Implementing Dinar and Dirham as Bimetallic Currency

"Implementing Dinar and Dirham as Bimetallic Currency"

Capitalism is the only religion that requires a blind-following; Capitalism is the only religion that has the largest blind-following and it is, in addition to that, the most damaging of all blind-followings.

Within ten years after the Bretton Woods Accord, the Indonesian Rupiah stood at 415 to 1 US dollar, in late 1986, 1000 to 1 and today it stands at approximately 9000 to 1. What happened in between was Indonesia’s blind following of Capitalism; an unquestioning adherence to the dogmatic dictates of Capitalism. The rupiah has been deliberately devalued time and again for reasons never clearly stated. History is alive with records that every time a currency just like the rupiah is devalued, there is a massive transfer of wealth from the hands of the people to the hands of those who control the resources and the real wealth of the country. This is a KIND OF theft, always unknown and is justified with too technical a language. The people of Indonesia have been reduced to such ridiculous poverty and destitution that though as a whole they despise the imposed currency – because the rupiah has only been losing its purchasing power ever since first issued – they are still unaware that the problem of their economic condition lies in the very paper money they despise.

To move the decimal point three digits to the left in order to make the exchange rate at least 9 to 1 US dollar let alone make it equal, the Central Bank has to reduce the money supply in the country – that includes all kinds of central and private bank deposits as well apart from the small fraction of worthless paper and coins in circulation – by a thousand times; then create demand for the rupiah. That would mean a preposterous increase in the interest rates and taxation which would in turn result in the dramatic reduction of the average income level in parallel to a consequent rise in poverty and destitution. It would also mean nationalising the resources of the country then creating international demand for them, restrict the powers of the Central Bank, and the list goes on. The government of Indonesia cannot solve the problem of the rupiah; the problem of inflation (which is more accurately an increase in the money supply, not general prices) but can only regulate it. This is all mathematics and the solution to the problem of the rupiah lies not in mathematical calculations in air-conditioned bourgeois office buildings; it is on the contrary to turn away from all this. 

The mess that modern economic mathematics has created in the rich and vast 3000 inhabited islands of Indonesia is an indication that the solution to the problem lies in the return to the original economic model of the Nusantara Sultanate that the people had practised for centuries before the colonial introduction of paper as currency.

The man who has in the past decade been calling the people of Indonesia not back to conventional economic practice but forward to the future of Indonesia’s economic strength, and who is receiving an exponentially growing response from the people on a daily basis, is the founder of the Wakala Induk Nusantara, Pak Zaim Saidi.

Pak Zaim Saidi, with the establishment of the Wakala Induk Nusantara in the year 2008 inaugurated the use of the Gold Dinar and Silver Dirham as currency together with the paper rupiah. He had already established the first wakala of Indonesia in the year 2003 and had long started public education on the function and role of the wakala and the coins. This he has based entirely on the history and culture of Indonesia and the economic model of the Nusantara Sultanate. Because the gold Dinar and silver Dirham are commodities per se, firstly they are free from inflation and secondly they can be used as a just means of pricing. Pak Zaim often says that the price of a chicken 1400 years ago in Madinah was 1 dirham and today when the price of a chicken in Indonesia is measured in dirhams, one would realise that it still remains 1 dirham. 

The Wakala Induk Nusantara also known as the Master Wakala is responsible for the minting of the coins – in several denominations which will be stated later – and therefore has a direct dealing with the Royal Mint of Indonesia (Loga Mulia) and then distributes them to the network of wakalas functioning under it. There are currently about 75 wakalas which in turn distribute the coins to the people who may finally choose to utilise them in a number of ways other than keeping them as collector’s item, which latter choice does still benefit the possessor because gold and silver serve as the best store of value. The wakala is, in short, a private institution that facilitates the exchange of paper money into gold and silver coins. Very importantly, it is not a business enterprise. It is profit free. The Master Wakala deals with the mint, the wakalas deal with the Master Wakala and the people deal with the wakalas. This is the basic operation mode that has been established.

The coins – denominations and use

The basic denomination of both the gold coin and the silver coin is 1 Dinar and 1 Dirham respectively. The Dinar is 22 carat gold (91.7% purity), 23 mm in diameter and is 4.25 grams in weight. The Dirham is of 99.99% pure silver, 25 mm in diameter and is 2.975 grams in weight. The Dinar has been minted in two other denominations – ½ Dinar and 2 Dinars. The silver is in three other denominations – 2, ½ and 1/6 (the last of which is called the Daniq). The Daniq has been minted very recently and may be considered the most important coin for basic and daily market transactions. Some significant details of the recent launch of the Daniq will be discussed later.

The exchange value of the coins follows the market price at the time of transaction. The Wakala keeps track of the daily fluctuations in the exchange rate with the Master Wakala – since the price of gold and silver fluctuates daily. The minting and distribution costs which amount to about 4% in total are then added onto the price of the coins.

In a terse brochure published by the Wakala Induk Nusantara entitled, “Use Dinar and Dirham – Daily Transaction, Hand to Hand,” the various uses of the coins are stated as follows:

• As Zakat Payment According to the Shari’ah, under which sub-heading the rulings by the Imams of the different madhahib that Zakat may not be paid in paper money is stated.
• As Savings and Value Protection.
• As Sadaqah.
• As Dowry.

One of the strongest arguments to use the coins as currency has been mentioned in the brochure in the following manner, “Besides the obligation to use them in mu’amalat (to pay zakat, etc) by using them your wealth will not be affected by inflation. The value of every paper-based money is always dropping, but the value of the Dirham and the Dinar always increases. Their values appreciate by 20-25% yearly.”

Pak Zaim Saidi has succinctly argued that since the coins have been minted based on the culture and history of Indonesia and the economic practice of the people of the Nusantara Sultanate and since they are encouraged to be used on the basis of a partial payment system together with the paper rupiah, it is not in anyway opposed to the state currency, though imposed, naturally when used in parallel with the Dinar and the Dirham (which are themselves minted by the Royal Mint of Indonesia) will reveal its worthlessness over time. There is no reason why the coins should not be used. Pak Sufyan, a scholar of Islamic coinage and the Islamic model of economics, quite clearly mentioned in an interview with a Dutch journalist that he is not in anyway opposing the Banking establishment but that he merely wants the freedom to choose his medium of exchange which when kept long would also preserve the value of his wealth. The Dutch journalist then included her study of Pak Zaim’s work in Indonesia and her interview with both Pak Zaim and Pak Sufyan in her internationally acclaimed documentary on Capitalism. Finally, the wakalas also allow the coins to be exchanged back to paper money but with a reduction of 4% of the price that not only covers minting and handling costs but also serves as a discouragement to exchange it back to paper.

Pak Zaim’s tiring effort to educate the public on such matters of daily importance as monetary economics and his actual work on the ground in minting and distributing the coins over the last eight years has now resulted in the circulation of approximately 50,000 coins all around Indonesia. At first look, traders generally express mistrust and suspicion but upon verifying the small certificate from the Royal Mint of Indonesia that accompanies every coin in a plastic cover, they accept them at once as payment quite puzzled at the immediate realisation that every silver dirham is worth multiple times more than the ten thousand rupiah note. This is because the only silver colour coin they see every day is the 500 rupiah and it has no purchasing power at all on its own. 

Zakat and Markets

The foundational element of Pak Zaim’s leadership of the Amirate of Indonesia is the collection of Zakat and the organising of markets to encourage entrepreneurship and trading links amongst Muslims that will surpass the barriers of monopolies, oligopolies and the giant private competitors of production in Indonesia.

Zakat is a fallen pillar of the Deen of Islam. This is because Zakat is not given as is sadaqah. Zakat is taken – this is clearly mentioned in a verse of the Quran (9:103) – by an Amir who is then responsible for its immediate distribution to eight categories of people mentioned in another verse of the Quran. This distribution, according to some scholars, has to be done before sunset and according to others within three days. Further, as mentioned above, Zakat cannot be collected in paper money but has to be collected in real wealth and in the case of savings and businesses, it has to be collected in Dinar and Dirham. Pak Zaim has taken on this task to collect zakat in the coins that he has been minting and then to distribute it in the regular markets he organises. He has set up the Baitul Mal Nusantara to have zakat collected and distributed by zakat collectors especially in markets (The Baitul Mal is a crucial element of the Dinar economy). This is because when the coins are distributed to the poor, needy and those eligible to receive them, the next question arises, ‘How can they be utilised?’ Since zakat is distributed in parallel with the organisation of markets, those receiving the money may immediately spend it according to their needs. So far seven Market Day Festivals have been organised based on the Islamic model of the free market in the major cities of Indonesia. There is no rent charged in the market, anyone can trade anything there and people who come to the market should be given the freedom to use the coins together with the rupiah. People have freely exchanged their paper money for the coins and have spent them in the markets with satisfaction. The Mayor of Depok has taken part in two such markets and this has helped increase confidence in the coins.

It is important to mention here that Pak Sufyan, who lives in Cilincing, has achieved tremendous success in convincing the traders of his district to accept the Dinar and the Dirham as a medium of exchange. A Pasar Malam or Night Market operates every evening in Cilincing. The Pasar Malam in Cilincing has attracted the attention of the mainstream media of Indonesia as well as several international journalists. Next to Cilincing, at a row of shops beside a fishing village there are several traders who have begun accepting the coins as currency as well. 

Umar Ibrahim Vadillo, a Spanish Muslim who pioneered the whole movement of the Dinar and the Dirham, minted the first gold Dinar in Spain in the year 1992 after the collapse of the Ottoman Islamic Empire. UMAR VADILLO ISONE OF THE KEY PEOPLE INTRODUNCING THE DINAR ECONOMY TO ASEA: He once remarked in a lecture at the International Islamic University of Malaysia (IIUM) that there are only as simple as two steps for the establishment of the Dinar and the Dirham as currency and they are firstly minting and distribution; and secondly using them. In Indonesia, the problem of the minting and the distribution has been solved and now the people have begun using them widely.

It is noteworthy to mention here that organising such markets for the use of the Dinar and the Dirham is the antidote to the current Capitalist establishment of shopping malls and giant supermarkets that involves huge corporations to supply them with commodities as well as to invest in them. This has destroyed entrepreneurship and has raised too many tall barriers for the man in the street to be able to engage in trade. To enter into such trade the first possibility can only be a bank loan and that destroys the very beginning of the business if the loan is approved. On the other hand, Pak Zaim’s efforts have enabled every man in the street to be able to trade. If someone desires to trade but has no capital to start with, the person may get an interest-free loan for the purpose of trade from the Wakala Induk Nusantara in Dinars and Dirhams. This is called ‘Qirad’ or a business loan. Many people have successfully started trading through such loans and they have also begun repaying the loan.

Pak Zaim has recently begun another major operation for the distribution of dirhams through a non-commercial channel. He has called it Garnissun Bangsa. It is an acronym taken from parts of an Indonesian phrase that means, Nationwide Movement of a Dirham of Infaq and Sadaqah for National Resilience. It is a campaign of economic strength, to encourage people to use dirhams in all transactions and give dirhams as charity. Besides the numerous activities organised under Garnissun Bangsa, like the business loans, Pak Zaim has started the Million Dirhams Give Away Campaign. It is to urge people who have to give to people who do not and that too in Dirhams which will help in the distribution of the coins. People may give to the mosque or any charity organisation or just to families and individuals. When a million dirhams enter into the economy, it starts making a difference because as mentioned above, the coins preserve purchasing power and is a good store of value and therefore is immune from inflation.

The Daniq and the Nisfu Dirham

On 18th April 2010, the Daniq and the Nisfu Dirham (half Dirham) were officially launched on the seventh Market Day Festival organised by Ameer Zaim. It was a historic event for the Daniq has never been minted as a coin in Muslim history; it has only been used as ‘odd-shaped clippings’ from existing silver coins of the respective times. The weight and value of the Daniq has therefore been determined now. The festival was attended by a number of significant government officials and leaders of large organisations including the Mayor of Depok, Bapak Dr Ir Nurmahmudi Isma'il, and the Chief of Police, Kiyai Sanwari Ahmad. Zakat was also distributed the previous afternoon and that very morning. Both the people who came to the market and the officials received the launch of the two new denominations of the coins appreciatively.

The Nisfu Dirham and the Daniq, especially the latter, solves the problem of using the Dirham in very basic transactions. Now for an angkot (minibus) ride, which costs exactly 1 Daniq, the people may freely use the coins without any need to expect any rupiah as change. Secondly, for small transactions like a cup of tea or coffee, even if paid with a Dirham, change may be given in Nisfu Dirhams and Daniqs. This will distribute the coins more widely all around the Nusantara. In short, though the use of the coins still functions together with the use of the rupiah, the introduction of the Daniq and the Nisfu Dirham has freed Indonesians further from dependence on the rupiah. Moreover, now anyone can exchange almost any amount of rupiah to dirhams and they in turn over time may be exchanged to Dinars. This may be the catalyst to the people’s complete disconnection from Bank Indonesia.

Pak Zaim continues to educate the public about the Dinar and the Dirham that will solve the problem of both the intangible electronic rupiah and the paper rupiah. He has given numerous television interviews, authored several books on the subject and has organised many seminars and markets to expand the work. Ilusi Demokrasi and Kembali ke Dinar are two of his important books. He has also translated from English to Bahasa Indonesia Umar Ibrahim Vadillo’s book Heidegger for Muslims. His website www.wakalanusantara.com is constantly updated with news of events and developments with regards to his work. The prices of the coins are also constantly updated twice daily according to world gold and silver prices to avoid loss in the daily fluctuations.

The very strength of the political establishment in the world today, including Indonesia, is Banking and the imposed currency. Be it a Secular state or an Islamic state, Capitalist state or a Communist state, regardless of the name, the modern state has three foundational elements: The Constitution, A National Debt and an Imposed Currency. The economic strength of those in power is due to the latter two – the national debt and the imposed currency. Due to this, every state does not recognise gold and silver or any other commodity as money. Hence it can be said that their very strength is their weakness because it is not in anyway against the law to mint the coins and use them as a ‘barter currency’. The people of Indonesia know it IS money. But the government refuses to acknowledge it as money and only recognises it as ‘barter currency’ and as a means for a partial payment system in buying and selling. In Indonesia there is a model for any serious person in any part of the world who has realised the fraudulence of paper money because of its incapacity to function as a good medium of exchange because it has no intrinsic value and consequently loses its purchasing power irreversibly. As the US dollar is falling, all currencies are pegged to it and therefore fall with it. To avoid the massive transfer of wealth that occurs every time the value of paper-based money falls, one has to closely study the working monetary model of the Indonesian Amirate. There is an alternative functioning model to adopt from Indonesia.

source :  http://www.islamicmint.com

COMMENT :

 I think the dinar and the dirham is the solution to the problem of economic problems in Indonesia. The reason, the rupiah was never stable and always change with the dollar. if the crisis, the government can only be overcome by borrowing overseas borrowing or selling bonds. if only the government in Indonesia using the dinar and dirham currencies. The currency value stable and fixed, and Insha Allah will not be inflation, currency fluctuations, market mechanisms and so on. Of this system people will not be in zhalimi by the economy like this, because in this system is prohibited and forbidden usury or interest. In singapore the country, had in mind the country into the Islamic banking in Asia. unfortunately, even though Indonesia is a country whose population is majority Islam. but the opportunity is not used. Another reason, using the dinar and dirham for the Muslims is a very good practice for following the sunnah of the Prophet Muhammad. :)