Islamic model for economic progress
TWO weeks ago, a recommendation to introduce an Islamic economic model in Malaysia was made by well-known economist Tan Sri Dr Kamal Salih in response to a query on the bumiputra agenda. He was of the view that the capitalist model that has been followed in Malaysia has not been able to address the equity agenda in the country.
Malaysia as a nation is blessed in many ways: abundant natural resources, geographically wellplaced, free from natural disasters and a relatively good economic planning framework. While it is not perfect, no one can deny Malaysia’s good performance especially for a multi-ethnic and multireligious country.
In the context of the bumiputra agenda and in the name of equity, various measures and policies were implemented to facilitate active participation of bumiputras in the modernisation and industrialisation processes.
However, it is the government’s own reports as well as interesting studies, such as by Muhammed Abdul Khalid (“Colours of Inequality”, 2016), that show the shortcomings of these policies and numerous other forms of inequality and equity that must be addressed.
In the 11th Malaysia plan, it was acknowledged that intra-bumiputra inequality was an issue to be given serious attention, for example the poor condition of the bumiputra in Sabah. The weak position of the Malaysian Indian community also led to a dedicated Malaysian Indian blueprint a few years ago.
One must also look at wealth inequality as an important form of inequality among all ethnic groups in Malaysia today. Median household income is still shockingly low. The attention given to the Bottom 40, or B40, in the 11th Malaysia Plan is proof of this. Employee Provident Fund (EPF) statistics have also clearly stated that the concentration of savings in EPF accounts is very skewed to a small wealthy upper middle and upper income group.
What seems to be very clear is that affirmative action policies to assist the disadvantaged cannot be based primarily on ethnicity. It would just create inequality between the rich and poor in all communities, including the bumiputra!
The wealth inequalities measured by the Gini Coefficient for Tabung Haji savings and Amanah Saham Nasional unit trust schemes show very high concentrations in the hands of a very small super rich segment of bumiputra.
The Islamic economic model proposed by Kamal calls for an emphasis on socioeconomic justice as its paramount feature and objective.
Distributive issues cannot be left as a by-product of growth. The capitalist approach glorifies “free markets” in the name of economic freedom. However, freedom has to be for all members in society and not just for the privileged few who have financial capital.
Affirmative action in economics must be reoriented along economic lines and criteria. The abuse and misuse of these policies clearly shows that socioeconomic equity cannot be achieved with the current capitalist model.
The Economist’s recent “Crony Capitalism Index” puts Malaysia in second place, which is not a praiseworthy situation. It is an indication of how abuse and misuse of an equity agenda can lead to the proliferation of a rentier class in society.
Since an overwhelming majority of bumiputra are Malays and by definition, Muslims, the use of an Islamic economic model is rational and logical. Besides the more technical side of an Islamic economic model, one must also give attention to the importance of “correct” values, attitudes and mindset for sustainable development.
Promoting ethical economics must be the way forward for new Malaysia where pursuit of material gains is not an end in itself but a means to achieving greater success. Income levels may increase but not at the expense of creating widening inequalities among members of society. Developing a new economic model requires the acceptance of the fundamental principle that ethics cannot be separated from economics.
As stated by Kamal, the ethical values promoted in the Islamic economic model are universal. The challenge is not religion as a source of ethics but how we understand religion and apply it in plural Malaysia. An Islamic economic model can play a positive role in Malaysia not only for the bumiputra community but for all Malaysians.
It is imperative for our policy makers to realise that religion, an important source of values for all communities in Malaysia, can be a uniting force in new Malaysia. The challenge is how we present it and how we learn to understand and accept others in our common land of opportunity.
Another challenge is to develop these workable models and to implement them effectively. An ethical economy and promoting socioeconomic justice for all must be part of that new Malaysia – and Malaysians of all faiths should be able to contribute to this.
The challenge is not religion as a source of ethics but how we understand religion and apply it in plural Malaysia.