Intellectual Discourse

Note from the Guest Editors

Gairuzazmi Mat Ghani — 2026-01-30

Enhancing Indonesia's Islamic Economy Ecosystem: Innovative Legal and Institutional Strategic Approach

Sutan Emir Hidayat — 2026-01-30

The National Committee for Islamic Economy and Finance (KNEKS), Republic of Indonesia, is the Indonesian government’s innovative and strategic breakthrough in legal and institutional policy. Indonesia is officially a non-theocratic state and adopts the civil law system. The government embraces Islamic economy as a new source of Indonesian economic growth and resilience, and its establishment of KNEKS is a catalyst of the development of Indonesian Islamic economy and finance. KNEKS is led directly by the president and vice president. It is designed with an innovative legal structure, the first of its kind, to address the bureaucratic barriers among stakeholders. Prior to the establishment of KNEKS, the government established the National Committee for Islamic Finance (KNKS), which focused only on the Islamic finance sector. KNKS began in 2019 and was transformed to KNEKS in 2020 by the Presidential Regulation Number 28 of 2020. Since the establishment of KNEKS, Indonesia has recorded tremendous progress and is currently considered one of the Global Top Three leading countries in Islamic economy and finance. This study aims to trace the progress of the Indonesian Islamic economy’s performance after KNEKS’s establishment and scrutinise the regulatory challenges to enhance its role and contribution. This study is expected to be a reference in understanding the legal ecosystem of the Islamic economy in Indonesia, as well as in formulating appropriate policies to enhance the ecosystem.

Assessing The Performance of Unit Trust Waqf Funds in Malaysia

Ahmad Fawwaz Mohd Nasaruddin — 2026-01-30

The Securities Commission Islamic Fund and Wealth Management Blueprint 2017 was the precursor for the establishment of waqf-featured funds in Malaysia. This is in line with the intention of Bank Negara Malaysia to employ social finance for the delivery of social goods and services. To date, there are five unit trust funds and one wholesale fund that are linked with waqf. The former are the Makmur myWakaf Fund, PMB-An-Nur Waqf Income Fund, Kenanga Waqf Al-Ihsan Fund, Maybank Mixed Assets-I Waqf Fund, and BSN Dana Wakaf Al-Ikhlas. Yet to the knowledge of the researchers, there is a dearth of studies that examine the performance of these funds. This could be attributed to the fact that the first unit trust waqf-featured fund, the Makmur myWakaf Fund, was only launched in 2021. Therefore, this study aims to compare the performance of unit trust waqf funds and identify the top consistent fund. By employing the modified Sharpe ratio method, we found that the top consistent fund is PMB An-Nur Waqf fund while the Makmur myWakaf fund should be considered for further analysis. This study is significant to aid investors in making sound decision in regards to unit trust waqf investments and may help the finance regulatory institution to further develop the social finance landscape in Malaysia.

Islamic Economics and Finance for a Sustainable Humane Economy: Whither Homo Islamicus?

Mohd Mahyudi — 2026-01-30

Proponents of Islamic economics and finance are motivated by their strong belief that the disciplines have a lot to offer. However, the academia, industry and policymakers have yet to show wide acceptance to the disciplines’ core ideals. This is surprising since among the heterodox schools of economic thought, Islamic economics does show the character of a valid integrated social science. This unfulfilled potential scenario requires the address of critical issues. Recently, a lively debate has appeared on the topic of economic agent. The focus is on the relevance of homo Islamicus in sustaining the body of knowledge itself. Thus, this article argues for the rightful place and emphasis for homo Islamicus within the overall framework of Islamic economics. The discipline’s foundation and doctrinal aspects must uphold the homo Islamicus concept. In policy design formulations, the Islamic economists are then inspired by homo Islamicus since they would be assisting towards the gradual evolution of its behavioural norms. Interestingly, this task-driven placement for homo Islamicus’ conceptual types fits well with the list of tasks for the Islamic economists. So, harmony among the discipline’s proponents would be promoted when the relevance of homo Islamicus is not questioned anymore. This methodological stance could attain wide applicability as it does not negate the usability of other economic agent concepts for modelling exercise on economic realities under study by the Islamic economists. Therefore, Islamic economics and finance disciplines could be the backbone for a sustainable humane economy.

The Real Challenge for Islamic Economics and Finance: Homo Economislamicus

Ali Polat — 2026-01-30

The rapid change in Information Technology, Blockchain, Industry 4.0, and Artificial Intelligence have not only changed the way business is done but also brought its own paradigm. The moving point for this research is the revisit of the human factor in Islamic Economics and Finance (IEF). For a perfect application of IEF—together with the availability of sharīʿah-compliant financial instruments, financial institutions and financial markets—the IEF literature requires the availability of homo Islamicus who will be on the demand or supply side of the financial activities. This “ethical” homo Islamicus needs to strictly follow Islamic ethics at the personal and professional corporate levels. Although we need such a perfect human being, economic activities are carried out by people having a perspective of homo economicus to some extent. Homo economicus is a concept that cannot be translated in real life. This research claims that modern human being is a combination of homo economicus and homo Islamicus, which can be branded as homo economislamicus. This perspective provides an improvement point that maximises the homo Islamicus perceptive in each piece of knowledge production and application in the market that will help a better practice of IEF. In order to increase the “Islamic” component of the applied finance, there should be greater awareness on the availability of homo economislamicus and consistency among knowledge-intention-application.

Islamic Economic Systems and Sustainable Development: Islamic Capitalism versus Insanism (Islamic Humanism)

Habib Ahmed — 2026-01-30

This article examines different economic systems and assesses their implications for promoting sustainable development. In a capitalist system, capital is managed by homo economicus who focuses on maximising profits and capital accumulation without ethical considerations. This has led to the continuous exploitation of natural resources, resulting in destructive impacts on the environment. Recognising that capital has the power to affect production and value creation, this article asserts that ethics is needed to tame capital and its production processes to achieve sustainable development. The configuration of an Islamic economic system will depend on the meanings of Sharīʿah and how it is interpreted. A narrow legalistic perspective would focus on legal compliance and would produce an Islamic capitalist system that would have similar adverse impacts on the environment as its capitalist counterpart. Alternatively, expanding the meaning of Sharīʿah to include legal-ethical principles and values would frame the economic system as insanism (Islamic humanism) that embeds human welfare-related ethics of maqāṣid al-Sharīʿah and legal maxims. In this system, moral homo Islamicus (homo islami-ethicus) imbued with the ethical characteristics of khalīfah, will act as a steward to guide capital and production processes, preserve the environment and contribute to sustainable development.

Social Welfare Provision within an Integrated Three-Sector Economic Framework

Bushra Abu Saiid — 2026-01-30

Despite its apparent contributions to social welfare, the third sector is still not properly recognised and integrated into mainstream macroeconomic models and statistics. With the aim of enhancing social welfare in Muslim economies, this article firstly seeks to conceptualise an integrated framework of social welfare provision within a three-sector economy. This article uses an integrative review and synthesis of Western and Islamic literatures on the concept and experience of the third sector and social welfare provision and subsequently presents a modified circular flow model that represents a comprehensive social welfare provision framework that actively involves all economic sectors, including the third sector which is largely neglected in traditional macroeconomic framework. Secondly, this article proposes the establishment of an Islamic Third Sector Commission (ITSC) as a tool to enhance efficiency of resource allocation and social welfare provision. It represents a systematic approach to identify priority areas, assess their needs, and allocate resources accordingly, promoting greater efficiency, transparency, and effectiveness in social welfare provision. In sum, this article offers conceptual framework and practical tools that have the potential to enhance the well-being of individuals and communities, while also promoting collaboration and synergy among economic sectors. This integrated approach accentuates the fundamental values of cooperation, solidarity, and justice which are at the core of Islamic economic principles.

Wealth for Welfare: The Role of Islamic Social Finance Institutions in Sustainable Human Economic Development

Mehmet Bulut — 2026-01-30

Development challenges have been pervasive and are hindering the well-being of humanity globally. Islamic social finance institutions can play a significant role to achieve Sustainable Human Economy (SHE). As demonstrated by the Ottomans, the institution of waqf has a long history of delivering the SHE. When communities fulfil its three pillars, zakāt, waqf and infāq (ṣadaqah, etc.) can support sustainable human economic development. The new global development strategy, which consists of 17 Sustainable Development Goals (SDGs) that must be accomplished by 2030, aims to build a sustainable society that meets the demands of the present generation while preserving the rights of future generations. This requires economic growth that tackles various developmental problems, including illiteracy, unemployment, hunger, malnutrition, and poverty, which are intricate and quickly spreading and pose risks to individual lives and society. Communities are increasingly prone to socioeconomic problems and struggle to handle them effectively. Since its inception in 2015, SDGs prompted nations worldwide to join forces with collective bodies or organisations to achieve socioeconomic sustainability and development by 2030. Islamic Social Finance has recently gained attention among scholars and specialists for its role in promoting financial inclusion and sustainable development. Therefore, this article investigates how Islamic Social Finance can contribute to achieving Sustainable Human Economic Development (SHED) and SDGs. It examines the main principal tools of Islamic Social Finance, namely zakāt, awqāf, and infāq, and their potential in the process. Moreover, this article proposes a new institution, namely Global Cash Waqf (GCF), for realising SHED and SDGs.

Islamic Worldview, Economics and Islamic Economics

Sayyid Tahir — 2026-01-30

This article explores the rationale for Islamic economics and some possibilities for developing it based on the Islamic worldview. For reasons recorded in the paper, the Qur’an is chosen as the basis for inquiry. The quest for an Islamic worldview is guided by four factors: Allah SWT’s relationship to all the creation, the nature of worldly life for humans, the position of humankind vis-à-vis all other creation and the position of an individual versus other humans. The Islamic worldview is articulated in relation to the following key points: (i) Allah is the original, absolute and ultimate owner of everything in the heavens and the earth, (ii) the universe has internal consistency, (iii) a cause-and-effect mechanism is always at work, and (iv) life is a test for humans with Divine permission for personal ownership (the right to title as well as use) and freedom of choice (including obeying or disobeying Allah). Recognition of the Will of Allah as the primary guiding principle for the conduct of life, provides the foundational rationale for Islamic economics and shapes its intellectual discourse. Some conclusions are also drawn for developing Islamic economics as an academic discipline.

Examination of Preservation of Wealth as a Prime Limb of Maqāṣid Al-Sharīʻah to Justify Bitcoin in Islamic Jurisprudence

M A K Mohamed Bishrul Rifath — 2026-01-30

This article adopts a maqāṣid al-sharīʻah approach to dealing with Bitcoin transactions. The Islamic law’s position on Bitcoin transactions is not explicitly clear. Unsurprisingly, Islamic law provides no rulings specific to Bitcoin transactions, as Bitcoin never existed at the time of Prophet (PBUH). Such disparity has created controversy among contemporary Islamic jurists on the permissibility of such transactions. While many Islamic jurists argue for the impermissibility of Bitcoin and any associated transaction involving Bitcoin, few Islamic scholars counter-argue the permissibility of Bitcoin if it is so engineered to fully adhere to Islamic values and principles. The article adopts a legal research (doctrinal) methodology in conformity with its agenda which is to review the Islamic rulings on the impermissibility of bitcoin transactions. This article suggests that the existing disparity is eliminated with a maqāṣid al-sharīʻah approach that takes a broader view of the philosophy and values of Islam linking the explicit rulings of Islamic law and jurisprudence to their implicit objectives. The research findings suggest that bitcoin and any transactions involving bitcoin fail to comply not only the jurisprudential requirements of permissibility but also the implicit objectives of sharīʻah, notably the “preservation of wealth” (ḥifẓ al-māl). This study emphasises that the objectives of sharīʻah must be followed in managing Bitcoin-related entities by formulating corporate objectives and Bitcoin policies complying with maqāṣid al-sharīʻah. Furthermore, these formulated objectives must be incorporated to indicate whether the Bitcoin entity upholds Islamic principles.

Zakāt, a ‘Use it or Distribute it Tax’ on Wealth

Salman Syed Ali Ali — 2026-01-30

Zakāt has a worship dimension (a pillar of Islam) and a rights dimension (a right of the poor ordained by Allah). We focus on the economic dimension only by asking: how is zakāt different from both the capital income tax and the wealth tax? Economists discuss whether a capital income tax is optimal for welfare or a wealth tax is better. Traditional literature argued that the two are equivalent if the tax on wealth is set equal to the capitalised value of the tax on capital income. However, Guvenen et al. (2019, 2023) have forcefully shown that this equivalence holds only if the rate of return on capital is equal across individuals. When rates of return on investment are heterogeneous across individuals, the two tax systems have opposite implications for efficiency and inequality. A capital income tax burdens the more productive capital, whereas a wealth tax—by taxing all wealth holders—not only increases the tax base but reduces the wealth of low-productivity individuals. If the productivity differences are persistent, then the wealth of low-productivity individuals will be gradually pruned. In this sense, a wealth tax creates a use-it-or-leave-it effect. How is zakāt different from both taxes and what are its efficiency and distributional implications? We bring in some key macro-features of zakāt which is a tax on idle wealth, not on deployed (or employed) wealth. Aimed at promoting wealth circulation and helping the poor, zakāt helps address the wealth gap and income inequality in a different way than what is possible by either the capital income tax or the wealth tax. It has a much stronger “use-it-or-lose-it” effect than a wealth tax.