ISLAMIC FINANCE
THE EVOLUTIONS OF ISLAMIC FINANCE IN MALAYSIA
INTRODUCTION
Islamic finance is the provision of financial services on a basis that is compliant with the principles and rules of Islamic commercial jurisprudence and a branch of Islamic Shari’ah jurisprudence. This means, all the operations in the bank must base on Shari’ah jurisprudence including of remittance business, letter of guarantee, letter of credit and foreign exchange. The main factor that differentiating between Islamic bank and conventional bank is all his business are conducted without any elements of interest. Interest also known as riba in Islam. This is because Islam prevent Muslim to give and take riba in all matters. Other than that, the main objective establishment of Islamic banks to meet the needs of Muslims in the banking business. Basic business operations is also based on the resolution of Al-Quran and Hadith, which is based on the concept of fair and in the interest of society. The concepts of Islamic finance also means of prohibition pf fixed return, profit and loss sharing and hence risk sharing, prohibition of gharar ( uncertainty ), speculation and gambling.
HISTORY OF ISLAMIC FINANCE IN MALAYSIA
In 1980
At the Kongres Ekonomi Bumiputera in 1980, the Lembaga Urusan dan Tabung Haji be allowed to establish Islamic banks that aim to collect and invest the money belonging to Muslims.
In 1981
Government urged to take immediate action to establish laws for the establishment of banks and financial institutions that operate based on the principles of Islam.
30 July 1981
The government has established Jawatankuasa Pemandu Kebangsaan Bank ...
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...titutions that deal in a financial system also has advantages in terms of competitiveness. Therefore, the banking institutions in Malaysia will increase the competitiveness and quality of service and quality of their products to attract customers.
ESTABLISHMENT OF LEMBAGA TABUNG HAJI
Lembaga Tabung Haji board established in 1969 to save money savings Muslim community who want to perform hajj. Hajj affairs fund administered by the laws of shariah. Lembaga Tabung Haji are increasing, particularly in diversified towards investments that will generate revenue and profits.
ZAKAT
Zakat is the amount of certain property required gods to persons entitled to receive in addition to producing a certain amount itself. Zakat laws of each state in Malaysia enacted by the Majlis Perundangan Negeri, respectively. Zakat can prevent a Muslim from jealousy and greed to others.
Muslims are expected to give alms to the Muslim community that amount to 2.5% of one’s income. The principle of knowing that all things belong to God is essential to purification and growth. Zakāt is obligatory for all Muslims who are able to do so. Currently,Muslims are living under secular governments and must pay taxes to them. So the zakat is in addition to their secular taxes. Because there is no central Islamic state, each person must choose where to give his money.
The prospective target audience for this would be a government agency. Government planning to provide its citizens with financial foundation and uplifting the overall economic growth should be the most appropriate audience for this particular policy brief. The government should take into consideration some aspects of this brief with starting similar or related initiatives.
...r something that has its source from Islam in their government. It can be seen from recent mosque protests that, even a place of worship comes to instill the fear of the sharia in people’s minds. Whereas sharia is something very complex and not a monolithic canon of law (it’s very flexible)—and most countries that say they practice it really don’t plus forget everyone else most Muslims don’t want a sharia themselves. Islam being such a controversial issue, it might not be possible to use zakat. However, the general idea was that society and individuals themselves are responsible for many aspects of poverty and it is their responsibility and duty to fix in the end for their own benefit.
The industry is composed by a continuum of banks which produce a homogenous product — banking service. Domestic as well as foreign competition is violent. Not to forget the fact that ICBC has not been the first bank to embrace internet banking. So, it is all the more reason which places the bank in the most precarious position to continuously shield it self from the volleying competition.
Lastly, in term of services and management of the Islamic institutions. The Islamic needs to have a training process for all theirs staff who works under the Islamic institutions. They needs to provide a huge knowledge of Islamic and important of Islamic financing to our life. From this, it would increase the awareness of Islamic finance. The workers also can deal with their customers or investors more effectively and effeciently when it goes to the Islamic financing. It also would create customers loyalty on their products and services. The information also would spread accordingly based on the shariah principles.
One of Malaysia’s more significant non-market environments that may have an impact on company’s performance is the country’s predominant religion of Muslim - 60% of the total population - followed by Buddhist (19.2%) .
Kharaj imposed by the early Muslims on the authorities of the Qur’an. Then this tax called as an Al-kharaj and fixed either per unit of land in the form of cash or share of the harvest in kind. Survey of these lands was carried out and kharaj was imposed according to the rates fixed per unit of land on different categories of crops. For HR & Widiastuti, ...
Can anyone imagine what will happen to Malaysia after a few more decades? Debt crisis in Malaysia is getting more severe due to lack of management among individuals. Serious debt crisis might lead to bankruptcy to our country. Nation leaders should lead others away from debt. If this scenario continues, Malaysia might follow the footstep of Greece, Spain, Italy, and Portugal. Debt crisis can be avoided by providing trainings and courses to the employees, improve individual personal finance management and filtering candidates in hiring process.
As the world has recently passed through the global financial crisis that begun in 2008 in the USA with the banks’ collapsing, analysts are giving different opinions and making new economic hypothesizes about the origin of, as well as the process of different countries escaped from the crisis. Among all these new “theories”, the case of Islamic banks is interesting in terms of its nature and consequences. In my essay, I will try to highlight the basic principles of the Islamic finance, the reasons of the restriction of interest, the most important tools used by Islamic banks in economic activities and brief explanation of them, and finally my view point of the probable future improvement of the Islamic financial system.
The overall discussion of risk management based on the Islamic law or maqasid al-shariah. Chapra quotes al-Ghazali in defining maqasid as promotion of “the well-being of the people, which lies in safeguarding their faith, self, intellect, posterity, and wealth (ISRA, 2011). Economic activities are not judged by their inherit risks, but by whether they add value and/or create wealth from an islamic perspective. To makes risk management an imperative for a flourishing financial system, wealth protection is being one of the major shariah objectives.
Zakat is the third pillar of Islam. It is an Arabic word, and translates as purification or growth. It is generally thought of as a tax, as the contributor should pay 2.5% of their wealth to charity. However, Zakat is valued not because of the money given, but the motive behind it. The intentions for giving Zakat should be pure, and simply about pleasing Allah, and earning good deeds.
Lastly the challenges faced by the Islamic banking is the lack of unity in giving Shariah’s view. Therefor, it gives problem to the agencies as there are different methodologies that are being proposed when elaborating the law. In order to counter this challenges, agencies need to take initiatives of choosing the view which is parallel or nearly parallel with what was underlined by the Al-Quran and As- Sunnah.
middle of paper ... ... inga (1999) and Pasiouras and Kosmidou (2007). The above estimation has left some questions pertaining to fill the gap by attempting to identify and measure factors that determine the profitability performance of commercial banks in Malaysia. What are bank-specific determinants and macroeconomic determinants influence on banks’ profitability in Malaysia compare to other countries?
This is followed in section 5 by an analysis of the recent changes in the banking industry. With the development of the financial system, declining entry barriers and the deregulation of the banking industry make banks no longer the monopoly suppliers of banking services and reduce their comparative advantages which they usually hold in the past. Whether the reasons give rise to the existence of banks are still powerful will be examined here, while section 6 offers a way of considering whether banks are declining by looking at the value added by the banks. When the value added by banks is examined, banks are not a financial intermediation, which not only conduct the traditional services but also provide more diversified
Bonds have a number of characteristics that differentiate one issue from another. We are going to define and describe a number of characteristics in detail below.