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January 2008
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Muslim Economy

Muslim Commerce is a Niche, not an Obstacle


A visit to shopping centres and supermarkets in Muslim countries today would reveal a plethora of goods ranging from Islamic Coke to even Muslim Jeans that are clearly made with Muslim tastes and preferences in mind


Today countries like Malaysia and Indonesia are breaking new ground in areas such as Islamic banking and finance. Furthermore the popularity of goods and services including consumer goods that carry a distinct ‘Made for Muslims’ brand is striking. A visit to shopping centres and supermarkets in Muslim countries today would reveal a plethora of goods ranging from Islamic Coke to even Muslim Jeans that are clearly made with Muslim tastes and preferences in mind. Malaysia is now in the process of developing what may be the first-ever Muslim car, that is designed with the needs of Muslims in mind. In areas such as popular entertainment and plastic arts, Muslim popular culture has become a major business, with even giant conglomerates like EMI signing up Muslim pop groups (such as the ‘Nashid’ or ‘Nasheed’ bands that are popular in Malaysia and Indonesia) as part of their stable of entertainers.


It has, however, to be remembered that what we are witnessing in the Muslim world today is hardly revolutionary or radical. To that end, it is important to stress a number of salient points.


Firstly, it has to be stated again and again that Islam is not a religion and belief-system that is anti-commerce. Indeed, a look back at the early history of Islam more than a millennium ago, would indicate that the early Muslim society was primarily a sedentary one that was geared towards urban life, industry and commerce. The ethical tenets of Islam do not deter one from engaging in commerce, for the Prophet (Pbuh) himself hailed from a family that was involved in commercial and trading enterprises.


Islam defends, and indeed promotes, free enterprise, private property and the accumulation of capital. It is also not an accident that, as Islam spread to the East, its first ports of call were the commercial entrepots of South, Southeast and East Asia, with Islam taking root among the mercantile communities there.


Secondly, what is happening today in the Muslim world is not a novel departure or the invention of something new. ‘Newness’ requires the introduction of radical contingency and/or alterity that radically changes the ontological and existential status of something. Yet this is not happening in the field of Muslim commerce, trade and finance: For, all that Muslims are doing is appropriating the tools and norms of commerce to serve their own communitarian ends. A red car that is painted blue is still the same car, and has not turned into another object altogether. Likewise Muslims, in their engagement with modern commerce today, have not disturbed or rejected the rudimentary rules of finance and trade, but merely appropriating the tools of the trade to serve their ends.


Thirdly, the development of a Muslim business sector is good news for all, it serves as a means of developing societies, generating and distributing new wealth, and also as a bridge-building mechanism in times of crisis when the relation between the West and the Muslim world is not as rosy as it could be. Muslims particularly Muslim capitalists want to make money and enjoy the same standard of living that they see being enjoyed in other developed countries in the world. If proof was still needed of the underlying goodwill and fondness for the West, it can be found in the ways in which Muslim entrepreneurs today have merely grafted Western products and services such as fast food, entertainment and leisure culture into their own respective social contexts. The development of things like ‘Muslim cola’ as typified by Zam-Zam Cola, Mecca Cola, etal. testifies to the fact that Muslims actually adore and covet goods and services that have for a long time been produced by Western industrial society.


The emergence of Muslim commerce should therefore be seen not as a block or obstacle but rather as the opening of a new terrain of commercial possibilities and opportunities for business communities to come together across the world, to explore, develop and service a vital consumer market that is aware of its economic clout and the opportunity this brings with it.


At a time when the media constantly bombards us with images of societies in turmoil and instances of inter-cultural conflict and violence, the entrepreneurs of the West and the Muslim world may well have another role to play namely as cultural bridge-builders and cultural entrepreneurs who may help to create that vital bridging capital which brings societies together instead of tearing them apart.


(Dr Farish A. Noor is a Malaysian political scientist and historian)



Arabia Plans World's Largest SWF
Dubai


Saudi Arabia is set to overtake the $900 billion sovereign wealth fund (SWF) of Abu Dhabi by setting up the largest SWF in the world, according to a Financial Times report on December 22.


This developed as the ailing investment bank Temasek of Singapore held “preliminary talks” with Merrill Lynch, a global financial management and advisory firm, regarding a multibillion-dollar stake in the bank, the report said quoting “a person familiar with the matter”.


But the person said there were “no indications” that a deal was “imminent”.


Temasek had struck deals with Government of Singapore Investment Corp and China Investment Corp, although it was also considered as an investor in global financial services firms UBS and Morgan Stanley, the report said. 


Acting as a country’s investment arm, SWFs have been investing money gained through export receipts or from sales of commodities such as oil. Merrill Lynch has said the funds, found in the oil-rich Middle East as well as Russia and Singapore, are seen to reach $7.9 trillion over the next three years from $1.9 trillion.


Saudi Arabia’s Public Investment Fund would likely spearhead the stakes despite a mandate for internal investment, the report said. While the stakes had avoided serious political backlash, any investments from the oil-rich kingdom would be greatly scrutinised.


Part of the kingdom’s oil revenues had in the past gone to its central bank, the Saudi Arabian Monetary Authority (SAMA) and into the private wealth of the ruling family, whose investment vehicles are never made public. And while SAMA’s balance sheet is public information, its investment has been constrained mostly in US Treasury bonds and shares.


Last month Abu Dhabi’s state investment fund injected $7.5 billion into US financial giant Citigroup, a move which could pave the way for other symbolic American conglomerates being owned by foreign governments due to the subprime mortgage crisis.


The appetites of SWFs, whose investment vehicle used to be government debt such as the US Treasuries, have become complex as they searched for greater returns, said Jay Bryson, global economist at financial consultant  Wachovia Corp, as quoted by CNNMoney.com.


Economists, however, say that sovereign funds are good for the US economy as they provide capital for big companies and support the tumbling dollar.