The Shari’ahsim System:
An Alternative in the Making

Abstract

The financial crisis and its lingering effects might drag the global economy into a double dip during 2011, and we might witness an exact repeat of the 2008 crisis and the global economy slowly slide into a recession. These turbulent and chaotic market conditions present the Islamic banking industry players as well as potential new entrants to the industry with an opportunity to join forces and resources in certain regions, specifically in the Islamic countries, to come to the forefront by reinventing and reinvigorating themselves as major mainstream providers of debt and equity, creating a globally recognized alternative to the present conventional system (interest based) that is sustainable and reliable with full transparency and disclosure which is contrary to the conventional system (interest based). During the 2008 financial crisis, when the industry confirmed its resiliency and sustainability as a versatile and ethical financial alternative, it was the first time that Islamic investment and finance was being considered as an alternative to the conventional (interest-based) structures and schemes in terms of financial products and solutions. Yet again, in 2011, the same calls are echoing louder to address the debt crises using Sukuk. Between the two crises, the Islamic Financial Institutions (IFIs) unfortunately went into hibernation, content to go through those stormy four years with minimum casualty. Unfortunately, the uncertainty in the market place might extend to 2013, and that reason, among many others, is enough for the industry as a whole to come together and abandon the silo mentality to capitalize on these calls to enhance the Shari’ahsim System as a logical choice and alternative to the present interest-based system. Both systems can co-exist side by side in the global financial market for the benefit and prosperity of individuals, societies, institutions, businesses and countries regardless of their beliefs and political orientations as stipulated by the Shari’ahsim System.