By Muhammad Hisyam Mohamad, The Star
Is the proliferation of ‘Islamic’ labels a true reflection of the Islamic spirit?
RECENT developments in consumer markets show a proliferation of approaches by manufacturers and service providers to attract Muslims, to buy or subscribe to their offerings by using the “Islam” label.
In most cases, “Islam” or any Arabic word is used to denote the essence of Islamic life and teachings as an adjective to manifest what they offer as being Shariah-compliant.
The rapid development of Islamic banking and finance services, as well as the halal food and consumer goods industry, and the emergence of Islamic tourism and Islamic fashion industry is evidence of this.
Commendable is the progress made thus far in various types of industries and services catering to Muslims.
In any business, a good first impression is important. Thus, products and services with “Islamic” label or branded as “Shariah-compliant” give an immediate perception to consumers that they conform to Islamic laws.
In some ways, Shariah-conscious consumers whose lives are defined by the Islamic faith would not face problems in fulfilling their daily needs, be it dietary, financial, health-related and lifestyle, as the so-called halal products and services are easily available to them.
Nevertheless, the rise of manufacturers and producers implementing such practices makes us wonder whether “Islamic” labelling and branding produce an economic atmosphere and a consumer culture that truly echo the Islamic spirit as enjoined in the Quran and prophetic traditions.
In an economic landscape where the values of capitalism remain prevalent and shape the behaviour of the economic actors, we may argue that the use of “Islam” by business entities and corporations is mainly incentivised by the desire to create wealth through profits. This desire is also fuelled by the process of economic globalisation, which enables the firms to extend their marketing capabilities, transcending national boundaries.
First, let’s take a look at the Islamic banking industry. As one of the fastest growing market segments in the world, Muslim consumers provide great opportunities for businesses worldwide. With a global population of 1.6 billion, Muslims serve as a lucrative market for all industry players.
Over the past decade, the industry has witnessed robust growth worldwide at a strong rate of 15% to 20% annually. Presently, the industry is not only confined to Muslim-majority countries but also non-Muslim nations and emerging economies such as Europe, India and China. A more significant trend is the entry of many conventional banks, including some major Western ones, into the industry.
The argument that the operations of such conventional banks in Islamic banking practices is to help uplift the well-being of humanity, especially the Muslim ummah, through Islamic banking activities is not tenable. Naturally, they are commercially driven and highly motivated by monetary gains.
Nor are fully-owned Muslim Islamic banks operating on the basis of morality and humanity. To some extent, researchers such as Zaman and Asutay (2009) assert that the whole industry these days seems to have grown as part of the conventional financial sector.
The original aspirations of the establishment of Islamic banking and finance in the 1960s and early 1970s was to provide a riba-free finance system, which could also be a catalyst in creating a moral and ethical economy through the concept of justice, social equity, brotherhood, charity and cooperation.
Both Zaman and Asutay argue that the industry has failed to achieve this comprehensive objective as it would not materialise by solely relying on prohibition ofriba. Moreover, the industry has been captured by the ideology of capitalism which puts the profit urge above all considerations and deprives the underprivileged access to finance.
Comparing world poverty facts and figures with the global volume of the Islamic finance industry reasonably justifies the claim by Islamic economists of the industry to achieve the intended aspiration.
As the global volume of the industry crosses approximately the US$1.3 trillion (RM4.17 trillion) mark, 46% of world poverty exists, lamentably, in the Muslim world.
Indeed, such a case is an absolutely clear paradox as evidence suggests that financial development is likely to accelerate economic growth and help to reduce poverty in a country; and yet, despite strong growth recorded by the Islamic finance industry in recent years, poverty among Muslim populations has not shown any significant improvement.
As a result, the “Islam” label in various Islamic entities such as banking, insurance (takaful), bonds (sukuk), funds and microfinance – which is basically the first impression projected to prospective clients of Islamic finance institutions that their products and services adhere to Islamic precepts – has become a marketing tool rather than an honest description of the values promulgated by Islam itself.
If the trend of exploiting Islam for the sake of personal and corporate profits persists without any attempt by Muslims to address the issue, we should be worried that Islam one day will lose touch with its living roots and no longer function as a perfect solution to human problems in all ages and places.
Muhammad Hisyam Mohamad is Fellow at Ikim’s Centre for Economics and Social Studies. The views expressed are entirely the writer’s own.