BUSINESS and Investments opportunity in the proposed new political entity, Bangsamoro, is a breakthrough in Mindanao. The ongoing peace talks between the Government of the Philippines and the Moro Islamic Liberation Front (MILF) holds out the possibility of peace, a responsive government and a better, more prosperous future for their people of the region. There are several questions we may ask ourselves, how can the communities within the Bangsamoro be described? How can the community be understood? What are its values and priorities? Who should be involved in helping develop and implement in creating a conducive-business climate for the region? Who is likely to be a great help and why? Who else can be part of a network of support? Who might hinder the process if not included? Who is the audience for business and long term investment initiatives and strategies?
Based on these insights and questions, Al Qalam Institute of Ateneo de Davao University, in partnership with Peace and Equity Foundation, decided to conduct a seminar-workshop entitled, Crafting the Bangsamoro Islamic Finance, at El Bajada Hotel on March 25-27.
As I write this article, the seminar is ongoing. There are more than 30 members from civil society organizations, cooperatives, NGOs coming from different provinces of Mindanao arrived in Davao last March 24 to actively participate in this three-day event.
Al Qalam invited two experts from Indonesia to serve as resource persons. The first speaker was Priyonggo Suseno, a professor from Islamic University of Indonesia and an expert in Shariah economics. He was assigned to discuss principles of Islamic economic and finance.
Mr. Priyonggo earned his degree on AB Economics and Development Studies at Gadah Mada University. He earned his Master's Degree on Islamic Economics and Banking and Finance at University of Loughborough, United Kingdom.
In his presentation, he started by asking, "Why Islamic banking and finance is the global trend now a days? He cited three reasons: religious, economic, and academic as bases of why people at the global markets are interested in Islamic finance.”
He added: "Muslims believe in Islam as the way of life which one of main principles is no separation between temporal and religious matters. This implies that the compliance with Shari'a is the basis for not only religious worship and rituals but also business practices and behaviors."
On the economic reasons, he provided the figures. The economic potential of Islamic finance lies on the fact that Islam is the fastest growing religion in the world with more than 28.26% Muslim people around the world or a total of 2.04 billion (23% Asia, 53% Africa). Also, there is also a huge potentials growth of Islamic finance (20% annual growth, $ 1.630 bill) and with high growth of product range and development.
He also mentioned of three types of Islamic finance development in United Kingdom, Malaysia, and Indonesia. In UK, it was mainly because of the petro dollar demand driven. Middle East and Europe are interested in Islamic finance in order to tap the vast resources of the oil rich Muslim countries in the Middle East. In Malaysia, the Islamic finance is government driven. They have the full support of the Malaysian government to ensure that their banking and finances are mostly based on Islamic principles and values.
The academic reason is based on the new paradigm of "profit-loss sharing principle." Based on their experience, this principle is more stable compared with debt-based finance system. This is why Islamic finance also aims to promote and practice just economic system.
Key points about what are promoted and prohibited on Islamic finance were also discussed by Prof. Priyongo. The prohibited acts are as follows: Usury or riba: Riba, which means "excess", interpreted as "any unjustifiable increase of capital whether in loans or sales", is the central tenet of the system. Indeed, any positive, fixed, predetermined rate tied to the maturity and the amount of principal is considered Riba and therefore totally forbidden. Uncertainty (Gharar): Excessive uncertainty and speculative behavior are totally prohibited. An Islamic financial system discourages hoarding and prohibits transactions that involve extreme uncertainty, gambling and risk. Investing in unlawful business (Haraam): Only Sharia approved activities are allowed, which means that investing in unethical sectors such as casinos, tobacco companies, wine, alcohol and sex-business is totally prohibited.
The promoted acts are the following: Promotes productive economic activities, Islam charges 'tax' on idle productive asset known as zakah. It Encourages trade and forbid interest based transaction. It promotes fairness and equity, encourage Capital owners and workers to share the profit and risk of business. Profit-loss sharing contract replaces interest based financing, and promotes redistribution of wealth to all people through zakah or charity obligation for rich people. And lastly, it promotes ethical business practice. Profit motive and social motive embedded altogether at one business organization. Social responsibility is part of business mission.
On March 27, the Government of the Philippines and the Moro Islamic Liberation Front are expected to sign the Final Peace Agreement or the Comprehensive Agreement of the Bangsamoro. We are all hopeful that this signing will not be limited on the text of the agreement. Key principles must be put to practice and be made operational. Insha Allah (God willing!) the Bangsamoro will engage on Islamic finance, banking and even micro finance. This can ensure that wealth will be properly distributed.
The seminar workshop is a start of a strong vision of CSOs, NGOs, and peace advocates who hopes that Islam will be viewed differently. As a way of life, this can offer not only spiritual aspect but also economic concerns of the people, Muslims and non Muslims as well. The Shariah economics is a different paradigm compared to the capitalist and western economic principles. It is very promising and we need to discuss this one day at a time.
In my article next week, I will discuss the BMT Practices and workable systems in the community level.