the beauty of Islamic finance

After a while I finally got the chance to read my AB magazine. Every month ACCA sends me a copy but I seldom find myself in the mood to read them. Bila balik rumah mmg malas nak baca benda2 pasal ekonomi dunia ni, too heavy ;-) Bila kat ofc mmg la x kuasa nak baca mau terbengkalai pulak keje harianku. When I used to get the mags sent to my parents' house, it was my dad who enjoyed reading them. I won't disagree that the articles are usually interesting. It's just whether u wanna read them or not.

Since I hv 3 issues of AB magazines waiting to be read, I hv to gv them a chance. After all they r part of GBP120 that I hv to pay as membership fee each year. Membazir jek bayar mahal2. Sebab itulah british pounds is strong, org mcm aku setiap tahun contribute to their economy. Cuba kira jek how many ACCA, ICEAW, CIMA etc members worldwide. Mmg lah kaya kerajaan gordon brown every yr dpt fixed income.

The issue I read features Islamic finance. Very interesting cover title: Turning to Mecca - World's Banks Discover Islamic Finance. Inside there r many articles on this topic. I'm just gonna list down a few points that I find really interesting:

1. Islamic finance has weathered the financial storm for a number of reasons, the main one being it is fundamantally based in the real economy, not in the paper economy. It is hard to get credit crunched if you do not rely on credit.

2. Interest (riba) is not permitted, and any money a bank makes is made upon a risk-share model, not an 'interest-slavery' model.

3. Islamic banking and investment forbids gharar (uncertainty) hence no speculative investments allowed.

4. Islamic finance's prohibition of riba and gharar has meant the sector has not invested in or offered the highly sophisticated, leveraged and speculative derivative products that have got the giants of Wall Street and the City into so much trouble.

5. The reliance of the sector on cash-based instruments or physical commodities has meant that, unlike conventional banks, Islamic banks have remained highly capitalised. In many ways, Islamic banking remains a cash and money business, unlike the conventional industry, which has increasingly become a credit-and-derivatives-based industry.

6. Although 60% of Malaysian is Muslim, the main growth of Islamic finance has been among the Buddhist Chinese population.

7. However, the sector is not without risk. Islamic banks in Dubai faces crash in real estate valuations. The sector also small compared to the conventional finance industry, raising issues of long term competitiveness.

8. Now is the golden opportunity for Islamic finance to provide an alternative model which, by its very nature, binds both the real and financial economies - just what the world needs right now.

..for every rule that beholds the pillars of Islam there is an underlying reason that benefits all mankind, masyaAllah..

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