Entries Tagged 'Economics' ↓

Draft Constitution for the HT State

A few readers have written to point out that Hizb ut-Tahrir have released a draft constitution for the HT state. Please discuss.

UAE: Govenment fixes price of food

Having already imposed price controls on the rental market, the UAE government is reportedly now setting maximum prices for food products, such as eggs, rice, chicken and even bottled water.

This may appear to some to be a reasonably good idea to ease the pressure on residents. However, as history has shown, when governments force people to sell products for a price that is at or below their natural market level, it creates a shortage: it will increase demand whilst simultaneously reduce the current and future supply of the product.

Continue reading →

Qatar introduces rent controls

Like Dubai before it, the Qatari government has decided to introduce rent controls:

Reports from Qatar suggest the government is to ban landlords from raising rents for the next two years. The drastic action is to help combat record inflation rates. A 27.7 per cent surge in rents spurred inflation in the world’s largest exporter of liquefied natural gas to 13.74 per cent in December, the second-fastest pace on record.

Good idea?

Continue reading →

Islamic Charity 2.0

The excellent Read/Write Web have published a guide to websites that allow people to support various charities and causes. It is interesting to see the extent to which Web 2.0 technologies are being used for charitable purposes. For example, there are now donation aggregation services, such as this one, that allow people and groups to donate to a large number of charities at once (a form of “distributed giving”). Then there are sites, such as Kiva, that work to offer microfinance loans to entrepreneurs in the developing world.

As is well known, charity plays a pivotal role in the faith of every Muslim — being, as it is, zakat, one of the five pillars of our faith — so it is surprising to see that there hasn’t been a similar innovation in terms of how we give charity. In Australia, for example, most Muslims would donate via an organisation such as Human Appeal International which then funds projects abroad, such as orphan sponsorship or well building.

However, I wonder if some of these models couldn’t also be extended or adapted to provide Muslims with an innovative service as well. For example, a number of the sites identified by Read/Write Web focus on ‘direct charity’ in which people post details of the project they wish to find and then others donate to it, using the site as an intermediary. DonorsChoose is an example of that, with the site allowing teachers at public schools in the United States to post their needs, such as funding for trips or materials, and others can choose to donate.

Continue reading →

BIS General Manager on Islamic Finance

The General Manager of the Bank of International Settlements recently gave an interesting speech on Islamic finance. The abstract reads:

Although there are differences between Islamic banking and “conventional” banking, there are some fundamental principles that apply equally to both. In particular, rigorous risk management and sound corporate governance help to ensure the safety and soundness of the international banking system. In the light of the growing importance of Islamic banks and Sharia-compliant financial innovation, the increasing integration of Islamic financial services into global financial markets serves to strengthen this point.

The Basel II framework improves the risk sensitivity and accuracy of the criteria for assessing banks’ capital adequacy. This framework is fundamentally about stronger and more effective risk management grounded in sound corporate governance and enhanced financial disclosure, the importance of which has been underscored by the recent problems that have arisen in the banking industry worldwide. The guidance provided by the Islamic Financial Services Board (IFSB) is a useful contribution to the realisation of these global goals. It will support the establishment of resilient financial market infrastructures and sound and robust core Islamic financial institutions operating according to safe and sound risk management practices.

For those who do not know, the Bank of International Settlements is, “an nternational organisation which fosters international monetary and financial cooperation and serves as a bank for central banks.”

(Thanks to Ozrisk)

Opportunities Down Under: Islamic Finance In Australia

We are very pleased to present a guest post from Ozrisk. This is a reprint of an article published in Business Islamica Magazine.

Since the first large-scale Muslim migration to Australia occurred in the early 1970s, the Islamic community has grown from just a few thousand, concentrated in the suburbs of Melbourne, to become the second-largest religious group in Australia. Substantial migration to Australia was initially from Lebanon, with other notable immigration coming from many Muslim countries, including Indonesia, Bangladesh, Egypt, the Palestinian territories and, more recently, Afghanistan and Iraq.

The number of Australian residents identifying themselves as Muslim on the census increased by over 40 percent in the five years between 1996 and 2001, from 200,000 to 281,000. This growth has continued, to the point where the estimated number of Muslims in Australia was 350,000 in late 2006.

Baby Steps

However, Islamic finance is still in its infancy in Australia. Because of the nature of much of the migration here, many Muslims arriving in Australia have naturally been more concerned with how to provide for their families than with developing financial institutions. Nevertheless, several small ventures have started, with at least two currently in operation: the Muslim Community Cooperative (Australia) Ltd (MCCA) and Iskan Finance. MCCA is currently restricted to offering facilities to shareholders and cannot accept normal bank deposits under Australian law. Iskan works with a number of other providers and offers mortgage and leasing products.

Insurance is another area where a void currently exists. While there have been several attempts to establish Takaful funds, notably during the 1990s, these do not seem to have succeeded.

Continue reading →