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Monthly Archives: March 2010
March 20, 2010
DR. ZULKIFLI HASAN
South Korean firms set to boost Asian sukuk market
South Korean firms set to boost Asian sukuk market

Available:
http://www.gulf-daily-news.com/NewsDetails.aspx?storyid=272940
MANAMA: South Korean institutions are showing increasing interest in Islamic financing to diversify capital raising avenues. That was the conclusion of delegates at a seminar on Korean sukuk held this week in Seoul by BNY Mellon, a leading provider of corporate trustee and agency services on Islamic transactions and other complex structured finance deals globally.
As the global financial markets recover from the financial crisis, Islamic finance is appealing as an alternative to conventional financial instruments. Islamic bond issuers do not need to be Islamic entities, nor is the market restricted to the Middle East. There is anecdotal evidence which suggests that most sales of sukuk this year will be generated from Asia.
Malaysia continues to dominate the sukuk market today with an 80 per cent market share in the global Islamic bonds market, but last year also saw other sovereigns such as Indonesia, with its successful sukuk treble, make their way into the market. Singapore also made a relatively small but significant debut.
Although a relatively latecomer to Islamic finance in Asia, South Korea is following the stated ambitions of its neighbouring countries, such as Hong Kong and Singapore, in trying to establish itself as an international Islamic capital market hub. The country’s National Assembly is currently considering a bill aimed at facilitating tax neutrality for the issuance of sukuk.
“South Korea was largely unaffected by the sub-prime crisis and is financially well-positioned globally as it accelerates out of the financial turmoil of 2009,” said BNY Mellon’s head of corporate trust business in the Asia Pacific region, Gary Lew. “Sukuk can help Korean firms diversify their financial resources, and expose them to Middle Eastern and Southeast Asian markets. “If they choose to use it, sukuk can offer Korean companies a new fund-raising avenue through which they can leverage the pool of Islamic capital. “If the legislation passes, the industry could see the first South Korean corporate sukuk as early as late 2010.” BNY Mellon’s corporate trust business services nearly $12 trillion in outstanding debt from 58 locations in 20 countries.
Underlying most arguments against the free market is a lack of belief in freedom itself.” Milton Friedman
Best Regards

ZULKIFLI HASAN

DURHAM, UK
Texas, USA
Islamic finance news
Leave a comment
March 19, 2010
DR. ZULKIFLI HASAN
Islamic Megabank
No chance of an Islamic megabank says CPI Financial poll
By: Mike Gallagher Available at:
http://www.cpifinancial.net/v2/fa.aspx?v=0&aid=458&sec=Islamic%20Finance
Will an Islamic megabank emerge in 2010? The debate continues to rage with proponents and opponents passionately arguing their case in a CPI Financial poll. Megabank, Islamic megabank, cimb, maybank, hsbc, standard chartered, dib, dubai Islamic bank, saadiq, poll. Is the idea of an Islamic megabank grounded in reality? The concept usually pops up into the headlines around the first quarter of the financial year as analysts speculate about which bank might claim the grand mantle.
However, a poll on the CPI Financial website generated a flood of voting when it posed the question: Will an Islamic megabank emerge in 2010? A slim majority of 55 per cent said ‘no,’ when the votes were tallied. Some people have dismissed the whole idea of an Islamic megabank as utterly ridiculous for a wide number of reasons. Plenty of questions are being asked about how it will take shape and the biggest question is where the skilled staff will come from.
Another is how it will be created. The investors and the good intentions may be there, but does the capacity exist? Building a global presence as an Islamic megabank is fraught with regulatory hurdles. Will conventional banks be converted? What if they can’t get a licence in a given country? Where will the bank come from? Will it be Asia, the Middle East or Europe? Will a number of Islamic banks with a global presence in different countries agree to merge to become a single, giant entity? Again, more scepticism.
Megabank sceptics like to point out that ambitious, egotistical chief executives are unlikely to want to hand over power and take a lower position. Some Middle Eastern Islamic banks are owned by prominent families who may be unwilling to see their creation disappear into the arms of a more powerful neighbour. Regional and local rivalries are common. Arcane laws which impose limits on foreign ownership in Asia may trip up the unwary.
This year all the speculation (not for the first time) is on Al Baraka Banking Group (ANG), which is led by Sheikh Saleh Abdulla Kamel. ABG (by Islamic banking standards) has a fairly wide geographical reach. It has a presence in a number of countries in the north and south of Africa (Tunisia, Egypt, Algeria, Sudan and South Africa) and is also on site in Pakistan and Indonesia, not to mention a number of Near Eastern (Turkey and Lebanon) and Middle Eastern (e.g Bahrain, Syria and Jordan).
Sameer Abdi, Head of Islamic finance at Ernst & Young seems to think it is likely to be a possibility this year. “The key shareholders I would say are on board and we are looking for an imminent launch, within six months to a year,” he told the Reuters Islamic Banking and Finance Summit in Bahrain. There has been speculation that Saudi Arabia-based Al Rajhi Bank could claim the title. It has 19 branches in Malaysia. Or maybe it could be Dubai Islamic Bank with its teams already in place in Ireland, Pakistan, Iran, Turkey, the Bahamas, Jordan, Sudan, Bahrain, Bosnia and Yemen.
Malaysia’s Maybank is on the ground in Bahrain, Brunei, Cambodia, China, Hong Kong, Indonesia, the Philippines, Singapore, the US, the UK, Uzbekistan and Vietnam.  CIMB from Malaysia is another contender. It has a presence in Bahrain, Brunei, Hong Kong and China, Indonesia, Myanmar (Burma), Singapore, Thailand, the UK and the US and HSBC Amanah with its immense global presence also cannot be discounted. Another significant presence in emerging markets with lots of Islamic potential is Standard Chartered Saadiq. Takaful companies may be asking the same questions. When will a megaTakaful company come along?
“A bank is a place where they lend you an umbrella in fair weather and ask for it back when it begins to rain.” Robert Frost
Regards

ZULKIFLI HASAN

DURHAM, UK
Oxford University
Islamic finance news
Leave a comment
March 15, 2010
DR. ZULKIFLI HASAN
Shari’ah boards face scrutiny amid financial crisis
Sharia boards face scrutiny amid financial crisis
By Shaheen Pasha Available at:
http://www.reuters.com/article/idUSLDE62A0J420100311
DUBAI, March 11 (Reuters) – Sharia boards face increased scrutiny and criticism as high-profile corporate defaults and cautionary comments from respected scholars cast a harsh light on the fast growth of financial products touted as Islamic.
Experts say rapid growth in the industry, which some estimates value at around $1 trillion, has put more pressure on scholars to sign off on increasingly complicated structures, wrapped in sharia packaging.
“In areas that have to do with capital guarantees, fixed income and derivatives … 40 to 50 percent of what’s being sent out is form over substance,” said Jawad Ali, managing partner at Dubai-based law firm King & Spalding.
Ali said while scholars have good intentions to produce sharia-compliant products, concerns arise when complicated structures like hedge funds and derivatives come into play — areas that mimic conventional products but are being touted as sharia financing by banks and attorneys.
“Mistakes do happen when a sharia board focuses on the instrument being presented … and there is little scrutiny on how the structures are being implemented,” he said.
Influential scholar Sheikh Taqi Usmani rocked the industry last year when he said many structures presenting themselves as Islamic didn’t meet the definition of true sharia compliance, raising concerns in the industry that some deals could be deemed un-Islamic after investors had bought them.
Those concerns increased when Kuwait’s Investment Dar (TIDK.KW) — which defaulted on a $100 million sukuk last May — presented a legal defense in the British High Court that one of its wakala, or agency deals, wasn’t sharia compliant. [ID:nLDE623152]
VERY PAINFULL
Such comments are tarnishing the reputation of sharia boards, said Mohd Daud Bakar, Islamic scholar and managing director of Amanie Islamic Finance Consultancy and Education.
“If any company claims deals aren’t sharia compliant after they’ve already been approved by their own boards, it would be very painful for the industry,” Bakar said, adding the relationship between a sharia board and business players structuring a deal had to be based on trust.
But Ali said there have been violations of that trust by eager bankers and lawyers, looking to cash in on the industry and push through a deal by any means necessary.
“Sharia boards can’t be policemen,” he said. “It’s completely unreasonable to expect a sharia board member to read every single page of a document. There has to be a level of trust with lawyers and bankers.”
Part of the problem is the scarcity of sharia scholars — particularly those with business acumen — available to oversee such transactions.
According to a study by consulting firm Funds At Work, in the Gulf Cooperation Council there are 755 sharia board positions in total. But 46 percent of those positions are filled by the same 10 scholars.
The same few experienced scholars are stretched too thin, said Harris Irfan, head of Islamic products at Barclays Capital.
“The scholars take their responsibilities seriously,” he said. “But I have frequently come up against bankers and lawyers that have glossed over thorny issues that might cause a problem in sharia and hoped that scholars would just sign off.”
And when a deal comes into question, as in the case of Investment Dar which said a fixed return promised in its wakala deal ultimately constituted interest, it’s the sharia boards that get hit with criticism.
To prevent such happenings, sharia scholars must take responsibility, Bakar said, regardless of their many obligations, to pore over every page of a contract and thoroughly understand the terms of a deal before signing it off.
“A leader or a man of action in a crisis almost always acts subconsciously and then thinks of the reasons for his action.” Jawaharlal Nehru
Best Regards

ZULKIFLI HASAN

DURHAM, UK
With Sheikh Ameen Fateh in Dubai.
Islamic finance news
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March 14, 2010
DR. ZULKIFLI HASAN
Dubai Financial Services Authority Launches Islamic Finance Handbooks
DFSA Launches Electronic Islamic Finance Handbooks

Available at:
http://www.dfsa.ae/WhatsNew/DispForm.aspx?Id=131
The Dubai Financial Services Authority (DFSA) has launched a series of electronic Islamic finance tailored handbooks, designed to help Firms undertaking Islamic finance activities in the Dubai International Financial Centre (DIFC). The Islamic finance handbooks are designed to assist with the identification of the DFSA’s Rulebook requirements applicable to financial activities conducted as Islamic or Shari’a compliant.
The five tailored handbooks relate to five different types of Islamic finance activities. Each handbook contains the parts of the DFSA Rulebooks which apply to that particular area of activity namely: Islamic Banking; Islamic Investment Business, other than Operating Funds; Islamic Insurance; Islamic Insurance Intermediation and Management; and Operation of Islamic Funds.
The Chief Executive of the DFSA, Mr Paul Koster said: “Islamic finance has witnessed tremendous growth and as such is an important area of focus for the DFSA. We want to provide the industry with improved access to our framework of Laws and regulations which is why we have created the Islamic finance tailored handbooks. By improving our delivery of information to Firms conducting Islamic finance activities, we hope that the handbooks will help Firms access the requirements that apply to their Islamic finance activities more easily.”
The electronic handbooks are available on:
http://www.complinet.com/dfsa/display/display.html?rbid=3022&record_id=1
“Writing a book is an adventure. To begin with, it is a toy and an amusement; then it becomes a mistress, and then it becomes a master, and then a tyrant. The last phase is that just as you are about to be reconciled to your servitude, you kill the monster, and fling him out to the public.” Winston Churchill
Best Regards

ZULKIFLI HASAN

DURHAM, UK
Statue of Liberty, New York
Islamic finance news
1 Comment
March 10, 2010
DR. ZULKIFLI HASAN
Best Corporate Governance Worlwide
Corporate Governance Awards 2010
Available at:
http://www.worldfinance.com/news/home/awards/article1095.html
Scandals of recent years, notably Enron, have created a more constrained corporate environment. Increasing public and stakeholder concern about the social and environmental impacts of business practices is forcing companies to come to terms with a much broader set of interests and expectations.
World Finance has selected the corporations who despite the difficult monetary climate have continued to achieve excellent levels of good governance; opting out of minimal disclosure and instead serving the best interests of their investors. Congratulations to the winners.
Best Corporate Governance in Austria

Telekom Austria
Best Corporate Governance in Bahrain

Mumtalakat Investments
Best Corporate Governance in Belgium

Solvay SA
Best Corporate Governance in Brazil

TOTVS S.A.
Best Corporate Governance in Canada

Nexen Incorporated
Best Corporate Governance in Colombia

ISA Colombia
Best Corporate Governance in Denmark

Danske Bank
Best Corporate Governance in Egypt

Mobinil
Best Corporate Governance in Estonia

AS Tallink Grupp
Best Corporate Governance in Finland

Rautaruukki Oyj
Best Corporate Governance in France

Credit Agricole
Best Corporate Governance in Germany

Bayer
Best Corporate Governance in Greece

OTE S.A.
Best Corporate Governance in Hungary

Magyar Telekom
Best Corporate Governance in India

Kotak Mahindra Bank
Best Corporate Governance in Italy

Atlantia S.p.A.
Best Corporate Governance in Mexico

Walmart de Mexico
Best Corporate Governance in Netherlands

Royal Phillips Electronics
Best Corporate Governance in Norway

Norsk Hydro
Best Corporate Governance in Portugal

Jeronimo Martins SGPS S.A
Best Corporate Governance in Qatar

Qtel
Best Corporate Governance in Russia

Rosneft Oil Company JSC
Best Corporate Governance in South Africa

Sappi Limited
Best Corporate Governance in Spain

Acciona SA
Best Corporate Governance in Sweden

Electrolux AB
Best Corporate Governance in Switzerland

Roche Pharmaceuticals
Best Corporate Governance in Thailand

Siam Cement Group
Best Corporate Governance in Turkey

Turkcell
Best Corporate Governance in UAE

Abu Dhabi Commercial Bank
Best Corporate Governance in UK

Vodafone PLC
Best Corporate Governance in USA

FedEx Corporation
“Governance and leadership are the yin and the yang of successful organisations. If you have leadership without governance you risk tyranny, fraud and personal fiefdoms. If you have governance without leadership you risk atrophy, bureaucracy and indifference.” – Mark Goyder
Regards

ZULKIFLI HASAN

DURHAM
University of Oslo, Norway
Islamic finance news
1 Comment
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Islamic Law of Islamic Law of

PropertyProperty

LAB2033LAB2033

DR. ZULKIFLI HASANDR. ZULKIFLI HASAN

ContentsContents

�� Conceptual Framework of Conceptual Framework of ZakatZakat

ZakatZakat

�� ZakatZakat was practiced since Prophet was practiced since Prophet ShuaibShuaib, Prophet , Prophet
Ismail (alIsmail (al--maryammaryam: 55) and other : 55) and other samawisamawi religion religion
such as such as NasraniNasrani and Judaism.and Judaism.

�� 22ndnd Year of Year of hijrahhijrah-- Only to Only to faqirfaqir and and miskinmiskin

�� 99thth HijrahHijrah-- Verse on 8 Verse on 8 zakatzakat recipients (alrecipients (al--taubahtaubah: :
60)60)

�� Allah associated Allah associated zakatzakat with with salatsalat in 82 verses. Some in 82 verses. Some
says 30 verses on says 30 verses on zakatzakat, 27 associated with , 27 associated with zakatzakat and and
solatsolat, 8 , 8 madenamadena and 22 Mecca.  and 22 Mecca.

�� ““And Be And Be steadfastssteadfasts in prayer and give in prayer and give zakatzakat””
albaqarahalbaqarah 110.110.

ZakatZakat in in HadithHadith

�� SunnaSunna corroborates the corroborates the QuranQuran..

�� Islam is raised on five pillars Islam is raised on five pillars ieie the oneness of the oneness of

Allah, the establishment of Allah, the establishment of salatsalat, payment of , payment of

zakatzakat. Fasting of . Fasting of ramadhanramadhan and the hajj. and the hajj.

Charity in Other ReligionCharity in Other Religion

�� HinduismHinduism-- in term of gifs, donation, not in term of gifs, donation, not

obligatoryobligatory

�� JudaismJudaism-- exist a priestly class. a1/10 revenue was exist a priestly class. a1/10 revenue was

given to the priestgiven to the priest

�� ChristianityChristianity-- No precise law of charityNo precise law of charity

�� IslamIslam--Comprehensive law of charityComprehensive law of charity

Meaning of Meaning of zakatzakat

�� PurityPurity

�� To purify oneTo purify one’’s possession of wealth by s possession of wealth by

distributing a prescribed amount imposed on the distributing a prescribed amount imposed on the

rich as an essential mode of rich as an essential mode of ibadahibadah..

�� SadaqaSadaqa tatawutatawu and and sadaqasadaqa mafrudamafruda..

�� ZakatZakat signifies the obligatory contribution.signifies the obligatory contribution.

�� There is no equivalent practice in other religions.There is no equivalent practice in other religions.

The Differences The Differences btnbtn ZakatZakat and Taxand Tax

ChangeableChangeableFixed RateFixed Rate

Tax can be forgivenTax can be forgivenNever be waivedNever be waived

All citizensAll citizensMuslimMuslim

Economic responsibilityEconomic responsibilityReligious dutyReligious duty

TaxTaxZakatZakat

Exemptions are not flexible Exemptions are not flexible

but accountablebut accountable
Exemptions are organic and Exemptions are organic and

realisticrealistic

Can be taken out of Can be taken out of

consumption of expenditureconsumption of expenditure
Out of productive wealthOut of productive wealth

Not necessary soNot necessary soTaken from the rich to give Taken from the rich to give

to the poorto the poor

Not definiteNot definiteMethods of distribution  are Methods of distribution  are

definitedefinite

TaxTaxZakatZakat

Scope is narrowScope is narrowWider base than taxation. Wider base than taxation.

Assets which are growingAssets which are growing

Higher than Higher than zakatzakatCheaperCheaper

Can transfer the burden to Can transfer the burden to

consumerconsumer
No transfer of burdenNo transfer of burden

NonNon--divine right to collect divine right to collect

moneymoney
Divinely grantedDivinely granted

Evasion is real possibilityEvasion is real possibilityForm of worshipForm of worship

TaxTaxZakatZakat

The Importance of The Importance of zakatzakat

�� Fourth pillar of IslamFourth pillar of Islam

�� ZakatZakat was made obligatory  at was made obligatory  at MadenaMadena 22ndnd hijrahhijrah..

�� Imam Imam akak--SarakhsiSarakhsi--ZakatZakat equals one third of Islam.equals one third of Islam.

�� ZakatZakat is associated with is associated with solatsolat. 82 places in al. 82 places in al--quranquran..

�� Caliph Abu Caliph Abu BakarBakar declared war against those who declared war against those who
disassociated disassociated salatsalat from from zakatzakat

�� Equal distribution of economy.Equal distribution of economy.

Virtues and Benefit of Virtues and Benefit of ZakatZakat

�� IbadahIbadah

�� Equitable system of wealth distributionEquitable system of wealth distribution

�� Social securitySocial security

�� SelfSelf--RefinementRefinement

�� Social RoleSocial Role

�� Saves Muslims from MisfortuneSaves Muslims from Misfortune

�� Self Generating reformative systemSelf Generating reformative system

Basis of Basis of ZakahZakah

�� 1. 1. Productivity or growth (Productivity or growth (namanama))

� Assets held for personal and family use ,such as
household furniture and transportation are not subject
to zakat

� Assets that do not grow ,such as bad debts are also not
subject to zakat.

� All growing assets, according to the preponderant view
of among jurists except with the Zahiriyyah are subject
to zakat .

�� 2. Possession and full ownership2. Possession and full ownership

3. 3. NisabNisab

� 2.5% from the capital income

� 10% or 5% from the land crops

� According to detailed code of rates for livestock

� 20% of the found treasures

4. 4. HawlHawl

� 12 full lunar months should pass over the possession of

zakat payable asset from the beginning of its ownership.

But this condition applies to capital assets ,such as

money ,business stock and livestock

� In the case of earned income, such as crops,fruits,

minerals and found treasure ,including wages, salaries

professional fees it is not a condition they are classified

as earned assets (mal mustafad).

What to exempt?What to exempt?

�� 1. Deduction of essential needs: 1. Deduction of essential needs: basic needs or
essential goods and services that one needs to
sustain himself and his dependent

�� 2. Deduction of debt2. Deduction of debt

On Whom?On Whom?

�� 1. Reason and Maturity1. Reason and Maturity

�� 2. The State of Being Muslim2. The State of Being Muslim

�� 3. Free person3. Free person

�� 4. 4. NisabNisab

�� 5. Wealth should be 1. fully owned 2. in excess of his 5. Wealth should be 1. fully owned 2. in excess of his
personal needs. 3. one year 4. productive in nature personal needs. 3. one year 4. productive in nature
which he can derive profit. which he can derive profit.

�� Property which lacks of productivity and basic Property which lacks of productivity and basic
essentials of life are exempt from essentials of life are exempt from zakahzakah

Conditions for Taxability of WealthConditions for Taxability of Wealth

�� 1. Legitimate ownership1. Legitimate ownership

�� 2. Lasting value2. Lasting value

�� 3. Tallying with taxable wealth and limits.3. Tallying with taxable wealth and limits.

�� 4. Possession of a year except in agriculture.4. Possession of a year except in agriculture.

�� 5. Freedom from debt5. Freedom from debt

�� 6. Freedom from loan6. Freedom from loan

�� 7. Freedom from larceny or accidental loss.7. Freedom from larceny or accidental loss.

�� 8. Free accessibility and free disposability8. Free accessibility and free disposability

Kinds of wealthKinds of wealth

�� Gold and silver and cashGold and silver and cash

�� Article or merchandiseArticle or merchandise

�� Agricultural productsAgricultural products

�� LivestockLivestock

�� Mineral and treasuresMineral and treasures

�� Salaries and Professional IncomeSalaries and Professional Income

Silver, Gold and CashSilver, Gold and Cash

�� As long as the amount constitutes a As long as the amount constitutes a nisabnisab. .

�� GoldGold-- 20 20 MithqalMithqal or 85 gramsor 85 grams

�� SilverSilver-- 200 200 dirhamsdirhams or 595 gramsor 595 grams

�� Rate of Rate of zakatzakat 2.5% of the value.2.5% of the value.

�� Cash, Shares and Bonds equal value of gold or Cash, Shares and Bonds equal value of gold or

silversilver

�� In MalaysiaIn Malaysia-- RM6200.00RM6200.00

ZakatZakat On DebtOn Debt

�� If debt is acknowledged by the debtor with the If debt is acknowledged by the debtor with the

willingness to pay it off, the creditor should pay willingness to pay it off, the creditor should pay

his his zakatzakat and vice versa. and vice versa.

ZakatZakat on on JewelleryJewellery

�� Only gold and silver Only gold and silver jewelleryjewellery. .

�� JumhurJumhur-- if keep her if keep her jewelleryjewellery as a treasure.as a treasure.

�� Abu Abu HanifaHanifa-- Must constitute Must constitute nisabnisab

ZakatZakat Upon Articles of MerchandiseUpon Articles of Merchandise

�� Obligatory.Obligatory.

�� Goods, estates, clothing, cars, buildings, fruits Goods, estates, clothing, cars, buildings, fruits

and etc.and etc.

�� NisabNisab-- same as cash.same as cash.

�� HawlHawl-- one lunar yearone lunar year

�� Intention of trade at the time of possession.Intention of trade at the time of possession.

ZakatZakat on Agricultureon Agriculture

�� Rate: if the land is irrigated by artificial methods 1/20.Rate: if the land is irrigated by artificial methods 1/20.

�� If the land irrigated by riversIf the land irrigated by rivers-- 1/101/10

�� NisabNisab: five wasaqs: five wasaqs--651.4 KG for dates and 675 for 651.4 KG for dates and 675 for
grains.grains.

�� Types Subject to Types Subject to zakatzakat::-- Wheat, barley, dates and Wheat, barley, dates and
raisinsraisins--Obligatory.Obligatory.

�� JumhurJumhur-- All types of agriculture yield which can be All types of agriculture yield which can be
stored or regular food.stored or regular food.

�� It becomes due when the grains are matured and the It becomes due when the grains are matured and the
fruits are ripened.fruits are ripened.

ZakatZakat on Honey and Animalon Honey and Animal

�� Including products based on honey and animal.Including products based on honey and animal.

�� NisabNisab-- Five Five wasaqswasaqs

�� RateRate-- 1/10 after covering expenses.1/10 after covering expenses.

ZakahZakah on Livestockon Livestock

�� Camels, cows, bulls, buffalos, sheep and goats.Camels, cows, bulls, buffalos, sheep and goats.

�� NisabNisab-- 5 camels, 40 sheep, 30 cows5 camels, 40 sheep, 30 cows

�� HawlHawl: One lunar year.: One lunar year.

ZakatZakat on Minerals and Treasureson Minerals and Treasures

�� NisabNisab-- 2.5% of value as cash2.5% of value as cash

�� RikazRikaz-- 1/5 of the value.1/5 of the value.

�� HawlHawl-- Do not require completion of a year.Do not require completion of a year.

ZakatZakat on Incomeon Income

�� ObligatoryObligatory

�� 2.5% from the total yearly income deducting 2.5% from the total yearly income deducting

personal expensespersonal expenses

ZakatZakat in Malaysiain Malaysia

�� zakatzakat on savings is levied at the rate of 2.5% on the lowest on savings is levied at the rate of 2.5% on the lowest
balance of a personbalance of a person’’s saving for the year, s saving for the year,

�� zakatzakat on income is 2.5% of a personon income is 2.5% of a person’’s s zakatablezakatable income income

�� zakatzakat on business is 2.5% of the on business is 2.5% of the zakatablezakatable assets of the assets of the
business, business,

�� zakatzakat on shares is levied at 2.5% on the lowest value of the on shares is levied at 2.5% on the lowest value of the
year of shares owned by the payer after deducting debts or year of shares owned by the payer after deducting debts or
loans on the shares,loans on the shares,

�� zakatzakat on gold is 2.5% on the value of gold kept by a person on gold is 2.5% on the value of gold kept by a person
for each year (if not less than for each year (if not less than nisabnisab of 85 grams), of 85 grams),

�� zakatzakat on corps or rice is on corps or rice is isis 10% of the field value of the rice 10% of the field value of the rice
harvested if this is more than 1,620 kgharvested if this is more than 1,620 kg

�� zakatzakat fitrahfitrah is about RM4.00 to RM5.00 per headis about RM4.00 to RM5.00 per head

2,7001994-1997

2,8001998

2,9001999

3,2002000

2,9002001

3,0002002

3,0002003

3,7002004

4,2002005

4,6002006

6,2002007

Nisab (RM) Year

AsnafAsnaf

�� 1. Fakir1. Fakir is Muslim who does not possess any is Muslim who does not possess any
permissible and qualified selfpermissible and qualified self--gained wealth (job) or has gained wealth (job) or has
an income which represents lower than 50% from his an income which represents lower than 50% from his
daily basic need and his family based on a moderate life daily basic need and his family based on a moderate life
style.style.

�� 2. A 2. A ‘‘MiskinMiskin’’ or needy is a Muslim who possesses some or needy is a Muslim who possesses some
wealth, permissible and qualified work which represents wealth, permissible and qualified work which represents
more than 50% of his basic need and his  family but more than 50% of his basic need and his  family but
insufficient and does not meet insufficient and does not meet Haddul KifayahHaddul Kifayah. .

�� These two categories include the poor from orphans, These two categories include the poor from orphans,
widows, elderly, ill, and others who do not have a widows, elderly, ill, and others who do not have a
sponsor, lowsponsor, low--income workers, families of lost income workers, families of lost
individuals, and the unemployed. individuals, and the unemployed.

ContCont……

�� 3. Muslim Converts (3. Muslim Converts (MuallafMuallaf) Recent embracers of ) Recent embracers of

IslamIslam

�� Those who his heart being tamed or tends to accept Those who his heart being tamed or tends to accept

Islam or a person who just embraced Islam that is Islam or a person who just embraced Islam that is ‘‘to to

tame his or her hearttame his or her heart’’ through   assistance to strengthen through   assistance to strengthen

their love towards Islam. their love towards Islam.

�� Debtors (Debtors (GhariminGharimin))

�� A Muslim who makes loans to fulfill his basic needs A Muslim who makes loans to fulfill his basic needs

and his family members or a person who make loans to and his family members or a person who make loans to

solve his communitysolve his community’’s problems and needs. (Debtor is s problems and needs. (Debtor is

unable to settle his debts and the debt is for matters of unable to settle his debts and the debt is for matters of

good and permissible by the Islamic laws).good and permissible by the Islamic laws).

Cont..Cont..

�� For The Cause Of Allah (For The Cause Of Allah (Fi SabilillahFi Sabilillah))
�� Fi SabilillahFi Sabilillah is any action / happening that leads to the needs and is any action / happening that leads to the needs and

problems to upright the Islamic teaching. Therefore any acts, problems to upright the Islamic teaching. Therefore any acts,
which strive in the cause of Allah to ensure that injustice agaiwhich strive in the cause of Allah to ensure that injustice against nst
Muslim is stopped and upright Islamic teaching, are considered Muslim is stopped and upright Islamic teaching, are considered
as as Fi SabilillahFi Sabilillah..

�� Wayfarer (Wayfarer (Ibnu SabilIbnu Sabil) Stranded Travelers) Stranded Travelers

�� A Muslim who runs out of provision while on a journey or a A Muslim who runs out of provision while on a journey or a
person who wants to begin his journey but posses no provision person who wants to begin his journey but posses no provision
on conditions (He begins his journey from his own hometown, on conditions (He begins his journey from his own hometown,
The purpose of the journey is for a good cause permissible by The purpose of the journey is for a good cause permissible by
the Islamic law).the Islamic law).

�� This would include people facing religious or racial persecutionThis would include people facing religious or racial persecution, ,
political exiles or refugees, those seeking safety from oppressipolitical exiles or refugees, those seeking safety from oppression on
and those pursuing knowledge and education or involved in and those pursuing knowledge and education or involved in
satisfying meritorious social wants away from home.satisfying meritorious social wants away from home.

Cont..Cont..

�� Riqab (liberating slaves)Riqab (liberating slaves)

�� Even though there is no more slavery system Even though there is no more slavery system

in this contemporary world, the portion of in this contemporary world, the portion of

Riqab is payable in terms of: Akidah Riqab is payable in terms of: Akidah

rehabilitation aid and Akhlak rehabilitation rehabilitation aid and Akhlak rehabilitation

aidaid

AmilAmil

��The collectors The collectors ))المصدقونالمصدقون ) ) , to collect the , to collect the ZakatZakat dues and deposit them in the dues and deposit them in the
authorized authorized ZakatZakat--centrescentres..

��The distributors The distributors ))القسامونالقسامون )), to apportion the , to apportion the ZakatZakat funds.funds.

��The custodians The custodians ))الحافظونالحافظون )), to keep safe and disburse the , to keep safe and disburse the ZakatZakat funds to the funds to the
lawful beneficiaries. lawful beneficiaries.

��The custodians include : the treasurers The custodians include : the treasurers –– the caretakers of the the caretakers of the ZakatZakat granaries granaries
and and ZakatZakat storehouses. storehouses.

��The measures The measures ))الكيالونالكيالون )), to measure or weigh the cereals and other kinds of , to measure or weigh the cereals and other kinds of
agricultural produce levied as agricultural produce levied as ZakatZakat..
��The scribes or clerks The scribes or clerks ))الكاتبونالكاتبون ) ) , to keep the , to keep the ZakatZakat files and records.files and records.

��The accountants The accountants ))الحاسبونالحاسبون )), to keep account of the , to keep account of the ZakatZakat revenue and revenue and
expenditure.expenditure.

��The informers The informers ))العارفونالعارفون ) ) , to seek out those persons who are deserving of , to seek out those persons who are deserving of
receiving receiving ZakatZakat assistance and to inform the assistance and to inform the ZakatZakat--officials of their condition officials of their condition
and whereabouts.and whereabouts.

��The assemblers The assemblers ))الحاشرونالحاشرون )), to assemble the , to assemble the ZakaZakatt--payers or the beneficiaries payers or the beneficiaries
of of ZakatZakat, when required., when required.

��The officers in charge The officers in charge ))رؤساء العاملينرؤساء العاملين ) ) , to direct and manage the various , to direct and manage the various ZakatZakat--
centrescentres and responsible to the state and to the public for the proper fand responsible to the state and to the public for the proper functioning unctioning
of their respective of their respective centrescentres. .

Issue on TimeIssue on Time

�� ZakatZakat must be paid immediately at its due time.must be paid immediately at its due time.

�� Deferment is prohibited unless has valid reason.Deferment is prohibited unless has valid reason.

�� Permissible to pay Permissible to pay zakatzakat in advancein advance-- JumhurJumhur

Issue on Transfer of Issue on Transfer of ZakatZakat

�� Consensus: Consensus: zakatzakat can be transferred from one can be transferred from one

city or country to another provided that the city or country to another provided that the

needs of the city or country have been satisfied.needs of the city or country have been satisfied.

Issues on Issues on zakatzakat owed by a deceased owed by a deceased

personperson

�� If one dies before he pays If one dies before he pays zakatzakat, it must be paid , it must be paid

from his estate.from his estate.

Issue on the payment of the valueIssue on the payment of the value

�� At first majority of the scholarsAt first majority of the scholars-- not permissible not permissible

to pay the value instead of item itself.to pay the value instead of item itself.

�� Abu Abu HanifahHanifah, , IbnuIbnu QudamaQudama, , IbnuIbnu TaimiyaTaimiya--

approved paying the value.approved paying the value.

�� Must choose the way which suffice the needs of Must choose the way which suffice the needs of

the needy and more beneficial.the needy and more beneficial.

Issue on Investment of Issue on Investment of zakatzakat fundfund

�� First viewFirst view-- QureshiQureshi, , TaqiTaqi UsmaniUsmani--

�� the the zakatzakat collection must be disbursed collection must be disbursed
immediately immediately

�� The state has no locus The state has no locus standistandi to invest it with the to invest it with the
view of generating more income.view of generating more income.

ContCont……

�� Second View: Second View: QaradhawiQaradhawi and and ZarqaZarqa: Allowable: Allowable

�� JumhurJumhur: ruler can spend the entire : ruler can spend the entire zakatzakat fund for the fund for the
benefit of one class and also at different rate. benefit of one class and also at different rate.
Permissible based on Permissible based on maslahahmaslahah..

�� It is not against principle of It is not against principle of tamliktamlik-- feasting and feasting and
clothing of the poor are allowableclothing of the poor are allowable

�� Disbursement does not have to be prompt. Can be Disbursement does not have to be prompt. Can be
given monthly basisgiven monthly basis

�� The risk on investment could be avoided by proper The risk on investment could be avoided by proper
planningplanning-- HanafisHanafis and and ShafiisShafiis in agreement that in agreement that
providing poor with tools for labor from providing poor with tools for labor from zakatzakat fund fund
proves that proves that zakatzakat can be used for future security.can be used for future security.

�� It is not an innovation of denounced types as it benefit It is not an innovation of denounced types as it benefit
the recipients.the recipients.


BLOG OF KNOWLEDGE (Shari'ah, Law, Islamic Finance and Muslim News)
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My E-Fatwa
Resolutions and Recommendation of the Council of the Islamic Fiqh Academy 1985-2000

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Heni says:
November 13, 2013 at 7:13 am

i got much information about  islamic finance here.. thank u so much!

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BLOG OF KNOWLEDGE (Shari'ah, Law, Islamic Finance and Muslim News)
Shari'ah, Law, Islamic Finance and Muslim News
Monthly Archives: February 2009
February 27, 2009
DR. ZULKIFLI HASAN
Sharia-compliant derivatives – a contradiction in terms?
Quoted from Financial Times. Available at:
http://ftalphaville.ft.com/blog/2009/02/11/52352/sharia-compliant-derivatives-a-contradiction-in-terms/
Reuters is running an interesting story on Islamic banks’ struggles to develop hedging tools to cope with market volatility. Not all Islamic scholars believe the use of derivatives is permitted by Sharia law – which leaves more conservative institutions with “few instruments to guard against wild swings in currency and interest rate movements,” according to the Reuters story.
“To the extent there are not enough sharia-compliant liquidity and risk management products, then clearly Islamic finance would be disadvantaged compared to conventional banks and would be less able to manage their liquidity risks,” said Hussein Hassan, head of Islamic structuring at Deutsche Bank . The $1 trillion industry bans banking structures that are vague or ambiguous to avoid exploitation — a rule which some argue shuts out the use of common hedging instruments such as currency and interest rate swaps and futures contracts.
There are two major schools of thought on derivatives in the the world of Islamic finance. One view is that derivatives are necessarily speculative, and so would contravene the prohibition on gambling. Scholars who take this approach also tend to argue that since it is not always clear what the underlying assets referenced by a derivative are, use of the product violates the prescription that only tangible assets can be bought or sold.
The second, less conservative view  is that derivatives are permitted as long as they are used solely to hedge existing positions. Of course, derivatives do exist in Islamic finance. Reuters cites some examples: Last year, CIMB Islamic, the world’s top arranger of Islamic debt, launched a forex hedging tool where investors enter into an Islamic transaction with the bank.
The net proceeds — which are similar to the premium paid for conventional options — gives investors the right to exercise the option at the agreed rate on the maturity date. Another type of options contract is ‘arbun’, which Reuters explains thus: Under an arbun contract, a purchaser makes a deposit (which forms part of the purchase price) to buy particular assets at a later date. Should the sale not proceed, the seller keeps the deposit.
Much of the impetus for the creation of Sharia-compliant derivatives has come from industry groups like ISDA, which has long been working to standardise derivatives contracts and documentation  in a way that would facilitate their use in Islamic finance. And for a time – up to and including those halcyon days of June 2007 – it looked like more scholars were coming around to the use of derivatives. Now, months into a crisis which is being blamed at least in part on these products, the case is less convincing.
Put another way, among the few institutions to have emerged relatively unscathed from the crisis are Islamic banks, as the FT’s David Oakley noted late last year. This apparent resilience is not just due to a restrained relationship with derivatives, of course – these insitutions also tended to be conservative in their lending and underwriting and have little, if any, exposure to mortgage-backed securities. But the crisis – and its components – has caused both scholars and practitioners of Islamic finance to take a step back, and in some cases, to adopt a more conservative view. Which brings one back to the initial question – what, then, is a worried Sharia-compliant banker to do?
Best Regard

ZULKIFLI HASAN

DUBAI, UAE
Islamic finance news
Leave a comment
February 23, 2009
DR. ZULKIFLI HASAN
The Social Contract: A Must Know Document for All Fellow Malaysian
Assalamualaikum,
In view of the recent political issues in Malaysia, I always believe that it is extremely important for us to really understand the actual history of our nation. This time I would like to touch on the issue of social contract which is considered a basis for our independence in 1957.  Surprisingly, without knowing the existence of such important document, there was actually a written agreement on social contract that unanimously agreed by the three main political parties i.e. UMNO, Malayan Chinese Association (MCA) and Malayan Indian Congress (MIC). I attach herewith the said document concerning the Political Testament of the Alliance, a memorandum by Tunku Abdul Rahman which was duly signed by representatives from UMNO, the MCA and the MIC. This document is scanned from a three-volume book entitled “British Document on the End of Empire: Malaya”. Just read and ponder.
Enjoy reading!

Best Regard

ZULKIFLI HASAN

DUBAI, UAE
My Thought
Leave a comment
February 20, 2009
DR. ZULKIFLI HASAN
My Story: A Journey Begins
Assalamualaikum,
Alhamdulillah, on 14th February 2009, I arrived Dubai for a very essential mission with two-pronged objectives i.e. to conduct my empirical study as well as to gain international exposure, working with the world class institution, the Dubai International Financial Centre (DIFC). I’ll be here in Dubai for the next three months from February until May. Within this period I have been planning to travel throughout the whole GCC countries from UAE to Oman, Kuwait, Qatar, Yemen, Bahrain and more importantly Saudi Arabia to perform umrah. InsyaAllah, with Allah’s Mercy and Bounty, I am planning to bring my whole family to Dubai and afterward if possible to visit Makkah and Madinah.
I would like to express my extreme gratitude to Mr. Shamsulfaiz, a very good friend of mine who is working as a solicitor in one of the prominent legal firms in Dubai that kindly offer me free accommodation at the Dubai International City. I really appreciate his generosity, kindness and may Allah gives His blessing to him and his family. Deep in my heart, to my beloved wife and my adorable Ameen, Iffah and Izzah, I crazily miss you all.
“A journey of a thousand miles begins with a single step”. (Lao-tzu, 604 BC – 531 BC)
Best Regard

ZULKIFLI HASAN

DUBAI, UAE
Dubai International Financial Centre
Ibnu Battuta Mall, Dubai
Malaysian Community in Dubai.
My Story
1 Comment
February 6, 2009
DR. ZULKIFLI HASAN
My Thought: Perak Constitutional Conundrum
Assalamualaikum,
Dear Readers,
It has been quite sometime that I have not pen down my thought on Malaysian politic. From my personal observation, money politics, corruption, accusation, cronyism and unethical norms of the politicians become mundane in the Malaysian political arena. I am not sure whether the sense of brotherhood, nationhood, solidarity is still embedded in the heart of the politicians. People put their eminent hopes to the politicians but it seems that they are just too busy with their political pinata.
Let me briefly analyse the current constitutional conundrum in Perak. Soon after the betrayal of PKR’s duo (coincidently, unfortunately and shamefully, one of them is from my constituency) and DAP’s assemblyman, the Perak’s Chief Minister has requested the Sultan to dissolve the State Assembly and called for snap poll while the Barisan Nasional claimed to form a new government. This position has led to constitutional dilemma and ultimately, the Sultan of Perak (retired Chief Justice) has decided to refuse the Chief Minister’s application because he had lose the confidence of the majority of the State Assembly members. It is worth highlighting two main views on this current constitutional issue:-
(1) The Sultan should dissolve the State Assembly and calls for a new election.

Perak state constitution: Artikel XVI(6): If the Mentri Besar ceases to command the confidence of the majority of the Legislative Assembly, then unless at his request His Royal Highness dissolves the Legislative Assembly, he shall tender the resignation of the Executive Council.

This provision states that the Chief Minister is only legally obliged to step down when a motion of no confidence on him has been passed in the state assembly, but not otherwise.
(2) Unnecessary election should be avoided and the Sultan has his discretionary or prerogative power to decide.

At this point, I tend to concur with Prof Dr Abdul Aziz Bari of International Islamic University of Malaysia (IIUM) where he said that several provisions in the Constitution indicated that unnecessary elections and by-elections should be avoided. It is for the Sultan who has power to decide whether to dissolve the State Assembly or not. As long as any political coalition has the composition to form a new government, unnecessary election should be avoided which may lead to furthering unneeded cost, time and efforts.  Whatever it is, the people of Perak have opportunity to decide and cast their votes in the 13th general election and this constitutional conundrum should provide a great lesson to both disputed parties. Just a matter of waiting for another few years.
“THERE ARE NO TRUE FRIENDS IN POLITICS. WE ARE ALL SHARKS CIRCLING AND WAITING FOR TRACES OF BLOOD TO APPEAR IN THE WATER”. (ALAN CLARK 1928-1999)
Best Regard

ZULKIFLI HASAN

DURHAM UNIVERSITY
With Yang Amat Berhormat, Datuk Dr. Zambry Abdul Kadir, a new Chief Minister of Perak (second from right) in Cape Town, South Africa. It is a great hope regardless of political ideology that he can serve the people well with integrity and honesty.
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February 1, 2009
DR. ZULKIFLI HASAN
Promoting Shari’ah-compliant finance violates the United States Constitution: In the Case of Kevin J. Murray v Henry M. Paulson, Jr
Assalamualaikum,
I am delighted to share this very recent case in the United States District Court for the Eastern District of Michigan
Click Here
The Plaintiff filed an application on 15 December 2008 to challenge the Emergency Economic Stabilization Act of 2008 enacted by the US Congress in which appropriated USD40 billion to bail out the AIG that engaged in Shari’ah-compliant activities. It is alleged that the Shari’ah-compliant financial products are anti-Christian, anti-Jewish and anti-American and therefore violates the First Amendment of the United States Constitution. In this instance, the plaintiff claims for declaratory and injunctive relief as authorized by 28 United States Constitution.
Interestingly, the plaintiff in this case is a retired US Marine who has experiences working in Iraq and Kuwait and claiming that Shari’ah-compliant finance has ties with Islamic terrorist. He alleges that by promoting, endorsing, approving, supporting and funding the AIG which involves in Shari’ah-compliant finance has contributed to the propagation of Islamic beliefs and practices which forms the basis for the global jihadist war against the US. The plaintiff asserts that one of the AIG Shari’ah supervisory board members has blood and intimate relationship with Justice Taqi Usmani who has authored a book on jihad which indicates the element of terrorism and hatred against the non-believers. Not only that, he also alleges that the zakat religious tax of the company is used to support Islamic charities some of which have affiliations with terrorist organisation.
This 18-page application in the US Court appears to be a very historic and celebrated case pertaining to Islamic finance. Although, the application for admission to this court is still pending, the notion of bringing the case into the court of justice and challenging the government’s decision and policy to involve in Shari’ah-compliant finance seems to be very polemical. InsyaAllah, I’ll discuss and examine the overall issue highlighted in this case and come out with a proper academic article in the near future that would be useful for further discourse.
“Ignorance of the law excuses no man: not that all men know the law, but because ’tis an excuse every man will plead, and no man can tell how to confute him” (John Selden 1584-1654)
Best Regard

ZULKIFLI HASAN

DURHAM UNIVERSITY
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