Debt enslavement still exists in society, says Mahathir<\/p>\n
Veeramalla Anjaiah, The Jakarta Post, Kuala Lumpur<\/p>\n
Debt enslavement has not been totally eliminated from our
\nsociety yet, said Malaysian Prime Minister Mahathir Mohamad.<\/p>\n
\"Countries, which are unable to pay their foreign debts, are
\nactually being made debt slaves of the rich countries whose
\ngovernment or banks had lent them (the funds),\" said Mahathir,
\nwhile launching the Islamic Financial Services Board (IFSB) on
\nSunday in the Malaysian capital.<\/p>\n
He said if Islamic banking was practiced in international
\nfinancial lending, the enslavement of borrowing countries would
\nnot happen.<\/p>\n
Islamic banking was enjoined because of oppressive practices
\nthat were prevalent in former times when debtors who could not
\nreturn the money they owed were made debt slaves of the lender,
\nMahathir said.<\/p>\n
While commenting on the process of globalization and
\nliberalization, the doctor turned politician said Malaysia wanted
\nto trade more, open up markets, enjoy a higher income and
\nincrease welfare as globalization was supposed to deliver.<\/p>\n
Stability in international financial markets is a must for
\nenjoying the benefits from globalization and liberalization, he
\nsaid.<\/p>\n
\"We need an international financial system that is fair and
\nrewards hard work rather than speculative activities that take
\nadvantage of the weak and the ill-informed,\" he said.<\/p>\n
Mahathir lashed out at speculators by saying \"speculation is
\nreally not business. It is a kind of gambling.\"<\/p>\n
Under the Islamic banking system, financial transactions need
\nto be supported by genuine trade or business-related activities,
\nhe said. That is why there is no room for investments in non-
\ntraded activities, such as currency speculation, derivatives and
\nother unproductive financial manipulations, he said.<\/p>\n
\"The basic tenets of Islamic banking prescribe a financial
\nsystem that rewards productivity,\" said Mahathir.<\/p>\n
Islam prohibits the concept of usury. The lender has to share
\nthe risks that the borrower is exposed to, although the real cost
\nof management, which should be variable and not predetermined, is
\nnot within the definition of usury.<\/p>\n
The other prohibition is excessive profits, or profiteering,
\nthrough unprincipled manipulation of prices or supplies.<\/p>\n
Mahathir also said the option to use the Islamic financial
\nsystem had to be voluntary and open so as not to cause turmoil
\nand economic regression, which Islam does not want to promote.<\/p>\n
He also witnessed the signing ceremony of the articles of the
\nagreement by the founding members of the IFSB, including Bank
\nIndonesia Governor Sjahril Sabirin.<\/p>\n
Malaysia's central bank governor, Zeti Akhtar Aziz, who is
\nalso the chairwoman of the IFSB Steering committee, hailed the
\ninauguration of the new board in her welcoming address as a new
\nmilestone in the history of the Islamic financial system.<\/p>\n
Prior to the IFSB, the Islamic Development Bank and the
\nAccounting and Auditing Organization for Islamic Financial
\nInstitutions were established in 1975 and 1990 respectively to
\nstrengthen the Islamic financial sector.<\/p>\n
IFSB will serve as an association of central banks, monetary
\nauthorities and other institutions entrusted to develop and
\npromulgate internationally accepted prudential regulatory
\nstandards and best practices.<\/p>\n
After two years of an extensive consultative process,
\nIndonesia, Saudi Arabia, Bahrain, Iran, Kuwait, Lebanon,
\nMalaysia, Pakistan, Sudan, United Arab Emirates, the Islamic
\nDevelopment Bank, the Accounting and Auditing Organization for
\nIslamic Financial Institutes and the International Monetary Fund
\nhave succeeded in setting up the IFSB.<\/p>",
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