A Qualitative Enquiry into the Risk Management and Reporting Practices of Islamic Banks in Malaysia
Mamunur Rashid, Quazi Sagota Samina and Abul Bashar Bhuiyan
This study explores the risk management practices, reporting and performance of selected Islamic bank in Malaysia using single case study. Under the broad paradigm of mixed methods, one in depth interview, content analysis and ratio analysis were conducted. The result evidences a clear gap between Shariah and practice of Islamic risk management, difference in Shariah and legal remedy, and availability of credible internal control mechanism that are responsible for effective risk analysis and management. The top priority risk is the operational risk followed by market and credit risks. Risk management activities are mostly reported using annual reports. The declining return ratios with respect to the decreasing risk ratios indicate evidence of existence of conventional mean variance frontier in Islamic finance. However, this low risk low return and credit to asset ratios exhibit low risk taking tendency of the bank. As a result liquidity ratio is increasing but profitability ratio is going down. Bank has to build an internal risk management culture by training the employees and building up the internal control system more effectively.
Keywords: risk management, Islamic finance, Islamic bank and Malaysia
Optimizing HR Outsourcing through Business Strategy
Hasliza Abdul-Halim and Norbani Che-Ha
The paper aims at investigating on how HR outsourcing could be optimized by leveraging on different types of business strategy and the impact on human resource performance. Four types of business strategy, namely: quality-based, proactive, breadth and reactive were employed to test their influence on HR outsourcing. The data was gathered from survey questionnaire (232) on manufacturing organizations. The findings suggest that HR outsourcing was effective by espousing reactive business strategy. In fact, by relying on human resource outsourcing, the organisations manage to experience higher human resource performance. This study adds to the literature by providing information on HR outsourcing and business strategy.
Keywords: Human resource management, business strategy, outsourcing, performance
Business Process Re-Engineering Implementations in the High Tech Entrepreneurship Firm in Malaysia: A Study on Determinant Factors
Itad Eissa A.S.and Abdul Manaf Bohari
Basically, Business Process Re-Engineering (BPR) is critical important as a problem solving mechanism within the firms with aimed to formulates the solution. With regard to the current competitive environment, most of high tech firm are choosing this method to enhance the performance, especially in the areas of process, procedure, or rules. However, in the high tech entrepreneurship firm, to the best of knowledge, there is lacks of knowledge regarding the practical implementations of BPR. From literature survey, BPR will become more important to make the firm achieved better performance compares to before. BPR implementation will increased the performances where make the firm more competitive, efficient and proactive. The general idea of the paper is discussed on determinants factor of success in the high tech entrepreneurship firm, with specific case on the MSC status firm in Malaysia. The main purpose of this study is to identify the success factor of BPR in the high tech entrepreneurship firm. Secondly, this paper is identifying what benefit(s) that the high tech entrepreneurship firm achieves from the BPR implementation. This study was conducted among 100 high tech entrepreneurship firm that select randomly from the directory of MSC Malaysia. One of the finding has indicated that there was a significant (2 tailed significant) positive relationship between independent variables (cross functionality, BPR methods, human resource skills and expertise, and leadership/motivation) and dependent variable (benefits of BPR). In addition, the results also indicated that variable leadership and motivation factor became more significant positive relationship with benefits of BPR. Finally, suggestion was made on how to use BRP as a method to sustain the firms’ performance, accordingly to the current change of current business environment.
Keywords: Determinants, business process re-engineering, high tech entrepreneurship firm, msc status companies
Contemporary Takaful in Thailand: a Community-Empowerment Oriented Analysis
Adil Siripatana, Nabeel Husalam, Wasana Wansakhun Chitima Wanyeelae, Wisoot Binlateh and Chairat Siripatana
The current main-stream Takaful system has been developed and practiced with a great success worldwide. It is becoming a replacement of conventional assurances for the Muslims although currently its share is only a few percentage of the market. However, Fatwa on Takaful has largely ignored the essential concept of community empowerment as founded in Islamic traditions, focused mainly on head-to-head competition (or as alternative) with conventional assurances, thus may cause long-term, negative effects it intends to mitigate for the communities. This article systematically analyses the compatibility of current Takaful system with Qur'an and Sunnah using an Islamic socio-economic and political architectural framework and a state-transition diagram. A serious mode-mismatch was found that would need urgent awareness and remedies. One of the main source of strategic mismatch is the transfer of responsibilities of care-taking activities from the closet (extended families and neighbors within reachable proximity), which is encouraged by Islam, to the outsiders who are indifferent in term of relationship. However, we suggested that the side-effects can be mitigated by proper/partial role-transferring to communities while keeping the strength of commercial providers in place.
Shubuhat on Matter of Bai’alinah and Tawarruq
Essia Ries Ahmed, Sofri Yahaya and Md. Harashid
Bai` alinah and Tawrruq concepts are used in Islamic banking system and capital market to facilitate the needs of market players when Islamic financial industry was pioneered in the Islamic countries. Even though the majority of Shariah scholars disallow these concepts, some of them are of the opinion that it is acceptable as long as all the pillars and conditions of the contracts are complied with. Based on these opinions, bai`alinah and tawrrauq concepts are differences about comply with Shariah rules. Therefore products of Bai’inah and Twarruq are very controversial issues based on Shariah compliance criteria; the primary objective of this paper is to highlight to Shubuhat on product of Bai'alinah and Tawrruq. It was found that shubuhat did exist in product of Bai'alinah and Tawrruq.
Keywords: Doubtful activities (shubuhat), bai’inah, tawrruq.
Community Marketing: An Essential Ingredient for Muslim Community Empowerment
Chairat Siripatana, Hussen Niyomdecha, Nabeel Hasalam, Wisut Binlateh and Mohd. Murray Hunter
The ultimate goal of Muslim community empowerment is to relieve all community members from all kinds of suffering physically, materially or spiritually. Although Islamic tradition, as modeled by the Prophet himself, implicitly and explicitly declares wars against perennial poverty, encouraging economic struggle individually and collectively, its importance has been underestimated and was left out in the initial phase of most successful community-empowerment establishments. This article attempts to analyze the general failure-modes of community development in the light of a newly-proposed Islamic socio-economic architecture and obtains partial conclusions, forming a basis for developing a holistic conceptual model of Muslim-Community Marketing (MCM). Finally, a “Morally Sustainable Marketing Model for Empowered Muslim Communities” was proposed which blend the modern SME marketing with spiritual values, taking into account Halal/Tayyib awareness trends, newly-created marketing channels, Muslim-community networks, entrepreneurial skill development, Islamic logistics and so forth.
Keyword: community marketing, empowerment, Thailand.
Towards an Islamic Business Model: A Tawhid Approach
Mohd. Murray Hunter
World events and media portrayal of Islam over the last few decades has projected negative images, which are based on a total misunderstanding of Islam and the principals it encompasses. Predominantly, Islam through many eyes is seen as a homogenous view of the world, where many elements of the media have stereotyped it as an extreme religion. This situation has not been assisted by the lack of published academic and intellectual thought, which could assist in developing more balanced views about what the principals of Islam stand for. The focus of most published works on Islamic economics and business has been in the domains of finance and morals, which leads most to the conclusion that Islam has little to contribute in the theories of economics and business. This paper postulates that within the Al-Qur’an and Hadith there exists not only a moral code of conduct of business but a complete management and business model, which offers an alternative business paradigm to conventional ‘Western’ management theories. In fact, many ‘Western’ management theories within the last few decades have come closer to the Tawhid model of business, which is presented in this paper. This paper will also highlight the gap between Tawhid principals and the reality of business today, and discuss various views as to whether Tawhid and Syar’iah compliance is a utopian ambition of Muslims or mandatory upon them. The importance of Toyyibat, often neglected in halal hub concepts will be discussed, along with its implications on Musharakah business organization in performing Ibadah in daily life. Business and personal dysfunctions will be viewed through the concept of Al-fasad and the underlying Islamic Psychology theories explaining this. The concepts of Shu’ra and Adab as control and strategic mechanisms within the Musharakah will be discussed.
Keywords: Business model, Islam, Tawhid, management theories.
Challenges to Practice Corporate Social Responsibility
Md. Tareq Hossain, Chamhuri Siwar, Mazlin Mokhtar and Mohd Fauzi Mohd Jani
In today’s competitive business environment, corporate social responsibility has been emerged as a prominent concept. The concept has been much debated among the classical scholars (Friedman, 1962) and the modern scholars (Carroll, 1998). However, none of the scholars looks on the challenges involved in practicing Corporate Social Responsibility. This research revealed the critical challenges involved in practicing CSR using survey data collected from large corporations and small enterprises.
Keyword: corporate social responsibility, challenges, corporate executives and Malaysia
The Effect of the Higher Petrol Price on Unemployment by Sectors
Mohd Shahidan Shaari and Wan Sallha Yusoff
Most of the past studies stated that the increase in petrol price caused some economic problems such as the increasing consumer price index, the decrease in the consumption and the shrink in the national output, the increase in unemployment rate and others. This study is to see the impact of the higher oil price on unemployment and by sectors. The data of petrol price, unemployment rate, employment and by sectors is collected and anlayzed. The results of the findings showed that the higher oil price caused the increase in unemployemnt rate in manufacturing, mining and quarrying sector. The higher price petrol had taken place and that the cost of production esnsued. As a result the demand in the product will drop and this would totally affect the manufacturing sector. Finally , various measures that could be taken by the goverment to reduce the effect of the increase in petrol price on unemployment in those sectors.
Keywords: oil prices, unemployment rate, by sectors, Malaysia
Ciri-Ciri Umum Usahawan Berjaya: Analisis Daripada Perspektif Islam
Keusahawanan memiliki garis panduan yang tersendiri dalam memerihalkan ciri-ciri usahawan berjaya. Ciri-ciri tersebut perlu dijadikan sebagai garis panduan kepada setiap individu yang berkecimpung dalam dunia keusahawanan. Usahawan yang berjaya bukan sahaja dinilai dari sudut pencapaian prestasi dan pemilikan material semata-mata tetapi juga perlu memenuhi tanggungjawab yang dituntut oleh agama. Justeru, artikel ini meneliti ciri-ciri umum usahawan berjaya seperti yang telah digariskan oleh al-Qur’an dan al-Sunnah serta pandangan sarjana yang berkaitan topik yang dibincangkan. Kajian ini mendapati, usahawan yang dinilai sebagai berjaya iaitu individu yang cemerlang dalam bidang yang diceburi dan memenuhi tannggungjawabnya sebagai muslim, mu’min dan muflih.
Kata Kunci: ciri-ciri umum, usahawan, usahawan berjaya, Islam