Islamic Finance in Malaysia (Bay Al-Dayn)

Islamic Finance in Malaysia (Bay Al-Dayn) Bay al-dayn is an Islamic financial instrument which was developed and currently practised in Malaysia. Bay al-dayn is considered a controversial issue because some countries practice it and some leave it out without prior improvement taking place. It is worth mentioning here that the principle of bay al-dayn is not widely used by other Islamic banks, especially in Middle Eastern countries but, bay al-Dayn has been mainly used in Malaysia as one of the fundamental Shariah contracts in structuring various Islamic finance facilities including, Islamic money market instruments, Islamic bonds, Islamic accepted, Islamic treasury bills and Islamic negotiable instruments. Firstly, bay al-dayn as money market instrument. The application of bay al-dayn is pertaining to trading instrument which has contributed to the development of various securitized products and tradable bonds. Due to this, it has provided a wide range of assets for investment. Money Market Instruments based on Islamic principles have arisen in competing the conventional ones. The securitization refers to the creation of tradable certificates as evidence of a debt that arising out from financing facilities. It also means putting a guarantee for the issuance of securities that are financial assets. For example, if Ali owes RM 5,000,000 to Bank Islam, apart from legal documents, a legal document of ‘I Owe You’ (IOU) would be created as evidence of the debt, as securitization. Secondly, Islamic bonds on the basis of bay al-dayn. A bond is a security which gives the holder a financial claim on the issuer.[1] This claim protects the holder if the issuer is unable to pay the amount due. The development of Islamic Economy in Malaysia has positively contributed to the application of bay al-dayn. Malaysia has successful in the application of Islamic securities which is based on the concept of bay al-dayn. Even though, bay al-dayn has not been applied in other countries, but its potential in Malaysia seems has grown. Basically, the creation of Islamic securities or bonds involves three main steps: Securitization- the creation of murabahah and BBA assets. Bond issues-issuance of debt certificates Trading of debt certificates- that is buying and selling of debt certificates in the secondary market using the contract of bay al-dayn. Thirdly, Islamic accepted bills (IAB) as a liquidity instrument. IAB is a bill of exchange, which is made by the bank and accepted by the purchaser or buyer, hence creating a debt owing to the bank. The bank then in turn, may sell the IAB in the secondary market at a discount value under the bay al-dayn. Therefore, bay al-dayn is instrumental in becoming a liquidity instrument and it is governed by the principles of murabahah and bay al-dayn. An exporter who uses an Islamic Bankers Acceptance Facilities (IBAF) prepares the export documents as required under the sale contract or letter of credit. The export documents will be sent to the importer’s bank. In addition, there must be genuine transaction between the parties involved, the goods involved must be lawful purpose, and there is adequate documentary evidence and that it is drawn in accordance with the law and requirements of IAB as indicated by Central Bank of Malaysia. Evaluation of bay al-dayn- Malaysian experiences: As been mentioned above, on 21st August 1996, The Malaysian Securities Commission Shariah Advisory Council approved a resolution unanimously agreed to accept the principle of bay al-dayn as one of the concepts for developing Islamic capital market instruments. This was based on the views of some of the Islamic jurists who allowed this concept subject to certain conditions for instance there is a transparent regulatory system in the capital market to safeguard the maslahah (public interest) of the market participants. There are arguments among the past and the present jurists on the issue of bay al-dayn. Nevertheless, there is no general consensus (ijma’) prohibits it. In general, majority of the jurists are unanimous in allowing the selling of debts. They only contrast in terms of the debt being sold to a third party for reason that the seller may not be able to deliver the sold item to the buyer. The illah for some Islamic jurists do not allow bay al-dayn is due to the risk that might be faced by the buyer, element of gharar, absence of qabadh and riba. Despite all of the controversial issues regarding the application of bay al-dayn, there is a logic idea behind the application. For instance, a transaction between Ali, Hap Seng Motorcar Sdn Bhd and Maybank Islamic. Ali wanted to buy a car from Hap Seng Motorcar with price RM 900,000 but at that time he does not have enough money to pay. Later, Ali sells his debt with Hap Seng Motorcar to Maybank with discount that amount RM 850,000. Thus, Maybank have to pay the car price to Hap Seng Motorcar. This is where the issue arise, when Ali sells his debt with discount. Some of the scholars agreed that there is a riba in this transaction. However, the logic is if we sell the debt with full price, who would want to buy it from Ali. At the end of the transaction Ali still need to pay his debt to Maybank at par value. Malaysia Islamic Banks: Bank Muammalat[2] refers bay al-dayn to the sale of a debt arising from trade and services transaction in the form of a deferred payment sale. The customer will sells this debt to the bank at a discount. The benefit is customer gets paid from the bank before realization of the sale. There are several features of bay al-dayn that includes: The cost must be revealed The price and tenor of the lump-sum deferred payment must be agreed upon by the Bank and customer The Bank appoints customer as an agent to sell on its behalf Only trade transaction on usance term is allowed Financing for finished goods Meanwhile, Bank Islam Malaysia[3] Berhad provides fews concepts for Trade services which includes Bai’ Dayn (Debt Trading). This contract refers to the selling of your trade debts/receivable arising from trade-related transactions. You will sell your trade debts/receivable to the bank for a discounted amount. Issues on bay al-dayn: However, there are lots of issues regarding the application of bay al-dayn in Malaysia. Bay al-dayn has formed many doubts amongst the countries practising Islamic Banking as to its permissibility as an Islamic financial instrument. The instrument is being developed to compete with the conventional banking to create a flow in the secondary market. It is also understood to create large capital by attracting investors to invest in Malaysia. It is widely used in the sales, bonds, import and export sales. Banking institutions in Malaysia are concern about maintaining the liquidity in the financial system therefore has developed this concept. However, other Islamic countries are reluctant to use this concept because it does not seem permissible and there is a possibility that this concept handles interest or riba which is prohibited in Islam. One of the main issues is, whether it is permissible to sell a confirmed debt which is backed by non ribawi goods at discounted price. Islamic scholars have put a plug on the possibility of earning profit by confirming that any sale of debt (Bay-al-dayn) or transfer of debt (Hawalat-al-dayn) must be at face value. This means when the bank buys the instrument of debt (shahada-al-dayn) from the original buyer, it is not entitled to any discount. There will be no riba by disallowing any difference between what it pays and what it receives on maturity (its maturity value). Some Islamic banks have been offering Islamic bill discounting products, and they essentially treat debt as any other physical asset that can be traded at a negotiated price. In fact, the prohibition of bay al-dayn is a logical consequence of the prohibition of riba or interest. A debt receivable in monetary terms parallels to money, and every transaction where money is exchanged from the same quantity of money, the pr ice must be at par value. Any increase or decrease from one side is equivalent to riba. Somehow, some parties in Malaysia encourage the development for debt discounting as an Islamic Financial product on the basis that it represents an important field of short term and self-liquidating investment, because the terms of negotiable instruments do not extend beyond six months especially in trade based debt discounting.[4] The scholars from Malaysia claims that debts can be sold because the original transaction is a debt created with an underlying contract of sale. They claim that it is legitimate to gain profit from the debt because the original transaction is legitimate. Gaining profit is usually being associated with risk ‘Al-Kharaj bi al-Dhaman’. The secondary market is a mechanism that allows lenders to obtain liquidity to make additional loans. Through the secondary market the lender will receives the benefits which may then passed on to the borrower in the form of lower interest rates and longer fixed rate terms. During the financial crisis in 1998 which was experienced by Malaysia, â€Å"the exchange rate essentially was affected by the flight of foreign funds while the stock market was being additionally pulled down by the herd behaviour of the local speculators†. Therefore, a flow to the secondary market does not necessarily be beneficial as it creates a flow to derivative s and speculators. Secondary market also encourages debt-creation as experienced in the financial crisis which has created too much debt for a nation to hold and therefore lead to the downfall of the economy. Comparison with Indonesia: In Malaysia issuance of a debit note which is then bought by the client and the results of the purchase are used for investment while, in Indonesia, the Shariah National Council of MUI does not permit trading in debit notes. There is no any shariah banking system in Indonesia including Bank Muamalat Indonesia (BMI) apply the bay al-dayn product. This is because the National Shariah Council (DSN) has not issued a fatwa in order to support this type of transaction. In Indonesia, the main concern in this matter is that the benefit which is determined in a transaction is usury. The classic ulama agree that bay al-Dayn with a premium is illegal, and not permitted according to shariah principle. Indeed, many contemporary ulama are of the same opinion. However, several Malaysian ulama have legalised this contract, relying on the Shafie opinion, but nor taking into consideration that the Shafie ulama permit this contract only in cases where a debt is sold at the nominal value of that debt. Bibliography Azhar, S. (n.d.). International Journal Of Islamic Financial Services. Bank Islam. (n.d.). Retrieved May 8, 2015, from Concepts of Shariah Trading: http://www.bankislam.com.my/en/Pages/ShariahContractsConceptsforTradeServices.aspx?tabs=1 Bank Muamalat. (n.d.). Retrieved May 8, 2015, from Trade Finance: http://www.muamalat.com.my/business-banking/corporate-banking/trade-finance/bwcf.html Billah, P. D. (n.d.). Applied Islamic Finance. Retrieved May 8, 2015, from Modern vs Islamic Bond: http://applied-islamicfinance.com/category/readmore/6 [1] (Billah) [2] (Bank Muamalat) [3] (Bank Islam) [4] (Azhar)

Crafting and Executing Strategy Essay

Develop an argument supporting the importance of a strategic plan for the success of the defined business. For the success of the defined business, in this case for Whole Foods Market, the importance of a strategic plan is unquestionable. In Crafting & Executing Strategy: The Quest for Competitive Advantage: Concepts and Cases Arthur A. Thompson, Jr., A.J. Strickland III, and John E. Gamble (2009) state that â€Å"a company’s strategy is management’s action plan for running the business and conducting operations† (p.6). They go on to further explain that a company’s strategy is all about how management intends to grow the business, how it will build a loyal clientele and outcompete rivals, how each functional piece of the business will be operated, and how performance will be boosted. Any organization without these defined â€Å"how’s† cannot succeed because all aspects of the business would be out of sync and could potentially take action that would be counterintuitive to the success of the company as a whole. If Whole Foods Market’s strategy (outlined below) didn’t fit the company’s situation, didn’t help the company achieve a sustainable competitive advantage, or result in better company performance, than the overall strategy would come up short and need to be re-evaluated to meet the needs of the business to drive success in these three big areas. Whole Foods Market’s strategy focuses on being America’s healthiest grocery store, seeking out the finest natural and organic foods available, maintaining the strictest quality standards in the industry, and having an unshakeable commitment to sustainable agriculture. All of these pieces make up the Whole Foods Market’s strategic plan for its day-to-day operations in all aspects of the business, and without all of its employees being clear on this it would fall apart and not be the success that it is since its inception in 1980. Create a mission statement for the company explaining how the mission will be essential to the company’s success. Thompson, Strickland, & Gamble state that the mission statement for any organization is essential to a company’s success because â€Å"†¦it represents the company’s present business purpose and reasons for existing, and sometimes its geographic coverage or standing as a market leader† (pg 28). The mission statement for Whole Foods Market is a good example of this due to providing customers and potential customers what Whole Foods Market is now and how they function as an organization. Whole Foods Market’s mission is to be known for selling the highest quality of natural and organic products available, for satisfying and delighting their customers, supporting team member excellence and happiness, creating wealth through profits and growth, supporting communities and encourage local involvement, promoting environmental stewardship, acknowledging all business associates, and operate with balance and integration. All of these boil down to one fact†¦ that Whole Foods Market intends to grow, and that today’s growth is just the beginning of tomorrow’s development. If Whole Foods Market didn’t have a mission statement clarifying exactly how they want to be portrayed in the food retail industry, then any current or potential customer would never know the type of business they were dealing with. The drive to be a leader in the organic and natural foods industry, and for every single â€Å"team member† to be a part of that drive, is an indicator that the organization values its standing in the industry and has a trusted staff invested in its own success. This is used as a lure for customers to want to do business with an organization that prides itself on being the best in the country. Whole Foods Market states that â€Å"our customers are the most important stakeholders in our business†¦ we want to meet or exceed their expectations on every shopping trip. We know that by doing so we turn customers into advocates for whole foods† (WholeFoodsMarket.com). The more customers that promote their experiences and happiness with Whole Foods Market, then the more they will want to continue to do business with them and potentially grow with the company as a whole and help more and more customers become a part of the Whole Foods Market customer base. Create a vision statement for the company explaining how the vision statement supports the company’s mission. Thompson, Strickland, and Gamble state that â€Å"a strategic vision delineates management’s aspirations for the business, providing a panoramic view of ‘where we are going’† (p.25). They go on to say that a strategic vision can only function as a valuable management tool it must do two things – illuminate the company’s directional path, and provide managers with a reference point for making strategic decisions and preparing the company for the future. Whole Foods Market’s vision statement is its Declaration of Interdependence: â€Å"Whole Foods Market is a dynamic leader in the quality food business. We are a mission-driven company that aims to set the standards of excellence for food retailers. We are building a business in which high standards permeate all aspects of our company. Quality is a state of mind at Whole Food Market. Our motto – Whole Goods, Whole People, Whole Planet – emphasizes that our vision reaches far beyond just being a good retailer. Our success in fulfilling our vision is measured by customer satisfaction, Team Member excellence and happiness, return on capital investment, improvement in the state of the environment, and local and larger community support. Our ability to instill a clear sense of interdependence among our various stakeholders (the people who are interested and benefit from the success of our company) is contingent upon our efforts to communicate more often, more openly, and more compassionately. Better communication equals better understanding and more trust.† (WholeFoodsMarket.com) This vision statement supports Whole Foods Market’s mission because it brings out to the open for all of its team members a lighted patch to take to drive the success of the business, both on a small and grand scale. Because the vision provides a purpose to all team members it highlights that Whole Foods Market is known for being a leader in the organic and natural food industry, and it also provides a roadmap to everyone employed within the company with the big-picture plan on how to succeed at continuing to be a leader within the industry. Establish five (5) key objectives for the company encompassing operational, financial, and human resource aspects of the business and justify why each of these objectives is essential to the success of the business. Whole Foods Market has six (6) key objectives that encompass operational, financial, and human resource aspects of the business, and each of them are essential to the success of the business currently and for in the future. The ten key objectives are: (1) quality standards, (2) organic farming, (3) seafood sustainability, (4) animal welfare standards, (5) caring for communities, and (6) Whole Trade guarantee. Each of these objectives fits within either the operational, financial, or human resource aspect of the business, and each of them plays an important role in the success of the organization as a whole. Whole Foods Market’s goal operationally and financially is explained in each of the six objectives in more depth because they explain how Whole Foods Market will operate day-in and day-out to perform as a company†¦ the types of standards being used to the types of the types of products being used, as well as how giving back will even help the company operate in the long run and into the bottom line. Each of the six (6) key objectives listed by Whole Foods Market is essential to the success of the business because they outline exactly how the business will be functioning in its everyday interactions with all of its customers, even demonstrating how future decisions and actions taken by a team member will drive their own personal/business success along with the success of Whole Foods. The Whole Foods Market brand thrives on being known as a leader in the organic and natural food retail industry, and by making it known to the public how it will drive customer experiences for future growth it gains even more customer loyalty. This subsequently drives the bottom line for any successes it has achieved as well as plans to achieve in the future. Justify how the five (5) key objectives established support the mission and vision statements of the company as defined by management. The six key objectives listed above for Whole Foods Market supports both its mission and vision statements because it outlines in depth how the company as a whole functions to drive its desire to be a market leader within the natural and organic food retail industry and utilize all of its resources (from locations to team members, etc.) to ensure the organization’s success is not just financial gain. The company prides itself on its customer service and ability to provide excellent products and services to its customers because its customers are what will continue to allow Whole Foods Market to do what it loves to do best. References Thompson, A. A., Strickland, A. J., & Gamble, J. E. (2010). Crafting and executing strategy: The quest for competitive advantage: Concepts and cases: 2009 customer edition (17th ed.). New York: McGraw-Hill-Irwin. Whole Foods.  © 2013 Whole Foods. http://www.wholefoodsmarket.com/company-info

Introducing Extended Essay Business and Management Topics

Introducing Extended Essay Business and Management Topics The Key to Successful Extended Essay Business and Management Topics After you've finished the simple coursework, it's time to select your specialty. Our courses and company certificate programs will be able to help you compete in the current challenging atmosphere. Many small business majors specialize in a place like accounting, finance, or marketing, and programs which do not offer you a specific concentration may not serve as a great fit. The program is intended to prepare students with the essential skills to begin their own company or to be a thriving employee of a small company. Based on your organization targets, it's possible to either enroll in a Ph.D. program, or a physician or company administration. Even in the event the deadline is truly tight, feel free to get hold of our managers. A topic is extremely important, vital, crucial, critical, or any greater adjective you'll be able to utilize to concentrate on its function in dissertation writing. Deciding upon a major or academic program is a critical choice, and you'll wish to be sure your choice aligns with your nature and your vision for your career. It is extremely important to have a practical comprehension and understanding of the financial flow of your all your company procedure and operations. Before applying ML, you've got to study all of your internal business processes. Feedback form isn't a good job. Design the feedback form is a great endeavor. Only a thriving small business manager can comprehend the true price and importance of collaboration. Managing a supply chain and ensuring production meets demand under tight deadlines can be unbelievably complicated and is crucial to business success. Possessing a legitimate passion for the business you're managing is quite vital for your success. Y ou started your business to modify the world and to have the freedom to relish life. 1 part is all about its production and the other part is all about its consumption. A marketing program and strategy will focus your efforts on attracting your intended market and help you determine if you're going off track and that which you need to do in order to achieve your destination (or business goals). Suspect Content Everyone in your intended market When your whole target market isn't conscious of your organization, product, service or the benefit it offers, then the very first objective of content is to just build trust. Actually company culture is a significant factor that contributes to the business's development and capacity to compete and be prosperous. Getting the Best Extended Essay Business and Management Topics The Fleet Management system is just one of the excellent techniques to boost the output of your company employees. Business managers may manage day-to-day tasks like hiring, training, purchasing and superior control in smaller firms. Talented small b usiness managers are in demand and might remain so as the worldwide small business environment gets more complex. The company management of the logistics business has become the most difficult situation for those businesses and that's the reason why they are finding the best device for managing the fleet of the vehicles. A business management degree is remarkably versatile, helping you to pursue work in a huge assortment of industries. The company structure in the country As previously mentioned, egalitarianism together with flat management is at the middle of the Swedish small business structure, which makes a lot of the business industries and organisations operation in the country less structured and layered when compared to other European nations. The management major is an all-inclusive breakdown of the skill set necessary to compete in a worldwide business environment.

The Environmental Impact Of Of Recycling - 1307 Words

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