Malaysia Toward an Islamic State
The Islamic Capital Market (ICM) refers to the market where the activities are carried out in ways that do not conflict with the conscience of Muslims and the religion of Islam. In other words, the ICM represents an assertion of religious law in the capital market transactions where the market should be free from the involvement of prohibited activities by Islam as well as free from the elements such as usury (riba), gambling (maisir) and ambiguity (gharar).
The ICM today is one of the components in the overall capital market in Malaysia. It plays similar important role as other capital market components in generating the economic growth of the country. The ICM has functioned as a parallel market to the conventional capital market for capital seekers and providers, and has played a complementary role to the Islamic banking system in broadening and deepening the Islamic financial markets in Malaysia.
As the market becomes more complex and sophisticated, it must possess adequate infrastructure to enable the system to operate and function more efficiently and effectively. The Commission’s early initiative towards establishing infrastructure support is reflected in the setting up of a dedicated Islamic Capital Market Unit (ICMU) within its Market Policy and Development Division. The mandate of ICMU is to carry out research and development activities including formulating and facilitating a long-term plan to further strengthen the ICM in Malaysia.
To advice the Commission on Syari’ah matters pertaining to the ICM, the Syariah Advisory Council (SAC) was established in May 1996. Members of the SAC comprise of individuals who are in a position to present Syariah opinions and those who have vast experience in the application of Syariah, particularly in the areas of Islamic economics and finance.
Today, various capital market products are available for Muslims who only seek to invest and transact in the ICM. Such products include the list of the Commission’s Syariah Approved Securities, Islamic debt securities, Islamic unit trusts, Islamic and Syari’ah Indices, warrants (TSR), call warrants and Crude Palm Oil futures contract.
ISLAMIC MARKET INDEX
Islamic Market Indexes were created for people who wish to invest according to Islamic investment guidelines. The indexes track Shari`ah compliant stocks from around the world, providing Islamic investors with comprehensive tools based on a truly global investing perspective.
What Is Islamic
Market Investing?
Certain businesses
are incompatible with Shari`ah Law. Thus, stocks of companies in these
businesses are not considered suitable for Islamic investing. Incompatible
lines of business include :
Alcohol
Pork-related products
Conventional financial services (banking, insurance, etc.)
Entertainment (hotels, casinos/gambling, cinema, pornography, music, etc.)
Shari'ah
scholars
also do not advise investments in tobacco manufacturers or defense and
weapons companies.
AMANAH SAHAM KEDAH (KEDAH ISLAMIC UNIT TRUST)
Kedah Islamic Unit Trust (ASK) is a fund which invest their money based on shari'ah value. The trading process between the ASK and the investor is done through the contract of Bai' al Naqdi, that is a cash purchase. The concept of ASK is based on the concept of wage deduction in Shariah (Al-Hujrah). To make sure the process of ASK is in line with the above principal, hence the ASK elected Shariah Advisory Board to watch the operational work of ASK. The approved investment instrument is mentioned in the Trust Deed and the prospectus of ASK. However, at this time, the ASK is not investing in any company's equity listed in the Kuala Lumpur Stock Exchange (KLSE) and money market.
