Riba'

WHICH IS THE MOST DANGEROUS FORM OF RIBA?

Since Allah, the Wise, has chosen to highlight only one form of riba by mentioning it in the Qur'an, then clearly that must be the most dangerous form of riba in the sense of having the capacity for inflicting maximum damage on mankind.

That form of riba is 'lending on interest'. And it is precisely that form of riba which has embraced all of mankind today in its venomous deadly embrace. Perhaps one of the reasons why it is the most dangerous form of riba is because it has been legalized.

Islam’s View Of Trade

Interest is not a subject without trade and commerce. Islam recognizes trade and commerce not only as a lawful profession but also as a moral duty. Islam has laid down a complete set of rules for trade. The reason for these rules is to specify what halal earning is. There are many traditions (Ahaadith) concerning halal provision that can also be found in the books containing the traditions of the prophet (peace be upon him). Actually, Islam has encouraged men to earn their own provision and to provide it to their families. The condition is that the earning has to be according to the conditions set by the Shari’ah. Any sort of transaction that does not correspond to the rules of trade will not be allowed. These rules can be found under the heading of trade in the books of jurisprudence. Interest is amongst those conditions which all dealings must be free from.

How Is Interest Illegal

The definition of interest has already been mentioned as well as that it is prohibited. If we explore the Qur’an we will come across at least four places where Allah has mentioned interest.
The first one is in Surah Al-baqarah verse no.275

"Those who devour usury will not stand except as stands one whom the Satan by his touch has driven to madness. That is because they say, "trade is like usury", but Allah has permitted trade and has forbidden usury",

In the next verse verse 276 in the same place he says,
"Allah will deprive usury of all blessing, and will give increase for deeds of charity, for he does not love any ungrateful sinner."

Two verses later in verse 278 he says,
"Oh you who believe! Fear Allah and give up what remains of your demand for usury if you are indeed believers."

In verse 279 he says,
"If you do not, take notice of war from Allah and his Messenger sallallahu alaihe wasallm but if you repent you shall have your capital sum. Deal not unjustly and you shall not be dealt with unjustly."

REPAYMENT OF LOAN WITH AN EXTRA AMOUNT PERMITTED

An extra sum can be added by a borrower, to the principal sum borrowed, at the time when a borrower is repaying a debt. Such an extra sum, however, has to be freely offered, i.e., it must not have been stipulated as a condition of the loan, and, as such, would not constitute 'interest' or riba. We learn this from the fact that the Prophet himself acted in that way when repaying a loan:

Jabir said: 'I came to the Prophet while he was in the masjid, so he said: Pray two raka'ahs of prayer. Then, since he owed me a debt, he paid me and even gave me more (than was due). [Bukhari]

In order for any increase over and above the capital sum lent to be recognized as riba, that increase would have to be a condition of the loan.

HOW MUCH INTEREST CONSTITUTES RIBA?

In the very last revelation of the Qur'an (2:278) Allah ta'ala addressed all those who still had riba due to them (from loans extended prior to the prohibition of riba) and ordered them to give it up (or write it off). In the event that such people were to heed the divine command and make repentance (tauba) then, Allah declared, they would be entitled to the return of only the principal sum which had been lent. Allah did not say that they would be entitled to the return of the principal sum plus a service charge, or plus a reasonable amount of interest.

Thus it matters not whether interest is small or large (1% or 25%), it would still be riba, and would still be prohibited. In this respect riba is like alcoholic beverages. Whether the glass contains a small drink of whiskey, or whether you are offered a large drink, it makes no difference, it would still be prohibited in Islam.

In fact riba includes any material benefit above the capital sum lent, which a lender may derive from a borrower. Banks don't lend money for blessings. Nor do they charge interest for the purpose of recovering losses sustained through inflation. They do it for profit! And what enormous profits do they make! Thus economic credit, 'the creature of modern banking' is most definitely riba, regardless of whether the interest-rate is high or low or compound or simple!

Thus the Prophet said:

Anas ibn Malik reported that the Messenger of Allah said: 'If you give a man a loan and he were to offer you a meal, do not eat it, because that is riba! - unless he used to invite you for meals prior to the loan, in which case you may eat.' And again he said: 'If you give a man a loan and he offers you a ride on his animal, do not take it, because that is riba! - unless he used to offer you rides on his animal prior to the loan, in which case you may take it.' [Sunan al-Bayhaqi]

Anas bin Malik also reported the Prophet as saying: 'If a man extends a loan to someone, he should not accept a gift' (i.e., he should not accept a gift from the debtor while the loan is still outstanding, but may do so after the loan has been repaid to him). [Bukhari]

WHAT CAN WE DO WITH RIBA MONEY?

Some scholars have felt it necessary to advise Muslims living in non-Muslim lands not to leave their riba earnings in the hands of non-Muslims. They advise that such riba money should be accepted and then given in charity. The terminology which they use is suspicious! The shariah (i.e. the sacred law) does not address 'non-Muslim lands'. It recognizes dar al-Islam and dar al-harb. Imam Shafe'i recognized such territory which was in a state of contractual peace and non-aggression with dar al-Islam as dar al-ahd.

What, then, can a Muslim do with riba money?

Since the enemies of Allah are waging war against us and against all of mankind with riba, we may, perhaps, be permitted to use riba money to oppose riba! We may thus use riba money to publish books such as this one, on the prohibition of riba in Islam, and then distribute them to the public free of charge. But Allah knows best! I may be wrong!

RIBA AND THE DOCTRINE OF NECESSITY (DARURAH)

Dr. Jamal Badawi, the learned scholar of Islam, rejects the opinion regarding the admissibility of the use of riba loans for housing etc. in USA, on the basis of the application of the doctrine of necessity (darurah). His position is that 'necessity' does not apply in the general conditions obtaining here today. It can apply only in specific conditions which are rare in USA today.

Such would be the case of a family of ten who cannot afford to buy a house and cannot obtain a house or apartment on rent. Nor do they have anyone who can help them with shelter. Such a family, faced with the prospect of being turned out onto the streets, are legitimately entitled to invoke the doctrine of darurah.

If darurah is invoked then there remain the further conditions that there must be an absolutely minimum use of riba, and it must be for the minimum time possible.

DIFFERENT FORMS OF RIBA

DIFFERENT FORMS OF RIBA

The Prophet (s) declared that there seventy different kinds or forms of riba. But he did not describe them all. In fact he described only a few of the different forms of riba. The implication, therefore, is that there are forms of riba existing in the world which have not been specifically identified as such by the Prophet(s). It remains for the scholars of Islam to use inference and analogy to locate other forms of riba not identified by the Prophet and which may not have appeared as yet in the world at the time of the Prophet (s), but have now made their appearance, particularly in this evil age of ya'jooj, ma'jooj, and Dajjal!

Here are a few of the forms of riba described by the Prophet (s):

[1] - credit transactions (bai muajjal). There are some credit transactions which have been prohibited by the Prophet (s) because they involve riba:

Usama bin Zaid reported the Prophet as saying: 'Credit involves riba.' In another version he said: 'There is no riba when payment is made on the spot.'[ Bukhari and Muslim]
Such a credit transaction would, for example, be one in which an animal is traded for another animal:

Samura b. Jundub said that the Prophet forbade selling of animals for animals when payment was to be made at a later date. [Tirmidhi, Abu Daud, Nasai, Ibn Majah and Darimi]

The reason for the prohibition appears to be the element of uncertainty in which death, for example, might occur to an animal, or it may fall ill etc. Such an occurrence can lead to disagreement and conflict between the parties to the credit agreement. Credit is also discouraged because when payment is to be made at a later date one may not be able to make the payment and that could have serious consequences.

The system of riba creates its own self-generating and self-sustaining apparatus in the form of credit-worthiness of individuals. A person has good or bad credit. The system forces every individual to struggle to establish and sustain a good credit record. It does so by punishing those who have bad credit.

If someone has never borrowed money on interest and, as a consequence, does not possess a credit record, he is looked upon with grave suspicion!
[Note on Bai Muajjal]

Bai Muajjal is a credit transaction. An article is purchased on credit, i.e., with the price of the article purchased to be paid at a later time. But this does not always constitute riba. The Prophet (s) himself purchased food-grain on credit. (See hadith quoted here-under). But it was not riba! It is important for us to note, however, that this credit (bai muajjal) was quite different from today's ordinary credit transactions.

Firstly, there was no increase in price in consideration of credit.

Secondly, the debt was covered through a mortgage, i.e., the price of the article purchased on credit was essentially guaranteed in an article which was mortgaged. In the event that the buyer of the article (on credit) were to die before the debt was redeemed, he would die without a debt - since the mortgaged article would be sold in order to recover the price of the article in the original sale.

Thirdly the article which was purchased on credit was not such as admitted the possibility of future complications and conflicts (such as a mango crop which was not yet ready to be harvested). As a consequence, there was no riba in such a credit transaction (bai muajjal). Thus we find that the Prophet (s) himself entered into such a credit-cum-mortgage transaction:

Aisha (the wife of the Prophet) said that Allah's Messenger bought food grains from a Jew on the basis of deferred payment and mortgaged his armor to him.' [Bukhari, Muslim] She said that when Allah's Messenger died his coat of mail was mortgaged to a Jew for thirty sa's of barley

(a sa being a measure of weight).' (Bukhari)

Debt is something to be feared! A Muslim should never enter into debt which he does not possess the means to liquidate, unless it be for grave necessity. Secondly debt should not remain outstanding indefinitely. If a debtor cannot repay a debt then the creditor should accept whatever the debtor possesses and the balance be remitted (i.e., forgiven). Alternatively the debt should be remitted after a reasonable period of time. In fact the Torah decreed a period of seven years for remission of debts..

[2] - increasing the price of an article in consideration of deferred payment. This credit transaction is known as riba al- nasi'ah;

Riba al-nasi'ah is what was well known and conventional among the Arabs in Jahiliyyah. They used to give loans on the condition that every month they will receive a stipulated amount with the whole principal remaining outstanding. Then, when the loan matured and the borrower was unable to clear his obligation, the amount was raised and the period was extended. This is the riba that was practised in the Jahiliyyah.

From Usama bin Zaid: From Usamah ibn Zayd: The Prophet, peace be on him, said: "There is no riba except in nasi'ah [waiting]." (Bukhari, Kitab al-Buyu, Bab Bay al-dinari bi al-dinar nasa'an; also Muslim and Musnad Ahmad) "There is no riba in hand-to-hand [spot]

transactions." (Muslim, Kitab al-Musaqat, Bab bay'i al-ta'ami mithlan bi mithlin; also in Nasa'i).

This was the most common form of riba in Makkah. The principle involved was that if you had to wait for your money you deserved to get an additional amount. A debtor was given an extension in time because he could not pay his debt on time. The amount he owed was increased, however, in consideration for the extension in time.

If capital can increase in consideration of time then money can, by itself, generate more money. No effort will be required. Money, in such an economy, will equate with power. Money will be king! And the value of human labor will continuously diminish until labor will find itself at the mercy of capital! That is the world today! Hunger creates the opportunity for capital to rule the worker more surely than it was given to the aristocracy by the legal authority of kings. All people are chained down to heavy toil by poverty more firmly than ever they were chained by slavery and serfdom. The same principle of price increase in consideration of credit operates all over the modern capitalist economy.

Murabaha (To sell at a profit).

Islamic banks around the world are attempting to by-pass riba by utilizing a financial mechanism which they erroneously define as murabaha. The bank would purchase an article for cash and then sell it for credit at a higher price than that for which it was bought. The bank argues that since there is agreement on the new price between buyer and seller the transaction is halal.

If the bank were to purchase a car for $15,000. cash, and then proceed to sell that very car for $25,000. cash in the same market in which it was purchased, the transaction would be of doubtful validity since the market price would be manifestly violated. Indeed, why would anyone pay $25,000. when the market price is $15,000.?

If, however, the bank were to buy the car for $15,000. cash and then proceed to sell that very car for $25,000. on credit there would be no other justification for the increase in price other than the factor of time (i.e., credit). Such a transaction would be one in which money increases in consideration of time, - or money breeds money over time! It would hardly be any different from riba al-nasi'ah in the time of the Prophet (pbuh). In fact, it would be pure riba! Those misguided Muslims who obstinately cling to this false murabaha should fear Allah and stop misguiding Muslims.

[3] - having someone artificially bid up the price in an auction, thus corrupting the free and fair market; this is a form of riba known as gharar:

From Abdullah ibn Abi Awfa: The Prophet said: 'A najish [one who serves as an agent to bid up the price in an auction] is a cursed taker of riba.' [Bukhari]

[4] - employing deception (gharar) as the basis for unfair profit, thus compromising the free market;

Anas ibn Malick said that the Messenger of Allah said: 'Deceiving a mustarsal (someone who is unaware of market prices) is riba" [Bayhaqi]

Abu Hurairah reported that the Messenger of Allah once came upon a heap of grain, and when he put his hand into it his fingers felt some dampness, so he asked the owner of the grain how that came about. On being told that rain had fallen on it he said: 'Why did you not put the damp part on the top of the grain so that people might see it? He who deceives has nothing to do with me.' [Muslim]

[5] - hoarding in order to capitalize on the resultant artificially created scarcity in the market, and thus compromising the free market;

Ma'mar reported Allah's Messenger as saying: 'If anyone keeps goods till the price rises, he is a sinner.' [Muslim]

Umar reported the Prophet as saying: 'He who brings goods for sale is blessed with good fortune, but he who keeps them till the prices rise is accursed.' [Ibn Majah, Darimi]

Ibn Umar reported Allah's Messenger as saying: 'If anyone withholds grain for forty days thereby desiring a higher price, he has renounced Allah and Allah has renounced him.'[Razin]
Hoarding results in profit which is unjust. That is riba!

[6] - monopoly: This is a means of gaining control over market in such wise as would result in freedom to fix prices. Such a situation would result in prices being fixed in accordance with the plan of the monopolists rather than the free market. As such, it is similar to hoarding. Wealth is sucked from the masses by deception. That is riba.!

[7] - sale or purchase of riba debts: Such would be a sale on the condition of deferred payment but with an increase in price. The debt is then sold to a third party for cash at a price which allows both parties to share in the increase realized through deferred payment;

[8] - speculative transactions: These are transactions in which one buys goods or stocks etc., anticipating that the price would rise. When it does, one then sells and makes a killing. Alternatively one may sell goods, stocks etc., anticipating that the price would fall. When it does, one then buys back and makes a killing! Such profit is unjust. There is no effort or labor involved. It is, in effect, gambling!

. [9] - options: Sometimes a speculative transaction can result in a disappointment. The price was expected to rise but it did not. The speculator does not want his money to be tied up in a transaction which may go wrong. So what he does is to buy from the owner of the goods an option to purchase the goods during a specific time frame for a price agreed upon. He pays a non-refundable fee for the purchase of this option. If the price does rise during the period of the option he exercises his option, buys the goods and immediately resells it at a profit. If the price does not rise he simply chooses not to exercise his option. His only loss will then be the fee he paid to purchase the option.

In a free and fair market the rise and fall of prices will be determined by Allah! He can use it for distributing and redistributing wealth. Options constitute a means of bypassing Allah's prerogative of fixing prices. It is thus haram!

[10] - bribery and corruption: Riba sometimes takes the form of a bribe, or of patronage which is dispensed in order to win influence or control over individuals and institutions. Take the example of a huge prize (US$500,00.00 or more) which is awarded by an oil-rich government in the Muslim world , and client-State to USA, to a scholar of Islam chosen by that government. When that scholar accepts that prize he has, in effect, been imprisoned with the prize to that State. He cannot participate in any effort towards liberating that territory from the influence and control of the enemies of Islam and restoring its freedom. This is the triumph of the enemy. Indeed they boast of their success:

[11] Riba al-Fadl - Its Legal Position
Riba al-naqd [al-fadl] is, however, the selling of one maund [a unit of weight] of wheat, or anything similar to it, against two maunds. (Al-Tafsir al-Kabir, Tehran: Dar al-Kutub al-'illmiyyah, 2nd ed., n.d., wol. 7, p. 85).

From Abu Sa'id al-khudri: The Prophet, peace be on him, said: "Gold for gold, silver for silver, wheat for wheat, barley for barley, dates for dates, and salt for salt - like for like, and hand-to-hand. Whoever pays more or takes more has indulged in riba. The taker and the giver are alike [in guilt]." (Muslim, ibid; and Musnad Ahmad).

Riba[1] is considered amongst Seven Heinous Sins Al-Saba al-Mubiqat (السَبعَ الموبِقاتِ): Narrated Abu Huraira: The Prophet said, "Avoid the seven great destructive sins." The people enquire, "O Allah's! What are they? "He said, "To join others in worship along with Allah, to practice sorcery, to kill the life which Allah has forbidden except for a just cause, (according to Islamic law), to eat up Riba (usury), to eat up an orphan's wealth, to give back to the enemy and fleeing from the battlefield at the time of fighting, and to accuse, chaste women, who never even think of anything touching chastity and are good believers. [Sahih al-Bukhari, Sahih al-Muslim]

RIBA' IN ISLAM

DEFINITION OF RIBA

It is instructive that the basic Qur'an definition of riba should come in the very first revelation on the subject:

'And that which you put out (i.e., invest) in riba seeking increase (i.e., profit) through the wealth of others (i.e., at the expense of the wealth of others), will not increase in the sight of Allah (thus Allah disapproves of it); whereas all that you give as charity, seeking Allah's Face (i.e., Allah's Pleasure), such will be blessed with multiple increase.' (Qur'an:- 30:39)

RIBA IN THE HOLY QUR'AN

First Revelation (Surah al-Rum, verse 39)
That which you give as riba to increase the peoples' wealth increases not with God; but that which you give in charity, seeking the goodwill of God, multiplies manifold. (30:39).

RIBA IN HADITH

From Jabir: The Prophet, may peace be on him, cursed the receiver and the payer of riba, the one who records it and the two witnesses to the transaction and said: "They are all alike [in guilt]." (Muslim, Kitab al-Musaqat, Bab la'ni akili al-riba wa mu'kilihi; also in Tirmidhi and Musnad Ahmad).

RIBA IN FIQH

The Four Schools
Abd al-Rahman al-Jaziri's al-Fiqh 'ala al-Madhahib al-Arba'ah, is a compendium on the juristic opinions of the four predominant schools of Muslim jurisprudence. It is held in high esteem and considered to be an authority on the subject. Given below are some relevant excerpts from this book on the subject of riba.

Definition and Classification

Riba is one of those unsound (fasid) transactions which have been severely prohibited (nahyan mughallazan). It literally means increase...

However, in fiqh terminology, riba means an increase in one of two homogeneous equivalents being exchanged without this increase being accompanied by a return. It is classified into two categories.

First, riba al-nasi'ah where the specified increase is in return for postponement of, or waiting for, the payment; for example, buying an irdab (a specific measure) of wheat in winter against an irdab and a half of wheat to be paid in summer. As the half irdab which has been added to the price was not accompanied by an equivalent value in the commodity soled and was merely in return for the waiting, it is called riba al-nasi'ah.

The second category is riba al-fadl, which means that the increase mentioned is irrespective of the postponement and is not offset by something in return. This happens when an irdab of wheat is exchanged hand to hand for an irdab and a kilah (another measure) of its own counterpart, the buyer and the seller both taking reciprocal possession; or when ten carats of gold produce are exchanged for twelve carats of similar gold produce.

Riba would thus be 'increase in capital at the expense of the wealth of others'. In other words if 'my' capital increases through riba, then 'my gain' would be 'your loss', - or 'the loss of others'. Such a transaction does not qualify as 'business'; rather it is the opposite of 'business'! Allah made 'business' permissible (halal), and riba prohibited (haram)! In riba the `loss' of one is the `gain' of the other. In business, on the other hand, Islam ordains an ideal of mutual satisfaction amongst all parties.

This definition of riba is further confirmed in the second revelation on the subject in which Allah condemns the Jews for their oppression, tyranny and evil or wicked conduct (zulm / zalim). Among their acts of oppression was their taking riba, 'although it had been prohibited for them', and, as a consequence of their taking riba, Allah went on to declare, they were:

' . . . consuming the wealth of mankind through means which were false and wrong (batil) . . .'
(Qur'an:- 4:161)

And so, what we now have is a definition of riba as follows: increase in capital, at the expense of the wealth of others, through means which are false and wrong.

In the third and fourth revelations of the Qur'an on the subject of riba, Allah, the Supreme, identifies one form of riba, i.e., lending on the condition that the capital sum lent be returned with a pre-determined additional amount (today called interest). (Qur'an:- 3:130, 2:279)

Riba is, therefore, an 'increase'. When used in the Qur'an it refers to unlawful increase derived through the interest on capital which has been loaned, or increase in which the wealth which belongs to others is wrongfully appropriated. Riba as interest on capital loaned was prevalent in Arabia in both personal and commercial loans.

The Qur'an directs particular attention to one form of riba mentioned above, that of borrowing and lending on 'interest', i.e., transactions in which the principal sum which is 'lent' increases through its repayment with a contractually pre-determined extra amount known today as 'interest', regardless of the amount of 'interest' involved.

This is clear from the very last revelation in the Qur'an (2:278-281) revealed to the Prophet which orders the believers to give up whatever remained of (their demand for) riba. It went on to explain that when a believer complied with this divine order he was then entitled to the return of only the principal sum lent (i.e., the principal sum without any interest whatsoever).

(Qur'an:- 2:278).

In fact the Qur'an rejects the view that such transactions as 'lending on interest' are business transactions. They are not! Allah has made business permissible (halal) and has made riba prohibited (haram). Riba is not business. All business takes place in the free and fair market, where there is risk, and where there can be profit or loss.

In riba the market is bypassed or circumvented and corrupted. The purpose for this is to eliminate risk and, as a consequence, eliminate all possibilities of loss! That is not fair! That market will no longer be a free and fair market. If A is insulated against loss while B is forced to assume the risk of loss it is clear that there will be a one-way long-term transfer of wealth from B to A. B will, in fact, be absorbing all losses, - his, as well as those of A. And that is precisely what is happening in today's world economy.

The competition in interest rates between banks and other lending institutions does not provide evidence of a free and fair market. Rather it is analogous to the competition in rates between hired killers.

Banks are constantly trying to relocate from those areas where poor people live, and banks don't like to lend to the poor. Such lending forces the banks to assume risks! And banks do not want to assume risks since they want to eliminate all possibilities of loss when they extend loans.

IJARA / IJARAH - Lease To Own

The term Ijara literally means rent, the Sharia process is known as Ijara-wa-Iqtina, rent with an acquisition or rent to own. The process of Ijara can be used for equipment as well as for property. The process is very simple, a single asset Trust is created, the Trust purchases the property, and then leases the property to the customer. With each monthly payment, a portion of that payment goes towards ownership, until the customer owns 100%.

The basic difference between a Sharia Ijarah-wa-iqtinah process and a conventional lease is that, the Ijara process obligates the Trust (seller) to sell the property to you under a Promise to Purchase, and while the same contract entitles the customer to purchase the property, the customer is not enforceable obligated to do so.

HOW THE PURCHASE PRICE OF THE IJARA TRANSACTION DETERMINED

The purchase price that is agreed to in the Promise to Purchase is equal to the original purchase price less the down payment made by the customer plus $1.00. For example, if the value of the property is $200,000 and the customer makes a $40,000 down payment, then the initial amount the customer has to pay the investor for 100% ownership is $160,001. As the customer’s ownership increases, this amount reduces, until the final ownership payment of $1.00

HOW THE MONTHLY IJARA RENT PAYMENTS CALCULATED

The initial Ijara amount that is financed by the customer, earns profit for the investor through monthly rental payments. Traditional amortization calculations are utilized to determine the exact monthly payment. The mathematical formulas are acceptable as there are no Sharia issues with mathematical calculations. The major difference between a traditional mortgage amortization and an Ijara transaction is that the Ijarah transaction is based upon a reverse amortization calculation.

THE BASIC OF USING A PERCENTAGE

While it may appear contrary to the Sharia, it is in fact acceptable to describe the profit on an Islamic transaction as a percentage. The following example should clear up any confusion regarding the acceptability of quoting the profit as a percentage in an Ijara transaction:
Suppose you have a $200,000 in cash.

You purchase a home and pay cash for the home.
You rent the home to a tenant for $1000 per month
At the end of the year you have collected $1000 x 12 or $12,000 in rent
That $12,000 in rent is a 6% return on your $1200,000 investment

Is that 6% Rent or Riba?

Well it is clearly it is Rent, as it is based upon a business transaction.

Now let's look at a traditional mortgage interest transaction:

Starting with the same $200,000 cash.
You give someone the money.
They proceed to purchase the same home with those funds.
They pay you the same $1000 per month, or 6% a year for use of the money.

This is basically rent on money

In this case is the 6% Riba?

yes, it is rent on money.

The first example was rent on property.

So it should be clear that from a Sharia perspective it is acceptable to describe the profit on an Islamic Ijara transaction as a percentage. Furthermore, it is also a requirement under the Truth in Lending Act/Consumer Protection Act that any profit earned on a residential real estate finance transaction should be described as a percentage so that a customer can clearly understand what the overall cost of the finance transaction is.

ISLAMIC VIEW ON ENTREPRENUERSHIP AND LOAN SERVICES

Islam has given detailed regulations for our economic life, to be balanced and fair. Muslims are to recognize that wealth, earnings, and material goods are the property of God, and we are merely His trustees.

Let’s us talk what a business person can do in his business. Whether it’s a big or small businesses, but it still one source of the Income.

I can’t deny that, when someone has entered a business, definitely his or her life changes. It’s normal in business, sometimes you are up and sometimes you are down. Same applies in Islam, giving us courage to search for rezeki by doing a business. In fact, it is stated clearly in Hadiths that 9 out from 10 incomes is in business.

[62:10]Then once the Salāh is over, disperse in the land, and seek the grace of Allah, and remember Allah abundantly, so that you may be successful.

What we can learn form this verse is that: Allah does not obstruct us in searching as many incomes as we want especially in business but we should not forget our responsibilities as followers.

In Islam, we are very concerned in actions permitted by Shariah law or forbidden by religious law and (Halal and Haram). Example: Business in Islam is considered as an action that was permitted by syariah law while interest is consider as forbidden by religious law.

However, doing a business, whether in a context of Islamic or in the method of execution is actually the same. However the difference is in the ethics involved in practice.

The basic of Islamic principle in the context of business is that we don’t focus on the money and the net profit but we see the value behind the business that we contribute to society.One of the challenges of doing a business is taking a risk so the business people have to be ready to face this!

Some people might say: In this life, if we are not brave enough to take up a loan, we might not get rich. After some thought, I partly agree on this but after thinking wisely I find it is stupid. Cos if believe in this thus we will always falls his trap. So who’s the trapper? Yes you are right, the trapper is the financial institution. They are like a hunter who is searching for a deer.

In Islam, they do recognize people who give and take up a loan. In fact, our prophets, Rasulullah S.A.W have said that: people who give loans is more noble that a person who take up a loan.

Why is it so?? Because people who are taking up a loan, is a person who are really don’t have anything but nowadays, the majority of people who is seeking up a loan is a person who actually is capable. Either they are workers that have a salary or their business is going to be successful.

Thus if we think we can afford it, why must we be in debt? This is a question that I been asking myself, if we observe this people, we can see that they are influence in two things:

1) Desire 2) Don’t have patience. Let me explain it.

1) Desire: We easily get influenced when we see new things; we want to have more income and etc. One of the solution is : keep some money and slowly you will get whatever you want using your own savings.

2) Don’t have patience: cos we want to have something very fast, want to be rich in just a minute thus to do so by taking up a loan. Today, we can take up a loan up to 6x from our salary. Easy right??? They forget when take up a loan is so easy but want to paying back is difficult.

The negative part of taking up a loan is: you always feel that you can afford a lot of things. Without you notice it, you get into a lot of debt!! Then problems will start, when you can’t pay back, thus you will declare as a bankrupt and your marriage will get affected and because of this you will have a broken family.

Actually by right, this all is an evil game; this is a easy way for them to distract us from Allah. Everyday we were born with a desire. Desires just trap us than we will act aggressively, more aggressive than our brain and our faith. At the end, we will defeat by desire.Our prophet’s advice: If we want to be dedicated in worship, we have to make it light in front and behind”

What does that mean?? Make it light in front, it means to less eat while light in behind means: to have a less debt.

A successful key to avoid from being debt with people is to think twice and thrice on what purpose we taking up this loan and ask yourself if you really can pay back on time so that we wont carry this heavy burden for so long.

Another more powerful strategy is by praying. Rasulullah have taught one of the sahabat, Abu Umamah when he come to Him and inform him that he got many debts until he scared to come back home thus he would like to stay at the mosque, thus the prophet teaches him the best way to waive the debt is not by running away but seeking Allah helps by saying this:-

{Allahumma inna a'uzubika minalhammi walhazan. Wa a'uzubika minal'ajzi walkasal. Wa a'uzubika mina jubni wabukhl. Wa a'uzubika mina ghalabatiddaini waqahrirrijal”

“O’ Allah, protect me from poverty and sadness; I seek your protection from despair and laziness. I seek your protection from cowardice and meanness and I seek your protection from the burden of debts and the cruelty of human beings.”

After practice this du’a, Abu Ummaah found a way to solve his problems and slowly without realizing it he have paid pay all his debt.

Always practice this doa, after your prayers, read it with a humble and sincere to seek Allah helps, and with Allah helps, one day you will feel that your life is more at ease with no debt and also with no financial burden.

Wallahu A’lam

Introduction to the Arab World

The Middle East is an area of international concern for several reasons: strategic location, oil resources, and the recurring political instability. It is also the birthplace of three great religions: Christianity, Judaism, and Islam. The region is composed of fifteen nations and four major languages: Arabic, Hebrew, Turkish and Farsi. It is a region of many people with extraordinary histories and cultures. However, most of its habitants practice Islam and are Arabs. The word "Arab" is applied to Muslims, Jews and Christians who speak the Arabic language and identify themselves with the Arab way of life.

It was in the Arab world where people first developed the system of writing; scientific advances were also developed. Rich cultures like Ancient Egypt, Assyria and Babylonia began in this region. The Arab culture has had many influences but Islam has shaped the culture like no other. The message of Islam appeared for the first time in the Arabian Peninsula in the early seventh century, and soon the faith expanded across North Africa, the entire Middle East and extended to the borders of China. A new and dynamic civilization was founded. In fact, while most of Europe was in the dark ages, the Arab/Islamic civilization was at its most glorious moment, making significant contributions to science, arts and the humanities that are still very alive in the world. Today, most of the ancient cities, such as Marrakech and Baghdad with its great flavors and customs, still exist and modern cities have been developed beside them. Unfortunately, they carry with them the common problem of modernization like overpopulation and pollution.

The Arab world straddles two continents, Asia and Africa, and its long coastline gives it access to critical waterways. The region offers a variety of climatic conditions from dry to seasonal rainfalls in Morocco, Tunisia and the mountains of Lebanon. Agriculture is a very important activity in the Arab world. The most import products are wheat, dates, rice, and olive oil, which are main ingredients in the Arab cuisine. Although there are differences among the Arab people from Morocco to the Persian Gulf, Arab people enjoy a common bond of history, culture and tradition.

TIPS ON DOING BUSINESS AT MIDDLE EAST

Tips On Doing Business with the Middle East

The Middle East is located in the southwestern part of Asia and is comprised of 17 countries. The Middle East is bordered by Turkey, Syria, Lebanon, Israel, Iraq, Iran, and Jordan. Egypt is often considered part of the middle east as well, even though it is part of the continent of Africa.

Main Industries:
1. Oil/gas services,
2. Mining
3. Transportation
4. Agriculture
5. Light industries

The region relies heavily on importing consumer goods and services.
Dubai is becoming an international commercial center.

Arab Business Culture:

Loyalty is paramount to people in the Middle east and they are loyal to families first, to tribes second, and to friends last. Friendships are typically very close and close contact between friends is common - even between men. Eye contact is very important during business interactions. Do not be surprised that during conversation there can be close physical proximity and that backing up to increase personal space can be considered offensive.

However, Woman may have difficulty doing business and should be sure to keep distance when talking to the opposite sex.

Small talk is essential in establishing relationships and friendship comes before business. Do NOT reject tea or coffee and do NOT offer gifts of food and alcohol.

Arabic is the language used in the Middle East and it is unusual for many Westerners due to the fact that it is a right to left language. Be sure to reverse your pictures in your marketing materials as well, otherwise processes and documentation may seem backwards to the Arabic reader.

The majority of the population of the middle east is Muslim. Only Israel has the majority of non-Muslims or Jewish people, however, parts of Lebanon and other countries have significant Christian influences as well as other religions. There are different religious sects including Sunni, Shiite, And Sufi.

The typical work week in the Middle East is from Saturday to Wednesday.
The Middle East Region offers many opportunities, many people don’t see this region as a good place for business due to the media coverage, the conflict in the area and the current war on terrorism. Many companies are seeing great success in the Middle East - by being open and doing your research…you could too.

Doing business in the Middle East

Some tips for doing business in the Muslim world:

1) When meeting with a group for the first time, shake hands first with the most senior man, then continue in a counterclockwise rotation.

2) It is uncommon for a man to shake hands with a woman, so women should not offer their hand first and risk an awkward situation.

3) Don't be overly admiring of an item that belongs to someone else. They might feel obligated to give it to you.

4) It is considered impolite to refuse a gift or an invitation for example : Saudi Arabians are very hospitable and enjoy giving gifts.

5) Be sure not to schedule appointments during one of the five daily prayer times. Ask what those times are.

6) Dignity and respect are very important to Saudi Arabians, so pressure tactics that force uncomfortable positions are not received well.

7) It is considered disrespectful to show the sole of your shoe to someone. Keep your feet on the floor.

8) Comparative advertising is prohibited in Saudi Arabia

DOING BUSINESS IN MIDDLE EAST

HAPPY NEW YEAR TO EVERYBODY!!!

May the glow of “2009” illuminate Your life with the Light of Peace, Love and Harmony and Lead You and your family on the Path To Good Health & Prosperity…
Have A Glorious New Year

On this New Year Day, I will share with you on 2 important things on doing Business In Middle East. Hope all of us can get benefits on it.

1) DOING BUSINESS AT MIDDLE EAST

The Middle East is an area which carries many stereotypes and myths. Before doing business in the Middle East it is imperative to learn about areas such as business culture, business etiquette, meeting protocol and negotiation techniques. Through such knowledge stereotypes are broken and barriers to communication reduced.

When doing business in the Middle East, it is wise to bear in mind the great diversity within the region. However, a common religion, language and culture make the highlighting of general traits and features for the region valid.

In this short guide to doing business in the Middle East, business culture and etiquette are explored. These are in no way meant to represent a comprehensive summation of tips on doing business in the Middle East, but a highlighting of some main areas one may consider.

Islam
One cannot talk about the Middle East in a cultural sense without mentioning Islam. Islam permeates all levels of society. It provides guidance, values and rules for personal life, community relations and ways of doing business.

Within the confines of this short introduction, justice cannot be served to such a highly complex faith. Therefore, it is advisable that one conducts their own research on Islam before doing business in the Middle East.

Avoid trying to do business in the Middle East during the month of Ramadan. Muslims fast from dawn till dusk which involves refraining from eating, drinking or smoking. During business hours general activity is reduced depending on the nature of the company or organization.

There are two major festivals of note. Eid al-Fitr follows Ramadan and Eid al-Adha follows the annual pilgrimage. These holidays last approximately three days although it is not uncommon for the government to extend these. It is best to avoid doing business on or near the two Eids.


Doing Business - Meeting and Greeting

The traditional Islamic greeting you will hear is 'Asalamu alaykum' (peace be with you). As a non-Muslim you would not be expected to use it, but if you did you would receive the reply 'wa alaykum salam' (and peace be with you). But prefer just to said Hello to the non Muslim.

When doing business in the Middle East, handshakes are always used and can last a long time. Islamic etiquette recommends that one waits for the other to withdraw their hand first before doing the same. Always use the right hand. Do not be surprised if your hand is held while you are led somewhere. Holding hands among men is common and does not carry the same connotations as it does in the West.
Arabs are fairly informal with names when doing business and generally address people by their first names. John Smith will be addressed as Mr. John. Arab titles of note are: Sheikh (an old man, scholar, leader), Sayyid (descendant of the Prophet Muhammad) and Hajji (one who has performed the pilgrimage).

Doing Business - Gender

The roles of men and women are far more defined in the Arab culture. Interaction between the sexes is still frowned upon in certain arenas. However, when doing business in the Middle East it is not uncommon to come across women.

If you are introduced to a woman as a male, it is advisable to wait and see if a hand is extended. If it is not, then do not try to shake hands. Avoid touching and prolonged eye contact with women.

Doing Business - Business is Personal

Many Westerners that have lived or worked in the Middle East might use the words chaotic, disorganized and frustrating when discussing doing business there. Although this is a matter of perception, it is true that business runs on very different tracks to business in the West.
The Arabs do not separate professional and personal life. Doing business revolves much more around personal relationships, family ties, trust and honour. There is a tendency to prioritize personal matters above all else. It is therefore crucial that business relationships are built on mutual friendship and trust.

A consequence of this mentality is the system known as 'wasta'. If you have friends or contacts in the right places then rules can be bent or things done more quickly. The system works on the basis that favors are reciprocated and never forgotten. Although it may seem biased, it is something that should be exploited when doing business in the Middle East.

Doing Business - The Spoken Word

The Middle Eastern culture places more value on someone's word as opposed to a written agreement. A person's word is connected to their honour. Contracts are viewed as memorandums of understanding rather than binding, fixed agreements. Be sure to promise only things you can deliver. Failure to do so will result in loss of honour.

Doing Business - Meetings & Negotiations

Meetings should not be made too far in advance as changes in personal circumstances may impact your appointment. Once an appointment has been made, confirm it verbally with the person you will meet a few days before.

Initial meetings are all about relationship building. Building trust and establishing compatibility are key requisites for doing business in the Middle East. One should engage in conversation and try to get to know the 'person' you are doing business with.

Meetings can be chaotic. Always be prepared to exercise patience. Phone calls are taken during meetings and people may enter the meeting room unannounced and proceed to discuss their own agendas.

Meetings are circular in nature. They do not follow a linear pattern and are not structured upon agendas or targets. Issues are raised as and when.

Punctuality is expected of foreigners. Although the Arabs place a high emphasis on punctuality they rarely practice it themselves. In fact, if Arabs want to stress that a set time must be adhered to they use the term 'mow'id inglizee' - literally, 'English meeting'. However, if you are running late do not panics as polite excuses will be accepted.If negotiating, remember the Arabs were a trading people and are excellent negotiators.

Haggling takes places everywhere, whether at the shop or in the board room. Decisions are made slowly. Bureaucratic formalities tend to add to delays. Do not use high pressure tactics as they will be counter-productive