Islamic Finance: Fiqh Business Transactions/ Business Ethics (Part 1)

Source: Online lecture by Sheikh Hacene Chebbani

A. The nature of Islamic Economic System

In Islamic commercial transaction, business ethics are divide into two kinds, there are: moral behavioral and immoral behavioral. Islamic business ethics explaine what is justice and injustice. The aim is to reach a justice for both buyer and seller. This is because justice is a part of our faith and religion.

Alloh says is Al Qur’an Surah Ali Imran verses 110 that all muslim must do amal ma’ruf nahi munkar. One of the form of that amal ma’ruf nahi munkar is practicing justice in business.  But, before discussing about Islamic business ethics,at first we discuss about the nature of Islamic economic system.

In this modern society, there two mainstream economic system applied in West countries and some of Islamic countries. There are:

  1. Communism

Shortly, in this economic system  there is no private ownership, goverment determination of prices, productions and other economic variables.

  1. Capitalism

In capitalism, private business own the productions, distributions and exchange, no regulation. What is right, what is wrong is determined by market forced.

In Islam, there are different economic system with these two economic system. There are the differences:

  1. Private onwership highly endorse in Islam, freedom of ownership with the boundary of Islam.
  2. Islam has free market like capitalism, what the different? The regulation is different. Capitalism is highly regulated but what is right, what is wrong is left to be determined by the market. There are no government regulation. The force to the market is not allowed.  The father of capitalism, Adam Smith said that the market will solve the problem.

While, in Islam what is right, what is wrong is determined by the syariah law.

Second, after we talk about the nature of economic system we talk about the concept of economic system in Islam. All activities that may harm seller or buyer are forbidden in Syariah. Islamic economic also has no concept of price intervensions by government (minimum government intervensions). This concept based on the hadist by Rosululloh SAW:

Ada seseorang yang mendatangi Rosul SAW dan mengadukan keadaan pasar bahwa harga-harga meninggi, orang tersebut meminta Rosul untuk melakukan intervensi harga di pasar (sya’ir lana = put a limit price) . Kemudian beliau menjawab:

Innalloha huwa al musya’ir  wa inni la uridu an alqohu in mathlomatil yaumil qiyamah” (It is Alloh who purify the price up and down). There is no justice here if I control the price.  (HR Muslim). From this hadist, Rosul SAW stated that supply and demand are naturally happen. Berdasarkan hadist in ulama mazhab, Imam Syafi’i sama sekali tidak setuju dengan adanya intervensi harga (totally againts the price control)

But, the other scholar that is Imam Malik is agree/believe in price control. This fatwa is based on the story of Khalifah Umar bin Khatab:

“Umar bin Khatab found Ibnu Ali Baltha’a sale the dry grape, then he said: you (Ibnu Ali) rise the price or leave the market. Ibnu Ali surprised with what he said then he left the market. Kekagetan Ibnu Ali disebabkan karena dia mengetahui hadist Rosul SAW bahwa beliau tidak mau intervensi harga (menaikkan atau menurunkan harga).  Kemudian, Umar bin Khatab mengetuk pintu rumah Ibnu Ali dan mengatakan kepadanya bahwa beliau (Umar bin Khatab) tidak ingin merusak kesejahteraan Ibnu Ali sehingga beliau menyuruhnya untuk menjual dengan harga sesuai dengan keinginannya”

This story used by Imam Malik as hujjah for allowing government intervened market price. Ibnu Taimiyah has same opinion with Imam Malik, but with some conditional situations. Ibnu Taimiyah said: the government has no right to intervene the price, but if the price growing up because of the manipulation in the market, the government has to intervene the price. The example of market manipulation is refrain the product until the price is up (al Ikhtikar). Rosul SAW said that one who does this manipulation is not part/one of us/Mulism (alaysa minna)

B. Ethical Room in Our Faith

There are some important points in Islamic business that all muslim should has:

1. Strong desire to earn legitimate income (halal income)

  • Every muslim must have the strong desire to earn the halal income, bacause if will effect their whole life. But, there is a fatwa/shariah rule to people who face the certain conditions. For example, seorang muslim yang bekerja di perusahaan alkohol di negara non Muslim (negara Barat), maka hal ini hukumnya makruh. Jika di negara Muslim sudah barang pasti hal ini haram, keberadaan perusahaan alkohol saja sudah haram.
  • Namun, jika seseorang tersebut tidak memiliki pilihan lain, he could stay on that job for a while but with the great intention to leave it and find the new one (halal alternative)
  1. Trade in mutual concern between two parties
  • Alloh says in Al Qur’an surah An-Nissa versses 4: an takuuna tijaarotan ‘antaroddim minkum (trasactions that both parties happy/pleased)
  • The seller and buyer have to pleased//happy with the price agreed between them. The happiness of seller and buyer should happen not only in one contract but also in additional contract call uqudul ‘itham, that been widely practiced in West and some muslim countries. The example of this controct such ase: rent house including the using of electricity, water etc that customers/buyers have no sign/says to these additional contracts. This contract come up with some benefits: Time saving and Cost efficient.

This kind of contract is permissible with one condition that is goverment has to actively watch these companies (that held this contract) or intervene if there is injustice.

Selling product under agreed price, or under agreed quota and force the buyer to accept that  is also forbidden in Islam, is called mukroh (forcefulness/pemaksaan)

  1. Al Amanah/tsiqoh/honesty

Amanah/ trust/honesty is the most important things in Islamic business. Honesty brings the Alloh’s blessing in the transaction. In order to put honesty in very worth position, Islamic gives the right to buyer and seller to cancel the contract if there are differences between what is agreed and what is real condition, for example the real products that promised by the the seller are not as good as what promised. This cancellation is called khiyar . There are many kinds of khiyar:

  1. Khiyar majelis: the cancellation of contract and transaction when they are still in the place of transaction (belum meninggalkan tempat transaksi). This kind of khiyar is allowed in all kind of transaction. Rasulullah SAW said: Dua orang yang berjual beli, boleh memilih (akan meneruskan jual beli mereka atau tidak) selama keduanya belum bercerai dari tempat akad.” (HR. Bukhari dan Muslim No. 44).
  2. Khiyar Syarat: the seller and buyer have right to cancel the transaction during the agreed time between them. Rasulullah SAW said: “Kamu boleh khiyar pada setiap benda yang telah dibeli, selama tiga hari tiga malam.” (HR. Baihaqi dan Ibnu Majjah)
  3. Khiyar aib: the conditions that may allow one of the party cancel the transaction because of there are some mistake in medium of exchange haven’t known when the transaction happen. Rasulullah SAW said: “dari ‘Aisyah ra bahwa seseorang membeli budak, kemudian budak tersebut disuruh berdiri didekatnya, didapatinya pada budak itu kecacatan, lalu diadukannya kepada Rasul, maka budak itu dikembalikan pada penjual itu. (HR. Ahmad dan Abu Daud)
  4. Khiyar ru’yah: right option to buyer to keep buying or cancelling the transaction upon the products, he hasn’t see yet when the akad Rasulullah SAW said: “Siapa yang membeli sesuatu yang belum ia lihat, maka ia berhak khiyar apabila telah melihat barang itu. (HR. ad-Daruqutnu dan Abu Hurairah)

Again, Islam put al amanah/honesty in very worth position, this reflect on that Islam allow the giving of penalty if the job is not finish in the agreed time. For example, sebuah pekerjaan disepakati untuk diselesaikan selama  satu tahun, kemudian karena satu dan lain hal pekerjaan tersebut menjadi molor hingga baru selesai selama dua tahun. Dalam hal ini pemberi kerja diperbolehkan memberikan penalti kepada pelaksana pekerjaan tersebut. This action is called shortul jaza’i.

Depok, 26122014, 23: 15 WIB

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