India's Financial Tech to launch new boarse in Bahrain

MANAMA, Jan 22 (Reuters) - India's Financial Technologies Ltd (FITE.BO) will launch a new bourse in Bahrain that will provide a secondary market for Islamic bonds, a company executive said.

The new exchange, called Bahrain Financial Exchange, has been licensed by the Gulf state's central bank and plans to start operations in the first quarter of next year, Financial Technologies' director Arshad Khan told Reuters.

Unlike conventional bonds the Islamic bond market, or sukuk, lacks a strong secondary market and most buyers hold the asset to maturity.

"This will be an opportunity to establish a secondary market where the transfer of ownership can keep happening, from buyer to seller," Khan, a director for business development in the Middle East and North Africa, said in an interview late Thursday.

"When a sukuk comes onto the market (today), banks will try to absorb it in their own portfolio, or sell it to their customers", he said.

The exchange will provide a trading platform for both Islamic and conventional products in equities, derivatives, commodities and currencies.

A strong secondary sukuk market could attract other important institutional investors such as pension funds to the sukuk market, Khan said.

"In so far, sukuk has gone to big financial players or high-end individuals, it has not gone to the retail market," he said.

Sukuk volumes dropped dramatically in 2008, hit by the global liquidity crunch. Total sukuk issuance stood at $14.9 billion, down 56 percent from 2007, according to ratings agency Standard & Poors.

Khan said he still sees fundamental demand for sukuk despite the current financial crisis. He said sovereign sukuk issuers, in particular, would be a key driver in reviving the market.

Singapore on Monday announced its first sukuk programme with a volume of $134 million to promote the growth of Islamic finance in the South East Asian city-state.

Islamic banks cater to investors who want to avoid earning or paying interest.

"There's a lot of money being aggregated or collected in Bahrain, but because local investment (opportunities) don't exist, it goes out," he said.

The small island kingdom of Bahrain has established itself as a regional banking centre on the back of Saudi oil wealth that uses Bahraini banks to invest on international markets. (Reporting by Frederik Richter; Editing by Kazunori Takada) (For Reuters content on Islamic finance, click on ISLAMIC)

President Yudhoyono calls on businessmen to remain steadfast

Batam (ANTARA News) - President Susilo Bambang Yudhoyono called on business companies operating in the free trade zones in Batam, Bintan and Karimun to remain steadfast in the current global economic crisis.

He made the appeal during a dialogue with Indonesian and Singaporean businessmen at Turi Beach Resort here on Monday evening.

"While the storm is not yet over, it is certain that exports will drop whereas Batam, Bintan and Karimun are relying on exports. So I ask for your understanding that the world market is indeed weakening and shrinking. Well this year we have to struggle to survive, so that in time later we could rise again," he said.

To ease the burden of businessmen, the President said, the government has since September 2008 cooperated with the central bank and some businessmen to issue special policies such as government regulations in lieu of laws, incentives, stimulus and others.

"They are all aimed at calming the market and reducing the burden of businessmen to maintain the real sector," he said.

To maintain the people`s buying power, the business community needs to give their contribution by reducing prices if possible, he said.

"If there is an opportunity to maintain prices or even lowering them, demands will be maintain, and there will also be buyers," he said.

The head of state said the essence of economic recession is declining demands and therefore the only way to solve the problem would be safeguarding demands.

President Yudhoyono also called on the people not to cut their spendings. "Those who can afford to buy things need to keep buying so that products from the real sector are maintained. Let us act like business is as usual in a positive sense," he said.

The President said the general elections Indonesia would hold in the near future would be one of the forms of economic movement.

"Indonesia will conduct general elections. A lot of colourful flags have been raised and in the not too distant future campaigning will be done and in April voting for legislative candidates will take place which will be followed later by presidential elections. They are business. I appeal to parties to raise as many flags as possible, make as many campaign T-shirt as possible and hold as many music performances as possible so that singers get a fortune and economy is moving," he said.

He said the government was ready to lose or to see the foreign exchange reserve to drop so long as people did not lose.

Regarding the country`s economic condition President Yudhoyono said quoting "The Economist" that it was so far so good.

"I think it was issued last week. There was a small article about Indonesia there titled "So far so good". Articles written by the Economist or the Times must have no political motives," he said.

It was said Indonesia`s economy grew 6.3 percent in 2007 and 6.1 percent in 2008. He said it showed that the real economy in 2008 still moved and so if Indonesia could withstand in 2008 it would certainly be able to do it too in 2009.

"Last year we could withstand so I hope the economic growth target that we have already revised could be achieved and I ask for your cooperation for it," he said.

The government has corrected the country`s economic growth to 4.5 and 5.5 percent.

Indonesian shares to be stagnant next week: dealers

Jakarta (ANTARA News) - Indonesian shares are likely to be little changed next week despite slashes in fuel and electricity prices, dealers said Friday.

"The market will be stagnant but volatile," analyst Suherman Santikno from Batavia Prosperindo told AFP.

"The market is driven by consumption. Good local news like fuel and electricity price cuts locally will promote consumption. But the market still look at Wall Street as a benchmark and global economic news have not been so rosy," he said.

Indonesia cut the price of subsidised fuel from Thursday to boost the buying power of Indonesians. The price of premium petrol was slashed from 5,000 rupiah (45 cents) a litre to 4,500, and diesel was reduced from 4,800 rupiah a litre to 4,500.

"The support level for next week is 1,300 and the resistance level is 1,400," Santikno said.

Dealers said the price cuts would reduce inflation and interest rates, and will benefit the banking and property sectors.

Indonesian shares ended 1.5 percent higher Friday following gains across most Asian markets.

The rupiah ended at 11,225 to the dollar compared with 11,210 the day before.

Hillary Clinton recognizes Indonesia`s economic role

Jakarta (ANTARA News) - Senator Hillary Rodham Clinton in her statement when testifying as secretary of state nominee at the US Senate`s Foreign Relations Committee in Washington DC, last Tuesday (jan. 13), recognized Indonesia`s role in dealing with the global economic crisis.

"We know that emerging markets like China, India, Brazil, South Africa, and Indonesia are feeling the effects of the current crisis. We all stand to benefit in both the short and long term if they are part of the solution, and become partners in maintaining global economic stability," she said.

"For too long, we have merely talked about the need to engage emerging powers in global economic governance; the time to take action is upon us. The recent G-20 meeting was a first step, but developing patterns of sustained engagement will take hard work and careful negotiation," she added.

Indonesia`s President Susilo Bambang Yudhoyono attended the G-20 Summit on the global economic crisis which was held in Washington DC, last November 2008.

In her statement Hally Clinton also recalled President-elect Obama`s mother, Ann Dunham, who had worked in Indonesia from late 1960s until early 1990s. Clinton called Ann Dunham as a pioneer in micro finance in Indonesia.

"As a personal aside, I want to mention that President-elect Obama`s mother, Ann Dunham, was a pioneer in micro finance in Indonesia. In my own work on micro finance around the world - from Bangladesh to Chile to Vietnam to South Africa and many other countries - I`ve seen firsthand how small loans given to poor women to start small businesses can raise standards of living and transform local economies," she said.

"President-elect Obama`s mother had planned to attend a micro finance forum at the Beijing women`s conference in 1995 that I participated in. Unfortunately, she was very ill and couldn`t travel and sadly passed away a few months later. But I think it`s fair to say that her work in international development, the care and concern she showed for women and for poor people around the world, mattered greatly to her son, and certainly has informed his views and his vision. We will be honored to carry on Ann Dunham`s work in the months and years ahead," she said.

The Senate is expected to confirm Hillary Clinton as the new US Secretary of State after the presidential inauguration of Barack Obama on January 20, 2009.

General Electric

The world admired company in writing that the company is admired the world based on a survey of Fortune magazine since 1997 up to 2008 to 10,000, including 500 companies from the Fortune global top and the companies that have a minimum income of 8 billion U.S. dollars. The nine criteria used to assess a company admired the world consists of quality management, quality of products and services, innovation, long-term investment value, echo financial, human resources management, the responsibility to the community and environment, wise use company assets and the ability to enter global markets .
The company ranked second in 2008 admired the world's version of Fortune magazine, is General Electric. General Electric, which has merusahaan develop, produce and market the products of various plants, transmission, distribution, control and the empowerment of electricity since the company was formed in 1892. Founder of the company is Thomas Alfa Edison. Products from these companies include household appliances, lighting, industrial automation, medical equipment, technology and sparasi Bioscience, equipment control and distribution of electricity, engine, generator, fuel and nuclear energy, jet engine commercial and military equipments, chemical and empowerment water, equipment and security systems and engineering materials, such as plastic and Silicon. Business run include Infrastructure, Industrial, health care, NBC Universal, Commercial Finance and Consumer Finance. The Company operates in North America, Europe, Asia and South America. At the end of 2006, General Electric has 163.4 billion dollars in income the United States and has nearly 316,000 employees and who is sekitar161.000 employees in the United States. In 2008, is led by Jeffrey R. Immelt as CEO / Chairman of the Board / Director

The Contribution Revolution: Letting Volunteers Build Your Business

Many internet superstars owe much of their success to the active and passive contributions made by countless people from outside their organizations. Think, most obviously, of Facebook profiles, eBay goods, YouTube videos, Wikipedia entries, and, less obviously, of the aggregated buying behavior underlying Amazon recommendations and the donated use of personal-computer resources underpinning Skype’s internet-based phone network.
Facebook is a social networking website launched on February 4, 2004. The free-access website is privately owned and operated by Facebook, Inc. Users can join networks organized by city, workplace, school, and region to connect and interact with other people. People can also add friends and send them messages, and update their personal profile to notify friends about themselves. The website's name refers to the paper facebooks depicting members of a campus community that some US colleges and preparatory schools give to incoming students, faculty, and staff as a way to get to know other people on campus. Mark Zuckerberg founded Facebook while he was a student at Harvard University. Website membership was initially limited to Harvard students, but was expanded to other colleges in the Ivy League. It later expanded further to include any university student, then high school students, and, finally, to anyone aged 13 and over. The website currently has more than 120 million active users worldwide.
eBay Inc. is an American Internet company that manages eBay.com, an online auction and shopping website in which people and businesses buy and sell goods and services worldwide. In addition to its original U.S. website, eBay has established localized websites in thirty other countries. eBay Inc. also owns PayPal, Skype,StubHub, Kijiji,and other businesses.The online auction website was founded in San Jose, California, on September 3, 1995, by French-born Iranian computer programmer Pierre Omidyar as AuctionWeb,part of a larger personal site that included, among other things, Omidyar's own tongue-in-cheek tribute to the Ebola virus.In 1997, the company received approximately $5 million in funding from the venture capital firm Benchmark Capital.
YouTube, LLC is a video sharing website where users can upload, view and share video clips. YouTube was created in February 2005 by three former PayPal employees.In November 2006, YouTube was bought by Google Inc. for 1.65 billion dollars, and is now operated as a subsidiary of Google. The company is based in San Bruno, California, and uses Adobe Flash Video technology to display a wide variety of user-generated video content, including movie clips, TV clips and music videos, as well as amateur content such as video blogging and short original videos. Most of the content on YouTube has been uploaded by members of the public, although media organizations including CBS and the BBC offer some of their material via the site.YouTube was founded by Chad Hurley, Steve Chen and Jawed Karim, who were all early employees of PayPal.Hurley studied design at Indiana University of Pennsylvania, while Chen and Karim studied computer science together at the University of Illinois at Urbana-Champaign.
Amazon.com, Inc.is an American electronic commerce (e-commerce) company in Seattle, Washington. It is America's largest online retailer, with nearly three times the internet sales revenue of runner up Staples, Inc.Jeff Bezos founded Amazon.com, Inc. in 1994, and launched it online in 1995. Amazon.com started as an on-line bookstore, but soon diversified to product lines of VHS, DVD, music CDs, MP3 format, computer software, video games, electronics, apparel, furniture, food, toys, etc. Amazon has established separate websites in Canada, the United Kingdom, Germany, France, China and Japan. It also provides global shipping to certain countries for some of its products (Wikipedia).
Cook, the founder of Intuit (maker of financial software products such as Quicken and TurboTax), challenges traditional companies to tap this emerging source of value by actively creating what he calls user contribution systems.
The user can be a customer, employee, sales prospect—or someone with no previous connection to the company at all. The contribution can be actively offered work, expertise, or information, as well as passive or even unknowing contributions, such as behavioral data that are gathered automatically as a by-product of a transaction or an activity. The system is the method, usually internet based, by which contributions are aggregated and made useful to others. Such a system creates value for a business as a consequence of the value it delivers to customers.
In this article, Cook describes the personal journey that led him to see the tremendous value in user contributions. He creates a taxonomy of the systems that can capture user contributions and shows the variety of ways in which companies from Honda to Procter & Gamble to Hyatt Hotels are leveraging them. And, drawing on his successes and failures in trying to put them to work at Intuit, he offers advice on how business leaders can catalyze action to create user contribution systems in their own organizations.

Source : Harvard Business Review

Practice of Finance: Islamic Finance at MIT Sloan School of Management

The MIT Sloan School of Management, based in Cambridge, Massachusetts, is one of the world’s leading business schools — conducting cutting-edge research and providing management education to top students from more than 60 countries. The School is part of MIT’s rich intellectual tradition of education and research.

MIT Sloan began in 1914 as engineering administration curriculum in the MIT Department of Economics and Statistics. The scope and depth of this educational focus have grown steadily in response to advances in the theory and practice of management to today’s broad-based management school.

A program offering a master’s degree in management was established in 1925. The world’s first university-based executive education program — the MIT Sloan Fellows — was created in 1931 under the sponsorship of Alfred P. Sloan, Jr., an 1895 MIT graduate who was then chairman of General Motors. A MIT Sloan Foundation grant established the MIT School of Industrial Management in 1952 with a charge of educating the “ideal manager.”

MIT Sloan School of Management teach subjects of Islamic Finance.
Description: Islamic financial institutions have in recent years experienced spectacular growth (+25 percent in 2006, +37 percent in 2007). Islamic financial assets now exceed 1 trillion dollars and what was once a small niche has gone mainstream. Indeed, most major Western financial institutions are involved in one way or another in Islamic finance. The first part of the course introduces the basic principles underlying the industry (the prohibitions of riba, gharar, etc.) and discusses its recent evolution. The second part focuses on the main Islamic products: murabaha, mudaraba, musharaka, ijara, sukuk, takaful, etc. and explains how Islamic deals are structured. The third part discusses the challenges — competitive, regulatory, political, religious, etc. — faced by Islamic institutions and considers the impact of the current financial meltdown on their future evolution.

Development of a Strategy

In Webter's New World Dictionary, the definition of the strategy is the science of planning, and the determination of the direction of military operations, large scale. Strategy is how to propel the team to the most advantageous position before the actual battle with the enemy. Multidevisional big business, usually have a three-level strategy, namely the corporate strategy, business strategy and functional strategy. Corporate strategy describes the overall direction of the company about the company's general attitude towards the growth and management of various business and product lines to achieve a balance portfolio of products and services.
Corporate strategy consists of a single business corporate strategy, and a multi-business corporate strategy. A single corporate business strategy is a corporate strategy, a growth-oriented and industry that will be the place to compete. Meanwhile, a multi-business corporate strategy not only in growth-oriented and industry, that will be the place to compete, but also the management of its business units to achieve synergy.
Business strategy, or competitive strategy, usually developed in the level of division and the emphasis on the improvement of the position of competing products or services companies in specific industries or market segments served by the division. Although many kinds of strategies that are available. Michael Porter has been summarizing strategy into three general types that provide a good beginning for strategic thinking: overall cost leadership, differentiation, and focus.
According to Hamel and Prahalad in his book Competing for the Future, the future competition is a competition will come to dominate and create the opportunities that arise. Creating the future is more than just capture the opportunities that we have set previously. Our objective is not only imitate the products, processes and methods of our competitors, but how to create opportunities for the future and take advantage of these opportunities.
W. Chan Kim and Renee Mauborgne said that the Red Ocean Strategy is no longer effective to create growth and profits in the future. They are proposing a new strategy called the Blue Ocean Strategy. Blue Ocean Strategy, considers that compete is to create market space that is not their. The market is very widely as "blue ocean".
While the strategy is on the third level of functional strategies. The strategy emphasizes the functional, especially in the optimization of resources productivity, for example, marketing strategy, financial strategy, human resource strategy, operating strategy and the strategy of research and development.

Best International Islamic Bank : HSBC Amanah (Euromoney)

HSBC Amanah is the global Islamic banking division of the HSBC Group, and was established in 1998 with the aim of making HSBC the leading provider of Islamic banking worldwide. With more than a hundred professionals serving the Middle East, Asia Pacific, Europe and the Americas, HSBC Amanah represents the largest Islamic banking team of any international bank.
HSBC has a rich tradition of community banking, and HSBC Amanah was established to serve the particular financial needs of Muslim communities. Our mission statement and corporate values reflect this vision.
The HSBC Amanah mission statement:
HSBC Amanah is committed to improving the lives of our customers worldwide by providing them with the highest quality Islamic banking solutions.

HSBC Amanah´s corporate values:
In developing our products and services, we are committed to the highest Shariah standards in the Islamic banking industry. We constantly strive to address the needs and concerns of our customers. Our teamwork with HSBC colleagues around the world harnesses the knowledge and resources of HSBC Group for the benefit of our customers. We are an organisation that demands and rewards excellence. We maintain high ethical standards in our business relationships and invest in the future of our communities.
HSBC Amanah considers Shariah compliance of its business operations as its most important & strategic priority. This is reflected in its Corporate Values, "In developing our products and services, we are committed to the highest Shariah standards in the Islamic banking industry." In addition to Global Shariah Advisory Board and Regional Shariah Committees, HSBC Amanah employs a team of qualified professionals to ensure that the guidance and advice received from the Shariah Committees is implemented in letter and spirit.
HSBC Amanah Global Shariah Advisory Board
The Global Shariah Advisory Board (GSAB) advises HSBC Amanah on research activities intended for further development of the Islamic finance industry. GSAB comprises of representative scholars from all Regional Shariah Committees (RSC) of HSBC Amanah in addition to other Shariah scholars of international standing. The presence of renowned scholars from various geographies at GSAB will provide an opportunity to achieve further harmonization of Shariah standards and practices of Islamic Finance Industry. The following independent Shariah scholars are currently members of GSAB.
Sheikh Justice (Retd.) Muhammad Taqi Usmani (Pakistan, Sheikh Hussain Hamid Hassan (Egypt), Dr. Muhammad Achmad Sahal Mahfudh (Indonesia), Dr. Mohammed Daud Bakar (Malaysia), Sheikh Dr. Mohamed Ali Elgari (Saudi Arabia), Sheikh Nizam Yaquby (Bahrain),and Dr. Mohammad Akram Laldin (Malaysia)
HSBC Amanah operations are closely supervised by four Regional Shariah Committees (RSCs) in addition to a Central Shariah Committee (CSC). The CSC supervises HSBC Amanah businesses as well as operations in UAE, Qatar, UK, USA and Bangladesh. The CSC comprises of following well-known scholars: Sheikh Nizam Yaquby, Sheikh Dr. Mohamed Ali Elgari and Sheikh Dr. Muhammad Imran Ashraf Usmani.

HSBC Amanah operations in Saudi Arabia, Malaysia, Indonesia and Singapore are supervised by following independent RSCs.
HSBC Amanah has won the Euromoney 2005 awards for Best Islamic Wholesale Bank and Best for Private Banking Services.
HSBC Amanah has won the following awards:
Euromoney awards : Best International Provider of Islamic Financial Services (2004), Best International Sukuk House (2004), Best Islamic Wholesale Bank (2005), Best for Private Banking Services (2005).
Award-winning transactions : Emirates ECA-backed financing 2001, (Euromoney, Jane´s Transport Finance, Institutional Investor, Airfinance Journal), Government of Malaysia Global Sukuk - 2002,(Euromoney, Institutional Investor, Asiamoney, FinanceAsia), Emirates IV, with Islamic Development Bank - 2003 and (Jane´s Transport Finance)

Sale of Gold and Silver Against Gold and Silver

If gold is sold against gold, and silver is sold against silver, whether it is in the form of coins or otherwise, if the weight of one of them is more than that of the other, the transaction is haraam and void. If gold is sold against silver, or silver is sold against gold, the transaction is valid, and it is not necessary that their weight be equal, but if it is sold on credit or stipulated time, the transaction will be void.
If gold or silver is sold against gold or silver, it is necessary for the seller and the buyer that before they separated from each other, they should deliver the commodity, and its exchange to each other. And if even a part of the thing about which agreement has been made, is not delivered to the person concerned, the transaction becomes void.
If either the seller or the buyer delivers the stock in full as agreed, but the other person delivers only a part of his stock, and they separate from each other, the transaction with regard to the part exchanged will be valid, but the person who has not received the entire stock can cancel the transaction.
If silver dust from a mine is sold against pure silver, and gold dust from a mine is sold against pure gold, the transaction is void, unless one is sure that the quality of silver dust is equal to the quantity of pure silver. However, there is no harm in selling silver dust against gold, or gold dust against silver, as mentioned earlier.

Persons Who Have No Right of Disposal or Discretion Over Their Own Property

A child who has not reached the age of puberty, (bulugh), has no right of discretion over the property he holds or owns, even if he is able to discern and is mature, and the permission of his/her guardian does not apply in this case. However, in those cases where a Na-baligh is allowed to make a transaction, like when buying or selling things of small worth as mentioned in rule 2090, or his testament for his relatives and kinsmen, as will be explained in rule 2706, the right can be exercised. A girl becomes baligha upon completion of her nine lunar years, and a boy is baligh when stiff pubic hair grow, or when he discharges semen, or upon completion of fifteen lunar years.
Growing of stiff hair on the face and above the lips may be considered as signs of bulugh, but their growth on chest and under the armpits, and the voice becoming harsh etc. are not the signs of one's reaching the age of puberty, except that one may become sure of having reached the age of puberty due to these changes.
An insane person has no right of disposal over his property. Similarly, a bankrupt (i.e. a person who has been prohibited by the Mujtahid to dispose of or have discretion on his property because of the demands of his creditors) cannot dispose his property without the permission of the creditors. And a feeble-minded person (Safih) who squanders his property for useless purposes, has no right of disposal or discretion over his property.
If a person is sane at one time and insane at another, the right of discretion exercised by him during his lunacy will not be considered valid.
A dying man in his terminal illness can spend his own wealth on himself, on the members of his family, his guests and on other things as much as he likes, provided that, it is not considered to be extravagance on his part. Also, he can sell his property at its proper value, or hire it. But if he gives away his property as gift, or sells it at a lower price than usual, it will be valid if the property gifted or sold cheap is equal to or less than 1/3 of his estate. And if it is more, it will be valid only if the heirs allow, and if they do not, then whatever he spent in excess of 1/3 of his estate will be considered void.

Individual Obligations, Rights and Self-Interests

In Islam man is charged with certain obligations toward his Creator, nature, himself and other human beings, all of which are outlined by the shari’ah. When these obligations are fulfilled, certain rights and freedoms, which are also delineated by the shari’ah, are gained. Limitations which are imposed by the shari'ah on the rights and freedom of the individual are in the direction of removing certain negative possibilities from the human life. The obligations, rights and limitations defined by the shari'ah must be observed if the individual and the system are to have an Islamic identity.
Within the framework of the shari’ah, and as a result of the Islamic concept of justice, the individual has the right to pursue his economic interests. Pursuing one's economic interests, within the framework of the shari’ah , is first an obligation and a duty, then a right which no one can abrogate. So long as the individual has the ability, the right of pursuing his economic interests is, concomitantly, extended to him. What is, however, significant is the fact that i f power and ability to pursue one's economic interests is lacking, the responsibility is no longer incumbent upon the person, while his rights are still preserved. II The right to economic benefits is never negated as a result of the lack of the ability of the individual to undertake his duty of pursuing his economic interests. The potential right remains even if a person is unable to actualize it. Conversely, if the person is able but does not perform his obligations, then his rights are abrogated.
According Khan and Mirakhor, In Islam, contrary to popular opinion, self-interest is not negated. Islam, in fact, considers it as a primary factor in its incentive/motivation system; a necessity in any organized society if the individual is to find it utility maximizing to follow behavioural rules prescribed by the system. Provided that self-interest is defined to cover spiritual and temporal, or temporary and eternal, all rules in the shari'ah carry with them their own justification in terms of individual self-interest. It is for his own benefit, material and spiritual, in this world and for his ultimate salvation in the next that the individual is invited to follow the rules of the shari’ah. This is made amply clear by the Qur'an in which all injunctions are generally coupled by the assertion that compliance with them with by the individual is for his own benefit.13 Often the incentive and the rewards, both here and in the hereafter, for compliance and th e retributions for non-compliance are enumerated. It is in pursuit of self-interest that individual obligations and rights as well as the limits to these rights are specified by the shari’ah.

Conditions Regarding the Property Given on Lease

The property which is given on lease, should fulfil certain conditions:
(i) It should be specific. Hence, if a person says to another: "I have given you one of my houses on lease", it is not in order.
(ii) The person taking the property on lease should see it, or the lessor should give its particulars in a manner which gives full information about it.
(iii) It should be possible to deliver it. Hence, leasing out a horse which has run away, and the hirer can not possess it, will be void. However, if the hirer can manage to get it, the lease will be valid.
(iv) Utilisation of the property should not be by way of its destruction or consumption. Hence, it is not correct to give bread, fruits and other edibles on lease for the purpose of eating.
(v) It should be possible to utilise the property for the purpose for which it is given on lease. Hence, it is not correct to give a piece of land on lease for farming, when it does not get sufficient rain water, and is also not irrigated by canal water.
(vi) The thing which a person gives on lease should be his own property, and if he gives the property of another person on lease, it will be correct only if its owner agrees to it.
It is permissible to give a tree on lease for utilising its fruit, although fruit may not have appeared on it yet. The same rule applies if an animal is given on lease for its milk.
A woman can be hired for her milk, and it is not necessary for her to obtain her husband's permission. However, if her husband's right suffers owing to her giving milk (to the child of another person), she cannot take up the job without his permission

THE FAMOUS MARKET PRE-ISLAMIC : OKAZ

In pre-Islamic times, Taif was home to the most famous of annual fairs anywhere on the Arabian peninsula. The Suq Okaz took place on what is now a rolling desert plain north of Taif. This fair occurred during the first 20 days of Dhu Al-Qadah, the eleventh month of the year. During Dhu Al-Qadah, Dhu Al-Hajjah and Muharram — respectively the eleventh, twelfth and first months of the year — as well as Rajab, the seventh month of the year — all warfare and raiding was banned. This allowed the residents and merchants of the region the necessary security to travel. Traders brought goods via camel and donkey to the Suq Okaz. Bedouin crafts such as rugs, camel-hair tents, sheepskins, pottery, tools, jewelry, perfumes, produce and spices were sold. Included in this colorful spectacle of the souq were poets and singers who came to participate in contests of their talents. According to Saudi archaeologists who have studied the area, it is believed that the Suq Okaz lasted until sometime around 760 AD.
OKAZ is the most famous ancient market in the Arabian Peninsula. It got its name from what Arabs used to do there — they bragged about their own achievements and ancestors. The market is first recorded in 500 B.C. The Quraish, a famous Arab tribe to which the Prophet Muhammad (pbuh) belonged came up with the idea of having a place where Arabs could gather and be united against any enemies. They selected the location at Okaz, between the two famous cities of Makkah and Taif. The place is called Al-Athdia, and the market began when pilgrims arrived in Makkah and went on for four months. The Arabs had specified those particular months during which they agreed that they would not use weapons or initiate wars. To them, this was a good idea since it would guarantee a safe environment for trading and other activities.
In comparison to modern malls, the Okaz market did not only offer goods for sale. Visitors had many things to do besides shopping. They challenged each other to see who could make the best Arabic poems; they boasted the achievements of their tribes and they also attempted to settle inter-tribal disputes and disagreements. Since the market offered so many cultural activities it helped to preserve and protect the Arabic language, helped to produce fine poems and encouraged talented poets to produce more.
The Prophet Muhammad (pbuh) visited the market for seven seasons and he attempted to tell the Arabs about Islam. Subsequently, people stopped going there and in fact, it was not known for sure exactly where the market was. King Faisal ibn Abdul Aziz ordered specialists and scientists to identify the location by looking back at ancient records and historical documents. The location of Okaz was finally located — near Taif in a place known as Al-Athdia.
After 1300 years the market is going back to operate again this year. It is witnessing a revival as the Governor of Makkah, Prince Khalid Al-Faisal, the son of King Faisal, has officially opened it and the government has planned a number of activities there. The events will last for 7 days and will include the sale of different goods and materials, both traditional and modern. There are also old Arabic poems written in gold and posted for visitors to see, along with an songs sung by famous Arab singers.
The market includes a special area for selling traditional food and has a location for children’s activities. Men can enjoy cultural events taking place in different tents, while women can also enjoy activities in a tent assigned to them. There are also handicrafts and perfumes made from the famous flowers of Taif. The tents where the activities take place bear the names of the most famous Arab poets during the pre-Islamic and Islamic periods. Among the names is Al-Nabiga Al-Dubiani who used to judge the poems presented in Okaz, Hassan ibn Thabit who used his poetic talents to protect Islam and praise it, and Al-Khansa, a Muslim woman poet who was well known for her fine elegies.

Conditions for Contract by Advance Payment

Purchase by advance payment means that a buyer pays the price of a commodity, and takes its possession later. Hence, the transaction will be in order, if, for example, the buyer says: "I am paying this amount so that I may take possession of such and such commodity after six months", and the seller says, "I agree", or the seller accepts the money and says: "I have sold such and such thing and will deliver it after six months".
If a person sells, on advance payment basis, coins which are of gold and silver, and takes gold or silver coins in exchange for them, the transaction is void. But, if he sells a commodity or money which is not of gold and silver, and takes another commodity, or gold or silver money in exchange, the transaction is in order if it conforms with the seventh condition of the rule which follows. And the recommended precaution is that one should take money and not other commodity in exchange for the commodity sold.
There are seven conditions of advance payment contract:
(i) The characteristic, due to which the price of a commodity may vary, should be specified. However, it is not necessary to be very precise, it will be sufficient if it can be said that its particulars are known.
(ii) Before the buyer and the seller separate from each other, the buyer should hand over full amount to the seller, or if the seller is indebted by way of cash to the buyer for an equivalent amount, the buyer can adjust it against the price of the commodity, if the seller agrees to it. And if the buyer pays certain percentage of the price of that commodity to the seller, the transaction will no doubt be valid equal to that percentage, but the seller can rescind the transaction.
(iii) The time-limit should be stipulated exactly. If the seller says that he would deliver the commodity when the crop is harvested, the transaction is void, because, in this case, the period has not been specified exactly.
(iv) A time should be fixed for the delivery of the commodity when the seller is able to deliver it, regardless of whether the commodity is scarce or not.
(v) The place of delivery should be specified. However, if that place becomes known from their conversation, it is not necessary that its name should be mentioned.
(vi) The weight or measure of the commodity should be specified. And there is no harm in selling through advance payment contract, a commodity which is usually bought and sold by sight. However, for such a deal, one must be careful that the difference in the quality of individual items of the commodity must be negligibly small, like in the cases of walnuts and eggs.
(vii) If the commodity sold belongs to the category which is sold by way of weight and measure, then it must not be exchanged for the same commodity. In fact, as an obligatory precaution, it must not be exchanged for any other commodity which is sold by weight and measure. And if the commodity sold is the one which is sold by counting, then as a precaution, it is not permissible to exchange it for the same commodity in increased number.

THE ANCIENT BAHRAIN

During the emergence of Islam in the sixth century (until early in the sixteenth century) Bahrain referred to the wider historical region of Bahrain stretching on the Persian Gulf coast from Basrah to the Strait of Hormuz. This was Iqlīm al-Baḥrayn, i.e. the Province of Bahrain, and the Arab-Iranian inhabitants of the province were descendants of the Arab tribe Bani Abd al-Qais. This larger Bahrain comprised three regions: Hajar (present day Al-Hasa in Saudi Arabia), Al-Khatt (present day Al-Qatif in Saudi Arabia) and Awal (present day Bahrain). The name Awal remained in use, probably, for eight centuries. Awal was derived from the name of an idol that used to be worshipped before Islam by the inhabitants of the islands. The centre of the Awal cult was Muharraq.

Bahrainis were amongst the first to embrace Islam. Mohammed ruled Bahrain through one of his representatives, Al-Ala'a Al-Hadhrami. Bahraini embraced Islam in 629 (the seventh year of hijra). Al Khamis Mosque, founded in 692, was one of the earliest mosques built in Bahrain, in the era of Umayyad caliph Umar II.

The expansion of Islam did not affect Bahrain's reliance on trade, and its prosperity continued to be dependent on markets in Mesopotamia. After Baghdad emerged as the seat of the caliph in 750 and the main centre of Islamic civilization, Bahrain greatly benefited from the city's increased demand for foreign goods especially from China and South Asia.

Bahrain became a principal centre of knowledge for hundreds of years stretching from the early days of Islam in the sixth century to the eighteenth century. Philosophers of Bahrain were highly esteemed, such as the 13th Century mystic, Sheikh Maitham Al-Bahrani (died in 1299). (The mosque of Sheikh Maitham together with his tomb can be visited in the outskirts of the capital, Manama, near the district of Mahooz).

Buyyid dynasty of Iran, reunited much of the country including Bahrain, after controlling Abbasid caliphs at Baghdad, and remained part of Iranian realm until 1522 when Portuguese invaded the Island and overthrown the Governor called Jaboor. In 1602 at the time of soaring power of Safavid dynasty, Iranian forces defeated Portuguese in ports and islands of Hormoz and expelled them from Bahrain and reunited the islands with the mainland once again.[5]

During this period Bahrain was administered by the tribes of Iranian origin of “Havāleh” in Zebāreh In northern of Qatar Peninsula, when Zebareh was herself under the rule of Government of Fars. Towards the end of Safavid periods though Zebareh Government was ruled namely by Iran, but mostly it was an obstinate and inattentive Government to the centre.

Circumstances in Which One Has a Right to Cancel a Transaction

The right to cancel a transaction is called Khiyar. The seller and the buyer can cancel a transaction in the following eleven cases:
(i) If the parties to the transaction have not parted from each other, though they may have left the place of agreement. This is called Khiyarul majlis.
(ii) If the buyer or the seller has been cheated in a sale transaction, or in any other sort of deal, either of the parties has been deceived, they have a right to call off the deal. This is called Khiyar of Ghabn. This Khiyar stems from the fact that each side in any deal wishes to ensure that he does not receive less than what he has given, and if he has been cheated, he should have the right to back out. But if one has in mind that if he is given less than what he has delivered, or is paid less than what he deserves, he will ask for the difference, he should first demand the difference before cancelling the deal.
(iii) If while entering into a transaction, it is agreed that up to a stipulated time, one or both the parties will be entitled to cancel the transaction. This is called Khiyarush Shart.
(iv) If one of the parties presents his commodity as better than it actually is, and thereby attracts the buyer, or makes him more enthusiastic about it. This is called Khiyar tadlis.
(v) If one of the parties to the transaction stipulates that the other would perform a certain job, and that condition is not fulfilled. Or if it is stipulated that the commodity will be of particular quality, and the commodity supplied may be lacking in that quality. In these cases, the party which laid the condition can cancel the transaction. This is called Khiyar takhallufish shart.
(vi) If the commodity supplied is defective. This is called Khiyarul 'aib.
(vii) If it transpires that a quality of the commodity under transaction is the property of a third person. In that case, if the owner of that part is not willing to sell it, the buyer can cancel the transaction, or can claim back from the seller the replacement of that part, if he has already paid for it. This is called Khiyarush shirkat.
(viii) If the owner describes certain qualities of his commodity which the buyer has not seen, and then the buyer realises that the commodity is not as it was described, the buyer can rescind the deal. Similarly, if the buyer may have seen the commodity sometimes back, and purchases it thinking that the qualities it had then will be still existing, and if he finds that those qualities have disappeared, he has a right to cancel the deal.
(ix) If the buyer does not pay for the commodity he has bought for three days, and the seller has not yet handed over to him the commodity, the seller can cancel the transaction. But this is in the circumstance when the seller had agreed to allow him time for deferred payment, without fixing the period. And if the seller had not at all agreed on deferred payment, he can cancel the transaction at once, without any delay. And if he had allowed him more than three days' credit, then the seller cannot rescind the deal before the termination of three days. If the commodity is perishable, like fruits, which would perish or decay if left for one day, and the buyer without any prior condition, does not pay till nightfall, the seller can cancel the transaction. This is called Khiyarut ta'khir.
(x) A person who buys an animal, can cancel the transaction within three days. And if a person sold his commodity in exchange for an animal, he can also cancel the transaction within three days. This is called Khiyarul haywan.
(xi) If the seller is unable to deliver possession of the thing sold by him, like, if the horse sold by him runs away and disappears, he can cancel the transaction. This is called Khiyarut ta'azzurit taslim.
If a buyer does not know the price of the commodity, or was unconcerned about it at the time of purchase, and buys the thing for higher than usual price, he can cancel the transaction if the difference of price is substantial, and if the difference is established at the time of abrogation. Otherwise, the buyer cannot cancel the deal. Similarly, if the seller does not know the price of the commodity, or was headless about it at the time of selling, and sells the thing at a cheaper price, he can cancel the deal if the difference is substantial and if other conditions mentioned above obtain. In a transaction of "Conditional sale", for example, a house worth $2000 is sold for $1000, and it is agreed that if the seller returns the money within a stipulated period, he can cancel the transaction, the transaction is in order, provided that the buyer and the seller had genuine intention of purchase and sale.
In a transaction of "Conditional sale", if the seller is sure that even if he did not return the money within the stipulated time, the buyer will return the property to him, the transaction is in order. However, if he does not return the money within the stipulated time, he is not entitled to demand the return of the property from the buyer. And if the buyer dies, he (the seller) cannot demand the return of the property from his heirs. If a person mixes inferior tea with superior tea, and sells it as a superior tea, the buyer can cancel the transaction.
If a buyer finds out that the thing purchased by him is defective, like, if he purchases an animal and finds that (after purchasing it) it is blind of an eye, and this defect existed before the transaction was made, but he was not aware of it, he can cancel the transaction and return the animal to the seller. And if it is not possible to return it, for example, if some change has taken place in it, or it has been used in such a manner that it cannot be returned, the difference between the value of the sound property and the defective property should be assessed, and the buyer should get refund in that proportion of the amount paid by him to the seller. For example, he has purchased something for $4 and finds out that it is defective. Now the price of the thing in perfect, faultless state is $8 and that of deficient is $6, the difference between these two prices will be assessed at 25%. The buyer will be paid 25% of what he actually paid, and that will be one dollar.
If a seller comes to know that what he received in exchange for his property is defective, and that defect was present in it before the transaction, but he was not aware of it, he can cancel the transaction, and can return it to its owner. And if he cannot return it due to change or disposal having taken place, he can obtain the difference between the faultless and the defective thing, according to the above mentioned rule.
If a defect takes place in the property after concluding the transaction, but before delivering it, the buyer can cancel the transaction. Similarly, if some defect is found in what is taken in exchange for the property, after concluding the transaction but before delivering it, the seller can cancel the transaction. But if both sides wish to settle by taking the difference between the prices, it is permissible, if returning of the articles involved is not possible.
If a person comes to know about the defect after concluding the transaction, it is necessary for him to cancel the transaction at once; and if he delays for unusually long time, he cannot cancel the transaction. Of course, various circumstances must be taken into consideration for the delay. If a person comes to know about the defect in a commodity after purchasing it, he can cancel the transaction even if the seller is not present. And the same order applies to all transactions involving the options.
In the following four cases the buyer cannot cancel the transaction because of defect in the property purchased by him, nor can he claim the difference between the prices:
(i) If at the time of purchasing the property, he is aware of the defect in it.
(ii) If he does not object to the defect in the property.
(iii) If at the time of concluding the contract, he says: "Even if the property has a defect I will neither return it nor claim the difference between the prices".
(iv) If at the time of concluding the contract, the seller says: "I sell this property with whatever defect it may have". But, if he specifies a defect and says: "I am selling this property with this defect", and it transpires later that it has some other defect as well, which he did not mention, the buyer can return the property due to that defect, and if he cannot return it, he can take the difference between the prices.
If a buyer knows that there is a defect in the property, and after taking possession of it another defect appears in it, he cannot cancel the transaction, but he can take the difference between the prices of the defective and the faultless property. But, if he purchases a defective animal, and before the expiry of the period of Khiyar (i.e. option to cancel a transaction) which is three days, another defect appears in the animal, the buyer can return it, even if he may have taken delivery of it. And if only the buyer was given the option to cancel the deal within a fixed period, and another defect appears in the animal during that period, the buyer can cancel the transaction, even if he may have taken delivery of the animal. If a person owns some property which he himself has not seen, but another person has described its particular to him, and he mentions the same particulars to the buyer and sells the property to him. Later on, he learns after selling that the property was better than what he knew about it, he can cancel the transaction.

Productivity and Expertise in Islam

Rasulullah s.a.w. while productivity than just ownership. He pleased Jabir bin Abdullah, the Prophet of Allah shower once said: "Whoever has the land, then plant the farm or so planted by his brother and do not you rent the farm " (Bukhari and Muslim). Even in the importance of this productivity, from she pleased, shower warn him once said: "Whoever is using a land that does not belong to someone, then it is entitled to have them." Urwah said the same thing also defined by Umar when a caliph (Bukhari, Abu Daud and Turmudzi). Similarly from Ibn Umar said: "Rasulullah s.a.w. recruit Khaibar’s people to develop plantation with half the wages from the planted fruit. "(Bukhari and Muslim).

Allah and His Messenger told each person to have expertise. Surah Saba 'verses 10-11: And undoubtedly, We gave to Daud a great grace from Us. O mountains! Turn towards Allah with him and O birds! and We made the iron soft for him. That make wide coats of mail and keep regard of the measurement in making, and you all do righteousness, Undoubtedly, I am seeing your works.
Rasulullah s.a.w. said: "It is not a person eating food that is better than the results of its own sweat (work) and indeed the prophet of Allah SWT., as David always eat the results of its own sweat (Bukhari).

Islamic Banking: Opportunity or Threat?

According Rodney Wilson, director of postgraduate studies at Durham University's Institute for Middle Eastern and Islamic Studies, Islamic banking, which implies the avoidance of interest, has become a substantial industry during the last four decades. One obvious question is whether its emergence further segregates Muslims from Western values and norms, creating a financial ghetto. An alternative view is that as increasing numbers of people in the West are dissatisfied or skeptical about the banking services they receive, and see them as exploitative or even unethical, the emergence of Islamic banking with its own distinctive morality results in Islam projecting a much more positive face.

Many Western bankers view Islamic finance as a curiosity, and perhaps even a business opportunity, but seldom as a threat comparable to that from Muslim extremism. Indeed, Islamic banking and finance can be regarded as a gentler aspect of Islam, and one that lends itself to dialogue between Westerners and Muslims.

Islamic retail financial institutions, including the Islamic Bank of Britain, the European Islamic Investment Bank, and Lariba Bank in California, are now well-established in a number of Western countries. Furthermore, the leading international banks, including Citibank, HSBC Amanah, Deutsche Bank and UBS of Switzerland, all offer Islamic deposits and Shari'a-compliant financing facilities.

There has been much dialogue between the Western bankers working in these institutions and the Shari'a scholars who advise what is, and what is not, permissible. This dialogue extends to insurance, where Islamic takaful companies have become increasingly active, their distinguishing feature being that they do not hold conventional interest-yielding bonds, and that shareholder funds and premiums paid by policy holders cannot be co-mingled, which could result in the former exploiting the latter's misfortune.
As Shari'a is about universal, divinely inspired principles rather than national laws, leading international law firms have also become involved in Islamic banking and finance, as contracts need to be drafted under English or American law in a way that is consistent with Shari'a. Indeed, the main job of the Shari'a committee members who serve on the boards of Islamic banks and conventional banks offering Islamic products is to ensure that new contracts are compatible with Shari'a principles and, if they are not, to pursue a dialogue with the lawyers concerning amendments and redrafting.

The aspiration of many Islamists is to have divinely inspired Shari'a replacing man-made laws, perhaps even the establishment of a universal caliphate under which everyone, Muslim and non-Muslim, should live. Not surprisingly, such an aspiration is unacceptable for most non-Muslims, and indeed for many Muslims, as it denies choice.

Islamic banking and finance can point to the way forward: it is about extending choice, not restricting options. As each institution has its own Shari'a board, Shari'a compliance is effectively privatized, rather than being a matter of national law. Indeed, each Shari'a board passes its own fatwas, or religious rulings, which further extends choice in the marketplace for religious ideas. Religion, of course, flourishes under competitive conditions and Islam is no exception, whereas when it is nationalized, its adherents soon become alienated.

The Islamic Republic of Iran can be regarded as an example of how not to encourage the development of Islamic banking and finance. There, all banking has been Shari'a - compliant since the Law on Interest Free Banking was passed in 1983. Bank clients have therefore no choice but to use the Shari'a system. The banks, however are state-owned and have little autonomy, even in determining what deposit and financing products to offer. They also do not have Shari'a committees, the argument being that this is unnecessary as the law ensures Shari'a compliance in any case.

The result has been that banking development has been slow, there is little financial innovation, and most Iranians do not have bank accounts. In contrast, on the Arab side of the Gulf and in Malaysia, where Islamic and conventional banks compete, Islamic banks have attractive products on offer and a growing client base. Al Rajhi Bank of Saudi Arabia has become the world's largest Islamic retail bank, and its range of services and delivery channels compares favorably with the best that Western banks can offer.
Islamic banking is here to stay, it is an opportunity rather than a threat, and it has an exciting future. Gaps remain-there is no Islamic bank in Israel, for example, to serve its Muslim population. But if the Central Bank of Israel licensed such an entity it could create much goodwill. It might also encourage the Jewish population living there to question whether the operations of their own banks are compatible with religious teaching in Leviticus and Deuteronomy.

Ultimately Islamic banking and finance is about the emergence of a distinctively Islamic form of capitalism that may co-exist and interact with Western, Chinese, Russian or any other capitalism. Such a development should be welcomed and facilitated, and not hindered or suppressed.