GOLD DINAR IN MALAYSIA

KU AZAMUDDIN BIN KU AZAM 233255MUHAMMAD IKHWAN NAIM BIN AHMAD ZAMRI 233806FATIN NABILAH BINTI OMAR ZAKIR 233250NUR AISYAH BINTI RAZANI 233239NUR AIN NADIRAH BINTI ZAINAL 233367

OBJECTIVES

• to determine the gold dinar in Quran and Sunnah• To study the history of gold dinar in Malaysia• To observe the application of gold dinar in Malaysia• To investigate the perspectives of Malaysian towards gold

dinar• To determine the advantages between using Ringgit

Malaysia (RM) and Gold Dinar

INTRODUCTION

• In a claim by a Muslim scholar Ibn Khaldun in his book Muqaddimah (1989:298) that God created the two precious metals, silver and gold to serve as a measure of value for all capital accumulations. • With the spread of Islam, the dinar was minted in

large quantities and gradually displaced the bezant gold coin as the major international currency, circulating throughout the Muslim world and the Christian Europe as well.

• The largest integration of the Dinar and Dirham into regular society in the world are in Indonesia, Malaysia and the surrounding areas. • There are also small initiatives in Pakistan,

United Kingdom, South Africa and the United States of America. Malaysia is not very far behind Indonesia in the movement, with the establishment of e-dinar Ltd in 2000 and the ‘e-dinar’ online electronic payment system.

GOLD DINAR IN QURAN AND SUNNAH

AL-QURAN

1) “O you who have believed, indeed many of the scholars and the monks devour the wealth of people unjustly and avert [them] from the way of Allah. And those who hoard gold and silver and spend it not in the way of Allah - give them tidings of a painful punishment.”(Surah At-Taubah:34)

2) “Beautified for people is the love of that which they desire of women and sons, heaped-up sums of gold and silver, fine branded horses, and cattle and tilled land. That is the enjoyment of worldly life, but Allah has with Him the best return.”(Surah Al-Imran:14)

3) “Their raiment will be fine green silk embroidered in gold. Bracelets of silver will they wear. Their Lord will quench their thirst with a drink (sparkling) with purity.” [This verse, as well as others that follow, reveal that gold and silver will remain precious and valuable in the hereafter as well.”(Surah Al-Insan:21)

4) “Circulated among them will be plates and vessels of gold. And therein is whatever the souls desire and [what] delights the eyes, and you will abide therein eternally.”(Surah Al-Zukhruf:71)

HADITH

1) Abu Bakr ibn Abi Maryam reported that he heard the Messenger of Allah say: “A time is certainly coming over mankind in which there will be nothing (left) that will be of use (or benefit) save a Dinar (i.e., a gold coin) and a Dirham (i.e., a silver coin).” (Musnad, Ahmad)

2) Narrated by Abu Bakr ibn Abi Maryam, and recorded in Musnad, Ahmad ibn Hanbal,The Messenger of Allah is reported to have said, “A time is certainly coming over mankind in which there will be nothing left that will be of use save a Dinar and a Dirham”

3) Narrated Ubadah ibn as-Samit:The Apostle of Allah (peace be upon him) said: Gold is to be paid for with gold, raw and coined, silver with silver, raw and coined (in equal weight), wheat with wheat in equal measure, barley with barley in equal measure, dates with dates in equal measure, salt by salt with equal measure; if anyone gives more or asks more, he has dealt in usury. But there is no harm in selling gold for silver and silver (for gold), in unequal weight, payment being made on the spot. Do not sell them if they are to be paid for later. There is no harm in selling wheat for barley and barley (for wheat) in unequal measure, payment being made on the spot. If the payment is to be made later, then do not sell them.(Sahih Muslim)

HISTORY OF DINAR• Islamic history has proven that gold money has been used

since the days of ignorance up to the time of the rise of Islam.

• Although money is minted gold and created by the Prophet Muhammad and the caliphs after him, but gold and silver have been used with great success until the fall of the Ottoman Empire.

• Gold dinar and silver dirham apparently practiced in the days of the Prophet Muhammad in which there are hadiths that touch on their use in financial affairs and worship, such as alms, dowry, blood money and the Jizya

• Ideas and suggestions to return the gold dinar in the financial system is nothing new under review by Tun Dr. Mahathir.

• . This issue has attracted him since the early 80s. It can be proved through his speech at the opening of a course organized by the Religious Bureau UMNO Malays on 27 November 1981, Dr Mahathir had said.

“The world financial system now which is no longer dependent on the use of gold and silver but bank notes and checks, and this is not from the Islamic system. This is the existence of a system of banks, money exchange, promissory notes, court promises

trade, investment, exports, imports, insurance and many others. This system controls the whole world that we cannot use it.”

• In the middle 2000, the idea of using the gold dinar currency has started to be discussed by a small group of Islamic economic thinkers of the world and also in Malaysia.

• Gold dinar attract Tun Dr. Mahathir when the world’s financial system failed to fend off currency speculators that caused the currency in most countries including Malaysia fell sharply.

• Tun Dr. Mahathir has brought these ideas and suggestions to all the countries of Islam in the world and is determined to continue to fight for a gold dinar.

APPLICATION OF GOLD DINAR IN MALAYSIA

• During the early period, the use of the gold dinar was distributed as an alternative currency and also specified the nature of the present economic system.

• Only in 1995, Malaysia had in their hands the gold dinar in their physical form.

• The Asian monetary crisis of 1997 opened the opportunity to the then gold dinar activist to reach out to more people on their understanding of the banking and finance system and also to raise again the issue of usury for public debate.

• This make an opportunity to make contact and to present their case to the then Prime Minsiter of Malaysia, Tun Dr. Mahathir Mohamad through books, papers and gold dinar coins, given to him as gifts.

• When Tun Dr. Mahathir proposed that the gold dinar could be the alternative currency for international trade and national reserve, especially with Muslim countries and those countries of where Malaysia had already Bilateral Payment Arrangements (BPA), many were caught by surprise.

• Tun Dr. Mahathir’s proposal to use the gold dinar had the support of Iran who proposed that Malaysia set up a secretariat to provide information on the concept.

• With the support of Iran and many articles written by foreign journalist, economist and analyst especially in internet and the mainstream media, the matter of the gold dinar had become an international issue and both the Muslims and non-Muslims waited for its implementation.

• However, when Tun Dr. Mahathir stepped down as Prime Minister, his successor, Dato’ Seri Abdullah Haji Ahmad Badawi did not show any interest in the matter of the gold dinar and all efforts instituted by Tun Dr. Mahathir came to a halt

PUBLIC PERCEPTION OF GOLD DINAR

1) Whether the use of gold dinar as a medium of exchange could remove the uncertainty. - It is pointed out that the use of gold dinar is depending on the willingness of the government to build the innovations towards a better economic condition.

2) The implementation of Gold dinar depends on the knowledge and level of educations. -Universities as a knowledge warehouse play a major role in educating our next generation. The universities’ curriculum should incorporate gold dinar as one the integral subjects in economics, finance, accounting and business management. The government could then setup gold dinar side by side with fiat money and eventually replace fiat money once gold dinar is widely used.

3) The issue about the scarcity of gold remains low compared to the issue of the willingness of others to accept gold dinar. -It is the fact that with fiat money the government could increase money supply almost without limit but not with gold dinar system. Again, the issue remains on the willingness of the government or the acceptance of gold dinar not in the scarcity of gold.

4) Gold has a low volatile price compared to the currency. -This will lead to a certain conditions to be expected by the agent of economics. Better expectations that lead to a better productivity and efficiency. The remain issue is not about injustice, poverty or the economic issue such as inflation, uncertainty, unemployment rather than the issue about productivity and efficiency.

ADVANTAGES OF USING GOLD DINAR COMPARED TO RINGGIT MALAYSIA (RM)

MOST STABLE CURRENCY Can be kept for future

UN-CREATABLE INDESTRUCTIBLE

Cannot be create or destructible

ZERO INFLATION

May not cause inflation

CONCLUSION

• As we all knows, the value of dinar itself is much higher, better and more valuable rather than ringgit itself in the world nowadays. The usage of dinar in Malaysia should be practiced because there are many benefits that we can get from it

• In the context of Islamic banking and trade, the likes of the former prime minister, Dr Mahathir Mohamad and activists like Tarek El Diwani, have been influential figures in advocating the introduction of gold dinars and replacing the fractional reserve-based banking system

• As these ideas are seen as radical by many, including Islamic bankers, it is important that the governments take a proactive role in implementing these proposals.

• As the government of Malaysia is spearheading an initiative to develop tools for liquidity management for Islamic banks, gold dinar and the issuance of a currency based on excess capacity may not be entirely abstruse concepts.

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