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Identification of main issue/problems (background of the issues)

In these modern days, credit card has become a normal purchasing partner for an individual. It seems to be inseparable with modern people today and sometimes referred to as the oil for our economic machinery. Everywhere we go today, even do not have cash in hand they still can buy especially shopping malls, service establishment, petrol stations or even coffee shops just swipe by using card credit. Credit card from Islamic perspective invites a lot of discussion and sometimes controversy due to its nature which is based on “credit”. Following to Ustaz Zaharudin Abd Rahman (2008) explains apart from all types of conventional lending products and conventional investment accounts in commercial banks, Muslims today are also exposed to transactions that contain elements of riba in the use of conventional credit cards.

Riba is one of the prohibited thing in Islam. As we know riba is an excess or growth and there are two types of riba which is Riba Al-Fadh and Riba An-Nasiah. In this context, we are discussing about an issue of Riba in credit card. Credit card is a card issues by a financial company which enable the cardholder to borrow fund. Other than that, issuance of credit card has the condition that the cardholder will pay back the original borrowed amount plus any additional agreed-upon charges. So here, we state the main issues that can damage economic Islamic if the elements of riba not stop from now.

First and foremost, transaction that contain elements of riba in the use credit cards when the charges are incurred due to the payment of credit card debts. This issue when at the time of the agreement, it was made clear that the late penalties were incurred on any payment that exceeded the time period granted. This payment is interest on the lapse of debt repayment. This additional payment known as riba al-nasiah which is the payment for the purpose of increasing the time of debt which is clearly illegal in the syarak. It was the result of the fiqh conference of credit cards in Bahrain in November 1998. Therefore, in terms of aqad clearly indicates the use of banned conventional credit cards for containing elements of usury.

The second issue we are discuss about the revolving credit limit. In this issue, the cardholder is not obliged to settle his debts as a whole but is allowed to pay the interest rate ratios provided. The remaining balance is settled during the given period and will be levied on the deferred amount. According to Islamic laws, Hadith and Quran, it is prohibited to pay interest on the money which is withdrawn in advance, like this all the additional interest charges of delaying payment is also prohibited.

In other issue is about an annual fees charged for the cardholder that have element of riba is   financially charged to cardholders. Obviously, there are two different views about it, the need for insight and the forbidding view. In islamic perspective, an annual fees charged for cardholder that has purpose to cover the cost of management for example the price card, cost of managerial service and others. but the fees must related to the cost of service. But in second views, that the payment of membership fees should not be. This is because credit card practices to be disallowed from the shariah point of view.

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IDENTIFICATION OF ISSUES ON STOCK MARKET - SHARIAH SCREENING (SHARIAH EQUITY SCREENING)

These issues are noticeably different from those of the Islamic finance industry because non- financial publicly listed companies were not set up to offer Islamic finance products and services, nor do they have a separate wing that offers Islamic banking or a financing unit.

Next, Identify the issue as the non-existence of standardized Shariah rulings embraced by regulators from various geographic locations and an insuf cient number of quali ed scholars to participate in the administration and rulings of Shariah law.

Lack of understanding among companies regarding the items considered important to Shariah principles. There are differences in the quantitative screening in terms of the formula, the denominator being used and the threshold limit granted to the companies.

The differences in the quantitative ratios can be caused by different objectives among the Shariah screeners, whether country-specific, regulation-oriented or globally business-oriented. Identifying prohibited activities indicated in the required category, in the main activities of the companies. Lastly, identifying the operations that constitute the main activity of a company

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Identification of main issues/problems.

The weaknesses or loopholes in the laws relating to land administration in Malaysia. Temporary Occupation of Licence (TOL) is a temporary license or permit granted by State Authority (SA) for specific purpose and time limit. It is in short, a form of approval to enter a land and work on it. Therefore, the TOL lands remain as State lands and there is no guarantee that the land will be transferred to the licensee who enjoys the TOL.  Under the National Land Code 1965, the disposal of government land is divided into two, namely the disposal by way of alienation and the second is disposal other than by alienation.  Disposal of the first type is found in section 76 which empowers the State Authority (SA) to grant freehold titles or titles for specific timeframe, while for the second method of disposal, the SA can provide reserve over lands, grant temporary occupation license, permit the extraction of rock and allow the use of air space over government land and land reserves. Disposal by way of temporary occupation falls under the second method.

The involvement of civil servants in corruption crimes which is increasing quite sharply in 2015 (174 cases) than in 2014. It further transpires that involvement of civil servants in such crime has reached to a level of concern as this scenario is deeply unhealthy if not immediately overcome.  There would be possibility for occurrence of corruption when such people who are involved used such opportunity to work together in order to fulfill their false aim to procure unjust enrichment due to their excessive rapaciousness. It obviously indicates that corruption basically occurs due to personal desires. Personal character may sometime become the pushing factor for a person to give or receive bribes.  The corruption case is rampant in the Land Office. Delays in the approving applications, casual procedures of control, as well as bribery, leads to the practice of paying bribes for faster service from the land office.

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Definition of intangible asset
*AAOIFI*, in its Shariah Standard 42 "property right that apply to intangible matters, entitling their owners to the exclusive right to any proceeds arising from then. "

*IFA-OIC*,in its Resolution no 43(5/5) chose to clarify the concept by citing the most examples, saying: "business name, corporate name, trademark, literary production, invention or dicovery, are rights belonging to their holders and have in contemporary times, financial value which can be traded. These rights are recognized by Shariah and should not be infringed. "

*Analysis of Shariah Issues in Intangible Assets*

1. Shariah issues on the recognition of intangible assets, two main issues:
📌the issue of identification and initial recognition of the intangible asset
📌the probability of its future benefits, which may rises the issue of excessive uncertainty (gharar fahish)
2. Shariah Issues on the measurement of intangible assets
3.Shariah issue on tradability of intangible assets
📌trading and exchanging intangible assets such as receivables,  and futures.
📌trading intangible assets which contain prohibited elements, either bearing interest or mixed with non Shariah compliant assets.
4. Shariah issue related to financing intangible assets
📌financial intellectual product
5. Shariah issue related to zakat obligation on intangible assets
📌Shariah ruling
📌method of measurement

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1. Identification of main issue / problems (background of the issue

The kootu fund can be likened to a traditional micro-financing scheme, whereby small loans of typically less than Rm100 are extended to the rural poor, mainly at the village level. As an informal way to borrow small amounts of money, kootu funds were vulnerable to abuse. This led to passage of the Kootu Funds (Prohibition) Act 1971. Since then, any kootu schemes have been forbidden and any registered business running anything resembling a kootu will be penalised up to RM5,000 and/or a jail up to three years.

The kootu fund is a high-risk investment which is subject to fraud. A kootu or online fund may make profits through ways ranging from simple drawing of lots to auctions to members. In cases where the scheme is as large as World Heritage Resources, a business that was incorporated under the Registration of Business Act 1956 (Act 197),which had more than 300,000 members and a total fund size of RM30 million accumulated over two years, the financial risks to participants is high. The high possibility of funds disappearing with or without a trace, regardless of whether the scheme is operated by a registered business. the returns in this case were paid using postal orders, which are under the radar of financial institutions money-laundering systems.

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Identification of main issue / problems (background of the issue 1. ASB

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Identification of main issue / problems (background of the issue 1. ASB

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The issue of investing in ASB become the big polemic since a decade ago in Malaysia. It involving the disagreement of opinion regarding the permissibility of investing in the ASB. Parties involved in the issue comprising prominent institutions from different authority , precisely Security Commision ( SC ) , JAKIM and religious institutions under different state . The permissibility and impermissibility of investing in ASB by different authorities due to the each ijtihad being derived based on different methodology, scope and roles that each institutions hold. It is not a different opinion by individual mufti, rather it is disagreement of opinion by the institutions ,which each institutions consists of their own shariah advisor and expertise in such matter like economists, public policy and  strategic investment. However, recent situation has shown that the disagreement of opinion has been diminished, that is between  JAKIM  , religious institutions under different state and SC to the only JAKIM and religious institutions under different state with SC. This is due to the religious institutions under different state like Selangor and Penang has align with the JAKIM ijtihad,that is investing in the ASB is permissible . Such changes create a big question about the main problem in the ASB matter and how each institutions view the issue from time to time.

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Isu utama yang sering dikaitkan dengan produk perbankan Islam  di Malaysia ialah beberapa masalah yang wujud daripada produk financing menggunakan kontrak Bai Bithaman Ajil. Jika dilihat daripada statistic taburan produk Bba berbanding produk yang menggunakan kontrak lain pada 2017,financing menggunakan produk Bba accounted for 13.4% which is RM5731251. Menariknya, produk ini yang telahpun mendominasi taburan produk perbankan islam sejak 1983 dilihat mulai menurun semenjak 2012 , yang mana pada ketika itu peratusannya telahpun menurun kepada 43% berbanding 50% pada tahun sebelumnya. Kini ( 2017 ), kontrak yang mendominasi financing di perbankan islam adalah kontrak Tawarruq , dimana meliputi 80.3% ( RM 34280067 ) daripada keseluruhan financing yang diberikan oleh Bank Islam.

Pengurangan tawaran produk berasaskan BBA dapat dikaitkan dengan beberapa isu yang muncul. Isu utama adalah isu perundangan yang berkaitan dengan produk BBA. Meskipun beberapa kes mahkamah yang melibatkan produk BBA menyaksikan keputusan juri menyebelahi pihak Bank Islam, namun sorotan daripada kes tersebut secara tidak langsung memberikan imej yang buruk berkenaan produk BBA.Sebagai contoh, kes pertama melibatkan Dato’ Hj Nik Mahmud Bin Daud v. Bank Islam Malaysia Berhad, dalam kes ini,Plaintif iaitu Dato’ Hj Nik Mahmud Bin Daud telah membangkitkan isu yang menarik bertarikh 5 Oktober 1994 , iaitu plaintif telah memohon kepada mahkamah supaya mengisytiharkan bahawa produk BBA tersebut adalah terbatal disebabkan produk itu sendiri bertentangan dengan undang2 negeri , iaitu menyalahi peruntukan Enakmen Perizaban Melayu (Kelantan) 1930 dan Kanun Tanah Negara 1965.

Bagaimana boleh bercanggah dengan undang-undang negeri?

Kan kita semua sudah sedia maklum bahawa BBA adalah perjanjian jual beli, iaitu dimana Bank Islam akan membeli tanah daripada pelanggan, dan kemudian menjual kembali kepada pelanggan. Isunya berlaku disebabkan peruntukan Enakmen Perizaban Melayu (Kelantan) 1930 tidak membenarkan mana2 tanah ataupun rezab melayu daripada dipindahkan hak miliknya daripada melayu kepada bukan melayu.

Baik , kita kembali kepada kes ini, apabila Dato’ Hj Nik Mahmud Bin Daud menjual kepada Bank Islam,persoalannya , adakah Bank Islam dikira sebagai orang melayu? TIdak, ianya adalah sebuah institusi , yang tidak boleh diiktiraf sebagai melayu atau bukan melayu. Jadinya penghujahan plaintif ada justifikasi yang jelas hakikatnya, iaitu BBA ini telahpun membuat orang melayu iaitu nik menjual kepada institusi yang tak boleh diiktiraf melayu ataupun bukan melayu. Dan ini jelas melanggar undang2.

Namun demikian, keputusan mahkamah menolak kes ini dan memberi keputusan yang menyebelahi Bank Islam. Iaitu kontrak BBA tidak melanggar peruntukan seksyen 7 Enakmen Perizaban Melayu 1930. Alasan penghakiman yang diberikan oleh Yang Arif Idris Yusoff H dalam kes tersebut adalah seperti berikut:

“Unlike in the instant case it was never the intention of the parties, in as much as it can ever be said to be within their contemplation, to involve any transfer of proprietorship. It so happened that the execution of the property purchase agreement and the property sale agreement constituted part of the process required by the Islamic banking procedure before a party can avail itself of the financial facilities provided by the defendant.”

Maksud mudahnya adalah sebenarnya bukan keinginan kedua-dua parti untuk melakukan pemindahan hak milik tersebut, ianya hnya dijadikan proses “JUAL” DAN “BELI” semata2 kerana ianya adalah proses yang diperlukan oleh Bank Islam untuk memberikan financing kepada pelanggannya. Penghujahan ini sebenarnya telah melahirkan persepsi negatif dalam kalangan pelanggan kerana ia memberi gambaran seolah2 perjanjian jual beli tersebut hanyalah di atas kertas semata2, namun hakikatnya hak milik tetap tidak berlaku proses pemindahan. Perkara ini juga disebabkann oleh perjanjian “BANK ISLAM BELI DARIPADA PEMBELI” DAN perjanjian “BANK ISLAM MENJUAL KEMBALI KE PEMBELI” dilakukan serentak. (Perjanjian Belian Harta adalah satu dokumen penting untuk memberikan hakmilik benefisial kepada Bank sebelum ia menjual semula aset tersebut kepada pelanggannya) .

Sepatutnya kedua2 perjanjian ini tidak boleh ditandatangani serentak dan dilewatkan beberapa jam untuk menunjukkan adanya perpindahan hak milik. Namun cadangan ini jika diterima pakai sekalipun, tetap tidak menafikan fakta bahawa ianya akan bercanggah dengan peruntukan enakmen negeri Kelantan.

Yang kedua,kita lihat dalam kes “Affin Bank Berhad v. Zulkifli Bin Abdullah” , dimana isunya adalah pihak Bank bersetuju untuk melakukan restructuring terhadap pembiayaan yang diberikan terhadap Zulkifli.Dalam kes ini, isunya, adakah penyemakan harga jualan yang diberikan adalah suatu tindakan yang sah menurut perspektif syariah ataupun tidak, ,,,,,saya berikan analogy mudah,

Apabila kita membeli perabot dari sebuah kedai pada satu hari dengan cara ansuran, bolehkah penjual tersebut pada keesokan harinya menyatakan kepada pembeli itu bahawa harga jualan telah disemak dan dinaikkan kepada harga yang lebih tinggi? Jawapannya tidak ,

Begitulah yg terjadi dalam kes ini, apabila ketika Zulkifli Bin Abdullah ingin membuat restructuring terhadap financing beliau yg disebabkan default in payment, Bank Islam telah menaikkan jumlah pembayaran tersebut. Drpd RM446,847.28(1997). kepada RM 992,363.40(1999)..

Baiklah, itu dua isu perundangan yang sedikit sebanyak memberikan persepsi negatif terhadap produk BBA, slain itu, kita juga dpt melihat, antara sebab produk BBA semakin berkurangan di Malaysia adalah kerana produk BBA ini, tidak diterima secara global. Ianya agak popular di Brunei,Bangladesh dan Malaysia kerana kita mengikut pendirian mazhab syafie yang membenarkan aplikasi BBA, namun jika kita lihat di Asia Barat serta Pakistan, mereka lebih memilih untuk menggunapakai konsep ijarah ataupun musharakah kerana mereka berpendapat BBA menyerupai Bai Inah .

Hal ini sepertimana yang telah diucapkan oleh Muhammad Nejatullah Siddiqi , iaitu Walaupun BBA dibenarkan di sisi syarak, Siddiqi tidak menggalakkan ia digunakan oleh bank-bank Islam dalam produk pembiayaan mereka. Beliau menyebut: “I would prefer that Bai’ al-Muajjal be removed from the list of permissible methods altogether. Even if we concede to its permissibility in legal form, we have the overriding legal maxim that ‘anything leading to something prohibited stands prohibited’ (ma adda ila al-haram fahuwa haram)…”

Malah,Di Pakistan, Maulana Muhammad Taqi Usmani selaku salah seorang hakim dalam kes M. Aslam Khaki v. Syed Muhammad Hashim8 memutuskan bahawa pembiayaan yang dibuat berasaskan tambahan untung (mark-up) seperti bai’ al-muajjal (BBA) adalah tidak sah untuk dijadikan asas produk perbankan kerana dibimbangi mengandungi unsur riba.

Penghujahan yang digunakan oleh mereka adalah kerana mereka berpendapat tidak boleh menjual kembali kepada pemilik asal dengan cara bertangguh pada harga yang lebih mahal daripada saat pembelian. Hal tersebut termasuk dalam permasalahan ‘inah,

Penggunaan dokumentasi Property Purchase Agreement (PPA) dan Property Sale Agreement (PSA) didakwa hanya sebagai pelengkap untuk memberi kesan kepada transaksi BBA Ini kerana, semasa pelanggan datang untuk menjual aset di bawah PPA, dia bukan pemilik sebenar barangan jualan/aset kerana pelanggan berkenaan hanya membayar sebahagian daripada harga jumlah keseluruhan aset.

Contohnya, 10 peratus kepada pemaju di bawah Amalan menjual dan membeli balik di bawah PSA dan PPA adalah semata-mata untuk memperoleh wang tunai yang perlu dibayar kepada penjual. Apabila dihasratkan hanya untuk mendapatkan wang tunai, maka transaksi sebegini menunjukkan berlakunya kontrak bai’ al- ‘inah. Dalam hal ini, bank hanya berperanan selaku pembiaya dan bukannya penjual.

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Purification of non halal income is the process of deducting non-halal or tainted income deemed unacceptable by Shariah from the total income generated in Islamic banks. It is undeniable that Shariah non-compliance events still occur in Islamic banking system considering the fact that Islamic banks have not been able to fully comply with the requirements of Shariah in their transactions, operations and financial activities..

As Islamic banks are established within the Shari'ah realm, all activities are expected to follow Shari'ah principles. However, ensuring Shari'ah compliance is not a straightforward matter. Although Islamic banks are striving to develop their products, activities and operations according to Shari'ah principles by enhancing their Shari'ah governance framework, Shari'ah non-compliance events still occur which in some situations involve a financial impact that leads to non-halal income. Non-halal income realised in Islamic banks could not be utilised for their own benefits and thus needs purification. The most distinguishing features of an Islamic bank, which demarcate it from a conventional bank, is to be free of the most deadly forbidden elements of riba, uncertainty (gharar) and gambling fraudulence, robbery, hoarding, bribery, stealing and to avoid conducting other unlawful trading.
Islamic banks as a matter of principle should not engage in any risky business activities in the process of which they can procure unlawful incomes. Nevertheless, bank as a corporate entity dealing with people of diverse cultures and International companies is bound not to be able to stay away from transactions which could avoid being tainted with unlawful and objectionable incomes. For instance, it is not a full proof against riba-based transactions. Some of its products are claimed to have been developed based on disputable and controversial contracts from an Islamic vantage point.

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Identification of main issues/ problems (background of the issues)
1) BANK ISLAM MALAYSIA BERHAD(BIMB) AND AL-AWFAR

BIMB imposed product namely, Al-Awfar on 25/3/2009. It uses the contract of Mudharabah. Depositors act as rabbul mal where as banks act as mudharib. The percentages of profits agreed is 98%(banks) and 2%(depositors) for saving account and 70%(banks) and 30%(depositors) for investment account. This product is approved by Shariah Advisory Council of BIMB. Through this product, lucky draw is offered to depositors. RM2.32 million are supplied every year for this product to be given to depositors through lucky draw contest. Drawing is every months and quarterly per year. Every RM100 that is saved, have a chance for a lucky draw. For the first time it was introduced, it attracts many depositors. Although it just for the first year, this attempt bring a good deal and impact. After that, Al-Awfar Junior is introduced in 2011. It targets RM50 million with 100,000 depositors aged below 18 in a year. The minimum saving is RM10 and it is allowed for a unit of chance. The frequency of drawing in Al-Awfar Junior is same like Al-Awfar. The ratio of profits also is same.

2)BANK SMPANAN NASIONAL(BSN) AND SSP

BSN is windows Islamic Banking. It offers Islamic Banking products but not all products are Shariah Compliance. BSN imposed a product namely, Sijil Simpanan Premium(SSP) on 1/6/1978. It aimed to attract people to save their money in the banks. This certificate is issued by banks. This certificate can be redeemed to get money or it can be used in lucky draw contest. It can be redeem in 45 days. 12 years old and above are qualified to buy this certificate. It cannot be transferred to others's name. The minimum for buying is 1 unit for RM10.00 and it does not has the maximum buying limit. Drawing is made every months. The special drawing is on last December 2013 and it must have minimum RM3000 and above before 25/12/2013 in saving account. This scheme offered over 37,000 of gifts and the result will announced in selected newspapers, on information board in BSN branch and on BSN Website. First, Al-Wadiah contract is used then it changes to Mudharabah.

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Identification of main issues/problems (background of the issues)

Ujrah is a generic term for a fee in Islamic finance especially one charge for a service. The National Higher Education Fund Corporation (PTPTN) is a loan assistant for students to further their studies in diploma, degree and so on which is provided by Malaysia government that offer to change the service charge of 3% to the 1% Ujrah payback scheme.

Previously, PTPTN charges 3% of the 'reducing balance' or 3% of the outstanding debt, which is clearly usury, similar to the way of riba calculation by conventional banks. This is because the service charge is not confirmed by any Shariah Council which clearly contains elements of riba in its calculations.

Although the way of ujrah calculation in PTPTN is cheap and validated by the Fatwa Committee of Malaysia, but this method still cannot penetrate the law that has been decided by international scholars. In Islamic law, individual lenders, private financial institutions or governments cannot impose any financial charges on borrowers, in particular from the type of percentage lent to the amount of lending, which is changing with the change in the amount of lending. However, the concept of ujrah in PTPTN is still in use. Apart from the understanding of nas, international scholars prohibit it from avoiding this wage charge to be a trick on usury, which originally charges added to the loan as time value of money. This is because riba charges and wage charges are the same according to the concepts and stages of economic outlook.

In conclusion, ujrah in PTPTN may not be the best option to settle the debt as it seems to be a trick behind it, which makes us to trust more to the method as it uses Islamic term. The 1% can be considered as an alternative way to make the borrower pay their debt as soon as possible.