Connect with us

Economy

Contemporary Marketing Communication and the Case of Islam

Published

on

This paper discusses specifics of marketing communication in the case of Islam with a purpose to enable better and efficient understanding with the Muslim business community.

This would mean that in order to understand Islamic people it is essential to understand that according to the doctrine of Islamic religion Muslims submit entirely to God, and are ready to give up pleasures in this world so that they will enjoy them in the next world. One should keep in mind that for Muslims, life in this world presents only a transitional phase in which they try to achieve heaven in the other, next world. Hence, against this background marketing and business communication should be very sensitive, taking well into account Islamic teachings. Failure to respect here discussed principles may cause serious damage to companies hoping to operate on Islamic markets, even prevent them from entering such markets. Marketing and business communication represent the first public steps of companies entering the market. If they make a mistake at this stage it will be hard to achieve success in subsequent stages. Particular attention is given to understanding the institution of fatwa as a form of communication and its reference to public relations.

INTRODUCTION

   The world is fast becoming a global village, although it still remains a conglomerate of different cultures, religions, nations and traditions. These differences, arising out of various cultures and societies, are also present in business, marketing and advertising as well as in traditional and legal codes of conduct and practice.

   Internationalisation refers to the increasingly international dimension of the activities of enterprises, while globalisation is based on the presumption that the world is becoming more and more homogenous at all levels (such as economy, culture, consumer behaviour). The world has actually become a single market, and the ability to compete in this global economy is not necessarily the only challenge of the business world. It also has to deal with the constant spread of international trade.

   However, along with this increasing international economic activity there is a growing need to establish successful business communication between subjects from different cultural backgrounds. For business people and academic theoreticians involved in business relations with the Islamic world it is important, in order to be successful, to become acquainted with business practices, customs, norms and other rules applicable in those countries. This is the central topic of this article, which will be explored by methods of presentation, analysis, comparison, comment and generalisation.

   This paper examines the dimensions of business communication with a special emphasis on fatwa as an element and principle of Sharia (Islamic law), which has an important role in business relations with the Islamic world. In this context it represents a set of specifically formulated rules and customs in marketing and financial operations arising from traditional Islamic culture, which differ significantly from other cultures and civilisations. Foreigners coming from other cultural backgrounds experience communicational incompatibilities in all life situations, especially in various transactions and negotiations as well as in trade and business relations. The solution, expressed as personal and business success, lies in intercultural communication. The ability to communicate interculturally enables the realisation of business goals at the international business level.

   The aim of this article is therefore to present and analyse the set of rules, norms, customs and practices in the business world, especially in business communication, for those who have a theoretical and practical interest in business relations with the Islamic world. Business communication is based on a broad range of sui generis social, political, cultural, legal and religious rules that are applicable across the entire Islamic world and are laid down in Islamic law. Thus, our hypothesis is that the lack of knowledge of said rules and practices renders it very difficult to carry out successful marketing communication with and in Islamic environments. Within this context particular attention is given to understanding the institution of fatwa as a form of communication and its reference to public relations.

THEORETICAL FRAMEWORK

General Remarks

   Many people share the idea of human universality, believing that human beings are essentially alike and able to overcome the many differences that divide us. This idea may be most convincing, but is also the most difficult to overcome in intercultural relations. Each individual develops his or her way of living over the course of one’s life and in the course of socialisation. Culture is an important element when it comes to relations between people from various backgrounds, because it broadly incorporates the common social and physical environments they share, as well as a mixture of various influences and forces that affect their personal thinking processes and communicational behaviour. Culture thus forms the model that defines the way people live and their life orientations while it also lays down prohibitions, limitations and taboos.

   The reason such value systems exist is to organise and maintain an ordered society. In order to understand the values of other people it is necessary to examine the signs of their cultures, using our own culture as support rather than as a pattern that might be taken as a benchmark of perfection.

   When we talk about Islam we refer to Sharia Law (Sharia). According to Karčić (1997b:12) this term is usually translated as Islamic law or Islamic religious code. However, it does not represent a legal system in the technical sense of the word, but a “comprehensive system of human obligations” (Ibid.). Islamic law is a practical expression of religion that incorporates rules of a religious, moral and socio-legal character. And it is an understanding of those rules that enables successful marketing communication with the Islamic world.

   Sharia represents the legal foundation of the Islamic economy. Its role lies in providing the broad outlines of the Islamic economic system and is similar to the role of any other legal system. In secular societies laws are adopted, amended or abolished collectively based on the will of certain individuals, and as such they are subject to change. However, in Islamic societies the laws are regarded as sacred and therefore unchangeable, eternal and beyond human influence or change. In Islam religion is inseparably integrated into politics and society.

   Islamic law is, like any other religious law, based on God’s will and has a special influence on the legal systems of countries with majority Muslim populations as well as on many minority Muslim communities in other countries. The desire to achieve intercultural communication is increasingly present in various spheres of modern life, especially in marketing and business communication. The need for efficient intercultural marketing and business communication is even more intensified at the global level with the acknowledgement of different cultural models that reflect diversity of cultures. The ability to adapt to others, also those coming from very different, even hostile cultures, is the necessity of our time. Productive business communication between different cultures should not remain a mere hope nor an accidental accord or pleasant event. It should include those dimensions of diversity that will overcome ignorance and discover common, mutual interests.

   Islamic law has the inherent capacity to develop and adapt to time and place. It is the duty of every generation to read the Qur’an, create its own agreement and apply its own abilities to implement it in everyday life. Islamic law is the basis of the Islamic economy. Knowledge of Islamic law enables successful marketing and business communication in the Arab-Islamic world. Islamic laws are universal, they apply to all Muslims and are binding upon them wherever they live.

   Marketing and business communication has an important role in Islamic societies. From its very beginnings Islam has stressed the importance of commerce and trade for society. Islamic societies are not isolated from the rest of the world. This means that marketing and business communication in those societies is a complex mix of the Western model and the traditional Islamic environment

   In Islamic law economic principles are based on supporting and developing activities that apply to people and are favourable for the state, such as: trade in goods that are not harmful to people, free market and free pricing, except in cases when state intervention is required, appropriate compensation for the labourer “before his sweat dries up”, prevention of fraud, protection of (private, social and state) property and means of production, caring for the poor, the disabled and those unable to work, protection of water, plants and animals, prohibition of environmentally unfriendly technologies, nationalisation of resources that belong to everyone (water, gold, oil and other natural resources etc.), and other (comp. El-Qaradawi, 1997a: 331).

   Other principles of Islamic law regulate the fields of politics, education, media, culture, family life etc., all of which directly or indirectly influence (successful) marketing communication. Megatrends in global marketing are increasingly based on special marketing programmes, which require detailed knowledge of the targeted market segment and consumer group. In order to be successful, the countries that cooperate with the Islamic world must therefore be familiar with the relevant market and with the codes of conduct that apply to any sphere of social life.

   From the theoretical point of view this article is based on some important works written by authors[1] who have dealt with issues of Islamic law, communicology, marketing, economics, political anthropology, phychosociology and politology. Therefore the central methods applied in this article include interdisciplinary comparison and generalisation with an emphasis on findings in Islamic law and communicology.

Islam and Marketing Communication

   The article analyses communication strategies in the Islamic world and their influence on business cooperation and communication with Western and other cultures. It is based on the mental pattern of a member of the Islamic community that defines the conduct of a Muslim as a religious person and affects marketing communication. It presupposes that the cultural patterns of behaviour arising from Islamic law determine the manner in which marketing communication is carried out in this part of the world.

   In the research process special emphasis was placed on the notion of fatwa[2], which lays down the rules regarding how Muslims should behave in unclear or questionable situations and that often relate to business activities and other fields of work and life (e.g. trade and communication with non-Muslims). Fatwa is a solution or answer to a concrete problem based on Islamic law that is issued by the mufti on a case-by-case basis. It represents an important institution in Islamic law, its role being to bring Sharia closer to the people in terms of the present time (everyday life) and place. Various public relations techniques must be applied in order to present a fatwa to the general or religious public. Those who issue fatwa must be well familiar with its mission, its aims and goals, relations with the media, writing texts for the public, preparation of public speeches and many other details. Inevitably the media plays an important role in this process. The aim of the person issuing fatwa is to create public opinion among a social community that would reflect the spirit of Sharia law. Since fatwa is issued in spoken and written form, public relations techniques regarding the written text also play an important role. Although the institution of fatwa means one-way communication within the Islamic community and society, such opinions must be unconditionally implemented. Fatwa is based on the teachings of the Koran (Qur’an), and God’s will is irrevocable.

   Note should also be taken of the social exchange process, which has been a constant feature of civilised societies and their inherent mechanisms. Exchange occurs due to the unequal distribution of the necessary resources among people and is indented to address and eliminate the lack of appropriate means of satisfying individual needs and desires. Exchange methods have developed continuously throughout the evolution of civilisations and actually enabled them to evolve in many respects. Therefore it may reasonably be suggested that “the exchange process is the most important mechanism that enables the functioning of society” (Jančič, 1996: 45).

   Without knowing the specificities of the Islamic world and all the dimensions of its social system it is impossible or at least very difficult to establish and carry on any successful business activity. It requires two-way communication between the Eastern and Western ways of thinking, and accepting the differences between those societies. Despite all of the differences between Islamic and Western institutions and economic systems, there is intensive cooperation between the two worlds.

   The aim of Islamic law is to regulate all areas of human activity, not only those that may entail legal consequences. According to Islamic theory Sharia represents the body of criteria that enables one to differentiate between law and non-law. Sharia is a complete moral and legal system that directs the regulation of all areas of human behaviour with the aim of achieving harmony with divine law. Islamic lawyers believe that adherence to Sharia rules and principles not only brings an individual closer to God but also ensures development of a just society in which each individual has the opportunity to realise his or her capabilities, which in turn enables and gives rise to progress that benefits everyone. In other words: religion as a set of values and beliefs establishes goals and ideals to be implemented by society, while Islamic law lays down the code of conduct to be followed by Muslims if they wish to realise those goals.

   Generally, Islam places a strong emphasis on communication. The Qur’an contains certain ayahs[3] that point to the differences between people and the need to get to know one another. A very good example is the following ayah: “O mankind, indeed We have created you from male and female and made you peoples and tribes that you may know one another.” (Al-Hujurat: 13). The Qur’an also lays stress on trade and commerce, such as the following ayah: “O you who have believed, do not consume one another’s wealth unjustly but only [in lawful] business by mutual consent. And do not kill yourselves [or one another].” (Al-Nisa: 29).

   Sharia is a literal understanding of everything that Allah has prescribed in order to regulate human life. It is manifested in the fundamental postulates of religious belief as well as in the basic principles of power, morality, everyday behaviour, science etc. (Kutb, 1996: 90). Islamic attitude to law and Islamic law (in the modern European sense) are notions that are often misunderstood or only partly understood in Europe. In order to understand Islamic law in its core sense one should start by dealing with theological rather than legal issues (Nielsen, 1986).

   From the Sharia point of view it is understandable that in Islam it is not possible to separate different spheres of human life as is possible in the modern West where – as Max Weber has taught us in considerable detail – the value fields of ethics, science, religion and art are separated and governed by the law of non-interference and intrinsic autonomy (Weber, 1956). In Islam the language of morality constantly borrows from the metaphoric language of art, while religious prayer may easily turn into a political pamphlet without triggering any feelings of inner inconsistency or violation of formal taboos. This results in the very complex nature of Islamic language and a direct existential experience. Any simplification of that language would seriously undermine such experience. In order to understand jihad, for instance, one should have a look at the root of the concept. In Islam the root is the Qur’an itself (Debeljak, 1994:14).

   Knowledge and understanding of Islamic codes and rules is a precondition for successful marketing and business communication both for Muslims communicating with the Muslim and non-Muslim worlds and for non-Muslims communicating with the Muslim world.

   In Islamic law the principles of economy are based on supporting and developing all activities that are intended for the people and are favourable for the state. Those principles include:

          trade in goods that are not harmful to people,

          free market and free pricing except in cases when state intervention is required,

          appropriate compensation of the labourer “before his sweat dries up” (the hadith),

          prevention of fraud,

          protection of (private, social and state) property and means of production,

          caring for the poor, the disabled and those unable to work (zakat, sadaqah),

          protection of water, plants and animals,

          nationalisation of resources that belong to everyone (water, gold, oil, mines and other natural resources etc.) (El-Qaradawi, 1997a: 331).

   According to the classic methodology of Islamic law the basic goal of any individual activity in society is to create benefit and eliminate disorder (Sušić, 1996: 26-53). Other principles of Islamic law regulate the fields of politics, education, media, culture, family life etc., which in one way or another directly or indirectly affect successful marketing and business communication and any business activity.

   Communication plays an important role in human history. We could say that the history of mankind is actually the history of communication, especially in modern societies. Communication is something that is with us at birth, and follows us through life until death. The communication process is based on information transfer.

   EnciklopedijaSlovenije(1999: 390-391) describes marketing communication as the public presentation of organisations and the offer of products, services and ideas with the aim to improve their market position under competitive circumstances. Expressions of advertising and (economic) propaganda are also used to denote marketing communication. The term marketing communication is generally accepted as an expression denoting various forms of communication between organisations and their environment. Traditional forms of marketing communication (the so-called promotional mix) include personal sales, advertising, sales promotion, publicity and public relations. The central form of marketing communication is advertising, i.e. ordered, paid and signed creative mass communication. Media by which advertising messages are communicated include newspaper, radio, television, Internet, posters, banners, brochures, catalogues, display windows etc. The goal of advertising is to generate consumption of products or services as well as to enhance the reputation of organisations. Moreover, advertising is also used for non-commercial, public interest issues. The level of creativity employed and achieved often approaches the level of art. Advertising often uses exaggeration in order to achieve certain effects, sometimes even as it flirts on the border of the ethically acceptable. Some countries limit advertising freedoms with regard to certain products (tobacco, alcohol, medicines, weapons) as well as content and means of advertising via legal restrictions and regulations as well as advertising codes and practices.

   Marketing communication is a special form of communication process where the company is usually the message sender and the consumer is the message receiver, the whole process being targeted at the consumer. The aim of all marketing communication activities is to establish a connection between suppliers and consumers. Communication is an exchange rather than a one-way flow of information. Speaking to someone does not necessarily mean communicating with that person. Communication occurs the moment the recipient actually receives the message that the sender intended to convey to him/her, and reacts to it. Rejection of the message, misinterpretation and/or misunderstanding of it etc. are examples of ineffective communication (Ule, Kline, 1996: 53).

   Most authors regard communication as an exchange of information. This article is focused on the exchange of information related to marketing and business communication of modern companies and companies that are fully or partly based on Islamic law.

   Although exchange as the basis of marketing was familiar to numerous early theoreticians the pioneering work in this field was carried out by McInnes (1964). The latter pointed to the role of market as the focal point of (economic) exchanges between suppliers and buyers. According to McInnes markets result from the social intercourse between people, when the makers and users of economic goods and services seek to satisfy needs and desires through exchanges. He defined marketing as “any ‘motion’ or activity that actualises the potential relation of the producers and consumers. Thus marketing is basically related to the market. The work of marketing always begins with the discovery of market potential. The concept of marketing in its widest sense, therefore, is any activity which actualises the potential market relationship between the makers and users of economic goods and services.” (Jančič, 1996: 47).

   Communication occurs in a social context and is determined by it. Messages are given their meaning within certain social contexts, e.g. within a group, institution etc. Communication is based on the common social knowledge of its participants as well as their history and their expectations, plans and anticipation for the future (Ule, Kline, 1996: 29).

FATWA AS A FORM OF COMMUNICATION  

   As an institution of Islamic law fatwa may significantly affect communication in certain societies. Certain fatwas may result in the limiting or prevention of communication, especially when they concern the prohibition of trade between Muslims and Jews. This may also cause other forms of cooperation to be discontinued. Nevertheless, the basic aim of fatwa is to regulate relations in a society by eliminating disorder, establishing a spiritually healthy society and creating social welfare. This is based on the principle that Islam is there to help people and not make their lives difficult.

   The institution of fatwa has developed as an expression of the cautelar nature of Sharia law that is reflected in efforts to prevent any form of behaviour that might jeopardise the ideal social order. In the Qur’an the term fatwa and its synonyms refer to the clarification of ambiguous or disputable issues. Giving such clarifications was one of the tasks of the Prophet Mohammad. However, in terms of Sharia law the above terms do not carry the usual technical legal meaning. In the former case clarifications embody the norms of the Qur’an, while in the latter case they carry the normative custom of God’s Prophet (Karčić, 1997b: 64).

   There are some similarities between fatwa and the institution of responsa in Roman law, but also significant differences that reveal the specific Islamic character of fatwa. Roman law uses the institution of responsa which comprises a body of opinions given by lawyers on disputable issues that arise during or in relation to court proceedings or when they are theoretically justified (Stojčević, 1978: 37). In the beginning responsa were given by lawyers who enjoyed their students’ trust. From the reign of Octavian Augustus onwards this function was performed only by select lawyers with whom the princeps vested certain powers in order to ensure uniformity and control of justice. Formally responsa did not have any legal force, although usually an ordinary judge could not reject the opinion of an authoritative lawyer. In the 5th century all legal acts were given legal force and the function of reponsa lost its significance with the introduction of the extraordinary procedure.

   The institution of fatwa is an important communicological element of the Islamic provenience. Unlike responsa which only deals with legal issues within the system that separates law from religion, fatwa embodies both legal and religious norms with ethical features. In Islamic law the lawyer’s creative role can only be expressed in areas that are not regulated by obligatory texts, while in Roman law there are no such situations. The change in Islamic law occurred with the introduction of the notion of “closing of the door of ijtihad”, which reflected on the legal character of fatwa, and for which there is no comparable component in Roman law. So the institution of responsa evolved along another path (comp. Đozo, 1996).

   Muslim countries did not have the same control over the development of legal doctrine as is known in Roman law, where the function of respondere was vested as a privilege only in certain lawyers. Besides being issued by official and private muftis, fatwa’s authority depended primarily on the power of the argument on which it was based.

   Ijtihad is an Islamic discipline that aims to clarify the fundamentals of Islamic law. It is one of the most important specifics and features of Islamic culture, as it proves the general relevance and contemporary applicability of Islamic law regardless of time and place, while at the same time ensuring its existence and perfection. Ijtihad is a means of finding direction and applying Sharia rules to all cases and life situations. It confirms the specific nature of Sharia as the conclusion and final testament to all previous divine laws. Since the Muslims believe it is the last revelation from God and that there will be no new divine revelations, it contains all the features and capacities to cover all human needs.

   Ijtihad is closely related to the institution of issuing fatwas. A mujtahid[4] is an Islamic scholar who is competent to independently offer opinions and solutions in Islamic jurisprudence (fiqh). In order to issue a fatwa one must have a very good knowledge of the situation for which fatwa is required, especially an understanding of the mental state of the person requesting fatwa and the general understanding of the time and place in which such a person lives.

   Fatwas are issued by muftis who are not fully comparable to mujtahids in all aspects. Mujtahids have their own methodology for resolving legal questions and are independent of other legal schools and political power, while the same does not hold for muftis. Truly a mufti can be a mujtahid, but the history of Islam has shown that his function is mainly to defend the constitutionality of the order that is based on the legal solutions laid down by a certain school of law (Džananović, 1999: 14).[5]

   In Islamic law, which regulates and sanctions the behaviour of individuals within an Islamic community, fatwa is a special form of communication of religious leaders with their followers and various publics (business people, men, women, members of other religious communities etc.).

   Fatwa is a form of order, provision, instruction, interpretation, call for action or motivation that is issued under certain social, political, economic, cultural, religious, demographic and other conditions. It is issued by Islamic religious leaders who belong to the so called ulamas, i.e. the senior or highest religious scholars whose lowest title is mufti.

   In judicial circles no one but a capable scholar who correctly and thoroughly understands the religion is allowed to form and offer the Sharia opinion. Otherwise he may declare something allowed which is prohibited, and something prohibited which is allowed, abolish certain obligations and oblige people to do what Allah does not oblige them to do, approve or introduce novelties, declare believers to be non-believers and forgive non-believers for not believing. Each and all of these acts are potentially dangerous since they arise out of a lack of knowledge or fiqh by people who dare issue fatwas and do as they please. We witness this today, when religion has become a place where the flock grazes as it pleases. Everyone who has a tongue or a pen speaks or writes about religion, although the Qur’an and Sunnah as well as the good predecessors of Islamic ummah seriously threatened those who dare enter this dangerous zone of religion without fulfilling the necessary conditions and proving readiness. And it is difficult to fulfil and prove such conditions and readiness (El-Qaradawi, 2000: 55).

   Fatwa is therefore a publicly issued, declared, verbally or otherwise issued order, provision, instruction, information, interpretation, final decision, legal opinion etc., which is, in the Islamic world and unlike in Roman law, an expression of God’s will and as such poses no other sanctions except for the moral ones which the religion interprets as punishment in this and other (posthumous) worlds. Unlike the obligatory nature of orders in other cultures and civilisations, fatwa is a constituent element of Islamic law that is based on the teachings of the Qur’an and is binding for all Muslims in relations both within the Muslim environment and within internal and external non-Muslim environments.

   Thus fatwa can be understood as a constituent institution of Sharia law that uses the holy Muslim book the Qur’an to explain what is not prescribed in detail or not sufficiently understood due to the time of occurrence, complexity and multiple dimensions of everyday life under modern conditions. Fatwa is a supplementary interpretation that points to obligatory behaviour in concrete circumstances of everyday life and daily political, economic and cultural situations. In order to understand the notion of fatwa it is important to know that fatwa emerge in times of crisis, under extraordinary circumstances and in spiritual moments of the Islamic community. When everything follows the settled or determined path there is no need for regulation through fatwa. Punishment for breach of fatwa is usually of a moral-religious nature and expressed through contempt and excommunication from the social community, which is regarded as a very severe sanction in the Islamic world, where the traditional feeling of belonging is very strongly present.

FATWA AND PUBLIC RELATIONS

   In order to evaluate fatwa as a form of largely public (and often also mass) communication within the categorial and conceptual structure of modern aspects of public relations, we should examine the basic principles of this increasingly important form of social (functional) public communication from the point of view of religious marketing, multiculturalism, ecumenism, sociology of religion, history of civilisations, ethnology, social anthropology, psychosocial aspects of geography etc.

   The first aspect is the informative component of public relations and fatwa. Fatwa is both an instruction and a legal opinion, representing information per se as well as the subject or object of information. Its intentional logic a priori means it contains information within and on the content of fatwa. Fatwa thus fulfils this component of public relations.

   The ontogenesis of the category of public relations is already contained in fatwa as an institution, notion and category. In its essence fatwa is thus a series of precisely selected public relations between the Islamic community (institution) and the public (religious believers). Fatwa is public communication that creates and counts on created public relations (based on the Qur’an and Sharia law) with the Islamic community, religious believers inter se and with external subjects (in the political, economic, religious, social, cultural and other spheres). As such fatwa belongs to what is regarded as classical public relations activities.

   If viewed from the aspect of the persuasive and binding component of public relations, fatwa (by informing, instructing and drawing attention to a concrete problem) always convinces the public (religious believers) of something and persuades them to certain behaviour, adapting the presupposed (through marketing research) value systems of Muslim customs and behaviour as regulated by the norms of the Qur’an, Sharia law, the hadith etc. In this connection fatwa represents an essential and constituent part of public relations. Its goal is not to provide neutral information but information pro domo sua, which triggers (re)active behaviour according to given instructions.

   The media play a special role in presenting fatwa to the public. It is a channel through which to reach the public. It includes largely special interest-based media such as professional and scientific publications targeting certain publics. Despite the key importance of media for public relations many PR practitioners are so busy with media coverage that they forget why contacts with the media are so important. They see the media as the publicity channel for their activity and thus believe that media coverage as such means that they address and influence several publics – none of which is far from the truth. Media includes both personal communication and specialised publications. The truth is that mass media is probably the main channel for reaching the public and as such is closest to public relations practitioners (Hunt, Grunig, 1995: 43-44). One should not forget the special role of religious media, which provides a detailed explanation of fatwa. Religious media is particularly important in non-Muslim countries where no such explanation is provided in the general media.

   Fatwa is issued in spoken or written form by the religious leader. It contains all the dimensions of promotion which unlike advertising (which pushes the object of the advertisement towards the consumer) pulls the consumer (religious believer) towards the object of promotion. Fatwa usually does not represent classical business communication. There is no negotiation or agreement – an authoritative decision is made in advance determining who is entitled to say, instruct, teach, search, write and declare and who should listen, be instructed and unconditionally respect what is prescribed or regulated with fatwa.

   In this respect fatwa does not enjoy or embody the two-way nature and equality principle typical of communication in the framework of public relations. Nevertheless, it does retain the co-orientational aspect, since respect for the Qur’an, Sharia law and hadith norms have been placed in advance on the (forced and voluntarily accepted) pedestal of perfection.

   This gives fatwa – as opposed to the basic philosophy of communication in public relations – an autocratic and metaphysical dimension. As such it can represent communication only in the case of prior acceptance and respect for Islam as religion, Allah as the almighty creator and master of this world and heaven, Mohammad as God’s last Prophet, and Islamic law as the conclusion of all prior findings.

   This certainly is the case in most of Islamic world, especially in those parts where religion has not been attributed a lay character through secularisation. There fatwa means two-way communication in which the teacher and the student roles are determined and assigned in advance, all wrapped in the divine holiness of Allah, who is personified as the great imam (religious and community leader) or ulama (with mufti the lowest title in terms of issuing fatwas).

   Public relations are a mild form of informative propaganda and communication activity whose aim is (unlike in advertising) to cultivate a long-term positive psychosocial attitude towards or opinion of a certain economic, political or religious issue. We are not what we think we are but as others see us. It is up to us to make a series of communicational activities to determine how others will see us.

   The concept of interaction covers all processes taking place between two or more persons as well as between an individual and a group of people or between groups of people. The most important process of social interaction is communication, i.e. the exchange of information. Social interaction and communication are important aspects of social psychology and other social sciences. However, social sciences evaluate social interaction and communication from the point of view of social and cultural systems rather from the point of view of individuals who are involved in interaction. The essential aspect of social interaction is that its participants constantly react to each other, trying to adapt their behaviour to their own intentions and to the expected or perceived intentions of their partners (Ule, 1997: 198-199).

   In the case of fatwa this two-way communication does not exist in the public arena. Instead it is a one-way order and those to whom it is directed must unconditionally respect it. The sanction for not following or executing a fatwa is of a moral character.

   In principle fatwa represents one-way communication, although it contains some elements of two-way asymmetrical communication (scientifically supported persuasiveness, established feedback relationship and examination of opinions), being a form of scientific persuasion based on the teachings of the Qur’an. Moreover fatwa also contains some elements of two-way symmetrical communication (mutual understanding, dialogue, balance and valuation of understanding), its goal being to overcome eventual conflicts within a society or religious community and to establish good relations with strategic publics. Fatwa is therefore a complex concept when it comes to public relations. It is actually based on the Qur’an, which requires unconditional respect and affords little or no chance for polemicising.

   The religious community should be responsible towards its publics in order to establish and maintain good relations with them. In general it should be responsible towards society as a whole. However, society is a large and ambiguous community. It is far easier to recognise the publics as groups on which the religious community can exert an effect. In order to be responsible, the religious community should answer to its public for the consequences of its actions. Responsibility means symmetrical (mutual) communication with its publics. Such communication creates productive relations that are (well) suited to the religious community. Consequently, public relations and public responsibility have become almost synonymous terms. The religious community can not enjoy good public relations if it does not act responsibly toward its publics.

CONCLUSION

   This article discusses Islamic communicational elements stemming from the Qur’an as the specific and basic conditions for understanding Islamic people (due to the complexity of this subject and the limitations of the size of this article a certain level of generalization was applied). It stems from the hypothesis that it is the lack of knowledge of the above discussed rules and practices that renders it very difficult to carry out successful marketing communication with and in Islamic environments. Hadiths as communicological norms enable a Muslim to establish better communication in relation to God, the Prophet Muhammad, fellow people and everyday life as regards religious and secular issues, as well as general communication within Islamic society and beyond. The substance of hadiths is testament to the readiness of Islamic people to respect divinity, to follow the life and work of the Prophet Muhammad, and apply hadiths to regulate life in the Islamic community as well as relations with other communities.

   The basic principle of Islam is that all secular activities, including those of an economic nature, are lawful and permitted except for those that are explicitly prohibited in the Qur’an. Islamic law enables Muslims to discover and know what is good for them, to enter freely into transactions, to conclude agreements and carry out secular activities fairly and impartially. Islamic law leads Muslims through their lives. Thus they are guided by Sharia also in communication. Companies intending to operate on a market that is partly or entirely based on Islamic law should take into account these principles in all dimensions of their activities on that market. Understanding the basic principles of Islamic religion, Islamic law, its sources, Sharia rules, ijtihad and religious-law schools is a precondition for successful marketing and business communication on Islamic markets. An important fact to bear in mind is that Islamic law adapts to the spirit of time and place. This is supported by ijtihad, which updates and harmonises Sharia rules to suit contemporary life. However, adaptation and application of Islamic law to modern societies requires a thorough knowledge of Islam. If such knowledge is lacking adaptation will not be appropriate, and market and business communication will be based on false foundations.

   In order to understand Islamic people it is essential to understand that according to the doctrine of Islamic religion Muslims submit entirely to God, and are ready to give up pleasures in this world so that they will enjoy them in the next world. For Muslims, life in this world is only a transitional phase in which they try to achieve heaven in the other, next world. Against this background marketing and business communication should be very sensitive, taking well into account Islamic teachings. Failure to respect those principles may cause serious damage to companies hoping to operate on Islamic markets, even prevent them from entering such markets. Marketing and business communication represent the first public steps of companies entering the market. If they make a mistake at this stage it will be hard to achieve success in subsequent stages.

   As regards various recently emerging situations and issues, the concept of ijtihad as a special institution of Islamic law provides answers to all of today’s questions that concern Muslims. Ijtihad establishes communication between an Islamic scholar (mujtahid) and the Islamic religious community, and represents a perfect case of two-way symmetrical communication. On the other hand the institution of fatwa represents, in principle, one-way communication, although it contains, as a form of scientific persuasion based on the teachings of the Qur’an, some elements of two-way asymmetrical communication. Moreover fatwa also contains some elements of two-way symmetrical communication, as it aims to overcome eventual conflicts within a society and/or to establish good relations with strategic publics. Fatwa is therefore a complex concept when it comes to public relations. It is based on the Qur’an, which demands unconditional respect and affords little or no room for polemicising.

   Although at first sight it may seem that marketing communication in the Islamic world is a one-way process and that Islamic societies are based on one-way communication, detailed analysis of Islamic law paints a different picture. This is borne out by the institution of fatwa, which contains some elements of two-way asymmetrical and symmetrical communication. Having in mind the above presented and discussed, it is our opinion that this article has proved on a general level the validity of our hypothesis. However, for a detailed and comprehensive analysis an additional and more extended research would be necessary.

   Marketing and business communication in Arab-Islamic societies is a mix of Western concepts and the rules of Islamic law within an individual’s traditional environment. The specific mix of elements in this equation depends on the environment or the country where marketing and business communication is carried out. The typical Islamic person is sensitive, traditional and reserved towards the West. Against such a background marketing and business communication has to be employed in the most appropriate manner, and should be adapted to the specific environment if it is not to fail, either in part or entirely.

References

Ahmed, Akbar. 1993. Living islam. London: BBC Books.

Al-Harran, Saad. 1996. Islamic Marketing Strategy. Malaysia: Longman.

Al-Hujurat: 13. http://quran.com/49/13 (24.10.2014)

Al-Nisa: 29. http://quran.com/4/29 (24.10.2014)

Ayish, I. Muhammad. 1998. Communication Research in the Arab World: A New Perspective. The Public, Journal the European Institute for Communication and Culture, Vol. V (1998), 1. Pp. 33–57.

Debeljak, Aleš. 1994. Islamska “sveta vojna” med duhom in telesom. Časopis za kritiko znanosti, let. XXII, 1994, št. 170-171, stran 14.

Džananović, Ibrahim. 1999. Idžtihad u prva četiri stoljeća islama. Sarajevo: Fakultet islamskih nauka Sarajevo.

Đozo, Husein. 1996. Fetve u vremenu. Srebrenik: Ilmija.

El-Gazali, Mohamed. 1998. Vjerovjesnikov sunnet između šerijatskih pravnika i znanstvenika hadisa. Tuzla: Muftijstvo Tuzlansko.

El-Qaradawi, Jusuf. 1997a. Halal i haram u islamu. Sarajevo: Ljiljan.

El-Qaradawi, Jusuf. 1997b. Suvremene fetve (izbor). Tuzla: Harfo-Graf.

El-Qaradawi, Jusuf. 1999. Univerzalni model društvenog života. Tuzla: Muftiluk tuzlanski.

El-Qaradawi, Jusuf. 2000. Razumijevanje prioriteta. Sarajevo: Bemust.

Enciklopedija Slovenije. 1999. Zvezek XV. Ljubljana: Mladinska knjiga.

Garaudy, Roger. 2000. Živi islam. Sarajevo: El-Kalem.

Grunig, Hunt. 1995. Tehnike odnosov z javnostmi. Ljubljana: DZS.

Guenon, Renė. 1997. Osvrti na tesavuf i tao. Sarajevo: DID.

Hamidullah, Muhamed. 1993. Uvod u islam. Jeddah: IIRO.

Huntington, Samuel. 1998. Sukob civilizacija i preustroj svjetskog poredka. Zagreb: Izvori.

Jančič, Zlatko. 1996. Celostni marketing. Ljubljana: FDV.

Južnič, Stane. 1977. Socialna in politična antropologija. Ljubljana: Partizanska knjiga.

Karčić, Fikret. 1997a. Istorija šerijatskog prava. Sarajevo: Fakultet islamskih nauka u Sarajevu.

Karčić, Fikret. 1997b. Studije o šerijatskom pravu. Zenica: Bemust.

Karčić, Karić. 1998. Šerijatsko pravo u savremenim društvima. Sarajevo: Fond otvoreno društvo BiH.

Kutb, Sejjid. 1996. Znakovi na putu. Tuzla: Muftijstvo Tuzlansko.

McInnes, W. 1964. A Conceptual Approach to Marketing. In: R. Cox, W. Alderson and S. Shapiro (eds). Theory in Marketing. Homewood, IL: Richard D. Irwin. Pp. 51–67.

Nielsen, S. Jorgen. 1986. Islam Law and Its Significance for the Situation of Muslim Minorities in Europe: Report of study project, Churches’s Committee on Migrant Workers in Europe Expert Group on Islam, Oegstgeest, November 21, 1986.

Nomani, Farhad, Rahnema, Ali. 1994. Islamic Economic Systems. New Jersey: Zed Books.

Sadeq, Abdul Hasan. 1992a. Financing Economic Development. Malaysia: Longman.

Sadeq, Abdul Hasan. 1992b. Readings in Islamic Economic Thought. Malaysia: Longman.

Sayyid, Tahir. 1996. Readings in Microeconomics An Islamic Perspective. Malaysia: Longman.

Schuon, Frithjof. 1996. Dimenzije islama. Sarajevo: El-Kalem.

Stojčević, Dragomir. 1978. Rimsko privatno pravo. Beograd.

Sušić, Mustafa. 1996. Usulu-l-fikh (Metodologija islamskog prava). Sarajevo: IZBiH.

Ule, Mirjana. 1997. Socialna psihologija. Ljubljana: FDV.

Ule, Mirjana, Kline, Miro. 1996. Psihologija tržnega komuniciranja. Ljubljana: FDV.

Vreg, France. 2000. Politično komuniciranje in prepričevanje. Ljubljana: FDV.

Weber, Max. 1956. Wirtschaft und Geselschaft. Tübingen: J. C. M. Mohr.

Zuhajli, Wehbe. 1976. Idžtihad u islamskom šerijatu. Rijad: Univerzitet u Rijadu.

 


[1] El-Qaradawi (1997a and b, 1999, 2000), Nomani, Rahnema (1994), Sadeq (1992a,b), Sayyid (1996), Al-Harran (1996), Ayish (1998), Karčić (1997a), Karčić, Karić (1998), Sušić (1996), Ahmed Akbar (1993), Garaudy (2000), Schuon (1996), Guėnon (1997), Đozo (1996), El-Gazali (1998), Kutb (1996) and Hamidullah (1993).

[2]A legal opinion based on Sharia law issued by a mufti or mujtahid (an Islamic scholar who is entitled to issue fatwas).

[3] A verse or statement in Qur’an.

[4] An Islamic scholar who is entitled to independently give opinions and solutions regarding Islamic law.

[5] For example, the renowned mujtahid El-Qaradawi (1997b: 141-142) in his book Modern Fatwas laid out some of the most important fatwas that relate to the life of Muslims.

Continue Reading
Comments

Economy

Rohingya Influx and its Economic Significance for Bangladesh

Published

on

Authors:Shuva Das & Sherajul Mustajib Sharif*

It is generally perceived that refugees are curse for host countries though the former often play positive roles for the latter. The context of Bangladesh over hosting Rohingya refugees is portrayed in such a way that demonstrates they are solely an obvious danger for the country in the areas of its economy, politics, environment, health, and security. The above argument is true but it is a one-sided view which is enough to make hospitable Bangladeshis hostile against the Rohingya. Thus, it is crucial to explore in which areas the Rohingya have made positive contributions in Bangladesh. In this article, we intend to elucidate the economic benefits offered by the displaced Rohingya for the host country.

Brief Overview of the Rohingya Crisis

The Rohingya crisis is one of the worst humanitarian disasters in the modern world. The degree of violence and persecution taken against the Rohingya by the military of Myanmar has reached in an extremely horrendous extent in which an UN fact finding team in 2018 found genocidal elements. The Rohingya are an ethno-religious Muslim minority group of Myanmar. Though they have lived in Rakhine state of the country for centuries, to the Burmese government and Buddhists they are illegal Bengali immigrants who came from the present Bangladesh to Rakhine State for works during British colonial rule. The Burmese government withdrew their citizenship status through the “1982 Citizenship Act”, rendering them stateless. Since 1978, they have experienced several brutal military crackdowns and every time they have taken shelter in Bangladesh. In particular, since 2017 when the military of Myanmar launched “clearance operation” against the Rohingya in retaliation of an insurgent attack allegedly carried out by a Rohingya rebel group known as the Arakan Rohingya Salvation Army on several police posts, a significant number of Rohingya, over 740,000, have fled to Bangladesh from Myanmar. This number with the previously remaining Rohingya refugees has exceeded the one-million mark in the host country, intensifying the level of strain on it.

Economic Advantages Offered by the Rohingya Refugees

Bangladesh is a small developing country and with a population of about 16.7 million, it is the world’s eighth most populous country. In these circumstances, over one additional million Rohingya refugees are competing with cheaper labor against many local people for jobs in the Rohingya-hosted areas in the Cox’s Bazar district of the nation, and they have put extreme pressure on its limited resources. Nonetheless, to graduate from the pool of the UN’s Least Developed Countries, with the massive refugee burden Bangladesh successfully accomplished all three required criteria in 2018 and is on track to be graduated by 2024. On an average, the real GDP growth of the country from 2017 to the running 2020 has also remained stable at around 7.70. The Rohingya influx has immense significance on the thriving economy of Bangladesh.

To begin with, Rohingya refugees have created numerous job opportunities for many Bangladeshi people who are working as volunteers, relief specialists, researchers, health workers and so on in almost 150 national and international aid groups and non-governmental organizations currently operating in Rohingya camps. In the United Nations High Commissioner for Refugees (UNHCR), for instance, more than 200 Bangladeshis have been employed to enhance its operational efficiency on the refugee crisis. Through working in humanitarian organizations, they are earning not only handsome salaries but quality skills. Besides, a good number of local people of the Rohingya-hosted areas in Bangladesh are doing transportation jobs to convey goods in the Rohingya camps.

Another vital point is that an entrepreneurial spark is currently seen among local host population. International donor agencies provide relief goods to Rohingya refugees who sell these to local traders to bring diversity in their daily meals. Local entrepreneurs purchase the relief products from Rohingya refugees at very low rate and sell these to their fellow Bangladeshis in a profitable price. Apart from this, the UNHCR took an ambitious project in 2019, under which 250 poor women of Cox’s Bazar along with equal number of Rohingya women have been given training in cloth crafting. And it has the will to train more women. Backward female population of Bangladesh can, in this manner, be empowered to be entrepreneurs, and effectively integrated into its booming economy.

Last but not least, International Organization for Migration, and the UN Food and Agriculture Organization in 2018 provided micro gardening kits to 25,000 Rohingya and 25,000 host households. This has opened a new economic window in South Eastern Bangladesh. To feed their gardens, the Rohingya purchase compost from Bangladeshi women. In addition to eating, they sell their produce in the host community market thereby generating a number of local vegetable dealers. The combined production of the Rohingya refugee and host families by micro gardening are enormously contributing to alleviate an estimated 50,000 metric ton yearly food deficit in Cox’s Bazar.

Concluding Remarks

Rohingya refugees have brought an economic boon for Bangladesh in multidimensional aspects. Because of them, many skilled and unskilled Bangladeshi people, especially women, have found their income sources. Positive contributions of the Rohingya should not be underestimated though these are less worthy if weighed against the overall drawbacks they have caused for the host nation. Since the Rohingya crisis is a protracted one having no possible certainty to be resolved soon, the government of Bangladesh needs not only to continue their diplomatic pressure against Myanmar but to focus on how effectively they can benefit from the displaced population in economic aspects.

*Sherajul Mustajib Sharif holds his BSS and MSS degrees from the Department of International Relations, University of Chittagong, Chittagong, Bangladesh.

Continue Reading

Economy

WTO’s ‘Crown Jewel’ Under Existential Crisis: Problem Explained

Published

on

World Trade Organization (WTO) is an international body that acts as a watchdog keeping an eye on the rules of trade between nations. WTO came into operation in 1995 and was founded as a successor to the General Agreement on Tariffs and Trade (GATT), which was incorporated in 1948. It acts as a forum where WTO members discuss and negotiate trade issues. Moreover, it works in the form of different multilateral as well as plurilateral WTO agreements. These agreements live at the heart of WTO as they deal with different aspects of trade policy.  Agreements like General Agreement on Trades and Tariffs; General Agreement on Trade in Services; The Agreement on Trade-Related Aspects of Intellectual Property Rights etc. forms the centerpiece of WTO.  Through these agreements, one WTO member enters into obligations and formulates the relation of reciprocity with the other WTO member.

Undeniably, the Dispute Settlement System (DSS) that works under the WTO is considered to be the ‘crown jewel’. No matter how stringent the laws are, unless they couldn’t be enforced, they are of not much worth. DSS functions as an effective mechanism to settle disputes and to enforce obligations in case of violation by any WTO member.  The ration d’etre of giving birth to DSS was to ensure settlement of disputes in a timely and structured manner.  DSS is committed to impede and further mitigate trade imbalances between stronger and weaker players by having their disputes to be settled on the verge of rules and not power. Since the day it came into force in 1995, 595 disputes have been brought before the DSS and out of which 350+ disputes are settled.

DSS is governed by the Dispute Settlement Body (DSB) through the rules incorporated in Disputes Settlement Understanding (DSU).  The DSS works as a two-tier redressal forum and is the most important and busiest international tribunal having a binding authority on the parties to the dispute once they adopt the report of findings. On the first level comes the Consultation as per Article 4 of the DSU rules. Article 4 states that “each WTO member undertakes to accord sympathetic consideration to and afford adequate opportunity for consultation regarding any representations made by another Member concerning measures affecting the operation of any covered agreement taken within the territory of the former.” Therefore, Consultation is mandatory before any dispute is addressed to DSB. Once the consultation is failed, the complaining party can request the DSB under Article 6 for the establishment of a panel body that shall aim to settle the disputes between the parties.

On the top of the hierarchy comes the appellate body which shall hear the appeal from panel cases. Any party to the dispute can formally notify DSB of its decision to appeal. Under Article 17 of the DSU rules, DSB shall establish a standing appellate body. Unlike the Panel body, the appellate body is a permanent body composed of seven persons out of which three shall serve on any one case. These members are appointed for a term of four years. It is the duty of DSB to ensure that the vacancies shall be filled as they arise so as to confirm the smooth and timely functioning of the hierarchical mechanism of dispute redressal. Principally, the decision under DSB is taken through consensus methodology. Article 2.4 of DSU explains this method stating that “the consensus is said to be achieved when no WTO member, present at the meeting, formally opposes to the proposed decision”.

The genesis of the crisis is attributable to the U.S. who through its non-consensus has blocked the selection procedure to fill the vacancies alarming in the Appellate Body. The minimum requirement for Appellate Body to function is at least three persons out of total strength of seven. However, on 11th December 2019, the term of two of the remaining three members came to an end. At present, the Appellate Body has only one member and thus, it is dysfunctional and the resolution mechanism has brought to a grinding halt. The political façade started long back in 2017 when the U.S. cleared its intention of not allowing the selection procedure to taken place in order to fill the vacancies in the Appellate Body. Nonetheless, the Appellate Body continued its function as the compositional requirement was manageable due to the tenure of three of its members remaining but ultimately the crisis knocked the doors of WTO in the last month of 2019.

Although, at present, the composition of the Panel Body has not been interjected and the process of addressing disputes through Panel Body is still in continuance. However, the problem is as per the trends, in 67 percent of the cases, one of the parties to the dispute appeals the finding of the panel body and thus; when the Appellate Body is itself dysfunctional, the order remains non-binding and the whole mechanism of the dispute resolution is disrupted severing the gravity of the political disaster. The reasons for the U.S. to block the normal functioning of the Appellate Body have been shared with other countries as well. Fortunately, no other country has repelled in the way the U.S. is exclaiming to address the loopholes. The dissatisfaction of the U.S. administration with the WTO is not a secret anymore when Mr. Donald Trump labeled the WTO as ‘disaster’ for their nation.

The reason for the U.S. to express dissatisfaction is because of the overreaching power that Appellate Body enjoys. To combat that, on a lighter note, the U.S. has shown a preference of going back to the non-binding dispute settlement system that was prevalent at the time of GATT, 1948. Ironically, it was the U.S. who during the Uruguay round of negotiations (1986-1994) pressured and voted for creating a dispute redressal system that is binding and enforceable, however as the tables have turned now and the Appellate Body has become an irksome affair for the U.S.

The central issue of the U.S. to cordon the appointment revolves around the problem ofjudicial overreach.  To elaborate the claim, the U.S. believes that the dispute settlement system interprets the WTO rules in such a way that instead of simplifying, it rather creates new obligations for the WTO members. What the U.S. believes is that the Appellate Body drifts away from its original mandate due to its practice of issuing decisions that either burden the WTO members with new obligations or diminishes the right they enjoyed earlier.

Further, the U.S. has raised the objections against the procedural irregularities by the Appellate Body. Entangling the issues of the procedure, firstly, the U.S.has pointed out the contradiction of the DSU rules adopted by the WTO members and the Appellate Body Working procedure which are drawn up by the Appellate Body itself. As per the Rule 15 of the latter, it allows the Appellate Body members to remain on board and to continue to serve on appeals which are pending during their terms; however, as per Article 17.9 of the former, a member enjoys the position for a fixed four-year term. Thus, the Appellate Body working procedures violate the provisional requirement as laid down in DSU rules.

The second procedural issue raised by the U.S. deals with the violation of completing the report by Appellate Body within the time frame of 90 days as prescribed by the DSU rules. The US has pointed out that the extraordinary delay violates the mandate of a speedy trial and further it negates the right of the complaining party as well as the party brought to dispute due to the hauling of their economies to a hiatus. It is the belief of the U.S. that the prospective incapacitation of the Appellate Body is undoubtedly a menace for the WTO and its members because once the report of panel body is appealed, it cannot be made enforceable unless the appellate body decides and thus, it holds the country for the indefinite timeframe not authorizing the party to retaliate on whose favour the panel body decided the dispute.

It is indisputable that the DSS need to undergo a series of reform in order to gain the lost confidence. Unfortunately, the step taken by the U.S. has been termed as harsh and politically motivated. One move of the U.S. has paralyzed the ability of the ‘crown jewel’ to resolve international trade disputes. Even going against the decision of the U.S. and outcasting the consensus power it holds won’t serve the purpose as the U.S. is an important player of WTO and if the U.S. is not a party to it; the WTO would be synonymous to a toothless tiger. 

Nevertheless, arbitration under Article 25 of the DSU rules can act as an alternative to the hierarchal redressal system, as well as, solving disputes through bilateral agreements can be another alternative during the time of this existential crisis. The proposed idea of forming a Multi-party Interim Appellate arrangement will not succumb for long because the U.S. will not be its part and as it is certain, U.S. forms a considerable part of international trade, thus, there will again be a situation of deadlock. Moreover, choosing such interim mechanisms for the long run can raise a threat to the uniformity of rulings that WTO embraces. All in all, WTO is currently under jeopardy and it can be the beginning of the end if a solution to the crisis is not found in a timely manner. As of now, the Supreme Court of the international Trade ceases to exist and is in a life or death moment.

Continue Reading

Economy

How Local Governments in China can Utilize New Infrastructure Policy to Promote Development

Chan Kung

Published

on

Authors: Chan Kung and Wei Hongxu*

In an effort to promote economic recovery, the central government, local governments, and enterprises have placed high expectations on the investment of new infrastructure, hoping it would promote the development of the digital economy, so as to enhance the internal driving force of economic development. Especially when the scale of local special bonds is expected to be increased and again issued ahead of schedule, many local governments hope to seize the opportunity of digital economy development and increase investment in new infrastructure areas to drive regional economic development. Unlike the conventional economy and conventional infrastructure investment, the new infrastructure is not a simple way to boost investment, but rather to help the conventional industries realize digital and intelligent transformation as soon as possible, and to create new consumption, new manufacturing, and new services. While the new infrastructure investment brings a new economic model, it is different from the past in terms of content, mode, and financing channels. It requires local governments to make corresponding changes with market-oriented thinking.

New infrastructure investment is not only the demand side of local users, but also the supply side of technology investment. From the perspective of the scope of new infrastructure, new infrastructure projects include 5G base stations, ultra-high voltage (UHV) electricity, industrial Internet, intercity high-speed railway, intercity rail transit, new energy vehicle charging piles, artificial intelligence, and Big Data centers. At present, rail transit and new energy infrastructure are not much different from conventional infrastructure investment. The degree of local participation of UHV electricity is limited, while the investment in other aspects, such as 5G base stations and Big Data centers, is relatively mature in technology and has good market supply capacity. In other aspects, it is more necessary to start from the aspects of technology research and industrial cultivation, and to invest in projects that encourage innovation and industrial park construction. Therefore, this requires not only clear investment objectives on the demand side, but also needs to expand the supply side such as technology research and application at the same time, which undoubtedly increases the complexity of new infrastructure investment.

At the same time, the sources and financing channels of new infrastructure investment still need to be explored. Recently, local governments in China have begun planning to finance new infrastructure projects through issuing special bonds, and many local governments have put new infrastructure projects on their agenda. Some market analysts believe that at present, 5G is still mainly invested in base stations. Generally, telecommunications companies such as China Unicom and Mobile Communications can invest on their own without issuing special bonds, thereby the special bonds can be invested in projects related to data centers. However, such projects are only available in first-tier cities, and there are not many such projects in second-tier, third-tier, fourth-tier, and fifth-tier cities. New infrastructure projects should be more market-driven and local governments should avoid excessive involvement via direct investment in industrial projects. Local governments also need to promote the public-private partnership (PPP) model and introduce more social capital to improve efficiency and broaden financing sources.

Even for new infrastructure projects funded by special bonds, attention should be paid to the financing capacity of the projects to avoid adding to the financial burden. There are two main ideas for the new infrastructure special bond declaration projects in many provinces. One is to build a digital information application platform at the county and district level based on the resources of the provincial and municipal cloud platforms. The second is to promote the optimization and upgrading of conventional infrastructure projects with the theme of digital and wisdom. Some local finance people worry that many of these projects are packaged around the concept of “new infrastructure” and are mostly non-yielding or low-yielding projects that may require the government to cover future bond payments. Therefore, the special bond for new infrastructure construction should be invested in public welfare projects that can generate income, rather than public welfare projects that do not.

At the same time, there are new requirements for investment entities in new infrastructure investment. Some financial institutions said that after the issuance of new infrastructure special bonds, most of them will eventually be invested in local urban projects. However, local urban projects were good at conventional infrastructure construction, unfamiliar with new infrastructure construction, and lacks experience in new infrastructure project operation. If we speed up the construction of new infrastructure projects without considering the actual situation, it will easily lead to the mismatch between the capacity and the project requirements, and drag on the development of local governments and enterprises. In particular, unlike conventional investment in forming fixed assets, a considerable part of new infrastructure investment in research, personnel training, and other forms of intangible assets will be formed. The conventional urban investment model does not have the ability to use and dispose of these assets. At the same time, the large amount of hardware equipment invested in the new infrastructure is different from the conventional “iron and steel foundation”. Its wear and tear, operation, and upgrading all require continuous follow-up investment, which cannot be “invested all at once.” These are also not available in some conventional urban investment enterprises. If the local government cultivates and supports relevant enterprises by means of industrial investment, it needs more consideration in terms of income distribution and asset management. Such investment cannot be simply measured by the unit of land and capital, but more in the form of equity investment such as industrial funds and venture capital. In this respect, the local government needs to have the investment entities and relevant personnel with the ability to invest in relevant industries.

Different from the past, local governments need to play their roles in market construction and maintenance, investment entities, and end-users in promoting new infrastructure investment and the development of the digital economy. In the cultivation of the digital market, market demand, and the maintenance of the market order, local governments should play the role as a supervisor, take the development of the market as the guide, and develop the local digital market. In terms of investment, it is necessary to start with basic research and development and personnel training, promote market-oriented investment and technological innovation to enhance the competitiveness of the digital industry. In terms of end-users, it is necessary to integrate their own digital resources, establish a public digital space, and expand digital demand with the digital transformation of public services and government affairs as the direction. These three new roles are the basic problems to be solved in the process of promoting new infrastructure.

While much attention has been paid to new infrastructure, the reality is that, in terms of overall size, it needs to be recognized that infrastructure investment is still dominated by conventional infrastructure projects, with new infrastructure as defined by the market accounting for less than 15%. ANBOUND is not a proponent of separating infrastructure from the old and the new, so one cannot fully “bet” on new infrastructure to revive the post-pandemic economy. From the perspective of economic development trends and current reality, the role of new infrastructure is to promote the coordinated and integrated development of digital technology to industry and regional economy. Therefore, local governments need to make good use of fiscal expansion policies and financing tools to build new infrastructure, rather than investing for investment’s sake, they need to pay attention to the trend of economic digitization and promote the market efficiency and the expansion of market space.

Final analysis conclusion:

Promoting economic recovery and the development of the digital economy with new infrastructure are the keys to current macro policies. In this regard, local governments need to pay attention to the differences between the new infrastructure and the conventional infrastructure model, and they need to make corresponding adjustments in the investment model and development thinking so as to give full play to the efficiency of the digital economy.

*Wei Hongxu, graduated from the School of Mathematics of Peking University with a Ph.D. in Economics from the University of Birmingham, UK in 2010 and is a researcher at Anbound Consulting, an independent think tank with headquarters in Beijing. Established in 1993, Anbound

Continue Reading

Publications

Latest

Africa51 mins ago

Visualising Ethiopia’s Economic Leadership (and Challenges) in the Horn of Africa

The Horn of Africa has historically been one of the world’s most unstable regions, with internal strife, secessionism, interstate war,...

Human Rights3 hours ago

More ‘can and must be done’ to eradicate caste-based discrimination in Nepal

Shocked over the killing last weekend of five men in Nepal, who had planned to escort home one of their...

Energy News5 hours ago

Myanmar: Power System Efficiency Project Brings Country Closer to Universal Electricity Access

The World Bank’s Board of Executive Directors today approved a $350 million credit from the International Development Association (IDA) to...

Economy7 hours ago

Rohingya Influx and its Economic Significance for Bangladesh

Authors:Shuva Das & Sherajul Mustajib Sharif* It is generally perceived that refugees are curse for host countries though the former...

Newsdesk9 hours ago

The “High 5s”: A strategic vision and results that are transforming Africa

For the past ten years, Africa has recorded some of the world’s strongest rates of economic growth. At the same...

Reports11 hours ago

COVID-19 Epidemic Poses Greatest Threat to Cambodia’s Development in 30 Years

The COVID-19 pandemic is hitting Cambodia’s main drivers of economic growth—tourism, manufacturing exports, and construction—which together account for more than...

Tourism13 hours ago

UNWTO Launches Global Guidelines to Reopen Tourism

The World Tourism Organization (UNWTO) has released a set of guidelines to help tourism sector emerge stronger and more sustainably...

Trending