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Saturday, 30 April 2011

Achievement of Falah (Success) in this World and the Hereafter

One of primary objectives of Islam is falah or well-being of the mankind in this world and in the next world. That is why al-Qur’an, the revealed book of Islam, admires those who pray to God : “Our Lord ! Give unto us in the world that which is good and in the Hereafter that which is good, and guard us from the doom of fire……” (Quran, Baqarah, 2 : 201)
The Islamic concept of falah is very comprehensive. It refers to spiritual, moral and socio-economic well-being in this world and success in the Hereafter. At micro level, falah refers to a situation where an individual is adequately provided for in respect of his basic needs, and enjoys necessary freedom and leisure to work for his spiritual and material advancement; whereas at macro level, it aims at establishment of an egalitarian and happy society with clean environment, with freedom from want and with opportunities to its members for progress in socio-political and religious affairs. Although welfare of the individual and the society does not necessarily lie only in economic prosperity because moral, cultural and socio-political advancement is equally important, but still Islam does not discourage achievement of material prosperity through fair means.
The concept of falah, in strictly economic field, refers to material well-being of the citizens of an Islamic state. The economic system of Islam, therefore, aims to achieve economic well-being and betterment of the people through equitable distribution of material resources and through establishment of social justice. Yet the basic objective of Islamic system remains the same which has been clearly laid down by the Qur’an thus : “But seek with (the wealth) which God has bestowed on thee, the home of the Hereafter, nor neglect thy portion in this world, but do thou good as God has been good to thee and seek not mischief in the land, for God loves not those who do mischief.”(28 : 77)

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Friday, 29 April 2011

Qiyas in Islamic Law – A Brief Introduction

Qiyâs is a method that uses analogy – comparison – to derive Islamic legal rulings for new developments. Qiyâs can be defined as taking an established ruling from Islamic Law and applying it to a new case, in virtue of the fact that the new case shares the same essential reason for which the original ruling was applied. Qiyâs, therefore, is a method that Muslim jurists use to derive a ruling for new situations that are not addressed by the Qur’ân and Sunnah, like many new developments of our age and like the customs of people not encountered in Arabia during the time of the Prophet (peace be upon him). By way of qiyâs, these issues can be referred back to those that are explicitly mentioned in the sacred texts. When we know the reason why something in Islamic Law is obligatory, preferred, permitted, disliked, or forbidden, then if something else shares the same reason, it can be given the same legal ruling.
Categories of Qiyâs:There are two major categories of qiyâs with respect to its strength as evidence: overt and obscure. A. Obvious Comparison (qiyâs jaliyy): This is where the new situation being investigated is clearly no different in its essentials from a matter that Islamic Law has a clear and established ruling for. This is especially the case where the sacred texts clearly spell out the reason for the original ruling or where there is unanimous agreement among Muslims as to what that reason is. In such cases, there is no need for the jurist to try to deduce a quality in the new situation that he can use to make a comparison with some precedent in Islamic Law. Everything is clear and up-front. Consider the following examples:
1. What is the ruling when the guardian of the orphan’s estate burns all the orphan’s property? Though there is no direct textual evidence that discusses burning the orphan’s property, the ruling is patently clear. It takes the same ruling as when the guardian squanders the orphan’s wealth on himself. Allah says: “Lo! Those who devour the wealth of orphans wrongfully, they do but swallow fire into their bellies, and they will be exposed to burning flame.” [Sûrah al-Nisâ’: 10] It is prohibited for the guardian of the orphan’s estate to wrongfully spend the orphan’s wealth on himself. The reason for this ruling is obvious – it brings loss to the orphan’s property. This is precisely what would happen if the guardian burns the orphan’s property. The orphan will suffer the loss. There is no material difference between the two cases. Since the two cases share the reason for the ruling, they share the same ruling. It is unquestionably prohibited for the guardian to burn or otherwise vandalize the orphan’s property.
2. What is the ruling on giving one’s parents a good smack? We will not find any text in our scriptures that directly addresses this question. However, we are in no doubt that it is absolutely prohibited and sinful to do so. We find in the Qur’ân that it is sinful to even mutter “ugh” or “uff” to our parents in exasperation when they ask us to do something for them. Allah says: “And your Lord has commanded that you shall not worship any but Him, and that you show kindness to your parents. If either or both of them reach old age with you, say not to them so much as “ugh” nor chide them, but speak to them a generous word.” [Sûrah al-Isrâ’: 23] We are prohibited to say “ugh” to our parents, because it is abusive behavior. At the very least, it hurts their feelings. We can have no doubt that shoving them or smacking them is even more abusive and hurtful. Since the reason for prohibition is even more evident here, we can be certain that smacking our parents is unlawful and very sinful. From these examples, there should be no question that qiyâs should be accepted as a legal means for establishing Islamic legislation whenever the comparison is overt and clear. Some scholars do not consider these examples to even fall under the heading of qiyâs, due to how clear and obvious they are, but consider such rulings to constitute part of what the texts themselves communicate. B. Obscure Comparison (qiyâs khafiyy): This is where the new situation being investigated is not so overtly similar in its essentials to the established matter in Islamic Law that it is being compared to. This is especially the case where the sacred texts do not spell out the reason for the original ruling or where there is disagreement among Muslims as to what that reason is. Scholars cite as an example that the criminal liability for murder with a bludgeon is the same as that for murder with a knife, since in both cases there is “an intentional and hostile act of killing”. The difference here to the examples above is that the shared reason for the ruling is one that has been deduced by the jurists from the ruling prohibiting murder. The formula “an intentional and hostile act of killing” is a legal construct developed by legal theorists to define when a killing is legally an act of murder. It is not something that is explicitly stated in the texts, but rather something that is deduced from them. In such cases, there is a greater burden upon the jurist, who is required to extrapolate and explain the cause of the established ruling and then explain how that cause is also present in the new matter under investigation. All scholars agree on calling this kind of reasoning by the name qiyâs.
Areas of Scholarly Agreement Regarding the Validity of Qiyâs as a Form of Reasoning:Muslims are all agreed that qiyâs is a valid approach to reasoning in the following areas of inquiry:
1. Worldly matters: for instance, comparing one medicine to another or pricing one product on the basis of the price of similar products in the market.
2. Any qiyâs that was carried out by the Prophet (peace be upon him): since its consideration become certain on account of its taking place in a context of certainty. The scholars of Ahl al-Sunnah are also in agreement that qiyâs cannot be applied to certain matters. It cannot be used to answer essential questions of belief or to investigate matters relating to Allah’s nature and attributes if it leads to comparing Allah to His creation. Qiyâs can only be validly applied in these matters to extent of demonstrating that Allah is superior and transcendent to created things. Otherwise, the use of qiyâs will lead to the mistake of considering both Creator and His creation equally under the aegis of more general concepts. It will also lead to considering Allah as being similar to created things. Allah says: “To Allah applies the highest similitude: for He is the Exalted in Power, full of Wisdom.” [Sûrah al-Nahl: 60] Allah says: “There is none like unto Him, and He is the All-Hearing, the All-Seeing.” [Sûrah al-Shûrâ: 11]

As Muslims, we must believe that Allah is free from every deficiency that exists in created beings. By contrast, every aspect of perfection applies more to the Creator than it can to anything in creation. These matters are agreed upon.

Areas of Scholarly Disagreement Regarding the Validity of Qiyâs:Scholars disagree regarding the applicability of the second type of qiyâs (qiyâs khafiyy) in matters of Islamic Law. The discussion that follows will be dealing specifically with this second type. All of the leading scholars from among the Prophet’s Companions, as well as the Islamic legal scholars from all the major schools of thought agree that qiyâs is a source of Islamic legislation. It can be used as evidence to establish Islamic legal rulings on matters that are not directly addressed by the sacred texts. Ahmad b. Hanbal said: “No one can entirely dispense with qiyâs.” Some legal theorists of the Mu`tazilî persuasion denied the validity of qiyâs. The leading proponent of this line of thinking was al-Nazzâm, who was followed by Ja`far b. Harb, Ka`far b. Mubashshir, and Muhammad b. `Abd Allah al-Iskâfî. This line of thinking was also adopted by some scholars of Ahl al-Sunnah, most notably Dâwûd al-Zâhirî. These scholars, in turn, differed among themselves regarding the reasons why they dismissed qiyâs. Some of them argued that qiyâs is contrary to reason. One argument given in this light was that: “Delving into this method is intellectually repugnant in its own right”. Another argument was: “Islamic legal rulings are based on human well-being, and no one knows human well-being except the One who gave us the sacred law. Therefore, the only way we can know the sacred law is from the revelation.” Other scholars said that qiyâs is not contrary to reason, but prohibited by the sacred law itself. There were two schools of though that propounded this general idea.
1. The first was that of Ibn Hazm, the most prominent scholar of the Zâhirî school of law. He argued that the Qur’ân and Sunnah came with everything that is needed, so there is no need for qiyâs.
2. A second school of thought considered it a sin to even acknowledge the validity of qiyâs. The Hanafî jurist Abû Zayd al-Dâbûsî summarizes the opinions of those who reject qiyâs as follows:
Those who reject qiyâs are four groups. First, there are those who reject all rational evidence, and reject qiyâs because it is based on reason. Then there are those who hold that the only valid source of knowledge is that which is founded in rational necessity, and they argue that qiyâs is not founded on rational necessity. Then there are those who do not regard qiyâs as a valid source of evidence for matters of Islamic Law. Finally, there are those who argue that qiyâs would only a valid source of evidence for matters of Islamic Law in cases of necessity. However, there is never a need to resort to qiyâs, because in the absence of direct textual evidence, the default legal ruling is one of permissibility.The truth is that qiyâs is a valid source of Islamic Law. The disagreements that developed regarding its validity came about after the Companions agreed unanimously that it is a valid approach, and after the Successors – the students of the Companions – applied qiyâs and endorsed it without hesitation.. This means that the disagreement came about after it had been a matter of consensus (ijmâ`).

General Rules for the Valid Application of Qiyâs: There are a number of guidelines that must be observed for qiyâs to be correctly applied. We will mention these in a very brief and summarized form:
 1. Qiyâs can never be used to establish a ruling that contravenes a ruling or legal principle established by direct scriptural evidence. This is because qiyâs is not to be resorted to in a matter where we have a text that gives a ruling.
2. The person who engages in deriving a ruling through qiyâs must have the qualifications to engage in independent juristic reasoning (ijtihâd).
3. The qiyâs itself must be reasoned through properly. It must comply with all of the considerations that Islamic legal theorists have discussed in the books of jurisprudence. Otherwise, the qiyâs will not be valid. It will be of the type that the earliest scholars condemned. However, they did not ever categorically condemn qiyâs. Al-Ghazâlî writes: “Whoever rejects qiyâs in principle is certainly mistaken in his thinking, and should be deemed as sinful.”

by Sheikh Walîd b. Ibrâhîm al-`Ujajî, professor at al-Imam Islamic University
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SMART Goal Formula

One acronym you may be familiar with when it comes to goal-setting is the SMART goal formula.  It goes as follows:
  • Specific – your goals must be specific; you must describe your goal in such detail that an outsider who has no knowledge of your goal would know exactly what it was that you wanted with no chance of misunderstanding
  • Measurable – the completion of your goals must be measurable; this is the ‘When’; by when will your goal be completed?  Make it specific; i.e. 6:00 PM, Monday May 31, 2011
  • Action-oriented – you must be able to take action on your goal and you must take some action immediately after setting your goal to begin to create momentum; nothing really happens until you take action!
  • Relevant – goals must be related to your purpose and vision; being clear about your purpose and holding your vision clearly in your mind, your goals must be relevant to this vision
  • Timely – related to ‘measurable’, your goals must move you closer to the completion of your vision; be sure to chunk your goals down into steps you can complete in a short period of time so you are making regular progress toward the completion of one of your larger goals

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Thursday, 28 April 2011

Pengurusan kewangan Islam

Pengurusan dan perancangan adalah suatu yang amat mustahak dalam semua urusan kehidupan lebih-lebih lagi yang berkaitan dengan harta atau kewangan. Kegagalan mengurus dan merancang sebenarnya seseorang itu mengurus dan merancang untuk kegagalan. Kegagalan merancang harta atau kewangan dengan bijak dikenal pasti antara punca mudahnya seseorang itu terperangkap dengan pelbagai masalah dalam kehidupan.

Seseorang yang mempunyai perancangan dalam menguruskan kewangannya akan memperoleh gambaran yang jelas tentang kedudukan kewangan terkininya, memberi hala tuju yang tepat mengenai matlamat kewangan yang ingin dicapai yang akhirnya akan membolehkan seseorang itu mencapai matlamat yang diharapkan secara lebih efektif.

Islam sebagai agama yang sempurna mengajar umatnya agar sentiasa mempunyai perancangan dalam menguruskan hal ehwal kehidupan mereka. Hal ini dapat dilihat menerusi al Quran dan sunnah. Antaranya firman Allah dalam surah Yusuf ayat 67.

Pengajaran daripada ayat di atas antara lain ia menyentuh tentang persoalan perancangan di mana Allah menjelaskan bahawa dalam menguruskan kehidupan jangan bergantung kepada satu pendekatan semata-mata tetapi perlulah mempelbagaikan pendekatan dan strategi. Dan setelah segala persiapan dan perancangan dilakukan maka hendaklah bertawakal kepada Allah.

Ayat 47-48 di dalam surah yang sama Allah menegaskan pentingnya perancangan sebelum menghadapi atau melakukan sesuatu malah perlu bijak dalam menguruskan kehidupan agar tidak susah di kemudian hari.

Di dalam ayat 9, surah al-Nisa' juga Allah tegaskan perkara yang sama bahawa perlunya mempunyai perancangan untuk masa depan keluarga dan hendaklah bijaksana dalam menguruskan harta/kewangan. Sebagaimana dalam surah al Hasyr ayat 18.

Ayat ini cukup jelas menyentuh tentang kepentingan perancangan dalam kehidupan, kerana masa depan bergantung kepada perancangan kita hari ini selain daripada ketentuan Allah.

Harta dalam Islam

Dalam Islam mengurus dan membelanjakan harta adalah antara amanah Allah. Ia adalah satu keperluan yang bertujuan mencapai kehidupan yang diberkati. Perspektif yang tepat terhadap harta akan memastikan seseorang itu mencapai bahagia di dunia dan di akhirat menerusi hartanya.

Harta mempunyai kedudukan yang sangat mulia di sisi Islam. Islam menggalakkan umatnya memiliki, menghasil dan menggunakan harta dengan baik dan bijaksana.

Dari kaca mata Islam, harta adalah alat untuk menjamin keselesaan hidup manusia di dunia dan kebahagiaan di akhirat. Ia juga merupakan wasilah untuk mencapai takwa. Allah juga menganugerahkan harta kepada manusia untuk menguji manusia itu sama ada bersyukur atau sebaliknya sebagaimana yang ditegaskan oleh Allah dalam surah al-Munafiqun ayat 9.

Di samping mengajar manusia agar mempunyai perspektif yang jelas terhadap harta, Islam juga mengajar manusia agar mempunyai pandangan yang betul terhadap kehidupan. Hal ini penting bagi memastikan kehidupan mereka bermatlamat dan arah tuju yang jelas.

Islam menggariskan agar umat manusia berusaha bersungguh-sungguh untuk membangun dan membina kehidupan yang bahagia dan harmoni. Ini dijelaskan dalam surah Hud ayat 61.

Islam juga menyeru agar menjadikan kehidupan ini dapat memberi manfaat kepada orang lain sebagaimana hadis Rasulullah SAW yang bermaksud: "Sebaik-baik kamu adalah yang paling banyak memberi manfaat".

Di dalam ajaran Islam, dunia adalah tempat sementara yang hanya sebagai jambatan untuk ke akhirat, dunia sebagai tempat bercucuk tanam dan akhiratlah tempat untuk menuainya. Walaupun dunia bersifat sementara, Islam dengan pelbagai kaedah dan pendekatan mengajar umat manusia supaya mempunyai status sosial dan ekonomi yang baik.

Oleh itu, Islam memerintahkan supaya harta dan kehidupan diuruskan dengan baik dan bijaksana. Jika sebaliknya ia akan menjadi faktor keruntuhan manusia dan kemurkaan Allah seperti dalam surah Saba' ayat 15 - 16 dan surah al-Nisaa' ayat 10 dan 161.

Konsep pengurusan harta

Secara umumnya ada lima aspek atau elemen utama pengurusan harta secara Islam. Pertama, Penghasilan Harta (Wealth Creation). Sebagai seorang Muslim yang sejati, Islam menggalakkan umatnya mencari harta dan tidak hanya pasrah pada qada' dan qadar seperti di dalam surah al-Juma'ah ayat 10.

Kedua, Pengumpulan Harta (Wealth Accumulation) atau dengan erti yang lain bermaksud pengembangan harta. Adalah tidak wajar jika harta yang kita ada disimpan begitu saja tanpa mengembangkannya. Pengembangan harta boleh dilakukan melalui simpanan dan pelaburan di institusi kewangan.

Malah Islam menggalakkan umatnya untuk membuat simpanan serta melaburkannya sebagaimana dalam surah Yussuf ayat 47-48.

Ketiga, Perlindungan Harta (Wealth Protection). Setiap manusia harus mempunyai matlamat dalam kehidupan dan pasti salah satu daripadanya ialah untuk dapat kehidupan yang selesa dan terjamin dari segi kewangan sepanjang hidup. Sebagai jaminan hidup di dunia ini selain mempunyai simpanan dan harta yang mencukupi, diri kita dan harta kita juga harus dijaga daripada sebarang musibah dan perkara-perkara yang tidak diingini.

Keempat, Pengagihan Harta (Wealth Distribution). Islam memperuntukan beberapa cara atau kaedah untuk pengagihan harta sebelum atau selepas mati. Antara instrumen perancangan harta adalah wakaf, wasiat, hibah dan sebagainya.

Kelima, Penyucian Harta (Wealth Cleansing). Sebagai seorang Muslim kita tidak sewenang-wenang membelanjakan atau mempergunakan mengikut kehendak dan hawa nafsu. Ini kerana setiap harta ada hak-hak yang tertentu untuk dibahagikan seperti berzakat dan amal jariah kita seperti sedekah. Ini terbukti dalam surah al-Baqarah ayat 195.

Pengurusan kewangan Islam

Pengurusan kewangan yang bijak itu adalah yang dapat mengimbangi perbelanjaan dan pengurusan hutang, pelaburan yang mengikut syariah dan pendapatan yang mendapat keberkatan. Perlu diingatkan bahawa merancang dan mengurus ini merupakan sunnah.

Dari sudut semasa, industri perancangan kewangan telah lama wujud di Malaysia tetapi bukan dalam bentuk satu disiplin profesional seperti yang ada sekarang. Diperakui oleh Suruhanjaya Sekuriti (SC) sejak tahun 2004 apabila SC menjadikan perancangan kewangan sebagai satu aktiviti yang memerlukan lesen.

Perancangan kewangan adalah satu aktiviti yang dikawalselia oleh undang-undang. Individu yang ingin menjadi "Perancang Kewangan Bertauliah" perlu mendapat lesen daripada SC (Jadual 2, Capital Markets and Services Act 2007).

Secara lebih mendalam, perancangan kewangan itu merujuk kepada 'Perancang Kewangan' sebagai "seseorang yang membuat analisis kedudukan kewangan individu lain dan mencadangkan perancangan pelan kewangan agar individu berkenaan mencapai matlamat dan objektif kewangannya." (Suruhanjaya Sekuriti).

Secara ringkas, perancangan kewangan Islam itu ialah "satu proses di mana matlamat kewangan keseluruhan individu digunakan untuk membangun dan melaksanakan pelan yang holistik untuk mencapai matlamatnya yang mematuhi syariah dan akhirnya mendapat keberkatan daripada Allah" (Mahadzir Ahmad, majalah VISI, Bilangan 95)

Perancangan kewangan yang didasarkan kepada Islam matlamat akhirnya menjadikan aspek kewangan sebagai satu wasilah mencapai hasanah di dunia dan di akhirat. Justeru, untuk memastikan matlamat ini dapat dicapai maka pelan perancangan perlu mengambil kira perbelanjaan untuk kemaslahatan sendiri seperti keperluan jasmani dan rohani, perbelanjaan untuk kemaslahatan orang lain seperti nafkah, sedekah dan juga perbelanjaan untuk kemaslahatan umum seperti membina masjid, hospital dan sebagainya.

Secara yang lebih sistematik perancangan kewangan dari perspektif Islam perlu mengambil kira komponen-komponen berikut; pengurusan kredit dan aliran tunai, pengurusan risiko dan perancangan takaful, perancangan pelaburan Islam, perancangan zakat dan cukai , perancangan persaraan dan perancangan harta pusaka dan wakaf.

Secara umumnya, ada dua aspek utama yang dititikberatkan oleh Islam dalam hal-hal yang bersangkutan dengan pengurusan harta, iaitu bagaimana harta itu diperoleh. Ia mestilah menerusi kaedah pemilikan yang sah dan jual beli, pelaburan secara Islam, hadiah dan sebagainya.

Aspek kedua adalah bagaimana harta itu dibelanjakan, sama ada untuk kebaikan ataupun untuk perkara-perkara yang dilarang Allah. Perkara ini dapat dilihat menerusi sabda Rasulullah SAW yang bermaksud: "Tidak akan berganjak kedua-dua kaki anak adam pada hari kiamat sehingga ditanya tentang umurnya pada apa ia dihabiskan, tentang usia mudanya pada apa digunakan dan tentang hartanya dari mana ia diperoleh dan bagaimana ia dibelanjakan dan tentang ilmunya pada apa ia diamalkan?"

Oleh itu, aspek utama yang perlu diambil kira di dalam perancangan kewangan Islam adalah memperoleh keberkatan. Harta yang melimpah ruah tidak membawa apa-apa erti jika tidak ada padanya keberkatan, malah harta boleh menjadi fitnah, boleh menjadikan seseorang itu sentiasa berasa tidak cukup sehingga sanggup melakukan apa sahaja termasuklah rasuah, penyelewengan dan sebagainya.


Sebaliknya, harta yang berkat walaupun sedikit akan membawa ketenangan dan memberikan kesan yang baik dalam segenap kehidupan.

Keberkatan bermaksud mendapat restu, keredaan atau rahmat dari Allah SWT. Bagi mendapat keberkatan dan rahmat tersebut, sewajarnya kita mematuhi serta mentaati setiap perintah Allah.

Namun keberkatan boleh hilang jika melakukan perkara yang menyalahi apa yang digariskan oleh Allah SWT seperti terlibat dengan riba dan melakukan dosa serta mengabaikan solat.

Kesimpulannya, untuk menikmati kehidupan yang selesa dan bahagia kita perlulah mempunyai perancangan kewangan yang sempurna.

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Quran verse: good in this world and good in the Hereafter...

And there are men who say: "Our Lord! Give us good in this world and good in the Hereafter, and defend us from the torment of the Fire!"  
(Quran:  Al-Baqara, Chapter 2, Verse 201)

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Wednesday, 27 April 2011

Islamic Banking and Profit Fairness

Islamic finance is a moral financial model based on divine principles, one of the the most important aspects is justice. There are many Quranic verses and Hadiths that deal with this, such as:
"We sent aforetime our messengers with Clear Signs and sent down with them the Book and the Balance (of Right and Wrong), that men may stand forth in justice," [Surat al Hadid; Verse 25].
There is also: "And the Firmament has He raised high, and He has set up the Balance (of Justice)" [Surat al Rahman; Verse 7].
God Almighty also said, "Allah commands justice," [Surat al Nahl; Verse 90].
In a Hadith Qudsi the Prophet [pbuh] narrated the word of God, saying "My servants, I have forbidden injustice for myself and I have made injustice forbidden to you. Do not be unjust to one another." Renowned Islamic scholar al-Izz Ibn Abdul-Salam said that Verse 25 of Surat al Hadid represents the essence of Islam.
 It is therefore just that profits should not be inflated to the point that this would invalidate the satisfaction [of the customer]. This is the crux of the matter in Islam, and can be seen in the Quranic verse: "O ye who believe! Squander not your wealth among yourselves in vanity, except it be a trade by mutual consent" [Surat al Nisa; Verse 29] and this is regardless of whether the inflated profit [made by the seller] is known to the buyer such as in the event of purchasing from a monopoly, or whether this increase [on the original price] is not known to the buyer, if the seller conceals the original price of the product.
There are several Hadith that prohibit sellers making large profits on the original price of items or services. In the Sahih Muslim collection of Hadith, it was reported that the Prophet [pbuh] said, "No one hoards but the sinner." Muslim scholars explained the term "hoard" in this instance to mean the hoarding of a commodity that people need in order to sell it later at a higher price. This is something that is forbidden in Islam as it restricts the necessities available to the public.
In addition to this, Prophet Mohammed [pbuh] also said, "Any Muslim who transgresses against another Muslim and is unjust then he is the sinner." In another Hadith, the Prophet [pbuh] is quoted as saying: "Injustice of a buyer is riba [usury]."
Religious scholars had different opinions with regards to the amount of profit that is permissible to make. Some of them define this precisely, while others judge this according to local customs [and other factors], which is more reasonable. Therefore Islamic finance should operate in a just manner with regards to profits, and avoid outrageous [profit] inflation, particularly with regards to long-term financing.
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Recipients of Zakah (zakat)

In Al-Quran surah At-Taubah verses 60, Allah said: "As-sadaqaat (here means zakah) are only for the fuqaraa (poor), and al-masaakin (poor) and those employed to collect (the funds) and to attract the hearts of those who have been inclined (toward Islam), and to free captives, and for those in debt, and for Allah's cause (i.e. for mujahiduun - those fighting in a holy battle) and for the wayfarer (a traveller who is cut off from everything); a duty imposed by Allah. And Allah is All-Knower, All-Wiser".
Thus, it is clear that there are eight groups (asnafs) of rightful recipients of zakah (mustahiq):
  • Fuqaraa and al-masaakin
  • The main purpose that these groups are being the recipients is to eradicate poverty and scantiness within the ummah. According to a wellknown mufassir (a person who understands the meaning of Quran) Tabari, fuqaraa means needy people but can help themselves not to beg, whereas al-masaakin means people who are needy and beg.
  • 'Amil zakah
  • The third target group is 'amil zakat, which are those who perform all the zakah administration. This includes collecting zakah, account them, and distribute them.
  • Muallaf
  • Muallaf are people whose hearts are expected to inclined to Islam or whose believe to Islam is expected to increase, or people whose bad intension to muslims is to be prevented, or people who are expected to be of benefit to or help muslims from their enemies. There are several groups of people that are qualified as muallaf:
    • People who or whose groups or family are wished to be muslims
    • People who are worried to do crime if not helped
    • People who just become muslims
    • Muslim leaders or public figures whose friends are kufur
    • Muslim leaders or public figures whose believe is not yet firmed
    • Muslims who live in fortresses or in the front of enemy line
    • Muslims who need help in enforcing the collection of zakah from reluctant people
  • Riqab (slaves)
  • There are two ways to free slaves. Firstly, is to help mukatab. Mukatab is slaves who have agreements with the master to be released once they can present certain amount of fortune. The second way is to buy slaves and then free them from their own zakah or from the collected zakah by a government.
  • Gharimun (debtor)
  • According to ibnu Humam in al-Fath, gharim are debtor who are trapped with their liabilities to fulfill basic need. Mazhab Imam Syafi'i argued that this asnafs deserve to be given zakat to pay their liabilities with some preconditions, which are: they have no wealth to pay their liabilities; they do not perform sin or illegal activities; the payment of liabilities has reached its due date. They deserve to get the amount of zakat which is as much as their liabilities. But if the creditors release them from their obligation to pay the liabilities, they have to give the share of zakat back to Islam. There are two groups of debtors. One is those who are in debt for their own wellbeing, such as for living cost, clothing, or treating sick people. Another group is those who are in debt in the effort to solve conflicts or to perform social obligations, such as care for orphans, provide health services for fuqaraa and orphans, etc.
  • Fi sabilillah
  • Fi sabilillah means in the path that conveys Allah's ridha in terms of aqidah or deeds. Syeh Rashid Ridha in Tafsir Al Manar explained that zakah for this asnaf can be used for the public benefit (maslahah of ummah) with regard to the establishment of aqidah of ummah.
  • Ibnu Sabil
  • According to jumhur ulama, ibnu sabil is an expression for musafir. Musafir are people who are travelling. Although an ibnu sabil has living means, he can receive zakah if he has trouble in accessing his means during travelling.
Other parties than these 8 groups are not qualified as the recipients of zakah. However, they can be recipients of infaq. Thus, the recipients of zakah are more specific than the recipients of infaq.
(Portal Infaq)

Alfalah Consulting:

Tuesday, 26 April 2011

Growth expected for Malaysian Islamic Insurance (Takaful) Industry in 2011

Projections foresee growth in 2011 topping 12% across the Malaysian insurance industry. The Malaysian government has unveiled stimulus plans and other legislative initiatives which together with an historically low interest rate environment have lead to very favorable conditions for growth in the insurance sector. All forecasts however need to be tempered by an awareness of uncertainties about the outlook for a number of western economies and the possible resulting downward pressures on overall performance of the global insurance industry.

Malaysia’s economy grew 7.2 percent last year, the highest rate experienced since the year 2000. The Malaysian government has aggressively pursued substantial investment programs with the explicit goals of doubling GDP per-capita and turning Malaysia into a high income country by 2020. New parliamentary initiatives such as the New Economic Model (NEM), Economic Transformation Program (ETP) and the Tenth Malaysian Plan will, according to industry analysts, lead to a growth in demand for insurance products and services. 

The Life Insurance Association of Malaysia (LIAM) held that in addition to these numerous initiatives announced in the Economic Transformation Program, including the private pension plan and worker insurance scheme, economic conditions in the country are ripe for further life insurance development. Consumer confidence in Malaysia has shown marked improvement, rising to 107 points on the latest Nielsen Global Consumer Confidence Index, its highest score since the third quarter of 2006. Around 41 percent of the Malaysian population is currently insured, according to the LIAM. This level of life-insurance penetration is low by a developed economy’s standards and will be an important factor in the further growth of the sector. The current low interest rate environment will act as an impetus to consumers seeking high-yielding products like insurance in Malaysia. 

The LIAM reported that new business sales for life insurance rose 19 percent on a weighted premium basis during the first three quarters of 2010. This growth was accredited to strong performances in regular premium sales which were up 21 percent compared with the identical period in 2009. Single premium business, however, registered a small 1 point decline.

The LIAM’s views were supported by the General Insurance Association of Malaysia (PIAM), the Malaysian Takaful Association (MTA) and Allianz Malaysia Bhd (AMB).

The General Insurance Association of Malaysia (PIAM) executive director Mr. Lim Chia Fook reported that, in absence of any further adverse impacts on the world economy, the insurance association foresees the outlook for the general insurance industry this year to be very positive with an increased demand for insurance in all areas expected. The general insurance industry recorded that for the third quarter of 2010, gross direct premium estimates were 3.16B$, demonstrating a growth of nine percent over the same three quarter period during the previous year.

The Malaysian medical and health insurance sector (MHI) is likewise expected to sustain powerful development, driven by upward trends in consumer awareness coupled with an increasing want for cover against escalating healthcare costs. Mr. Lim added that the introduction of the health insurance plan designated for foreign workers would further drive growth in the MHI sector. PIAM anticipated new areas of industry growth through micro-insurance products, especially considering the rapidly developing small and medium enterprise and biotechnology sector in Malaysia.

The Malaysian Takaful Association (MTA) expects the Islamic insurance industry to continue to improve on its 10% market penetration, particularly by expanding into rural areas. The Islamic insurance market has grown due to more interest in shariah-compliant investments. The industry has experienced substantial growth after the Malaysian central bank issued takaful licenses to four established consortiums in 2006, which included HSBC, Malaysia’s Hong Leong Bank and Prudential Holdings. Malaysia currently has eight takaful operators and trusts that the inclusion of new insurance players would increase industry competition, pushing players not only to capture new market share but also to develop fresh takaful products. Similar to general insurers, the islamic insurance sector operates through correlation with macro economic performance; hence the positive outlook for the Malaysian domestic economy will affect the development of both sectors.

MTA chairman Datuk Syed Moheeb Syed Kamarulzaman reported: “The significant growth in retail credit financing, especially in relation to home financing in 2010, may be curbed to some extent in 2011 and this should encourage takaful operators to diversify their business focus away from financing protection products to agency driven products.” 

Allianz Malaysia CEO Jens Reisch remarked that apart from the initial low insurance penetration rate in the country, increase in consumer knowledge, greater demand for retirement savings, together with growing Bancassurance and takaful businesses from a more liberalized insurance industry, are some of the other factors that would advance the insurance sector. Mr. Reisch added that Allianz: “is undertaking numerous initiatives to improve its distribution capabilities and we hope to continue to strengthen the top line and sustain profitability.”

Mr. Reisch highlighted that the major challenges facing the insurance trade would be the provision of long-term assets for packaging insurance products, the low interest environment for insurers failing to manifest attractive guaranteed return products and the requirement to offer high guaranteed products into the long term future.

The LIAM assert that global economic uncertainty could restrain the growth potential of the industry: “While it is an external factor, the quagmire prevailing in the established economies of the United States, Japan, Europe and the reaction of the local share market towards such sentiments may have an indirect impact on the industry. It can cause a slowdown on external demand that will eventually influence consumers in terms of decision-making, thus making sales more difficult.”

The association’s president, Md Adnan Md Zain, believes the best actions to take to overcome these peripheral obstacles would be through prudent domestic policies, active oversight, working closely with regulators and better integrating as an industry. The Life Insurance Association doesn’t discount the potential for inclusion of new foreign insurance players that could invigorate the market as well as the continued implementation of the financial inclusiveness programs undertaken by both the authorities and financial institutions.

(Int. News)

Alfalah Consulting:

Monday, 25 April 2011

What is Faraid?

Faraid is that section of the Islamic law that deals with the distribution of the estate of a deceased person among his heirs in accordance with Allah's (God) decree in the Holy Quran and according to the hadith or tradition of the Messenger of Allah (peace be upon him).
What is an estate?
Estate is all the assets and liabilities of a deceased person, which, according to Islamic law, may be inherited by the deceased person's heirs.

What are the types of estates?
- Immovable property such as a building, a piece of land, a plantation, etc.
- Movable property such as money, shares, jewelry, equipment, vehicles, clothes, etc.
- Money owed to a deceased person.
- Property that has been mortgaged or pawned by a deceased person and that is redeemable.
- Property purchased by a deceased person during his lifetime for which payment has been made by him but which has not been delivered to him until his death.
- Mahr (Dowry) that has yet to be paid to a wife until the wife's death.
- Other assets such as savings, employee provident fund money, shares, unit trusts, bonds and insurance policies approved by Islamic law.
- All the aforesaid property in and outside the residence of a deceased person.
- All other assets of material value.
What is the basis of Faraid?Faraid is based on:
  1. The Quran:"Allah enjoins you concerning your children: the male shall have the equal of the portion of two females; if there are more than two females, they shall have two-thirds of what he has left, and if there is one, she shall have the half; and as for his parents, each of them shall have the sixth of what he has left if he has a child: but if he has no child and only his two parents inherit from him, then his mother shall have the third; but if he has brothers, his mother shall have the sixth after the payment of any bequest he may have bequeathed or a debt. You know not whether your parents or your children are nearest to you in benefit. These are settled portions ordained by Allah and Allah is All-Knowing, All-Wise." (4:11)
  2. Hadith: 
    The Prophet Muhammad (peace be upon him) said: "Give the appointed portions to those entitled to them. Then whatever remains is for the nearest male." (Narrated by Bukhari).
  3. Ijmak and Ijtihad of the companions of the Messenger of Allah, imams of mazhab and mujtahid of proven knowledge. 
A substantial part of Faraid and the section governing the distribution of property among heirs are provided for in the Quran. Only a small part is determined on the basis of Hadith and Ijmak.
Who are the beneficiaries?
Beneficiaries are the persons who have the right to inherit the estate of a deceased person on the basis of their relationship with the deceased by descent and marriage.

Male: son, grandson (and his direct male descendants), father, paternal grandfather, brother, half-brother (by the same father), half-brother (by the same mother), nephew (brother's son), nephew (half-brother's son), paternal uncle, father's half-brother (by the same father), son of paternal uncle, son of father's half-brother (by the same father), husband

daughter, granddaughter (son's daughter), mother, maternal grandmother, paternal grandmother, sister, half-sister (by the same father), half-sister (by the same mother), wife
What is Baitulmal?
Baitulmal is the body or institution that functions as a trustee of the Muslims. It looks after assets from which members of the Muslim public can benefit.
In Singapore, the Majlis Ugama Islam Singapura [MUIS] administers the Baitulmal. The estate of a deceased person goes to the Baitulmal under the following circumstances:
- There is no rightful beneficiary to the estate.
- All beneficiaries have received their shares, yet there is still a portion that remains of the estate.
- There is no claimant to the estate.
- The deceased person leaves no heir.
Order of sequence of rights on the estate
When a person dies, those living must do the following with the estate that the deceased leaves behind, in the following order:
  1. To discharge all his obligations relating to zakat, various kaffarah or penalties for oath, zihar, coition whilst fasting in the month of Ramadan, coition whilst in the state of ihram during hajj or umrah, homicide, etc.
  2. To pay for his funeral expenses.
  3. To settle all his debts to his fellow beings. The settlement of such debts shall include the performance of the hajj on his behalf if he had not already done so in his lifetime, and the payment of mahr if payment had not already been made. Even if the deceased died testate, the settlement of all his debts must precede the disposal of his estate that is spelt out in his testament.
  4. To execute his will. A will is not for a person's heirs. The amount of estate provided for in a will for disposal shall not exceed one-third of the remaining estate after the settlement of (i) to (iii) above.
  5. To distribute the remaining estate among his heirs after settlement of (i) to (iv) above.
The next of kin of a deceased person are entitled to the deceased's estate regardless of the amount. The estate must therefore be distributed among them in accordance with the law of Allah except to those who disclaim their right thereto. In the event that a beneficiary is away from the country or is missing, his share of the estate must be set aside for him until his return.
Concealing the estate of a deceased person from those who are entitled to it is an act of deceit.          It is haram (forbidden) and cruel to do so. Any beneficiary who is involved in such an act, either directly or indirectly, shall be answerable to Allah in this world and in the hereafter.
A Muslim cannot ignore the rule of Allah and dispose of the estate of a deceased person according to the rule or custom of a particular country.
  1. Daughter inherits 1/2 of what the son inherits
  2. Wife inherits 1/4 and husband 1/2 if the deceased has no children
  3. Wife inherits 1/8 and husband 1/4 if the deceased has children
  4. If the deceased has no ascendant or descendants, the sister inherits 1/2 share that of the brother
Male inherits double than female because he financially supports the family. In Islam, a woman has no financial obligation. Financial responsibility lies on the shoulder of the man. Before a woman is married, it is the duty of the father and brother to look after her financial requirements. After she is married, it is her husband's or son's duty. Islam holds the man financially responsible for the needs of his family. In order to fulfill the responsibility, the men get double the share of inheritance.
What is the wisdom behind Faraid?
Faraid is ordained in great detail by Allah in the Quran. Muslims must abide by this rule of Allah in all circumstances. Allah has decided upon the rights of inheritance on the basis of the responsibilities of men and women. Allah has fairly and systematically made the choice of beneficiaries.

Under the Islamic social system, women are not obliged to work for a living. It is the responsibility of the male members of families to earn a living and to provide for their womenfolk. When a woman weds, she receives a mahr the quantum of which she herself determines. She has the absolute right to decide on the manner in which the mahr is to be used. The mahr is given to her by the man she marries. Given the fact that women have the privilege of protection by men, it is clear that what has been decided as their share vis-à-vis the distribution of estate is 
(Gedung kuning)

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