3. The country of Kuwait is a constitutional monarchy located on the coast of the Arabian
Gulf. The country borders Iraq to the north, and Saudi Arabia to the south. The name
Kuwait is an abbreviation of an Arabic word that means "fortress built near water".
Introduction
Kuwait's economy is a rich petroleum-based economy. Kuwait is one of the richest
countries in the world. The Kuwaiti dinar is the highest value currency unit in the world.
According to the World Bank, Kuwait is the fifth richest country in the world according to
gross national income per capita. Kuwait's economy is the twentieth largest in the world
according to GDP per capita. As a result of various diversification policies, petroleum now
accounts for 43% of total GDP and 70% of export earnings. Steel manufacturing is the
second largest industry in Kuwait. Kuwait is self-sufficient in steel.
4. Problem
An increase in interest rates can lead to
various related problems and challenges. Some
of the issues associated with rising interest
rates are interest rate as abuse of humanity,
unfair distribution of money and power,
economy inequality and instability and in
terms of cultural and economic.
5. Interest rate as abuse humanity
Financial Burden on Individuals:
High-interest rates can place a
heavy financial burden on
individuals, making it difficult
for them to meet their basic
needs and causing financial
stress.
Impact on Vulnerable
Populations: The burden of
interest disproportionately
affects individuals with lower
incomes, potentially contributing
to social and economic
disparities.
6. Unfair Distrubution Of Money & Power
Interest payments can
contribute to income
inequality as those with
higher incomes may have
more resources to manage
and pay off their debts,
while individuals with lower
incomes may struggle.
Income inequality Limited Access to Economic
Opportunities:
Unequal access to credit
can result in limited
economic opportunities
for those without access
to affordable financing.
7. Economic Inequality and Instability
Interest-based debt may contribute to the widening wealth
gap between those who can afford to borrow and invest and
those who struggle with debt payments.
Wealth Gap
Impact On Economic Growth
Excessive debt levels can hinder economic growth by
reducing consumer spending and business investments,
leading to economic instability.
8. Exploitation in Terms of Cultural and Economic
Cultural Implications: The economic system,
including interest-based debt practices, can
have cultural implications, potentially
perpetuating inequalities and exploitation.
Impact on Vulnerable Groups: Exploitative lending
practices may disproportionately affect certain cultural
or ethnic groups, exacerbating existing economic
disparities.
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9. To address concerns related to usury and promote ethical financial
practices, the implementation of policies such as the prohibition of
interest, the distinction between halal (permitted) and haram (forbidden)
transactions, fair and equal distribution, and profit and loss sharing
contracts can be considered for the Kuwaiti state to do. thus economic
growth in the country of Kuwait will grow and develop in the right
context.
Recommendation
10. Prohibition Of Interest
Islamic Banking Practices: Kuwait may encourage the growth of Islamic banking institutions
that adhere to Sharia principles, which prohibit the payment or receipt of interest (riba).
Islamic banks operate on profit-sharing and asset-backed financing principles.
Supervision and Control of Interest Rates: Monitor and supervise the interest rates applied
by financial institutions to ensure that they are in accordance with the stipulated provisions.
11. Distintion Between Halal & Haram
The distinction between "halal" (permissible) and "haram"
(forbidden) is a fundamental aspect of Islamic ethics and is
applicable to various aspects of life, including finance,
consumption, and behavior. In the context of Kuwait, a
predominantly Muslim country, this distinction is crucial in
guiding individuals and institutions to adhere to Islamic
principles
Public awareness campaigns and educational programs can be implemented to inform the public
about the distinctions between halal and haram financial transactions, fostering a culture of
ethical financial practices. In addition, Kuwait needs to encourage the growth of the sharia
financial sector by providing incentives to financial institutions that provide products and
services in accordance with sharia principles.
12. Fair & Equal Distribution
Kuwait may enhance social welfare programs to ensure fair
and equal distribution of resources. This includes targeted
assistance to vulnerable populations, providing support for
housing, education, and healthcare to reduce economic
disparities.
Implementing a progressive taxation system can contribute to a fairer distribution of wealth by
placing a higher tax burden on those with higher incomes.
13. Kuwait can Encourage the use of profit and loss sharing
contracts such as Musharakah (partnership) and
Mudarabah (investment) in financial transactions. These
contracts promote a more equitable distribution of
profits and losses between parties involved.
Venture Capital and Entrepreneurship: Support the
development of a venture capital industry that invests in
businesses through equity-based financing. This can
encourage entrepreneurship and stimulate economic
growth based on profit-sharing arrangements.
Profit & Loss Sharing Contract
14. Conclusion
By implementing these recommendations, Kuwait can reinforce its
commitment to Islamic principles in economic activities, contributing to the
development of a more ethical and Sharia-compliant economic landscape. This
approach aligns with the values and expectations of a predominantly Muslim
population in Kuwait.
