INTERNATIONAL SEMINAR ON FISCAL POLICY AND DEVELOPMENT PLANNING IN AN ISLAMIC STATE

By Professor Khurshid Ahmad

Professor Khurshid Ahmad, Chairman, Council of International Institute of Islamic Economics. Mr. Prime Minister, Excellencies and Distinguished Guests, Assalam-o-alaikum wa Rahamatullah wa Barakatohu.

It is indeed a pleasant privilege for me to extend to you a hearty welcome to the Inaugural Session of the International Seminar on Fiscal Policy and Development Planning in an Islamic State organized by the International Institute of Islamic Economics. I am particularly grateful to Prime Minister Junejo for gracing the occasion to inaugurate the Seminar by sparing some of his precious time for this purpose from his multifarious pre-occupations with the affairs of the State. This is a token of the Nation’s commitment to upholding the banner of Islam and for application of the Islamic injunctions and teachings in all aspects of life. Indeed, the destiny of the Nation is as indivisibly linked with Islam as was its foundation.

We are all well aware of the fact, and I need hardly to dilate upon it, that Islam encompasses the totality of human life and provides ample guidance to man to so regulate his affairs in this transitory earthly life as to achieve peace and justice and thereby earn the pleasure of Allah Subhanahu wa Ta’ala which is a sine qua non for success both in this world and in the eternal life in the Hereafter. As such, Islamic economics is nothing but a sub-set and an integral part of the Islamic way of life. This, in fact) distinguishes Islamic economics from the conventional economics as developed in the West. The West treats religion as a purely personal affair. As a result, all spheres of social life, including economic, are completely divorced from the Creator and His Guidance. The development of economics as a science during the last over two centuries has, therefore, been steeped in the traditions of secularism, relying entirely on Man’s own discretion and judgment, and consequently focusing only on the mundane and the worldly. Regardless of the fact that the subject matter of economics are human beings who, unlike material objects, possess free will and moral personality, conventional economists have been striving to follow the model of natural sciences aiming to achieve “scientific positivism” and “value-neutrality” for economics. Conventional economics has consequently been facing a crisis and is unable to meet the challenges of the real world. Economic theories have been constantly changing and new schools of thought have been emerging one after the other. And yet, not only the old problems have remained unresolved but new and more serious ones have been cropping up.

No wonder that the world is today faced with multiple economic problems of gigantic proportions which defy solution. Mass poverty side by side with fabulous affluence, intra-regional, inter­regional and international misdistribution of income and wealth, frustrated development effort, unemployment, stagflation and crushing international debt burden on poor nations are among the major maladies plaguing mankind today which the positivistic economics has miserably failed to tackle so far.

By contrast, Islamic economics is normative and founded on the values and principles revealed by the Omniscient and Beneficent Creator for the guidance of man seeking mankind’s real well-being. Islamic economics as a discipline is of comparatively recent origin. In early years of the twentieth century it emerged as an extension of Fiqh and Kalam. During the last over half a century, a large number of books and journal articles have appeared on different aspects of Islamic economics. However, it was only in the last decade or so that Muslim economists started focusing attention with intensity of fervor and increasingly dealt with the subject with scientific rig our. National and international seminars, workshops and conferences have been held quite frequently and new institutions devoted to the subject have emerged.

The credit for pioneering this movement goes to the International Centre for Research in Islamic Economics, which was set up in the King Abdul Aziz University, Jeddah, in 1977. Teaching of Islamic Economics has passed through many stages, but the real breakthrough has been achieved in the teaching programmes of the International Institute of Islamic Economics, International Islamic University, and Islamabad and of the Faculty of Economics, International Islamic University, and Kuala Lumpur. In this context, I am happy to say that Pakistan can take legitimate pride in having established a unique institution in this pioneering phase, namely, the International Institute of Islamic Economics. The formal establishment of the Institute took place in August, 198 3 in response to a declaration by the President of Pakistan in the Second International Conference on Islamic Economics held in Islamabad in March, 1983. The new Ordinance of the International Islamic University, Islamabad, has reiterated the objectives of the Institute in the following words:

1. To organize teaching of economics. Islamic economics and related disciplines and conduct advanced studies and research in the field of economics and allied disciplines and evaluation of Islamic economics at undergraduate, graduate, doctoral and post-doctoral levels;
2. To promote cooperation with other institutes and organizations in the field of economics and allied disciplines and Islamic economics through seminars, scholarships, stipends and bursaries and in any other manner which the Council of the Institute may approve;
3. To organize studies, surveys, collection of data in the field of economics and allied disciplines from the Muslim world and publish the results of this work for the larger benefit of the Ummah; and
4. To adopt such other measures necessary to achieve its objectives as the Council may determine from time to time.

Entrusted as it is with manifold responsibilities by its Charter, the Institute is one of the most ambitious projects in the field of education and research in the Muslim world. It has organized teaching and study of economics, Islamic economics and related disciplines at different academic levels. It is conducting and promoting research on theoretical issues in Islamic economics as well as on practical problems facing the economies of Muslim countries. It has also to serve as a data bank for scholars, researchers and policy makers in the field of Islamic economics and economic conditions of different Muslim countries. It is the combinationof these three functions in oneinstitution thatgives the Institute a unique character and a distinctive position in the Muslim world.

The work of the Institute has been organized in three main Divisions, namely, the School of Economics, the Research Division and the Resource Centre. The School of Economics is the teaching department of the Institute. Its main aim is to produce a steady stream of scholars well-versed in economics as well as in Islamic Shari’a. The curricula have been so designed as to impart to the students a thorough knowledge of economics. Islamic economics, Fiqh literature on economic issues and the Arabic language.

The main functions of the Research Division include undertaking and sponsoring of research in theoretical issues in economics and Islamic economics as well as in practical problems facing the Muslim countries and the world economy; preparing and sponsoring preparation of teaching material and text books for different levels of education to be used in Universities; collaboration in schemes aimed at promoting research in Islamic economics in different parts of the world; and holding of seminars, training courses, colloquia, workshops and national and international conferences.

The Resource Centre is entrusted primarily with the responsibility to assemble information on the economies of Muslim countries so as to serve as a data bank; to establish a good research and reference Library; to periodically publish information on the economies of Muslim countries in the form of a Survey and reports, monographs etc.; and to arrange for technical assistance to Muslim countries in the fields of teaching of Islamic economics as well as for adopting policies and programmes for application of Shari’a in the economic sphere in these countries.

By the Grace of Allah, the Institute has made a remarkable all-round progress within a short span of time of about two and a half years so far, and I take this opportunity to briefly review its activities.

One of the first tasks to which the Institute addressed itself soon after its establishment was the strengthening of its teaching and research staff. At the time of its establishment its faculty consisted of only 8 persons who were previously working in the School of Economics of Islamic University. Recruitment of staff, particularly at senior levels, proved a formidable problem on account of acute shortage of highly qualified economists, especially those with Islamic orientation and the terribly unattractive pay scales offered by Universities in Pakistan. Nevertheless, the Institute has been able to increase the strength of its faculty to 23. Of these, 7 are Ph. Ds and one a renowned Islamic scholar.

To advise and assist the Institute in performing the various functions and to achieve its objectives, the Institute has constituted four bodies viz… (1) The Board of Studies; (2) The Research Council; (3) The International Advisory Board; and (4) The Finance and Planning Committee.

The academic program of the School of Economics originally consisted of only undergraduate courses of instruction leading to the degree of B.Sc. (Hons) in Economics, which is a four program after higher secondary school certificate or equivalent qualification from Deeni Madaris. The first year is devoted to English and Arabic languages and Islamic Studies to provide the students with necessary orientation and preparation for courses in the subsequent three years, in which students are given a good grounding in economics and allied subjects, such as mathematics, statistics, econometrics, research methodology as well as Usal Al-Fiqh and Fiqh. The teaching of Arabic language is so designed as to provide the proficiency required for consulting the original sources of Qur’an, Hadith and Fiqh literature. The first batch of B.Sc. (Hons) students graduated last year.

Beginning from September 1985, the School of Economics has initiated graduate program of teaching leading to the M.Sc. and Ph.D. degrees in Economics. All the 16 students who graduated from the School of Economics with B.Sc.(Hons.) degree took admission as regular M.Sc. students. Admissions have also been given provisionally to another 9 students Riding Bachelor’s degree from other institutions. Their admission would be regularized on successful completion of preparatory courses which are designed to bring them at par, in term of academic requirements, with those holding B.Sc. (Hons.) degree from the School of Economics. Similarly, 8 students with M.A. / M.Sc. degrees from other institutions have also beem admitted provisionally in the Ph.D. program.

For the benefit of those teaching Islamic Economics in other Universities, Colleges and Training Institutes in Pakistan at post-graduate level, the School of Economics organized a Refresher Course in July, 1984, The Course was designed for an intensive study of Islamic economic literature produced in recent years so as to disseminate the latest knowledge in the field of Islamic Economics among the teaching community in Pakistan. The participants in the Course came from 11) Universities, 8 post-graduate colleges and one Training Institute. Encouraged by the success of the Course, the Institute now proposes to organize a similar Course at international level. Collaboration of the Islamic Development Bank is being sought for this purpose.

To impart greater insight to students on practical issues facing Pakistan and other Muslim countries and to give them a firsthand view of the progress of Islamization of economy in Pakistan, a program of Extension Lectures has been organized from the current academic year. Lectures in this series are delivered by persons having special expertise and experience in a particular field. The subjects covered so far are “Salient Features of Islamic Economic System”, “Islamization of an Economy: Experience of Pakistan”, “System of Zakat and Ushr in Pakistan”, “Islamization of Development Finance Institutions in Pakistan”, and “Central Banking Policies and Procedures in an Islamic Economy”.

A two-year research program for the academic year 1984-85 and 1985- 86 was prepared under the guidance of the Research Council. Out of 10 research topics approved by the Research Council, work has been completed or reached an advanced stage of completion on five topics. Two research studies viz., “The Ethico Economic System of Islam” and “Islamic Land Tenure system” have been issued in the Discussion Paper Series of the Institute.

The Resource Centre has accorded the highest priority to development of a really good research and reference library which is an essential need of all the major three divisions of the Institute. Efforts have been made to speed up acquisition of books and journals both through local book sellers as well as from abroad. The total stock of books in the library now stands at about 10,000 as against some 2000 books at the inception of the Institute. The library is subscribing to 129 foreign journals on economics and allied subjects and to 41 Pakistani journals on a regular basis. In addition, back issues of some important journals and other useful research materials have been acquired in micro-fiche, micro-film and print forms.

The Resource Centre has also made progress in the matter of collection of data on economies of Muslim countries. In response to requests addressed to Central Banks and Monetary Agencies of Muslim countries, the annual reports, statistical bulletins and other publications are being received regularly from 23 of these countries.

In pursuance of the requirement under the Institute’s Charter “to organize studies, surveys, collection of data in the field of economics and allied disciplines from the Muslim World and publish the results of this work for the larger benefit of Ummah”, the Resource Centre, in collaboration with the Research Divisions, plans to start preparation and publication of an Economic Survey of the Muslim World on a regular annual basis.

The Institute has been directed by the President of Pakistan to undertake training program for senior officers of Government Ministries, financial institutions and public sector corporations twice a year to help meet the challenge of Islamization of the economy. Accordingly, the first training program was held from March 29, 1986 to April 24, 1986. The program aimed at familiarizing the participants with the Islamic economic doctrines and setting in motion a thinking process for finding solutions to practical problems and difficulties they were facing in their respective spheres of operation by providing an opportunity for free and frank exchange of views. I am glad to say that inspite of being a maiden attempt, the Course proved to be remarkably successful in achieving its objectives.

The Charter of the Institute also requires it to organise seminars, workshops and conferences to promote knowledge on topics related to Islamic economics. Accordingly, a three-day Workshop on” Elimination of Interest from Government Transactions” was held in October»1984 and a Seminar on Islamic Financing Techniques was organized in December, 1984.

In January 1985, a “Working Group on Conduct of Banking on Profit-Sharing Basis” was set up. The Working Group has been meeting periodically to deliberate on issues related to the subject matter. The report of the Working Group is likely to be finalized in the next few months.

The present International Seminar on “Fiscal Policy and Development Planning in an Islamic State” represents the latest program in the series of Conferences and Seminars organized by the Institute. We hope that this Seminar would be helpful in developing a better understanding of the Islamic approach to problem of fiscal policy and development planning.

With a view to making the Institute better known in the Muslim world, a brochure giving basic information about the Institute has been widely distributed. Two Annual Reports, reviewing the activities of the Institute and providing other important information have also been published.

In keeping with its resource availability in terms of manpower and funding, the Institute has also initiated a modest Technical Assistance Program in the fields of its specialization. The Institute has promptly responded to a number of requests for technical assistance received both from within the country and abroad.

The Institute plans to set up a School of Banking and Business with the objective of imparting in-service training to bank officers as well as preparing a new generation of Islamic bankers by offering courses leading to certificate, diploma and degree, with specialization in Islamic Banking.

Mr. Prime Minister, Fellow Delegates: From the foregoing brief review you would appreciate that the Institute has achieved substantial progress within a relatively short span of time. However, further progress of the Institute is seriously constrained by certain problems to which I would now like to draw your attention.

The Institute has an ambitious work program before it but it is handicapped by inadequacy of professional staff. As stated earlier, recruitment of additional staff, especially at senior level, has proved to be a formidable problem, and it was with great difficulty that the present strength of its faculty could be achieved. Due to inadequacy of staff strength in the face of steady increase in the activities of the Institute, the faculty members are already heavily overworked. Future growth of the Institute would depend crucially on the success the Institute achieves in augmenting the strength of its professional staff. This, however, would continue to be extremely difficulty unless adequate incentives are offered to attract fresh talent. This, in turn, is constrained by paucity of financial resources at the Institute’s disposal.

Another big handicap for the Institute is the lack of adequate accommodation for all its constituent departments under one roof. The limited accommodation available to the Institute in the International Islamic University soon proved to be insufficient and three other buildings had to be hired to provide accommodation for Faculty members, ancillary staff as well as for the Library and the Training Academy. These buildings are located at considerable distance from the University Campus which is causing considerable inconvenience and loss of time to both students and faculty members. Bringing the Institute as a whole under one roof is, therefore, of vital importance. The Institute has formulated a plan for its building. However, funding is again the greatest bottleneck.

In the end, I thank you again, Mr. Prime Minister, for gracing this occasion and extend a very warm welcome to all the delegates and observers to the Seminar, particularly to those who have come from abroad. I hope that their stay with us would be comfortable as well as meaningful.