Mehmet ASUTAY*

1. Introduction:

The Essentialisation of Islamic Economics Beyond Islamic Finance Islamic finance, which emerged as part of Islamic economics thinking, has gained roots in the global financial system in recent years. In this novel and alternative financing method, Shari’ah compliance, as a mandatory aspect in terms of legal and mechanical terms, is essential and important. It is also important in a consequential manner that Islamic financing must fulfil the foundational principles and aspirations of Islamic economics. In this particular point, recent developments indicate that Islamic finance is moving in a ‘capitalist’ direction away from an Islamic economic value system. Therefore, the essentialisation of an Islamic economic system is necessary to asses whether Islamic finance is merely an alternative mode of capitalist production or a unique and egalitarian alternative economic order, which aims to be a ‘moral economy’, as coined by Tripp [2006].

Bismillahir-Rahmanir-Rahim

Prof. Dr. Muhammad Al’ Mahdi

(December, 2005 – revised January, 2006)

My very dear young Muslim brothers and sisters I have something of extreme importance to talk to you about. I want to tell you some things about boy-girl relationships, sex, and marriage. I know these are very personal and delicate matters for discussion, but given how essential they are to your life, to the whole Muslim Ummah, and to the future of Islam as our way of life these are matters we must discuss. In Islam it has been made very clear as to what is acceptable and what is not acceptable between males and females who are not married to each other, so if all was going well in this critical area of life I wouldn’t need to say anything; but, all is not going well. Please know what I am going to say to you I say only because I love Islam and I care so very much about the future safety, happiness, and success in the lives of all of you although we may have never met.

Introduction

Recent development of Islamic economics indicates wide recognition and acceptance to its presence, especially after global evidence in rapid growth of banking and financial sector, supporting theoretical underpinning which is anchored in the Islamic teaching. Scientific procedure on which Islamic economics must rely necessitates not only “consistency” and “commitment” of this subject for acceptance, but also empirical proofs which, on the other hand, creates self-confidence among Muslims. Obviously, further researches and other intellectual exercises are in need.

Indonesians often complain that neighbouring Malaysia is stealing their traditional dances and costumes for its tourism marketing. If they were to take something in return, however, they could do worse than replicate Malaysia's approach to Islamic finance.

Islamic finance in Asia is a distinctly Malaysian affair. Indonesia, an emerging regional powerhouse with the world's biggest Muslim population, does not even figure. Indonesia needs to address this shortcoming. Islamic finance could help it solve two of its biggest financing challenges: funding infrastructure and reducing its dependency on foreign borrowing.

The prospect is especially tantalising because Indonesia is in a position to learn from Malaysia's experience and develop its own Islamic capital markets much more quickly. It could even exploit the deep liquidity pool that Malaysia has built.