The Establishment of Islamic Finance and Its Impact in the
Bangsamoro as Perceived by Select Ulama and Professionals in Lanao
del Sur
Anwar M. Radiamoda
Shari’ah Center, Mindanao State University, Marawi City, Philippines
Keywords: Islamic Finance, Bangsamoro, Lanao del Sur.
Abstract: The aim of this research is to examine the influence of the establishment of Islamic Finance and its impact in
the Bangsamoro
1
as perceived by select Ulama and professionals in Lanao del Sur. The idea behind
establishing Islamic Finance, is to remove riba and maysir and from Traditional Financing system without
disturbing and dividing the society economy, and how the whole society is conducting financing business in
a unified way. The mean purpose of this study is to comprehend that Islam Finance emphasizes fair and
equitable distribution of resources and meeting the needs of economically weak people as part of piousness,
dedication, worship and faith. It encourages its followers to relate their piety (Taqwa) with social realities. It
persuades a person to share the blessings and bounties of Allah with others as a matter of obligation by
declaring that Taqwa encompasses not only the love of Allah, but also the love of fellow human beings, who
should be treated as part of an extended human family. This refers in a way to the need to study the economic
aspects of mankind free from scamming and harming. The major finding and recommendation to the
Bangsamoro: the establishment of Islamic Finance requires rulers and various regulators in the system to
protect the common people from non-Shari’ah compliance, scam, harm and hardship caused by dishonest
factors in society through strong and effective laws, and they should be respected in the sense of fulfillment
of all socio-economic rights. The parliamentary of Bangsamoro must also control institutional and other
misconducts. .
1 INTRODUCTION
Islamic Financing has become very important sector,
as more and more economies of the word are adapting
such finance methodology, in response to the growing
need for such financing system. The Muslim must be
financially ready to assume the task of home-
building. A good life requires that a person has a good
source of income to support his family and society.
This is oftentimes misunderstood by some people by
alleging that because Allah provides for their
sustenance, there is no worry for a person to think
about what he and his family needs.
Al-Qardawi (1980) mentioned that in Islam, two
of the pillars of religion speak about good financial
1
Bangsamoro People. The term refers to those who at the
time of conquest and colonization were considered
natives or original inhabitants of Mindanao and the
Sulu archipelago and its adjacent Islands including
Palawan, and their descendants, whether or mixed or
standing. These are zakat and hajj. How can a Muslim
perform these religious duties if he does not have the
means to do so? Thus, a Muslim is always encouraged
to seek a good livelihood so that he and his family and
his society can fully enjoy the blessings of Allah on
earth. Allah Almighty said:
-
In English translation: “O you who believe! When the
call is proclaimed for the Salah on Al-Jumu`ah
(Friday), then hasten (Fas`aw) to the remembrance
of Allah and leave off business. That is better for you
of full blood, shall have the right to identify
themselves as Bangsamoro by ascription or self-
ascription. Spouses and their descendants are
classified as Bangsamoro. (BBL-Republic act
No.6734)
28
Radiamoda, A.
The Establishment of Islamic Finance and Its Impact in the Bangsamoro as Perceived by Select Ulama and Professionals in Lanao del Sur.
DOI: 10.5220/0010113900002898
In Proceedings of the 7th ASEAN Universities International Conference on Islamic Finance (7th AICIF 2019) - Revival of Islamic Social Finance to Strengthen Economic Development Towards
a Global Industrial Revolution, pages 28-33
ISBN: 978-989-758-473-2
Copyright
c
2022 by SCITEPRESS – Science and Technology Publications, Lda. All rights reserved
if you did but know! Then when the Salah is complete,
you may disperse through the land, and seek the
bounty of Allah, and remember Allah much, that you
may be successful.
"
(Holy Qur’an, 62:9-10)
The involvement in Islamic Financing among
Bangsamoro is somewhat new, compared to
conventional banking, after the creation of
Bangsamoro Autonomous Region in Muslim
Mindanao (BARMM), this individual constituents
should be knowledgeable to Islamic Financing as it is
part of Islamic Law. Living in a Muslim Community
such the BARMM its economic stability should be
financially instituted thru Islamic Law. The present
constituents of Bangsamoro have a duty to be
knowledgeable in Islamic Finance because they will
be the successor of the present leaders.
This study attempts to find answers to the
perception and awareness on Islamic Banking among
college students in the Province of Lanao del Sur,
Philippines. Specifically, this study, searched for
answers to the following question:
1. What is the soci-economic profile of the
respondents?
2. How the respondents knowledgeable in Islamic
Financing?
3. What are possible impact and intervention
program in learning Islamic Financing?
4. What are the implications of the study that can be
drawn?
2 RELATED LITERATURE AND
STUDIES
Many scholars today argue that Islamic Finance is a
social science which studies the economic problems
of people imbued with the values of Islam, which
enables people to perform their obligation to Allah
(peace be upon him) and to their society. Studying
finances should support satisfy our interest about
everything that happens around us. Conventional
finances is about scarcity and shortage, choice and the
effect of our choices on each other, Al-Qardawi,
(1980).
It relays to every aspect of our lives, from the
decisions we make as individuals or families to those
developed by governments and firms. A theory
without policy is of not much interest, but the right
ideology will be important if the policy is
implemented and its results scientifically analyzed.
Moreover, the implication of declaring something
Islamic when it is clearly rejected in the Qur’an and
the traditions of Prophet Muhammad (peace be upon
him).
Therefore, Mannan (1986) has indicated some
reasons or socio-economic imperatives for the study
of Islamic Financing. They are, ideological,
economic, social, ethical, political, historical and
international. M. Umer Chapra (1970) stated that
based on the study of the Qur’an and Sunnah, some
basic socio-economic rights of human beings have
been identified. These rights are: (1) The right to
safety and scurity; (2) The right to be informed; (3)
The right to choose; (4) The right to be heard; (5) The
right to satisfaction of basic needs; (6) The right to
redress; (7) The right to education; (8) The right to a
healthy environment.
Islamic Finance is the knowledge and application
of injunctions and rules of the Shari’ah that prevent
injustice in the acquisition and disposal of material
resources in order to provide satisfaction to human
beings and enable them to perform their obligations
to Allah and the society, as defined by Mannan (1986)
M. Umer Chapra (1996) has listed the following
functions of the State in the field of economics and
finance: (1) Eradication of poverty; (2) Maintaining
law and order; (3) Ensuring full employment; (4)
Achieving an optimum rate of growth; (5) Economic
planning; (6) Ensuring social and economic justice;
(7) Stability in the value of money; and (8)
Harmonizing international relations and national
defence.
The concept choice in Islamic Finance is a guided
by the basis values of Islam in imparting just and
equity that focuses on the well-being of man,
although conventional finance is typically based on
capitalist finance framework that focuses on capital
movement from point to another, such as from point
C TO D, reflects the concept of unlimited wants, as
explained by Ayub (2007). ISLAM recognized that
human desires are unlimited, but also points out that
man has limited needs. Allah the Almighty said;
-
In English Translation: “O you who believe! Eat not
up your property among yourselves unjustly except it
be a trade amongst you, by mutual consent. And do
not kill yourselves (nor kill one another). Surely,
Allah is Most Merciful to you. And whoever commits
that through aggression and injustice, We shall cast
him into the Fire, and that is easy for Allah.“ (Holy
Qur’an, 4:29)
The Establishment of Islamic Finance and Its Impact in the Bangsamoro as Perceived by Select Ulama and Professionals in Lanao del Sur
29
The rules of Islamic finance follow to the
comprehensive principles of avoiding Maysir and
Qimar which are gambling and gossip along with
Gharar which is uncertainty coupled with
manipulation and unfairness. This closes the door to
the concept of interest and prevents the use of
unoriginal debt-based instruments. The Islamic
financial system encourages risk-sharing, promotes
free enterprise, discourages theoretical behavior, and
emphasizes the sanctity of contracts, as explained by
Chapra, (1996).
The central tenet of the Islamic financial system is
the prohibition of riba, a term literally meaning "an
excess" and interpreted as "any unjustifiable increase
of capital whether in loans or sales". More accurately,
any guaranteed increase in return tied to the maturity
and the amount of principal, regardless of the
performance of the investment, would be considered
riba and is strictly prohibited as described by Ghazali.
Islamic finance offers different instruments to
satisfy providers and users of funds in a variety of
ways. Basic instruments include cost-plus markup
financing (murabaha), profit-sharing (mudarabah),
leasing (ijarah), partnership (musharakah), and
forward sale (bai' salam). These instruments serve as
the basic building blocks for developing a wide array
of more complex financial instruments, suggesting
that there is great potential for financial innovation
and expansion in Islamic financial markets, as
specified by Rashid (1989).
The economic problem in Islam turns around
mans’ needs. Man is driven to produce the means to
satisfy his needs .the economic problem lies in the
possession of wealth and not in the creation of wealth
and is thus a function of ownership (milkiyyah).
Property implies ownership being a function of labor
and capital, since property satisfies human needs, and
labor is the means to obtain property or its benefits,
then property is the basis of the benefit. Indeed, man
strives to obtain property for possession. Hence, the
combination of both labor and capital (mal), are both
reflected in wealth (mal) for a man become
prosperous.
In fiqh mu’amalat, labor and capital are required
to satisfy needs, not just a production function, but
when combined in the form of Islamic partnership.
An examples: musharakah and mudharabah (trustee
partner) or rabb al-amal (capital provider). Disposal
and distribution of wealth should conform to rules
pertaining to the Bayt al-amal (state treasury),
although private ownership, disposal and distribution
of wealth is governed by the rules of ownership,
contracts and transactions with regard to business and
trade (tijarah).
In essence, the finance problem in Islam is not in
the area of production, but in the area of distribution.
Al-Zuhaili (1985) explained that from the
perspective of Islamic economics, Man is the cause
and object of creation, and to do facilitate our life in
earth, Allah the almighty has subjected creation of our
benefit. Adam (peace be upon him) was offered Iman
(faith), aql (reason, intellect) or haya (shyness,
modesty) he chose aql in order to discover Iman and
thus obtain haya. Man as given a choice to determine
the straight path to success.
Hence, any establishment and transactions should
be in accordance with Islamic Law. The Prophet
Muhammda (peace be upon him) said;
)
.(
In English Interpretation: "Shulh (settlement of
disputes through deliberation and consensus) can be
conducted among the Muslims, except shulh which
forbids something permissible or permits something
forbidden, and the Muslims are bound by their terms
and conditions unless the terms which forbid the
permissible or justify the forbidden" (Narrated by
Tirmidhi from 'Amr bin' Awf).
Furthermore, in legal maxim says;
.
"Basically, all forms of muamalah (traansactions)
can be done unless there is a proof which forbids
them."
2.1 Methodology
Research Design. The investigators used the
descriptive research technique to categorize the
outcomes of the study and possible conclusion that
can be used by future successor in running the
economics means of the BARMM. This study used a
regulated survey questionnaire that was prepared by
the researchers in five pages disseminated personally
and send a softcopy over online to the respondents
and personal and online interview. The facts in the
inquiry form were checked, tallied and charted. The
results provided treasured information about the
problem that was deliberated. Ultimately, the
outcomes aided as the basis for conclusion and
recommendations.
Research Locale. Lanao del sur (Meranaw and
Iranun: Pagabatan Ranaw), officially the Province of
Lanao del Sur, is a province in the Philippines located
in the Bangsamoro Autonomous Region in Muslim
Mindanao (ARMM). The capital is the city of
Marawi, and its border Lanao del Norte to the north,
7th AICIF 2019 - ASEAN Universities Conference on Islamic Finance
30
Bukidnon to the east and Maguindanao and Cotabato
to the south. To the southwest lies Illana Bay, an arm
of the Moro Gulf.
Research Respondents. The respondents of the
study were selected 200 individuals that were Ulama
and Professionals either in a State University, State
College and Private College located in the Province
of Lanao del Sur.
3 DISCUSSION OF RESULTS
AND FINDINGS
3.1 Socio Economic Profile of the
Respondents
Table 1: Respondent Profile Based on Age.
Indicator Frequency Percentage
25 below 67 33.5%
26-30 23 11.5%
31-35 19 9.5%
36 above 91 45.5%
Total 200 100%
The data implies that the majority of the
respondents are 36 above years old which is the
average age of a respondents from Ulama and
Professionals in the province of Lanao del Sur. Given
that they can truly give a reliable response as they
attain the age of maturity.
Table 2: Respondent Profile Based on Gender.
Indicator Frequency Percentage
Male 123 61.5%
Female 77 38.5%
Total 200 100%
The data indicated that the male (61.05%) were
the majority respondents of the study which denotes
that male should be the head of the family and has the
responsibility of finding economics means under the
Islamic concept of family supervision.
Table 3: Respondent Profile Based on Institution.
Indicator Frequency Percentage
State
University
72 36%
State
College
33 16.5%
Private
Institution
95 47.5%
Total 200 100%
Majority of the respondents (47.5%) were Ulama
and Professionals in Private Institution, which imply
that this study communicated the right individuals
whom have the access on every information and news
globally.
Table 4: Respondent Profile Based on Educational Degree.
Indicator Frequency Percentage
Education 48 24%
Islamic Law 23 11.5%
Islamic and
Arabic
Studies 60 30%
Agriculture 44 22%
Social
Sciences 25 12.5%
TOTAL 200 100%
The researcher decided at least 35 or more
respondents on this study from every targeted
department in Lanao del sur from different
institutions. This implies that majority of the
respondents are Ulama who have learned from
Islamic Institutions both public private colleges.
3.2 Knowledge in Islamic Finance and
Possible Intervention Program in
Learning Islamic Finance
1) Majority of the respondents have good enough
knowledge of the Islamic Finance and they were
favor in implementing Islamic Finance in the
Bangsamoro home-land because, it is a way to
eradicate scam and usury. The Muslims in the
Southern Philippines since time immemorial
have been aspiring to become true faithful
Muslims by living in accordance with Islamic
teachings.
2) Majority of the respondents has no access of a
Bank offering banking thru Islamic concept of
financing, while most of them are more
knowledgeable in conventional banking.
3) Majority of the respondents from private
schools said that they hadn’t ever watch an
advertisement of Islamic Financing and
Banking, and they have no idea to engage in
investment thru Islamic financing
4) Majority of the respondents suggest the many
ways in intervention program: A lecture Seminar
from experts of Islamic Financing coming from
Universities from Malaysia, Indonesia, Saudi
Arabia, and other countries; exchange students
program between the students from Lanao and
Asian countries; symposium regarding Islamic
The Establishment of Islamic Finance and Its Impact in the Bangsamoro as Perceived by Select Ulama and Professionals in Lanao del Sur
31
Finance conducted by some prominent professor
of Islamic Law and Financing.
4 CONCLUSION
Based on the findings, results of this study, the
researcher is wish to enumerate implication and
conclusion and recommendations as follows:
1) Despite of different feedbacks among the
respondents, this study concludes that among the
people of Lanao del Sur is less knowledgeable
of Islamic financing. Consequently the
competent authority of the Bangsamoro people
shall have an intervention programs to coup up
to the result of this study. The researcher noted
in this study that the economy of Province of
Lanao de Sur is suffering from some structural
problem due the conflict of ideas and
information regarding what are the proper
financial system to be engage with. The main
problem of this conflict is the lack of
information and ideas about Islamic Finance.
Therefore, an intervention program is need by
the Perople of Lanao del Sur.
2) The study concludes that the perceptions and
awareness of the respondents need
reinforcement thru an intervention program such
as seminar, training, short course, exchange
program and conference from the expert
individuals and nations.
3) The major recommendation to the Bangsamoro,
Islam requires rulers and various regulators in
the system to protect the common people from
non-Shari’ah compliance, scam, harm and
hardship caused by dishonest factors in society
through strong and effective laws, and they
should be respected in the sense of fulfillment of
all socio-economic rights. The parliamentary of
Bangsamoro must also control institutional and
other misconducts.
4) The establishment of Islamic financing industry
in Bangsamoro must take advantage of
opportunities, namely by providing innovative
products based on Information and
Communication Technology (ICT) to provide a
variety of options and expand the reach of the
public. However, until now Islamic financing
products innovation is still very limited. In
addition, another thing that is important to
support the development of Islamic Financing in
Bangsamoro is to take advantage of economic
growth opportunities, and increase the
availability of funds. By utilizing these
opportunities, the establishment of Islamic
financing industry in Bangsamoro can grow and
competitiveness.
5) It is further recommended for the need of
Judicial System in the BARMM and in the High
Court and District Court. Additional
recommendation is for the Supreme Court to
have representatives who are truly
knowledgeable in the Qur’an and Sunnah of the
Prophet Muhammad (S.A.W.), and in English or
Secular law, those who are both cognizant in the
areas of learning and teaching in both fields.
Finally, an emphasis on the establishment of
Islamic Windows, Islamic Banking, Islamic
Insurance, Islamic Cooperatives, Islamic Pawnshop
and others in the recommendation of the
incorporation of Islamic Finance in expanded Code.
ACKNOWLEDGMENTS
The researcher would like to express their heartfelt
appreciations to all those who in one way or another
help him, especially the respondents for their
cooperation that made the conduct of this study
successful.
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