DEALING with syariah-compliant financial institutions is obligatory and not an option for Muslim customers in Brunei, said an Islamic scholar from the region.
“(Products offered by) conventional banks are financial products that are not permissible in Islam as they involve riba (usury),” said Dr Zaharuddin Abdul Rahman, senior lecturer at the college of economics, International Islamic University Malaysia.
He said Muslims should not move away from Islamic banking or investments and disregard the Islamic aspects of doing business just because they want to optimise their profit or investments.
“We spoke of how riba is the highest degree of haram in dealing with business, money, earning and spending. So there is no way – when there are Islamic banks around (in Brunei) – can a Muslim ignore these Islamic banks by going to the conventional banks because of price or whatever reasons,” he toldThe Brunei Times on the sidelines of a symposium held at The Empire Hotel and Country Club last week.
He said Muslims shouldn’t use price or efficiency as an excuse to stay away from Islamic banks.
Dr Zaharuddin said there are various ways in which a Muslim can invest with an Islamic bank so that they can grow their money through syariah-compliant methods.
The first option is to get a Muslim investment manager.
“That type of investment is called Wakalah (protection or remedying on behalf of others) so the bank will use their expertise to find where would be best securities to invest in and then the bank will take some profit in terms of agency fee,” he said.
He said if the bank manages to achieve a target profit, then all of it will be returned to the investors.
“This type of contract is available in Islamic banks in Malaysia and all around the world,” he said.
Another method is by investing money in unit trusts, if an investor decides to go for a “low to medium risk” investment vehicle.
“ The contract will be under Wakalah and the agency will collect fees upfront and use their expertise in purchasing appropriate shares and securities as well as carry out trading based on their analysis,” he said.
Unit trusts investing, may however, take “three or four years” to yield returns, he added.
Muslims who want to invest their money for short to medium term, may also invest their money into a “general investment account which replicates a fixed deposit account”.
“You can choose between three months to one year and then at the end of the maturity date, the bank will be able to give you some dividends based on the performance of the investment,” he said.
High-risk investors can buy shares of companies that operate syariah-compliant businesses.
“That is also permissible in Islam with the condition that you are using your own money and not borrowing from someone else with interests,” Dr Zaharuddin said.
Another way of investing money is opening a physical business.
“So you are using your own money to open a business. That is also an investment. Say you have for example, $100,000 to open a boutique, you just need to have knowledge and skills in managing cash flows, marketing and the whole operations. This is also acceptable in Islam,” he said.
The investor can also get a partner who can manage a business.
“You can do a partnership with somebody who knows how to market the product or business. So they may put 20 per cent of the capital and you pump in 80 per cent. That type of investment is calledmusharakah (partnership),” he said.
Another method is a profit-sharing investment whereby an investor chooses not to have direct control of the operations.
“For example, your friend has a good restaurant and you want to invest in it. You may put $100,000 into the business but you don’t have to work with him. Depending on the agreement, the restaurant owner, as an entrepreneur will run the business and you will have the privilege to do the audit to ensure the business is on the right track,” he said.
Source: http://www.bt.com.bn
