ABSTRACT
Islamic finance has been growing rapidly over the years. Although it was not fully immune from the global financial crisis (GFC) of 2008 and the subsequent economic downturn, it was viewed more favourably mainly owing to its lesser exposure to speculative investments. This chapter briefly examines the concepts and principles behind various Islamic finance products. Although religions, particularly the more organized ones such as Islam, generally impose strict ethical standards on both individuals and business firms, it is often difficult to specify what exactly should be construed as a ‘socially responsible business practice’. The UN Global Compact launched in July 2000 plays a significant role in this regard as it clearly states ten universally accepted principles in the areas of human rights, labour standards, environment and anti-corruption (for details see United Nations Global Compact 2008) that need to be embraced by companies for sustainability and responsible business operations. Some conservative Muslims have, however, raised questions about whether business entities engaged in ‘haram’ activities (prohibited in Islam) could be treated as socially responsible. We believe that a ‘moderate’ stance is beneficial for peaceful coexistence of Muslims and non-Muslims in today’s globalized world and both will benefit from businesses that follow the framework laid out in the UN Global Compact, even though some of these businesses are not truly Islamic. Singapore, for example, although not an Islamic country, aims to promote itself as a centre for Islamic finance in Southeast Asia. The city-state republic offers various Islamic finance products alongside conventional banking and finance products as part of its strategy to become an international financial centre.
