Islamic Finance & Institution in Malaysia

BPMS 6023MuamalatManagement

Mohammad Zuhadi Shamsuddin (822416)Hafizullah Mohd Amin (822481)Md. Zulkeflee Shah Omar (817252)NofriYanti (820809)

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Islamic Finance in Malaysia

• Islamic finance system in Malaysia

• The function of Bank Negara Malaysia

• The function of Syariah Council

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Islamic finance system in Malaysia

• The Islamic financial system in Malaysia has witnessed a tremendous growth in demand, acceptance and development since its introduction in 1963.

• Three major industries in the Islamic banking and finance fraternity, being: (i) Islamic banking and finance; (ii) takaful; and (iii) Islamic securities.

• It began with the establishment of the Malaysian Pilgrims Fund Board (Tabung Haji) and the country’s first Islamic bank, Bank Islam Malaysia Berhad (BIMB), which began operations on 1 July 1983.

• Since then, BIMB has become the core component of Malaysia’s Islamic financial system.

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Objective

• The ultimate goal of the Malaysian Islamic financial model is to operate in parallel with Malaysia's conventional financial system.

• To achieve this, the Islamic financial system presents itself as a viable alternative to the more established, conventional system.

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The function of Bank Negara Malaysia

• Established on 26 January 1959 as Bank Negara Tanah Melayu, wholly owned by the Government of Malaysia, reports to the Malaysian Minister of Finance

• Main purpose is to maintain the stability of the financial system,issue currency, act as banker and adviser to the Government of Malaysia and regulate the country's financial institutions, credit system and monetary policy.

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• The bank is endowed with certain powers through establishment of legal Acts by the Parliament of Malaysia to help fulfill its objectives.

The function of Bank Negara Malaysia

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Central Bank of Malaysia Act 2009

Financial Services Act 2013

Islamic Financial Services Act 2013

Money Services Business Act 2011

Anti-Money Laundering and Anti-Terrorism

Financing Act 2001

Development Financial

Institutions Act 2002

The function of Syariah Council

• The Shariah Advisory Council of Bank Negara Malaysia (SAC) was established in May 1997 as the highest Shariah authority in Islamic finance in Malaysia.

• The SAC has been given the authority for the ascertainment of Islamic law for the purposes of Islamic banking business, takafulbusiness, Islamic financial business, Islamic development financial business, or any other business, which is based on Shariahprinciples and is supervised and regulated by Bank Negara Malaysia.

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The function of Syariah Council

• As the reference body and advisor to Bank Negara Malaysia on Shariah matters, the SAC is also responsible for validating all Islamic banking and takaful products to ensure their compatibility with the Shariah principles.

• SAC advises Bank Negara Malaysia on any Shariah issue relating to Islamic financial business or transactions of Bank Negara Malaysia as well as other related entities.

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The function of Syariah Council

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Endorse Shariah policies and procedures prepared by Bank

Endorse and validate relevant documentations

Assess work carried out by Shariah review and Shariah audit

Assist related parties on Shariah matters

Provide Written Shariah Opinions

Provide the Bank with guidelines and advice on religious matters

Make decisions on matters arising from existing and future activities of the Bank which have religious repercussions

The Shariah Committee shall ensure the quality and consistency of the Shariah decisions

Islamic Institutions in Malaysia

• Tabung Haji Malaysia

• JAKIM, ILIM

• State Islamic Religious Affairs

• Syariah Court

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Tabung Haji

• Lembaga Tabung Haji (TH) is the premiere Islamic financial institution in Malaysia established in 1963.

• TH has more than 50 years of experience in deposits, Hajj services & operations and investments.

• Being the country’s largest Islamic fund manager with more than RM62 billion funds, TH endeavours to strengthen the economy of the Malaysian Muslims by capitalizing on its available funds and resources.

• Net profit of almost RM3 billion

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Tabung Haji

• Focuses on providing excellent and satisfactorily hajj services to Malaysian pilgrims

• Has served as a role model of innovative hajj management and Islamic financial services by most Islamic countries in the world.

• Venturing into several investment sectors in accordance with Islamic principles such as plantation, property development and construction, Islamic finance, information technology, oil and gas and hospitality.

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JAKIM

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The Islamic Development Department of Malaysia, the Prime Minister's Department will act as the central agency in the planning of Islamic Affairs and the development of the ummah.

Objective- Ensuring Islamic Teaching is Spreading to the Community

- Developing Competitive Leadership and Creating Trained, Competent, Dedicated and Wisdom Management Staff

- Produce Value-Based Management and Islamic Ethics

JAKIM

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As a leading agency of Islamic affairs management at the federal level as well as the secretariat to the National Council for Islamic Religious Affairs Malaysia (MKI), JAKIM implements the following three main functions:

• Drafting and Standardization of Islamic Law

• Coordination of Islamic Administration

• Coordination and Development of Islamic Education

ILIM

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The Malaysian Institute of Islamic Training (ILIM) is the institute responsible for providing courses, seminars and training to Islamic Affairs Service Officers from Islamic religious agencies throughout Malaysia. However, the offer is also open to officials and staff from various government departments who are interested.

Vision

To become a global Islamic Leadership Training.

ILIM

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Mission

Driving the Transformation of Islamic Affairs Management to Enhance the National Value Through Innovative and Strategic Islamic Agency Empowerment

Objective

Producing officials and staff of Islamic affairs management and civil servants who are taqwa, competent and challenged to face the challenges.

State Islamic Religious Affairs

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MAIS MAIP MAINS

MAIWP MAIK MAIJ

Syariah Court

• Refer to Sharia law in Islamic religious law and deals with exclusively Islamic laws, having jurisdiction upon every Muslim in Malaysia.

• The Syariah Court system is one of the two separate system of courts which exists in Malaysian legal system.

• There is a parallel system of state Syariah Court, which has limited jurisdiction over matters of state Islamic law (Shariah).

• The Syariah Courts have jurisdiction only over Muslim in the matters of family law and religious observances, and can generally only pass sentences of not more than three years imprisonment, a fine of up to RM5,000, and/or up to six strokes of the cane.

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Syariah Court

• Article 145 of the constitution says the Attorney General of Malaysia has no power over matters related to the Sharia courts.

• There are three levels of the courts: Appeal, High and Subordinate.

• Unlike the civil courts in Malaysia, which is a federalised court system, the Syariah Court is primarily established out of state law.

• Similarly syariah or Islamic law is a matter of state law, with the exception of the Federal Territories of Malaysia.

• Thus syariah law in one state might differ to that of another state. There are 13 state syariah law departments and 1 syariah law department for the Federal Territories.

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Reference

• http://www.bnm.gov.my

• https://en.wikipedia.org/wiki/Bank_Negara_Malaysia

• https://en.wikipedia.org/wiki/Islamic_finance_in_Malaysia

• http://www.islam.gov.my

• http://www.tabunghaji.gov.my

• http://www.esyariah.gov.my

• http://www.jais.gov.my

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