THE GRiT: Islamic Economics

Assalamualaikum. How are you? Hopefully you guys was in pink of health. Today, I would like to share a journal that have been writing by Nurizal Ismai with the topic Price theory from Islamic Perspective: Analysis from the earlier Muslim Scholar's thought .

I love to share because I think this topic was interesting to be looked in different perspective. And I believe that the best of people are those who are most beneficial to the society. I hope by sharing this journal can improve our knowledge towards Islamic economy. Hope all of you can enjoy.

Ok. Before we go through the conceptualization of theory of market price in Islamic Economics, we need to understand and take noted what have been Islamic scholar thought about this matter.

PRICE THEORY FROM EARLIER MUSLIM SCHOLARS PERSPECTIVE

Actually some Islamic economics literature have been discussedand have described by the classical Muslim scholars were long before the emergence of schools of economics such as classical economics or the new classical economics. A description of the prices concept by earlier Muslim thinkers as follows:

1. Imam Abu Yusuf

Real name is Yaqub ibn Ibrahim al-Ansari was born in Kufa (Iraq) in the year 731A.D or 113 A.H. He occupied the highest position in law as the chairman of the judges(Qudhat al-Qudha) in the reign of Harun al-Rashid.Further his contributions to the fieldof economic thought can be seen from his book kitab al-kharaj´.In regard to the concept of price, Imam Abu Yusuf argued that the price is cheap not because of supply (supply)of food in the market that much, and the expensive price is not caused by a few food supplied. Abu Yusuf rejected the argument that states when supplies of goods increase,then prices will decrease or when the supply is limited, then the price will increase. The rise and fall in the market price according to him is the will of Allah SWT. Here we can see that the market determines the price not only lies on the demand side, but there are other factors that determine which is on the supply side.

For example, it was happened in the Amirul Mukminin Umar bin Khattab period, in which the price of corn during the period increased due to a bad season (natural factors). So the offer supply or demand in the economy is a mechanism of price formation through a policy of Allah SWT (the natural law).

2. Imam Shafi'i

Real name is Abu Abdullah Muhammad ibn Idris al-Shafi  i or Muhammadibn Idris ash-Syafi `I was born Gaza, Palestine, 150 H / 767 A.D. He was a great mufti Sunni sect of Islam and also the founder of the Shafi'I school. In regard to the concept of price, Imam Shafi'i only describes briefly about the cause of the rising and falling prices in the market. According to him, the value of a commodity increase and decrease at anytime due to changes in price, and at less and more of human desire and the quality and number of goods.

From a brief explanation is understandable that there are some decisive factors that cause the value of a commodity or service subject to change, namely: human desire, change of price, quality and quantity of goods

3. Qadi 'Abdul Jabar

His real name is Abdul Jabbar Ibn Ahmad Ibn 'Abdul Jabbar al-HamaJani al-Asadabadi, who was born 935 A.D. He was a Mu'tazilite the ologian, a follower of the Shafi'i school. He lived in Baghdad, until he was invited to Rayy, in 367 AH/978 A.D, byIbn 'Abbad, a staunch supporter of the Mu'tazila. He was appointed chief Qadi of the province. On the death of Ibn 'Abbad, he was deposed and arrested by the ruler.In regard to his view on the price theory it can be traced from his book "Al-MughniAbwbfi al-Tawhid wal'Adl

" in the chapter of prices, cheap and expensive,' Abdul-Jabar gives moredetails his concept of market price. The first explanation about is the provision of acommodity exchange that will be sold by pleasure way.

Furthermore, he divides the concept into two parts, namely the price on the concept of cheap and expensive in the market. The definition of cheap is a decrease in number according to the price, the custom prevailing at the time and place.

Therefore, it cannot be equated ice price decreases in winter, which happens in the summer that the price becomes cheaper. On the other hands,decrease of ice price in cold regions cannot be regarded as cheap price in hot areas.The definition is expensive according to the price increase as customs prevailing at the time and place.

From the definitions and examples mentioned we need to know thecauses of rising and high prices of some goods. The price to be cheap because Allah SWTwho increases the commodities or goods of the particular period, then the quantity will become cheaper, Moreover, the price becomes cheaper due to Allah SWT to deduct or decrease need for something.

Because the other is Allah subtracting the number of people

who want a commodity due to contain the disease. While the price is high due to AllahSWT subtracting the quantity of commodities or goods to the needs of a commodity or the number of requests for goods or commodities.

By these points it can be understood or inferred the explanation of Qadi 'Abdul Jabar on the concept of price that rise and fall of prices is Allah who determines. We must obey Him and be grateful for every blessing that has been given by him.

4. Ibn Taymiyyah

His real name is Taqi ad-Din Abu 'l-Abbas Ahmad ibn  Abd al-Halim ibn  Abdas-Salam Ibn al-arrn Taymiya who was born in Harran in 1263 AD. Its contribution in the field of Islamic economic thought can be known through his book "Majmu al- Fataawa" and "Siyasa al-Syar'iyyah". According to Ibn Taymiyyah that something increases its demand, the price will increase, otherwise if a little demand. It is related to the few and the many needs or strong and weak demand. So when more and strong demand for something then it will increase the price compared to when the little and weak need not increase the price.

Furthermore, according to him that the human desire have a lot of difference and diversity, namely:

1. By many and few goods requested; people want the goods when the quantity is less than more.

2.By many and less demand of goods: when it is more demand of goods, the price will rise inversely when less demand of goods, the price will fall

3.Based on the few and the many needs, and strong and weak demand, so when many needs and strong demand, prices will rise slightly and inversely proportional to the weak need not increase the price.In addition, he says that the rise and fall in prices is not always due to an injustice (zulm) by certain individuals. Thus if desire for the good increases while its availability decreases, its price rises. On the other hand, if availability of the good increases and the desire of goods decreases, the price comes down. Accordingly, the causes of price are not only because of injustice, but also from other aspects or components which it is desire of human is created by Almighty Allah.

5.Imam Ghazali

His real name is Ab med Muammad ibn Muammad Ghazl was born in1058 A.D. In regard to the concept of price can be found in his book ³Ihya Ulumuddin´

.The price according to him when the demand of commodity decreases the price willdecrease. It is stated: ³if the farmer does not get a buyer for produce,the he sells at a very low price´

His awareness of market forces is evident when, concerning high food prices,he suggests that the price should be induced down by reducing demand, implying aleftward shift in demand curve. In addition, according to Ghan zafar and Islahi that Imam Ghazali already talked about equilibrium price which in the term known today.

It was called in his book as just price.

From the description of classical scholars on the concept of price can be concluded that the price is determined by God as the Word of Prophet Muhammad:

"So Allah SWT that determines a lot and at least demand a good or service and he also determines a lot and the least supply of goods and services on the market.

The implications of the will of God it is to changes in commodity prices or goods and services.They agreed that the price changes are determined by the will of Allah SWT( sunnatullah process) are realized in the form of market price mechanism, namely: the first is when the demand increases for goods and services that are in the market will cause prices to rise and reverse the price will come down when demand for goods decreases in this case relates to the supply side.

Both are from the quantity of goods, when the quantity of goods or commodities on the market then the prices will come down and vice versa when the quantity of goods and commodities on the market a little then the price will goup (demand side). Third is the enabling factors that cause changes in prices, such as the human desire factor, quality factor for commodity goods, and natural factors. On the second point only Imam Abu Yusuf who do not agree, he said not all goods are abundant,the price will be low and vice versa are not all expensive when the price of scarce good sin the market. In essence he said the price of cheap and expensive is God Almighty who set out as described by 'Abdul Jabar.

Taking into consideration of two figures it can be derived by such explanation.Explanation in figure 1 is a clear that when the price decrease from P1 to P2, the demand of goods on the market will increases from Q1 to Q2. On the other hands, figure 2 is a supply curve that explains when the supply of goods increases from Q1 to Q2, the prices will rise from P1 to P2.

Both curves are transformed by the will of Allah.

Furthermore, by taking an example given by Imam Ghazali then will find the balance point between demand and supply curves. According to Imam Ghazali if farmers do not get the buyer of the goods, he will sell it at a cheaper price. See figure 3

At the price level P1, the number of goods offered by the seller amounts to QS, while the amount of goods demanded is QD1.

Because the farmer does not find a buyer, then he lowered the price at the point P2, so the number of buyers increased from QD1 becomes Q*, forming price equilibrium (E) is the meeting point between demand and supply items to be sold by farmers. This equilibrium price is determined by the will of Allah SWT (sunnatullah process).

Furthermore, the concept of price by western thinkers has a similarity with the earlier Muslim thinkers, but the difference is the secular and west ignores the role of religion in economic activity.

Therefore, in the price theory, they mentions that the price will be formed adjusted naturally without any role of God the Almighty fornicators over everything in it. In Islam the price adjustment is determined by God Most Originator of all things. Although the actual price of Adam Smith is the market mechanism through invisible hand that encourages the formation of prices. According to him let alone adjust with reasonable price without any interference from the government because there will be invisible hand that will bring prices at the point of equilibrium.

But Adam Smith did not explain whose invisible hand that he meant. The fundamental difference can be seen from the economic worldview of both concepts. In Islam,

Tawhid is the main foundation of a human as a guidance for all economic activities while the view of secular and west that the reason are mainstream.

CONCLUSION

In fact, Islamic literature either in general or specific source, introduced the price theory in the tenth century as well as the modern concept of price which was introduced by western scholars in seventeenth century.

Both views have similarity concept in the demand and supply law and have the difference in the fundamental aspect of man(worldview).In the fundamental aspect, the price theory from Islamic perspective is different from secular and western point of view. The price according to Islam is determined by the will of Allah through certain causes or called sunnatullah

process, while secular system views that the price will find or adjust in equilibrium price in natural. So, the secular or western concept on the price ignores of God who determines the price. This economic worldview is just only grounded by the reason. On the other hands, Islam must be based on firstly on the revelation, and after that the reason.

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Abstract

Consumerism is an important aspect and the nearest thing with daily human life that is needed to be addressed to achieve the goals of good in the world and the hereafter for all human especially for Moslem who has been handled by Al-Qur’an and Sunnah. The purpose writing this article is to discuss a topic “Islamic Perspective in Consuming Quality Product” related to consumer behaviour and Islam views to give more understanding and awareness about consuming good quality product by using literature review from main sources of Islam, previous researchers, and discussion. The findings of this article are quality products occupy an equally important position in Islam as well as in human life on the consumption of a product viewed from how perspective the Islam, its advantages, and the intentions given by that person.

Keywords: Quality product, Consumer behaviour, Islamic perspective, Consumption

Introduction

Quality is part and parcel of human life in order to largely measurement of anything. This word become buzzword these days and many people talk about quality since they know the adverse will happen due to error of its quality, increase quality of life in self-improvement, quality of public health, quality control and management, quality tested of goods, quality food, and so on, virtually people have high interest to get something which is good. For example, for the results, usually keep the quality as the desired end result. At the end of every year, usually people or companies, will calculate: what has been done this year and what improvements can be done next year. The person or company evaluate the performance that he got and see the quality of its performance is where a more difficult goods achieved compared with the performance itself. In this case it can be seen that quality is ultimately a reference to the achievement of performance itself. Another example, in consuming something will refers to quality product which is also have expectation when they consume quality product that renders fulfill that good as they expected. Quality becomes something to be expected at the beginning and the end result. In this discussion generally will discuss the expected quality in the beginning that gives good results, in the end, especially discussing the consumption of quality products and its Islamic perspective.

Discussion

Quality is generally defined as the most favourable conditions, ideal, conforms to the requirements specified and to the satisfaction of all parties. Nevertheless, few understand the true meaning of the word quality and fewer still are able and willing to put quality in its true perspective in the changing context of the liberalization and globalization where the national boundaries for freer trade and commerce are slowly, but surely, breaking down. In the olden times, quality has a simple definition - a product or service should fit the purpose for which it was intended. For example, a part should fit another part without much effort. But nowadays. In addition, Evans and Lindsay (2007) argued the notion of quality evolves to become no longer universal along with the growth and maturity of the profession. According to a study asking about the definition of quality to the manager of 86 companies in the eastern part of the United States that produced several answers which are related to customer satisfaction, product design and operating performance. The notion of quality that remains popular today, which is based on consumer guidance, is that quality meets or exceeds consumer expectations.

Obviously, the meaning of quality in Islamic perspective decidedly different from the usual meaning given by Western researchers. In Islamic, the views of quality as not only to productivity alone but involves questions of morality and character development which means that pursuing the pleasure of Allah s.w.t by combining the materially and spiritual reward. Dusuki (2007) in his writing said that quality is not measured by rating scales of human or “utilitarian” but also depends on the condition and measurement of the pleasure of Allah. The term “quality” from an Islamic perspective is very closely associated with the concept of blessings (Salleh, 2003). Another study gives the specific explanation about quality as the ability to meet customer requirements in terms of standards that have been set in terms of production. He also added the services offered must be included with ethical values such as courteous, punctuality, speed and accuracy with no defects ( Kamri, 2008).

Beside that, another author also explained about this, Afzal al-Rahman (1991), the standard of purity is one of the important aspects of consumption. He concluded that Islam argues its followers to only use items that are pure and good. In addition, he also stated his opinion that all words referring to the good products as stated in the Quran means every matter that brings pleasure and joy to the consumer is subjected to the limitations of law. In this case, Hassan (1995 ) explained that Islam views quality as a process that brings positive changes towards excellence in every human effort as our prophet words:

”Narrated Syaddad bin Aws: the two of Allah’s Apostle (PBUH)that I’ve taken care if has said: “Verily, Allah commands excellence in all things...”

Moreover, Mat and Ghani have talked about the importance of quality based on the hadith of the prophet, which means:

“Verily, Allah loves us when we do things with itqan.” (Hadith Narrated by Baihaqi)

Islam emphasized the importance of quality and treasured it more than the quantity, because the good quality-from peoples and from deeds-even if it is small in quantity, its effect will be great. Also, the large quantity without good quality has very little effect if any. We have to filter which one is good and which one is bad that have to leave because the most number does not guarantee the truth. If we look into the Qur’an, we will find many verses in which Allah scolds the large majority of people, because this majority was from those who do not think, or do not know, or do not believe, or do not give thanks. It is the clear word of Allah s.w.t:

"But most of them (mankind) have no sense." (Surah Al-Ankabut: 63),

"But most of the mankind don’t know" ( Surah Al-Araf: 187), "But most of the mankind don’t believe." ( Surah Hud: 17),

"But most men don’t give thanks." (Surah Al-Baqarah: 243),

Allah (S.W.T.) also said to his prophet Muhammad (S.A.W.) and to every believer till the Day of Judgment in Surah Al-Ana’am, (verse 116), what can be translated as,

"And if you obey most of those on earth, they will mislead you far away from Allah’s Path."

Thus, the majority of people are not with the truth, and this is an important fact which confirmed by the Qur’an. In consuming, majority people do not consider their quality even virtually it gives the good impact, safe, reliable, and long-lasting. Cruz ( 2015), using quality products gives the safety and product quality is not only beneficial to these customers but also advantageous to the manufacturing industry. It should be clearly understood that quality is an attitude of mind and a way of life where “excellence is a journey, not a destination.” Personally, I put this thought as my principle in way of life to what I get is coming from the optimum what I do especially in consuming I put high priority to give the best to myself. Besides that, Maqasid al-Shariah, as the fundamental for the best life, strengthens of mind to give the best. Literally, the Maqasid al-Shariah can be defined as a whole for shariah purpose or a point. It is aimed at the purpose of the prohibition that is able to produce maslahah (kindness) to the people and to prevent harm. Maqasid syari'ah as agreed by the scholars is to maintain five very vital aspects of human life. The five aspects are to preserve religion (hifz al-din), soul (hifz al-nafs), intellect (hifz al-aql), heredity (hifz al-nash) and wealth (hifz al-mal). Whereas the relationship between maqasid and Malahat is a symbiotic relationship.

President of Malaysian Islamic Youth Forces (ABIM), Amidi Abd Manan in an interview by Selangor Journalist now, Hafizan Taib said Maqasid Syariah is a perimeter of the quality of society. For example, for hifz al-nafs (self-preservation), which is related is the quality of health services. It's not just life-threatening from the threat of murder but should be seen from healthcare glasses through all means and efforts. Food quality, for example, is also contained in self-preservation. Therefore, consuming quality product is the way to fill the fundamental for the best of life. The way to keep life in Islam by eat the forbidden only for necessity mentioned in Qur’an:

“While He has explained to you in detail what is forbidden to you, except under compulsion of necessity?” (Surah Al an’am :119)

Eating, drinking, clothing and housing:

“O Children of Adam! Take your adornment (by wearing your clean clothes), while praying and going round (the Tawaf of) the Ka'bah, and eat and drink but waste not by extravagance, certainly He (Allah) likes not Al-Musrifun (those who waste by

extravagance).”[Surah Al- A’raf :31]

The consumer perception in quality product is influenced by many factors, Agyekum et al ( 2015) found that consumers have different ideas or perception on the product quality based on their ages, income levels, and, educational background and this goes a long way to influence them on the criteria used in determining the quality of product when making a purchase. In this study, limitation and scope of this topic obviate those factor while determining their purchasing to consume, just to know the intention while all those are not arising.

Many things about quality always take precedence over our daily lives. Rice is not falsified, the transport is safe and reliable, the food we consume does not contain harmful substances and others. All these assumptions will become chaotic if something goes wrong. For example, an unscrupulous trader mixes harmful substances in cooking. Oil that turns deadly and leads to serious illness or death. Air travel is generally safe but small pilot errors can be disastrous with tragically hundreds of passengers. As such, we have taken quality as being reliable and safe in whatever activity we are involved. Taken, for example, sports equipment that we exercise. If a minor problem exists unnoticed, then someone sometime is bound to face a serious injury. In these days of technological inventions, supposed to improve the quality of life, quality is given a high degree of importance as one mistake could put an end to that invention in which millions of money have been invested. A responsible and intelligent customer always chooses a quality product and is reliable because he knows the quality of the Product/service will last as long as the customer has it, while the paid price is forgotten in a short time. It is wise to remember what W.A. Foster a few years ago:

“Quality is never an accident. It is always the result of high intention, sincere effort, intelligent direction and skilful execution. It represents the wise choice of many alternatives.”.

Therefore, from most researchers finding from literature review and discussion, the quality gained from the expectations that he created if it manifests from paying for some price, he will do beside it gives the value of 'self-esteem'. Thus, people actually have high intention to consume quality product unless nothing consideration in income as usual.

Conclusion

The quality meaning in Islamic perspective decidedly different from the usual meaning given by Western researchers. In Islamic, the views of quality is as not only to productivity alone, but involves questions of morality and character development which means that pursuing the pleasure of Allah s.w.t by combining the materially and spiritual reward while in general quality defines as the most favorable conditions, ideal, conforms to the requirements specified and to the satisfaction of all parties, in popular until nowadays define quality as meets or exceeds consumer expectations. From main sources of Islam, consuming the quality product is recommended while there are other perceptions putting quality as an attitude of mind and by consuming the quality product is one of the ways to preserve the self or hifz al nafs which means we could save our life and our self that is a trust from Allah giving us this body. We have to save it as well we can do.

References

Evans James R., Lindsay William M., 2007, An Introduction to Six Sigma & Process Improvement, Thomson South-Western, Singapore

Dusuki, A. W., 2007. Why Do Malaysian Customers Patronize Islamic Banks?. International Journal of Bank Marketing, 25(3): 142-160.

Salleh, M.S., 2003. 7 Prinsip Pembangunan Berteraskan Islam. Kuala Lumpur: Zebra Editions Sdn. Bhd, pp:75.

Afzal al-Rahman, 1991. Doktrin Ekonomi Islam. (trans.) Zaharah Salleh, v. 2. Kuala Lumpur: Dewan Bahasa Dan Pustaka, pp: 11-13.

Hassan, N.M.N., 1995. An Islamic Approach to Quality and Productivity. In Quality and Productivity, ed., Al-Habshi, S.O. Kuala Lumpur: Institut Kefahaman Islam Malaysia.

Al-Nawawi, 1994. Shahih Muslim bi-syarh al-Nawawi, Kitab al-Sayd wa al-Dhaba’ih, Bab al-Amr bi Ihsan al-Dhabh wa al-Qatl, no. Hadith 5028.

Arif, S., Ahmad. R., 2011. Food Quality Standards in Developing Quality Human Capital: An Islamic Perspective. African Journal of Business Management Vol. 5(31), pp. 12242-12248, 7 December 2011. ISSN 199308233

Cruz, Albert V., 2015. Relationship between product quality and customer satisfaction. Walden Dissertations and Doctoral Studies. Walden University. Walden University ScholarWorks.

Agyekum, Crentsil K., Haifeng, Huang,. Agyeiwaa, Amma,. 2015. Consumer Perception of Product Quality. Microeconomics and Macroeconomics

Minda Presiden. 2015. http://www.abim.org.my/profil/minda-qiyadah/item/652-kepentingan-maqasid-syariah.html Access on Friday 24 Nov 2017

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Who are the Caliph Umar bin Abdul Aziz?

Caliph Umar bin Abdul Aziz was my role model in Islamic Economy . I’m very admired with his principle in life and because of him, I'm keep believe that one day our world can became a better place by implement Islamic Economy as our core economy system.

Caliph Umar bin Abdul Aziz was in reign for a period of only two years and five or six months, but the caliph has been successful in revolutionising almost all the systems within the field of power that he holds as a caliph. Those fields were political, economic, education and social[1].

People lived peacefully under his reign [2]. As a proof, the citizens of Basra were very happy whenever the messenger from the caliph came to their area as they know, they will be awarded with good news from the caliph. Once, the messenger comes in tears. The tears also bring tears to the whole citizens of Basra. The messenger went inside the Basra Mosque and read aloud the letters which told the news of the death of the Caliph Umar bin Abdul Aziz.

The event showed that Caliph Umar bin Abdul Aziz was a caliph who really performed his duties to such extend that makes people love his reign so much, unlike the previous caliphs who were guilty of fraud particularly when handling treasury assets.

Umar Abdul Aziz was well-known as a ruler who implemented a system of government based on Islam. His implementation was considered a success compared with his predecessors or successors (Mohd Saufee, 2015). This involved the implementation of economic and political approaches based on the uswah hasanah of Khalifah Umar Abdul Aziz itself. He established that the government should be managed based on the Quran and Sunnah (Al-Shallabi, 2010). His personality and character as a Muslim formed the guideline in selecting his workforces as well as implementing all affairs and other matters (Muhammad Tahir, 2013). During his tenure as the Caliph, he had set two conditions in his office. First, he worked based on truth and applied aspects of justice in his governance, he would not oppress and persecute anyone in managing the Bayt al-Mal; second, he divided the national wealth to his subjects in Madinah. These conditions were accepted by Khalifah al-Walid. Khalifah Umar Abdul Aziz then performed his duty well. The people of Madinah welcomed him with joy (Al-Shallabi, 2010: 35). This event had proven that Khalifah Umar Abdul Aziz used his political power in managing economic matters and the welfare of his subjects, so that they may live peacefully and prosperously.

Based on a research paper of Radieah Mohd Nor Department of Management
University Sains Malaysia, Malaysia . She discussed about the factor that determined the successful treasury management by the caliph. It was a preliminary discussion, but she was able to put the factor in a nice way and can be understood easily.

The success factors that will be discussed in this paper are, firstly, the creation of a healthy climate for economic growth. Secondly, strengthening of treasury funds. Thirdly, stimulating and boosting the business sector. Forth, creating new rules for agricultural sectors. Fifth, focus on the general fund stored in the treasury. Sixth, vigilant toward the use the national treasury. These six factors will be discussed in the following sub-topic.

1. Creation of a Healthy Climate for Economic Growth

The attitude of predecessor of Caliph Umar bin Abdul Aziz was a burden to the people. The rich keep getting richer and the poor became poorer. The situation was recognized by Caliph Umar bin Abdul Aziz when he expressed his dissatisfaction over the way Caliph Suleiman bin Abdul Malik rules. The way Caliph Suleiman bin Abdul Malik rules has made the people lives in economic systems which unfavourable to them [3]. When Caliph Umar bin Abdul Malik was appointed as caliph to replace Caliph Suleiman bin Abdul Malik, he has created a healthy climate for economic growth for the people and their country as well. The system has profited the people and eventually has increased treasury funds [4].

Among the enhancements that were implemented was prohibiting the governors and government employees to do monopolies of national assets and wealth. In addition, the caliph also forbade the governors and government officials to confiscate and seize the people’s assets unjustly [5]. Properties that were confiscated unjustly before he enforces the law were reinstated to the original owners. He investigated and makes it public so that people who were oppressed before will come forward to reclaim their properties. However, if the identity of the owners remained unknown, the properties are to be owned and used properly for the people [6].

Moreover, the Caliph Umar bin Abdul Aziz also build infrastructure such as bridges, public transportation, dig a few wells, build roads and drainage system (dig the land to build river). In developing these infrastructures, Caliph Umar bin Abdul Aziz ordered it without collecting funds from the people. The instructions were issued so that the governors and civil servants will not taking advantages of the people by charging taxes for the construction [7].

The caliph effort has indirectly made his people getting involved in business and trade. The increase in revenue of the trading has increased the treasury fund too, especially funds that come from zakat and ‘usyur. These have resulted in many zimmi to embrace Islam.

The creation of a healthy climate for economic growth has impacted by increasing the treasury funds. The wisdom of providing this enhance system was due to the acquisition of knowledge by the caliph. The caliph also was a scholar who has issued fatwas. Thus, his status as a caliph has made it easier for him to enforce the fatwas in his ruling system. Such situation has made it easier to strengthen the treasury management during his reign.

Making a positive authoritative atmosphere is not another thought, but rather it has turn into a corporate basic presently. As development moderates and benefits slack, organizations are examining key measurements of their atmosphere and applying their insight to the whole business atmosphere change.

2. Strengthening of Treasury (Baitulmal) Fund

Islamic funds deposited in the treasury during his time were zakat, ufti, khaaraj, usyur, a fifth of ghanimah, and fa’ie. However, overall the funds from zakat was increased due to the increased of revenue from the business, trades and agricultural sectors. Increased of zimmi who converted to Islam also contributing in increasing the zakat’s fund as there were more Muslim who can contribute zakat. A new fatwas issued by the caliph regarding the expansion of the law to pay zakat for the trades of fish and honey also lead to an increase in zakat funds.

Zakat overflow occurred during the reign of Caliph Umar bin Abdul Aziz as it was said that almost all of the people were not eligible to be the recipient of zakat. It has been narrated by Yahya bin Said, who was governor at the time. He said:

“Saya pernah diutus Umar bin Abdul Aziz untuk memungut zakat ke Afrika. Setelah memungutnya, saya berniat untuk memberikannya kepada orang-orang fakir. Namun, saya tidak menjumpai seorang pun. Umar bin Abdul Aziz telah menjadikan semua rakyat pada waktu itu kaya. Akhirnya, zakat tersebut saya putuskan untuk membeli hamba sahaya lalu memerdekakannya”. (I was sent by Umar bin Abdul Aziz to collect zakat from Africa. After collecting it, I intended to give it to the poor people. However, I did not find one. Umar bin Abdul Aziz has made all the people rich during that time. Finally, I decided to use the zakat fund to buy and emancipate slaves) [8].

Ufti imposed on the zimmi living in Muslim countries also were based on Islamic law. Prior to the reign of Caliph Umar bin Abdul Aziz, ufti was imposed on the converted Muslim. During his reign, the caliph removed the rules as it was conflicting with Islamic law. His fair decision has resulted in more zimmi convert to Islam. However, the situation is causing complained from the governor as they said it will reduced the number of people who pay ufti. To deny the allegations, Caliph Umar bin Abdul Aziz has answered with a letter as follows:

“Amma Ba’d. Sesungguhnya Allah SWT telah mengutus Nabi Muhammad SAW untuk menyerukan agama ini kepada seluruh manusia, bukan sebagai pemungut cukai dan ufti”. (Amma ba’d Almighty Allah sent the Prophet Muhammad to call for the religion of all mankind, not as a tax of ufti collector) [9]. For zimmi living in poverty, the caliph did not imposed ufti on them. He did as was done by Hadrat Umar bin Khattab RA who issued funds from baitulmal to help them [10]. His decision has strengthened the ties between the people and governor. Moreover, people’s trust toward the governor also increased. The defamation against underfunded treasury when governor was instructed not to collect ufti from the converted non-Muslim was also eliminated by then [11].

The increased of zimmi who embraced Islam during the caliph time has resulted in increased of zakat’s payer. This occurs because the converted zimmi was rich, so they were able to pay zakat from the revenue of their enterprise in commercialize business and trades [12].

Prohibition of the sales of land bounded by land tax also resulted in increased of kharaaj. Prohibition of the sales of the land was an ordered from the caliph which was in alignment to the sharia. Apart from the ban, Caliph Umar bin Abdul Aziz also has been building drainage systems for irrigation purposes and roads to facilitate the process of exporting out the crops [13].

Elimination of several taxes in business also made many zimmi have desire to expand their business. These have resulted in increased of ‘usyur, thus further increase the baitulmal funds during the caliph reign compared to other caliph before him.

However, the funds in form of a fifth of ghanimah and fa’ie were not much during his reign. It happens because the caliph focused more on the paramount matter at that time, which was improving the people and the country’s condition. His short period in reign also did not gave him chance to carry out war but only to correspond via letters to kings and governors to embrace Islam.

3. Stimulating and Boosting the Business Sector

When the unreasonable taxes imposed previously has been removed by the Caliph Umar bin Abdul Aziz, the price of agricultural products declined. This situation makes the increased demand for goods which ultimately make business more brisk than ever compared to the time before the unreasonable taxes were eliminated.

Caliph Umar bin Abdul Aziz also urged the governors to build facilities along the merchant’s routes. Homes for transits were available and merchants were allowed to stay for one day and one night there. However, those who were sick were allowed to stay beyond the one day one night period. Muslim traders who lost, or whom having their merchandise stolen or were inflicting by other disaster were given helped too. All their losses will be guaranteed by the baitulmal. Those security and convenience indirectly has motivated traders and thus boost the business sector [14].

Apart from that, any provision for the traders is prohibited so that the traders will focused more on their trades rather than on the gift. Any merchants who were bankrupt, his debt will be settled by the baitulmal. Caliph Umar bin Abdul Aziz done that as an encouragement for the traders to not gave up especially for those who are still new in business and trades sector. Standardization of weights and measurement were carried out earnestly by the caliph [15]. It was also a part of national law during his reign [16].

Caliph Umar bin Abdul Aziz also prohibits the governors and close relatives to the royals from involved in business. He forbade it to provide healthy competition between businesses and to avoid changes of market price in their favou [17].

Stimulating development can fortify growth and competitiveness while all the helping nations propel their potential at the innovation. This accomplishment, then again, requires both an approach domain and ventures that are multi-pronged considering replication of achievements from around the world, and in addition adjustment to particular nation connection.

4. Creating New Rules for the Agricultural Sector

Caliph Umar bin Abdul Aziz also implemented new regulations in the agricultural sectors. Amongst them was to prohibit the sale and purchase of land bound by lease. This prohibition was issued by the caliph because he said it was not in Islamic law, unless the land was acquired through war. However, if the lease were to happen before the new rules were implemented, the owner can give alms in lieu of the lease instead [18].

Attention was also given to the farmers by eliminating the tax imposed on them. Various taxes imposed on the land’s owner causing more of them to just leave their land unattended. Some of them have to sell their lands in order to avoid penalties and taxes. Moreover, people also avoid from having lands in order to escape the burdensome taxes [19]. As a solution, the caliph eliminates the taxes to stimulate the growth of agricultural sector back.

Recovery of abandoned land was also made by Caliph Umar bin Abdul Aziz by encouraging the people to open up new land to be developed or used for agricultural purposes. Furthermore, land tax was only imposed on land that produces revenue. Loans were also provided to encourage more agricultural production [20].

Himaa lands were not allowed to be solely owned by only a person or party only. Instead, the caliph ordered the land to be used wisely by the Muslims. Such land was more likely to have waqf status. However, the himaa land in the Naqii district was more dedicated for camels that come from alms or charity as the specialization has been determined by the Prophet [21].

Caliph Umar bin Abdul Aziz also encourages his people to explore new land that has no owner. Moreover, the land taken from the previous governor which was left unattended and having unknown owners or heirs, were utilised accordingly by the caliph. The revenue from the lands was handed over to the baitulmal [22].

5. Focus on General Funds Stored in the Baitulmal

Caliph Umar bin Abdul Aziz was very concerned regarding the public funds held in the baitulmal. He distributes the funds for the benefit of social protection. Among the efforts was to pay attention to the poor and needy. He always tried to solve problems and complained that was bring upon him. For example, the caliph received a letter from Fartunah as-Sauda’ who was a slave to Dhi Ashbah. She wrote complained about the wall of her house that was low which make it prone to attack from bad guys and having her chicken stolen so often. Caliph Umar bin Abdul Aziz immediately replied her letter and having a letter sent to Ayyub bin Syurahbil, who was his officials at Egypt, to raise the walls of Fartunah as-Sauda’s house [23].

The caliph also pays off the debt of his people unless it was used for vices or sinful purposes [24]. The debts of citizens who have died are also were pay off using the baitulmal’s fund [25]. The funds were also used to settle any fine that has been imposed on his people. As has been reported, the accumulated funds of baitulmal were so much that the governor of Kufah wrote to the caliph regarding the matter. The caliph then replied ad follows:

“Engkau telah memberitahuku tentang Baitul Mal yang banyak menyimpan dana. Dana tersebut boleh engkau gunakan untuk melunaskan hutang pasukan perangmu yang tidak digunakan untuk kemaksiatan atau juga untuk mereka menikah namun tidak memiliki apa-apa sebagai mahar untuk pengantin wanita. Wassalam”. (You have told me about the abundance of funds in the Baitulmal. You can use the funds to pay off debt of your war team which wasn’t used for vices purposes or even for those who wanted to get married but did not have anything as dowry for the brides wassalam) [26].

Similar deals have been read at Kufah Mosque, which offering to pay the people’s debt [27] and wedding dowry for those who don’t have the ability to provide dowry to the bride. All of the payment was to be taken from Baitulmal funds.

Large attention also was given to those who are paralyzed or suffered any illness. The caliph has given each of the paralyzed and ill people a slave to attend to their necessity. It was reported that during that time, each of sick people have slaves attending to their needs and each blind person have slave to help them move around [28].

Muslim’s prisoner of wars and slaves also were giving attention by the caliph. Using the Baitulmal funds, the caliph tried to free the captured Muslims and freeing any slaves. Moreover, those who have involved in criminal cases and qisas also were protected by the caliph. The caliph once, has wrote letter his governors to not to bind Muslims prisoner in way that will make it more difficult for the prisoner to stand up for solat (pray). The prisoners were also given good care in terms of suitable food and clothes either during summer or winter [29].

High salaries were given to the governor while the caliph has eliminated specific compensation and wages that was practiced by the caliph before him. His own salaries otherwise has been reduced. He did it so that the governor and officials became richer to prevent them from involved in fraud [30].

6. Vigilant with the Use of National Treasury

Caliph Umar bin Abdul Aziz was very frugal in the use of national treasury. He has different lamp when he was attending to the national and personal affairs. He has sent letter to Abu Bakr bin Muhammad bin Amru bin Hazm, the governor of Medina, to not using the same candles which was provided to use to manage national affairs to light up the road if he was to be out at night for personal affairs. In addition, Caliph Umar bin Abdul Aziz also has written to Suleiman, which also a governor of Medina, to prohibit wasteful use of paper. Those prohibitions were issued by the caliph to avoid waste and extravagance used of the baitulmal funds [31].

Conclusion

The wisdom of Umar bin Abdul Aziz in managing the national treasury has made abundance of baitulmal funds was available. Despite the overflowing of treasury funds, the caliph however did not use it arbitrarily for himself or his family. Although the caliph and his family live in a poor condition, people under his reign live a prosperous life. As narrated by a male descendent of Zaib bin Khattab:

“Umar bin Abdul Aziz memerintah selama dua tahun setengah, iaitu 30 bulan. Dia tidak meninggal dunia kecuali selepas membuatkan kita kaya dengan membawa harta yang melimpah-limpah, lalu dia berkata, ‘Bahagikan ini kepada orang yang kamu anggap fakir’. Umar terus melakukan itu sampai dia pulang dengan membawa harta yang tersisa. Saat itu, tidak ditemukan lagi orang yang berhak menerima zakat dan santunan negara, sehingga harta itu dibawa kembali ke baitulmal. Umar bin Abdul Aziz telah membuat seluruh rakyatnya menjadi kaya.” (Umar bin Abdul Aziz ruled for two years and a half, i.e. 30 months. He did not die but after making us rich with riches galore, and he said, “divide this to anyone you think is poor”. Umar continued to do that until he returned with the leftover funds. At that time, he no longer found a person entitled to receive zakat or states compensation that the fund has to be brought back to Baitulmal. Umar bin Abdul Aziz has made all his people become rich) [32].

Successful baitulmal management during the period was not only depended on the strategies undertaken by Caliph Umar bin Abdul Aziz. The success was also influenced by four main factors which the caliph regards as the pillar of power. The pillars were the caliph, the governor or district’s ruler, the judges, and the officials of Baitulmal [33]. The caliph has described that all the four factors were essential to create a prosperous country. Through a competent caliph, governor or district rulers, judges, and baitulmal’s officer only the successful management of baitulmal funds could be done.

Any financial institution such as baitulmal, state bank, world bank and so on, if were managed through solid strategies by competent and honest person can bring substantial benefits to the people and the country. It was proven by history as was prevailed during the reign of Caliph Umar bin Abdul Aziz.

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