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Islam and Economic Growth in Malaysia View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by Calhoun, Institutional Archive of the Naval Postgraduate School Calhoun: The NPS Institutional Archive Theses and Dissertations Thesis Collection 2003-12 Islam and economic growth in Malaysia Ahmad, Mahmud bin Monterey, California. Naval Postgraduate School http://hdl.handle.net/10945/6241 NAVAL POSTGRADUATE SCHOOL MONTEREY, CALIFORNIA THESIS ISLAM AND ECONOMIC GROWTH IN MALAYSIA by Mahmud bin Ahmad December 2003 Thesis Advisor: Robert M. McNab Thesis Co-Advisor: Robert E. Looney Approved for public release; distribution is unlimited THIS PAGE INTENTIONALLY LEFT BLANK REPORT DOCUMENTATION PAGE Form Approved OMB No. 0704-0188 Public reporting burden for this collection of information is estimated to average 1 hour per response, including the time for reviewing instruction, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to Washington headquarters Services, Directorate for Information Operations and Reports, 1215 Jefferson Davis Highway, Suite 1204, Arlington, VA 22202-4302, and to the Office of Management and Budget, Paperwork Reduction Project (0704-0188) Washington DC 20503. 1. AGENCY USE ONLY (Leave blank) 2. REPORT DATE 3. REPORT TYPE AND DATES COVERED December 2003 Master’s Thesis 4. TITLE AND SUBTITLE: Islam and Economic Growth in Malaysia 5. FUNDING NUMBERS 6. AUTHOR(S) Mahmud bin Ahmad 7. PERFORMING ORGANIZATION NAME(S) AND ADDRESS(ES) 8. PERFORMING Naval Postgraduate School ORGANIZATION REPORT Monterey, CA 93943-5000 NUMBER 9. SPONSORING /MONITORING AGENCY NAME(S) AND ADDRESS(ES) 10. SPONSORING/MONITORING N/A AGENCY REPORT NUMBER 11. SUPPLEMENTARY NOTES The views expressed in this thesis are those of the author and do not reflect the official policy or position of the Department of Defense or the U.S. Government. 12a. DISTRIBUTION / AVAILABILITY STATEMENT 12b. DISTRIBUTION CODE Approved for public release; distribution is unlimited 13. ABSTRACT (maximum 200 words) Muslim countries are often thought of as culturally backward, authoritarian, misogynistic, and poor in economic performance. The teachings of Islam, however, prescribe democratic governance and free-market economics. While Muslims, as a whole, have tremendous economic potential, many Muslims are among the world’s poorest and least educated. Corrupt autocratic leaders have attempted to capitalize on the Muslim dream of building a grand society but owing to these manipulations and leaders’ insincerity, their efforts have yielded little fruitful results. This thesis discusses nation building by fusing Islam, pluralism, democracy, and modernity. It argues that Malaysia’s religious tolerance and adherence to western development models fostered economic growth since its independence. Clearly, practicing Islam, while pursuing social, economic, and political development, is a suitable model especially for heterogeneous societies. The thesis offers a model, Malaysia, as a unique example of the influence of Islamic universalism, multiculturalism, and Islamic modernism to improve economic growth. The thesis depicts the evolutionary transformation of Malay-Islam from its settlement to its status as a model for Muslims and the Third World countries. This thesis illustrates the compatibility of Islam and modernity in economic development. 14. SUBJECT TERMS Muslims, Islam, Malaysia, Islamic Universalism, Multiculturalism, Islamic 15. NUMBER OF Modernism, Economic Development PAGES 127 16. PRICE CODE 17. SECURITY 18. SECURITY 19. SECURITY 20. LIMITATION CLASSIFICATION OF CLASSIFICATION OF THIS CLASSIFICATION OF OF ABSTRACT REPORT PAGE ABSTRACT Unclassified Unclassified Unclassified UL NSN 7540-01-280-5500 Standard Form 298 (Rev. 2-89) Prescribed by ANSI Std. 239-18 i THIS PAGE INTENTIONALLY LEFT BLANK ii Approved for public release; distribution is unlimited ISLAM AND ECONOMIC GROWTH IN MALAYSIA Mahmud bin Ahmad Major, Malaysian Army Advanced Diploma, National University of Malaysia, 2001 Submitted in partial fulfillment of the requirements for the degree of MASTER OF ARTS IN SECURITY STUDIES (SECURITY BUILDING IN POST-CONFLICT ENVIRONMENTS) from the NAVAL POSTGRADUATE SCHOOL December 2003 Author: Mahmud bin Ahmad Approved by: Robert M. McNab Thesis Advisor Robert E. Looney Thesis Co-Advisor James J. Wirtz Chairman, Department of National Security Affairs iii THIS PAGE INTENTIONALLY LEFT BLANK iv ABSTRACT Muslim countries are often thought of as culturally backward, authoritarian, misogynistic, and poor in economic performance. The teachings of Islam, however, prescribe democratic governance and free-market economics. While Muslims, as a whole, have tremendous economic potential, many Muslims are among the world’s poorest and least educated. Corrupt autocratic leaders have attempted to capitalize on the Muslim dream of building a grand society but owing to these manipulations and leaders’ insincerity, their efforts have yielded little fruitful results. This thesis discusses nation building by fusing Islam, pluralism, democracy, and modernity. It argues that Malaysia’s religious tolerance and adherence to western development models fostered economic growth since its independence. Clearly, practicing Islam, while pursuing social, economic, and political development, is a suitable model especially for heterogeneous societies. The thesis offers a model, Malaysia, as a unique example of the influence of Islamic universalism, multiculturalism, and Islamic modernism to improve economic growth. The thesis depicts the evolutionary transformation of Malay-Islam from its settlement to its status as a model for Muslims and the Third World countries. This thesis illustrates the compatibility of Islam and modernity in economic development. v THIS PAGE INTENTIONALLY LEFT BLANK vi TABLE OF CONTENTS I. INTRODUCTION........................................................................................................1 A. MOTIVATION/IMPORTANCE....................................................................1 B. THESIS .............................................................................................................3 C. BACKGROUND ..............................................................................................4 D. STRUCTURE OF THESIS.............................................................................6 II. HISTORY OF ISLAM IN MALAYSIA ....................................................................9 A. INTRODUCTION............................................................................................9 B. BRIEF HISTORY OF ISLAM .......................................................................9 C. THE ARRIVAL OF ISLAM IN MALAYSIA.............................................13 D. THE MALAY ISLAM...................................................................................15 E. MALAY ISLAMIC BELIEFS AND PRACTICES ....................................17 F. ISLAM, ETHNICITY, AND MALAY POLITICS.....................................18 G. POST-INDEPENDENCE ISSUES OF MALAY-ISLAM..........................22 H. ISLAMIC INSTITUTIONS AND LAW......................................................25 I. ISLAMIC EDUCATION...............................................................................27 J. CONCLUSION ..............................................................................................28 III. ISLAM AND GOVERNANCE IN MALAYSIA.....................................................31 A. INTRODUCTION..........................................................................................31 B. ISLAMIC POLITICAL FRAMEWORK....................................................32 C. ISLAMIC GUIDING PRINCIPLES............................................................34 D. ISLAM AND DEMOCRACY.......................................................................37 E. ISLAM AND STATE IN MALAYSIA ........................................................38 F. CONCLUSION ..............................................................................................47 IV. ISLAM AND ECONOMY IN MALAYSIA ............................................................49 A. INTRODUCTION..........................................................................................49 B. ISLAM, SOCIAL JUSTICE, AND ECONOMIC REGULATION ..........50 C. ISLAM AND ECONOMIC GROWTH.......................................................55 D. ISLAM AND MALAYSIA’S ECONOMIC GROWTH.............................57 1. Malaysia’s Growth Models ...............................................................57 2. Growth Model for the 21st Century?................................................63 3. Malaysia’s Economic Islamization ...................................................64 E. CONCLUSION ..............................................................................................67 V. ISLAM AND DEVELOPMENT: A COMPARATIVE ANALYSIS OF MUSLIM SOCIETIES IN ASIA ..............................................................................71 A. INTRODUCTION..........................................................................................71 B. INCLUSION OF ISLAM IN DEVELOPMENT ........................................73 C. EXCLUSION OF ISLAM IN DEVELOPMENT .......................................76 1. Islam in Indonesia..............................................................................76
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