Application of promise in Al-Ijarah Thumma Al-Bai' (AITAB) facility

• Main Authors: Muhammad Zin, Hakimah, Salamon, Hussin
• Format: Article
• Published: Medwell Journals 2016
• Subjects: BP Islam. Bahaism. Theosophy, etc
• Online Access: http://eprints.utm.my/id/eprint/71335/; https://www.scopus.com/inward/record.uri?eid=2-s2.0-84988959201&partnerID=40&md5=6198651a78b7701689b6aa3697094889

Financing facility is important for most businesses and enterprises. Al-Ijarah Thumma Al-Bai' (AITAB) is among the most popular methods of financing facility in Malaysian financial institutions. One of the important elements in structuring this method of financing is the promise. The application of promise in AITAB must satisfy Shariah rulings to ensure its compliance to Shariah law. The application of promise must also satisfy the relevant civil laws to ensure its enforceability at the court of law. Failure to comply with any of these laws may lead to Shariah or legal issues. Hence, this study aims to analyse the extent to which the application of promise in AITAB facility as practised by Malaysian financial institutions is valid and legally enforceable from the perspective of Islamic law. It is then compared to the position under civil law perspective. This study is limited to the application of promise in AITAB facility and does not include its implementation in other ijarah-based facility such as Musharakah Mutanaqisah and Sukuk Ijarah. This study employed qualitative research methodology and the data were collected by conducting document analysis. The finding of the study shows that the application of promise in AITAB facility is valid and legally enforceable from the perspective of Islamic law. Nevertheless, there is legal issue from the civil law perspective because the promise as practiced in AITAB would not be legally enforceable under Malaysian civil law. Hence, efforts must be undertaken to strengthen local law governing the implementation of promise in AITAB facility.