FOR the last two consecutive months, Malaysians have been enjoying lower fuel costs due to the drop in global oil prices. According to the World Bank, the price of the commodity will remain low in the next two years, hovering around US$53 (RM193) to US$60 (RM218) per barrel.
For average consumers, this is good news as they can save money on petrol. At the same time, they are also expecting prices of most essential goods and services to also go down, so that at least they can increase their disposable income.
By default, in Malaysia, every time there is a hike in oil prices, the price of other goods and services will also go up. By the same token, the adverse principle should apply whenever oil prices go down. Unfortunately, this does not happen in Malaysia.
The business community and traders cite that they cannot lower the prices of their products and services just because of the drop in oil prices. They argue that the price of goods and services are the function of many factors. Besides fuel, it is determined by other variables ranging from raw materials, logistics, electricity tariff, etc. Basically, their argument is valid.
Nevertheless, to raise the price of goods owing to an exclusive excuse of high fuel prices (as most businesses are used to) and reluctantly reduce it when the oil price drops, to a certain extent, may seem very unethical.
Furthermore, if we look at the current world oil production, the practice will warrant suspicion from many quarters that business communities are profiteering out of the ample supply of the world oil commodity.
Profiteering normally refers to one taking advantage of the unusual market situation to make a profit through tactics such as manipulation of prices, abuse of dominant position, etc. In a world where the worldview of capitalism is dominant, taking advantage of others for personal gains is not an issue. For some business owners, profiteering may seem to be an avenue to increase their individual wealth.
Whatever it is, profiteering has never been the Islamic way of doing business and Islam strongly condemns all forms of exploitation and domination that can lead to deprivation of social justice.
In a hadith, Prophet Muhammad is reported to have said, “The honest and trustworthy businessman [on the Day of Resurrection] will be amongst the Prophets, those who are truthful and the martyrs.”
The statement can be interpreted in two ways. First, it is an indication that Islam highly encourages its believers to be involved in trade and business.
According to Agustianto (2011), from an Islamic point of view, business is not just the pursuit of profits as much as possible as taught by the capitalist economy, but it is also oriented to the ta’awun (helping others) attitude as the social implications of business activities.
The social implication intended here will only materialise if the bedrock principle of business operation is based on pure justice and moderation, i.e. profit is not the sole function of business.
In surah al-Humazah verses 1-4, there is a Quranic warning against obsession in generating excessive wealth where Allah says to the effect: “Woe to every slanderer, defamer, who amasses wealth and considers it a provision (against mishap); He thinks that his wealth will make him immortal. Nay! He shall most certainly be hurled into the Crusher (Fire).”
The second point that can be synthesised from the hadith is that the reward in the Hereafter promised by the Prophet only awaits those who abide by rules prescribed by the Quran and the Sunnah. Unscrupulous and dishonest businessmen and those who indulge in sinful deeds such as creating artificial scarcity of goods or speculative trading are not entitled to the merit mentioned in the hadith.
This carrot-and-stick approach also implies the seriousness of Islam when it comes to the issue of justice. Since its inception, Islam has sought to uphold justice (’adl) in all spheres of human life, including economics and trade. As a matter of fact, the Quran’s vision of a well-functioning economy is that the concept of ’adl is to prevail in society.
The above vision can be achieved through the implementation of rules prescribed by Allah with regard to property rights, market regulations and distributional equity.
In Islam, all wealth belongs to Allah and man is only the appointed trustee to use the resources collectively for the good of mankind. This implies that regardless of how rich or wealthy an individual is, he is only a trustee of the wealth he owns.
On this basis also, those who own resources or control the means of production should not consider that they have an exclusive possession or ownership claim over their wealth. As trustees, they should be mindful of the rights of those who are unable to access the resources due to economic circumstances, hardship or physical incapacity.
With regard to the market institution and upholding justice in exchange, Islam has set rules and conditions by which all contracting parties must abide.
Principles including freedom of contracts, the need of the contracting parties to fulfil the contract, the prohibition of malpractices (such as profiteering, exploitation, monopolistic and oligopolistic market structures) ensure that the rights of the parties involved in any transactions are protected by Islam.
Although all resources belong to Allah, He never puts any restraint upon humans from sharing or taking benefits from them. In fact, all things in the universe are the common property of Adam’s progeny.
Using his inborn potentialities, man is encouraged to combine the resources with his efforts and creativity to produce and develop the earth, particularly through engaging in trade and commerce.
Nevertheless, in the quest for development and wealth generation, Islam requires that the business community – be it institutional or individual – operationalise their strategy within the framework prescribed by syariah, which aims at attaining a balance between commercialism and humanitarianism.
Simply put, their motivation should not only rest on pecuniary profits, but also be socially responsible towards communities and other stakeholders.
> Muhammad Hisyam Mohamad is Fellow at Ikim’s Centre for Economics and Social Studies. The views expressed here are entirely his own.The STAR Home News Opinion IKIM Views 24 Feb 2015