Islamic Economy System Prepared by: Nuradli Ridzuan Shah & Abdullaah Jalil BOF Y2S2 2 PFS 2253 ISLAMIC FINANCE

Chapter Outline Definition Al-Falah Maximization Islamic Economy Philosophy The Objectives of Islamic Economics Basic principles of Islamic Economics Islamic Economics Structure Special characteristics of Islamic Economics

Definition Islamic Economics as a science on how to consume and manage resources for self interest, society in order to get the bessing of Allah - Hailani Muji Tahir –Importance characteristics Akidah Self interest could become priority as long as it do not affect the interest of the society The objectives of Islamic economics is to get the blessing of Allah

Al-Falah Maximization Al Falah maximization is to get the blessing of Allah as compared to Conventional economics which is to maximize profits. Just profit instead of max profit The inclusion of reward and sin Al-falah also means the success in this world as well as in the hereafter.

Islamic Economy Phylosophy The concept of Tauhid (Oneness) The Concept of Rububiyah (Allah is the Greatest Creator) The concept of Tazkiyyah (Purification) Judgment day Man as the Khalifah (Trustee) Equality and Brotherhood Ownership Concept – Man as the trustee Normative and positive economy

The Objectives of Islamic Economics Economics stability for individual, society and country Necessity Optimum Resource Usage Fair distribution of wealth Uphold individual freedom Equal rights and opportunities Justice and cooperation

Basic principles of Islamic Economics Individual liberty Right to property Economic inequality with natural limits Social equality Social security Wider circulation of wealth Prohibition of accumulation of wealth to certain group Prohibition of anti-social institutions Social and individual welfare

Islamic Economics Structure Politics/Public (Siasi) Business/ Private (Tijari) Social/ Voluntary (Ijtimai’)

Special characteristics of Islamic Economics Resources – Trustee Islam approved personal property ownership but public interest exceeds individual interest Al-Taa’wun (Cooperation) Property as a productive resource and not selfish end Public ownership for certain industry Taqwa (fear of Allah) to avoid oppression, fraud, unlawful profit, discrimination

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