Application of Maqasid Shariah in Strategic Management 2023 10 30 Published

ISLAMIC MANAGEMENT NOTE 1

ISLAMIC MANAGEMENT IS THE ONLY SOLUTION TO SAVE HUAMAN FROM GRAVE CATASTROPE.

Secularism, Liberalism, Socialism, Communism, and Capitalism, failed to save the world from Grave Catastrophe. The only solution is the Islamic Way of Life, named, chosen, perfected, and completed by God. There is a critical need to implement Islamic Management based on Quranic Principles. 

Let us focus our minds and energies on applying Quranic Principles, in all our activities, including managing our Societies, Nations and the World. 

QURAN AND MANAGEMENT PART 1 IIIT ONLINE COURSE BY DR SHAYAA OTHMAN 2023 ...

APPLICATION OF MAQASID AL SHARIAH

 IN MANAGEMENT, HOSPITALITY, BANKING AND FINANCE.

Dr SHAYA'A OTHMAN

 

This is Part 1 of 5 Parts of the Lectures:

AT THE END OF THIS 5 WEEKS LECTURE, 

1. You will able to understand Maqasid Shariah as Strategy

2. You will be able to understand that Maqasid Al Shariah is Creating a New Dimension of the Islamic Economy

3 . You will be able to Integrate Revealed Knowledge with Secular Knowledge and the Work Process

[SHARING OF USEFUL KNOWLEDGE AND EXPERIENCES IS THE BEST GIFT TO FRIENDS AND MANKIND]

Tick the following link. Feel free to download the slides and you can use them for education and management.

https://www.slideshare.net/OTTOMAN/part-1-of-5-iiit-maqasid-al-shariah-strategy-in-management-certificates-course-2226-nov-2022pdf

  

APLIKASI MAQASID AL SHARIAH DALAM PENGURUSAN STRATEGIK - [ Untuk Mahasi...

APLIKASI
MAQASID AL SHARIAH
DALAM PENGURUSAN STRATEGIK

[ Presentation in Malay Language ]

oleh

Dr SHAYA'A OTHMAN

Chairman & Founder Universal Crescent Standard Center [UCSC]

Senior Academic Fellow

International Institute of Islamic Thought [IIIT]

East & South East Asia.

NOTA

[ Untuk Rujukan Mahasiwa, Pengurus, Pentadbir & Pemimpin ]

Selapas menuntun video [ 30 min] ini kita dapat memahami:

1. Shariah pada keseluruhanya - Makna, Sumber, Komonen,  Objetif Shariah. 

2. Pengurusan sebagai Proses Kerja - Memikir, Merancang, Menyusun,  Memimpin, dan Mengawal. 

 

3. Integrasai Shariah dengan Pengurusan - Pengurusan Shariah dan Pengurusan Stratgik. 

 

4. Contoh Shariah dan Maqasid Al Shariah di amalkan dalam Pengurusan Strategi dalam Industri Pelancongan [ Hospitality Industry] dan Industri Aalm Sekitar [ Environmental Industry]

APPLICATION OF MAQASID AL-SHARIAH
IN
STRATEGIC MANAGEMENT

Online Course Conducted By International  Institute of Islamic Thought IIIT, the USA  at  East and South East Asia Regional Office  in Kuala Lumpur, Malaysia 

PETINGNYA KITA PERLU BERFIKIR 

DAN 

CARA MANA KITA PERLU MELAKSANAKAN  MAQASID AL SHARIAH  

SEBELUM KITA MEMEBUAT KEPUTUSAN ATAU TIDAKAN, UNTUK KELUARGA DAN NEGARA KITA

The Best Gift to Mnakind is Sharing of Knowledge

[Sebaik-baik Hadiah Kepada Umat Manusia Adalah Perkongsian Ilmu ]

ISLAMIC SCHOLARS AND MUSLIM PROFESSIONALS :

CREATING NEW MAINSTREAM OF ISLAMIC ECONOMY

By 

SHAYA'A OTHMAN

Please Click Here for Full Presentation

INTEGRATION OF MAQASID AL SHARIAH WITH STRATEGIC MANAGEMENT CREATING A NEW MAINSTREAM OF ISLAMIC ECONOMY

BY 

SHAYA'A OTHMAN 

PLEASE LICK BELOW TO VIEW OR DOWNLOAD FULL PRESENTATION

https://www.slideshare.net/OTTOMAN/integration-of-maqasid-al-shariah-with-strategic-management

MAQASID AL SHARIAH 

IN THE GOVERNANCE  &  MANAGEMENT STRATEGY 

OF ISLAMIC TOURISM INDUSTRY

By

Nor'ain Othman , Shaya'a Othman, et al.

(Published in International Journal of Islamic Management and Business)

Vol.-3,  No 1, 2017

PLEASE CLICK HERE OR AT THE IMAGE BELOW FOR FULL TEXT

MAQASID AL SHARIAH STRATEGY TO SAVE THE WORLD FROM TOTAL CATASTROPHE

MAQASID AL SHARIAH STRATEGY 

FOR

ORGANIZATION & NATION

( Preventing Company and Nation from Catastrophes )

By

Shaya'a Othman

Maqasid Al Sharia means ultimate objectives of Islam, consisting of the following:

1. Protection of Religion ( Islam - al-din)

2. Protection of Life

3. Protection of Offspring

4. Protection of Intellect

5. Protection of Wealth

Maqasid is an Arabic word which means "objectives" and the word Shariah was used to refer to a path or a passage that leads to an intended place, or to a certain goal, or it means “the road to take or the line to follow" Although the word Shariah and its different derivative forms are mentioned in five places in the Qur’an, its extensive use only came into vogue much later, for the words Islam and din (religion) were more commonly used to express the same meaning in the early days of Islam.

Shariah which is defined as "Commandments of Allah [God], derived from (1) the primary sources of Holy Quran, and Sunnah, and (2) the secondary sources of decision of Islamic Scholars :  for all human activities,  which include  (i) Belief (Aqidah ), (ii)  Human Behaviours ( Aqalk)  and  (iii) Laws (Fiqh)  - Rules of Worshipping (Ibadat); -Family Laws (Munakahat) Trade and Commercial laws; ( Muamaalat ) and Criminal Laws (Jinayat)),-  towards achieving the ultimate objectives of Islam ( Maqasid-Al Shariah) - which include protection of religion, protection of life, protection of intellect, protection of offspring and protection of wealth.". Chart 1 further illustrates the definition of Shariah in a map form to enable us to understand Shariah in totality.

Maqasid Al Shariah is a set of objective of Islam.  Strategy is commonly defined by academicians and scholars and understood by many as "set of long terms objectives". Thus based on this definition, Maqasid Al Shariah, can be considered as a strategy beyond  "long term" to "infinity" in this world and to hereafter. 

The propose Maqasid Al Shariah Strategy as an overriding strategy to be adopted by Muslim companies and nations is dynamically explained in the following  Chart 2

Maqasid Al Shariah Strategy should be adopted by Muslim organizations and nations. It is derived from Shariah which sources are from Quran and Sunnah [practicing of Prophet Muhammad (Peace be upon him)]. It is wisdom from Allah (God the only one God) not a postulation, philosophy, theory or idea from  man derived from empirical research. 

Since Islamic System is for the good of all mankind and it is universal in nature, Maqasid Al Shariah Strategy may be adopted not only by Muslims but non-Muslims alike. This have been proven in the case of Islamic Finance being accepted by all and now growing into a multi-trillion dollars financial industry. The same for Islamic Halal Industry which created  multi-trillion dollars in Islamic Economy (Halal Foods, Halal Cosmetic, Halal products -leather goods, etac). Islamic Hospitality Industry is another growing area.

The performances could be much better in terms not only in areas of financial-benefits but also to social-benefits and environmental benefits, if only if Maqasid Al Shariah Strategy being adopted as Overriding Strategy above the Corporate Strategies they may have adopted, such as Blue Ocean Strategy  advocated by Kim & Mauborgne (2005) [1] or  Competitive Advantage Strategies  by Porter (1979) [2]

As shawn in Cart 3, the Muslims nations as well as the world today are  facing with various problems in all aspect of human activities - financial, economy, environment, social,  and technology, and the trend is that the world is going towards grave catastrophe. Everything is going for commercial or financial-benefits at the expands of human degeneration and world catastrophe. What is the solution? 

The only solution is Islam. Islam has a complete system for all mankind, which include specially, commercial laws, criminal laws, family laws, and these Islamic Systems bring justice to all mankind and universally applicable and acceptable as the case of Islamic Financial System and Islamic Halal Standards. In short application of Maqasid Al Shariah Strategy is the only solution. 

Certainly we thanks Allah and our beloved Prophet Muhammad (peace upon him) who provide guidelines to all of us in the forms of authentic written Quran and volumes of recorded of the practices and saying of  Prophet Muhammad ( peace be upon him) known as Sunnah .  Also we have to acknowledge the works of past Islamic scholars who  concretized  Maqasid Al Shariah as it is known today. The first attempt to formulate idea of maqasid include Al-Tirmidhi al-Hakim ( 296H/908CE ), Abu Zard al-Balkhi ( 322H/933CE ), Al-Qaffal al-Kabir (365H/975CE), Ibn Babawayh al-Qummi (381/991CE) and Al-Amiri al-Faylasuf (381/991CE).  In the fifth of Islamic century witnessed the emergence of comprehensive principles of Islamic law and also gave birth to the  term  maqasid in the Islamic law. 

The most significant contributors to maqasid between fifth and eight Islamic centuries include, Abu al-Maali al-Jawaybi (478H/1085CE), Abu Hamid al-Gazali (505H/1111CE), Al-Izz ibn Abd al-Salam (660H/1209CE), Shihab al-Din al-Qarafi (684H/1287CE). Shams al-Dinibn al-Qayyim ( 748H/1347CE),  and lastly the most significantly contributor and also considered as father of Maqasid Al-Shariah was Abu Ishaq al-Shatibi (790H/ 1388CE). Al-Shatibi book became the standard text book Abu on Maqasid Al Shariah in Islamic scholarship until the twentieth century.[3]

Wal-Allah -hu -a'lam ( Allah knows better)

---

[1]See; Kim and Mauborgne, W. Chan Kim and Renee Mauborgne, Blue Ocean Strategy How to Create Uncontested Make Space and Make the Competition Irrelevant, Boston, Harvard Business School Publishing, 2005.

[2]See; Porter, Michael E. Porter, Competitive Strategy, Free Press, New York,  (1980)

[3] See; Auda, Jasser Auda, Maqasid Al-Shariah as Philosophy of Islamic Law, A System Approach, International Institute of  Islamic Thought, Islamic Book Trust, 1411H/2010CE, Chapter 1, pp.1-25

ISLAMIC ECONOMIC IS THE BEST SOLUTION THAN GREEN ECONOMIC. ISLAMIC ENTREPRENEURS HAVING HEAVY RESPONSIBILITIES TO SAVE THE WORLD FROM GRAVE CATASTROPHE. 

https://www.slideshare.net/OTTOMAN/islamic-entrepreneurship-as-the-best-option-than-green-entpreneurship

SUMMARY OF THE KAYNOTE ADDRESS:  Keynote address at the International Conference on Green Entrepreneurship & Innovation for Sustainable Development  ICGEISD 2017 At University Muhammadyiah Gresik Indonesia on 28th August 2017.


Green Economy is addressing the environmental issue, but Islamic economic addressing both environmental and human issues. Thus Islamic Economy is the best option..

Islamic Entrepreneurs play important role to protect the world from grave catastrophes, to fulfill the objectives [Maqasid al Shariah] of Islam namely. [1] Protection of Religion, [2] Protection of Human Life, [3] Protection of Human Intellect, [4] Protection of Human Offspring, and lastly [5] Protection of Wealth and resources 

The Muslim Nations should be united both economically and politically by establishing Muslim Economic Community towards creating Muslim Union, similar to that of EEC and EU. The Muslim Malay Nations such as Brunei, Indonesia and Malaysia should lead the formation of MEU. The Malay nations consisting of over 400 millions population and over 90% are Muslims have georraphical, culutural and religious advantanges.

Islamic Universities should give special emphasis in developing future Islamic Leaders and Islamic Entrepreneurs, to equip them with knowledge and skills in the field of Islamic Management and the whole spectrum of Islamic Economics.

NOTE:

Detail of the kEYNOTE ADDRESS is shown in the following Slide Presentation. Everyone can use it all or in part of the presentation for a good purpose, with or without reference to me. Sharing of Knowledge and Experiences are the Best Gifts to Friends and Mankind.

https://www.slideshare.net/OTTOMAN/islamic-entrepreneurship-as-the-best-option-than-green-entpreneurship

https://www.slideshare.net/OTTOMAN/islamic-entrepreneurship-as-the-best-option-than-green-entpreneurship

  

ISLAMIC MANAGEMENT:

Thinking Strategically and Strategic Planning

Summary Presentation of a Lecture given to Delegation of Muslim Youth Leaders from Cambodia at Regional Office International Institute of Islamic Thought,  on 2016.7.26 , Kuqala Lumpur Malaysia

ENGLISH: If we cannot change the thinking and behaviour of present Muslim Leaders, certainly we can develop the future generation of Muslim Great Leaders to lead the world to peace and harmony.

MALAY: Jika kita tidak boleh mengubah pemikiran dan tingkah laku Pemimpin Islam masa kini, sudah tentu kita boleh membentuk Generasi Masa Depan Pemimpin Muslim Dunia untuk memimpin dunia ke arah keamanan dan keharmonian.

ISLAMIC MANAGEMENT: Thinking Strategically and Strategic Planning

http://www.slideshare.net/OTTOMAN/islamic-management-thinking-strategically-and-strategic-planninhg16724

ISLAMIC MANAGEMENT IN FINANCE
Islamic Banking

MALAYSIA pioneering and leading the world in Islamic Finance providing Muslims and all mankind the way out from the biggest sin of  'riba' and the war of Allah to those who are engaging in giving or taking or providing services in any kind of activities involving  'riba'. It is our obligations without any choice, to migrate totally from activities of 'riba' to non- 'riba'.

Banking and Insurance are the main activities in business as well as in our daily life. In early 1960s we never heard of Islamic Bank or Islamic Insurance and we were exposed to interest banking or financial system, which we had no other choice but to involve in these un-Islamic activities. Muslim is strictly prohibited to take , give, and providing activities relating to 'riba' as clearly stated by Allah in the Quran Surah 2:275

As a Muslims we have to avoid ourselves from activities which involve 'riba' or interest. This is because 'riba' is one of the biggest sin and the only sin that Allah declares war on those involve in taking or giving or providing services in 'riba', as clear stated in the Last Testament, the Holy Quran in Surah 2:279.

Muslim Management experts from Malaysia formulated the first Islamic Financial System by introducing an Islamic Financial Institution known as Lembaga Tabung Haji Malaysia [Haj Fund Board]  [TH]in 1963, and later introduced Bank Islam Malaysia in 1983 to the business activities. Indeed Malaysia is pioneering and leading the world in implementing Shariah Management in Finance.

Today TH has grown into an Islamic Financial Power House in Malaysia with Group asset of RM 49.5 billion or USD 16.5 billion, in 2013, The investments of TH, which are all strictly according to Shariah, are spreading all over the world. The financial detail of TH Group is shown in the following table:

The development of Islamic Management in Finance which is in conforming to Shariah [Islamic Laws] is very encouraging and being accepted by all Muslims and Non-Muslims alike. In 2013. Malaysia leading the world by issuing the biggest amount of Suku [Islamic Bonds] a total of USD 37 billion which was 63% of the suku issued all over the world, followed by Saudi Arabia USD 9.3 billion, United Arab Emirate [UAE] USD 5.2 billion , Indonesia USD 2.8 billion, and all other countries, USD 4.7 billion,

Today Islamic Management in Finance plays a very important role in all field of business activities as well in our lifestyle all over the world, The United Kingdom Islamic Finance Reported that currently in 2014,  Global Islamic Asset is estimated to be USD 2.0 trillion.

Islamic Finance provides Muslims and all mankind the way out from the biggest sin of  'riba'  and the war of Allah to those who are engaging in giving or taking or providing services in any kind of activities involving  'riba'. It is our obligations therefor, without any choice, to migrate totally from activities of 'riba' to non- 'riba'.

Malaysia still leading the world of developing Islamic Management in Finance. According to the latest Islamic Finance Development indicators Ranking, Malaysia remain the the Top No 1 of the top 10, with 93 points, followed by Bahrain 76 points, Oman 64 points , United Arab Emirates 57 points, and the last bottom in the ranking is the Saudi Arabia 31 points and followed by Brunei 29 points.

STATISTICS & MANAGERIAL ETHICS : OVERVIEW OF PROBLEMS AND TOTAL SOLUTIONS INCLUDING MAQASID AL SHARIAH

ISLAMIC MANAGEMENT: Maqasid Al Shariah as Total Solution to Abuse of Statistics and Managerial Ethics

By SHAYA'A OTHMAN

Redefinition of Statistics 

I would like to redefine Statistics as " “Statistics is a scientific method of collecting, organizing, presenting, analysing and interpreting numerical information, developed from mathematical theory of probability, within the ethical values of  Maqasid al-Sharia”

It is proposed that the solution to the problems of Managerial Ethics is by means of integrating Maqasid Al Shariah with the Managerial Functions

 

The total solution is applying Maqasid Al Shariah in all important areas namely, at individual and professional levels, at school and university, in society and organization.

To know more please CLICK HERE or the SLIDE BELOW. You can download the full slide and it is free for you to use it or share it to others. The best gift to a friend is knowledge.

http://www.slideshare.net/shayaa/statistics-managerial-ethics-overview-of-problems-and-total-solutions-including-maqasid-al-shariah

MAQASID AL SHARIAH IN MANAGEMENT

APPLICATION OF MAQASID AL SHARIAH IN STRATEGIC MANAGEMENT

By SHAYA'A OTHMAN


This a complete lecture presentation on the application of various Strategic Options including Maqasid Al Shariah as an strategic option in Strategic Management.

There are various strategic options which include the following including Maqasid Al Shariah :

1.      1. COMPETITIVE STRATEGY

      • Three Generic Strategies

2. DEVELOPMENT STRATEGY     
    •Alternative Directions For Strategic Development

3. PORTPOLIO STRATEGY   
     •Boston Consulting Group [BCG] Growth Share Matrix      
       McKinsey/Attractiveness Strength Matrix

4 . BLUE OCEAN STRATEGY

5. MAQASID AL-SHARIAH STRATEGY

This Lecture note or presentation is good reference for MBA students as well as Managers in both private and public sectors. 

Please Click Here or the Above Slide to see complete or upload the presentation. 

ISLAMIC MANAGEMENT DECISION PROCESS

ISLAMIC MANAGEMENT DECISION PROCESS:

The Essence of a Leader’s or Administrator's Responsibility 

[Summary of Series of Lectures on Islamic Management by Dr SHAYA’A OTHMAN]

“If we as Muslim Leaders and Managers practice this Islamic Management Decision Process, I am sure Muslim Nations, Muslim Organisations, and Muslim Families will become models for others to follow. But the situation today is generally otherwise”.

Decision-making is the essence of a leader’s, administrator's or manager's responsibilities. In carrying out the 5 functions of management in relation to effectively and efficiently utilising all the resources [see SHAYA'A OTHMAN ISLAMIC MANAGEMENT MODEL as discussed in earlier post], many decisions have to be made. Thus, a leader or manager needs to understand what is meant by decision-making.

As shown in the following DECISION MAKING MAPPiCXS, a manager needs to understand the following:

1. Decision-Making Process

2. Manager as Decision Maker

3. Decision Making for Today's World

4. Decision Making from an Islamic Perspective.

I would like to highlight the effective element of "CONSULTATION" which you may notice is not being included in the Management Process as advocated by management gurus.

Management from an Islamic perspective, "CONSULTATION" is the essential element before any decision is made. Examine and digest the following MATRiCXS, and you will understand why "CONSULTATION" has to be included in the DECISION-MAKING PROCESS.

God [Allah the one and only God], the Most Gracious & Merciful, mentioned in the Holy Quran S3:159 [ The only Authentic & Unadulterated Holy Book from God to mankind as guidance] about the Process of Making Decision, shall include the 2 main elements of "CONSULTATION" and "put TRUST in Allah" :

"....and consult them in the affairs. Then, when you have made a decision, put your trust in Allah...."

In line with the guidance from God as mentioned in the verse of the Holy Quran above, I would like to include "CONSULTATION" as one of the steps or elements in "DECISION MAKING PROCESS", which applies to all Leaders, Administrators and Managers - Muslims and Non- Muslims alike.

If you are a Muslim, I would like to encourage you to perform Solat Istikarah [ Prayer for Guidance from God], after you have made "CONSULTATION" but before a decision is made. Then finally "..put TRUST to Allah..." by performing Solat Hajat [Prayer asking God to bless for decision made]. As a Muslim, these additional 2 steps need to be included in "DECISION MAKING PROCESS", - this makes a difference and the beauty of Islam.

The following Chart shows the Islamic Process of Making Decisions for Muslim Leaders, Administrators and Managers. 

Finally, let us examine ourselves as Muslim leaders, administrators or managers, whether we include these additional 3 steps in the process of making decisions. If we, as Muslim Leaders, administrators and Managers, practice this Islamic Management Decision Process, I am sure Muslims Nations, Muslim organisations, and Muslims Families will become models for others to follow. But the situation generally today is otherwise.

THE NEED OF MAQASID AL-SHARIAH IN MANAGEMENT STRATEGY

The Maqasid al- Shariah in

Management Strategy of Islamic Bank

by SHAYA’A OTHMAN

INTRODUCTION

The business of banking in Malaysia came into force with the introduction of the Central Bank of Malaya Ordinance, 1958 (CBO), and on 26 January 1959 the Central Bank of Malaysia or known in Malay as Bank Negara Malaysia (BNM), was first being established in the then Federation of Malaya. This ordinance was further revised in 1994 and renamed as the Central Bank of Malaysia Act 1958 (revised -1994). Under this Act, the roles of Bank Negara Malaysia are defined, which constitutes the apex of the monetary and banking structure of Malaysia, with the objectives to include the following: 

1.  Issue currency and keep the reserves safeguarding the value of currenc.
2. Act as a banker and financial adviser to the Government. 
3. Promote monetary stability and a sound financial structure; and
4. Influence the credit situation to the advantage of Malaysia. 

The introduction of Islamic Bank in Malaysia was driven by the growing interest of number of Muslims who want to lead their way of lives in accordance with Shariah which include the area of banking and finance. In response to this development Government of Malaysia enacted a separated banking legislation, the Islamic Bank Act 1983. This enactment enables the establishment of Islamic banking to run side-by-side with conventional banking. Later in the same year the Government Investment Act 1983 was also being enacted, to allow the Government to issues Government Investment Issues based on Islamic principles.  The Act also enables Islamic banks to meet their liquidity requirements as well as acting as an instruments to absorb idle funds in the short run. The same with all other conventional banks, Bank Negara Malaysia was given absolute powers under the provision of Islamic Bank Act 1983, to regulate and supervise the Islamic banks licensed under this Act

DEVELOPMENT OF ISLAMIC BANK

The first known Islamic bank was first introduced in 1963 in Egypt at Mit Ghamr by Ahmad El Najjar. Unlike conventional this bank based on sharia, whereby no interest was charged to investors and borrowers.  Unfortunately this bank lasted for less than 5 years. It stopped operation in 1967.

Another interesting development in 1963 was the establishing of an Islamic institution in Malaysia known as the Tabong Haji Malaysia was established in 1963. I share the view of Khir, Gupta and Shanmugam (2008), that “Islamic banking, with a very different approach to that in Egypt, also emerged in Malaysia. It was a financial institution developed for Malaysia Muslims undertaken the pilgrimage to Mecca and medina. This institution called Lembaga Tabung Haji (Pilgrims Fund Board, Malaysia) was set up to help Muslims save for their pilgrimage expanses’.

In 1971, another bank known as Nasser Social Bank was later established in Egypt. Although it makes no reference to sharia, but it declared as an interest-free commercial bank, and it may be considered as Islamic bank. The development of Islamic banking also taken place in Philippine, which is a prominently Christian Catholic nation. Bank Amanah was established here in 1973, and has survived without any state intervention. 

The establishment of Islamic Development Bank [IDB} in 1975 by the Organisation of Islamic Countries (OIC), marked the mile stone the significant development of Islamic bank, and triggered the formation of Islamic banks all over the world, not only in the Muslims countries but also in the Christendom, especially in the European Unions.  The formation of IDB by the OIC members resembles to that of World Bank and Asian Development Bank (ADB).

In Malaysia, although Lembaga Tabung Haji was established in 1963, the first full-flashed Islamic commercial bank was established in July 1983, known as Bank Islam Malaysia Berhad (BIMB). It was established, when the Islamic Banking Act 1983 was enacted by Malaysian Government, and BIMB is the first commercial Islamic Bank licensed under this Act. The introduction of Islamic Banking Scheme Skim Perbankan Islam –SPI) 1998, by Bank Negara Malaysia, further allowing conventional banks to offer Islamic banking products and services which are in compliance with Shariah.

The development of Islamic bank is not confined to Islamic countries only but also to other countries such as the United States of America, European Union, Australia, Singapore, Thailand and Hongkong. Interestingly, non-Muslims countries like United Kingdom, Singapore and Hongkong are trying to develop centres as hub for Islamic products and services. Figure 1 shows the development of Islamic Banking.

Figure1. Establishment of Islamic Banks (1960- 2002)

PURPOSE OF ESTABLISHING ISLAMIC BANK

It is observed that the early establishment of Islamic bank was meant to provide services to Muslims who want to practice Shariah in their way of life which were relating to financial activities, as the case of establishing Mit Ghamar Local Islamic Bank (1963) in Egypt. The products or services provide by the Islamic bank develop from retail banking only prior in 1970s, to fully commercial banking in 1970s, and develop further to property finance and syndication in 1980s. In 1990s the services provide by Islamic Bank include more to equity funds and Islamic securitization, and today it developed actively in areas of  treasury services, balance management and innovation asset management. Figure 2 shows this significant development.

Figure2: Significant Development of Islamic Finance 1970s

Khir,et al (2008), explained that Islamic banks are financial intuitions established to promote Islamic economics. An Islamic economy is a market economy guided by moral values. Islam differs essentially from capitalism and socialism in nature of ownership. Islam has given detailed regulations for economic life, which is balanced and fair. According to the Holy Quran, everything on this earth belongs to Allah the Almighty. Man is mere trusty and he is accountable to Allah in accordance with the rules laid down in the Sharia. The fundamental principles of an Islamic Economy system include the following;

1.      Socio-Economic Justice and Equitable Distributions

2.      Trading of forbidden objects

3.      Trusteeship

4.      Prohibition of Hoarding

5.      Spirit of Corporation

6.      Duality of Risk

7.      No gain without either effort or liability

.

Karim (2005), elaborate further on Sharia whereby Sharia is an Arabic word that literally means “the road to take or the line to follow.” Sheikh Syalthut (1959) p.68, defines further the terminology of Sharia as a set of divinely pre-sanctioned lost and rulings, or prescribed principles which Muslim should abide themselves so they can relate to Allah as well as other human beings

Muslim scholars are of the opinion that the ultimate objectives [maqasid al-Sariah] which are a necessity [al-daruriyyah] for mankind to be able to live peacefully in this world, according to al-Quran and al-Sunnah, include five main areas – [1] Protection of life, [2] Protection of al-Din [Islam], [3] Protection of Progeny or Offspring, [4] Protection of Intellect or Faculty of Reason, and, lastly, [5] Protection of Material Wealth or Resources. From a review of the related literature, little is mentioned or discussed about Islamic banks working towards achieving these ultimate objectives or maqasid al-Shariah.

Here we are not going to discuss the order of importance or priority to these five objectives of shariah, or Maqasid al-shariah. But I share the view of Gamal Eldin Attia (2010) that we have to acknowledge the arrangement posed by al-Ghazali *(505 HA/1111 AC), which became most widely acceptable thereafter, notably in the following order of priority:

1.      Protection of al-Din (Islam)

2.      Protection of Life

3.      Protection of Intellect or Faculty of Reason

4.      Protection of Progeny or Offspring

5.      Protection of Material Wealth.

MAQASID AL-SHARIAH IN ISLAMIC BANKING

It is observed as to date there is not much discussion on the application of Maqasid al-Syariah [Ultimate objectives of Syariah] in the formulation of Strategic Planning in Islamic banks. The management of Islamic financial institutions such as Islamic banks and Islamic insurance companies should look beyond profit. Although profit is very important for the institution to be able to exist, it is not the main objective of the institution. Profit is just like oxygen in our bodies which is essential for us to stay alive, but which is not the main objective.

Today non-Muslims are getting inroad into the business of Islamic banking, even the name of the bank is confusing to the public. For Example Hong Leong Islamic Bank of Malaysia, is totally owned by non-Muslim. The name “Hong Leong” itself reflects that the bank is owned by non–Muslim but Islamic. Could be in the future that more non-Muslim names reflected as the name of Islamic Bank owned by non-Muslims? The question is whether the current Islamic banks owned by non-Muslims will be able to incorporate Maqasid al-Shariah into their management strategies so as to justify being “Islamic”.

What are the objectives of the many conventional banks which are rushing to “convert” their products but not themselves into “Islamic Banks” or provide open windows of “Islamic Banks”? Are they attracted to the ultimate objectives [Maqasid al-Shariah] as advocated by Islam? Or are they attracted to make profits from the abundant wealth of Muslims?

Also, is there is any rationale whatsoever for countries predominantly populated by non–Muslims and governed by non-Muslims becoming Islamic Financial Centres?  London, Singapore and Hong Kong are all planning to establish such centres, and the question arises as to whether maqasid al-Syariah is being incorporated into their blueprints for creating these centres?

FUTURE SUSTAINABILITY OF ISLAMIC BANK

In year 2012 the asset management under the management of Islamic Instructions is estimated to be around USD1,600 billion and revenues to be around USD120 billion. The future growths and sustainability of Islamic finance could be realized if Maqasid a-Syariah is put in place in all Islamic Banks. If not Islamic Banks will experience the disastrous financial melting down as experienced recently by conventional banks.

Curtis, G. (2008) in his research of the main causes of the recent financial meltdown, concludes that “the root cause of the crisis was the gradual but ultimately complete collapse of ethical behaviour across the financial industry. Once the financial industry came unmoored from its ethical base, financial firms were free to behave in ways that were in their – and especially their top executives’ – short-term interest without any concern about the longer term impact on the industry’s customers, on the broader American economy, or even on the firms’ own employees”. This conclusion may be capsulized in other words of “the non-compliance to Maqasid al-Shariah”, particularly in the area of “Islamic Ethic”.

It is proposed that Maqasid Al-Shariah need to be incorporated in the present management strategy of all Islamic banks. Though profitability is essential and must be achieved, but it is not the main objective. In Islam, the ultimate objectives of any activities including business activities are ultimately with the aim of achieving objectives of Shariah or Maqasid al-Shariah.

CONCLUSION

Strictly, I have the view that the current practice of Islamic banks needs to incorporate Maqasid al-Shariah into their management strategy to ensure its sustainability to serve mankind in the future, in confirmation to the requirement of Shariah. Otherwise, the use of the word ‘Islamic’ should be dropped. Furthermore, it is proposed that the term ‘Islamic Bank’ should be reviewed, and should only be used to refer to an ‘Islamic Bank’ owned and managed by Muslims.  This is because Muslims are the only community [ummah] recognised by Allah, that can or able to uphold Maqasid al-Shariah.  Islamic banks owned by non-Muslims may be called ‘Interest Free Banks’.

References:

Gamal Eldin Attia ( 2010). Towards Realization of The higher Intents of Islamic law : Maqasid al-Shariah a functional Approach. Kuala Lumpur. Islamic Book Trust.

Khir, K. Gupta, L. Shanmugam, B (2008). Islamic Banking: A Practical Perspective, Selangor, Malaysia. Pearson-Longman

Curtis, G. (2008). White Paper No. 44 – The Financial Crisis and the Collapse of Ethical Behavior , Greycourt & Co., Inc.

Beekun, R. I.,(2006). Strategic Planning and Implementation for Islamic Organizations. London. International Institute of Islamic Thought.

Karim, A. A., (2005). Islamic Banking: Fiqh and Financial Analysis, Jakarta, PT Radjagrafindoprasada.

The Central and The Financial System in Malaysia: A Decade of Changes (1999) Bank Negara Malaysia, Kuala Lumpur

The Central Bank and the financial System in Malaysia: A decade of Change 1989-1999 (1999).  Kuala Lumpur. Bank Negara Malaysia