Wednesday, October 29, 2008

SAC: ‘Regulations on Islamic finance should be amended’

A number of Shariah scholars who are involved in Islamic finance transactions have suggested that Bank Negara Malaysia (BNM) should effect an amendment to regulations to make it mandatory for judges to refer to the central bank's Shariah Advisory Council (SAC) when dealing with Islamic finance matters.
At the moment, High Court judges are not mandated to refer to the SAC, the anchor outfit in deciding the Shariah-compliance of banking and takaful products offered by Islamic financial institutions in Malaysia.
This issues came to light following remarks by High Court judge Justice Datuk Abdul Wahab Patail in a written ruling dated July 18 in Arab Malaysian Finance Bhd v Taman Ihsan Jaya & Others (2008).
In one of the two recent BBA judgment-related seminars, Dr Ashraf Md Hashim, Shariah adviser at ZI Shariah Advisory Sdn Bhd, said the court reference to the SAC must be made compulsory in determining the Shariah compliance status of any Islamic banking and finance product.
He said this might require amendments to the Act and therefore would take time to materialise. He believed the SAC was the best option available as far as Malaysia is concerned, and as such felt that what is allowed by the council should be accepted as Shariah-complaint by the courts.
"Shariah is a science by itself. Those who are not trained in the discipline should refer any issue in question to the expert in the field. It is the practice of the court to refer issues to relevant experts such as physicians and scientists. It will be a consistent practice if reference is made to the Shariah specialist for Shariah-related issues," he added.
Dr Ashraf was speaking at a seminar entitled Whither BBA in Malaysia? — Analysis of Recent Decisions, organised by legal firm Zaid Ibrahim & Co. ZI Shariah is a unit of Zaid Ibrahim.
However, another speaker at the same forum took a different view. Responding to the suggestion, former High Court judge Datuk Faiza Thamby Chik said there was no need for High Court judges to refer to the SAC on such matters. He contended that it was the duty of judges to interpret the law and if the ruling had created unhappiness, then the solution is to train the judges.
International Syariah Research Academy for Islamic Finance executive director Dr Mohd Akram Laldin, who also spoke at the half-day seminar, said there was a need to strengthen the role of the SAC to avoid confusion in the industry. He agreed that the SAC should be made the sole reference point on matters regarding Islamic finance, adding that the Islamic banking industry should depart from "controversial" contracts to other alternatives. (By Hablim Wahab & Habhajan Singh; The Malaysian Reserve, Oct 29, 2008, Page 4)

No comments: