Making sense of the Dinar

By Wong Chun Wai, TheStar

PAS, which has never moved away from its ambition of setting up an Islamic state, obviously wants to prove its commitment to institutionalising its religious programmes and agenda.

WHICHEVER way you look at it, the fact remains that the PAS-led Kelantan state government has introduced a new system of currency. The state government calls it an alternative but it certainly wants the people to use it.

The alternative for the ringgit notes and sen coins is now the gold and silver coins that the state government has called the dinar and dirham respectively.

The move is unprecedented and would certainly have an impact on the shape of politics to come in this country.

If Kelantan has introduced it, then we can assume that Kedah would follow suit as the leadership is also PAS.

In simple language, what the Kelantan state government has done is this – you can now use their self-minted gold and silver coins to pay for purchases there.

It is a practice from the early Islamic societies which PAS wants to revive in present-day Kelantan to show its religious credentials. The dinar was the official currency of Islamic societies for centuries.

Nik Mahani Mohamed, executive director of the state-owned Kelantan Gold Trade Sdn Bhd, which mints the coins, has reportedly said that over 1,000 stores would be using the coins. He has described the circulation of the coins, which started on Thursday, as a “great, great moment”. Each dinar is worth RM180 and one dirham is RM4.

Kelantan state executive committee member Datuk Huzam Musa has downplayed the issue, saying syariah currency should be seen as an alternative currency for barter trade. He has been quoted as saying that the dinar had been around since the beginning of Islam.

A check with the Kelantan Gold Trade website has shown that the currency-maker has proudly declared that “this is the first time in the last 100 years, since the collapse of the Ottoman Caliphate, when a Muslim government introduces the syariah currency”.

It also said this would be “the return of a medium of exchange that has been known for 1,400 years” and encouraged religiously.

What has set the Kelantan dinar apart from other countries such as Algeria, Iraq, Bahrain, Libya and Tunisia, which all use dinar as a currency, is that theirs are paper money.

Indeed, in 2002, Tun Dr Mahathir Mohamad had pushed for the gold-based dinar system to be used as an international currency to prevent currency manipulation, which had sparked off the 1997 Asian financial crisis. He had wanted the dinar to replace the US dollar but, as expected, he could not convince the other countries.

The former premier was presumably looking at the issue from an international perspective as he did not talk about replacing the ringgit or seeing another system in a Malay­sian state.

Bank Negara is, as expected, peeved. It has said that the ringgit is the only legal tender for payment of goods and services in this country.

While the Kelantan dinar could be used as payment of zakat and dowries, for example, it still needs to be proven how it could be used for daily transactions. For practical reasons, how much of the currency can be minted and circulated widely?

It has been reported that staff of the state administration would be paid with the dinar. If this is so, how will this be worked out and would banks want to be involved in the transaction since Bank Negara has said that the ringgit is the only legal tender?

Kelantan Mentri Besar Datuk Nik Abdul Aziz Nik Mat had said the state would strive to expand the use of the currency in its transactions, including in the remuneration of civil servants.

We can expect more denominations to be worked out along the way and since these would be coins instead of notes, Kelantanese who support the move would need bags or pouches to carry these heavy things around. Their pockets just won’t do.

Whatever the intention of the PAS state government, it would be regarded as a political ploy ahead of the next general election to win over the Malay voters.

PAS, which has never moved away from its ambition of setting up an Islamic state, obviously wants to prove its commitment to institutionalising its religious programmes and agenda. The latest currency decision is just one of the many that would come.

MCA president Datuk Seri Dr Chua Soi Lek has challenged the other Pakatan members – namely PKR and the DAP – to state their stand on the Islamic currency, saying the issue should be handled properly as it would affect the confidence of foreign investors and entrepreneurs.

A quick look on the blogs and Twitter has shown many negative reactions among non-Muslims to the move by the Kelantan government. Many have expressed incredulous comments, with some saying the decision was a case of “one upmanship” in Malay politics that would not help the country in the long run.