Revisiting OIC Fiqh Academy rules on Organised Tawarruq

Interesting to note that the Tawarruq concept has been the key financing structure used and up to $1 trillion in the Islamic finance industry. But whether or not the way it is organized in modern banks contradicts Shariah, or Islamic law, has triggered fiery debates between scholars as the industry is struggling with a decline in business during the global financial crisis. The discussion or debate rises especially when the The International Council of Fiqh Academy, a leading industry body based in Saudi Arabia, in April declared that organised tawarruq "a deception" that carries elements of interest-based lending, prohibited under Islamic law. Thus it is in need to evaluate the differences of opinion (proponents and opponents of tawarruq) between scholars and analyze the relevance of the scholars arguments that support the use of Tawarruq in the industry as long as it fulfill the Shariah requirements.

A holistic and integrated understanding of structure and mechanism of commodity murabahah as an innovative liquidity management tool is essential since its being widely use in the Islamic finance industry. The effectiveness and efficiency of liquidity management mechanism via the usage of commodity murabahah currently is expanding from time to time. Liquidity management lies at the heart of confidence in finance industry. Therefore, this paper provides insights into the structure and mechanism of Commodity Murabahah or also known as Tawarruq as an instrument to serve the liquidity need and investment opportunity of Islamic financial institutions in Malaysia and the Middle East.

Fatawa on Tawarruq: Reappraisal

Tawarruq has been a quite contoversial issue lately since the recent resolution of the International Fiqh Academy Council on Tawarruq. It has ignited a new the already controversial application of modern Tawarruq. Due to the fatawa, various stakeholders of Islamic finance such as Shariah scholars, bankers and accountants, have attempted to express their opinion on the matter.

Shariah scholars like DeLorenzo, Dr Nikan Faroozye, Dr Aznan Hasan, Dr Akram Laldin, Shaikh Nizam Yaquby and Monzer Kafh are among scholars that responded to the matter with some unique arguments. These scholars (and we believe many more) understand and sees that matter from a global perspective in responding towards the resolution made.

They hold the view that Tawarruq is permitted provided that it is properly axecuted and fulfills all its requirements of a valid sale contract as well as proper documentation that highlight the rights and liabilities of the parties involved clearly detailed for any possible dispute resolution or litigation later. They supported the AAOIFI standard to be referred to and provide the necessary checks and balances to prevent the abuse of Tawarruq.

First is that it is better to strengthen the practice, rather than prohibiting it. Meanwhile, it is encourage for people in the industry to understand that the permissible come with responsibilities where by the implementation and practices of tawarruq in the products or instruments use must fulfilling the requirement made by the Shariah Advisory Council in order to avoid miss-used of such concept.

If we understand the usage of Tawarruq globally and see it from a bigger picture, it is understandable that not only Tawarruq.concept can be miss-used. It also goes to any products or services offered by the institutions if the usage is not fulfill the requirement or the standard acquired in order for it to be Shariah compliance. Thus this shows that the practice of Tawarruq is not prima facie prohibited, but due to several violations of its practices. That is why a proper monitoring is needed by the respective regulatory bodies.

Therefore, if the Tawarruq is properly executed and fulfilling all its requirements, and all the violations have been eliminated, the practice of modern Tawarruq should not be prohibited simply because it is somehow systemized and organized. Explain of modern financial instruments, it should be understandable that any modern practice has to be organized. Without it to be undertaken on the spur of the moment would not only render the transaction impracticable in most circumstances, but also expose the parties involved to a very high and unexpected risk.

However, we should see and evaluate each of these arguments addressed carefully without denying it has its merits of course. Moreover, we also could not deny the fact that Tawarruq is a hugely popular financing method, and is probably the most used single liquidity providing scheme and is used in virtually every country which practices Islamic Finance as an alternative concept rather than Bay al-Inah or Bay Bithamanil Ajil that are more criticize by the scholars in Islamic finance. Due to that we can obviously seen the distinction between the Tawarruq and Bay al-Inah drives the careful specifications of Tawarruq transactions.

Tawarruq: The way forward?

In conclusion, we hope that people who directly and indirectly connected to the markets and the practice of Tawarruq is not ease by the counter-arguments, we just hope that the actual fine print of Shariah rulings is more likely to be adhered to more closely in the future, with Islamic financial institutions are striving to show that their Tawarruq (although an organized Tawarruq) complies with every detail of the Shariah.

The dispute between scholars opinion on this is healthy, but the questioned arises how other people will view on it? This is due to the decision that is quick and does not quench one’s thirst about the íllah behind the decision made. There should be an economic study done to analyze the impact of the instruments and the implication of the fatwa.

Eventually we do hope that the ruling will likely lead to other alternatives being developed in order for Islamic financial institutions practicing ideally as according to Memon and Ansari who believe that we should not try to pull the legs of an infant who is just trying to take his first step towards a long journey just because of which only reflects to one more element in the confusing array of opinions and decided to put the nail into the coffin of Tawarruq. However, we should try to ensure that he commences his journey the right way, on a strong footing. More appropriately, it will serve us well when we are in a position to implement the complete Islamic way of living.

Wallahuállam.

p/s: To read further you can read and download full research paper here.

Ibn Yusof

10.38 p.m

22 October 2009 / 4 Dhul-Qa`dah 1430

www.ibnyusof.blogspot.com

Perjalanan Bertemu Dua Tokoh

Pada 17 Oktober 2009 lepas, saya berpeluang menghadiri Daurah anjuran IQ dan GMT di Institut al-Qayyim,Bukit Mertajam,Penang. Jika sebelum ini saya selalunya menjadi peserta daurah, kini sahabat-sahabat di USM menjemput saya sebagai pembentang dalam salah satu slot daurah tersebut. Topik pembentangan yang diamanahkan kepada saya bertajuk “Pengenalan Kepada Asas Muamalat & Aplikasinya Dalam Sistem Perbankan Islam”.

Ternyata topik hasil perbincangan dengan pihak penganjur itu sedikit sebanyak mampu mengetengahkan para peserta tentang kepentingan muamalat dalam kehidupan mereka seharian.Masa sedikit terhad kerana saya banyak menumpukan kepada fasa pertama pembentangan yakni asas-asas muamalat walaupun hanya membentangkan perihal akad dan riba. Dua perkara ini menyebabkan perbincangan meleret agak lama kerana perlunya penekanan dalam hal ini terutama apabila para peserta didedahkan dengan hukuman-hukuman jika terlibat dalam transaksi riba sekaligus memupuk minat mereka untuk mendengar alternatif yang perbankan Islam tawarkan,

Adapun fasa kedua pembentangan yang melibatkan aplikasi atau konsep muamalat dalam sistem perbankan Islam hanyalah bergantung kepada baki masa setengah jam menyebabkan konsentrasi saya ketika membentang sedikit terganggu akibat masa yang terhad. Pemilihan 4 produk utama dalam sistem kewangan ini dipilih khusus kerana dipercayai lebih dekat dengan diri para perserta menyebabkan mereka kelihatan lebih berminat berbanding fasa pembentangan berkenaan asas-asas muamalat. Hal ini sudah saya jangkakan lebih awal kerana aplikasi muamalat dilihat lebih jelas apabila ianya berkait dengan kehidupan diri para peserta sendiri apabila kita membincangkan tentang produk akaun simpanan,pembiayaan perumahan,pembiayaan kereta dan takaful.

Mereka yang berminat boleh memuat turun slides pembentangan saya di link berikut. Semoga perkongisan ini sedikit sebanyak bermanfaat walaupun slides tersebut dibuat dalam masa yang singkat dan ada antaranya adalah copy&paste daripada beberapa slides pensyarah saya.

Saya dan rakan-rakan kemudiannya ke Perlis bersama teman-teman untuk menghadiri muhadharah bersama Fadhilatu al-Syeikh al-Muhaddith Ali bin Hasan al-Halabi serta al-Syeikh Abu Ubaidah Masyhur Hassan Salman, murid kepada al-Syeikh al-Imam al-Albani rahimahullahu di Masjid Putra,Kangar pada ahad (18 Oktober 2009). Saya pada awalnya tidak pernah merancang untuk naik ke Perlis kerana mengikut perancangan asal selepas pembentangan Daurah di Penang, saya ingin pulang segera kerana kesibukan tugasan yang menghimpit. Tetapi akibat merasakan ada ilmu yang boleh digapai di Perlis bersama dua orang tokoh terkenal tersebut maka saya tidak mahu melepaskan peluang tersebut bersama dengan rakan-rakan yang lain.

Ketika mendengar mereka akan bertandang ke Malaysia, dan waktunya tepat dengan daurah adalah suatu kebetulan dan semestinya bersyukur ke hadrat Allah Azza Wa Jalla atas peluang yang diberikan. Tersenyum sendirian ketika terbaca kata-kata Syaikh Muhammad Abdul Wahab Marzuq Al-Bana dalam menggambarkan kedua hubungan guru-anak murid ini, “Syaikh Al-Albani adalah Ibn Taimiyah zaman ini, dan muridnya Syaikh Ali Hasan, Ibn Qayyim zaman ini”.

Kedua masyaikh ini adalah tokoh yang tidak asing lagi dalam dakwah sunnah di serata dunia.J ika pada beberapa tahun lepas berpeluang berjumpa dengan rakan seperjuangan berliau yakni Syaikh Salim ibn Ied al-Hilali, kini beliau bersama Syeikh Masyhur Hassan Salman bertandang ke Malaysia untuk berkongsi ilmu mereka dengan para daié di Malaysia. Syeikh Abu Ubaidah Masyhur Hassan Salman juga tidak kurang hebatnya, yang juga berguru dengan Syaikh Muhammad Nashiruddin al-Albani rahimahullah dan juga Syaikh Musthofa az-Zarqa rahimahullah, seorang ulamak terkenal di Syam. Saya selalu merujuk kepada kitab beliau yang masyur ketika menjawab persoalan-persoalan solat di dalam forum, kitab beliau tidak lain tidak bukan yakni Al-Qaul Al-Mubin fi Akhthaa Al-Mushalin. Kini berpeluang juga bertemu penulis kitab tersebut.

Antara perkara yang kelihatan baik daripada guru mahupun anak murid ini ialah persamaan mereka dalam bab ilmu, terserlah daripada penjelasan mereka seumpama hidup dengan tidak mengenal sesuatupun kecuali ilmu, ilmu senantiasa memenuhi waktunya, malam, siang, saat di rumah mahupun bepergian, dipenuhinya dengan ilmu. Sentiasa mereka menitik beratkan soal ilmu.

Walaupun muhadharah itu berlaku dalam masa yang agak singkat tetapi penuh juga beberapa helai muka surat sempat saya coretkan ilmu-ilmu yang para masyaikh curahkan. Tetapi apa yang saya rasakan lebih penting untuk dikongsikan bersama para pembaca ialah antara nasihat yang mereka sempat utarakn kepada para daíe di dalam sesi tertutup selepas muhadharah itu berlangsung ialah seperti berikut:

Nasihat Syeikh Ali bin Hasan al-Halabi:

1) Fokus dengan ilmu (yakni perngajian atau kuliah-kuliah ilmu) dan jauhi perkara-perkara perkara-perkara yang lagha (sia-sia).

2) Gunakan pendekatan yang lembut (uslub dakwah). Beliau juga memetik kata-kata Syaikh al-Albani "Kebenaran itu adalah perkara yang berat,bagaimana sesuatu yang berat bisa disampaikan dengan metodologi yang berat''

3) Elakkan atau dalam erti kata lain jangan berjidal (debat) dengan golongan atau hizbiyyah yang lain hanya kerana wujud beberapa perbezaan pendapat, perlulah difahami dakwah dan islah adalah lebih utama.

Nasihat Syeikh Abu Ubaidah Masyhur Hassan Salman:

Dakwah perlu dimulakan dengan diri sendiri terlebih dahulu.antara aspek yang perlu diambil kira ialah

1)Perlulah ikhlas dalam membawa dan menyampaikan manhaj (tanpa ikhlas maka semuanya adalah sia-sia)

2)Gunakan masa sebaik mungkin (untuk pelajari ilmu,untuk mendalami ilmu dan elakkan dari menyibukkan diri dengan pertelingkahan antara mashaikh kerana perkara ini telah lama berlaku dan tidak ada penghujungnya)

3)Hendaklah para daié menjaga lisan mereka (tathabbut/periksa segala sumber berita sebelum menyampaikannya dan mengakibatkannya tersebar)

Sekian,semoga perkongsian yang bermanfaat insyaAllah.

''Muhasabah itu perkara yang munasabah''

Ibn Yusof

19 Oktober 2009 / 1 Dzulkaedah 1430

9.36 p.m

www.ibnyusof.blogspot.com