Light at the end of the tunnel


  • IKIM Views
  • Tuesday, 22 May 2018

THE results of GE14 have shone an extraordinary light at the end of the 60-year-old independence tunnel.

In his first press conference as the new prime minister, Tun Dr Mahathir Mohamad had emphasised the nation’s concern over the country’s economic situation, one that had disappeared from the world’s radar.

For quite some time, Malaysians had lost hope, despite our remarkable resources, because of bad fiscal and monetary policies.

Dr Mahathir did not waste any time. He first called for hard work from the rakyat and the new line-up of Cabinet ministers was one of his first acts taken to put Malaysia back on track.

Members of the press were also urged to play their role in avoiding news spin.

With all these in place, we should now be able to re-evaluate the current internal and external state of affairs and henceforth, plan strategically for the future.

Internally, our currency will certainly be strengthening in direct relation to the restoration of trust towards the new government.

Other aspects that critically need attention are inflation, productivity, cost efficiency in government expenditure, ventures into profitable projects, reducing government debt and capitalising on advantages and resources.

In the international arena, we should start the search for ventures with competitive advantages and technological transfer, in particular for foreign direct investment (FDI).

For international trade settlements, we should also revisit the idea of using gold as a medium of exchange.

The world is indeed heading towards a digital economy and a cashless society.

Digital economies create a level of accessibility even more favourably with its low cost and high liquidity.

The development of infrastructure towards expanding an untapped Internet of Things (IoT) should be put on the national agenda in order to facilitate the digital marketplace.

Over time, the Malaysian economy was transformed from a labour-intensive one to a technological-based one.

However, what concerns many people is the ability to produce and facilitate the market.

An equitable market share should first be established, where we should also strive to become exporters of our own products and not just consumers.

Malaysia is also known to be a champion of Islamic banking and financial products and services. The financial sector is said to be an economic lubricant.

Therefore, to move the economy forward, the financial sector needs first to be restructured.

History has shown us that money is manipulated to justify banking and interest. This has only been achieved by defining money as a commodity which comes at a price, that is, interest.

In contrast, Islam considers money as “like a mirror, which has no colour, but it reflects all colour...it is an instrument to lead to all objectives...” (Ihya’ Ulumuddin by Al-Ghazali).

Studies have shown that fiat-based money is a currency prone to inflation, an untrustworthy store of value, and is problematic as an equitable standard of differed payment.

Malaysia should embark on world financial reform by concentrating on a particular country as a pilot project for trade settlement via gold-based digital tokens.

Hence, this is a clarion call to all academia to study the possibilities and risks associated with it.

In a recent development in the industry, the government of Turkey managed to introduce a gold-lease sukuk as a new asset class and it has gained quite a significant amount of money out of the new asset issuance.

This year alone, the sukuk collected TRY1.11bil (RM968.42mil) to the total accumulation of TRY2.43bil (RM2.12bil).

Such a funding deserves attention if the Government is in the midst of considering a new financing venture.

While borrowing is inevitable for a country’s development, it is a ticking time bomb – especially if the borrowing is done for the sake of funding a country’s expenditure.

If a country continues to fund expenditure by exploiting loaned money, it is just like being trapped in quicksand. The more one moves, the faster one will sink.

Thus, our economic focus should emphasise real economic sectors as income improvement to balance expenditure.

The Quran captures such a spirit in the following verse: “And [they are] those who, when they spend, do so not excessively or sparingly but are ever, between that, [justly] moderate” (al-Furqan: 67).

Above all, continuous support and concern from all the rakyat for national interests will definitely be able to put Malaysia to the fore.

Mohd Noor Omar is a Fellow with the Institute of Islamic Understanding Malaysia’s (Ikim) Centre for the Study of Syariah, Law and Politics. The views expressed here are entirely the writer’s own.

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