Islamic Banking, Islamic Banking,

TakafulTakaful and Al and Al RahnuRahnu

LCA4562LCA4562

DR. ZULKIFLI HASANDR. ZULKIFLI HASAN

ContentsContents

�� PawnbrokingPawnbroking

�� Al Al RahnuRahnu

PawnbrokingPawnbroking??

�� the business of advancing loans that are secured the business of advancing loans that are secured

against pledges of personal assets. against pledges of personal assets.

�� Those assets could include anything from Those assets could include anything from

jewelleryjewellery, diamonds, watches, and gold, to silver, , diamonds, watches, and gold, to silver,

antiques, and fine artwork. antiques, and fine artwork.

�� No credit checksNo credit checks

�� •• Confidential serviceConfidential service

�� •• Instant cashInstant cash

�� •• Retain ownership of the valuable itemsRetain ownership of the valuable items

WhatWhat’’s wrong with conventional s wrong with conventional

PawnbrokingPawnbroking??

� higher interest rates

� usurious

� exploitative activities

� the decreasing value of pawned goods

� low collateral value during the valuation process

Historical Background of Al Historical Background of Al RahnuRahnu

�� The first Islamic pawnThe first Islamic pawn--broking institution, broking institution,

Mu'assasahMu'assasah GadaianGadaian Islam Islam TerengganuTerengganu (MGIT), (MGIT),

was set up by the was set up by the MajlisMajlis Agama Islam Agama Islam dandan AdatAdat

IstiadatIstiadat TerengganuTerengganu in January 1992. in January 1992.

�� In March 1992, In March 1992, KedaiKedai AlAl--RahnRahn (KAR), a subsidiary (KAR), a subsidiary

of of PermodalanPermodalan KelantanKelantan BerhadBerhad. .

�� On 21 August 1993, the MOF announced the Skim On 21 August 1993, the MOF announced the Skim

AlAl--RahnuRahnu through the collaboration of three through the collaboration of three

institutions namely BNM, YPEIM and BKRMinstitutions namely BNM, YPEIM and BKRM

�� 1997: BIMB1997: BIMB

�� 2002: EON bank and AGRO bank2002: EON bank and AGRO bank

�� verse 283 of verse 283 of SurahSurah alal--BaqarahBaqarah: :

�� (And if you are on a journey and can not find a (And if you are on a journey and can not find a

scribe then let there be a pledge taken scribe then let there be a pledge taken

(mortgaging) then if one of you entrusts the (mortgaging) then if one of you entrusts the

other, let the one who is entrusted discharge his other, let the one who is entrusted discharge his

trust faithfully and let him be afraid of Allah, his trust faithfully and let him be afraid of Allah, his

lord. And conceal not the evidence for he who lord. And conceal not the evidence for he who

hides it. Surely his heart is sinful. And Allah is hides it. Surely his heart is sinful. And Allah is

AllAll--knower of what you do).knower of what you do).

�� Narrated Narrated AishahAishah r.ar.a the prophet the prophet s.a.ws.a.w. bought . bought

foodstuff on credit for a limited period and foodstuff on credit for a limited period and

mortgaged his mortgaged his armourarmour for it [for it [sahihsahih AlAl--BukhariBukhari, ,

3/2509].3/2509].

What is Al What is Al RahnuRahnu??

�� AlAl--RahnuRahnu or pawnor pawn--broking is an activity whereby a broking is an activity whereby a
valuable item is valuable item is collateralisedcollateralised to a debt which may to a debt which may
be be utilisedutilised as payment should the debt is not as payment should the debt is not
repaid within the agreed period. In the event the repaid within the agreed period. In the event the
debtor is not able to repay the debt, the pawned debtor is not able to repay the debt, the pawned
asset will be sold off to settle the outstanding debt asset will be sold off to settle the outstanding debt
and any surplus will be given back to the owner of and any surplus will be given back to the owner of
the asset. However, if the owner of the asset could the asset. However, if the owner of the asset could
not be traced, it is the responsibility of the Islamic not be traced, it is the responsibility of the Islamic
pawnpawn--broker to place the fund in the broker to place the fund in the BaitulmalBaitulmal
account for future savings should any claims be account for future savings should any claims be
made for the surplus by the owner or his heir.made for the surplus by the owner or his heir.

Al Al RahnuRahnu

�� A combination of three concepts is applied for A combination of three concepts is applied for

the shortthe short--term financing under Islamic pawnterm financing under Islamic pawn--

broking, i.e. broking, i.e. QardhulQardhul HasanHasan (benevolent loan), (benevolent loan),

AlAl--RahnuRahnu and and AlAl--WadiahWadiah (custodian). (custodian).

(1) (1) QardhulQardhul HasanHasan

�� A bank will grant a benevolent loan to the A bank will grant a benevolent loan to the

applicant who wishes to pawn his valuable item. applicant who wishes to pawn his valuable item.

The loan will be issued under the concept of The loan will be issued under the concept of

QardhulQardhul HasanHasan, whereby the customer is only , whereby the customer is only

required to pay the amount borrowed; required to pay the amount borrowed;

(2) (2) AlAl--RahnuRahnu

�� Pledge or security related to loan.Pledge or security related to loan.

�� Prior to Prior to disbursmentdisbursment of cash to the applicant, of cash to the applicant,

the applicant is required to place a valuable asset the applicant is required to place a valuable asset

as collateral for the loan extended by the bank; as collateral for the loan extended by the bank;

(3) (3) AlAl--WadiahWadiah

�� The bank accepts custody of the valuable asset The bank accepts custody of the valuable asset
on a on a WadiahWadiah concept whereby the bank concept whereby the bank
promises to keep the valuable asset in a safe promises to keep the valuable asset in a safe
place. The bank will need to take precautionary place. The bank will need to take precautionary
measure such as providing security and measure such as providing security and
insurance to ensure its safe returns once the insurance to ensure its safe returns once the
customer pays his debt. Under the customer pays his debt. Under the WadiahWadiah
concept, the bank will charge the customer for concept, the bank will charge the customer for
the services rendered in keeping the valuable the services rendered in keeping the valuable
asset.asset.

Al Al RahnuRahnu

�� The borrower (AlThe borrower (Al--RahinRahin) submits an item (gold) for ) submits an item (gold) for
pawning to the lender (Alpawning to the lender (Al--MurtahinMurtahin) as the collateral from ) as the collateral from
which the borrower (Alwhich the borrower (Al--RahinRahin) receives an interest) receives an interest--free free
loan amounting to 60% of the pawned item.loan amounting to 60% of the pawned item.

�� The collateral item is held by the lender and a storage fee The collateral item is held by the lender and a storage fee
is charged to the lender during the period of the loan.is charged to the lender during the period of the loan.

�� The loan is paid in full or in installment after the maturity The loan is paid in full or in installment after the maturity
date and the lender must return the collateral or the item date and the lender must return the collateral or the item
to the owner. to the owner.

�� In the event of a default on the loan by the borrower; the In the event of a default on the loan by the borrower; the
item is then auctioned.item is then auctioned.

�� The money gained from the auction of the item is used to The money gained from the auction of the item is used to
pay the defaulted loan and outstanding storage fees, while pay the defaulted loan and outstanding storage fees, while
what is let over is given to the borrowerwhat is let over is given to the borrower

AdvantagesAdvantages

�� 1. Easy access to credit facility provided the 1. Easy access to credit facility provided the
customer posses the respective recognized customer posses the respective recognized
asset by the credit granter/financier.asset by the credit granter/financier.

�� Through Through ArAr--RahnuRahnu financing, the financial financing, the financial
institution is not strict on the credit history or institution is not strict on the credit history or
creditworthiness of the clients.creditworthiness of the clients. The financing The financing
is not based on the customeris not based on the customer’’s income as the s income as the
case of an ordinary personal loan.case of an ordinary personal loan. The The
important consideration for the granting of the important consideration for the granting of the
facility is the item pledged itself.facility is the item pledged itself. The items The items
will be valued and will be the basis of amount will be valued and will be the basis of amount
granted for the finance.granted for the finance.

�� 2. Items/assets assigned to the financier will be 2. Items/assets assigned to the financier will be

returned once payment is made for the amount returned once payment is made for the amount

borrowed.borrowed.

�� The assets which are pledged to the financial The assets which are pledged to the financial

institution will be returned back to the client institution will be returned back to the client

provided that payment is made for the amount provided that payment is made for the amount

lend by the financial institution together with the lend by the financial institution together with the

safekeeping fee (rental charges).safekeeping fee (rental charges). In a sense In a sense

money is not created by the financial out of thin money is not created by the financial out of thin

air but in exchange for the value of the asset air but in exchange for the value of the asset

(items pledged).(items pledged).

�� 3. In event of inability to pay, the asset will be sold 3. In event of inability to pay, the asset will be sold

and amount above the borrowed amount and rental and amount above the borrowed amount and rental

fee will be returned to the customerfee will be returned to the customer

�� In the events of defaults and inability of the customer In the events of defaults and inability of the customer

to pay the amount borrowed, the items will be to pay the amount borrowed, the items will be

auctioned with the market gold value as the reserved auctioned with the market gold value as the reserved

price.price. Proceeds from the auction will be used to Proceeds from the auction will be used to

settle off the amount borrowed together with the settle off the amount borrowed together with the

safekeeping fee.safekeeping fee. The balance of the amount after The balance of the amount after

deducting the borrowed sum and payment of related deducting the borrowed sum and payment of related

fees will be given to the customers.fees will be given to the customers. This is normally This is normally

the case as the initial financing is only given base on a the case as the initial financing is only given base on a

maximum of 60 percent of the items value.maximum of 60 percent of the items value.

�� 4. The items assigned to financier are gold, thus value 4. The items assigned to financier are gold, thus value

will be stable and fluctuation in gold value is not erratic.will be stable and fluctuation in gold value is not erratic.

�� The pledged items are in gold of different grades. The pledged items are in gold of different grades.

Unlike other asset such as houses or cars, gold value is Unlike other asset such as houses or cars, gold value is

more stable as fluctuation of its value is not erratic.more stable as fluctuation of its value is not erratic. As As

been observed property value such as houses can be been observed property value such as houses can be

high in a period and may be low in another.high in a period and may be low in another. Cars on Cars on

the other hand depreciate highly especially after the first the other hand depreciate highly especially after the first

year (such an example is a first hand car).year (such an example is a first hand car). With respect With respect

to the stable gold value both the financier and the to the stable gold value both the financier and the

customers will not be exposed to a high risk in the customers will not be exposed to a high risk in the

event of such items needs to be auctioned off.event of such items needs to be auctioned off.

�� 5. Less/No risk from fluctuating interest rate 5. Less/No risk from fluctuating interest rate

as the facility is not associated with interest as the facility is not associated with interest

rate.rate.

�� Another advantage of the financing facility is Another advantage of the financing facility is

that the facility is not as much related to any that the facility is not as much related to any

changes in the market interest rates.changes in the market interest rates. The main The main

exposure of the financing facility is the value exposure of the financing facility is the value

of gold rather then the prevailing interest of gold rather then the prevailing interest

rate.rate. The main income to the financier will The main income to the financier will

be in the form of documentation/processing be in the form of documentation/processing

fees and safekeeping (rental) fees.fees and safekeeping (rental) fees.

�� 6. Contribution on social welfare of the 6. Contribution on social welfare of the
societysociety eradicating unjust pawningeradicating unjust pawning

�� In the normal pawning activity, the items pawned are In the normal pawning activity, the items pawned are
surrendered totally to the pawn shop and ownership surrendered totally to the pawn shop and ownership
is transferred to the shop.is transferred to the shop. If the owner wanted to If the owner wanted to
redeem the items, he/she have to pay a much higher redeem the items, he/she have to pay a much higher
price for the items compared to the initial pledged price for the items compared to the initial pledged
amount.amount. The valuation of the items is also subjective, The valuation of the items is also subjective,
as it I based on the pawn shop valuation of the items as it I based on the pawn shop valuation of the items
and not based on the real value of the items.and not based on the real value of the items. By By ArAr
RahnuRahnu facility the owner of the items can have access facility the owner of the items can have access
to funds while at the same time redeem the items to funds while at the same time redeem the items
with the respective amount borrowed through with with the respective amount borrowed through with
the payment of the safekeeping fee. Valuation is also the payment of the safekeeping fee. Valuation is also
made based on the value of the gold item rather then made based on the value of the gold item rather then
subjective valuation. subjective valuation.

DisadvantagesDisadvantages

�� 1. 1. TakafulTakaful bore by the financier for safekeeping of the bore by the financier for safekeeping of the
assets/items: The amount covered is the whole value of the assets/items: The amount covered is the whole value of the
items (though initially financing is only given to a maximum of items (though initially financing is only given to a maximum of
60 percent of the gold value). 60 percent of the gold value).

�� 2. Customer need to have assets particularly in gold: For those 2. Customer need to have assets particularly in gold: For those
whom do not have these items, they are not eligible to subscribewhom do not have these items, they are not eligible to subscribe
to this product.to this product.

�� 3. Disadvantage if initial contract on higher gold value and 3. Disadvantage if initial contract on higher gold value and
auction  is made on a lower gold value: should the future price auction  is made on a lower gold value: should the future price of of
gold decreases and at the same time the customer are not able togold decreases and at the same time the customer are not able to
repay the amount, the reserve price of the gold will be at a lowrepay the amount, the reserve price of the gold will be at a lower er
market value.market value.

�� 4.  Associations of rental / safekeeping fees with the financing4.  Associations of rental / safekeeping fees with the financing: :
Association of rental fees with the advanced amount might lead Association of rental fees with the advanced amount might lead
to the understanding that the monthly rental fee/charge is to the understanding that the monthly rental fee/charge is
indirectly based on some percentage of the financing indirectly based on some percentage of the financing
amount.amount. This is similar to conventional finance where the This is similar to conventional finance where the
charges (interest) is based on the principal amount lend.charges (interest) is based on the principal amount lend.

Fatwa on al Fatwa on al RahnuRahnu

�� The 77th The 77th MuzakarahMuzakarah of the Fatwa Committee of the National of the Fatwa Committee of the National
Council held on 10th Council held on 10th --12th April 2007:12th April 2007:

�� 1. The working capital for Islamic pawn broking shop (1. The working capital for Islamic pawn broking shop (arar--RahnRahn) )
must be gained from Islamic banks or lawful (must be gained from Islamic banks or lawful (halalhalal) sources and ) sources and
free from free from usury(ribausury(riba), gambling, uncertainties (), gambling, uncertainties (gharargharar) and other ) and other
activities that do not meet the activities that do not meet the ShariahShariah requirementsrequirements

�� 2. The pawnbroker should subscribe to Islamic insurance 2. The pawnbroker should subscribe to Islamic insurance
coverage and is not allowed to get involved with conventional coverage and is not allowed to get involved with conventional
insuranceinsurance

�� 3. If the collateral is lost, stolen, damaged or alike, the 3. If the collateral is lost, stolen, damaged or alike, the
pawnbroker has to pay compensation for the remaining value of pawnbroker has to pay compensation for the remaining value of
the collateral at the time of valuationthe collateral at the time of valuation

�� 4. The pawnbroker should appoint internal 4. The pawnbroker should appoint internal SyariahSyariah legal advisor legal advisor
to supervise the operation and activities of to supervise the operation and activities of arar--rahnrahn..

Parameters of of al Parameters of of al RahnuRahnu

�� 1. The borrower (Al1. The borrower (Al--rahinrahin) should submit the item ) should submit the item
or the collateral to the lender (Alor the collateral to the lender (Al--murtahinmurtahin), where ), where
the lender can forgo the item (like returning back the lender can forgo the item (like returning back
to the borrower) but not viceto the borrower) but not vice--versa. versa.

�� 2. Any property which can not be traded according 2. Any property which can not be traded according
to the to the syariahsyariah law can not be used as Allaw can not be used as Al--rahnurahnu..

�� 3. The borrower must pay the loan after the 3. The borrower must pay the loan after the
maturity date and the lender must return the maturity date and the lender must return the
collateral or the item to the owner. If the borrower collateral or the item to the owner. If the borrower
fails to repay the loan, the lender receives the right fails to repay the loan, the lender receives the right
to recover his loan form the collateral and he must to recover his loan form the collateral and he must
return to the borrower if any thing remained.return to the borrower if any thing remained.

�� 4. The lender is responsible for the collateral for 4. The lender is responsible for the collateral for
any damage caused by his wrong doings but not any damage caused by his wrong doings but not
otherwise and in the later case the borrower otherwise and in the later case the borrower
remains owing the loan to the lender.remains owing the loan to the lender.

�� 5. The collateral (Al5. The collateral (Al--rahnrahn) can be submitted to ) can be submitted to
third party if both sides have confidence with third party if both sides have confidence with
him.him.

�� 6. If the borrower rejects the selling of the 6. If the borrower rejects the selling of the
collateral in the case of default or the lender collateral in the case of default or the lender
conditions that he will take the collateral if the conditions that he will take the collateral if the
borrower default to pay him such transactions borrower default to pay him such transactions
can not be counted as Alcan not be counted as Al--rahnurahnu..

�� 7. If both sides disagree how much the loan was 7. If both sides disagree how much the loan was
the judge will consider the words of the the judge will consider the words of the
borrower with swearing unless the lender comes borrower with swearing unless the lender comes
with evidence.with evidence.

�� 8. If the lender claims that he returned the 8. If the lender claims that he returned the
collateral to the borrower and the borrower collateral to the borrower and the borrower
rejects the latter's words will be considered with rejects the latter's words will be considered with
swearing unless the lender comes with evidence.swearing unless the lender comes with evidence.

�� 9. The lender can get a benefit from the pledged 9. The lender can get a benefit from the pledged
assets if they were submitted as collateral for assets if they were submitted as collateral for
example he can raid the horse or use the milk of example he can raid the horse or use the milk of
the cow by feeding them but he should be fair the cow by feeding them but he should be fair
so he can not use more what he spent on them.so he can not use more what he spent on them.

�� 10. If the lender feeds the animal in the case used as Al10. If the lender feeds the animal in the case used as Al--

rahnrahn without the information and acceptance of the without the information and acceptance of the

borrower he can't claim any thing about that. borrower he can't claim any thing about that.

�� 11. If the lender maintains the collateral for example like 11. If the lender maintains the collateral for example like

when the house collapses or close to collapse and is when the house collapses or close to collapse and is

maintained by the lender. The letter can claim the maintained by the lender. The letter can claim the

irremovable things such as stones and woods where it is irremovable things such as stones and woods where it is

impossible to remove from the house.impossible to remove from the house.

�� 12. If the borrower dies or become bankrupt, the lender 12. If the borrower dies or become bankrupt, the lender

should be privileged among other lenders. He has a right should be privileged among other lenders. He has a right

to sell the collateral to discover his loan if the collateral isto sell the collateral to discover his loan if the collateral is

not enough for the loan he will remain one of those not enough for the loan he will remain one of those

waiting repayment from what the dead man has left or waiting repayment from what the dead man has left or

the bankrupted borrower still owns the bankrupted borrower still owns

Al Al RahnuRahnu ProductsProducts

�� YPEIMYPEIM

�� Agro BankAgro Bank

�� Bank Bank RakyatRakyat

�� BIMBBIMB

�� AffinAffin Islamic BankIslamic Bank

Al Al RahnuRahnu

�� Collateral: Only gold Collateral: Only gold

�� Margin: rm10kMargin: rm10k--rm25k or not more than 65% of rm25k or not more than 65% of

the collateral value.the collateral value.

�� Period: 6 monthsPeriod: 6 months

CollateralCollateral

� In the Islamic-based pawnshop, gold is the only
permitted item.

� Firstly, gold is easily resold and so there is potentially
auctioning the collateral should the borrower not
redeem the pledge.

� Secondly, gold’s purity can be easily determined and so
the risk of mispricing the collateral can be minimized.

� Thirdly, gold chains and rings typically require only a
small flat envelop for storage and so can be kept
securely in the bank safe at little additional cost.

� Finally, women often receive gold chains and bracelets
as wedding gifts and generally retain personal
ownership of these items especially in Malaysia

Safekeeping FeesSafekeeping Fees

� The storage fee is based on the value of gold and not
on the amount of the loan,

�� RM100.00 RM100.00 –– for the first 3 months is 0.60% per monthfor the first 3 months is 0.60% per month
RM1, 000.00 RM1, 000.00 –– for the next 3 months is 0.70% per for the next 3 months is 0.70% per
monthmonth

�� RM1, 001.00 RM1, 001.00 –– for first 3 month is 0.65% per monthfor first 3 month is 0.65% per month
RM 5, 000.00 RM 5, 000.00 –– for the next 3 month is 0.80% per for the next 3 month is 0.80% per
monthmonth

�� RM5, 001.00 RM5, 001.00 –– for the first 3 months is 0.80% per for the first 3 months is 0.80% per
monthmonth
RM10,000.00 RM10,000.00 –– for the next 3 months is 0.90% per for the next 3 months is 0.90% per
monthmonth

Safekeeping FeesSafekeeping Fees

No chargeNo charge0.650.65RM1-RM1,000

No chargeNo charge0.750.75RM5,001-

RM50,000

No chargeNo charge0.950.950.750.75RM1,001-

RM5,000

No chargeNo charge0.850.85RM401-

RM2,000

No chargeNo charge0.600.60RM1-RM400

MGITMGITBKRMBKRMPMKPMKAsset valueAsset value

Legal FrameworksLegal Frameworks

�� S 46 of the Pawnbrokers Act 1972: The following S 46 of the Pawnbrokers Act 1972: The following

persons shall be exempted from the provisionspersons shall be exempted from the provisions

�� of this Actof this Act——

�� (a) any bank licensed to carry on banking business in (a) any bank licensed to carry on banking business in

Malaysia;Malaysia;

�� (b) Bank (b) Bank PertanianPertanian Malaysia established under the BankMalaysia established under the Bank

�� PertanianPertanian Malaysia Act 1969 [Act 9]; andMalaysia Act 1969 [Act 9]; and

�� (c) any co(c) any co--operative society registered under any writtenoperative society registered under any written

�� law in force in Malaysia relating to colaw in force in Malaysia relating to co--operative operative

societies.societies.

Legal FrameworksLegal Frameworks

� Al-rahnu scheme in BKRM is subject to different acts:-

� 1. the Bank Kerjasama Rakyat (M) Berhad Act 1978,

� 2. the Co-operative Societies Act (1993)

� 3. the Development Finance Institutions Act 2002.

� 4. Occupational Safety and Health Act for workers who

are exposed to acid for the gold test and the Weight

and Measurement Act, in which the gold weighing

device has to be licensed every year.

Operational AspectOperational Aspect

� Islamic pawnbrokers would prefer the customer to
redeem their collateral within 6 months. However, if
there is no repayment, there is an extension period of 3
months after which the client is informed that the item
will be sold by auction within a further of 2 months
period.

� any surplus from the sale of the gold over the amount
owed to the pawnbroker, including accumulated
deposit fee and any costs related to the sale, has to be
returned to the customer. In case the customer cannot
be located, the surplus will be forwarded to the
Baitulmal from which the customer is entitled to make
future claims.

SyariahSyariah IssueIssue

�� 1. maintenance of the pledged asset1. maintenance of the pledged asset

�� Upon the borrowerUpon the borrower

�� The lender can not make profit out of it.The lender can not make profit out of it.

SyariahSyariah issueissue

�� 2. al 2. al intifaintifa bi al bi al marhunmarhun

�� The lender can not use the pledged asset except The lender can not use the pledged asset except

with permissionwith permission

SyariahSyariah issueissue

�� 3. safekeeping fees.3. safekeeping fees.

�� Fees must be actual costFees must be actual cost

�� The lender however makes profit through this The lender however makes profit through this

fees.fees.

� Eg. Loan RM5000.00 pledged asset value

RM10000.00, fees, (RM0.45 × 100 = RM45.00).
If 6 months RM270.00 (RM45.00 × 6 =
RM270.00).

Thank YouThank You

�� Dr. Dr. ZulkifliZulkifli Bin Bin HasanHasan

�� EE--mail: mail: zulkiflih@admin.kuim.edu.myzulkiflih@admin.kuim.edu.my

�� EE--mail: mail: zul361977@yahoo.comzul361977@yahoo.com..

�� Tel. No: 06Tel. No: 06--79884557988455

�� Mobile: 0163379776Mobile: 0163379776


BLOG OF KNOWLEDGE (Shari'ah, Law, Islamic Finance and Muslim News)
Shari'ah, Law, Islamic Finance and Muslim News
Monthly Archives: April 2011
April 30, 2011
DR. ZULKIFLI HASAN
Former Dubai Islamic Bank executives get 10-year prison terms
Former Dubai bank executives get 10-year prison terms
Four businessmen, two Britons, an American and a Turkish citizens — are charged with criminal complicity, as the American and the Turk were sentenced in absentia because they have fled the country
Reuters Available at:
http://english.ahram.org.eg/~/NewsContent/3/12/10925/Business/Economy/Former-Dubai-bank-executives-get-year-prison-terms.aspx
Two former Dubai Islamic Bank (DIB) executives and four businessmen were sentenced to 10 years each in prison by a Dubai court on Wednesday and fined 1.8 billion dirhams ($496.5 million), the amount they were accused of embezzling from the bank.
The case was one of the largest financial fraud cases in the United Arab Emirates, home to tourism and financial hub Dubai.
The convicted were charged with appropriating public funds, illegal profiteering and inflicting intentional loss to the government and its interests.
The two executives, Pakistani citizens, were arrested in 2008 and first appeared before a Dubai criminal court in March 2010.
The public prosecution said they accepted bribes totalling $1.7 million.
The two were tried as government officials — the Dubai government owns a 30-percent stake in DIB — leading to a stiffer penalty under the UAE penal code which stipulates more severe punishment for government employees.
The businessmen — two Britons, an American and a Turkish citizens — were charged with criminal complicity. The American and the Turk were sentenced in absentia because they have fled the country.
Prosecutors said the suspects swindled DIB by submitting “documents and invoices about fraudulent deals.”
Dubai launched an anti-corruption campaign in 2008 that led to the arrest of several high-profile business figures, including government ministers.
Dubai adopted a new law in December 2009 under which the state can impose prison terms of up to 20 years for financial crimes shortly after a debt crisis erupted when flagship conglomerate Dubai World requested a standstill agreement on $26 billion of debt. The company reached a debt restructuring deal with its creditors late last year.
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ZULKIFLI HASAN
Islamic finance news
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April 29, 2011
DR. ZULKIFLI HASAN
Gaza border crossing to be permanently opened
Egypt FM: Gaza border crossing to be permanently opened
Egyptian FM tells Al-Jazeera that preparations are already underway to permanently open Rafah border crossing, which would allow goods and people in and out of Gaza with no Israeli supervision.
By Avi Issacharoff Available at:
http://www.haaretz.com/news/diplomacy-defense/egypt-fm-gaza-border-crossing-to-be-permanently-opened-1.358690
Egypt’s foreign minister said in an interview with Al-Jazeera on Thursday that preparations were underway to open the Rafah border crossing with Gaza on a permanent basis.
Egyptian Foreign Minister Nabil al-Arabi told Al-Jazeera that within seven to 10 days, steps will be taken in order to alleviate the “blockade and suffering of the Palestinian nation.”

Palestinians Rafah border – AP
Palestinians at the Rafah border crossing before leaving the Gaza Strip to Egypt after Egypt opened the border in 2008 for two days.

Photo by: AP
The announcement indicates a significant change in the policy on Gaza, which before Egypt’s uprising, was operated in conjunction with Israel. The opening of Rafah will allow the flow of people and goods in and out of Gaza without Israeli permission or supervision, which has not been the case up until now.
Israel’s blockade on Gaza has been a policy used in conjunction with Egyptian police to weaken Hamas, which has ruled over the strip since 2007. The policy also aims to reduce Hamas’ popularity among Gazans by creating economic hardship in the Strip.
Rafah’s opening would be a violation of an agreement reached in 2005 between the United States, Israel, Egypt, and the European Union, which gives EU monitors access to the crossing. The monitors were to reassure Israel that weapons and militants wouldn’t get into Gaza after its pullout from the territory in the fall of 2005.
Before Egypt’s uprising and ousting of longtime leader Hosni Mubarak, the border between Egypt and Gaza had been sealed. It has occasionally opened the passage for limited periods.
Regards

Zulkifli Hasan
Muslims News
Leave a comment
April 28, 2011
DR. ZULKIFLI HASAN
Gulf Arab rulers tense over Egypt’s policy shifts
ANALYSIS-Gulf Arab rulers tense over Egypt’s policy shifts
By Andrew Hammond Available at:
http://af.reuters.com/article/egyptNews/idAFLDE73L0C920110427?sp=true
DUBAI, April 27 (Reuters) – At a recent conference in Abu Dhabi, a confidant of the emirate’s crown prince vented his frustration over the downfall of a major ally who Gulf Arab rulers once thought was as entrenched in power as they are.
“How could someone do this to him? He was the spiritual father of the Middle East. He was a wise man who always led the region,” the aide told Reuters. “We didn’t want to see him out this way. Yes, people want democracy but not in this manner. It’s humiliating!”
But yesterday’s strongman is today’s fallen dictator. Brought down in three weeks of protests in Egypt that took his allies by surprise, Hosni Mubarak now faces prosecution on accusations of abusing influence to enrich himself and ordering police to open fire on protesters who toppled him 75 days ago.
Gulf newspapers have carried days of angst-ridden commentary on the stunning denouement. “There is a very real danger that mob rule is destroying Egypt’s reputation, stability and economy,” Khalaf Al Habtoor, head of a leading merchant family in Dubai, wrote in an angry article in the Gulf News last week.
Mubarak was not only a friend of Gulf Arab rulers, he was a vital part of Arab political architecture during his three decades in power, setting the standard on Arab approaches to the Israeli-Palestinian conflict and offering Saudi Arabia and Gulf countries solid backing in their long cold war with Iran.
Now that he has gone, the Gulf has seen those shibboleths challenged and governments are scrambling to limit the damage.
“There’s no doubt the Saudis are very concerned about Egypt’s new foreign policy orientation. Egypt has already in a short amount of time shifted its foreign policy,” said Shadi Hamid, analyst at the Brookings Centre in Qatar.
POLICY SHIFTS
Egypt’s ruling military council allowed two Iranian warships to pass through Egypt’s Suez Canal in February, despite loud objections from Israel and irritation in Washington — a sign that the new Egypt wanted to play by a different set of rules.
Egyptian Foreign Minister Nabil Elaraby said this month Cairo was ready to re-establish diplomatic ties with Iran that were severed in the early days of the Islamic Republic, at a time when Egypt was forging ahead with peace with Israel.
Egypt intends to try seven officials including a former energy minister over controversial low-priced gas sales to Israel. And post-Mubarak Egypt has eased the movement of Palestinians from Hamas-ruled Gaza over its Gaza border.
All are signs of a shift away from a policy that was very much in harmony with the Western-aligned spirit that has for decades characterised foreign policy in most Gulf Arab capitals.
“Gulf policymakers are concerned about Iran making inroads into Egypt,” said Ted Karasik, a defence analyst based in Dubai.
“Saudi Arabia is seeking to regain its heavyweight position in the region and doing so in a very assertive manner. It does not want to see Egypt erase any Saudi gains.”
Although the U.S. administration took its time before expressing support for protester demands that Mubarak step down, Riyadh was shocked at what it saw as Washington’s abandoning of a trusted ally who stuck his neck out to back U.S. policies.
It is hosting exiled Tunisian leader Zine al-Abidine Ben Ali after an uprising ousted him in January, and has taken a muscular approach to perceived threats from unrest in the Gulf.
Saudi Arabia and the United Arab Emirates (UAE) sent troops to Bahrain last month to help suppress a pro-democracy protest movement that could have empowered its majority Shi’ites, who are seen by Sunni elites as susceptible to Iranian influence.
Riyadh also helped arrange $20 billion in aid from the large Gulf oil producers to help Bahrain and Oman quell protesters.
Iran, a non-Arab Shi’ite giant with over 70 million people, seemed to confirm the fears of Gulf rulers when it complained to the United Nations of a Saudi “invasion” of Bahrain, a small island state over which it once claimed sovereignty.
NEW CHAPTER
During a visit to the Gulf this week, Egyptian Prime Minister Essam Sharaf made conciliatory noises about Gulf security but defended what he called a “new page”.
“We have turned a new page that does not involve personalising issues. Iran is a country like any other,” the leader of Egypt’s “post-revolution” government said after meeting 87-year-old Saudi King Abdullah, who has handed out $130 billion in largesse to Saudis to encourage them not to make pro-democracy demands.
“We are extremely keen that interference in these countries should be a red line. The security of the Gulf states is part of Egypt’s own national security,” Sharaf added.
But he also defended democracy and prosecuting Mubarak.
“We have started on a one-way path to democracy,” he said. “We are trying to take the first step towards the rule of law and no one is above the law, whoever they are.”
Sharaf was also expected in the UAE and Qatar, a tiny Gulf state widely seen as having eclipsed Egyptian clout through its pan-Arab media outlet, Al Jazeera, and maintaining channels with Palestinian group Hamas, Lebanese Shi’ite group Hezbollah and Iran — allies all opposed to the American tilt in the region.
Egypt’s need for financial aid could offer the Gulf countries a conduit to influence its policy direction.
Egypt is calling for up to $10 billion in loans as it forecasts that its budget deficit could widen to 9 percent in the current fiscal year. Sharaf said on Tuesday he was hoping for more annual aid from Kuwait or other Gulf states.
“We would rather get money from our friends than going to the International Monetary Fund,” he told reporters.
Sharaf also denied there was tension with the UAE over visas for Egyptian expatriates, millions of whom work in the Gulf. Bahrain has begun expelling Lebanese in apparent retribution for Hezbollah criticism over its crackdown on disaffected Shi’ites.
“Egypt doesn’t want to alienate the Gulf countries too much. They can benefit a lot from financial assistance during a difficult period,” Hamid said. (Additional reporting by Amena Bakr, Marwa Rashad and Eman Goma; editing by Mark Heinrich)
Best Regards

ZULKIFLI HASAN
Muslims News
1 Comment
April 27, 2011
DR. ZULKIFLI HASAN
Risk-sharing ‘vital for Islamic finance’
Risk-sharing ‘vital for Islamic finance’

Manama: Tue, 26 Apr 2011 Available at:
http://www.tradearabia.com/news/BANK_197516.html
To move forward the Islamic finance industry would do well to go back to its roots, according to HSBC Amanah global chief executive officer Mukhtar Hussain.
‘Islamic finance has become a force in its own right, especially in the emerging markets of Asia and the Middle East,’ he said.
‘However, this has not been without its fair share of ups and downs. The industry suffered the after-effects of the global financial crisis and has been criticised for products that look too much like their conventional cousins.
‘The main principles of Islamic finance are that of risk-sharing – taking on risks for possible rewards or losses and a requirement for financial transactions to be backed by assets such as properties or land.
‘Going back to these principles, especially the latter, will pave the way for what we believe, are the strongest opportunities for Islamic finance which are sukuk project finance and Islamic real estate investment trusts (REITs),’ he said.
‘Although nascent, there is so much opportunity for more of these deals because project finance bonds and REITs are a natural fit with Islamic finance, which is about building a stable future by investing in the real economy,’ he added.
‘As the global population is forecast to reach 9.2 billion by 2050 from 7bn currently, project finance sukuk can help raise more capital to build infrastructure in developing countries.
‘Islamic REIT, which by definition, is asset-backed by a portfolio of properties, is a new asset class that fund managers and private investors can consider, post the financial crisis, when money has flown out of traditional equities,’ he added.-TradeArabia News Service
Best Regards

ZULKIFLI HASAN
Islamic finance news
Leave a comment
April 18, 2011
DR. ZULKIFLI HASAN
Muslim BRIC has arrived
Muslim BRIC has arrived
By Rushdi Siddiqi Available at:
http://www.btimes.com.my/Current_News/BTIMES/articles/SAMI/Article/
The investing and financing world is about country linkages that are economic and financial opportunities clustered as growth stories. The most recognised country linkage is BRIC (Brazil, Russia India and China): it conjures mental images of geographies, growth, size, demand, etc.
Another term that is increasingly invoked by businesses looking for opportunities is ‘RDE,’ or Rapidly Developing Economies, and includes examples of Brazil, China, India, Mexico, and so on. To put theory into practice, globally committed firms, like Thomson Reuters, have established positions like Global Head of RDE.
But, as this column is about Islamic finance, Halal industry, and Muslim countries, we now need to think a ‘Muslim BRIC.’ But, why? The simple answer is ‘why not,’ but the relevant answer is the present Muslim country clusters news and information is more about coverage than investing and trading opportunities.
The acid test is this; are Muslim country investors, from middle class to high net-worth to institutional, investing in a meaningful way in fellow Muslim majority OIC countries like Albania, Benin, Comoros, Gabon, Kyrgyzstan, Mali, Niger, Somalia and/or Yemen?
Today, we have 57 Muslim countries and 1.6 billion Muslims, we need a Muslim BRIC that conjures similar focused images of potential, opportunity, and accessibility. We can look at the Silk Road countries, OIC (Organisation of Islamic Conference) countries, CIS (Commonwealth of Independent States) countries, and so on, yet, outside of conferences in or about Muslim countries, such clusters are not capturing the investors’ imagination or attention.
SAMI
On April 4, Thomson Reuters, along with their partners, IdealRatings, and World Halal Forum launched the SAMI Halal Food index. The SAMI Halal food index stands for Socially Acceptable Market Investments.
The index is about the beginning of convergence between Islamic finance and Halal industry. But, more importantly, its about Muslim country inward investing as Muslims, presently as ‘consumer investors’ in these halal food firms become shareholder investors.
Now, within the ‘BRIC context,’ SAMI stands for Saudi, Ankara, Malaysia and Indonesia. Without getting into the multitude of economic and financial numbers for these four countries on GDP growth, inflation, foreign direct investment, exports, debt capital market development, population growth patterns, and so on, we have a compelling established emerging market that happens to be Muslim countries on the old Silk Road.
Branding
The question is why the SAMI acronym? As with any branding exercise, it comes down to recall, recognition and reach whilst conveying a visual message of sustainable and scalable opportunities. The opportunities have become increasingly de-linked from the political minefield commonly found in emerging markets, which happen to be all Muslim countries.
Some general observations about SAMI countries include:
1. Three countries are G-20 countries: Saudi Arabia, Turkey (Ankara), and Indonesia. But, these countries are also the anchors for their respective geographies; Saudi Arabia for GCC (6) countries, Indonesia for Asean (10) countries, and Turkey for (5) CIS countries and beyond. These regions, especially GCC and CIS, may be viewed as pre-RDE countries.
2. Malaysia is the recognised global leader in both Islamic finance and Halal Food. Much has been written about Malaysia’s achievements, but the real take away message for any country, Muslim or non-Muslim, wanting to be a hub, is the holistic and consistent approach of the country on the two inter-related sectors.
3. Saudi Arabia is the world’s largest oil producer and largest halal food importer. The political crisis in the Arab world has shown the importance of Saudi Arabia, as the country stepped up oil production to offset the loss of Libyan oil from the markets.
4. Indonesia has the largest Muslim population and growing
Meanwhile, Turkey is the ‘sizeable’ bridge to the east and west, as led by the present Islamist party.
Indexes & MNEs
One of the many spin-off possibilities here is a four country SAMI equity indexes for syariah-compliance, halal and conventional food.
Much like BRIC indexes convey a pulse of health, opportunities, fund flows, etc, the SAMI indexes will present not only ‘conventional,’ but Islamic and halal food (consumer non-cyclical sector) opportunities, information and insights.
From Indexes come firmsthat become the alter-ego of the country. The Financial Times had an interesting observation on Multinational Enterprises (MNEs) from RDEs, like Petro-China, Embraer (Brazil), Wipro (India), as these firms have become global brands and country ambassadors in a short time.
The ‘good will’ created and disseminated globally by such firms about their countries has detached them from the political landmines associated with emerging markets.
In the Muslim world, according to Dinar standards (DS), Muslim MNEs, as part of the DS-100 index, may be the next hidden gems for all investors. Thus, firms like Petronas, Emirates Airlines (Dubai), Kuwait Finance House (Kuwait), Ulker (Turkey), Indomie (Indonesia), and others represent tomorrow’s Muslim country global ambassadors of investable opportunities.
Thus, the Muslim BRIC, SAMI, has arrived in Malaysia.
Best Regards

ZULKIFLI HASAN
Islamic finance news
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Islamic Law of Islamic Law of

PropertyProperty

LAB2033LAB2033

DR. ZULKIFLI HASANDR. ZULKIFLI HASAN

ContentsContents

�� Administration of Administration of ZakatZakat

�� Regulation on Regulation on ZakatZakat

Management of Management of zakahzakah During the During the

ProphetProphet’’s times time

�� Prophet appointed officer to collect and distribute Prophet appointed officer to collect and distribute

zakahzakah..

�� EgEg. More than 25 companions were . More than 25 companions were zakatzakat officer. officer.

MuadhMuadh in Yemenin Yemen

�� Prophet give written instruction on Prophet give written instruction on zakatibilityzakatibility..

�� Prophet also appointed accountant and record keepersProphet also appointed accountant and record keepers

�� Prophet instructed the officers to distribute all Prophet instructed the officers to distribute all zakatzakat

collection to the recipients.collection to the recipients.

�� ZakahZakah funds were separate entity from other revenues. funds were separate entity from other revenues.

Management During 4 CaliphsManagement During 4 Caliphs

�� UmarUmar RARA-- Introduced Introduced

�� 1. system of record keeping or al1. system of record keeping or al--dawawindawawin. .

Record for Record for zakatzakat and other revenues.and other revenues.

�� 2. System of deduction at source began2. System of deduction at source began

�� 3. System of obligatory collection of 3. System of obligatory collection of zakahzakah on on

merchandise, gold, silver by installing public merchandise, gold, silver by installing public

officers at road and bridgesofficers at road and bridges

After Four After Four ChalipsChalips

�� Rise of the four schools of jurisprudence.Rise of the four schools of jurisprudence.

�� ZakahZakah management is the authority of management is the authority of

muslimmuslim government.government.

�� Separate account of Separate account of zakahzakah known as bait known as bait

almalalmal..

�� Government to collect Government to collect zakahzakah of all of all zakatablezakatable

itemsitems

�� No voluntary No voluntary zakahzakah organisationorganisation to collect to collect

zakahzakah..

Models of Models of ZakatZakat ManagementManagement

�� 1. Voluntary 1. Voluntary zakatzakat administrationadministration-- Kuwait, Kuwait,

South Africa, Jordan, EgyptSouth Africa, Jordan, Egypt

�� 2. Compulsory Collection of 2. Compulsory Collection of zakatzakat by the Stateby the State--

Malaysia, Pakistan Saudi Arabia.Malaysia, Pakistan Saudi Arabia.

Types of Types of ZakatZakat ManagementManagement

NPONPO

NPONPO

NPONPO

NPONPO

Jordan/Kuwait/EJordan/Kuwait/E

gyptgypt

South South AfrciaAfrcia

CorporationCorporationCorporationCorporationSelangor/PenangSelangor/Penang

GovtGovtCorporationCorporationWP/N.9WP/N.9

GovtGovtGovernmentGovernmentPakistan Pakistan

DisbursementDisbursementCollectionCollectionState/CountryState/Country

Administration of Administration of ZakatZakat

�� ZakatZakat is the responsibility of the Islamic Council of is the responsibility of the Islamic Council of
each state in the country or each state in the country or MajlisMajlis. The state . The state MajlisMajlis is is
empowered to collect empowered to collect zakatzakat and and fitrahfitrah due from every due from every
muslimmuslim in accordance with in accordance with hukumhukum syaraksyarak

�� There are 14 Islamic Councils, one of each of the 13 There are 14 Islamic Councils, one of each of the 13
states and one for the Federal Territory (states and one for the Federal Territory (WilayahWilayah
PersekutuanPersekutuan). ).

�� EgEg. Islamic Council of the Federal Territory of Kuala . Islamic Council of the Federal Territory of Kuala
Lumpur has set up a Lumpur has set up a ZakatZakat Collection Centre for such Collection Centre for such
purpose.purpose.

� Lembaga zakat, Baitulmal Office, Zakat Committee,
Zakat Unit or Zakat Department

JAWHARJAWHAR

�� The government of Malaysia has formed a department The government of Malaysia has formed a department

for for zakatzakat, , waqfwaqf and and hajj hajj on the 27th March 2004 with the on the 27th March 2004 with the

aim of making the administration systematic and aim of making the administration systematic and

effective. This department however does not have an effective. This department however does not have an

authority to administer and manage authority to administer and manage zakatzakat fundfund but but

rather plays a role as a planning coordinator and rather plays a role as a planning coordinator and

observes the observes the zakatzakat matter.matter.

�� JAWHAR has issued Guidelines or manual for JAWHAR has issued Guidelines or manual for zakatzakat

managementmanagement

ZakatZakat Management in MalaysiaManagement in Malaysia

CorporationCorporationCorpCorpSelangor/PenangSelangor/Penang

GovtGovtCorpCorpWP/N.9WP/N.9

GovtGovtGovtGovtKelantanKelantan, Sarawak, , Sarawak,

PerakPerak, , PerlisPerlis and other and other

statestate

DisbursementDisbursementCollectionCollectionStateState

Power to collect Power to collect zakatzakat

�� S 86: S 86: MajlisMajlis to collect to collect zakatzakat and and fitrahfitrah due from due from

every Muslimevery Muslim

Function of the Function of the MajlisMajlis

�� Section 87 of the Administration of the Religion Section 87 of the Administration of the Religion
of Islam (State of of Islam (State of SelangorSelangor) Enactment 2003 ) Enactment 2003
The The MajlisMajlis has the power to make regulationshas the power to make regulations

�� to determine the rate of value of to determine the rate of value of zakatzakat and and
fitrahfitrah portion payable by every Muslim, portion payable by every Muslim,

�� create procedures on collection, create procedures on collection,

�� appoint appoint amilsamils, create penalties and provide , create penalties and provide
punishment in relation to the collection and punishment in relation to the collection and
delivery of all proceeds of delivery of all proceeds of zakatzakat and and fitrahfitrah. .

ContCont……

�� S 81 (1) AILS 2003 stated that fund to be S 81 (1) AILS 2003 stated that fund to be

known as known as baitulmalbaitulmal is to be established. It is to be established. It

shall consist of money or property, movable or shall consist of money or property, movable or

immovable which under Muslim law or the immovable which under Muslim law or the

enactment accrues or is contributed by any enactment accrues or is contributed by any

person to the fund. person to the fund.

�� All money vested to All money vested to MajlisMajlis who will who will

administer the fund. Any investment of such administer the fund. Any investment of such

asset may be sold, asset may be sold, utlisedutlised and disposed of, the and disposed of, the

proceeds may be invested from time to time proceeds may be invested from time to time

being an investment of trust fund.being an investment of trust fund.

ZakatZakat PracticesPractices

�� In Malaysia, Muslims are obliged to pay In Malaysia, Muslims are obliged to pay zakatzakat on on

savings, business, shares, gold, corps,  and savings, business, shares, gold, corps,  and

earnings including earnings including zakatzakat fitrfitr. .

�� The fatwa authorities differ on the obligation to The fatwa authorities differ on the obligation to

pay pay zakatzakat of earnings. of earnings.

�� In 2002, National Fatwa Council issued a fatwa to In 2002, National Fatwa Council issued a fatwa to

pay pay zakatzakat of earnings as an obligation. of earnings as an obligation.

�� Most of the Muslims pay Most of the Muslims pay zakatzakat mal and mal and zakatzakat fitrfitr. .

They normally pay in month of December with a They normally pay in month of December with a

purpose to get rebate from income tax payment for purpose to get rebate from income tax payment for

a particular year.a particular year.

54,732,942.458,254,654.5046,478,287.95Johor

159,836,252.799,892,668.10
149,943,584.69

2010: 336 juta
Selangor

147,587,898.484,283,495.40143,304,403.08W.P

TotalZakat FitrahZakat Harta
State

Sources of Sources of ZakatZakat FundFund

�� ZakatZakat on businesson business

�� ZakatZakat on agricultureon agriculture

�� ZakatZakat on Savingson Savings

�� ZakatZakat on livestockon livestock

�� ZakatZakat on miningon mining

�� ZakatZakat on earnings on earnings

�� zakatzakat fitrfitr. .

Method of CollectionMethod of Collection

�� 1. Collection by appointed staff1. Collection by appointed staff

�� 2. Collection through offices of the state 2. Collection through offices of the state

religious departmentreligious department

�� 3. Collection through salary deduction3. Collection through salary deduction

Calculation of Calculation of ZakatZakat on Incomeon Income

�� Annual salary, arrears salary, variety allowance Annual salary, arrears salary, variety allowance
(transport, food, meeting) and others (including bonus (transport, food, meeting) and others (including bonus
and anything which can be describe as income). and anything which can be describe as income).

�� The income per year will be deducted with the life The income per year will be deducted with the life
requirement (basic) per year. requirement (basic) per year.

�� A was married and his salary is RM 1,500.00 per month x 12 A was married and his salary is RM 1,500.00 per month x 12
month = RM 18,000.00 per year. month = RM 18,000.00 per year.

�� Then, the salary is deducted to the household expenses Then, the salary is deducted to the household expenses
including himself (per year) RM 8,000.00, his wife (per including himself (per year) RM 8,000.00, his wife (per
year) RM 3,000.00 and his child (each one) RM 8,000.00. year) RM 3,000.00 and his child (each one) RM 8,000.00.
The amount is RM 11,800.00 minus to the per year income The amount is RM 11,800.00 minus to the per year income
per year = RM 6,200.00 per year. Therefore the rate of per year = RM 6,200.00 per year. Therefore the rate of
ZakatZakat is:is:

�� RM 6,200.00 x 2.5 % = RM 155.00 per yearRM 6,200.00 x 2.5 % = RM 155.00 per year

�� RM 155.00 per year will divided with 12 month = RM 12.91 RM 155.00 per year will divided with 12 month = RM 12.91
per monthper month

ZakatZakat of KWSP of KWSP

�� Two views:Two views:--

�� 1. to pay when retire 1. to pay when retire

�� 2. to pay every year when the conditions are 2. to pay every year when the conditions are

correct even the money still in KWSP. The rate correct even the money still in KWSP. The rate

of of ZakatZakat is 2.5 percent is 2.5 percent

ZakatZakat of Agriculture of Agriculture

�� Paddy price = 1 kilogram =RM0.60Paddy price = 1 kilogram =RM0.60

�� Subsidy price = 1 kilogram= RM0.24Subsidy price = 1 kilogram= RM0.24

�� Price of paddy per KG =RM 0.84Price of paddy per KG =RM 0.84

�� RM 0.84 X 1,300.49 kilogram (5 RM 0.84 X 1,300.49 kilogram (5 AusukAusuk equal to equal to

2 2 KuncaKunca 2 2 NalihNalih 6 6 gantanggantang)) = RM 1,102.94  = RM 1,102.94

�� The rate of Paddy The rate of Paddy ZakatZakat is 1/10 is 1/10

�� RM 1,102.94 X 1/10 = RM 110.29 RM 1,102.94 X 1/10 = RM 110.29

Regulation on Regulation on ZakatZakat

�� ZakatZakat is part and parcel of Muslimis part and parcel of Muslim’’s obligation in s obligation in
MalaysiaMalaysia

�� TerengganuTerengganu was the first state to control the was the first state to control the
collection of collection of zakatzakat formally through MAJLIS and formally through MAJLIS and
controlled by the Chief Minister.controlled by the Chief Minister.

�� KelantanKelantan-- 11stst state to introduce state to introduce PeraturanPeraturan ZakatZakat dandan
FitrahFitrah 1907.1907.

�� PerlisPerlis 1930 and 1930 and KedahKedah 1936. 1936.

�� RM25 million 1980s and 2001RM25 million 1980s and 2001--RM320 million RM50 RM320 million RM50
million million zakatzakat fitrfitr and RM270 million and RM270 million zakatzakat on on
property.property.

Tax IncentiveTax Incentive

�� The Income Tax (Reduction from Retired) The Income Tax (Reduction from Retired)

(Amendment) Act 2000 anybody who pays (Amendment) Act 2000 anybody who pays

ZakatZakat will enjoy rebate for their income tax.will enjoy rebate for their income tax.

� Effective from 2005, exemption from tax is
permitted for businesses and companies paying
zakat for maximum amount of RM20,000 or 3
percent from the net income.

ContCont……

�� EnakmenEnakmen KutipanKutipan ZakatZakat KelantanKelantan 1927.1927.

�� Undang2 Undang2 ZakatZakat TganuTganu 1947. 1947.

�� EnakmenEnakmen ZakatZakat PerlisPerlis 19491949

�� EnakmenEnakmen BailtulBailtul Mal, Mal, ZakatZakat dandan FitrahFitrah PerakPerak
1951.1951.

�� EnakmenEnakmen ZakatZakat KedahKedah 1955, 1987, 1955, 1987, PeraturanPeraturan ZakatZakat
19821982

�� EnakmenEnakmen ZakatZakat dandan FitrahFitrah JohorJohor 1957.1957.

�� All the above laws have been repealed and be All the above laws have been repealed and be
replaced with more comprehensive law namely replaced with more comprehensive law namely
PeraturanPeraturan ZakatZakat dandan FitrahFitrah PerakPerak 1975, 1975, PhgPhg 1970, 1970,
PenangPenang 1962, 1962, JohorJohor 1962, 1962, KedahKedah 1982, 1982, PerlisPerlis 1966.1966.

Features of the Features of the ZakatZakat RegulationRegulation

�� DefinitionDefinition

�� Power to collect Power to collect zakatzakat

�� MuslimMuslim’’s Obligatory to pay s Obligatory to pay zakatzakat

�� Way of distributionWay of distribution

�� The needs to prepare The needs to prepare zakatzakat accountaccount

�� The needs to have separate account of The needs to have separate account of zakatzakat and and

baitulbaitul mal. mal.

�� Penalties Penalties

KelantanKelantan

�� EnakmenEnakmen KutipanKutipan ZakatZakat KelantanKelantan 1927.1927.

�� Regulation:Regulation:--

�� 1. 1. PeraturanPeraturan KutipanKutipan FitrahFitrah 19381938

�� 2. 2. PeraturanPeraturan KutipanKutipan ZakatZakat 19381938

�� The above laws were repealed with the The above laws were repealed with the
EnakmenEnakmen MAI MAI dandan AdatAdat MelayuMelayu dandan MahkamahMahkamah
KadiKadi 1953.1953.

�� PeraturanPeraturan TadbiranTadbiran ZakatZakat PadiPadi 1978.1978.

PerlisPerlis

�� PeraturanPeraturan MengutipMengutip ZakatZakat dandan FitrahFitrah 19301930

�� The above regulation was replaced with The above regulation was replaced with
PeraturanPeraturan ZakatZakat dandan FitrahFitrah PerlisPerlis through the through the
Enactment of Enactment of ZakatZakat PerlisPerlis 1949 and then this 1949 and then this
enactment was replaced by the Administration enactment was replaced by the Administration
of Islamic Law Enactment of Islamic Law Enactment PerlisPerlis 1950. 1950.

SelangorSelangor

�� AtoranAtoran PentadbiranPentadbiran UgamaUgama Islam (Islam (ZakatZakat dandan

FitrahFitrah) 1953 through the Administration of ) 1953 through the Administration of

Islamic Law Islamic Law SelangorSelangor 1952.1952.

�� PeraturanPeraturan KutipanKutipan ZakatZakat dandan FitrahFitrah SelangorSelangor

1973. 1973.

MalaccaMalacca

�� PeraturanPeraturan PadaPada MenjalankanMenjalankan KerjaKerja--kerjakerja ZakatZakat

dandan FitrahFitrah MelakaMelaka 1960 through the 1960 through the

Administration of Islamic Law Enactment Administration of Islamic Law Enactment

Malacca 1959.Malacca 1959.

�� PeraturanPeraturan ––peraturanperaturan ZakatZakat dandan FitrahFitrah, , UrusanUrusan

WaqfWaqf dandan BaitulmalBaitulmal NegeriNegeri MelakaMelaka 1982.1982.

JohorJohor

�� Peraturan2 Peraturan2 ZakatZakat dandan FitrahFitrah JohorJohor 1962 through 1962 through

Undang2 Undang2 ZakatZakat dandan FitrahFitrah JohorJohor 1957.1957.

Federal TerritoriesFederal Territories

�� KaedahKaedah BaitulBaitul Mal Mal WilayahWilayah PersekutuanPersekutuan

((PerbelanjaanPerbelanjaan dandan PenggunaanPenggunaan) 1980) 1980

�� Amended twice in 1988 and 1996.Amended twice in 1988 and 1996.

Other States Other States

�� KedahKedah-- EnakmenEnakmen ZakatZakat KedahKedah 1955 and later was 1955 and later was
replaced by replaced by PeraturanPeraturan ZakatZakat KedahKedah 19821982

�� PahangPahang-- KaedahKaedah ZakatZakat dandan FitrahFitrah 1970.1970.

�� PerakPerak-- PeraturanPeraturan ZakatZakat dandan FitrahFitrah 1952 and later 1952 and later
1975 through The Administration of Islamic Law 1975 through The Administration of Islamic Law
PerakPerak 1965.1965.

�� PenangPenang-- PeraturanPeraturan FitrahFitrah PenangPenang 1962 and later 1962 and later
was replaced by was replaced by PeraturanPeraturan PungutanPungutan ZakatZakat dandan
FitrahFitrah PulauPulau PinangPinang 1979. 1979.

�� N.9N.9-- KaedahKaedah ZakatZakat N. 9 1998.N. 9 1998.

Offences for NonOffences for Non--Payment of Payment of ZakatZakat and and

FitrahFitrah

�� S 16, S 16, SyariahSyariah criminal offences enactment criminal offences enactment SelangorSelangor
19971997

�� NonNon--payment ofpayment of zakatzakat oror fitrahfitrah
�� AnyAny personperson who,who, beingbeing liableliable to payto pay zakatzakat oror fitrahfitrah----

�� (a)(a) refusesrefuses oror wilfullywilfully failsfails to pay theto pay the zakatzakat oror fitrahfitrah; or; or

�� (b)(b) refusesrefuses oror wilfullywilfully failsfails to pay to pay
thethe zakatzakat oror fitrahfitrah through through
anan amilamil appointed,appointed, oror anyany otherother personperson authorized,authorized, by the by the
MajlisMajlis toto collectcollect zakatzakat oror fitrahfitrah, shall, shall bebe guiltyguilty of of
anan offenceoffence andand shallshall onon convictionconviction bebe liableliable to to
aa finefine notnot exceedingexceeding oneone thousandthousand ringgitringgit or or
toto imprisonmentimprisonment for afor a termterm notnot exceedingexceeding sixsix monthsmonths or or
toto both.both.

ZakatZakat EnforcementEnforcement

�� MajlisMajlis is the sole authority to monitor the is the sole authority to monitor the

collection of collection of zakatzakat..

�� There were cases in There were cases in kelantankelantan, , KedahKedah, , PerlisPerlis and and

PerakPerak whereby some of the Muslims were whereby some of the Muslims were

prosecuted and penalized for not paying prosecuted and penalized for not paying zakatzakat..

MAJLIS VS Musa MAJLIS VS Musa dandan Lain2Lain2

�� ShSh. Ct imposed fine to 16 . Ct imposed fine to 16 muslimsmuslims due to failure due to failure

to pay to pay zakatzakat fitrahfitrah in 1947. in 1947.

�� Each of them was fined with RM15 or 1 month Each of them was fined with RM15 or 1 month

imprisonment under the section 8 imprisonment under the section 8 PeraturanPeraturan

KutipanKutipan FitrahFitrah KelantanKelantan 1938. 1938.

Annual Report, Department of Annual Report, Department of ZakatZakat

PerlisPerlis 19531953

�� Ten farmers who refused to pay Ten farmers who refused to pay zakatzakat were were

prosecuted and imprisoned. prosecuted and imprisoned.

PerakPerak

�� 19531953-- 52 52 muslimsmuslims were prosecuted due to failure were prosecuted due to failure

to pay to pay zakatzakat..

�� 19561956-- MajlisMajlis planned to summon 49 planned to summon 49 muslimsmuslims in in

the district of the district of SelamaSelama and 38 and 38 muslimsmuslims in the in the

district of district of SetiawanSetiawan due to failure to pay due to failure to pay fitrahfitrah..

�� 19531953-- 69000 did not pay 69000 did not pay fitrahfitrah

�� 19541954-- 84000 did not pay 84000 did not pay fitrahfitrah

KedahKedah

�� 19651965--19661966--36 cases. 36 cases.

�� OffencesOffences

�� 1. Refuse to cooperate with 1. Refuse to cooperate with amilamil on the land 2. on the land 2.

Receive Receive zakatzakat without authority 3. Refuse to pay without authority 3. Refuse to pay

zakatzakat 4. Offences on the part of 4. Offences on the part of amilamil. .

Regulatory IssuesRegulatory Issues

�� 1. No specific 1. No specific zakatzakat lawslaws

�� 2. Investigation2. Investigation

�� 3. prosecution3. prosecution

�� 4. Enforcement4. Enforcement


429 Too Many Requests

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