Sharia Economics Conference 2013
The world economy is once again facing turbulent time. The global financial crisis which has been induced by mortgage crisis in the United States of America and followed by the European sovereign-debt crisis is affecting the world economy. High debt-to-GDP ratio in European countries (as per 2010: Greece 142.8%, Italy 119%, and Ireland 96.2%) made them susceptible to crisis, added by the fact that investors trust is decreasing which causes the increase of interest rates for publishing obligations. As a result, the number of unemployment increases, and economic growth of the countries declines. This could be taken as an indication of the fragility of global capitalism, the mainstream of today world economy. Thus, a change of mainstream approach on the world economy is necessary.
Meanwhile, the Islamic economic system is starting to be considered as alternative solution. In contrast to the capitalist system which is based on capital accumulation and interest (riba), Islamic economy pay great attention to contracts deal and circular flow of economic activity. When conventional banks were greatly shaken by the economic crisis, Islamic banks have survived because they don't mainly rely on money markets and speculation.
In the last decade, Islamic economics has been growing considerably. The expanding of sharia banks and Islamic financial products can be taken as an indication for this. According to Maximilian JB Hall, Professor of Banking and Financial Regulation in Loughborough University, the growth of global Islamic banking assets in 2010 reached 8.9 percent with total assets of 900 billion USD. For example, in Indonesia, according to the data of Bank Indonesia, the growth of total assets of Islamic banks as per January 2012 reached 46 percent with a total assets of 115.3 trillion IDR, compared to the total assets of 78.2 trillion IDR as per January 2011. The resonance of sharia economics can be observed not only in Muslim-majority countries, but also in Europe. As an example, since its first appearance in England in the 90s, sharia finance had growth so rapidly that the total assets of sharia finance in 2008 reached 18 billion USD, which placed England in the eight position of countries with most sharia financial assets in the world (Source: The Banker, November 2008). In Germany, as another example, sharia financial products was introduced in 2004 with the publishing of sukuk ( commonly referred as the Islamic equivalent of bonds) in Saxony-Anhalt. In 2009, the German Federal Financial Services Authority (BaFin) organized a conference on Islamic Banking, welcoming Islamic banks to enter the German market.
However, the rapid development as described above is still only related to finance products. Many aspects of the Islamic economics, which have great potential for the benefits of mankind, have not been revealed and implemented yet. So far, the discussions revolve only around finance products, excluding macroeconomic and public policies (i.e. natural resources management, development and poverty alleviation), and the basic concept of Islam as worldview is still kept apart from the discussions until now.
The conceptual distinction between Islamic economic system and others system hasn't been fully comprehended by the public yet, including the European community. There are many questions which have often been repeated, such as the difference of interests in conventional system and profit-and-loss sharing in Islamic system, or the difference between economic ethics in Islamic and conventional system. This often leads to incorrect conclusion that Islamic economic system is similar to capitalist economic system, but without usury (riba) and with addition of alms (zakat). Although as a matter of fact, Islamic economy has its own conceptual characteristics in term of ownership, asset development and utilization, and wealth distribution within society.
On the other hand, misconceptions of Islam among European community leads to a distrust on the concept of Islamic economics, e.g.: Islamic economic system is supposed to be beneficial only for Muslims and not for the society as a whole. Based on the previous facts, a complete and comprehensive explanation to the society regarding Islamic economics is needed, especially, with regard to the misconceptions, in Europe.
As a non-profit and independent organisation focusing on strategic studies in relation to public policies and economics, Proficient Indonesian Muslims Association (PRIMA) plans to take the initiative to organize a conference which involves experts and professionals, discussing the concept of Islamic economics on various aspects.
Meanwhile, the Islamic economic system is starting to be considered as alternative solution. In contrast to the capitalist system which is based on capital accumulation and interest (riba), Islamic economy pay great attention to contracts deal and circular flow of economic activity. When conventional banks were greatly shaken by the economic crisis, Islamic banks have survived because they don't mainly rely on money markets and speculation.
In the last decade, Islamic economics has been growing considerably. The expanding of sharia banks and Islamic financial products can be taken as an indication for this. According to Maximilian JB Hall, Professor of Banking and Financial Regulation in Loughborough University, the growth of global Islamic banking assets in 2010 reached 8.9 percent with total assets of 900 billion USD. For example, in Indonesia, according to the data of Bank Indonesia, the growth of total assets of Islamic banks as per January 2012 reached 46 percent with a total assets of 115.3 trillion IDR, compared to the total assets of 78.2 trillion IDR as per January 2011. The resonance of sharia economics can be observed not only in Muslim-majority countries, but also in Europe. As an example, since its first appearance in England in the 90s, sharia finance had growth so rapidly that the total assets of sharia finance in 2008 reached 18 billion USD, which placed England in the eight position of countries with most sharia financial assets in the world (Source: The Banker, November 2008). In Germany, as another example, sharia financial products was introduced in 2004 with the publishing of sukuk ( commonly referred as the Islamic equivalent of bonds) in Saxony-Anhalt. In 2009, the German Federal Financial Services Authority (BaFin) organized a conference on Islamic Banking, welcoming Islamic banks to enter the German market.
However, the rapid development as described above is still only related to finance products. Many aspects of the Islamic economics, which have great potential for the benefits of mankind, have not been revealed and implemented yet. So far, the discussions revolve only around finance products, excluding macroeconomic and public policies (i.e. natural resources management, development and poverty alleviation), and the basic concept of Islam as worldview is still kept apart from the discussions until now.
The conceptual distinction between Islamic economic system and others system hasn't been fully comprehended by the public yet, including the European community. There are many questions which have often been repeated, such as the difference of interests in conventional system and profit-and-loss sharing in Islamic system, or the difference between economic ethics in Islamic and conventional system. This often leads to incorrect conclusion that Islamic economic system is similar to capitalist economic system, but without usury (riba) and with addition of alms (zakat). Although as a matter of fact, Islamic economy has its own conceptual characteristics in term of ownership, asset development and utilization, and wealth distribution within society.
On the other hand, misconceptions of Islam among European community leads to a distrust on the concept of Islamic economics, e.g.: Islamic economic system is supposed to be beneficial only for Muslims and not for the society as a whole. Based on the previous facts, a complete and comprehensive explanation to the society regarding Islamic economics is needed, especially, with regard to the misconceptions, in Europe.
As a non-profit and independent organisation focusing on strategic studies in relation to public policies and economics, Proficient Indonesian Muslims Association (PRIMA) plans to take the initiative to organize a conference which involves experts and professionals, discussing the concept of Islamic economics on various aspects.