Critical Perspectives on Musharakah Mutanaqisah Home Financing in Malaysia: Exploring Legal, Regulative and Financial Challenges

ABSTRACT Critical Perspectives on Musharakah Mutanaqisah Home Financing in Malaysia: Exploring Legal, Regulative and Financial Challenges Hanira Hanafi As shelter is one of basic needs for the human beings, the financing for housing need is also an essential need. Since individuals are not in a position to pay for their houses in one go, the availability of mortgage is an imperative in ensuring homeownership. Islamic mortgage as being the housing finance tool of Islamic banking and finance offers a home ownership for those who seek for halal alternative. There are indeed various type of instruments used as an underlying contract for Islamic mortgage, which comprise of debt based financing (murabaha, istisna’, ijarah, bay’bithaman ajil) and equity based financing (musharakah mutanaqisah). As the debt based products of Islamic mortgage are criticised for mimicking the conventional counterparts, the introduction of equity product of home financing based on musharakah mutanaqisah (MM home financing) is deemed to become a better alternative, which capable of fulfilling the true spirit of Shari’ah and overcome the shortcomings of debt based products. As MM based Islamic mortgage has just been in the Malaysian market for seven years, there are many issues surrounding its implementation. This study, therefore, aims to explore and critically analyse the supply and demands side issues related to MM home financing by paying particular attention to challenges and prospects of MM home financing in Malaysia. In particular, this study explores legal and Shari’ah related operational issues associated with the implementation of MM home financing and also examine the prospects of this product through customers’ perceptions and expectations. In achieving the aims, this study employed mixed method whereby the data obtained from the questionnaire survey and interviews. The sample size of the questionnaire survey is 260 respondents who have either Islamic or conventional mortgage and are from Klang Valley area of Malaysia. The interviews were conducted with 19 individuals who are actively involved in the implementation of MM home financing in Malaysia including Islamic bankers, Islamic economists, Shari’ah advisor and regulator. The interview finding revealed that besides several legal issues such as inadequate of legal framework, treatment in the event of default, non-standardised agreement, issue of ownership and Shari’ah issues such as use of purchase undertaking or wa’d, there are number of other issues involved in MM home financing. These include takaful and its maintenance, issue of rental benchmarking. All these together are believed to hinder and ‘pollute’ the MM home financing operation. The study also noted the problems that also arose from the banks and customers itself. The finding of the survey, also, revealed that the customers’ awareness on Islamic mortgage products is still very low, particularly for MM home financing. In addition, take-up reason for Islamic mortgage is mainly due to religious factor and non take-up reason is due to the price. However, it is very interesting to note that the majority of the respondents expected Islamic mortgage to be capable of safeguarding their interest. In other words, majority of the respondents expect Islamic mortgage could realise the inherent advantages associated in it which capable of serving the individual but also social interest. This factor is crucial to the Islamic banks, as this position seems generally agreed and expected by majority of the respondents. Therefore, capable of fulfilling this factor will ensure a promising future for MM home financing as the price for MM home financing is as competitive as the conventional counterparts making Islamic mortgage having extra advantages for the customers to opt for. Based on the findings of the study, several recommendations are also proposed in order to revive the soul and spirit of Shari’ah which ultimately portray the efficiency and effectiveness of Islamic finance particularly in dealing with home financing for the benefit of all the stake holders

The possibility of using waqf to finance the Malaysian federal government's public expenditure

The purpose of this paper is to examine thepossibility of using waqf to finance the federal government’s public expenditures in Malaysia. The arguments werebasedon the primary data gathered from semi-structuredinterviews with waqf experts. The resultshows that waqf can financethe Malaysian federal government’s public expenditure for three reasons; Shari’ah permissibility, there is evidence of implementation in past Muslim economiesand political will from the federal government. This study is motivatedby Malaysia’s persistent primary deficit, Malaysia’s rising debt to GDP, and the versatile nature of waqf that could address these problems. Due to the exploratory nature of this study, qualitativeresearch was conductedthrough the employment of semi-structuredinterviews. The thematic analysis was then performedon the interview transcripts. Literary evidencewasalso mentioned to ensure the concurrentvalidity of the mentioned results. The findings of this paper may add to the existing literature on the solutions to the burgeoning government expenditure and debt. Even more so, this article motivates researchers to explore the arising issues stemming from this particular waqf implementation

Determinants of quality of life person with disabilities in Malaysia

To maximize the quality of life (QoL) among persons with disabilities (PWDs) in Malaysia, it is important to identify factors that are strongly associated with the QoL of PWDs. The aim of this study is to identify the determinants of QoL among PWDs in Malaysia. A cross-sectional study approach was applied covering 340 participants with hearing impairments, visual impairments, and physical disabilities. A multiple regression analysis was performed to determine the determinants of QoL. The seven QoL domains namely physical health, psychological, social relationships, environment, discrimination, autonomy, and inclusion were considered as dependent variables while demographic profile, socio-economic status, and disability history were considered independent variables. The contribution of independent variables to most of the QoL domains was modest. This study found that type of disabilities is a significant determinant for physical health, psychological, environment, discrimination, and inclusion domains. Meanwhile, the level of education is a significant determinant in the environment and autonomy domain. It was also found that age group is a significant determinant in the psychological domain. Meanwhile, employment status is a significant determinant in physical health domains. However, self-rated health is not significant in the discrimination domain. Both PWDs with good health conditions or PWDs with unhealthy conditions face the same experience of discrimination. These findings supplement the existing knowledge and contribute to future research, service planning initiatives, public education, and policy formulation. Furthermore, this study may aid social service stakeholders in evaluating the effectiveness of current activities and identifying trends for future planning

Muslim women’s marriage, pregnancy, abortion and spacing of children: Evidence from the United States, Iran and Malaysia

Background: This study investigates the decisions on marriage, pregnancy, abortion and spacing of children among Muslim women (MW) residing in the United States, Iran and Malaysia to explore the occurrences as well as socio-demographic characteristics associated with the likelihood of making an independent decision regarding sexual and reproductive health rights. Methods: A total of 1140 MW in Washington, D.C. (the United States), Tehran (Iran) and Kuala Lumpur (Malaysia) participated in this study, and the number of respondents were equally distributed across the three cities. To examine the occurrences of sexual and reproductive rights violation, we report the descriptive statistics from the responses given by MW in these cities. Results: On the decision to solemnize marriage, 84.5 per cent of MW in Malaysia reported that the marriage decision is made jointly with their husbands, but this figure stands at only 30 per cent in Iran and 47.9 per cent in the United States. More than 80 per cent and 72 per cent of MW in Malaysia and Iran, respectively, make decisions on pregnancy, abortion and spacing of children jointly with their husbands. Conclusions: Policymakers should promote jointly made (made by wife and husband together) decisions among Muslims, which accords with Islamic teachings and is considered as good practice among Muslims

Applied Economic Issues in Malaysia

The Malaysia economi has undergone significant structural changes in the last four decades. This has posed numerous challenges to the growth and management of the economy

The possibility of using waqf to finance the Malaysian federal government’s public expenditure

The purpose of this paper is to examine the possibility of using waqf to finance the federal government’s public expenditures in Malaysia. The arguments were based on the primary data gathered from semi-structured interviews with waqf experts. The result shows that waqf can finance the Malaysian federal government’s public expenditure for three reasons; Shari’ah permissibility,there is evidence of implementation in past Muslim economies and political will from the federal government. This study is motivated by Malaysia’s persistent primary deficit, Malaysia’s rising debt to GDP, and the versatile nature of waqf that could address these problems. Due to the exploratory nature of this study, qualitative research was conducted through the employment of semi-structured interviews. The thematic analysis was then performed on the interview transcripts. Literary evidence was also mentioned to ensure the concurrent validity of the mentioned results. The findings of this paper may add to the existing literature on the solutions to the burgeoning government expenditure and debt. Even more so, this article motivates researchers to explore the arising issues stemming from this particular waqf implementation

Waqf financing expenditure and its impact on government debt

The Malaysian debt has been under scrutiny since the 1Malaysia Development Berhad (1MDB) scandal; placing pressure on the research for sustainable debt. The purpose of this article is to forecast the impact of waqf (Islamic pious foundation) financing expenditure on federal government debt in Malaysia. It is to ascertain whether waqf can be an alternative solution to government debt reduction. To perform this, the Neoclassical Dynamic Stochastic General Equilibrium (DSGE) model is adopted. The theoretical framework is developed by considering the history, tradition, culture, and political influence of waqf primarily in Muslim majority countries. It was also inspired by the European third sector framework. The result shows that federal government debt can be reduced when waqf finances federal government expenditure. This has several implications. For one, this study revives the cohesive government-waqf role in providing pure and mixed public goods without depending solely on government expenditure. It highlights the fact that these shared role has an impact of reducing government debt. The result also inadvertently provides evidence of a significant third sector role on public finance dynamics. As a matter of fact, this study is one of very few quantitative attempts in illustrating how waqf interacts with the economy and its impact on government debt

The possible role of waqf in ensuring a sustainable Malaysian Federal Government debt

This paper attempts to investigate waqf as a possible instrument to reduce the Malaysian Federal Government debt. The latest Malaysian federal government debt to gross domestic product (GDP) ratio is 54.47%; more than the 50% threshold for developing economies. This increasing debt level will hurt the economy in the long run. In an effort to reduce the debt, the Malaysian government is presently selling government assets and reforming the taxation system i.e. by introducing Goods and Sales Tax (GST) on 1st April 2015. We however notice that there is an alternative solution from Islamic economics which complies with the Shari’ah law. The alternative is waqf. This paper provides a conceptual framework of the possibility of waqf with respect to its role in federal government debt sustainability. Firstly, the aspect at which waqf can contribute to federal government debt reduction is presented. Secondly, the study discusses the Shari’ah law of waqf, its contemporary issues and the management of waqf in Malaysia. Since Malaysia is a multi-religion society consisting of Muslims and non-Muslims alike, we also analyse the Shari’ah law of waqf pertaining to the non-Muslims. Finally, this paper offers suggestion of a waqf model that may be able to manage and control the federal government debt from ballooning

A proposed model for waqf financing public goods and mixed public goods in Malaysia

Purpose: The purpose of this paper is to formulate a model for waqf financing of public goods and mixed public goods in Malaysia which constitute the country’s federal government expenditures. The model is built on the basis of understanding the concept of waqf, learning from waqf institutions of the past and present and addressing specific Malaysian waqf issues. Design/methodology/approach: This study uses both primary and secondary data. The primary data originate from semi-structured interviews of waqf academicians from the Islamic economics and Islamic finance fields, waqf government officials and private sector institutions that are involved in waqf management. The secondary data come from the Malaysian Federal Constitution, law enactments, books, e-books, bulletins, journals, conference proceedings, government reports and websites. Findings: By synthesizing the data, it is found that return from cash waqf investment in unit trust can be used to finance 11 items of federal government expenditures. The overall process can be managed by Yayasan Waqaf Malaysia through a collaboration with an Islamic unit trust firm. Practical implications: This research shows how waqf can practically assist the Malaysian federal government in financing public goods and mixed public goods. It indirectly shows an alternative source of financing for these goods. Other economies can also learn and adapt from the model developed in this paper. Originality/value: This paper attempts to revive the function of waqf as a provider of public goods and mixed public goods from Islamic history. Inadvertently, this paper also introduces waqf as a possible fiscal tool

Contextualizing institutional capacity in water governance framework: a literature review

Reliable water governance will ensure the strength and sustainability of an institution. The rising needs for water warrant a thorough study of critical variables of water governance. These variables are crucial for the development of a sound institutional framework. However, there were still insufficient studies that systematically review the existing literature in this field. Hence, the current study aims to examine the key components of the institutional framework for water governance. This study was guided by PRISMA 2020 in its systematic searching strategy on three databases, namely Web of Science, Scopus, and ScienceDirect. Articles for the period of 2018–2022 were screened. The process resulted in the selection of 20 related studies which were then assessed using the Mixed-Method Appraisal Tool (MMAT). Thematic analysis was employed and three themes were identified, namely stakeholders engagement, policy and practices, and water resource management. Based on the pattern of previous studies, the study offered significant contributions to practical purposes and the body of knowledge