PRINCIPLES OF ISLAM

AND MUAMALAT
By the end of this chapter, students should be able to:
1.understand the concept of Islam as ad-din (the
religion that to be practiced as a way of life)
2.understand the principles of the Islamic teachings.
3.able to explain the meaning of Aqidah (believe to
Allah), Shariah (law and regulations in Islam), and
Akhlak (ways to act and communicate with others).
4.distinguish the types of human needs according to
the Islamic perspectives.
5.understand the principles of business in Islam and
the importance of conducting business dealings.
6.understand the types of hukum (Islamic law)
• In this chapter, foundations of the Islamic
teachings, aspects of human needs, and
principles of business dealings in Islam are
presented. These aspects are important in
observing the underlying reasons for
performing good business practices, i.e to
obtain the blessings from Allah (blessing/redha).
• This means that performing business activities
in Islam is considered as one form of ibadah
(good deeds) which one will be rewarded, if he
or she adheres to the regulations and principles
of Islam.
• In Islam, regulations and principles of
conducting business are governed by the
Fiqh Muamalat (Muamalat Law). It is one of
the guidance laid down before Muslims to
follow.
• For example, fiqh muamalat provides reasons
and law (hukum) why irresponsible actions
such as corruption, dishonesty, manipulation,
and uncertainty practices in business
dealings in the course of obtaining profits are
strictly prohibited in Islam.
• The corporate scandals such as Barings bank
and Enron as well as the deterioration of the
environment proved that the current practice
of capitalism economy that believes nothing
other than profit-making could not be taken
as rules or guidance in the business world.
• The essence of the Islamic teachings in term
of its proposition to good business dealings
corresponds greatly to the corporate
governance concept where business
managers need to respect other people and
the planet in the course of making the profit.
 1.1 ISLAM AS
AD DIN (THE WAY OF
1.3 TYPES OF 1.2 FOUNDATIONS OF THE
LIFE)
HUKUM ISLAMIC TEACHINGS

BUSINESS AND TRADE:

THE ISLAMIC
PERSPECTIVE
1.6
PRINCIPLES OF
BUSINESS
IN ISLAM
1.4 TYPES OF HUMAN
NEEDS

1.5 ISLAMIC ECONOMICS

PHILOSOPHIES
Islam is a divine religion.

Surah Al-Dzariyat (verse 56)

“I (Allah) don’t create jinns and men,

only for them to worship me”.
• Language : safe, secure, prosperous
• Term: ​A religion which were sent to Prophet
Adam AS until the Prophet Muhammad SAW
that covers all aspects such as believe (faith),
law (shariah), and also moral (akhlak).
• Islam means submission and obedience to
God in all human actions that cover all aspects
of human life such as thought, knowledge,
speech, manners, behavior, and trust or
confidence (i'tikad) in one's pertinent articles of
faith.
• Islam lays down rules and guidance for
Muslims to live their life by the teachings of
Al-Quran, the practices and words of Prophet
Muhammad (p.b.u.h), ijtimak ulama’ (decisions
of the Islamic scholars) and qiyas (analogical
deductions from agreed laws or decisions).

The main existence of a Muslim

is to seek the blessings of Allah
• Islam needs to be practiced in all
aspects of its believers.
“O People who Believe! Enter Islam in full –
and do not follow the footsteps of the
devil; indeed he is your open enemy”.
(Surah al Baqarah: 208)
• Every Muslim repeat the promises and
covenants to God every day in their
prayer (Doa Iftitah).
“Truly, my prayer, my service of sacrifice,
my life and my death are (all) for Allah,
the Lord of the Worlds.”
 WORLD FOR THE HEREAFTER
•Any action in the world is with the understanding that true
justice is in the afterlife.
•Muslims believe that this world is only a bridge that man
should pass over so as to join an eternal life; or in other
words it may be a farm, to sow here and to harvest in the
hereafter or else it may be taken as a market to provide for
the next life to come.

“But seek, through that which Allah has given you, the home of the
Hereafter; and [yet], do not forget your share of the world. And do good
as Allah has done good to you. And desire not corruption in the land.
Indeed, Allah does not like corrupters.” (Surah 22:77)
ISLAM AS AD-DIN

12
i.Tauhid
a. Tauhid Uluhiyyah
b. Tauhid Rubbubiyah
ii.Iman
iii.Aqidah
iv.Ibadah
v.Taqwa
i. Tauhid

The first foundation of the Islamic teachings is Tauhid

(Faith in Allah). This is the main foundation as it
refers to one’s believe and submission to agree that
Allah is the ONLY GOD to be worshipped. The
Ulama’ had divided tauhid into two types.

a. Tauhid Uluhiyyah

Uluhiyyah is originated from the word ilah which

means, the worshipped. This concept centres on the
words of
“La ilaha illa Allah”
By having Tauhid Uluhiyyah, one agrees that there is
nothing that can be worshipped except for Allah. Al
Maududi in his book entitled “Foundations of Islam”
says that the meaning of tauhid is that there is nothing
that is worthy submission in form of worship and
ibadah.

b. Tauhid Rububiyyah
The second aspect of tauhid is Tauhid Rububiyyah. This
believe is acquired by those who believe that Allah as
the Owner, Creator, Law-maker of the universe.
This type of tauhid is shared by Muslims with those
who are not, but believe that there is one god that
owns, create and administer the universe.
 Shahadah
•It is one of the Five Pillars of Islam.
•The word come from the verb shahida meaning “testifies” or
“bears witness”
•Tauhid is the first part of the testimony. This sentence was
followed by the second part of the testimony that
Muhammad is the Messenger of Allah.
•The second testimony needs to prove by word and deed
which was brought by Prophet Muhammad SAW from Allah
SWT.
“There is no God but Allah, and the prophet
Muhammad is the messenger of Allah”
ii) Iman (faith)
Believe without doubt that Allah is the only God and the
Prophet Muhammad SAW is a messenger of Allah.
There are 6 Pillars of Iman:
1.Belief in Allah;
2.Belief in the angels;
3.Belief in the revealed books;
4.Belief in the commissioned Messengers (peace be
upon them);
5.Belief in the resurrection and the events of Qiyamah;
6.Belief in the predestination by Allah of all things, both
the (seemingly) good and the (seemingly) bad.
iii. Aqidah

• Deep believe on the teachings and ahkam (laws)

of Allah
• It originates from the possessions of Tauhid
Uluhiyyah and Tauhid Rububiyyah and relates to
the Shariah (Islamic laws) and good Akhlak (good
attitudes).
• Having faith in Allah will results to a Muslim
agreeing to follow the rules and guidance of
Islam.
• Finally, the result of believing in Allah as well as
following the laws of Islam, one will be in form of
good Akhlak that a Muslim must practice.
iv) Ibadah (worship)
•The basic meaning of Ibadah is humility and submission. In the
Shariah, it has numerous definitions, but their meaning is one:
•It is to worship Allah in conformity to what He has ordered upon
the tongues of His Messenger.
•It is utmost submission with utmost love for Allah.
•A more general meaning of Ibadah is that it is a comprehensive
term for everything that Allah loves and is pleased with from
speech and actions inwardly and outwardly.
•Two types of worship (Ibadah):
a.Specific (Khusus) is performed as required and governed by the
law of Islam such as performing prayers, paying zakat and
performing hajj.
b.General (umum) is performed in order to seek for the blessings
of Allah by interacting among human beings such as performing
trade, entering into marriage contract and so on.
v) Taqwa (Piety)
•The term Taqwa is often translated as ‘piety’ or ‘God-fearing’, but a
better equivalent would be ‘God-consciousness’. It is considered to be
the essential quality of a believer.
•Taqwa of a believer should illuminate through all facets of his/her life.
•Taqwa, when coupled with Imaan (faith), makes a well-rounded
believer. Taqwa goes hand in hand with Imaan; one cannot be
completed without the other, and vice versa.
•Taqwa is the state of hyper-vigilance against falling into sin in
negligence. It is the idea that a believer is always on guard and is
perpetually alert of not committing any action that would earn the
displeasure of the Almighty.
 ISLAM

I`tiqadiyyah `Amaliyyah `Akhlaqiyyah

(Belief) (Practice) (Morality)

Pillars of Human with Human with Human with Human with

Creator Human Creator Creation
Iman (`Ibadah) (Mu`amalah
/ `adah)
Political system,
non-Muslim in
Islamic state, Politic
foreign
relationship, Human Non human
being being
Law (family, Social
civil, criminal),
administration of
justice
Economy
Commercial
transactions,
public finance
and economic
system
 ‫وما ارسلناك اال رحمة‬
‫للعالمين‬
“And We have not sent you (O Muhammad) but a mercy to the whole universe”
(Al-Ambiya:107)

Alleviate Hardship Eliminate Prejudice

Justice

Via Hukum-Hukum;
Wajib
Sunat
Makruh
Harus
Maqasid as-Shariah
Haram
(The Objectives of Shariah)

Religion/Ad-Din
Wealth/Harta
Intelect/’Aqal
Life/Jiwa
Posterity/Keturunan

Preservation and Promotion

Fard or Wajib - an obligatory duty, the omission of which is
punishable, eg., paying zakat and performing 5 times daily
prayer
Mandub or Sunnat - an action which is rewarded, but the
omission is not punishable, eg. Brushing teeth (bersugi),
sacrificing lifestock (Qurban).
Mubah or Harus - an action which is permitted, and the law
is indifferent, eg. Eating, drinking, sleeping.
Makruh - an action is disliked yet not punishable, but the
omission is rewarded, eg. use of a great amount of water for
the ablution, consume smelly food.
Haram - an action which is absolutely forbidden an
punishable, eg., stealing, drinking alcohol, adultery, bribe.
“And seek to abode of the Hereafter with the wealth
that Allah has given you, and do not forget your part in
this world, and do favours (to others) the way Allah has
favoured you and do not seek to cause turmoil in the
earth; indeed Allah does not like the mischievous”.
Surah Al Qasas (77)

In this verses, Allah mentioned about the need for

Muslims to acquire themselves with what the world has
to offer in term of worldly possessions. This is of
course, to be done with full realization on the need for
acquisition of worldly material that is to provide
necessities and comforts of life to the family and to
contribute to the society in the form of zakah, sadaqah
or waqaf contribution.
The human needs in the Islamic perspective
can be divided into three :
i. Daruriyyah (basic needs)
ii. Haajiyyah (wants)
iii. Tahsiniyyah (completion, excess wealth)

*Note: The essence of human needs in Islam is not the same as Maslow
theory on human needs
i. Daruriyyah (basic needs)

• The modern necessities of life, according to

Wafa et. al (2007) consist of the following:
Food, Clothing, Dwellings
Education
Healthcare
Security
Need for order or system such as education,
military and agricultural system.
• In the modern society, the society will naturally be
divided into three segments:
o low-income
o middle class
o high income

• Haajiyah needs is what the low income class is

sometimes lacking. In the U.S, for example, the poor
do not have the access to health care benefit. Every
U.S citizens are required to have medical insurance
to have access to medical treatment. They are cases
where people died when they were refused
treatment especially in cases of emergency.
• In the countries where medical benefits are
provided such as U.K and Malaysia, the situation is
not that critical.
• Poor segment of the society sometimes do not
receive primary education, such as the third world
African countries. This made people in these
countries becoming even more backwards since
education may change the future of a generation.
• In Islam, hardcore poor and marginally poor people
will be assisted using the funds collected known as
zakat which is managed by Baitulmal.
• Poor people are one of the asnaf (beneficiary) of
zakat.
• For zakat to be payable, a certain nisab (threshold)
need to be met.
ii. Haajiyah (wants)
• It can be referred to a situation where basic needs are all
provided for. For middle class society, they will want to
have better food, better clothing and more comfortable
houses.
• In the theory of economics and finance, this group of
people will be the largest in the country except for in
countries where the distribution of wealth is imbalance.
• This class of society usually earns good income that they
need to pay zakat for their income. As for the zakat for
wealth or assets, they sometimes do not reach the nisab for
zakat payment.
• More importantly, this segment of society usually does not
need assistance from Baitulmal. That frees the funds to be
used to help the poor and the needy.
iii. Tahsiniyyah (completion, excess wealth)

• Tahsiniyyah condition is achieved when a person is

experiencing excess wealth. All their basic needs
and their wants of having better basic items are
provided for.
• This group of people is the main contributors of
zakat either in the form income as well as zakat on
wealth and zakat on business income.
• A saying goes, ‘with great achievement, comes
great responsibility’. This group of individuals owes
their wealth to the society in form of zakat payment
as well other responsibilities to build the society.
Afzal-ur-Rahman (1974) in the “Economics Doctrines of Islam” stated about the
philosophies of Islam economics in the economic dealings which are based on the
following concepts :

i.The Concept of Worshipping of Allah (Tauhid).

ii.The Concept of The God Being The Master of The Universe
(Rububiyyah)
iii.The Concept of the Good Manners (Akhlak Cleansing)
iv.The Concept of Believing in the Day of Judgment
v.Human as the Creation in Charge of the World (Khalifah)
vi.The Concept of Equal Stance among the Human Being
vii.The Concept of Allah Being The Ultimate Owner of The
Property
i. The Concept of Worshipping of Allah (Tauhid)
 It refers to the relationship of human being with God
which then applies to people in dealing with one another.
That is, people need to be good to others as a result of
their good relationship with God.
 Wafa et. al (2007) reported that in term of the economic
activities, the concept of tauhid can also be referred to
the individuals being responsible to the creation of Allah.
 That brings to the efficient utilization of resources, taking
care of the environment and such.
 In short, the act of worshipping Allah need to be
translated to the responsible economic dealings with
people without doing injustice to the planet. The 3P
concept (profit, people and planet) is also the backbone
of corporate social responsibility that need to be
complied by business organizations
ii. The Concept of The God being The Master
of the Universe (Rububiyyah)

 Allah is the creator and the owner of the

universe, thus the law-maker. His law should be
observed by all beings.
 Hence, the economics have to be in the
boundary of the permissible or Shariah-
compliant manners.
iii. The Concept of the Good Manners (Akhlak
Cleansing)

 The economic activities need to be run in a way

that it contributes to the objective of achieving
good manners.
 Economic dealings should not be done to
oppress and to cheat other parties. For example,
it is prohibited to involve in ‘sweatshop’
activities where workers are forced to work in
poor working conditions for unjustified wages.
Such practice is haram or forbidden as it does
not comply with the spirit of building good
manners.
iv.TheConcept of Believing in the Day of
Judgment

This concept stems from the concept of

accountability of every action.
Islam states that all of human’s action will be
rewarded; either favorably or unfavorably however
small the actions are.
That suggests that in Islam, the concept of hisbah
or accountability is strict so that the interests of the
society can be safeguarded.
It is the duty of enjoining good and forbidding evil
as well as making improvement to the living
condition of the public.
v. Human As the Creation in Charge of the World
(Khalifah)
 The fundamental attitude of Islam toward man's
position in the world is that Allah SWT has made
the earth for the benefit of man, to whom He has
given control over it. It is the duty of man to profit
from this favor and to exert himself to seek Allah's
bounties throughout the earth (Yusuf al Qardawi).
 With the intelligence provided to human, comes the
responsibility to manage the world in a good way.
 As managers, allocation and distribution of
resources in the economy should be done according
to justice by avoiding corruptions and oppressions.
vi. The Concept of Equal Stance among the Human
Being

 This concept serves as one philosophies of the Islamic

economy because oppression of one group of people
towards another has proved to be one of the factors
that contribute to the malfunctions of the society.
 The advanced economies such as the US and the UK
rightfully observed this concept by ensuring the equal
opportunity in their economy.
 Example, when job seekers apply for jobs, they are
assured that they will be treated fairly and will be
given the equal opportunity to get the job regardless of
ethnicity, gender and social class.
vii. The Concept of Allah being The Ultimate
Owner of The Property

 In order to prevent human of being insatiable

towards the material possessions, Allah has stated
that the ultimate owner of the whole thing is Him.
 This is as a mean of equitable distribution of
resources.
 The obligatory duty of Muslims to pay zakat or tax
on property and income stems from this concept.
 It is for human to appreciate that it is not worth it
for possessing wealth that are obtained through
unlawful ways such as by doing oppression,
injustice to other people, involving in riba-related
activities as in the end, it is not the human who
owns the possessions but Allah.
 However, that does not mean that the Muslims cannot
possess wealth or property. In fact in one of the
Hadith, Prophet Muhammad SAW said:

“It is better to leave your family rich than leaving them

poor and begging from others”.

 For that matter, the Prophet had laid down that it is

better for a Muslim to be a rich person rather than a
poor one.
 In another Hadith, Prophet SAW mentioned about the
persons who are giving sadaqah is better than the
persons who are receiving it.
 This indicate that as human being, we are encouraged
to work hard to possess our own health but it has to
be in accordance to what has been prescribed by
Shariah.
Scholars of Islam, have various definitions on business.
Among them are:
 Exchange of goods with other goods or currency
A transaction performed in order to earn profit
Valid contract in Syara’
Agreement between sellers and buyers

In Islam, the concept of business covers wide area of

Muamalah such as buying and selling, employment and
paying and receiving wages.

In Surah Al-Nisa’: 29, Allah SWT mentions, “O believers,

don’t you take wealth among you in a bad way, except on
the basis of business of dealings that was agreed among
you”.
Business dealings are performed in order to:

i.satisfy human needs (Dharuriyat, Haajijah,

Tahsiniyyah).

ii.permit exchange of goods using currency as not many

people can produce all things that they need. One has
to buy what he needs from other parties.

iii.Business and trade can be a medium to widen the

Islamic teachings. For example, Islam reached Malacca
through merchants from Yemen and India. Islam
reached China through Arab merchants using the ‘silk
journey’ which spans from Turkey to India through
China.
The main principles of conducting
businesses in Islam reported in Salamon
(1992) are as follows:

i.Freedom
ii.Transaction without interest (riba)
iii.Fairness (Adil)
iv.Performing business dealings with
good manners (akhlak)
v.Honesty and Integrity
vi.Hard work and Persistence
(will be discussed in chapter 4)
REFERENCES

The
Lawful and the Prohibited in Islam Http://www.islamicstudies.info › literatur
e › halal-haram