THE ringgit is expected to weaken next week following the recovery of the US dollar as investors resume buying interest in the greenback, dealers said.

They said the greenback remained the beneficiary, if the risk of global recession deepened everyday, and fear prevailed in the US financial market.

“The ringgit will slowly depreciate next week and may breach the 3.63 level against the US dollar,” one of the dealer said.

Meanwhile, Bank Negara’s announcement that Malaysia’s forecast growth for the year would remain at 5-5.5 per cent will lift the ringgit in the medium term, a forex analyst said.

On Friday, Bank Negara Governor Tan Sri Zeti Akhtar Aziz also said the ringgit had remained stable against most major currencies despite heightened de-leveraging activity.

“In the medium term, the ringgit can be supported by our strong fundamentals, an increased account surplus and prospects for growth,” Zeti said.

Early in the week, the central bank at its Monetary and Policy Committee meeting decided to reduce the overnight policy rate (OPR) to 3.25 per cent from 3.50 per cent, which benefited the ringgit.

The ceiling and floor rates of the corridor for the OPR are correspondingly reduced to 3.50 per cent and 3.00 per cent respectively.

On a week-to-week basis, the ringgit was lower against the US dollar at 3.6210/6260 compared with 3.6180/6230 the previous Friday.

The local unit decreased against the Singapore dollar to 2.4010/4064 from last Friday’s close of 2.3608/3664 and also dropped against the yen to 3.8000/8068 from 3.7980/8053 previously.

The ringgit was lower against the British pound at 5.5782/5877 from 5.3706/3794 last Friday and also weaker against the euro at 4.6772/6862 from 4.5319/5393 previously. — Bernama

CAIRO, Egypt (AP) - OPEC ended a hastily convened meeting in Cairo Saturday without announcing new output cuts, despite the steep drop in crude prices and the threat it poses to member governments' national budgets.

The oil producing group's president, Chakib Khelil, said OPEC is concerned about the weakening world economy and its impact on oil prices. The group, however, will likely wait until a meeting in Algeria on Dec. 17 to decide whether to cut additional crude supplies from the market.

Khelil said oil ministers of the Organization of Petroleum Exporting Countries "agreed to take any additional action on 17th of December to balance oil supply and demand and achieve market stability.''

His comments came after the group convened what it called a consultative meeting in Cairo to take stock of market situations and to asses whether members were complying with a 1.5 million barrel per day output cut announced Oct. 24 in Vienna, Austria. Khelil said preliminary market data indicated members were complying with the earlier cuts.

Saudi Arabia's king said in an interview published Saturday in a Kuwaiti newspaper that the price of oil should be $75 a barrel, much higher than it is now, but the conclusion of the Cairo meeting with no announcement on output indicated no measures would likely be taken until OPEC meets again next month.

Saudi Oil Minister Ali Naimi went into Saturday's meeting saying OPEC would "do what needs to be done'' to shore up falling oil prices when the group meets in Algeria, but for now it was "too early.''

Naimi, whose country is the world's largest oil producer, said the bloc needs to wait until the Algeria meeting to assess the impact of earlier production cuts.

The cut announced in Vienna has so far failed to stop the price drop, and the cartel abruptly convened the Cairo gathering on the sidelines of the Organization of Arab Petroleum Exporting Countries' meeting. The price of crude stood at about $147 a barrel in mid-July. On Friday, the U.S. benchmark West Texas Intermediate crude for January delivery was trading at about $54 per barrel.

The price drop and the wider financial meltdown threatens to cut deeply into OPEC member states' government budgets.

"We believe the fair price for oil is $75 a barrel,'' Saudi King Abdullah was quoted as saying in Saturday's edition of the Kuwaiti newspaper Al-Seyassah. He did not say how the price could be raised.

The king was echoed by Qatar's Oil Minister Abdullah Bin Hamad al-Attiya, who told the Arab news channel Al-Arabiya that prices needed to rise to guarantee investment in the oil sector.

"The price between 70 to 80 (dollars a barrel) is the one encouraging in investment and developing new or current oil fields,'' he said. "It falls below 70 (dollars), the investment would freeze, which will lead to a crisis in supply in the future.''

Nigerian Oil Minister Odein Ajumogobia also said they would be "very happy'' with oil at $75.

Kuwait's oil minister, Mohammed al-Aleem, warned the market is oversupplied, and he didn't rule out the need for OPEC to cut production further. But he, too, said he believed there was no need for OPEC to make a decision in Cairo on cutting output.

"We believe a decision could be taken ... but I think it will happen in Algeria,'' he said, before the start of Saturday's session.

Al-Aleem said current prices could undercut investment in future projects and were not good for either producers or consumers.

The recent price drop has left OPEC price hawks Venezuela and Iran clamoring for further reductions of at least 1 million barrels a day. Both countries need crude at about $90 per barrel to meet spending needs aimed in part at propping up domestically unpopular regimes.

Other OPEC members, such as Nigeria and Ecuador, face budget problems too, making them reluctant to implement more cuts that might shrink revenues further.

The Saudis are better positioned to cope with the drop in prices. The International Monetary Fund estimates Riyadh needs crude in the range of about $50 per barrel for 2008 fiscal accounts to break even.

The statements by the king, however, indicate that normally dovish Saudi Arabia is ready to see the price rise, indicating cuts will eventually take place. OPEC itself, along with the International Energy Agency, has significantly revised down its projections for demand growth in 2009.

Meanwhile, global crude inventories are growing, as evidenced by a U.S. government report showing a surprisingly large 7 million barrel build in stocks last week in the world's largest energy consumer.

OPEC's last round of cuts would put its total production at about 30.5 million barrels per day, according to the IEA. That is about 500,000 barrels per day higher than the forecast call on OPEC crude in much of 2009.

A Nov. 24 New York-based Oppenheimer & Co. research report says that for oil to rebound to $65 a barrel, OPEC would need to cut crude production by more than 3 million barrels per day from its September levels _ a move it called highly unlikely. - AP

Obama's economic stimulus plan

US President-elect Barack Obama says his two year stimulus plan will create millions of jobs.

This was the first time that the US President- elect went into such detail about the status of the troubled US economy.

His proposals for a two year plan indicate the large effort involved in reviving the ailing economy.

He said the plan would create around 2.5 million more jobs by 2010. The Labour Department announced that unemployment has reached its highest levels in 16 years.

Obama warns swift action needed to avert deflation

Obama says plan would save or create 2.5 million jobs

Picks of Geithner, Clinton suggest centrist policy bent

CHICAGO - US PRESIDENT-ELECT Barack Obama said on Saturday that he was crafting an aggressive two-year stimulus plan to revive the troubled economy, warning that swift action was needed to prevent a deep slump and a spiral of falling prices.

Mr Obama gave a bleak assessment of the economy in his most detailed comments on the subject since winning the Nov 4 election and just a day after US stock markets rallied on his apparent choice of Mr Timothy Geithner, president of the New York Federal Reserve, as Treasury secretary.

'If we don't act swiftly and boldly, most experts now believe that we could lose millions of jobs next year,' Mr Obama said in a weekly radio address.

'We now risk falling into a deflationary spiral that could increase our massive debt even further,' he said.

Mr Obama said the plan would aim to save or create 2.5 million jobs by January 2011 and would be 'big enough to meet the challenges we face'.

Any additional jobs would offset what is expected to be a dismal employment picture in the near future.

Mr Obama, who succeeds President George W. Bush on Jan 20, moved rapidly to form the team that will address US economic and foreign policy challenges, convincing former rival Hillary Clinton to be his secretary of state and selecting Mr Geithner, a Treasury official in President Bill Clinton's administration.

Those appointments underscored a centrist bent to the personnel decisions being made by Mr Obama, who had a liberal record as a US senator from Illinois.

But the Democratic president-elect, who has been silent about his Cabinet picks, focused his Saturday address on a programme to create jobs and warned that the economy was likely to get worse before it gets better.

Still, as fears grow that the economy could be in for one of its most severe downturns in decades, Mr Obama is signaling anything but a middle-of-road approach on economic stimulus.

He called in October for a $175 billion (S$267.45 billion) stimulus measure, but his radio speech suggested he was ready to push for a much larger package. He did not give a price-tag in the speech.

The two-year time frame for the stimulus further indicated a sizable proposal. Most such plans are aimed at covering a one-year period.

'Likely to get worse'
Mr Obama and his economic team have worked for weeks to lower expectations that the economic problems can be solved fast.

'There are no quick or easy fixes to this crisis, which has been many years in the making, and it's likely to get worse before it gets better,' Mr Obama said.

The top Republican in the House of Representatives warned against increasing government spending to help the economy.

'The time for endless and aimless Washington spending has passed,' US Rep. John Boehner said in a statement, adding he was willing to work with Mr Obama on an economic recovery bill.

Mr Obama said recently the United States should not worry about its budget deficit for the next two years as it worked to prevent a deep recession.

The number of Americans joining the unemployment rolls surged to the highest in 16 years, up more than 540,000, the Labor Department said on Thursday. Government data also painted an increasingly dire picture of the housing market.

'The news this week has only reinforced the fact that we are facing an economic crisis of historic proportions,' Mr Obama said in his address.

Later Saturday, Mr Obama announced the choice of close aide Robert Gibbs to be White House press secretary.

A senior Democrat said Mr Obama was expected to announce his economic team, including Mr Geithner, as early as Monday.

US stocks, which had been sinking all week, surged more than 6 percent on the news that Mr Geithner, 47, had been selected. US Treasuries fell and the dollar surged.

Congressional Democrats have promised to make a broad economic stimulus a priority when they reconvene in January.

The package is expected to include middle-class tax cuts and billions of dollars for public works projects, such as the construction of roads, bridges and mass transit.

Hobbled US automakers are negotiating with lawmakers and the White House over a bailout package they say is urgently needed. Mr Obama has kept a low profile in that debate. -- REUTERS

Malaysian Opposition Leader and KeADILan De factor lately has been mentioned in parliament to debate on the Malaysian FDI- Foreign Direct Investment outflow but has been rejected by the Deputy Speaker Datuk Ronald Kiandee as it was not an urgent matter.

Anwar moved the motion under Article 18(1) of the Standing Orders because he said Malaysia has suffered a negative net-flow of RM9 billion with RM38 billion outflow in FDI as reported in the United Nations Conference on Trade and Development (UNCTAD) World Investment Report 2008.

This should be taken serious by parliament member as it deals with the current situation in Malaysia itself. As been stated in Malaysian situation, FDI plays important role in defining Malaysia development movement. The issue must be taken down by all members of government. There is truly needed for serious discussion and also importantly is to seek solution for the matter not just answered on the issue.

"A massive outflow of FDI has been occurring since 2005 and it will cause contraction in the economy, a decrease in gross domestic production and an increase in the unemployment rate" press statement by Anwar itself. Again he stated that The Asean region had an increase of 81.9% in the in-flow of the FDI from RM116 billion in 2006 to RM209 billion in 2007 and Malaysia recorded the lowest in-flow with only 13%.

Anwar said also it was not just a financial crisis but a crisis of confidence to Malaysia because the reports by the World Bank, UBS (an international financial firm) and International Institute of Finance had pointed out that the obstruction of in-flow of FDI into the country was because of its economic policies, including:

>> high requirements and strict regulations, especially in the service sectors;
>> the “mismatch” of training in the vocational schools and universities with the requirements of the industry;
>> high management cost, such as commissions, “which are always linked to corruption”; and
>> lack of transparency in awarding contracts and confidence in the judiciary.

Furthermore, the if was been reported by other organization party which is to be looked by others region as a fact. Deputy Minister of International Trade and industries, Dato’ Liew Vui Keong should not disagree with the statement that Malaysian has been decreased in-flow of FDI. This is because the serious action need to be done pertaining to the problems.

TOKYO: Asian economic giants Japan and India yesterday revealed fresh damage from the global financial crisis, which has battered international trade and consumer spending.

Japan slipped deeper into recession with factory output tumbling 3.1 per cent and consumer spending dropping 3.8 per cent in October, official data showed.

The figures were "stunningly bad," said Societe Generale's chief Asia economist, Glenn Maguire.

"Japan's industrial activity is set to worsen in the near-term, perhaps by an unprecedented degree, as exports to the US have plunged over the past year," he warned.

Rising economic powerhouse India, struggling with extremist attacks in the financial capital Mumbai, said its economic growth slowed to 7.6 per cent in the third quarter of 2008, from 7.9 per cent in the second.

While it was still a respectable performance at a time when many developed economies are in recession, the slowdown in India highlights the extent to which the US-born financial crisis has spread around the world.

There was also bad news from South Korea, where industrial production fell 2.3 per cent in October in a sign that the export-driven economy was slowing faster than expected.

In Thailand, exports grew 4.7 per cent on an annual basis in October, way below the 5.5 per cent forecast in a Reuters poll.

Thailand's current account deficit widened to US$1.13 billion (US$1 = RM3.26), and the October trade deficit surged to US$964 million versus a US$142 million surplus in September as imports rose 23.5 per cent from a year ago, more than expected.

Thailand had been the only Asian nation predicting growth would actually pick up this year after a lacklustre performance in 2007. But data this week showed that economic growth was at a 31/2-year low in the third quarter and the government slashed its growth forecasts. - Agencies

Services sector the main driver, expands 7.1%

KUALA LUMPUR: Malaysia’s economy posted a moderate growth of 4.7% in the third quarter (Q3) ended Sept 30 against 6.7% in the second quarter (Q2), supported by a 6.5% increase in domestic demand amid continued expansion in private and public consumption, Bank Negara said.

But the global economic crisis has cooled the country’s exports, with the net real export of goods and services declining 14.8%, compared with a growth of 20% in Q2, and weaker growth seen in the manufacturing sector.

Private consumption registered a growth of 8.1%, against 9% in Q2, due to bonus payments to civil servants, festive season spending and payment of fuel subsidy cash rebates, according to the central bank.

Public consumption increased by 6.9%, against 10.9% in Q2 on continued high expenditure for emoluments, and supplies and services.

O n a sectoral basis, the services sector continued to drive growth with an expansion of 7.1% (Q2: 8.2%), manufacturing saw weaker growth at 1.8% (Q2: 5.6%), agriculture grew at a moderate pace of 3% (Q2: 6%), construction moderated further to 1.2% (Q2: 3.9%) while mining contracted 0.3% (Q2: -0.5%).

Trade balance registered a record surplus of RM41.6bil (Q2: RM40.6bil), while exports grew moderately at 16.9% (Q2: 20.8%), supported by commodities and resource-based manufactured products. But capital imports were lower, reflecting the slower private investment activities in the economy.

Economists told StarBiz that the first half of next year would see the economy experiencing a marked slowdown consistent with the slump at the global level.

RAM Holdings Bhd chief economist Dr Yeah Kim Leng said the Q3 growth was “decelerating slightly faster than expected” but was reflective of the global economy’s performance.

“The immediate impact is on the export-oriented industries, as can be seen from the manufacturing sector’s growth,” he said.

Yeah warned that Q4 figures “may be markedly lower although we’ll still be able to achieve overall growth of 5%,” adding that there was a need to prepare for a “slightly more severe” first-half of 2009.

CIMB Research chief economist Lee Heng Guie said the economy would likely see a slower growth of 2.5% to 2.7% in the first-half of next year.

“I’m still maintaining my 3% full-year growth for 2009,” he said.

Lee said full-year growth for this year would be 5.6%, revised from the 5.3% earlier as the Government had revised the first-half’s growth figures.

“We expect another 50 basis points cut in the overnight policy rate next year with the first 25-point cut to come in Q1 next year,” he said, referring to Bank Negara’s key interest rate which was cut by 25 basis points to 3.25% recently.

By Fintan Ng- The Star

Study domestic demand and Govt policies to help expand economy

KUALA LUMPUR: As global economic growth weakens significantly, Bank Negara believes Malaysia will not join the list of countries that have slipped into recession.

Governor Tan Sri Dr Zeti Akhtar Aziz said the country’s sturdy domestic demand, which has driven the key services sector, along with policies already in place, would be enough to see the country continue to post growth this year and next.

She said growth for 2009 was forecast at between 5% and 5.5%, and while some moderation might take place in the fourth quarter, the economy was projected to expand by between 3.5% and 4.5% in the final quarter of this year.

“Usually, activities in the fourth quarter tend to be stronger but we need to see consumption activity sustained during that period,” she told the media yesterday.

In shooting down talk of Malaysia entering into a recession, Zeti said the reason for slower growth had been the external sector.

“Our financial institutions continue to function and lend and we have ample liquidity in our financial system,” she said.

The central bank governor said prices were moderating and the reversal should help investment activity which had been dampened by high costs.

Zeti said there were no large scale retrenchments in Malaysia and the position of households was still stable. “We are also an economy that does not have an asset bubble.

“All these elements enhance our prospects of sustaining growth even though it may be more a moderate growth. It certainly enhances our prospects and reduces the risk of a recession in our economy,” she said.

Should the situation deteriorate faster than predicted, the central bank and the Government have, at their disposal, fiscal and monetary measures to counter the situation.

“We are also monitoring the policies taken by crisis-affected countries and how effectively they will be implemented and their results,” she said.

Zeti said the central bank still had room for further adjustments on interest rates should the need arise but added that the current overnight policy rate was “very low and it is seen as very supportive of growth”.

“We do not see the applications for loans slowing significantly; therefore it has not been a factor inhibiting borrowing trends.”

Zeti said the cut in interest rates by countries such as China recently was to promote growth or to avoid a major economic downturn.

“The priority now is to avoid a major economic downturn because the cost of this will be very high,” she said.

“If we have a major economic downturn in any part of the world, it would involve the closure of businesses, defaults and rise in unemployment and all these will result in a prolonged recession.”

On inflation, Zeti said it had peaked at 8.4% and the rate was expected to moderate in the first half of 2009 before dropping more significantly in the second half of next year.

By Jagdev Singh Sidhu-The Star

It plans three funds tied to sukuk and syariah equities

KUALA LUMPUR: Asian Islamic Investment Management Sdn Bhd (AIIMAN) targets to manage a fund size of US$300mil (RM1.09bil) in its first year of launch.

A 49:51 joint venture global Islamic investment management entity between Hwang-DBS Malaysia Bhd and DBS Asset Management Ltd of Singapore, AIIMAN intends to launch about three funds early next year, focusing on asset classes such as global sukuk and syariah-compliant Asian equities.

DBS Asset Management chief executive officer and AIIMAN director Deborah Ho said the market for Islamic investment products was growing at about 15% to 20% a year on demand for these products coming from the Middle East, Europe and Asia.

“Syariah equity fund assets alone are forecast to jump from US$15bil to US$53bil by 2010,” she said at the launch yesterday.

She added that under the current global economic climate, institutional investors were looking for less risky investments and Islamic investment by nature recognised the importance of avoiding investments in highly leveraged companies and complex derivatives.

AIIMAN is not DBS’s first initiative in global Islamic asset management.

“The first step was when DBS Bank set up the Islamic Bank of Asia (IB Asia) which offers commercial banking, corporate finance and capital market services. AIIMAN would be a valuable provider in our efforts to develop the Asian Islamic banking markets,” Ho said.

AIIMAN chief executive officer Nor Azamin Salleh said the company planned to leverage on the wide Asian networks of DBS Bank as well as IB Asia to gain a foothold in key markets for syariah products, specifically in most major cities in Asia and the Middle East.

Nor Azamin said most Asian countries had large current account surpluses and massive domestic liquidity.

“Asia accounts for more than 50% of the world’s population but controls less than 10% of the global wealth. It is catching up fast with the emergence of vibrant economies such as China and India,” he said.

He added that macro risks in Asia had reduced significantly since the last financial crisis while corporate governance had moved to a higher level across companies and sectors.

“Valuations are relatively cheap - Asian markets are trading at discounts to developed markets, but with vastly improved free cashflows and capital efficiency ratios,” he said.

"Economics is supposed to be social science, i.e. an intellectual discipline resting upon empirically-observed facts, in which mathematics and conceptual frameworks are tools for understanding. But in contemporary mainstream economics, the tools are often in the driver's seat, declaring evident facts impossible and reducing the subtleties of the real world to whatever clockwork economist’s best know how to build. Post-Autistic economics is the attempt to escape the tyranny of these tools and build new ones that will work properly."

Ian Fletcher

Unrealistically low poverty line results in rosier statistics

In its article titled “The Mahathir Mystique”, Newsweek, (23 November 2003) terms Malaysia as an Asian success story where “the percentage of Malaysian households that fall below the poverty line has plunged from nearly 50 per cent to an estimated 6 per cent in 2000.” The figures quoted by Newsweek are lifted from Mahathir’s 2004 budget speech in Parliament on 12 September 2003. From the horses’ mouth as they say — but unfortunately some horses have learnt to bluff!

The poverty line

Generally speaking, the poverty rate can be lowered by two methods. The first is by raising the income of the poorer families to above the poverty line. The second method, and undoubtedly the easier option, is to lower the poverty line itself!

"Can a family of five survive on an income of RM550 per month, given the cost of living in Malaysia today? Where would they live? And can their children go to school? "

Malaysian household income distribution as quoted in the Eighth Malaysia Plan is pictured in Table 1 — with 75 per cent of Malaysian households earning below RM3,000 per month and 25 per cent of households earning below RM1,000 monthly. The same document (8MP) also specifies the poverty line for Semenanjung Malaysia as RM540 per month for a family of five individuals. Is this a realistic figure?

A living wage?

Table 1 - Household Income (RM/month)
More than RM5,000	9.8%
RM4,001 - RM5,000	5.5%
RM3,001 - RM4,000	9.6%
RM2,001 - RM3,000	17.4%
RM1,001 - RM2,000	32.7%
RM501 - RM1,001	20.0%
Less than RM500	5.0%
Source: Eighth Malaysia Plan.

Can a family of five survive on an income of RM550 per month, given the cost of living in Malaysia today? Where would they live? And can their children go to school? Yet given the government’s definition, they would not be classified as being poor.

At a meeting with 60 factory workers in Sg Siput recently, we asked them to suggest a reasonable household budget, and the outcome of that exercise is summarized in Table 2. The participants felt that the cost of buying a house and a small allocation for savings must be part of a balanced family budget. In their opinion, any family with a household budget of below RM1,750 would be facing economic hardship;

A realistic poverty line

Table 2 - Household Expenditure (per month)
House Loan	400
Marketing	300
Groceries	300
School expenses	200
Motorbike	150
Medical/Clothes	100
Festivals/Trips	100
Light/Water/Phone	100
Insurance/savings	100
Total	RM1,750

In Britain and in several other countries in the European Union, the poverty line is defined as one half the average household income. In Malaysia, the average household income is RM3,200 per month. Half this figure would be RM1,600. In other words if we used the definition used in Britain, households earning less than RM1,600 per month would be considered as poor! If RM1,600 per month is taken as the realistic poverty line, then around 50 per cent of Malaysians are poor — see the Income Pyramid overleaf — and this is the level of poverty as quoted by Mahathir for 1970!

No one is denying that there has been significant growth in the national economy. Per capita income (Per capita income = total income of the nation for that year divided by the population) has soared from RM1,132 in 1970 to RM13,683 presently! (Incidently, this would work out to an average household income of RM5,534 per month.) However as the income distribution pyramid depicts, the distribution of income in Malaysia is skewed towards the rich, and there is still significant poverty in Malaysia.

Perhaps the most incredulous aspect of Malaysia’s poverty statistics is that it hasn’t been challenged by the mainstream media nor by the academicians. Big Brother’s doublespeak (term used by Orwell in his book 1984) apparently rules supreme in Malaysia today!

by Jeyakumar Devaraj
Aliran Monthly 2004:2

More banks announced a cut in their lending and financing rates yesterday, following Bank Negara Malaysia's downward revision of the Overnight Policy Rate (OPR) on Monday.

Asian Finance Bank said it will reduce its base financing rate (BFR) by 25 basis points to 6.5 per cent effective December 1 2008.

It said the move is to stimulate financing growth and boost economic activity in Malaysia.

Public Bank Bhd and Public Islamic Bank Bhd, meanwhile, also said in a statement that they will reduce their base lending rate (BLR) and BFR by 25 basis points to 6.5 per cent effective next month.

"With the reduction of BLR/BFR, the full benefit of the reduction in interest rate by Bank Negara is passed on to our customers and would support the objective of Bank Negara in promoting domestic economic activities by lowering the cost of financing for consumers and businesses.

"The above revision in BLR/BFR will have marginal impact on the net interest income of the Public Bank Group, after taking into account the benefit enjoyed from the reduction in statutory reserve ratio from four per cent to 3.5 per cent," it said in a statement.

PETALING JAYA: Local economists agree that Asian nations should take urgent and coordinated actions to protect their economic growth in the face of recessionary conditions in the US and Europe.

Aseambankers Malaysia Bhd chief economist Suhaimi Ilias said they must work together to mitigate the slowdown in their economies.

“Asian countries should discuss how to boost their domestic economic activities in terms of consumption and investment. This will sow the seeds for closer integration so that Asian economies are not so dependent on Europe and the US for export growth,” he said in response to a call by the Asian Economic Panel (AEP) for a more coordinated macro-economic expansion among China, Japan, South Korea and other Asian economies.

It said such counter-cyclical policies should include monetary, fiscal and exchange rate actions.

AmInvestment Bank senior economist Manokaran Mottain concurred that Asian countries must do more as a unit to avert a major recession.

“More can be done together, for example, coordinated fiscal stimulus packages and interest rate cuts. China can help in the recovery process by giving financial aid to other Asian countries which are short of liquidity,” he said.

Founded in April 2001, AEP brings together prominent economists from around the world who gather twice yearly to discuss economic issues that are of importance to Asian economies.

Members include professor of economics and director of the Earth Institute at Columbia University Dr Jeffrey Sachs and former Bank Negara deputy governor and a member of the National Economic Action Council working committee Tan Sri Dr Lin See-Yan.

“By undertaking such policies in a coordinated manner, the Asian economies will achieve much larger and more durable results than they would achieve through unilateral actions,” AEP said in a statement.

The AEP expected the US to experience a dramatic downturn, with severe spillovers to other parts of the world.

The spillovers could include falling exports from Asia to the US, a weaker dollar and a withdrawal of credit lines from US banks and US investors in Asia, it noted.

“Macro-economic expansion in Asia will not only help sustain Asia’s own economic growth and employment levels, but will also help put a floor on the coming global slowdown.

“Higher growth in Asia will also mean more sales of US goods in Asian markets, thereby helping to moderate US and European recession as well,” it said.

By Elaine Ang- The Star

There are many needs to be concern for. Currently, there are many problems occurred whether in the world economy or Malaysian Economy itself. The government still have to do a lot of discussions to solve the problems such as inflation, financial crisis, unemployment and many more. The question here is how the plan was to be set up which will be followed by great action.

As we can say there must be transparency in dealing with where the 'package' have been transfered to. What i have been said is within the current issue in Malaysia where Deputy Prime Minister, Datuk Seri Najib Razak which is newly elected Finance Minister introduce 'Stimulus Package RM7 Billion' which he said it will help Malaysian company to survive within Financial Crisis.

Again, the 'package' can be questionable as does it really help the economy to prosperous as what Malaysia in time of leadership under Tun Dr Mahathir Mohamad when facing Asian Financial Crisi 1997-1998. For current crisis, which is not only involve Asian market but overall market in the world which is start at 'superpower' level (United State). There also many companies ; such as Lehman Brothers, AIG and currently Citigroup- in US who is went on bankrupt and have serious problems internally also externally. Bail-out program that want to do by US government to help the companies in problem was previously rejected. This is because there will be effected others.

Back to the issue inside Malaysia, the issue of of stimulus package have been gotten many responds by economist and also parliamentary people. When Tun Dr. Mahathir asked about the 'package' he said "Its maybe can help to boost up the market and economy but it maybe just in a while". This statement is correct because the problem today is within the monetary system not just financial. Whether the 'package' is relevant or not is dependable. Furthermore, the stimulus package has not been debatable yet in the parliament.

Malaysia itself is a trade country. There are too much dependency on foreigners to which is within FDI- Foreign Direct Investment. There, we must focused on this issue as to solve the problem today's crisis. The statement that Malaysia will be stable and do not effected by the crisis is wrong because conditionally Malaysia is a trade country. Malaysia have too much dependency on US. Furthermore, FDI became first element for Malaysia development. Currently, there was a UN Conference on Trade and Development World Investment Report 2008 said that Malaysia’s FDI outflow had touched RM38bil compared with its RM29bil inflow, resulting in the country experiencing a net outflow of RM9bil.

This show the impact will be higher on the next year if there are no great action to solve the problem. Serious discussion have to be made between all expert. Not only stimulus package need to be concern because it will effect other sectors when one sector to be helped. This is a normal situation. It will be relevant if other sector also to be considered. If not, the crisis will lead Malaysia to crisis maybe to further recession. Serious research also need to be conducted.

Markets fret over early signs of deflation in the US, but the government is expected to launch more programmes to stimulate consumer spending

SHOPPERS love nothing more than a sale when prices are marked down for a season. They will always welcome an extended season of sale.

So, why did Wall Street swoon on Wednesday after the US labour department said prices of consumer goods fell 1% last month?

It’s odd that in mixed economies, shoppers can’t have a prolonged period of sale. If there is a sustained decline in the prices of consumer goods, profits of manufacturers will also decline or even turn into losses.

The companies will not expand their plants and hire more workers. They may even close some of their plants.

This works in the same way as a prolonged period of decline in commodity prices when some mines will be closed or farms abandoned.

Just a few years ago, there was fear of deflation caused by excess manufacturing capacity and labour in China.

This time, just a few months ago, the world felt the impact of high inflation. Now, economists and investors are worried over the risk of deflation.

To some extent, this sudden turn of events is due to the volatile commodity prices.

As consumer prices surged just a few months ago, it’s not surprising that those prices have fallen back as commodity prices retreated. Hence, the 1% decline in US consumer prices last month comprised 0.9% from food and energy prices that fell back, and 0.1% from discretionary goods like clothes and cars.

Notwithstanding that, deflation is associated with contraction of credit and consumer spending, which are the conditions in the US now. It would aggravate recessionary conditions.

Hence, the government will continue to launch stimulus programmes to reverse that.

Deflated CPO price

Current crude palm oil (CPO) prices have fallen back to the 2006 level of around RM1,450 a tonne, having toppled from an average of RM3,500 between April and June.

This, together with the sharply lower crude oil prices, will be a drag on nominal gross domestic product (GDP) which measures the country’s output of finished goods and services at current prices.

There would be a sharply lower growth rate than real GDP which is the figure reported by the media. Real GDP in Malaysia measures output at constant 2000 prices.

In 1986, for instance, real GDP showed a marginal growth rate of 1.1% but nominal GDP was a severe contraction of minus 7.6% due to a collapse in commodity prices.

While crude oil is by far the country’s largest export commodity, lower CPO prices have a greater impact on income levels as far more people are engaged in the cultivation of oil palm.

Rural income is sharply lower now for both planters and those in small towns where the main economic activity in the neighbourhood is centred on oil palm.

Mid-sized public listed plantations could also be struggling to turn a profit for those that have high all-in costs, analysts wrote in their reports last week.

Deflated US values

There is rough justice that the market values of iconic American companies have been crushed, if not annihilated altogether in some cases. The greed of American bankers have, after all, greatly aggravated the effects of a cyclical housing downturn.

While the distressing effects of the US recession have reverberated around the world, the blow to the market values of American companies has been far greater than their better managed Asian competitors.

A comparison of the market values of American companies with their peers in Asia should be an embarrassment to the inept, but more highly paid, American CEOs.

The market capitalisation of Industrial & Commercial Bank of China, for instance, is three times that of Bank of America.

The market value of Citigroup has fallen so much that it is almost equalled by the combined market values of the Big Three banks of tiny Singapore.

In the automotive sector, the equally besieged General Motors (GM) is surpassed in market value by little known Dongfeng Motor that operates in China and is listed in Hong Kong, and which is not even among the top 10 Asian car companies.

South Korea has reason to be proud of its Hyundai Motor Company which has a market value larger than the combined market values of Ford Motor Company and GM.

China’s Shanghai Automotive Ind-ustry Corp (SAIC), listed in Shanghai, is also larger than the combined market values of Ford and GM.

This recession could mark a milestone in the long term position of the US, the world’s biggest economy, as it weakens relative to Asia.

sources: The Star Business

The Secret to Wealth

Whether you want to invest in shares or across a broad range of asset classes, unit trust funds provide you with one benefit that can be very hard for individual investors to achieve - diversification.

Many people invest but only some become wealthy. Why?
The mistake many people make when investing is that they treat their investment as saving.

Saving Versus Investing

So what is the difference between saving and investing? Saving is what you do to build up funds for something, like a holiday, and when you have the amount saved you withdraw your capital from your investment and spend it on the holiday. After the holiday you have nothing left, and start the process all over again.

But building wealth is different. People who want to build wealth invest their money for the long term in ‘growth assets’ such as shares and property.

Their strategy is to spend the income that the investment produces, but to leave the capital invested. They don’t withdraw the capital, so it stays there growing and compounding, and producing more and more income each year.

If you do this it will take you quite a while longer initially to get to your investment goal , but in the long run you will find that the extra wait has been worth it. As the years go by, you will have an increasing additional income stream from your investments and your standard of living can rise accordingly!

Should I continue to retain capital in retirement?
Retaining your capital is a good strategy to use for wealth accumulation. Of course when you stop working later in life, your strategy may change. At that point it can often be beneficial to start drawing on some of your capital as well, whilst still ensuring that it will last for as long as you need it.

KUALA LUMPUR: Move on and focus on the economy, especially now with the current financial crisis in the US.

This was the pragmatic reaction of Gerakan secretary-general Datuk Seri Chia Kwang Chye on the Parti Keadilan de facto leader Datuk Seri Anwar Ibrahim’s failure to take over the government yesterday.

“If Anwar has names to reveal, then he should just go ahead and do it. Put the issue to rest. We need to move on,” said Chia. Chia said that there has not been enough focus on the country’s economic development and progress since the March 8 general election.

This was worrying, he said.
Postponing the announcements will only add on to the political instability, which in turn is affecting the country’s foreign investments, he said. “We need to focus on our economy, especially with the current situation in the United States,” he said. told the New Straits Times.

Chia was referring to the global financial shakeup on Monday when two of the top five investment banks in the US became victims of the sub-prime mortgage crisis in the United States.

Financial institution Lehman Brothers filed for bankruptcy protection and its rival Merrill Lynch agreed to be taken over by the Bank of America. This brings the number of to three major investment banks in the US departing the financial scene within six months. Bear Sterns was acquired by JP Morgan in March.

International experts say that the fallout from the global financial crisis was far from over. Although Malaysia was unlikely to be directly affected by the collapse of the two American financial institutions, local financial experts say that the effect on the American economy will consequentially affect global growth.

Equities head of broking at JP Morgan Malaysia Clement Chew said that a slower US economy will hurt growth forecasts in Asia and Europe.

By : Nisha Sabanayagam
New Straits Times 17/09/2008

Palm oil prices have plummeted from a March high of 4,486 ringgit (S$1,907) per tonne to less than 1,500 ringgit, due to the financial crisis and the falling price of crude oil. -- PHOTO: THE STAR

KUALA LUMPUR - THE global economic slowdown has sent palm oil prices crashing, spelling misery for countless smallholders who have been forced to watch their harvests rot on the trees.

Hundreds of thousands of farmers in Indonesia and Malaysia, which produce 85 per cent of the world's palm oil, are reliant on the industry which has gone from boom to bust in just a few months.

Palm oil prices have plummeted from a March high of 4,486 ringgit (S$1,907) per tonne to less than 1,500 ringgit, due to the financial crisis and the falling price of crude oil - which reduces demand from the biodiesel industry.

Malaysia's deputy commodities minister Kohilan Pillay said today's prices were close to the production costs of most smallholders, squeezing their earnings and pushing them to the brink of bankruptcy.

Oil mills are causing further hardship by flouting laws that require them to buy fruits from smallholders, whatever the going rate, he said.

'Their excuse is that it is not economical for them to process CPO (crude palm oil) at this time as prices are too low so they just shut down production,' Mr Pillay said.

'Many are waiting for the prices to hit rock bottom before purchasing and this is a problem as the fruits are perishable and so these independent smallholders end up with rotting, unprocessed fruits which they cannot sell.'

Smallholders or independent oil palm farmers account for about 30-35 per cent of Malaysia's total palm oil output and around 25 per cent of Indonesia's production.

'The bigger companies can sustain themselves even if prices fall below 1,000 ringgit per tonne but it is the smallholders who suffer the most,' Mr Pillay said.

In Indonesia, the government is under pressure to help independent farmers who face big losses.

'At present, oil palm growers are on the brink of bankruptcy in the wake of the sharp drop in the price of oil palm fruit bunches,' Mr Yulman Hadi from the West Sumatra Legislative Assembly told the state Antara news agency in October.

'Rescuing the growers from bankruptcy needs serious handling at the national level,' he said, warning that the loss of revenue could create a ripple effect in the region's economy.

Mr Achmad Ya'kub from the Indonesian Peasants Union said smallholders were facing the same kind of problems as their counterparts in Malaysia.

'The big CPO companies that also own plantations prioritise buying palm oil from their own plantations, so the smallholders are really having a hard time selling their stuff,' he said according to Antara.

Malaysia and Indonesia have announced plans to reduce supply by using the slump as an opportunity to replant old trees, and bolster demand by mandating the use of biodiesel.

Malaysia has also scrapped an import duty on fertilisers and plans to further cut fertiliser prices by 15 per cent to reduce production costs.

The hard times are here to stay, according to CLSA Asia-Pacific Markets, which has slashed its 2009 price forecast by 46 per cent to 1,000 ringgit (S$424.8), saying that measures to cut production will not be effective. -- AFP

Obama economic plan focuses on job creation, public works projects, alternative energy sources WASHINGTON (AP) -- President-elect Barack Obama promoted an economic plan Saturday he said would create 2.5 million jobs by rebuilding roads and bridges and modernizing schools while developing alternative energy sources and more efficient cars.

"These aren't just steps to pull ourselves out of this immediate crisis. These are the long-term investments in our economic future that have been ignored for far too long," Obama said in the weekly Democratic radio address.

The goal is to get the plan quickly through Congress, with help from both parties, after Obama takes office Jan. 20. The plan, which envisions those new jobs by January 2011, is "big enough to meet the challenges we face," he said. The president-elect said he has asked his economic advisers to flesh out the recovery plan -- one "big enough to meet the challenges we face. ... We'll be working out the details in the weeks ahead, but it will be a two-year, nationwide effort to jump-start job creation in America and lay the foundation for a strong and growing economy."

Obama noted the growing evidence the country is "facing an economic crisis of historic proportions" and said he was pleased Congress passed an extension of unemployment benefits this past week. But, he added, `We must do more to put people back to work and get our economy moving again."

Nonetheless, he said, "There are no quick or easy fixes to this crisis, which has been many years in the making, and it's likely to get worse before it gets better."

It will take support from Democrats and Republicans to pass the economic plan, Obama said. "I'll be welcome to ideas and suggestions from both sides of the aisle," he said. "But what is not negotiable is the need for immediate action."

People "are lying awake at night wondering if next week's paycheck will cover next month's bills," if their jobs will remain, if their retirement savings will disappear, he added.

Senate Majority Leader Harry Reid, D-Nev., said congressional Democrats will "continue pushing for aggressive but necessary measures. Part of that is passing a substantial economic recovery package, like the one President-elect Obama discussed this morning, that creates good-paying jobs here in America and stabilizes a volatile market."

In a slap at President George W. Bush, Reid added, "We will soon finally have a leader and partner in the White House who recognizes the urgency with which we must turn around our economy, and I look forward to working with him and the new Congress to do so."

The Labor Department reported that claims for unemployment benefits jumped last week to the highest level since July 1992, providing fresh evidence of the weakening job market.

"We'll put people back to work rebuilding our crumbling roads and bridges, modernizing schools that are failing our children, and building wind farms and solar panels," Obama said. He also made a commitment to fuel-efficient cars and alternative energy technologies "that can free us from our dependence on foreign oil and keep our economy competitive in the years ahead."

Obama pointed to the past, saying that Americans in this country's darkest hours have risen above their divisions to solve their problems, as a hope for the future.

"We have acted boldly, bravely, and above all, together," Obama said. "That is the chance our new beginning now offers us, and that is the challenge we must rise to in the days to come. It is time to act. As the next president of the United States, I will."

AP Special Correspondent David Espo contributed to this report.

Video link to Obama's address: http://www.change.gov

By Will Lester, Associated Press Writer

Robert A Mundell

As Robert A Mundell suggested in his paper The International Monetary System in the 21st Century, gold can be replace current international monetary system for this 21^st century. For him, the gold significance is very attractive. Back then also at 1960’s people were deliberating about the future of the international monetary system, gold figured importantly in the discussions.

In his work, his suggest that nowadays need to come back to history itself which the international monetary system was linked to gold-which today it is totally demolished. It will lead the system to be interdependence, the exchange rate will be fixed and also inflation can be stabilized. This is right as we can see current situation when the US has problem which called sub-prime issues and credit crunch has led each country follow to be in recession. What we can say that the prediction of the dollar crunch has been shown and occurred.

The ‘superpower’ will not make it happened as they will not doing monetary reform because it will demolished their power in control other country. He assured that whoever becomes the ‘superpower’ they will not agree with the monetary reform as it has shown in the history itself.

The Bretton Woods conference actually develops IMF and World Bank as it is beginning ‘the history of Dollar’.

Monetary reforms and back to gold as currency needed because it leads to protect from inflation. It also can combatant the case of deflation. Current monetary policy leads to hyper inflation. But he insists that there is no need to fix the gold price. This is because the gold itself is stability and have intrinsic value.

He also denominate that monetary reform should be implementing as he also stated that current monetary reform lead to many problems as it control by one ‘superpower’ which give disadvantages to the world of economy itself.

The establishment of the Federal Reserve which is vehicle to spread the dollar is a mistake because it is total lost for developing country.

Tun Dr Mahathir Mohammad

Previously, at the time or crisis 1997, Tun Dr Mahathir Mohammad had put stressed blame on the speculators which they have ability to manipulation paper money, an inherent weakness of the fiat money system. He also stressed to come back to gold which gold should be recognized to be real money and stable unit of account. The purported purpose of this move would be to reduce dependence on the United States dollar as a reserve currency, and to establish a non-debt-backed currency in accord with Islamic law against the charging of interest.

Tun Dr Mahathir suggested to established Bilateral Payment Arrangement (BPA) and Multilateral Payment Arrangement (MPA) using Gold Dinar based system within country especially developing countries for example trading between Malaysia and Indonesia. The question arise on how and when gold dinar to be implemented in international trade? Tun Dr Mahathir also agrees that the implementation of gold dinar cannot be as immediately as it to be said. It needs to be step by step such as by pairs of countries then advancing to group of countries- to settle balance of payment.

Based on him the main objective of Gold Dinar proposal is to use surpluses to finance between the developing countries. Furthermore, with minimizing the use of developed countries currencies for settlement of the intra developing country trade, the developing country will help each other to grow and develop, buy and sell from each other. This will lead the flow of the trade itself come from the developing countries with the implementation of Bilateral Payment Arrangement (BPA) or Multilateral Payment Arrangement (MPA) using Gold Dinar. Furthermore, the dependency to foreign currency especially US Dollar will be demolished. Within this the future of developing country will be secured in stable condition and greater unity especially in Islamic Nations (OIC)

Implementation of Gold Dinar in International trade can lead to justice between import and export. They can help trading country especially in OIC country. It also helps the developing country to trade with develop country in fairness and justice value. There will be no fluctuation exchange rate involve. Currency denomination and currency settlement of trade should not be based on US Dollar instead but using the Gold Dinar.

All these problems arise because the world went off the Gold Standard. In the International Conference on Gold Dinar Economy 2007 Tun Dr Mahathir noted that in the case of paper people will have risk in losing their value and also purchasing power. He stressed back that only Gold Dinar really has a value in it.

Gold Price Malaysia (Ringgits)

Gold Price Malaysia (Ringgits)

Conversion : 1 troy ounce = 31.1034768 grams

Malaysian Ringgits per Gram Malaysian Ringgits per Kilo

Sources Chart: GoldPrice.org

Explanation

Historically gold was used to back currency; in an economic system known as the gold standard, a certain weight of gold was given the name of a unit of currency. Every day we can see the changes in price of Gold in the market. The above chart describe the price of Gold per Gram and per Kilo in Malaysian Ringgits.

The trend of the Gold Price all over the world basically in upward trend since the collapse of the Brenton Woods Agreement in 1971. Before the agreements it shows that the data of price of gold stable since before. It means that it is assured that gold have more stable and value rather than current monetary system which is 'fiat money'- based on the legal tender by the authority such in Malaysia manage by Bank Negara Malaysia (BNM). The system we can numerously say it is create out of nothing and involve seigniorage- the cost of production and profit to authority.

Come back to the price itself the gold shows it have more fluctuation-sometimes it upward trend and downward trend but stable in the matter of the value. Furthermore, it is acceptable by all people all over the world. Every day within 24hours the trend of gold price can be seen online such above. At 09.36 NY times it shows that the Gold Price increase on RM2.37 rather than yesterday.

If we compare to the stock exchange such in Kuala Lumpur Stock Exchange (KLSE), the Gold price cannot be predicted in since it the the most valuable in commodity market. we can say that any country that have largest gold holding have the most advantages. The bourses in the world currently on downward trend basically because the world too much dependency on the US which is on the problem of sub-prime crisis and dollar crash which shows the dollar in problem. But, when we measured about the dollar it give problem when one country have much dependent on US market. We can see here for the exchange of Malaysia currency opposed to US Dollar. To boost US market the dollar need to be strengthened then shows that Malaysian Ringgit weakened further- currently 1USD= RM3.6225.

The Gold Dinar
Malaysia has stated that it plans to start a gold dinar scheme as early as mid 2003. Malaysian Prime Minister Dr. Mahathir bin Mohamad has hosted conferences to explain and "Sell" the concept of the gold dinar. It is not intended that there should an actual gold dinar coin, or that it should be used in everyday transactions, the gold dinar would be an international unit of account for international settlements between national banks. If for example the balance of trade between Malaysia and Iran during one settlement period, probably three months, was such that Iran had made purchases of 100 million Malaysian Ringgits, and sales of 90 million Ryals, the difference in the value of these two amounts would be paid in gold dinars.

What is the Value of a Gold Dinar?
Although we have seen a claim that the first gold dinars was issued in 1992, we do not know of any such Malaysian coin, although we believe a private company may have issued their own unoffical version. From the reports of the Malaysian conferences, we deduce that the gold dinar would be one ounce of gold or its equivalent value.

The Islamic Dinar
Malaysia has suggested that its trading partners in the Islamic world should all use the gold dinar. This appears to be politically motivated, as one of its main aims appears to be to reduce the dependence of the Islamic world on the US dollar for international settlements. It may also be intended to attack the value of the dollar by means of Islamic nations and their people, selling dollars and switching into gold dinars. Malaysia has stated its hope that other non-muslim countries would also use the gold dinar, although this may have been to deflect any criticism of the scheme as a closed-shop muslims only, anti-western club.

The Malaysian Dinar
The Malaysian currency system uses the ringgit as its main denomination, and all its gold coins have been issued with values in ringgits. No Malaysian gold dinar coins have ever been issued.

The Effect on the Gold Price
If the entire Islamic world were to ditch the US dollar, and use gold as its main or only reserve currency, then this could have a major influence on the gold price, and a similar but opposite effect on the value of the US dollar. We have seen very bullish opinions about this, but we believe that a gold dinar scheme for interbank settlements would not necessarily create a huge and sudden demand for gold, but a switch by businesses and individuals out of dollars and into gold could have a greater effect over the long term.

No Gold Dinar Coins
We have been receiving a growing number of enquiries about the availability of gold dinars, and as you can gather from the above, it appears unlikely that any will be issued as gold coins. There is certainly no plan to issue a competitor to the Krugerrand and other one ounce bullion coins.

Privately Issued "Dinars"
One source quotes the following specifications for what appears to be an unofficial privately issued version of a "gold dinar"
We also show an image of one of these coins.
Please note we do not have any stock of these "coins", or any plans at present to deal in them. Specifications

Denomination	Diameter	Weight	Alloy	AGW Gms	AGW Ozs
Dinar	23	4.25	.9166	3.895833	0.1252

Real Gold Dinars
Many countries in the arab world have used dirhams or dinars as part of their currency systems as various times during the last two thousand years. The word dinar derives from the latin word denarius, which was actually a silver coin, and the origin of the "d" in the British "£.s.d" system, abbreviations for the latin words libra, solidus, and denarius.

Taken From: http://www.taxfreegold.co.uk

In this page you can download article that I provide.

Working Paper

1. Gold Dinar in International Trade
2. Macroeconomics, Monetary and oil Price: Malaysia Case
   
3. Future Environment
4. Alternative School-Post Autistic Economics (PAE)
   
5. Development- A realistic Value in Islamic Economic Thought
   

Data

Articles

The technical meaning of Siyasah Shar’iyyah is that it is the understanding and guideline of rule that is created by the imam (leader), judge or authorities based on the Maqasid of Syar’iyyah (Objectives of Syariah) and do not contradict with the primary (Al-Quran and Sunnah) and also secondary sources in Islam to help them in manage ruling based on the syariah. It must be preserved, organized, established, purity. The Ijtihad that are to be made must be relevant to Islam and also make consideration of Maslahah. It must based on the way of Islam and fulfill the teaching of Islam in many aspects.

The legality of it is based of the aspects of the policies that is created by the imam (leader), judge or authorities must give benefits and advantages to the society as a whole without concern of any trick and wrong elements that is contradicts with the teachings of Shariah and also ruling of Shariah. The policies must be made with the reference of the sources of Islam and must be adherence of the command of prohibition of Allah. The Command must be follow and the prohibition must be avoided. Furthermore, the perseverance of Al-Quran As-Sunnah and secondary sources need to be look into well.

The ruling must be adherence to the current situation. Such as one of the leader when there is victory in war in Iraq do not separate the land to the Conquerors. In this, it is because in Al-Quran stated when it is victory the land have been separated by the imam to the conquerors, but at that time it is told that they are all poors. So because of the conquerors of Iraq is in wealthy condition so it is wise decision not to separate the land to them.

Another example is in the case of giving zakat to the Asnaf especially in the case for the people who come or converted to Islam (Muallaf). It is the real objectives of Zakat to distribute the Zakat to Muallaf to to help and appreciate them to purify their condition because when they come to Islam they do not have anything and also they have many problem occurred. The distribution actually to the Muallaf who had problem and maybe he will come back to their previous religion when they is in trouble. In case of wealthy and rich a person who is converted to Islam they should not get the Zakat contribution as they have fulfilled the wealth for their own. Furthermore, there maybe many others poor and needy people that should more get the zakat contribution.

The scopes of Siyasah Syar’iyyah in Maqasid As-Shariah that needs to be fulfilled in order to make the rulling or polices aspects are:

1. Dharuriyyah (Basic Necessities such as shelter, cloth, food, marriage)
2. Hajiyyat (Complementary aspects for example Dowry for marriage)
3. Tahsiniyyah (Desirable which means that it is want that can be fulfilled by the effort and luxury for example jewelery)

In aspects of state and also authorities or government, the first scope of Siyasah Syar’iyyah needs to be fulfilled and completed to all people in the country. If the aspects of basic necessities do not completed, the government should not go for the second and also third scope eventually. They need to make sure basic necessities of the people have been fulfilled. After that they can make anything possible to make the country developed in many aspects such as industrial and construction.

There are two ways to actually implement siyasah based on Imam As-Syatibi.

1. Subjective ways
2. Methodology ways

Based on the subjective ways there need to make sure that the ways must be on the context of definitive text, speculative text, command and prohibition, original objectives and also the establishment of the policy. Then within the methodology it is based on the causes, research and study of work. They are within the current situation (Maslahah) and also based on the customs of the shariah.

There are about five (5) thing must be preserved that is told by Fakhrudin Ar-Razi. The preservations are:

1. Preservation @ protection of religion.

2. Preservation of life,

3. Preservation of mind,

4. Preservation of wealth

5. Preservation of lineage.

One of imam adds from 5 to 6 preservation. He adds the aspects of dignity. This is because he said that the 5 preservations is not include the thing of punishable. But other scholar said that there should be more than 5 or 6 preservations.

When we said about the context of Al-Quran, there is an objective and means in the context itself. For example:

“When there is a calling for Salah (Jumaat prayer) then leave your sale”

The calling for salah itself is the objectives and leave your sale is the means.

In Al-Quran also there are definitive words and also speculative words. The definitive words cannot be argues for example Riba’. But in the speculative words we can make ijtihad based on it. Considerations of Maslahah need to be made to make sure that it is legitimate to the aspects of Islamic ruling.

Siyasah Syar’iyyah is statted at the time of the prophet itself when prophet make some ruling that is not in the Al-Quran. This is we call Sunnah. At the time of Khilafah the siyasah is implemented well.

The first writing of Siyasah As-Syariah had emerged has happen on the the writing of to Imam Ibn Taimiyyah then it has been passed to his student Ibn-Ashur. Many other scholars also had writing based on the Siyasah Syar’iyyah. There are many articles stated and talked about Siyasah Syar’iyyah such as Al-Ahkam fil Siyasah Syar’iyyah. Imam As-Syatibi.

The current and present scholar who has writing about the Siyasah in aspects of ruling is Syeikh Dr. Yusuf AlQardhawi. He demonstrates in his writing about how to make an effective ruling based on the siyasah.

The aspects of Siyasah As-Shar’iyyah are many. Based on Dr.Syeikh Yusuf Al-Qaradhawi in his writing (Al-Muwafaqat) he said that five elements must be adhered.

1. The fiqh of Objective Shariah (Maqasid As-Syar’iyyah)
2. The fiqh of Contemporary life
3. The fiqh of priorities
4. The fiqh of weighting and preference
5. The fiqh of combining/ balancing

There are many scholars talk and mentioned about it because to lead the mufti, Imam, leaders, authorities, policymakers and also individual to make them really understand how to make ruling that is in line syariah principle and also true ruling in Islam. They must make sure that all aspects of objectives of syariah have been fulfilled.

If there is no writing about it, then maybe people will make their own ruling that is just given advantages to them and do not care how the society react. It is also help the Muslim state in formulating Shariah oriented public policies.

In doing their applicatory Ijtihad, they need to know well how the siyasah is really based on the shariah. If not it will effect to the society as a whole. The ijtihad must not contradict to the primary and secondary sources. The perseverance of the ruling must not let a way to the legality and scope of syariah.

They must preserve the condition that that be mentioned. Consideration of Maslahah needs to be observed well in accordance to the syariah. But, the Ijtihad must be look into aspects of legal view. If the legal view has in it, then the Maslahah is not acceptable. The Maslahah can be considered when there is none legal view. I must give benefit to all.

Gold Dinar and Fiat Money

Gold dinar is an alternative system to fiat money whereby the value of the currency is Gold value rather than paper note. The implementation and usage of Gold Dinar give more value added as opposed to the fiat money. Furthermore, in the usage of Gold as a currency and financial instrument it leads us to follow the way of Islamic society in the past. The usage of Fiat Money is actually first implemented by the west which is Non-Muslim community. They establish the usage of fiat money e.g. paper money to change the system of Gold Dinar. It is actually after the feel of Khilafah system in 1924. They gradually use the fiat money in everyday life.

The speculative issue in using fiat money is available. This is because the value of fiat money itself a ‘paper’. It leads to much speculative issue (Gharar). It is not correct manner because it makes the efficiency and effectiveness of trading will be drop, for example in the financial crisis in the 1997-1998. The crisis of the value of money happened because people try to speculate of it.

Besides that, there are many disadvantages of using fiat money:
1. It generates inflation
2. It makes countries become more indebted through the current system of borrowing in case of deficit.
3. Printing money easily by the central banks take away purchasing power of the money
4. It brings injustice in monetary transaction by dominant currencies/countries
5. Do not have intrinsic value

As opposed to the usage of the fiat money, I recommended to go back to the reality of usage of financial instruments which is Gold Dinar. Below are the advantages of using Gold Dinar as financial instrument.
1. It has intrinsic value
2. It leads to harmonization in currency system that people cannot make injustice for the usage of it
3. Inflation maybe happened in natural way
4. it can solve the problem of overproduction in printing money. Do not lead to discrimination
5. The value of Gold stable

Some Ulamaa’ are calling for abrogation of fiat money, because of the above mentioned reasons. The question arise here is will it working effectively to change from fiat money to Gold Dinar? Time will make sure it happens. Then, it is true the current fiat system generates more harm than good to the people. But how to change the financial system to make it reality in using Gold as transaction? Actually the role of changing the system by the leader, should not be sudden, as that may create more harm than the benefit, like say changing the currency suddenly. People that have money are bound to loose at least most part of their money if not all.

As for the suggestion before by the former Malaysia Prime Minister, Tun. Dr. Mahathir Mohammad, he suggests to go back in using Gold Dinar as a transaction. Many ways that he has suggest bringing unity in the Muslim leaders in one community.

The implementation that can be use to start direct of usage Gold Dinar is with the Muslim country itself in the issue of trading. For example, if Country A wants to buy or trade the commodity from Country B they can pay it with Gold Dinar and they get what they want from Country B. This also can lead the unity of the Muslim country and bring together into one Muslim world that should not be lead by the foreign country such as Europe.

As for that, America under their presiden George Bush condemned the action. They said that Gold Dinar is Useless. It is totally wrong because the usage of Gold Dinar give many advantages to Muslim World. Maybe the presiden have their own agenda.

To make Islam as a unity Muslim in the world, the secularism in using fiat money need to be change gradually. It is to make sure that the problem in using fiat money will not harmful to Muslim society. With using Gold Dinar it will bring us together (Islamic World) into one wonderful system and make many advantages of it. Recognition of Muslim world needed to be done to make it using Gold Dinar a reality. Basically it is not impossible. Only time will make it happen. A lot of study and implementation need to be done.

Assalamualaikum and a very pleasing moment to all

The new beginning chapter is begins.

To all guests, WELCOME to my newly develop blog which i called 'Economics and Financial Issues: Research and Response'.

Within this i will include all my opinion and also news on current issues related to economics in Malaysian and worldwide. I will try my best to give opinion and suggestion on Economics problem and Issues. I'll focus on the Malaysian side, Islamic Economics, Banking, Financial and Investment.

Thank You and continue supporting me.

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The Author:
Name: Mohd Helmi Md Suhaimi
Contact: +6012 3052143
Financial Consultant, CIMB Wealth Advisors