I thought this may if interest to some on the list. Abdoulie Jallow -----Original Message----- From: Islamic Economics and Finance <[log in to unmask]> To: [log in to unmask] <[log in to unmask]> Date: Saturday, August 21, 1999 12:48 AM Subject: finance: Intl Conf on Islamic Economics in 21st Century || || o || _o_,_\ ,;: .'_o_\ ,;: (_|_;: _o_,_,_,_; ( .. / (_) / ( . Bismillah irRahman irRaheem In the Name of Allaah, The Most Gracious, The Most Kind ----------------------------------------------------------------------------- Hijri date: Saturday 9 Jumaada al-awal 1420 A.H. From: [log in to unmask] International conference on Islamic economics in the 21st Century (report prepared by IFDS Multimedia http://www.ifds.net) An international conference entitled "Islamic Economics in the 21st Century" was held last week from 9 to 12 August 1999 in Kuala Lumpur, Malaysia. The conference was organised by the International Islamic University, Malaysia (IIUM) in collaboration with the Islamic Research & Training Institute of Islamic Development Bank in Jeddah, Saudi Arabia (IRTI). According to IIUM's Rector, Professor Dr. M. Kamal Hassan, it has been almost five years since the university organised a conference of international level in the area of Islamic economics. The conference, which was held at a prominent hotel in the city, was attended by over 200 delegates from more than 15 countries including Algeria, Bangladesh, Palestine, Pakistan, Iran and others. The Malaysian Minister of Education and President of the University, Dato' Sri Mohd. Najib Tun Abdul Razak officially opened the conference. Najib stated that the Malaysian economy was 'bottoming out' and that the economical crisis Malaysia faced was a good opportunity for scholars to look into the past in order to plan for the future so that the same mistakes would not be repeated. Najib also suggested several solutions to the challenges Islamic economics is facing today. This included looking back into Islamic fundamentals, getting rid of the distinction between developed and non-developed worlds, restructuring the OIC so that it be more economically driven and encouraging scholars to unite in articulating their voice regarding Islamic economics. The issues raised during the conference included the principles and interpretation of Riba, Islamic bonds, Waqf, Gharar, Zakah, Islamic banking and economics in general. Speakers and discussants included members of universities and institutions such as IIUM, the Islamic University of Palestine, IRTI, the National University of Malaysia (UKM), the Institute of Islamic Understanding Malaysia and many others. Members of the corporate sector also spoke including those from the Al-Rajhi Banking and Investment Corporation in Saudi Arabia, World Assurance in Algeria, the Central Bank of Iran, and Bank Islam in Malaysia. For more details on the conference, click on any one of the following: Day One Day Two Day Three Day Four Day One The first paper presented after the opening was "The Principles of an Integrated Concept of Riba: Towards an Islamic Theory of Value" by Elmi M. Nur of the International Institute of Islamic Economics, International Islamic University in Pakistan. In his paper, Nur concentrated on the meaning and interpretation of riba while analysing the conceptual difficulties with each of its interpretations. He also defined its meaning and classified its problems. This was followed by paper on a subject considered controversial amongst many Islamic scholars, "Bay' al-Dayn and Islamic Bond Issues in Malaysia" by both Saiful Rosly and Sano Koutob Moustapha of the Economics department in IIUM. Here, the two speakers laid out the different types of Islamic bonds found in Malaysia as well as the steps involved in issuing Islamic bonds in Malaysia. In their papers, several justifications were given to support the legitimacy of Bay' al-dayn by clarifying its relationship with Bay' Ma'ajjuz at-Taslim (sale of undeliverable item), Bay' Ma la Tamlik (sale of unpossessed item) and Riba. The role of Waqf in the 21st Century was then presented by Mohammed Boudjellai of World Assurance in Algeria. Boudjellai began his paper by emphasising the historical role of the Waqf in the life of Muslims. In his paper, he proposed that a "new institutional framework capable of enhancing waqf activities in Modern Muslim society" to ensure a better and durable management of the continuous flow of waqf donations be established. In the afternoon, the subject of Gharar was discussed by Sami Al-Suwailem in his paper entitled "Towards an Objective Measure of Gharar in Exchange. The objective of his paper was develop an objective criterion to identify and measure gharar in exchange by formulating it according to basic axioms of expected theory and game theory, and in consistence with Shari'ah rules and maxims. He was of the view that this measure would help economist view gharar as an integrated theory of risk, which could then be easily communicated with non-Muslim economists while providing a quantitative measure of gharar that can potentially be applied to innovative risky transactions. The subject on Waqf was again discussed in Abul Hassan M Sadeq's paper entitled "Socio-economic Development Role of Waqf in the 21st Century and Restructuring of its Administration with Special Reference to Bangladesh". Sadeq began his paper in similar tones with Boudjellai by explaining the role of Waqf historically. He then went on to explain the socio-economic developmental role the institution of waqf could and should play in the context of a resource scarce in developing countries. Sadeq was of the view that an organised institutional system of waqf was possible in order to provide facilities badly needed in developing countries such as educational, medical and infrastructure facilities. In suggesting this, he gave examples of how such a system is workable and needed in Bangladesh. This was followed by a paper entitled "The Performance of the Institution of Zakah in Theory and Practice" by Monzer Kahf of IRTI. In his paper, Kahf looked at the performance of the Zakah institution in contemporary Muslim societies while comparing it to Zakah at the time of the Prophet Muhammad. The final session of the day was a discussion on the "Islamisation of Economics: Agenda for the 21st Century" by two panelists, namely, Jomo K.S. from the University of Malaya and Muhammad Ahmad Sakar from the Islamic University in Palestine. Day Two The second day of the conference proceeded as scheduled with the first presenter, Professor Dr. M. Sultan Abou-Ali, delivering the first keynote address of the conference entitled "Economic Cooperation among Muslim Countries in the 21st Century." The chairperson for this session was Professor Dr. Kamal Hasan, Rector of the International Islamic University Malaysia (IIUM). Prof. Abou, the first speaker for the day, is currently a professor of Economics at the Faculty of Commerce in Zagazig University in Egypt. Prof. Abou, who is an eminent scholar in the field of economics, has vast advisory experiences. He had served as an advisor to the Council of Arab Economic Unity (Cairo), the Deputy Prime Minister for Services and the Governor of Central Bank of Egypt, the World Bank, African Development Bank and Kuwait Fund for Development. He has also contributed enormously to publications, authoring various books, articles and reports. Some of his notable books include Economic Planning and Its Techniques (Arabic), 1972 and Lectures on Money, Banking and Financial Institutions (Arabic), 1994. The theme of Prof. Abou's paper is the importance of economic cooperation among the Muslim countries as ordained by God Almighty. He said, quoting a number of Quranic verses that God has created and made us into nations and tribes in order that we understand each other. However, the best among us are the righteous ones. (Ref: Surah Al-Hujurat, Verse 13). Focussing on this verse, he said it was important for the Muslims to respect all people and strive hard to achieve "power". Power, as he puts it, includes a combination of military, economic and political strengths, which he says cannot be acquired unless the society possesses a lead in science and technology. "Although mankind seeks cooperation, the world is generally characterized by confrontation among nations, civilizations, cultures etc. This confrontation is not always harmful. It could be one of the main driving forces for progress, inventions and new discoveries," he said, quoting a Quranic verse that refers to this point. "Had it not been for cooperation among people endowed to them by the power of Allah, the world would have been destroyed." (Surah Al-Baqarah, Verse 251) The speaker thus urges the Muslims to strive to become strong nations. As at present, economic power is the most important element of strength, he calls on all Muslim countries to strive to achieve this power. According to him, being stable economically would not only make us stronger nations but also contribute towards the protection of our religion. Economic power, he says, should be aimed at achieving three ultimate goals, which are: to preserve the Islamic Ummah; to give a good and strong example which is the foundation for the perfection of Islam as way of life, and for the benefit of the whole human society, since Islam is the model which realizes the balance between material needs and spiritual satisfaction. In his speech, he also discussed the reasons why previous attempts for cooperation among the developing countries, Muslim countries in particular, have not been successful. He also gave an extensive explanation on the trends that were expected to prevail in the 21st century, concentrating specifically on the trends that have direct relevance to the topic of economic cooperation. Prof. Abou concluded his speech by proposing a number of recommendations to heighten economic cooperation amongst the Muslim countries. Since the trends anticipated in the 21st century call for closer economic cooperation in all fields, which include trade, aid, technology and production, he urged the Muslim countries to look into alternatives and strive to achieve the goal soon. He referred to the European Union as an example, saying that it was not an overnight effort to consolidate and work as a united power. "It takes years for these countries to come to terms and work as an alliance. I recommend the Muslim countries to start now, as otherwise our vision of achieving this goal would just be buried off," he said, adding that however small our efforts maybe now, will finally see the fruit of our efforts in times to come. Among the recommendations proposed in his paper to further enhance economic cooperation among Muslim countries are as stated below: Stronger political commitment on behalf of the Muslim countries needs to be established. The existing cooperative institutions in the Muslim countries should be provided with necessary authority and responsibilities, instead of creating unnecessary new regional institutions. Serious steps should be taken toward establishing Muslim Multinational Companies (MNCs) in specific sectors and production of goods and services should be encouraged. Plan or layout agreements and treaties such as customs union (10 years), free trade area (5 years) and single market (10 years) to realize gradual economic integration. With the spread of privatization and the mounting role of the private sector, give businessmen in the Muslim countries greater roles to play. The concept of regionalism should be established. As Muslim countries are spread over three continents, regional sub-groupings, according to Prof. Abou, is a necessity. Closer relationships and ties should be encouraged between the sub-groupings to facilitate and strengthen economic cooperation within the Islamic World. "The world is changing very fast. Distances and time have greatly diminished. Muslim countries should match this change. Great causes push nations to heights that would not otherwise be achieved. Closer economic cooperation and integration among Muslim countries is such a cause, shall we strive to fulfill it," he said, ending his well-documented speech. The second presenter for the day was Mr. M. Iqbal Anjum, a lecturer and research officer at the International Institute of Islamic Economy, International Islamic University, Pakistan. The chairperson for this session was Dr. Abdul Rashid Moten, the Deputy Dean of the Department of Political Science at the International Islamic University, Malaysia. Mr. Anjum presented a paper entitled "Sub-regional Economic Integration for Convergence and Development in the Islamic World." He should certainly be given credit for his efforts in producing this paper. It was greatly appreciated by the participants, discussants, chairperson and other speakers. It was clear from Mr. Anjum's presentation that he had undertaken great pains to come up with such informative piece of work. The information provided in the paper was complete with statistical data and graphs. Mr. Anjum's paper comprises five major topics that are divided further into sub-topics. He began the presentation of his paper by describing what the "received doctrine" means. According to him, the "received doctrine" is the doctrine of free trade that has been received and advocated by economists, who view free trade as an engine of growth and development, as an ideal trade policy. He said the movement in the direction of free trade has culminated into a world-level movement called globalization, which means liberalization of international trade in goods and services as well as the application of the World Trade Organization (WTO) rules and the Basle regulatory standards in the whole world. Globalization, he says, is now a fashionable economic issue in the entire world. "Now the whole world, especially the western world, seem to herald the movement of globalization, which considers the whole world a global village, and aims at economic integration through the fast growth of multilateral trade of all the countries for ensuring economic convergence and development," he said. According to him, multilateralism–based globalization is a golden opportunity for improving the welfare of the developing countries as well as the developed countries in the long run. In contrast to the global optimism associated with the practice of this doctrine, he says it is an empirical fact that free international trade and related process of integration affect countries unevenly and enhances international disparities. Moreover, he says, numerous actions of the capitalist proponents of globalization have clearly negated their announced agenda of globalization and implied that they are more interested in regionalism than in globalization. Offering valid evidence for this conclusion, he continued by saying that the world is now simultaneously experiencing trends of globalization and regionalism. He is also of the view that the "capitalist champions of globalization are camouflaging their regionalist designs under their propaganda of globalization." Continuing his discussion, Mr. Anjum moved on to various other topics, which he discussed at great length. Among the topics he touched on besides the free trade doctrine are as stated below: Multilateralism Vs Regionalism: Conflict or Complimentary Convergence among OIC Countries and Its Role In Their Economic Integration Mechanisms and Strategies For The OIC Countries' Integration A Comparative Study of ECO, GCC and D-8 In concluding his speech, Mr. Anjum offered a number of constructive policy recommendations for the Muslims to follow in their efforts to accomplish greater economic cooperation, especially in the framework of regional and sub-regional economic integration. One of his most significant suggestions was to urge the Muslim countries to come up with an Islamic monetary union that administers a common central Islamic bank currency. "It is important to note that sub-regional economic integration of the Islamic countries is merely a short-term objective. After the accomplishment of this short-term objective, the efforts should be directed towards the achievement of the long term Islamic objective of ultimately establishing a universal Islamic Common Market in view of realizing the Islamic ideals of universal human development," he said as his closing remark. The discussant for Mr. Anjum's paper was Dr. Syed Nawab Haider Naqwi, Rector and Professor at the Kausar University of Sciences in Pakistan. Dr. Naqwi, who assessed Mr. Anjum's paper, made some useful remarks about his work, suggesting there were both weaknesses as well as strengths in his paper. The bottom line was that both of them agreed that realization of economic cooperation and integration is not an easy task and requires a lot of effort. However, "overcoming these challenges with a positive attitude and creative mind would certainly contribute to the realization of this goal", they acknowledged. The third speaker for the morning session was Dr. Farda M. Assadov, Head of Arabian Countries History and Economics Department at the Azerbaijan Institute of Oriental Studies in Azerbaijan. His paper entitled "Caspian Oil Region: Economic and Political Determinants of the Development in the 21st Century," looked mainly at the challenges of oil industry development in post-communist Muslim states. Offering in depth explanation on this topic, Dr. Assadov discussed various issues and problems facing these countries and their struggle in overcoming them. The discussant for this paper was Dr.Amer Roubai, Professor at the International Institute of Islamic Thought & Civilization, Malaysia. The last speaker for the morning session was Mohammed Solaiman, Professor of Marketing at the University of Chittagong, Bangladesh. He presented a paper called "Services Marketing: Ethical Issues and Challenges (Case Study of Islamic Banking Services in Bangladesh)." In his paper, Dr. Solaiman, discussed the status of Islamic banks in Bangladesh and how they are faring in terms of activities directed at generating, disseminating and responding to market intelligence. In concluding his paper, he gave a number of suggestions to encourage and accelerate the process of ethical Islamic marketing system in both Bangladesh and other Muslim countries. The discussant for this paper was Dr. Syed Abdul Hamid al-Junid, Deputy President and Professor at the Tun Abdul Razak University, Malaysia. The afternoon session proceeded with Dr. M.A. Hamid, a Professor at the Rajshahi University, Bangladesh, presenting a paper entitled "Islamic Banking in Bangladesh: Expectations and Realities." Dr. Hamid's paper, complete with statistical facts and graphs, provides insight into what has been happening in the Islamic banking scenario in Bangladesh with special reference to Islamic Bank Bangladesh Ltd. (IBBL). The discussant for this paper was Dr. AbulHassan M.Sadeq, a Professor at the Department of Economics, International Islamic University Malaysia. The sixth speaker for the day was Sayed Ali Asghar Hedayati, a faculty member at the Iran Banking Institute, Central Bank of Islamic Republic of Iran. His paper, entitled "Islamic Banking: As Experienced in the Islamic Republic of Iran", looks at the steps and efforts being undertaken for the Islamization of the banking system in Iran following the Islamic Revolution in 1979. The paper discussed in great details the methods of Islamic banking, the monetary policy in Iran, impact of Islamic banking system on International banking system, basic problems and suggestions, and analysis of interest free banking system in Iran after 15 years of operation. The discussant for this paper was Dr. Kazem Sader from the Department of Economics, Shahid Behesti University, Iran. The conference took a short break before moving on to the final discussion or panel discussion called "Islamic Economic Cooperation: Agenda for the 21st Century." Dr. Syed Nawab Haider Naqvi and Dr. Mohammed Ariff, Executive Director at the Malaysian Institute of Economic Research, Malaysia headed the discussion. This session was the most controversial as Dr. Ariff's thoughts and suggestions were greeted with contention from the participants and academics. The speech however was admirable as it carried substantial facts and reflected the actual economic conditions of the Muslims today. His suggestions too seemed practical and realistic. What he actually said was that Muslims were unrealistic in their aims and goals to achieve better economic conditions. "After years of meetings and establishment of regional groupings, nothing has transpired. Our conditions are still the same. The core problems have not been solved," he strongly pointed out, thus suggesting that we take informal steps or adopt loosely structured economic policies rather than radical ones to solve the current economic problems. It was at this juncture that many from the audience stood up against him, saying that his suggestions, if followed, would crush the dream of the Muslims to unite economically. Many were of the opinion that Muslim countries had to take drastic actions now as we were running out of time. Dr.Ariff's "take it slow but make it work" concept was cast out. Although a number of participants boldly lashed out at him, Dr. Ariff appeared fairly composed. He maintained that the audience misunderstood him, as his intention was to suggest that realistic measures be taken instead of visionary but inapplicable ones. "It may seem like I am wrong now but it is better to make small efforts now and see that our dreams are realized later than dreaming now and not seeing anything at all in the future," he said ending the final session of the conference. Day Three The third day saw further discussions on Islamic economics with Datuk Syed Othman Al-Habshi of IIUM starting the morning session with his paper entitled "Islamic Economics in the 21st Century". Consequently, M. Shaukat Ali of the Ministry of Planning and Development in Pakistan took a closer look at the finance side of Islamic economics by presenting his paper entitled "Creation of Money and the Role of Central Bank in an Islamic Framework: simulation for Pakistan". Once again, money was the main issue in a paper presented by Usamah A. Uthman of King Fahd University of Petroleum and Minerals in Saudi Arabia entitled "Money, interest and an Alternative Macroeconomic System". The final paper for the morning, "On the Design and Effects of Monetary Policy in the Middle East" was presented by Magda Kandil of the University of Wisconsin-Milwaukee, USA. The first paper for the afternoon session was entitled the "Role of Supreme Audit Institutions in Shaping the Islamic Economy in the 21st Century" by Muhammad Akram Khan of the Ministry of Economic Affairs in Pakistan. The last paper for the day, "Financial Performance and Distribution Policy of Islamic Financial Institutions" was presented by Syed Musa Al-Habshi from the Accounting Department of IIUM. Day Four On the final day, Dr. Mabid Ali, Director of Islamic Research and Training Institute, IDB, presented a keynote paper in the morning entitled "Islamic Banking and Finance in 21st Century". The paper reviewed the challenges facing the researchers in the Islamic banking and insurance sector. The speaker outlined the essential steps to be taken in order to succeed in the field of research. He named five reasons for research failures: firstly, the lack of expertise in economic analysis, secondly, the lack of tools to make a good research paper, thirdly, the inability to pick out important topics worthy of research, fourthly, the misunderstanding of Shari'ah and finally, the lack of knowledge regarding past research. Following that, the speaker reviewed the success and failure of Islamic economics, mentioning the many efforts that were made in the early sixties, and finally Islamic economics developed by employing the tools of profession. Nevertheless, Islamic economic remains a fertile land for economic research. Dr. Mabid shed light on the many areas for research by raising the following questions as area of research: Should the central bank invest newly issued money or hand it over to the government? Should there be a government deficit and how should it be financed? Should we allow indexation of future monetary obligations? The IDB research center will multiply and produce quality specialists and academicians necessary for guiding Muslims into the next decade. Further, he talked about the two approaches of banks in the industrial countries, the commercial bank and universal bank where he suggested a research be done to show the differences that exist between the Islamic and universal banks. Dr. Mabid also discussed the issue of the lack of regulations for Islamic banks and the need of setting up an appropriate institution for Islamic economics. Finally, Dr. Mabud put forward that the following be established: A new breed of economists that are sophisticated and have undergone rigorous training in economics while at the same understanding Shari'ah. A close tie between economics and Islamic economics. The practice of Islamic banking and finance to cover 75% of Muslim financial resources. The countries interested to structure their economy based on Shari'ah will rise. The IDB research center will multiply and produce quality specialists and academicians necessary for guiding Muslims into the next decade. In the second session two papers were presented. The first paper, entitled "The Islamic Financial landscape in Malaysia" was presented by Awang Adek Husin of Bank Negara Malaysia (the Central Bank of Malaysia). The paper revolved around the Islamic banking system in Malaysia. Husin informed the delegates that there are one Islamic bank, 24 commercial banks, 18 finance companies, 5 merchant banks and 7 discount houses active in Islamic banking. In addition, there are 2 Takaful companies, 3 saving institutions and 3 development institutions operating as non-bank Islamic financial intermediaries. A number of statistic were provided such as the total assets, deposits and the financing of Islamic banks as at the end of 1993 and at the end of May 1999. The statistics showed that the total assets of the Islamic banking system have grown from only RM2.4 billion in 1993 to RM29.9 billion as at end May 1999. The second paper, entitled "Islamic Fund Management", was presented by Rodney Wilson of Durham University in the UK. The paper was basically a survey of Islamic investment funds, especially those managed outside the UK and other European banking entities. The topic on managing and structuring Islamic equity funds took up a considerable part of the paper, where both equity and trade funds are covered. However, the bulk of the paper focused on the evaluation of a number of existing Islamic investment funds in Saudi Arabia. In the last session of the conference, three papers were presented. The first paper was entitled "Risk Sharing and Management in Infrastructure Financing: An Islamic Evaluation", by Mohammed Obaidullah of Xavier Institute of Management, India. The paper reviewed the financing modes for investing in infrastructure projects in developing countries with emphasis made on the important role of the private sector in this area. The main objectives of the paper was: The introduction of suitable Islamic modes at different phases and hierarchies of private infrastructure project finance. Initiating a discussion on managing the risks of these modes in such projects. The session proceeded with Dr. Muhammed Shahid Ebrahim of the University of Brunei Darussalam presenting his paper entitled "Optimal Consumption Asset Financing: an Islamic Perspective". The paper was theoretical in nature and used simulation methods to find optimal consumption asset financing using Islamic instruments. Instruments considered were the Bai' Bithaman Ajil (BBA), Ijara wa Iqtina and decreasing Mudharabah. The third paper was delivered by Adiwarman A. Karim of Bank Muamalat in Indonesia entitled "Optimal Contract for Islamic Banking: A survey of literature". The paper explained the economic behavior in a free market, with the speaker providing a summary of many papers which was useful as a quick reference eventhough no critical evaluation was provided. The paper concluded by stating that mark up financing is similar to debt financing and thus share similar optimality properties. The last paper entitled "Size and Profitability of Islamic Financial Institutions with a special reference to management and control issues" was delivered by Dr. Humayon Dar and John Presley of Loughborough University in UK. The speakers felt that the portfolio of Islamic Financial Institutions (IFI) are geared towards the credit facilities of Bai' Murabahah/Bai' Mua'jjal (markup), and Ijara (leasing)/Ijara wal- 'Iqtina (lease-purchase). The speakers attributed this to the theory of Corporate Control advanced by Grossman and Hart (1982), Harris and Raviv (1988). The basic idea behind the theory is that optimal stakeholders of a firm are equity (who control it) and non-voting debt (who are content with a fixed return). As the bulk of financing activities of Islamic banks are concentrated towards quasi debt facilities, the speakers rationalize this to the theory of corporate control, where corporate entities are reluctant to use Mudharabah/Musharakah as that would relinquish their authority over their firm. _____________________________________________________________________________ Islamic Banking and Finance Net Listserver [log in to unmask] ============================================================================== FINANCE-NET URL: http://www.muslimsonline.com/finance http://islamic-finance.net/forum.html SCHOOL OF ISLAMIC BUSINESS EDUCATION & RESEARCH (SIBER) HOME PAGE URL: http://islamic-finance.net MUSLIMSONLINE HOME PAGE URL: http://www.muslimsonline.com/ ============================================================================== To subscribe to FINANCE-NET: Send "subscribe finance-net" (without the quotes) in the body of a message to [log in to unmask] ============================================================================== Please forward similar notices relevant to Islamic economics and finance to: [log in to unmask]