1. BASIC AND INSTRUMENTAL VALUES IN ISLAMIC ECONOMICS
Yeni Salma Barlinti

2. DEFINITION
Islamic Economic System is an economic system that occurred the economic principles that guide its work, influenced or restricted by the teachings of Islam, which is sourced from the Qur'an and Sunnah as developed by the human thinking

3. SYSTEM OF ISLAMIC ECONOMICS
PHILOSOPHY PRINCIPLES OF ISLAMIC ECONOMICS
BASIC VALUES OF ISLAMIC ECONOMICS
Ownership; Balance; Fairness
INSTRUMENTAL VALUES OF ISLAMIC ECONOMICS
Zakat; Riba Free; Economic cooperation; Social security; Role of state

4. PHILOSOPHY PRINCIPLES OF ISLAMIC ECONOMICS
The universe belongs to Allah absolutely
Allah creates creatures and universe
Man obliges to believe in judgement day and the hereafter

5. BASIC VALUES OF ISLAMIC ECONOMICS
Ownership:
Human has limited freedom of his wealth
Balance :
Between the world and the herafter;
Between individual and common interest
Fairness :
For all parties, not only certain party(ies)

6. INSTRUMENTAL VALUES OF ISLAMIC ECONOMICS
Zakat
Free of Riba
Economic cooperation
Social Security
Role of State

7. 1. Zakat
Zakat is the treasure that must be given by every Muslim who meet certain requirements to certain people with certain conditions

8. FUNCTION OF ZAKAT
Zakat purifies and sanctifies muzakki’s live and treasure and increases his fortunes
QS At Taubah verse 103:
“On their goods, take alms, that so thou mightest purify and sanctify them”

9. 2. FREE OF RIBA
Riba covers any return of money on money, whether the interest fixed or floating, simple or compounded, and at whatever the rate
(Daud Vicary Abdullah & Keon Chee, 2010)

10. Riba in Al Qur’an QS Ar Rum (30): 39
“And whatever you give for interest to increase within the wealth of people will not increase with Allah . But what you give in zakah, desiring the countenance of Allah - those are the multipliers.”

11. Cont’d
QS An Nisa (4):
For wrongdoing on the part of the Jews, We made unlawful for them [certain] good foods which had been lawful to them, and for their averting from the way of Allah many [people],
And [for] their taking of usury while they had been forbidden from it, and their consuming of the people's wealth unjustly. And we have prepared for the disbelievers among them a painful punishment.

12. Cont’d
QS Ali Imran (3): 130
“O you who have believed, do not consume usury, doubled and multiplied, but fear Allah that you may be successful.”

13. Cont’d QS Al Baqarah (2): 278-279
O you who have believed, fear Allah and give up what remains [due to you] of interest, if you should be believers.
And if you do not, then be informed of a war [against you] from Allah and His Messenger. But if you repent, you may have your principal - [thus] you do no wrong, nor are you wronged.

14. Kinds of Riba Riba Nasi’ah Riba Fadhl
Money return as additional amount of debt
Riba Fadhl
Additional amount of goods on same goods exchange

15. Riba =/≠ Interest? Pragmatic Conservative Socio-Economic
Prohibition of riba prevailed in the past
Conservative
Interest is riba because it is money return on on money or loan
Socio-Economic
Interest is fund raising for certain people only
Risk transfer
Profit is not obtained from self-effort

16. 3. Economic Cooperation
Qirad is a partnership between the owners of capital or money or investor to entrepreneurs who have the expertise, skill or effort in implementing the economic units or enterprises
Kinds of Qirad:
Mudaraba: Investor finance (100%) the activities managed by entrepreneurs
Murabaha: Capital owner finance by purchasing of goods managed by entrepreneurs to get the profit margin

17. Impact of Economic Cooperation
Creating productive works for society in daily life
Rasing prosperity and avoiding misery of people
Avoiding economic oppression and inequitable economic/wealth distribution
Protecting poor people’s interest

18. 4. SOCIAL SECURITY
Islam guarantees a minimum level and quality of life for society, namely:
All the creatures of God Almighty have to benefit from the wealth of natural resources
Pay attention on the poor
The wealth should not be enjoyed and rotated among the rich
Do something good for society
Wealth should be used for social purposes
Social contribution is not intended to be praised by others
Social security is given at least to those who written in the Qur'an

19. 5. ROLE OF STATE Legal aspects
Planning and supervision of resource distribution
Equity income
Growth and stability of economic

20. Factors in Islamic Economics
1. Production 2. Consumption 3. Circulation 4. Distribution

21. Factor of Production Land  welfare of society
Human resources  power of cooperation
Capital  free of riba, limited ownership
Organization  based on capital equity, enterpreneur and worker are working together

22. Factor of Consumption
Fulfilling human needs: primair needs, happiness, and wealth
Pay attention on halal haram of consumption
Pay attention on principles: justice, cleanliness, simplicity, generosity, and morality

23. Factor of Circulation
Circulation of economic activities in goods and services is based on sharia
Market price is determined by supply and demand
Islam admits “controlled freedom”, freedom controlled by justice, religion and moral principles

24. Factor of Distribution
Value of freedom in ownership management: believe in God and trust others (human / people)
Value of justice in job opportunity, placement worker, giving rights of worker, and social security for the poor
Social security for the poor. Such as zakat (alms) and charity

25. Thank You
Wassalam

26. ASSIGNMENT FOR MONDAY, 22 SEPT 2014
Find institutions which manage islamic economics activities of bank, insurance, capital market, zakat, and waqf
Describe the function of each institutions above
Do the assignment in pairs