Pakistan emerged with the objective to prosper as an Islamic nation by following divine code of guidance from Allah and his Prophet Muhammad (PBUH) in Quran and Sunnah. However, in the beginning of materialization the domino effect of society’s Islamic conviction were merely appreciated in their culture, rituals and way of living but little or no influence of society celestial beliefs are evidence in commerce and financial sectors of the country. Nowadays, our banking and financial systems are gradually moving towards Islamic procedures from conventional one. For instance large portion of our financial sector comprises of Islamic banks and institutions. While the commerSce slice of our economy stagnantly adhere the commercial laws constructed by state government, benchmarking Western laws of business, which subtle the impact of Shariah rule. Thus, this results in formation of businesses which associated with decisions, products, dealings, contracts and practices that are makruh or prohibited (haram) from Islamic perspective.
Islam is the unique and divine religion that comprehensively covers all aspects of Muslims life, explicitly it don’t solely emphasize or regulates Muslims religious commitment and routine life though, it equally plays an overarching role in systematizing commercial, commerce and business dealing by dint of Shariah laws (traditional Islamic commercial laws), which directly deriving from delivered revelation Quran, which enclosed the actual words of almighty Allah and not recited revelation hadith the words and teaching of Prophet Muhammad (PBUH) which later interpreted and explain by Muslim scholars.
Islamic laws which are enshrined in Quran and Sunnah put a noticeable emphasis on the principles of justice, objectivity, equality and neutrality. In the business sphere these doctrines convert in the prevention of interest (riba or usury) and also compel business to be cautious of involving in speculative or risky investments, transactions or contract which devise extreme uncertainty (gharar), gambling (maysir), weapon business, prostitution, sell products of non-halal components like alcohol or pork, involvement in an ambiguous contract that are in Allah’s hand like insurance policies.
Countless verses stated in Quran and Sunnah underline the Islamic approach of business transactions, contract formations and Shariah decisions.
– Islamic law has strictly forbidden businesses to deal in terms of usury or riba (interest). As Allah said in Quran,
“Those who take interest cannot stand [In their dealing with people] except like the one who has been confounded by the touch of the Satan-this is so because they say, that trade is just like interest. [Whereas] Allah has allowed trade and forbidden interest.”(Surah 2:275). Shariah laws always support the wellbeing of all parties involved. Hence, Islam do not tolerate usury in any sort of business transactions because the almighty Allah has permitted business or trade which embrace definite degree of risk and strictly prohibited to involve in any nature of investments that guarantees fixed returns for one party but not for the other. The core objective behind prohibition (haram) of charging usury is that it is considered as taking undue advantage of parties in poor state of bargaining, provoke involvement in speculative transactions by offering unfair returns.
– Dealing of products that composed of intoxicating liquor, pork or byproduct of forbidden (haram) animals are not permitted in Shariah.
Allah says in Surah 2:219 of Quran, “They ask you about intoxicants and games of chance. Say, ‘In both of them there is a great sin and profits for men, but their sin is greater than their profits’.”
However, only alcoholic drinks covers under prohibition circle of Islamic commercial laws. Thus, trading intoxicants that are not prepared for human consumption and utilized for industrial work is permitted in Shariah jurisprudence.
– Purposively hoarding (stocking) common food stuffs or any other products which are short in supply and its demand is peaked during the period, with the anticipation of its price increment; immoral decisions similar to “hoarding” that merely profits the single party but not the other is haram in Shariah jurisprudence. Prophet Muhammad (PBUH) said, “None hoards the food items except the sinner.”
Merchants that observe Shariah law to trade the produces on fair market price.
– Typically most of the businesses covenants in three basic types, explicitly buying and selling, hiring and partnership. Parallel, Islamic commercial laws contain connected rulings for these contracts types.
In the commerce structure, Shariah law comprehensively emphasizes on integrity in measuring, faithfulness in speech and prohibition of fraud (ghish) and deception (tadlis); on the customer side commitment of business.
In Surah 6:152 of the Quran Allah says, “Give full measure and weight with justice.”
Cheating on measures and scales by mumin with other mumins is strictly prohibited in Islam. Merchant’s personal greediness commit them to habitually involve in this act. Hence the word “mumin” (Muslim) itself defined as “one whom the believers can entrust with their lives and property.”
– Islamic commercial law congruently debates on protection of partnership rights therefore it has broadly emphasized on written agreements to smooth out long business relations and to prevent disputes with their mates.
– Shariah laws give noticeable importance to employer and employee relationship. As employee’s blood, sweat and tears contributes a significant part in the success of any business conclusively for the growth and prosperity of any company the employer requires satisfied employees. Islamic laws stress on the formation of crystal clear contract between employer and employee on the subject of salaries, work obligations and other job requisites to avert any sort of future complications.
If the corporates espouse these Islamic commercial law in their trade and business activities it isn’t merely prolific for them, on the other hand the application is also lucrative for their customers, employees, business partners and society and economy as a whole.
Beneficial parties in the application of Islamic commercial laws:
Islamic business laws are based on the principles of justice, fairness and loyalty. When a company follows Islamic business laws and sells its products with fairness without any manipulations in its products with an utmost desire to benefit its customers. Then the customers would definitely become more loyal with the company’s products and it can make customer to buy a product consistently which can help a company to increase its sales so forth its profitability and market share.
Moreover if a company pursues Islamic commercial laws and deals fairly with its employees, fulfills their rights, take care of their welfare then it can achieve the customers’ satisfaction. Besides this, the employees’ commitment level also increases with the company and they work with more zeal and put forward their efforts to make it successful. The employee turnover rate also decreases when a company provides justice and equality to its employees then more of the employees can be attracted towards that company.
Further when a company implements Islamic commercial laws then it creates a sense of good- will in the society as a company fulfills all the principles of justice, equality and create peace in the society then that company can generate the ‘win-win’ concept and it can receive an illustrious position in its society. The management techniques and strategies can be admired by the other companies thus it creates a good reputation and soft power of Islamic commercial laws as well.
Thus, Islamic commercial laws in business can help companies to maintain worth- while and an influential relation with the stakeholders.
It also assists in maintaining a prosperous society moreover being an organization it can develop its own positive and impactful image in the society.
2- Customers, Internal Customers And Business Partners:
There are several benefits of implementing Islamic business laws in an organization, which will support companies to arise in the business world. There are three kinds of people, which would be seeking benefits including customers, employees and partners. The benefits which would be provided to customers, employees and partners by implementing Islamic business laws are.
– According to Islam there are many hadiths, which majorly emphasizes on trustworthiness and truthfulness. In business ethics the great emphasis was specified on truthfulness in communication and honesty in measuring. To encourage the act of honesty, the companies are recommended to provide right products and services and ensure to give customer rights. According to Islamic governance, Imam Ali (AS) has emphasizes in Quran about the society welfare. A business person should always rigorously think about the overall well-being of the society. There are many ways companies do fraud and cheating to market their products through false statements about the value of a product and presenting a product in an unrealistic manner which is against the Islamic business law. By simply applying the Islamic laws in business, companies will be truthful in statement and they will present it in an appropriate manner which will benefit the customers by getting the right product.
– Employers respect other employees it is similar to respecting their own work and business. As the saying goes a happy employee relates that happiness to customer and vice versa. Hence, without happy employees, your business can’t be flourished. Islamic teachings has also emphasized on employees’ issues that is “not getting salaries on time and denying the wages to employees” which is against the Islamic business law. By applying Islamic business law employees will get their work rights. Hence, a business, which is being constructed on Islamic standards can’t have the superiors who merely upsurge their own wages and ask their staffs to accept subordinate wages. Islam never accepts discrimination on the basis of gender, color, race and so on. By adopting the Islamic business laws, the employees will not be treated with discriminations. According to the Islamic point of view working durations must be limited so that employees would not be burdened and Islam has directed to make the working environment safe, hygienic and non-hazardous. The rules are not merely quoted in Quran but have been acknowledged in the Hadith and by renowned Muslim scholars.
– According to Islamic business law your partner has a right to share their burden, work equally with them and likewise consider the value of their decision. In partnership both partners share profit and loss equally. The Quran has said about the Muslim being the brothers to each other and according to business perspective team work shows great significance in growth and success of the companies.
3- Society and Economy:
Islam is a complete way of life either to spend personal life or to run the economic and business activities of a country. In the present time almost all countries seems to be deviated from the Islamic guidelines including the countries that are referred as Islamic countries. The root cause of the current economic crunch is because of not following the principles laid down by the Holy Quran. People witnessed the flourishing economies of the time whenever and wherever they had followed Lord’s injunctions. Islamic laws present a solid foundation and ensure an ongoing stability.
When the businesses are under the shadow of Islamic laws, they work on interest free trading that means individuals don’t save their cash in the bank accounts and invest in their own business but they let it to flow in the economy that leads to greater lifestyles of the peoples so the economy starts booming and it swells to better business opportunities, escalation in business deeds and the society moves towards better wealth circulation so forth people become tempted towards investments plus discourage savings and eliminate unlawful activities such as kickbacks, gambling etc., so in that way, tax collection gets high to run the affairs of the country.
There is an excessive interest rate at every financial sector, which is only bearable by the money making sectors and high standard people, which is decreasing the savings and investments and is somehow growing the unequal income distribution and is leading the economy towards the injustice with the poor and is swelling the poverty rate in various countries. Whereas An Islamic economic system focuses on developing the secured decent life for every individual and not leaving any room for the injustices with the people living in the society. By following Islamic laws, everyone has an opportunity to partake in dealing of goods by means of Shariah principles, so people purchase the halal merchandises and sells it. Therefore, the market will develop and the society will boom to a higher level that will meet all the rudimentary requirements of Islam.
Islamic commercial laws stretches the notion of ethical tenets, brotherhood, and socio-economic justice and Islam stances for the equality, legal ethics and is against of any illegal activities alike corruption that abolishes the societal growth. The aim of the Shariah law is to build the society where everyone behaves as responsible and honest human being and also fulfills the laws of justice, equality and provide human rights to the state.
However, corporates have gone through pinnacle barriers throughout the journey of converting their organizational activities, policies and practices according to Shariah laws.
Challenges in adopting Islamic business laws:
The growing companies have gone through several hurdles in the process of applying Islamic business law. The challenges businesses have encountered in the application of Shariah laws are that there is a scarcity of information about goals, values, and benefits of Islamic business laws in Pakistani Muslims.
According to the majority of Muslims; Islamic laws are merely based on non-usury, while the other devotees of diverse faiths have very little or no knowledge about it at all. This is a major obstacle in adopting Shariah law in Pakistan. Further there is a huge lack of human resources on the expert level and a shortage of Shariah scholars who are well versed in Islamic laws for the growth and development of businesses according to Shariah laws.
Moreover, corporates have no appropriate standards to follow the Islamic business law in credit analysis, financial studies, monitoring of ventures, and portfolio evaluation and a poor controlling in Pakistan as well as the lack of Shariah’s advisory board to regulate and supervise to follow the Islamic business laws is another obstacle which restrict the growth of businesses according to the Islamic regulations.
Besides this Islamic laws build different opinion and interpretation of Islamic verses which result in different policies and practices adopted among different authorities. Hence, Islamic commercial laws, policies and practices should be standardized and harmonized. This would build and make industries and sectors vigorous from Shariah perspective and eliminate illusions and weak views. Furthermore, in applying Shariah law businesses won’t be able to expand locally and globally for the reason that other types of business who are not following Shariah compliant laws and also using non halal products in their businesses will become an obstruction in expanding the business.