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This research aims to examine the impact of the Covid-19 pandemic on contractual obligations in Islamic banks. It explores the Shariah issues arising from the pandemic, the Shariah approaches considered in addressing these issues, and the rights of the various contracting parties affected by the pandemic. The study employs both descriptive and analytical methodologies. The descriptive approach is used to analyze the fiqh perspectives on Covid-19 and relevant jurisprudential theories, while the analytical approach assesses the application of Islamic legal maxims to contractual obligations and evaluates the consequences on existing contracts within the Islamic finance industry. Additionally, a comparative approach is adopted to examine the Ijtihad (independent reasoning) of both classical and contemporary scholars, highlighting the pandemic's impact on key Islamic financial transactions. The study concludes that postponing the payment of installments under a murabahah contract with a fixed profit rate, or rescheduling with an increase, would result in the prohibited practice of pre-Islamic riba. However, in a murabahah contract with a variable or floating rate, where the contract stipulates a higher price or ceiling profit rate, the bank may commit to providing a rebate (ibra') to customers who pay their installments as scheduled. In such cases, the customer is only required to pay the effective rate. Furthermore, the study finds that banks may adjust future installments in lease contracts and diminishing partnership contracts (musharakah mutanaqisah), but not for installments that are already due and payable. Importantly, banks should not require customers to pay additional amounts to cover losses incurred during the postponement period.
This note explores the challenges surrounding idle Waqf (Endowment) land in Malaysia and proposes an innovative framework for Waqf-linked Sukuk (Bonds) to address funding constraints and unlock the potential of Waqf assets for socio-economic development. Drawing on the evolution of Waqf and Sukuk, guided by Islamic principles, this note examines the legal, regulatory, and societal implications of the proposed framework. By integrating Waqf into Malaysia's sophisticated Islamic finance system, the framework aims to mobilize funds for Waqf projects while ensuring Shariah compliance and investor confidence. This note discusses the influence of Islamic principles on Waqf and Sukuk development and highlights the societal and transnational impacts of the proposed framework. Ultimately, the research underscores the importance of innovative strategies to harness Waqf assets for sustainable socio-economic progress, offering insights for policymakers, scholars, and practitioners in Islamic finance and philanthropy.
Sustainable Responsible Investment (SRI) Sukuk are instruments aimed at improving the condition of societies and communities. Sukuk itself are Shari ah compliant alternatives to bonds or technically they are certificates of equal value represent fractional ownership or investment in assets, structured according to Shari ah principles. The Sustainable and Responsible Investment Sukuk Framework was issued by the Securities Commission of Malaysia for Sukuk that funds green projects, social projects or projects that develops waqf (endowment) assets. This note examines the use of Sukuk for more than just commercial gain, this paradigm shift is welcomed and necessary to stay true to the Maqasid al Shari ah (the goals and objectives of Shari ah) to provide ease for people. In this note, two examples of SRI Sukuk namely Sukuk Prihatin (Empathetic Sukuk) and Ihsan Sukuk (Excellence Sukuk) will be examined. The SRI Sukuk focusses on positive social change, while there is a return on investment there is also an additional emphasis on enabling less privileged segments of the society to benefit from the funds provided through the issuance of the Sukuk. The objective of this note is to explain SRI Sukuk framework and examine case studies and provide recommendations for future SRI Sukuk issuances and understand how the Maqasid al Shari ah (the goals and objectives of Shari ah) is being pursued.1 The methodology used in this note is non-doctrinal and document analysis. Secondary sources were reviewed to answer the research objective.
The primary objective of this paper is to draw lessons from Sri Lanka's experience with OrphanCare utilizing Islamic social finance, while also identifying avenues through which Malaysia could establish a sustainable model for achieving a similar purpose. This study uses a qualitative, exploratory approach to investigate the operational framework of OrphanCare in Sri Lanka and its potential lessons for Malaysia. Due to limited secondary sources, an unstructured interview with OrphanCare representatives was conducted to gather in-depth insights. The research unfolds in two phases: first, data collection from both primary (interviews) and secondary (reports, literature) sources to identify gaps and challenges; and second, the analysis of this data using content analysis. The OrphanCare interview from Sri Lanka offers crucial insights for Malaysia's mission in enabling orphan access to higher education. Challenges, like financial constraints and limited support networks, align with Malaysia's inequality reduction goals. Tertiary education benefits, including employability and personal growth, are highlighted. Islamic social finance lessons stress its transformative potential, while collaboration and long-term commitment are its strengths. Recommendations include education funds, support networks, career guidance, awareness campaigns, and sustainable collaborations. A regulatory framework featuring the Orphans Education Fund with a 2% annual contribution from listed companies, managed by National Higher Education Fund Corporation (PTPTN), is proposed. This paper demonstrates originality by uniquely proposing the utilization of Islamic Social Finance to enhance orphan access to tertiary education. It draws insights from Sri Lanka's OrphanCare model and presents innovative strategies for Malaysia to tackle inequalities through collaborative efforts and a robust regulatory framework.