Islamic Finance

Introduction

Estimates about the worlds total Muslim population range between 1.2 and 1.6 Billion. Most Islamic countries are, on average, less developed than non-Muslimcountries. Less than 5% of all Muslims are living in Muslim countries which can be considered developed. However, the wealth of all these rich, developed Islamic countries depends largely on oil. Moreover, many Muslims living in developed countries live in Western non-Muslim countries. In fact, one-third of young Muslims in Kosovo (the most recently established Muslim State) are already looking to emigrate in search of fortune elsewhere (i.e. The West). This should not come as a surprise, with 73% of their young being unemployed.^[1]

Many Islamic economies depend on agriculture, raw materials or textile products, with little or no production of sophisticated products. There are almost no high tech products originating from an Islamic country.

For example, Malaysia is the only Muslim-majority country with a significant electronic industry. However, most products produced in Malaysia derive from production facilities built by foreign manufacturers. Thus, capital and technology are imported from western or East Asian multinationals.

In some countries with Muslim majority, such as Indonesia and Malaysia, minorities enjoy a significant influence on the national economy. Therefore, many Islamic governments are suppressing such minorities to keep limit their influence upon their national economies.

Haram Businesses

Alcohol, pork and gambling are agreed upon to be forbidden under Islamic law. Similarly prohibited is the charging and collecting of interest.

Of the economic possibilities thus limited by Islamic law, the prohibition on interest is the most consequential, since all banking, financing and investing in the world´s economy depends on interest.

Islam traditionally prohibited interest since it feared of usury leading to debt-slavery and other undesired social problems. However, modern laws increasingly prohibit and secure against debt-slavery, and it would appear that interest has a net-positive effect on the global economy today, as it enables every sort of loan.

There are also Islamic banks existing in many Muslim countries, however, many companies would prefer a western bank to fulfill their financial needs and stay independent from an investor who buys company shares - which is the alternative to interest commonly used in Islamic economies to secure investment/loans.

Nevertheless interest remains forbidden in many Islamic countries and many small or medium sized companies cannot find any investor to expand their business.

Lack of Education in Islamic Countries

World Statistics reveal that many Islamic countries face serious problems regarding education.

Many Islamic countries suffer from considerably high rates for illiteracy, with little hope that the picture might change. High population growth rates make public education unaffordable.

Many boys do not attend school but only "Qur'an-Schools" where they are forced to memorize the Qur'an without understanding anything of it.

Many Muslim women are illiterates because many men think that they do not need education. The result is that they cannot pass-on any knowledge to their children, worsening the situation further.

In other cases, Islamic laws does not allow that even well educated woman work. In Saudi Arabia many women attend university, but they will never find a job because they are not desired to work.

Gender segregation

Islamic societies (for example, in Saudi Arabia, with only slight changes taking place recently) are wasting the power of women.

• Women can never meet male teachers directly.

• High qualified but not desired to work.

• Cannot drive.

• Cannot move or travel anywhere alone.

• They must be veiled.

Discrimination against Non-Muslims

There are many difficulties for Non-Muslims in Muslim-Societies, including the Jizyah “poll tax” for dhimmi's:

In Malaysia, the Chinese minority effectively controls the economy, but Chinese students have to attain higher qualifications on average compared to local people to acquire the same jobs and scholarships.

In addition to endemic instability, this commonly discriminatory environment in many Muslim-Societies is not inviting for foreign investors.

Mismanagement in Iran

Struggling economy, not enough refined petroleum and protests, economy controlled by religious foundations small and medium sized companies with little influence private sector underdeveloped, key industries under control of the Islamic government, little success in developing of not oil related businesses.

Due to dilapidated drilling rigs and pipelines, Iran can only produce 4.3 million barrels of oil/day out the 130 billion barrels of proven oil reserves.^[2] Furthermore, Iran can refine only 40% of its oil consumption; it has to export crude oil and import refined oil for the other 60% of consumed oil.

High unemployment rates—15% according to the Iranian government ^[3]. Since population is very young, rate is expected to rise in the future. Many young Iranians want to emigrate^[4].

References

Further readings

• Iran's Economic Morass: Mismanagement and Decline Under the Islamic Republic, ISBN 978-0944029671

External links

• Islam and Mammon: The Economic Predicaments of Islamism