function of money. The gold dinar remained the official Islamic currency for 77 years, around the time of the Ottoman Empire until the collapse of the Empire in 1924. There are many reasons why gold dinar needs to be reinstalled to replace paper money, credits, derivatives and any other monetary instruments not backed by real gold. In short, the later mediums used in trade activities had led to many economic distortions. The need for Muslim World to manage their foreign exchange risk thus becomes apparent. Nowadays traders hardly use paper money to conduct trade. Bills of credit backed by saving sometimes not backed by real money deposits could support trade activities. What happen to paper money? Well, initially the creation of paper currency, was to be used as a medium of exchange, but later was traded in the money
market. This is when, paper money (created out nothing) immediately being treated as a commodity. As such, the price of money fluctuates thereby opens opportunities for traders to reap profits, leaving the economy at risk. Back in 1997, there was a huge and devastating currency raid by traders in the money and capital markets, including in it the famous George Soros, who leveled Asian monetary units and sent the major Asian economies to crunch. In addition to the raid, offshore currencies transactions and exchange rate movements left many individuals, firms and businesses helpless. The more open the economy is the more it would have been effected by the exchange rate movements. To avoid being shortchanged due to the movements in the exchange rate, Muslim World need to value all trade items against gold. Traders of course can manipulate the price of gold. But the imposition of the rule hand to hand (exchange condition for gold or silver) makes this impossible, that is to say: One dinar is still one dinar, regardless of locations anywhere around the globe. On top of that, gold in any form, posseses an intrinsic market value. The disappearance of gold in the international exchange system, and the false objections to using gold as a medium of exchange: Not enough gold, subject to speculation, would produce instability in prices of commodities, nevertheless are shown not to deter Muslims from minting dinar to facilitate trade and be used to pay zakat, and in giving mahar (dowry). The Islamic Gold was in circulation since 1992 in Spain, Scotland, Germany and South Africa. At the introduction of e-dinar in Nov. 2001, base in Dubai, the USD has dropped to a record low against the Euro, while the price of gold has climbed from about USD260 to over USD 410 per ounce (Executive Intelligence Review, Nov. 15, 2002) in www.larouchepub.com. In July 2003, the Royal Mint of Malaysia launched another minted gold (shown in Appendix X). This dinar is minted according to the standard set during Caliph Umar Al Khattab r. a. (632 A.D), weighing 4.25 grammes with purity of 91.7%. As a start the Royal Mint employees were given an option to receive their monthly salaries, mainly those allotted for saving purposes. But one calculate roughly out of 1.8 billion Muslims, 10% decided to pay zakat in dinar, there would be more than 180 million people (this is more than 1/3 of U.S. population) who would belief that the return to the payment of Zakat in gold and silver is an essential part of the re-establishment of Islam. This dinar could be used to eliminate unjust exchange. Traders can make arrangment with the authority, where gold is deposited (i.e. Islamic Mint or the Royal Mint of Malaysia), to close trade, hand to

hand. In the case of e-gold, a quantity of e-dinar, can be transferred directly from one customer to another. It is effected by e-dinar automated order processing (www.e.dinar.com). In bilateral trade, payments of imports can be balanced by the exports, and the differences settled in gold (dinars) . There is no necessity to carry sacks of gold coins for transaction within the countries. In Malaysia and for that matter in Indonesia, Bangladesh, Iraq and northern African States, a small amount of gold is enough to buy a mountain of groceries! With the sophisticated technology nowadays, the account in terms of gold deposit can be deducted on a spot basis. To measure the effectiveness of the introduction of the dinar and its potential use, these are some views relating to monetary crisis and the comeback of gold:
At the outset, the major challenge for halal trade is not only financial but the readiness among Muslims to put their Imaan into practise (Amal). If the Muslim World were ready to conduct trade as stipulated in the AlQuran and the Hadiths, all the major challenges would gradually be removed. Trade but not riba shall flourish. This section describes some aspects on trade loans and contracts, as they might hinder halal trade.
CHALLENGES FACING HALAL TRADE AND EXCHANGE
Albert Einstein: The world cannot get out of its current state of crisis with the same thinking that got it there in the first place Nobel laureate Robert Mundell predicted that gold would again be part of the international monetary system in the 21st century. Retired Gold Trader, James E. Sinclair: It is amazing that out of Islam comes, what will save the Western Worlds economic system. Narrated by Abu Bakar ibn Abi Maryam, Messenger of Allah swt said, A time is certainly coming over mankind in which there will be nothing, which will be of use. Save a dinar Imam Ahmad ibn Hanbal (www. Islamicmint.com)
Loan Contract: Riba may exist in a loan contract, if the lender gained some excess amount - a source of Riba al-Fadl. Islamic Banking: Musharakah or Mudaraba contract: They are suited to attract paper money and enjoy the capacity to invest the deposits profitably. The banks were not geared to act as an entrepreneur, trader, and industrialist. The bank therefore cannot claim any competence in trading, neither has it a claim on capital (machine) purchased by the borrowers. It cannot also act as a stock-
ist to buy and resell the entire stock of imports and exports that are needed by traders. Forwards, futures: The Malaysian Derivatives Exchange (MDEX) makes available a number of derivatives instruments - Kuala Lumpur Composite Index Futures, Index Options, Crude Palm Oil Futures and Kuala Lumpur Inter-Bank Offered Rate Futures. The Islamic law of contract explicitly deals with exchange of currencies. Islam permits currency exchange on a spot basis - hand to hand (Hadith Bukhari: 1031, p. 481). M. Obaidullah (2002) reported that Fiqh has defined riba in any exchange or sale contract to be unlawful gain derived from the quantitative inequality of the countervalues in any transaction purporting to effect the exchange of two or more species (anwa) which belong to the same genus (jins) and are governed by the same efficient cause (illah), then no gain is permissible. M Akram Khan (1988) made a clear distinction between forward and futures: While condeming the later to possess a strong element of speculation, he viewed forward market in general to be permissible. He suggested in bai-al salam, the condition for payment in full, in advance being substituted by some bank guarantee to legalise the contract under Islamic law (p. 96-97). For futures he argued, the practice of allowing a two day lag to close the contract cannot be accepted in the Islamic framework. Others consider this should be acceptable on the ground that it involved the lag between the deals date and the execution date. Fahim (1995) found both to be totally forbidden, and prefer to make some modifications only in relation to commodity related contract. Kamali (1996, p. 221) viewed futures trading as ibahah (principle of permissibility), but warned that currency futures need to be viewed differently from commodity futures. Where possession (qabd) is not essential requirement of sale, futures may not be deemed prohibited. Only in the case of currency to currency (sarf) is qabd elevated to a prerequisite of a valid contract (ibid, p. 209-210). Majority of scholars consider both futures and forwards to contain the element of risk and uncertainty (gharar) thus could not be permissible. In todays trade, dealings are carried out on a computer screen, where buyers and sellers meet and the whole globe is a market. The time traders enter the market can be recorded and the time transaction takes place can be printed, as evidence. Currency Exchange: Obaidullah (2002) discussed in length, the rulings with respect to the exchange using gold under various schools of Fiqh with regard to currency exchange and gold (dinar

exchange). Dinar is made of gold with a known instrinsic value described as thaman haqiqi. When a currency made of gold from country A is exchanged for currency (made of gold) from country B then any deviation of the exchange rate from unity or deferment of settlement is riba al-nasia. This is different in the case of paper money - the exchange involving currencies of different countries is the same as bai-sarf with different jins. When paper currency from country A is exchanged with paper currency from country B, paper currency A is not thaman in country B, the price risk, if positive would eliminate any possibility of riba al-nasia. However deferred settlement would lead to riba al nasia.
Obaidullah (Ibid, 2002) and a collective fatwa by the OIC Fiqh Academy issued in year 1412 (Hijrah) gave these rulings on these trade instruments:
CONCLUSION
Islamic Swap: In the case of swap of interest free loans between A and B there are divergent views on the permissibility of such contracting. Commodity and stock futures are not permissible in Shariah because the Shariah requires that either commodity or price must be executed at the time of contract. Islamic Options: All forms of conventional Considered as promise and it is permissible and the promise is not a subject matter of sale. The promisor cannot charge the promisee a fee. On the hand scholars who consider that currency exchange must be settled on a spot basis rule out option. It is not a financial right and does not qualify, according to Shariah, for independent transactions.
I believe one should relate the key subject matter of economics to the reminder by the Prophet s.a.w on riba and trade. To explain economics along the line that riba is not trade is most challenging indeed. It is like dragging people to believe that there will be a great disaster in front of them, while these people have seen prosperity out of riba. By now, traders should be aware of what constitute halal trade: The product, how it is to be processed, packaged and stored. Muslims are asked to care about things they eat, what they trade and how they carry out trade. Right from the start he must take only what is good and pure to enable him to see the light of halal trade as opposed to riba, in order to gain Allahs pleasure. So where is the trader who loves
Allah and His Apostle more than his trade? When trader makes profit, he should pay zakat promptly. Sadaqah should be given and debt repaid handsomely. When it comes to payment, the mode of exchange matters, in order to avoid being accused of eating others wealth. The Islamic marketplace is unique, and Islam has proper guidance on the behaviour of traders, their rights and also the rights among buyers. This work asserts that the Baitulmal should be made to play a bigger role. The centralised fund is to provide infrastructure for halal trade and welfare of the people. At the institutional level, Halal trade would be markedly improved if the Muslim World agreed to form a trade based economy. As believers, traders should expect that trade based economy is the economy full of blessings, instead of exporting bounties and accumulating wealth from sources built on riba based economy. The potential for halal products within the Muslim World is great enough. Thus the opportunities for halal trade. Close co-operation therefore is urgent among authorities of the Muslim World. For a start, a Halal certifying body that is globally recognized should come under the umbrella of a recognized international Islamic organization, so as to avoid doubt in the mind of the consumer. It is important for the certifying bodies to be vigilant and not issue Halal status to non Muslims. Monitoring of the marketplace is also crucial to sustain the supply of halal products and services. Muslims World must have seen that paper money will not sustain riba based economy. What happened in Genoa will happen again. The Dollar and the Euro will continue to be engulfed in instability caused by fiscal policy and interest rate movements. The use of the Malaysian gold dinar and the e-gold can provide the currency for trade between nations. Financing can be real with gold backing. Many people confuse riba with financing. What is prohibited in Islam is riba; financing is not. E-trade has the same conditions as apply to other trade. Commodity trade has almost no limitations. Currency therefore could not be traded as a commodity since currency trade requires immediate and full payment. When using gold, traders can avoid exchange rates, one dinar is always one dinar, every where around the globe. Risk and uncertainty will be minimised, as against the risk when traders need to use futures and forward contracts. Receiving proceeds in gold would enable the Muslim World to protect the returns on its bounties. Thus halal trade is not riba, as the former is characterised by faith, and carried out by people who obey Allah and the Apostle s.a.w. Since gold was used during Prophets, times Muslims should not again, ignore the opportunities to use metalbased currency such as gold.
26 / Bibliography
BIBLIOGRAPHY
A Bewley: (n.d). False Growth in the Credit- Based Economy. In Abdul Razzaq Lubis et al. Discredit Interest - Debt. p. 49-67. Paid network. A Yusuf Ali. 1983. The Holy Quran. Text Translation and Commentary, Amana Corp. Abdul Gafoor, A.L.M. 1995. Interest-Free Commercial Banking. Groninigen, The Netherlands: Apptec Publications. Abdullah Ahmad Badawi. 2005. Mesasage from the Prime Minister of Malaysia. MIHAS 2005. Kuala Lumpur. 28-31, p. 2. De Gamo et al. 1997. Engineering Economy. Prentice Hall. Executive Intelligence Review. Nov. 15, 2002. in www.larouchepub.com. Fatwa (various dates). Islamic online.com. Fatwa (h. 1412), OIC Fiqh Academy. Government of Pakistan. 1980. Report of the Council of Islamic Ideology on the Elimination of Interest from the Economy. Islamabad, p. 1. IMF. 2002. IDB Summit Conference. Preparing the Ummah for the 2st Century. Washington D. C. IMF. March 2004. Direction of Trade Statistics. Washington D .C. Islamic Gold Dinar, www. Islamicmint.com. Jim Sinclair. 2002. The Gold Dinar: A Nuclear Wild Card. in Al- Fath al-ali al-Maliki. pp. 164-165. Kamali, M. H. 1996. Islamic Commercial Law: An Analysis of Futures. The American Journal of Islamic Social Sciences. Vol. 13, No. 2, p. 221. Khan, M. S. 1986. Islamic Interest-Free Banking: A Theoretical Analysis. IMF Staff Papers, Vol. 33, No. 1, pp.1-25. M. Akram Khan.1988. Commodity Exchange and Stock Exchange in Islamic Economy. The American Journal of Islamic Social Sciences, Vol. 1. M.L.A. Bashar Fiscal Structure and relationships in Early Islamic States, in http:// www.jomanifc.com/article/154/Banking and Finance. M. Obaidullah. 1996. Financial Contracting in Currency Markets: An Islamic Evaluation. International Journal of Islamic Financial Services. Vol. 3, No. 3. M. Umer Chapra. The Nature of Riba in Islam, Hamdard Islamicus, Vol. VII, No. 1: http:// www.jomanifc.com/article/154/Banking and Finance. Mahathir bin Mohamad. Oct 2002. The Gold Dinar in Multi-Lateral Trade IKIM Seminar. Kuala Lumpur. Mohsin S. Khan. March 1986. Islamic and Interest Free Banking: A theoretical Analysis. IMF Staff Papers. Vol. xxxiii, No. 1.
Bibliography / 27
Muhammad M. Khan. 1996. Sahih Al Bukhari. trans., Darussalam Pub., Riyadh. Murray L. Weidenbaum. July 1984. Free Trade Under Attack, What America Can Do in Imprimis. Journal of Hillsdale College. Vol. 13, No. 7. R. I. McKinnon (n.d.). The World Dollar Standard and the East Asian Exchange Rate Dilemma. Perspective. Vol. 3, No. 4. Rais Umar Ibrahim Vadillo. 2002. The Return of the Islamic Gold Dinar. New Edition, The Murabitun Inst. Msia: ISBN 1-874 216 169. Ramcel Media. 2004. OIC Trade Directory. Kuala Lumpur. Vadillo, Umar. 1991. Fatwa on Paper Money. Dar Al Ifta, Granda. www.e.dinar.com.
28 / Appendix
APPENDIX I
Table 1 Economic Resources and Direction of Trade of OICS - 2004

Albania Afghanistan COUNTRY Total Polulation 28513677 GDP (billion) 3544808 16.13 20 GDP/ Caput 4500 700 Export (billion) 0.098 Import (billion) 0.425 24.96 1.007 USA 12.42 Italy 1.76 Italy 1 France USA 2 Greece India Trading 3 Germany France Japan UK Germany Pakistan Turkey Spain Partner 4 Japan Canada Turkey India USA USA India Morocco S.Africa Nigeria France Italy Russia Italy 5 6
Germany Belgium
Bahrian Benin Brunei
Azerbaijan
Algeria
32129324 141340476 7250033 13574820 16063678 17327724 677886 365251
7868385
Bangladesh Burkina Faso Cameroon Chad
11.29 258.8
26.65
196
6000 3400
16900
12.605 6.492 6.713 0.293 1.873 3.439 0.485
7.742 6.5
1900
5.126 S.Arabia 9.458 USA 0.726 China 1.63 Japan
2.498 Italy
USA
Czech
14.55 27.75 10.67 0.441 24.51 7.301 19.02 1.063
18600 1100 1800 1200
1100
India Italy
Germany S.Korea China Germany Germany
UK
France
0.6336 Spore 1.959 Spain 0.76 USA
Thailand Thailand France USA Portugal China UK China China Portugal UK USA
Thailand
France Ghana Italy Australia
Germany India Niger
Georgia
China China China UK
Indonesia
Comoros Djibouti Egypt Guinea Bissau
9538544
Cote dlvoire Gabon Gambia Guyana
651901
466900 76117421 1355246 1546848 9246462
0.619 295.2 2.56
1400 5500 1700
700
0.365 0.028 5.299 2.891 0.156 0.155 8.759 0.726
0.088 France 2.781 France 1.079 USA 0.271 UK 0.665 S.Arabia 14.75 USA 0.646 S Korea 0.612 Canada
France Japan Spain
Nherland
Colombia Cameroon Kenya
1300 4000 2100
Nherland USA Ethiopia Italy France Belgium Spain USA
France France
Japan Germany France Nigeria Portugal
USA UK Germany India
UK Malaysia Ireland China Jamaica
1388363
705803
2.797
4000
800
0.054 0.512
0.104 India
Senegal
Belgium
Iran
Indonesia Iraq
238452952
Jordan
25374691
69018924 15143704 5081429 5631585 2257549 3777218 393330 5611202
758.8
478.2
3200
37.92 23.64 41.46 35 7.808
7000
63.89
1500 4300 1600
29.88
40.22
7.542 2.908 22.29 0.548
25.26
Japan USA USA
6.521 4.946 9.606 0.601
Japan Bermuda S.Korea UAE Italy Szerland USA
USA Iraq
China
Singapore Italy Canada Taiwan Szerland Canada
S.Korea Taiwan Italy China USA Russia USA Turkey China Italy Japan Germany Spain Spain Spain Belgium India
China
Jordan Spore
Turkey
Kazakhstan Kuwait Lebanon Libya Mali Kyrgyzstan
105.5
19000
6300
12.72
8.621
Russia Szerland UAE Spain USA Thailand China Spain India UAE Spain
Szerland S.Arabia
Italy
S.Arabia Japan
Morocco
S.Korea Turkey
Thailand
Germany Jordan China
Germany Germany
17.82 1.25
4800 6400 900 9000 3900
1.359 14.32 98.4 0.09
6.073 6.282 0.392 74.4 0.86 0.4
Kazakhsta Turkey S.Korea UK Germany France
Malaysia
Maldives Morocco
23522482 11956788 32209101 136461000 2998563 18811731 2340815
207.8 10.53 5.195 21.23 9.062
Japan Thailand France USA France Belgium France USA S.Korea Israel USA India
Germany India Italy Italy
Singapore Sri Lanka China Japan Brazil UK Japan Singapore S.Korea UK Mali China Jordan
Taiwan Japan
Tunisia
Mauritania Niger Mozambique
128.3
4000 800 900
1800 1200
0.915
8.466 0.28 21.8
0.541 0.795 11.7
0.927
Bangladesh UK USA Germany
Indonesia S.Arabia
12.75
Oman Qatar
Nigeria Palestine
11360538
1.142
S.Africa Nigeria China S.Korea Egypt
114.8
Pakistan
152,061,000
36.7
3600000
318
13100 2100 700 21500
14.54
Saudi Arabia Sierra Leone Somalia Senegal
10852147 8304601 5883889
25795938
840290
17.54 3.057 17.09
0.603 12.36 1.23 86.53 0.079 0.049
11.7
5.659
12.51
Thailand USA Italy
France UAE
Ivory Coast China USA
Japan S. Arabia UK Germany Djibouti France Spain
287.8
11800
5.711 0.0264 1.753
1.9
Germany Taiwan USA Kuwait
Hong Kong Germany Singapore Nigeria
1600
30.38
Japan Belgium Yemen
4.361
500
500
France Oman
Japan
0.344
Germany
Ivory Coast
Ivory Coast
Source: Compiled from Country Data, OIC Trade Directory (Ramcel Media 2004)
Cont...
Sudan Suriname Syria Tajikstan
Togo Tunisia Turkey Turkmenistan Uzbekistan Yemen UAE Uganda
39148162 436935 18016874 7011556
5556812 9974722 68893918 4863169
70.95 1.752 58.01
2523915 26404543
8.257 68.23 458.2 27.88 43.99 15.09 57.7 36.1
6.812
1900 4000 3300 1000
1413058706
26410416 20024867
1.413 bil
23200 1400 1700 800
1500 6900 6700 5800
0.3981 8.035 49.12 3.355 56.73 0.495 2.83 3.92
2.45 0.495 5.143 0.75
0.5013 10.3 62.43 2.472
2.383 S.Arabia 0.604 USA 4.845 Germany 0.89 Brk.Faso France Germany Italy
Netherland Turkey Ghana Italy USA Iran
UAE Norway Italy
37.16 Japan 1.179 Kenya
Source: Complied from Country Data, OIC Trade Directory (Ramcel Media, 2004)
Source: Compiled from Country Data, OIC Trade Directory (Ramcel Media 2004)
4.5 trilion
4491.427
621.0441 621 bil
458.9143
459 bil
2.31 Russia 3.042 China
S.Korea Iran China Szerland Netherland UK China Thailand Ukraine India
Netherland Germany UK Russia
Latvia
China Belgium China
Benin Spain France Ukraine
UK France France
APPENDIX I
Mali Libya Russia Turkey Uzbekistan Russia Germany Trinidad Turkey France India Iceland UAE
Appendix/ 29
Szerland
Tajikstan S.Korea
Germany S.Africa
Bangladesh Turkey Malaysia UAE
USA India
Szerland UAE
Table 2 World inter and Intra Trade of Industrial, Developing and IDB Member Countries, 2002
WORLD USD billion Share (%) Growth (%) Share in World Export (%) INDUSTRIAL COUNTRIES USD billion Share (%) Growth (%) Share in World Export (%) DEVELOPING COUNTRIES USD billion Share (%) Growth (%) Share in World Export (%) IDB MEMBER COUNTRIES USD billion Share (%) Growth (%) Share in World Export (%) FROM TO WORLD INDUSTRIAL COUNTRIES DEVELOPING COUNTRIES
APPENDIX II
IDB MEMBER COUNTRIES
6419.1 100.0 4.6 100.0
4197.9 65.4 3.1
2151.6 33.5 7.7
407.9 6.4 9.3
4021.8 100.0 2.9 62.7
2869.0 71.3 2.2
1127.3 28.0 4.4
216.1 5.4 8.0
2394.8 100.0 7.8 37.3
1327.8 55.4 5.0
1022.8 42.7 11.6
191.6 8.0 10.8
483.6 100.0 1.6 7.5
251.0 51.9 -2.0
210.0 43.4 5.9
55.7 11.5 6.3
1. Trade flows are analysed using export figures of reporting countries. 2. Figures are based on, Direction of Trade Statistics (IMF, March 2004).
30 / Appendix
THE CONCEPT OF HALAL In Al-Quran APPENDIX III
O you people, eat of what is on earth lawful and good, and do not follow the footsteps of Satan, for he is to you an avowed enemy. 11:168 (A. Yusuf Ali, 1983) Another long verse: Forbidden to you for food are: Dead meat, blood, the flesh of swine and that on which has been invoked the same of other than God, that which has been killed by strangling, by violent blow, by a headlong fall or by being gored to death; that which has been partly eaten by a wild animal unless you are able to slaughter it (in due form), that which is sacrificed on stone (alters); (forbidden) also is the division (of meat) by raffling with arrows: that is impiety. This day have those who rejected faith given up all hope of your religion: So fear them not, but fear me. This day have I perfected your religion for you, completed My favour upon you, and have chosen for you Islam as your religion. But if any is forced by hunger, with no inclination to transgression, God is indeed oft-forgiving most merciful. 5: 3 (A. Yusuf Ali, 1983). Also They ask thee what is lawful to them (as food). Say: Lawful unto you are (all) things good and pure(5: 4, Ibid) The food of the people of the Book is lawful unto you, and yours is lawful to them..(Lawful unto you in marriage) are (not only chaste women, who are believers, but chaste women among the People of the Book(5: 5, Ibid) Why would you not eat of (meats) on which Gods name has been pronounced when he has explained to you in detail what is forbidden to you except under compulsion of necessity? But many do mislead (men) by their appetites unchecked by knowledge. Your lord knows best those who transgress. 6: 119 (Ibid)
Source: A Yusuf Ali. 1983. The Holy Quran. Amana Corporation.
But Say not for any false thing that your tongues may put forth: This is lawful and this is forbidden so as to ascribe false things to God. For those who ascribe false things to God will never prosper. (in such falsehood) is but a paltry profit but they will have a most grievous penalty (16: 116,117. (Ibid) ___________________________________
Appendix/ 31
APPENDIX IV RULES AN CONDITIONS FOR HALAL SLAUGHTERING
According to the Shariaah, there are rules and conditions required for Halal slaughter of permitted animals and birds. Among the rules are:
The abattoir or factory and must be under the close and constant supervision of a Halal certifier.
The premises, machinery and equipment must be cleaned according to Islamic Sharia (law) before any production takes place. The slaughterer must be a mature pious Muslim of sound mind who understands fully the fundamentals and conditions relating to Halal slaughter, and be approved by the religious authorities. The slaughter must be performed manually using a stainless steel knife. The slaughterer must sever the respiratory tract, esophagus and jugular vein. The animal must be completely dead before skinning takes place. Only Halal animals and birds are Halal Slaughtered. Facilities must be available for rinsing the knife after each kill. Only acceptable live animals and birds can be slaughtered.
32 / Appendix
APPENDIX V V(a) THE FISCAL STRUCTURE AND MANAGEMENT OF WEALTH IN TRADE BASED ECONOMY Bashar noted that Caliph Abu Bakar (632-634 A.D.) took the initiative to organise the activities of the Baitulmal set up during the Prophets s.a.w time. Caliph Umar (634-644 A.D.) further organised and systematised the sources and expenditure of revenues of the Baitulmal. The Diwan was set up to co-ordinate all economic activities relating to fiscal matters. Broad classification of the revenue include: Sadaqah, zakat revenue, custom duties, tolls collected from traders, booty, tax on mines, tax on property lost and found (luqalah), and the estate left by Muslims who have no heirs.The beneficiaries of revenues are in accordance with the Quranic verse. During the reign of Caliph Umar, the Islamic empire expanded greatly, led to significant changes in the fiscal management. He raised the rates of jizyah (1.2 dinars for workers and peasants; 2.5 dinars for middle income group and 4.8 dinar for the rich). One dinar (no mention as to whether it was minted gold) but fixed at 4.25 grams in weight. Vadillo (2002, p. 87) reported that under Caliph Usman (644656 A.D.) and Ali (656-661 A.D.) copper coins was used. First dated dinar however exist from 74 AH/ 694 A. D. using standard 4.4 grams, replaced in 77 A. D. During the Umayyad period, reports that a coin was struck to a new standard of 4.25 grams. Only in the year 100 AH were coins minted with the inscription In the name of Allah, the Merciful, the Compassionate; this inscription was also used on the coins in Al Andalus and on the half and third Dinars (Vadillo, p. 88). Walid bin Abdul Malik (88 A.H: 705-715 A.D.) spent public income to repair roads and render social service, in order to prevent the poor and the weak from begging, and granted them pension. At this stage, almost all revenue accruing to the central government was used for specific services, such as education, infrastructure and agriculture. When rebuilding the Masjid of Medina the entire materials came from all parts, including the Byzantine. About 100,000 Mithqals of gold was spent. Mosque at Damascus, was estimated to cost 600,000 dinar, and materials came from far-off places. During this time dinar (minted gold) and dirham (minted silver) were used to measure the value of goods traded.
Appendix/ 33
Many major cities under the Umayyads were recorded: Damascus, Basrah and Kufa (Iraq province). Canal dug at a cost of 8 million dirhams, directly transferred from the central treasury. Hospitals and dispensaries were built during the time of Al-Wathiq (842-847 A.D.). Roads and bridge were constructed linking Baghdad with the provinces and the places including Mecca, Syria and China. Riba Based Economy For a quick historical sketch on the false growth in the riba based economy, work by A. Bewley (in Abdur-Razzaq Lubis et-al, n.d.) is referred in Appendix V(b). Bewley illustrated two patterns of trade economy outside the Arabian peninsular. One pattern of economy referred to 15th Century Venice and that of the Ottoman Empire prior to 1800, which was based on trade without fiat (discretionary/arbitrary) or fiduciary money, and during which time there was a state of peace. Another is the economy built on false credit, that began and ended with wars. Examples of which are the economies of the cities of Genoa, Amsterdam, London and New York. The growth of these cities was centered around the creation of fiduciary money by the banking system. The banking system had been claimed to benefit markedly from the interest (riba) of banks deposits that it creates out of nothing (other peoples deposits). On the contrary, Al Quran has reminded: And do not eat up your property among yourselves... with intent that ye may eat up wrongfully and knowingly a little of (other peoples) (2: 188). Note that in the riba based economy, trade was not closed although the individual bank claimed that the account was closed based on promised payment held by in the banking system. The transfer of goods has been separated from the payment even in trading of ordinary goods. Thus the monetary policy of this economy, will remain independent of real sectoral activities. Price movements and the rate of inflation will thus be affected by the uncertainties ensuing from the monetary sector. Such an adverse effect of the rate of inflation on the real sector will cause instability in both the real and the financial sectors. Such an economy had began, and after an enormous and unmanageable debts, had ended with war/civil war. To comprehend how humiliating riba can be, ponder the hadiths narrated by Abu Hurairah; the Prophet, s.a.w that said: Riba has seventy segments, the least serious being equivalent to a man committing adultery with his own mother. (Ibn Majah, Vol. 2: 2274, p. 764:); and There will certainly come a time for mankind when everyone will take riba and if he does not do so, its dust will reach him. (Ibn Maja, Vol. 2:2278, p. 765). Quotations from those who can comprehend the danger of paper money to the global economy are given in Appendix VI.
34 / Appendix
V(b): MONEY AND BANKING IN RIBA BASED ECONOMY Merchants of Venice and Ottoman Empire Bewley reported that commodity trade was reported to be the life blood of Venice. As Venetian traders were forbidden to trade directly in Germany, the Germans traders who came to trade in Venice, were confined to a special residence where they deposited their goods which were traded under strict supervision. Monopoly in the case of annual auction reported to be banned. The primary financial instrument was the commercial loan (colleganza), 90% involved a partnership deals, where merchants provide the capital and share the profits. Account had to be settled within 30 days of a ships return. The term of the bill of exchange was never more than that: Limited to the duration of the journey. The fall of Constantinople to the Turks, was the major factor of the decline of Venice. The bazaar economy of Ottoman Turks was a market economy centred at the city where exchange followed the rules of Shariah. Business conducts was characterized by Islamic faith. The price offered here was low as compared to western Europe; a lot of actual coins/ silver in circulation. The backbone of markets independence (free market) lay in the caravans which were strictly controlled by the state, thereby facilitating Muslim control over trade, based on faith. Foreign merchants were kept under surveillance at the allocated quarters. Most of her seas were protected. The advance of European economy and the constant conflict with Russia put pressure on Turkey leading to the loss of control of the state over the influx of foreign goods, which not only destroyed the bazaar economy, but the metal based currencies gradually disappeared from the market. This leads us to look at the riba based economy through the creation of money by the banking system. V(c) MONEY AND BANKING IN GENOA, AMSTERDAM, LONDON AND NEW YORK
When fiduciary money was first created, it was a receipt which represented a certain amount normally backed by gold or silver deposits, given to goldsmith (some one in trust).The receipt given by the goldsmith to the depositor was a contract, not legal tender. Later the receipt (paper money) was exchanged without having to involve the goldsmith. Due to its convenience, the use of receipts starts to grow though limited in use between merchants in Italy (XI century), later in Vienna and Granada from XV century to the setting up of the Bank of England in 1694.
Appendix/ 35
Genoa moved to the forefront of finance in the 1550s lasted to 1627. In 1557, the Genoese managed and moved Charles Vs money after lending him at 10 %, some said 30% interest. The credit created out of loans enable the Genoese to control the silver bullion, which they used to buy gold. All bills of exchange had to be paid in Gold and increased the power Genoese financiers considerably. The King tried to sack them in 1575 but they, being the financiers blocked the circulation of gold. Genoa was the first to develop the paper system of bills as a mechanism to monopolise credit. Later, Amsterdam became the 17th century financial center, gradually displacing Genoa as the city was flooded by refugees (mainly the Jews ) who were the masters of currency and stock exchange at that time. After Spanish bankruptcy of 1627, the Genoese withdrew. What had happened in Genoa, happened in Amsterdam. The later began as commodity center, than the Bank of Europe. In 1782, reported Bewley, there was too much paper money in Amsterdam. From a total capital of 900 million guilders invested in loans, only 50 million (5.5%) was in gold/silver, the rest was guilders. England had built a rather large debt following the war with Holland. To finance the debt, the Bank of England was set up in 1694 initially as a keeper of gold. (reported to be 72,000 pounds), but in return the Bank issued a receipts of deposit and through a Decree, named it legal tender, a form of fiduciary money backed by gold (money that can be exchanged for gold). Deposit (money) saved in the Bank, would earn interest as well as the Bank could lend money (other peoples money) at a particular rate of interest. It was reported that the Bank lent 16.75 times out of deposit, at an annual interest of 8.25% to William, the King of Orange, to finance the war against France. At that rate the Bank earned interest amounting to 100 thousand pounds a year. On this issue, its founder, William Peterson, was reported to have claimed: The Bank will benefit from the interest of banks deposits that it creates out of nothing. (Vadillo, 1991). This refers to the concept of credit creation by all present-day conventional banks. The amount of credit that could be created depends on the required reserve ratio (R.R) fixed by the Central Bank of each country. For example if R.R is 25%, the bank would be able to create new deposit 4 times (1/25% ) the actual deposit. Say, with new deposits of 100 million, the bank will keep 25 million on reserve and lends 75 million new loans. Through out the banking system, reserve will increase by 4 times, that is 100 million, loans by 4 times (that is 300 million), and total deposits by 4 times (that is 400 million). The new credits take the form of fiat money (the money issued with no actual base, thus intrinsically worthless).
36 / Appendix
In 1711 all holders of British government short terms debts became shareholders in the famous South Sea Company. Also an overseas trading company was set up (Mississippi Company) which accepted government securities as payment for shares in the company. The Government creditors (shareholders in the South Sea Company) were able to exchange their bonds for shares in the later trading company. Many more companies were set up, including British Telecom. The price of shares rocketed due to government backing. But when the Mississippi (trading ) company brought in 2% dividend, the great crash began. Bewley reported that shareholders sold and sold their shares. Eventually in 1816, England ended the gold standard. The bank notes, with the guarantee to pay in gold, circulated but new notes of the same denomination began to be issued with the guarantee to repay in gold absent. The real guarantee was transferred to the output and prosperity of Britain. The debt of the Bank of England was large but the government obliged the Bank by allowing it to evade it promise to repay in gold. When the loan floated by Barings was used to help finance the war against France, the money power was vested in the credit brokers. World War I basically left Britain in debt on which the annual interest was 326 million pounds. Appendix VIII highlights the nature of money and interest (riba), in the form of quotations from those who are able to comprehend the false promise of credit and the danger of riba to the individual, society and mankind. In the middle of the 18th century, the history of money and credit encountered a hiccup in America when President Thomas Jefferson was reported to have said Banks are to be feared more than standing armies (Bewley, p 63), and the U.S. currency was backed by gold. In 1930 the USA was the worlds principal creditor as gold flowed into this country as repayment of war debts. After World War II the 1944 Bretton Woods Agreement and the International Monetary Fund (IMF) took the center stage; to understand their roles in world trade , refer to trade practices in sub-section (c).
Sources: A Bewley (n.d) , False Growth in the Credit-based Economy, in Abdul Razzaq Lubis, et al. Discredit Interest - Debt Paid Network. p. 49-67,
Appendix/ 37
APPENDIX VI
USD FACILITATING ROLE AS INTERNATIONAL MONEY Medium of Exchange Unit of Account Private Official Peg
Store of Value Payment
Standard of Deferred
Banking Invoice
Instrument
Intervention Reserve Sovereign Bond
Private Bond
Adopted from: R. I. McKinnon The World Dollar Standard and the East Asian Exchange Rate Dilemma, Perspective Vol 3, No. 4 http://www.0ycf.org/Perspective/16_033102/ world_dollar_standard.htm, p.3
38 / Appendix
BALANCE OF PAYMENT, EXCHANGE RATE, MONETARY POLICY AND FISCAL POLICY VII (a) BALANCE OF PAYMENT CURRENT ACCOUNT (CA)
APPENDIX VII
(Trade in Goods And Services, Investment Income and Transfer)
Rise in Import (M) (Trade Balance Decreases)
Muslim World
Falls in the Value of Domestic Currency (Trade Balance Increases)
Outside World
Rise in Export (X) (Trade Balance Increases)
Rise in the Value of Domestic Currency (Trade Balance Decreases)
(Involving International Investors, Currency Speculators) RISE IN IMPORT (In CA) Capital Flow Out of Domestic Market (Shift out Capital When Returns/ Interest Rate Low) (Shift out Money When Spot Rate Low)
VII (b) BALANCE OF PAYMENT CAPITAL ACCOUNT (CP AC)
Fall in the Value of Domestic Currency
Money becomes Commodity Rise in the Value of Domestic Currency
RISE IN EXPORT (In CA) Capital Flow Into Domestic Market (Invest CapitallMoney When Returns/ Interest Rate High) (Shift in Money When Spot Rate High)
Money becomes Commodity
Cont...
Appendix/ 39
Expansionary Monetary Policy Restrictive Monetary Policy (Rate of Interest) Expansionary Fiscal Policy (Decrease Tax) Restrictive Fiscal Policy (i.e. Taxation)
ECONOMIC CONDITION
VII (c)
APPENDIX VII
CURRENT ACCOUNT EXCHANGE RATE Depreciation Appreciation Depreciation Appreciation
Deterioration (M > X) Improvement (X > M) Deterioration (T < G)
Improvement (T > G)
40 / Appendix
QUOTATIONS ON MONEY AND INTEREST (RIBA) APPENDIX VIII
Illusion from Ten Symponies: Gorka Konig, by Ian Dallas: If you think money is real, you will be an obedient slavemoney is god.
From Abu Hurayra: The Prophet, peace be on him, said: Riba has seventy segments, the least serious being equivalent to a man committing adultery with his own mother. (Ibn Majah, vol. 2, p. 764:2274).
Narrated Abu Huraira: The Prophet said, A time will come when one will not care how one gains ones money, legally or illegally (Muslim, Volume 3, Book 34, Number 276).
In Strangers of The Forest, by Eric Hansen: Keep your money. You can print money, you cant print land. We ( The Penan Tribe) want our land.... Abraham Lincoln: The money power preys upon the nation in times of peace, and conspires against it in times of adversity....
Sir Joseph Stamp, Governor of the Bank of England: Banking was conceived in iniquity and born in sin. Keynes: There is no subtler or surer means of overturning the existing basis of society than to debauch the currency.
Governor Eccles, former Head of the IMF: The Bank can create and destroy money. Bank credit is money. The Monetarists Boast: Give me a fulcrum and a lever long enough, and I can lift the world.
Frederick Soddy A Noble Price Winner: The whole profit of issuing money is the capital starting from nothing whatever of their own, they have got the whole world ... by a trick of credit creation.
Aristotle on usury: The most hated sort of money making ... which makes the gain out of money... money was intended merely for exchange Cont...
Appendix/ 41
Albert Einstein, Noble Price winner, on being congratulated for his invention and asked, what he thought was the greatest discovery of all time ? His reply: Compound interest It is most powerful force...it works for you, and when you borrow, it works against you (www.aarp.org/ money/financial).
APPENDIX VIII
42 / Appendix
APPENDIX IX
GLOBALISATION Lowering Tariff means Lower Price
Lending at market rate USD/ EURO/Technology/Services Bounties of Muslim World Agricultural Goods, Source of Energy
Banking System that lends USD in order to sell exports
FDI
Country of Origin FREE TRADE
Borrowing USD at market rate to buy foreign export LENDING PROCESS AND DEBT CREATION IN THE MUSLIM WORLD
Appendix/ 43
Biodata / 45
Professor Dr. Sabariyah Din Akademi Tentera Malaysia (ATMA) Universiti Teknologi Malaysia Professor Dr. Sabariyah obtained her bachelor degree majoring in economics from the University of Malaya. Began her career at Institut Teknologi Kebangsaan (ITK) in 1972. After gaining her Diploma in Education from UM in 1973, she was appointed Assistant Lecturer A at the Institute (later upgraded to Universiti Teknologi Malaysia (UTM). She received a masters degree in 1978, from the Australian National University (ANU). In 1988, she pursued her doctoral study at the University of Birmingham where she gained her Ph. D. On returning, she served the Faculty of Management as Deputy Dean (Academic) until 1997. Currently she is seconded to the Malaysian Military Academy (ATMA). She has taught bachelor degree subjects in the areas of: Land and Urban Economics, Marketing Research, Engineering Economics, Technology and Economic Development, and Quality Management. Taught Economics in Education and Research Methods at masters level. Supervised and evaluated over one hundred bachelor and master degree projects in the area of Economics of Valuation, Technology Management in Defence and Economics of Education. At doctorate level, she has evaluated research proposals in the area of Property Market, Housing Policy and Amelioration of Adverse Effects of Technology. Her areas of interest are on Land Based Economics, Income Disparities, Marketing Management and Economics of Technological Change. At the masters level, she has studied the dependency of Malaysias agricultura marketing on institutional support, and the effects thereof on production and land management. Her doctoral thesis was on land-technology trade-off and income alleviation brought about by large scale farming estate system. She chaired the Publication Committee, Academic Staff Association, (1982), was involved in the planning stage of UTM, Towards Academic Excellence, (1986). Chaired the Research Committee, Faculty of Management and Human Development (1992-96). She was involved in the initiation stage of setting up the UTMs Research Unit (1987) and Technology Policy Centre of Excellence (1997). She was a member of UTMs Permanent Senate Committee, Deputy Chairperson UTMs Technology and Cultural Group. Member of UTMs (Business Group) Quality Committee, and member of the Evaluation Panel for the UTM Vice Chancellor Quality Awards, 2001.
46 / Biodata
At ATMA, she was the Deputy Director (Academic) 19982004. Involved in drafting he UTM-ATMA Academic Regulations for Senate approval. Chaired the UTMs Degree Presentation Committee, for ATMAs graduates, Monitored documentation and presentation of the UTM-ATMA Engineering programmes and the Nautical Science programmes; now recognized by the Board of Engineers and by the PSD respectively. At the national level: A member of the HSC Economic Committee, Malaysian Examination Council. Involved in the documentation of the Economics Terminologies, published by Dewan Bahasa dan Pustaka (1987). Pioneered the educational link between UTM Akademi Laut Malaysia (ALAM) in Management Technology (Maritime Transportation) course (1994); UTM TLDM (Maritime Defence Transportation, (1994). Involved in the UTM MINDEF academic programmes, conducted at ATMA (1995). She rendered service to many institutions; among them: The Malaysian Cocoa Board, Jabatan Perpaduan Negara Johor, Yayasan Pembangunan Keluarga Johor, Malaysian Maritime Institute, the Servicemens Association and Womens Association (HAWA) Perlis. At the International level, she took part, under CICHE academic link (1982) between the Department of Valuation UTM, and the Department of Land Economy, University of Aberdeen, in the revision of syllabi for, and approaches to teaching the subject of land economics. Conducted a Market Study on Mobile Phones (1994) for Nippon Telegraphic and Telegraph (NTT) and helped design the UTMALAM, UTMTLDM, UTMIAB and UTM University of Queensland MOUs. Carried out a study for the UPU on the Malaysian Construction Industry Completed the Socio Economic Study for the YPK, Johore Wrote papers in natonal and international conferences COSTAM, ASAIHL, UPEN Johore, and University of Aristotle, Greece. In many occasions she was invited to address conference sessions: at NGOs Johore Government Convention, and, at WFWP World Conference, Washington D. C. to introduce Malaysian speaker addressing a theme: The Education for the Heart and the Heart of Education. Professor Dr. Sabriyah was active in sport and took part in the interuniversity staff games. For her service she was honoured with Excellence Award, Khidmat Bakti and Jasa Bakti by the University. Now, she is leading the ATMA Quality Committee in the application for the MS 9001:2000 (Academic Programme and Military Training Procedures). Indeed, she has helped to place technology based education in a niche position within the Malaysian Armed Forces, and has worked to provide academic management system for cadets to achieve academic excellence.
Biodata / 47
She dedicates this Inaugural lecture to her ex-students who are now successful registered valuers, professional engineers, and military leaders in the making, with the hope they fear Allah in their undertakings.

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Virtual Intelligence and Knowledge Management / 1

Professor Dr. Sabariyah Din

2 / Siri Syarahan Perdana Profesor

SIRI SYARAHAN PERDANA PROFESOR

Professor Dr. Sabariyah Din

UNIVERSITI TEKNOLOGI MALAYSIA 2006

Trading Halal Commodities: Apportunities and Challenges / 1

SIRI SYARAHAN PERDANA PROFESOR

2 / Siri Syarahan Perdana Profesor

Trading Halal Commodities: Apportunities and Challenges / 3

4 / Siri Syarahan Perdana Profesor

Trading Halal Commodities: Apportunities and Challenges / 5

6 / Siri Syarahan Perdana Profesor

Trading Halal Commodities: Apportunities and Challenges / 7

Riba: Sources in the Al Quran

8 / Siri Syarahan Perdana Profesor

Trading Halal Commodities: Apportunities and Challenges / 9

10 / Siri Syarahan Perdana Profesor

Trading Halal Commodities: Apportunities and Challenges / 11

12 / Siri Syarahan Perdana Profesor

Trading Halal Commodities: Apportunities and Challenges / 13

14 / Siri Syarahan Perdana Profesor

Trading Halal Commodities: Apportunities and Challenges / 15

16 / Siri Syarahan Perdana Profesor

Trading Halal Commodities: Apportunities and Challenges / 17

18 / Siri Syarahan Perdana Profesor

Trading Halal Commodities: Apportunities and Challenges / 19

20 / Siri Syarahan Perdana Profesor

Trading Halal Commodities: Apportunities and Challenges / 21

22 / Siri Syarahan Perdana Profesor

CHALLENGES FACING HALAL TRADE AND EXCHANGE

Trading Halal Commodities: Apportunities and Challenges / 23

24 / Siri Syarahan Perdana Profesor

Trading Halal Commodities: Apportunities and Challenges / 25

Table 1 Economic Resources and Direction of Trade of OICS - 2004

Bahrian Benin Brunei

32129324 141340476 7250033 13574820 16063678 17327724 677886 365251

Bangladesh Burkina Faso Cameroon Chad

12.605 6.492 6.713 0.293 1.873 3.439 0.485

5.126 S.Arabia 9.458 USA 0.726 China 1.63 Japan

14.55 27.75 10.67 0.441 24.51 7.301 19.02 1.063

18600 1100 1800 1200

Germany S.Korea China Germany Germany

0.6336 Spore 1.959 Spain 0.76 USA

France Ghana Italy Australia

Germany India Niger

China China China UK

Comoros Djibouti Egypt Guinea Bissau

Cote dlvoire Gabon Gambia Guyana

466900 76117421 1355246 1546848 9246462

0.619 295.2 2.56

1400 5500 1700

0.365 0.028 5.299 2.891 0.156 0.155 8.759 0.726

France Japan Spain

Colombia Cameroon Kenya

1300 4000 2100

Nherland USA Ethiopia Italy France Belgium Spain USA

Japan Germany France Nigeria Portugal

USA UK Germany India

UK Malaysia Ireland China Jamaica

69018924 15143704 5081429 5631585 2257549 3777218 393330 5611202

37.92 23.64 41.46 35 7.808