THE ROLE OF OIL WEALTH IN ECONOMIC DEVELOPMENT IN THE LIGHT OF MAQÓØID

AL-SHARÔÑAH: A CASE STUDY OF PETROLIAM NASIONAL BERHAD [PETRONAS]

BY

MOHAMMED ZAINUL ABIDEEN

A thesis submitted in fulfilment of the requirement for the degree of Master in Islamic Revealed Knowledge and

Heritage (Fiqh and UÎËl al-Fiqh)

Kulliyyah of Islamic Revealed Knowledge and Human Sciences

International Islamic University Malaysia

JUNE 2013

ii

ABSTRACT

Oil is considered one of the most important natural resources; it has become the

backbone of modern civilization and appears to be a strategic commodity for each and

every country. Whoever controls this commodity and its industry possesses huge

power. Consequently, oil history is the history of struggle among the big powers

competing for areas of influence. Looking at the importance of oil and its significance

in our life, the big question naturally emerges as to who should own this commodity,

an individual or local communities or private company or state? The study aims to

examine the position of oil in the Qur‘Én, ÍadÊth and the classical and modern fiqh and

determines the ownership of oil in the light of MaqÉÎid al-SharÊÑah, and highlights the

relationship between oil wealth and economic development indicating how to take the

advantage of this resource to achieve economic development. In addition, it takes a case

study of Petronas a wholly state-owned petroleum company, to examine its

contributions towards Malaysia’s economic development in the light of MaqÉÎid

al-SharÊÑah, employing inductive and analytical methods. The study concludes that the

ownership of oil should be given to the state to regulate its wealth and utilize it for the

betterment of the country. Moreover, the study reaches to the conclusion that Petronas

has met most of the MaqÉÎid al-SharÊÑah (the objectives of SharÊÑah) in terms of

economic development and distribution of oil wealth.

iii

خلاصة البحث

النفط على الصعيدين العالمي والمحلي، يتبادر إلى الأذهان لأهميةنظرا

أللأفراد بحكم كونهم عطى حق ملكية هذا الذهب الأسود؟ لمن ي تساؤل مهم:

حكومات المحلية )الدولة(؟ ومن هنا للالتي يقع النفط فيها، أم قاطني المنطقة

هدف الدراسة والمتمثل في محاولة تحديد ملكية النفط. إلى جانب يبرز

محاولة الوقوف على دور النفط في التنمية الاقتصادية الإسلامية في ضوء

شركة بتروناس فضلا عن اتخذت هذه الدراسةمقاصد الشريعة الإسلامية،

ها في مدى مساهماتعن للبحث بوصفها نموذجا للدراسة التطبيقية، الماليزية

التنمية الماليزية في ضوء مقاصد الشريعة. وقد توصلت هذه الدراسة إلى

على الأدلة الشرعية، وانطلاقا من بناء: جملة من النتائج لعل من أهمها

هداف التي تتوخى مقاصد الشرعية تحقيقها للمجتمع والفرد على حد الأ

ي ستعمل ومن فضلية ملكية الدولة للنفط، والتأسواء، توصل البحث إلى

توصلت و على تنمية المجتمع وتحقيق الرفاهية للأفراد. عائدتهخلال

مع مقاصد الشريعة تتطابقالدراسة إلى أن مساهمات شركة بتروناس

وعدالة توزيع عائدات مدخول النفط التنمية تحقيق الإسلامية من حيث

.الماليزي بين أفراد المجتمع

iv

APPROVAL PAGE

I certify that I have supervised and read this study and that in my opinion, it conforms

to acceptable standards of scholarly presentation and is fully adequate, in scope and

quality, as a thesis for the degree of Masters of Human Sciences (Fiqh and UÎËl al-

Fiqh)

………………………………….

Mohd Afandi Awang Hamat Supervisor

………………………………….

Khaliq Ahmad Co Supervisor

I certify that I have read this study and that in my opinion it conforms to acceptable

standards of scholarly presentation and is fully adequate, in scope and quality, as a

thesis for the degree of Masters of Human Sciences (Fiqh and UÎËl al-Fiqh)

………………………………….

Examiner

This dissertaion was submitted to the Department of Fiqh and UÎËl al-Fiqh and is

accepted as a fulfilment of the requirement for the degree of Masters of Human

Sciences (Fiqh and UÎËl al-Fiqh)

………………………………….

Head, Department of Fiqh and

UÎËl al-Fiqh

This dissertation was submitted to the Kuliyyah of Islamic Revealed Knowledge and

Human Sciences and is accepted as a fulfilment of the requirement for the degree of

Masters of Human Sciences (Fiqh and UÎËl al-Fiqh)

…………….……………………

Dean, Kuliyyah of Islamic

Revealed Knowledge and

Human Sciences

v

DECLARATION

I hereby declare that this dissertation is the result of my own investigations, except

where otherwise stated. I also declare that it has not been previously or concurrently

submitted as a whole for any other degrees at IIUM or other institutions.

Mohammed Zainul Abideen

Signature…………………………………. Date………………………………

vi

INTERNATIONAL ISLAMIC UNIVERSITY MALAYSIA

DECLARATION OF COPYRIGHT AND AFFIRMATION

OF FAIR USE OF UNPUBLISHED RESEARCH

Copyright © 2013 by International Islamic University Malaysia. All rights reserved.

THE ROLE OF OIL WEALTH IN ECONOMIC DEVELOPMENT

IN THE LIGHT OF MAQÓØID AL-SHARÔÑAH: A CASE STUDY PETROLIAM NASIONAL BERHAD [PETRONAS]

I hereby affirm that The International Islamic University Malaysia (IIUM) holds all

rights in the copyright of this Work and henceforth any reproduction or use in any

form or by means whatsoever is prohibited without the written consent of IIUM. No

part of this unpublished research may be reproduced, stored in a retrieval system, or

transmitted, in any form of by means, electronic, mechanical, photocopying, recording

or otherwise without prior written permission of the copyright holder.

Affirmed by Zainul Abideen

…………………………………. ………..…………….

Signature Date

vii

I would to dedicate this thesis to my beloved parents for their unconditional love and

supports; both financially and emotionally throughout my life. I do not have words to

express my thanks except what AllÉh has commanded “My Lord, bestow on them your

mercy as they did bring me up when I was young.” (17:24). There is no doubt in my

mind that without their support I could not have completed this degree.

I also dedicate my thesis to my mentor and role model Maulana Khalilur

Rahman Sajjad Nomani, whose encouragement, guidance and support till to date

enabled me to complete this work.

viii

ACKNOWLEDGEMENTS

First and foremost, My heart-felt gratitude goes to my supervisors; Dr. Mohd Afandi

Awang Hamat and (Co-Supervisor) Prof. Dr. Khaliq Ahmad who endured, with all

patience and sincerity, the responsibility of academic supervision of this research.

They helped me with their valuable suggestions and guidelines. With their thorough

intellectual and academic support, finally I could be able to produce this thesis.

I would like to thank Dr. Muhammad Arif Zakaullah for suggesting this topic

as a fruitful subject for research.

My sincere thanks also go to sister Azhar Hadi Fathdil who has been very

generous in her support, ideas, feedback and advice that supported me all the way

since the beginning of my studies. May Allah reward her.

And I shall not forget to thank the International Islamic University-Malaysia,

which granted me the opportunity to further my studies. I am also very much thankful to

the Librarians and other staff of Baitul Hikmah Library of IIUM for providing me

with the necessary materials needed for this research.

I want to thank my wife for her sacrifices, assistance, tolerance, and

enthusiasm that made it possible for me to study.

I pray to Allah SWT for His mercy upon all of those, who provided me any

kind of the support by any means during the period my doctoral thesis was drafted.

ix

TABLE OF CONTENTS

Abstract ................................................................................................................... ii

Abstract in Arabic .................................................................................................... iii

Approval Page .......................................................................................................... iv

Declaration Page ...................................................................................................... v

Copyright Page ......................................................................................................... vi

Dedication Page ....................................................................................................... vii

Acknowledgements .................................................................................................. viii

List of Tables ........................................................................................................... xiii

List of Figures .......................................................................................................... xiv

List of Abbreviation ................................................................................................. xv

CHAPTER ONE: COUNTORS OF THE SUBJECT ....................................... 1

Introduction ................................................................................................. 1

Problem Statement ...................................................................................... 3

Justification of the Study ............................................................................. 4

Research Questions ..................................................................................... 4

Objectives of the Research .......................................................................... 5

Significance of the Study ............................................................................ 6

Research Methodology ................................................................................ 6

Literature Review ........................................................................................ 7

Organization of the Study ........................................................................... 17

CHAPTER TWO: OIL IN PAST, PRESENT AND IN ISLÓM ....................... 18

Introduction ................................................................................................. 18

Definition, Characteristics and Origin of Oil .............................................. 18

The Origins of Oil ....................................................................................... 20

Oil in the Past .............................................................................................. 22

Present Day Oil ............................................................................................ 29

Bases of Oil and its Ownership in Qur‘Én and Suannah and Jurisprudence 31

Oil in Qur’Én ............................................................................................... 32

Oil in Sunnah ............................................................................................... 34

Oil in Islamic Jurisprudence ........................................................................ 34

Meaning of Ownership ................................................................................ 35

The Right of Ownership .............................................................................. 36

Definition of Minerals ................................................................................. 38

Classification of Minerals ........................................................................... 38

Meaning of Apparent and Hidden Minerals ................................................ 44

Ownership of Minerals ................................................................................ 45

Preference of the Opinion ........................................................................... 52

Summary ..................................................................................................... 53

CHAPTER THREE: OWNERSHIP OF OIL AND ITS ZAKÓH IN THE LIGHT

OF MAQÓØID AL SHARÔÑAH ........................................................................... 54

Introduction ................................................................................................. 54

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Ownership of Oil and MaqÉÎid al SharÊÑah ................................................. 54

Oil ownership in Four Jurisprudence Schools ............................................ 55

ZakÉh of Oil ................................................................................................ 60

Should ZakÉh be imposed on State Who Owns Oil Resources? .................. 61

Summary ..................................................................................................... 67

CHAPTER FOUR: MAQĀØID AL SHARĪÑAH, OIL WEALTH AND

ECONOMIC DEVELOPMENT ......................................................................... 69

Introduction ................................................................................................. 69

The literal and technical definitions of the term MaqāÎid al-SharīÑah ........ 69

The emergence and development of MaqāÎid al-SharīÑah .......................... 72

Types of MaqāÎid al-SharīÑah ..................................................................... 74

MaqāÎid al-SharīÑah and Oil Wealth ........................................................... 82

Impact of Oil and its MaqāÎid with Regard to the Worship ....................... 82

MaqāÎid al-SharīÑah with Regard to the Spending on Mosques ................. 83

MaqāÎid al-SharīÑah of Oil in Jihād ............................................................ 84

Oil and MaqāÎid al-SharīÑah in the establishment of good Muslim ............ 86

The Oil and MaqāÎid al-SharīÑah with Regard to the Protection of lineage and

building a the Good Family ......................................................................... 88

MaqÎad al-SharīÑah of public ownership of oil ........................................... 90

The MaqÎad of investment .......................................................................... 92

Economic Development and Its Definition ................................................. 93

Types of Development ................................................................................ 96

Goals of development in Islam ................................................................... 98

Islamic Economics ...................................................................................... 99

MaqāÎid al-SharīÑah in Islamic economics ................................................. 100

Oil and economic development ................................................................... 105

Impact of oil on economic development ..................................................... 109

Summary ..................................................................................................... 112

CHAPTER FIVE: THE ROLE OF PETRONAS IN ECONOMIC

DEVELOPMENT IN THE LIGHT OF MAQÓØID AL-ØHARÊÑAH .............. 114

Introduction ................................................................................................. 114

A Brief History of Petronas ......................................................................... 114

Petroleum Activities Prior to Petronas ........................................................ 115

Causes that lead to the formation of Petronas ............................................. 116

Petronas and the Ownership of Petroleum resources .................................. 118

Discretionary powers and duties of Petronas .............................................. 119

Philosophy of the Company ........................................................................ 119

Petronas as global player ............................................................................. 120

Political Linkage of Petronas ...................................................................... 122

Petronas and Economic Development ........................................................ 127

Petronas’ Contribution in Export Sector ..................................................... 127

Contributions of Revenue to Federal Government ..................................... 133

Payments to Malaysian exchequer .............................................................. 134

Petronas and Foreign Investment ................................................................ 136

Petronas Redistribution of Oil Wealth ........................................................ 136

Petronas and Employment ........................................................................... 139

The Role of Petronas in Education and Skills Development ...................... 148

xi

The Role of Petronas in Health Protection .................................................. 154

The Role of Petronas in the Light of MaqÉÎid al SharÊÑah ......................... 160

Evaluation of Petronas Performance ............................................................ 160

Summary ...................................................................................................... 163

CHAPTER SIX: CONCLUSION AND RECOMMENDATIONS ................... 165

Conclusion ................................................................................................... 165

Recommendation ......................................................................................... 167

BIBLIOGRAPHY ................................................................................................. 168

xii

LIST OF TABLES

Table No. Page No.

2.1 Natural Resource ownership under constitutions 51

5.1 Petronas International Operations 121

5.2 Malaysia: Diversification of Exports 129

5.3 Export and Import (Petroleum and Gas) 131

5.4 Malaysia’s Major Exports 2001-2003 131

5.5 The Export of LNG 132

5.6 Gross Exports. 1987, 1997 and 1998 (RM million and % share) 133

5.7 Contributions of Revenue to Federal Government 134

5.8 Gas subsidies 138

5.9 Malaysia: Employment by Sector and Ethnic Group,

1970 1998 (000) 141

5.10 The Largest Government owned firms Listed on Bursa Malaysia by

Market Capitalization and Per Cent Owned 144

xiii

LIST OF FIGURES

Figure No. Page No.

2.1 Classification of minerals by Economist 40

2.2 Classification of Minerals by Classical Jurists 43

4.1 MaqÉÎid al-SharÊÑah 81

4.2 MaqÉÎid al SharÊÑah of Oil Wealth 93

4.3 Interdependence of MaqÉÎid al-ØharÊÑah, Oil Wealth and Economic

Development 113

5.1 Relationship between NEP, Government and Petronas 126

5.2 Petronas’ Contributions to Malaysia’s Development 159

5.3 Comparison Between MaqÉÎid al-ØharÊÑah And Petronas’

Contribution 162

xiv

LIST OF ABBREVIATION

ALAM Akademi Laut Malaysia

BCIC Bumiputera Commercial and Industrial Community

BPD Barrels per day

FIMA Food Industries of Malaysia

CARIF Cancer Research Initiatives Foundation

CSR Corporate Social Responsibility

INSTEP Institut Teknologi Petroleum Petronas

IPPs Independent Power Producers

GLC Government Link Company

HICOM Heavy Industries Corporation of Malaysia

LNG Liquefied Natural Gas

LPG Liquid Petroleum Gas

MHE Ministry of Higher Education

MADA Muda Agricultural Development Authority

MARDEC Malaysia Rubber Development Corporation

MIDA Malaysian Industrial Development Authority

NEP National Economic Policy

NIE Newly Industrialised Economy

NOC National Operations Council

OPEC Organization of the Petroleum Exporting Countries

Petronas Petroliam Nasional Bhd

PERMATA Petronas Management Training Centre

PMTSB Petronas Management Training Sdn. Bhd.

PSC Production Sharing Contract

SEDCs State Economic Development Corporations (SEDCs)

TDC Tourist Development Corporation

UDA Urban Development Authority

UTP Universiti Teknologi Petronas

1

CHAPTER ONE

COUNTORS OF THE SUBJECT

1.1 INTRODUCTION

AllÉh S.W.T has created human beings for His worship, as He states in the Holy

Qur‘Én “And [tell them that] I have not created Jinns and men to any end other than

that they may [know and] worship me” (al-dhÉriyÉt: 56).1 This world was created for

the use of human beings and its resources would enable the human race to sustain

itself, so that it can achieve the purpose of its creation. AllÉh (SWT) says in the

Quran, “Allah is the One who created the heavens and the earth and sent down water

from the sky, then brought forth with it sustenance for you from the produce, and

subjugated for you the ships, so that they may sail in the sea with His command, and

subjugated for you the rivers;). And He subjugated for you the sun and the moon,

moving constantly, and subjugated for you the day and the night”. [IbrÉhÊm: 32-36].2

Natural resources are one of the most fundamentally blessed sources that

provide human beings with the means to live. They are the basic building blocks of a

society or a country, and play a significant role in economic development. They come

in many forms. Crops grown through farming are essential for human survival, as

without them, people will be malnourished and unable to work. Renewable resources

such as wind, solar power, and water are able to provide us with limitless energy, not

forgetting the most basic means of survival and civilization. Minerals such as iron,

نس إلا ليـعبدون 1 .وما خلقت الجن والإ

لك لتجري في البحر بأمره م وسخر لكم الف الله الذي خلق السماوات والأرض وأنزل من السماء ماء فأخرج به من الثمرات رزقا لك 2.والنـهار الليل لكم وسخر دائبـين والقمر الشمس لكم وسخر. وسخر لكم الأنـهار

2

coal, fossil fuels, etc., are used to generate power and for export to other parts of the

world. The advent of industrial revolution energy, especially oil, has become an

indispensable part of the economy, and has great impact on the economic

development of a country.

Since the whole universe is created for human beings, they have to utilize the

resources in a way that their needs are met and they live a life of peace and happiness,

prosperity and security. Man is God’s vicegerent on the earth, he has been given the

guidance and teachings to live accordingly. The basic universal purpose of divine

guidance is to secure benefit for and repel harm to humanity. This theme is

indisputably established through the inductive reading of the QurÉn and Sunnah and

also known as MaqÉÎid al-SharÊÑah3 (objectives of SharÊÑah). According to ImÉm Al-

GhazÉlÊ, “The objectives of SharÊÑah is to promote the well-being of all mankind,

which lies in safeguarding their faith (dÊn), their human self (nafs), their intellect

(‘aql), their posterity (nasl) and their wealth (mÉl). Whatever ensures safeguard of

these five serves public interest (al-maÎlaÍah al-ÑÉmmah) and is desirable”.4

The uppermost SharÊÑah objectives regarding wealth and property consist of

wide circulation of wealth in society, transparency (rawÉj) in economic policy to

eliminate discriminations (wuÌËh), protection (Íifz), certainty (thabÉt) and justice

(Ñadl),5 and the purpose of acquisition and investment (takassub and istithmÉr).6

3 Ibn ÑÓshËr defines MaqÉÎid SharÊÑah as “the deeper meanings (maÑÉnÊ) and inner aspects of wisdom(Íikam) considered by the Lawgiver (ShÉriÑ) in all or most areas and circumstances of legislation(aÍwÉl al-tashrÊ’); Ibn ’ÓshËr M., Treatise on MaqÉÎid SharÊÑah, trans. M. T. El-Mesawi,(London-Kuala Lumpur: The International Institute of Islamic Thought- Al- MaqÉÎid Research Centreand Islamic Book Trust, 2006), 5-9.4 Chapra M. Umar, “The Islamic Vision of Development in The Light of MaqÉÎid al-SharÊÑah”,Occasional Paper Series: 15, (London: The International Institute of Islamic Thought, 2008), 118).5 Ibid., 279-293.6 Akhtarzaite binti Abdulaziz, “Al-DharÉ’i’ and MaqÉÎid al-SharÊÑah: A case study of Islamicinsurance”, Intellectual Discourse, Vol.18, no. 2, (2010): 269.

3

Since natural resources are essential for human survival and growth of human

civilization, this study attempts to discuss the role of oil wealth in economic

development in the light of MaqÉÎid al-SharÊÑah, and takes Petronas7, a wholly state-

owned oil company by the Malaysian government as a case study. The purpose of this

research is to examine the role of oil in Malaysia’s economic development in the light

of MaqÉÎid al-SharÊÑah.

1.2 PROBLEM STATEMENT

This study attempts to develop a theoretical model of oil wealth within MaqÉÎid

al-SharÊÑah framework through discussion of various issues pertaining to oil wealth in

the light of MaqÉÎid al-SharÊÑah discipline, based on Prophet MuÍammad’s (SAW)

saying “Muslims are partners in three things; water, pasture and fire”.8 The study

discusses whether oil falls under fire or not. If the oil is discovered in the property of

a person [whether in land or in water], the question is, should he be given the right to

own it, as allowed by the French law,9 or should it be taken from him and controlled

by the state, considering it a public property for the welfare of the whole community.10

Moreover, zakÉh of oil wealth should be imposed on the state-owned oil companies,

private firms and corporations? In addition to the aforesaid issues, points like oil and

economic development, identification of income distribution areas according to

MaqÉÎid al-SharÊÑah for the betterment of society and country, for example;

7 Petronas, the acronym for Petroliam Nasional Berhad, was incorporated on 17 August 1974 under theCompanies Act, 1965. It is wholly-owned by the Malaysian government and is vested with the entireownership and control of the petroleum resources in Malaysia through the Petroleum Development Act,1974. Over the years, Petronas has grown to become a fully integrated oil and gas corporation and isranked among the Fortune Global 500 largest corporations in the world. See: Petronas Annual Report2010, 6.8 AbË DÉud, Sunan AbÊ DaËd, Edited by AlbÉnÊ, MuÍammad NaÎir al-DÊn, Chapter: Book of ijÉrah,Section: fÊ man’i al-mÉÑ, 625.9 See: MaÍmËd al-Muzaffar, “Al-tharwah al-ma’daniyyah wa ÍuqËq al-daulah wa al-fard fÊhÉ”, (theRight of the State and Individuals in the Mineral Wealth), (Beirut: DÉr al-Haq, 2nd edn., 1998).10 As Prophet MuÍammad (SAW) said; “people are partners in three things; water, pasture and fire”.

4

infrastructure, education, health care centers, orphanages, and so on will also be

stressed upon as well as determine prohibited areas for investment of oil income.

These are a few examples of debatable issues that the present study attempts to discuss

in the light of MaqÉÎid al-SharÊÑah. The study chooses Petronas, a wholly state-owned

petroleum company as a case study to examine its efforts and role towards Malaysia’s

economic development within the framework of MaqÉÎid al-SharÊÑah.

1.3 JUSTIFICATION OF THE STUDY

The objectives of SharÊÑah are universal, and any organization can be studied in light

of that, whether it operates in a Muslim country or a non-Muslim country. What we

will see is, how it serves its stockholders in the light of MaqÉÎid al-SharÊÑah. In this

particular case, we are focusing on Petronas. In addition, Petronas happens to be

located in Malaysia where there is a vibrant Muslim society, the government is run by

majority Muslims and the constitution has given an especial status to Islam as the

state’s religion.11 Furthermore, many Islamic laws have been implemented in various

areas12. For example, in education we have an International Islamic university, in

pilgrimage operations there is Tabung Haji, Islamic banking in investment and

management of funds, Islamic insurance, Islamic finance, and now we are going to

examine how Petronas has been pursued, and to what extent the policies of Petronas

have fulfilled the objectives of SharÊÑah.

11 See: Article 3 (1), Laws of Malaysia, (2006), Published by The Commissioner of Law Revision,Malaysia Under the Authority of the Revisoin of Laws Act 1968 in Collaboration with PercetakanNasional Malaysia BHD, 18.12 Norhashiman Mohd YasÊn, “Islamization/Malaynization: A Study on the Role of Islamic Law in theEconomic Development of Malaysia: 1969-1993”, 7.

5

1.4 RESEARCH QUESTIONS

1- Does oil fall under the concept of fire as stated in the hadith, “Muslims are

partners in three things: water, pasture and fire”?

2- Determination of ownership of oil. Is oil public property, governments’ or

individuals’? Is it permissible for the state alone to own and benefit from

it? Is zakÉh of oil the responsibility on state-owned company? What if the

state-owned company pays tax instead of zakÉh?

3- What role does oil wealth play in economic development? What are the

most important practical implications in contemporary time?

4- What are the most important economic development goals that seek to be

achieved in the light of MaqÉÎid al-SharÊÑah?

5- To what extent is Petronas able to participate in Malaysia’s economic

development in the light of MaqÉÎid al-SharÊÑah?

1.5 OBJECTIVES OF THE RESEARCH

1- To examine the position of oil in the QurÉn and ×adith and the classical

and modern fiqh.

2- To determine the ownership of oil, whether state, individual or foreign

companies have the right to own it, focusing on the matter of zakÉh and

tax.

3- To highlight the relationship between oil wealth and economic

development, indicating how to take the advantage of this resource to

achieve the economic development in the light of MaqÉÎid al-SharÊÑah.

4- To identify the goals of economic development to be achieved in the light

of MaqÉÎid al-SharÊÑah.

6

5- To analyze the experience of Petronas in the income generation of oil

wealth investment, its role in Malaysia’s development and its benefits to

society in the light of MaqÉÎid al-SharÊÑah.

1.6 SIGNIFICANCE OF THE STUDY

This research attempts to draw a preliminary methodological framework for

diagnosing real-world situations and then prescribing and implementing Islamic

solutions for the problems of society. The importance of the study can be determined

in the following main points:

- The lack of significant academic study on the role of oil wealth in the

economic development in the light of MaqÉÎid SharÊÑah; besides, the

researcher has not found any study that examines the role and contribution

of Petronas in the development of Malaysian society, according to the

MaqÉÎid SharÊÑah.

- The search for a new concept, far from the prevailing ideas of

development, aiming to achieve economic development, consistent with

the values of Islamic law.

- The present researcher is of opinion that the need for such a study in this

subject is significant, particularly in English because the language is

increasingly becoming the most common medium of communication

among Muslim scholars. In this study, the researcher intends to provide a

comprehensive study of the classical and modern views regarding oil

wealth, which perhaps will be a valuable resource for scholars as well as

researchers.

7

1.7 RESEARCH METHODOLOGY

The research will employ inductive, hermeneutic and analytical methods;

1- The inductive method is to collect data to compare the views of the

various schools of fiqh.

2- The hermeneutic13 method is intended to interpret the texts of the QurÉn,

Sunnah, and the views of jurists and contemporary scholars, to gain access

to the rules of the Islamic approach, which can be followed in economic

development.

3- The analytical and care study method is used to examine Petronas’

contribution to Malaysian society in the light of the MaqÉÎid SharÊÑah

model, by studying its annual reports, policies and in-depth discussion.

1.8 LITERATURE REVIEW

There are many articles and scholarly works produced by scholars that focus on the

role of economic development and MaqÉÎid SharÊÑah. However, there is no

comprehensive literature yet that has given full attention to and has critically analyzed

Petronas and its participation in economic development in the light of MaqÉÎid

al-SharÊÑah.

However, having said the above, there are some great work, which are relevant

to this thesis, and from which it hopes to benefit and could help this study. The

following paragraphs discuss some books and works which are relevant to this

research.

13 Hermeneutics is an art of interpretation, in other words the theory that refers to the study of theinterpretation of written texts, especially texts in the areas of literature, religion and law. Contemporary,or modern, hermeneutics encompasses not only issues involving the written text, but everything in theinterpretative process. This includes verbal and nonverbal forms of communication as well as prioraspects that affect communication, such as presuppositions, pre-understandings, the meaningand philosophy of language. <http://en.wikipedia.org/wiki/Hermeneutics>, accessed 4 August 2011).

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In the further review, we shall not deal with all the accumulated literature on

the subjects of MaqÉÎid, economic development and oil. Rather, we shall confine

ourselves to three categories of works as follows:14

1- The first category consists of two theses that address the subject of mineral

wealth from the Islamic perspective.

2- The second Category deals with MaqÉÎid al-SharÊÑah, through abundant in

literature; its application in today’s economic sector is limited.

3- The Third category discusses the works related to the economic

development, specifically to the care of Malaysia’s economic development

with regard to Islamic values.

The first category consists of two theses that address the subject of mineral

wealth from the Islamic perspective.

Firstly: Al-tharwah al-ma’daniyyah wa ÍuqËq al-daulah wa al-fard fÊhÉ (the

Right of the State and Individuals in the Mineral Wealth) by MaÍmËd al-MuÐaffar15

was submitted as a doctoral thesis at the Institute of Islamic Studies in Bagdad

University. A revised and expanded version of this work bearing the title “Al-tharwah

al-ma’daniyyah wa ÍuqËq al-daulah wa al-fard fÊhÉ” was published by DÉr Al-Haq in

1998. The purpose of this thesis is to provide all details and Islamic rulings related to

minerals; it is a comparative study between Islamic jurisprudence and te contemporary

institutions and laws.

14 It should be noted that the present researcher did not find any work pertaining to Petronas that dealswith Islamic or MaqÉÎid SharÊÒah perspectives, except, (1) Information technology outsourcing issues:A case study of Petronas Bhd Malaysia, by Abduljaleel Kehinde Shittu. (2) Knowledge managementimplementation in Petronas: A case study by Naguib Chowdhury. Both theses have been submitted toKulliyyah of Information and Communication Technology at International Islamic University ofMalaysia.15 MaÍmËd al-Muzaffar, “Al-tharwah al-ma’daniyyah wa ÍuqËq al-daulah wa al-fard fÊhÉ”, (the Rightof the State and Individuals in the Mineral Wealth), (Beirut: DÉr al-Haq, 2nd edn., 1998).

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MaÍmËd divides the study into an introduction and three chapters and

supplements. In the introductory chapter he focuses on the nature of the minerals and

explains them from the linguistic and idiomatic perspectives, the kinds of minerals

and their impact on the development of human civilization and establishment of the

rules for modern scientific and technological renaissance. Then MaÍmËd talked about

the ownership of minerals, comparing between Islamic and contemporary

international laws regarding the method of acquiring the right to cultivate barren land.

Furthermore, he sheds the light on taxation of minerals, the meaning of rikÉz (ore), the

characters of its tax, and the kinds of minerals upon which the tax is imposed, and the

doctrines of different schools of fiqh in this regard, and the necessary conditions to

pay the tax on minerals. However, MaÍmËd just focuses on the rules of mineral

wealth in determining the right of individuals and state according to the jurisprudence,

comparing them with the international law, during the discussion of minerals he shed

the light briefly on oil wealth as well, which is the main theme of the present research.

In addition, MaÍmËd in his study does not talk about the economic development and

MaqÉÎid SharÊÑah that the present research aims to deal with.

Secondly: ÑAÍkÉm al-tharwah al-ma’daniyyah wa ÑatharuhÉ fi al-tanmiyah

al-iqtiÎÉdiyyah,16 (Rules of the Mineral Wealth and their Impact on Economic

Development) by MuÍammad ‘Ayman Al-KhatÊb.

This is a doctoral thesis, which was submitted to the Faculty of Islamic Studies

at Damascus University. The aim of the thesis is to demonstrate the importance of the

cultivation of barren land, giving it to the one who works at and extracts its resources,

and its impact on economic and social developments. Furthermore, it explains the

16 Al-KhatÊb, MuÍammad ÑAyman, “ÑAÍkÉm al-tharwah al-ma’daniyyah wa ÑatharuhÉ fi al-tanmiyahal-iqtiÎÉdiyyah, (Rules of the Mineral Wealth and their Impact on the Economic Development), (PhD,thesis, Damascus University, 2009).

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functions of the state and its role in the process of economic development through

intervention, planning and social justice in the society. It determines a compulsory

share for individuals according to SharÊÑah. The main contribution of this thesis is that

it discusses the resources and minerals al-maÑdan according to Islamic jurists’ and

geologists’ point of view.

Al-KhaÏÊb focuses on several issues; the legitimacy of cultivation of barren

land and its impact on economic development, the conditions of barren land and what

it carries of the minerals, the concept of development in modern economic and Islamic

thought and the role of the state in achieving economic development through the

mineral resources. In addition, he examines the tax on extracted minerals from the

earth and the sea, and the conditions of this tax.

In his thesis, al-KhatÊb more deals with the rules of mineral wealth as MaÍmËd

did, but besides focusing on the jurisprudence wealth, al-KhaÏÊb examines the role of

mineral wealth in economic development. However, the present research attempts to

examine the role of petrol explicitly in economic development in the light of MaqÉÎid

al-SharÊÑah, that makes the present research more specific and hence different from

al-KhaÏÊb’s thesis.

Second Category: In this category, we shall review the works which deal with

MaqÉÎid al-SharÊÑah. This category consists of three works.

Firstly: The work of M. Umar Chapra entitled “The Islamic Vision of

Development in the Light of Al-MaqÉÎid SharÊÑah”,17 was published by the

International Institute of Islamic Thought London, 1429/2008. The author argues that

the aim of this book is to explain what MaqÉÎid al-SharÊÑah or goals are, how they are

all mutually interrelated, and in what way they can together help to promote real

17 Chapra M. Umar, “The Islamic Vision of Development in The Light of MaqÉÎid al-SharÊÑah”,Occasional Paper Series: 15, (London: The International Institute of Islamic Thought, 2008), 118.