Islamic Management

Definition Definition attention The conventional definition of counselling is acquire work done through peck, b atomic number 18ly real management is developing people through work. Characteristic of conventional management Examinees apiece resource sector and surroundings component in isolation Examines each resource sector and/or environmental component in isolation (e. g. , water, air, forests, fish) Focuses on biotic components limited, if each, consideration of ecological surgical procedurees (e. g. , hydrological process) Targets lone(prenominal) specific resources of interest typically those of commercial message value Conflicting management policiesComparision Moslem management and conventional management 1. 2 CONVENTIONAL AND Muslim UNIT TRUSTS 1. 2. 1 CONVENTIONAL UNIT TRUSTS Based on the Guidelines on Unit Trust pecuniary resource issued by the Securities complaint in October 1991, a whole deposit store confederation can tho invest in authorized Malays ian assets, which complicate listed and over-the-counter securities of Malaysian companies, Malaysian Government Securities, Cagamas bonds, bankers borrowings, assignable Certificates of Deposits, Government Investment Certificates and cash (Bankers Journal Malaysia, 1995).However, in March 1994, the Commission has provided a provision by which curse nones can invest (10% of portfolio) in overseas stock. Hence, conventional building block assurance coin can invest in any of the above Malaysian assets without any restriction as long as the farm animals have not reached its maximum pass size. 3 1. 2. 2 ISLAMIC UNIT TRUSTS The Moslem building block hopes principally focus on the investments in portfolios of halal stocks and bonds complying with the Syariah principles.Such halal stocks exclude companies involving in activities, products or services related to conventional banking, amends and financial services, gambling, alcoholic beverages and non-halal food products and excessively companies whose products can cause illness, death, disease or even promote social ills much(prenominal)(prenominal) as tobacco. From an Islamic perspective, the above industries atomic number 18 avoided as they represent elements that are require by Allah and the harmful effects of such products on mankind (Smart Investor, 2002).The returns of Islamic social unit trusts in any case avoid the incidence of riba or usury interest through the process of cleaning or purification by the removal of such amounts representing the interest element. In instances where a breed has inadvertently make profits investing in non-permissible sectors, the fund will liquidate the investments. The proceeds of the summation will then be donated to charities. Mohd Nasir (2000) mentioned in his paper that the Syariah principle of musharakah acts as a base for Islamic unit trust whereby it is a participatory financing involving system between the contributor of capital and the user .Therefore, the providers of funds or partners are the unitholders in an Islamic unit trust. A formal distill between the unitholders, capital or fund, profit, the offer, the acceptance and the investment activities are to a fault acquirable within the consecrate of the Islamic unit trust. The concept of al-wadiah yad dhamanah or guaranteed safe chains is involved in the operation of the Islamic unit trust fund. Prior to the funds existence, the owners of assets are the investors, custodian holder is the fund manager, and asset is the money invested.After the creation of the fund, the owners of assets are the unit holders, the custodian is the trustee and the assets include all assets of the fund. Besides that, the concept of al-baibithamin ajil is also practiced in the Islamic unit trust whereby there is a traffic of buying and redemption of units of funds. In this case, the barter for or redemption determine is the managers precedent selling or buying outlay at the next v aluation foreland when investors watch to buy or unitholders decide to redeem their shares. Moreover, the valuation point is the expenditure at the close of business for the day.Nonetheless, found on al-wakalah principle, the price mustiness be determined at the magazine the contract of sale or leverage is executed. As a result, the current practice of Islamic unit trust does not conform to the al-wakalah principle. Thus, it has been suggested that daily historical price would be more appropriate in order to observe the Syariah principles (Shariff, 2002). Apart from having the resembling standard criteria for other conventional unit trusts as explained in the Securities Commissions Guidelines on Unit Trust funds (1997), the Islamic unit 4 trust funds must lso meet the criteria as advised by the Securities Commissions Syariah Advisory Council (SAC) 2 . For example, the Islamic unit trust funds can only invest in securities approved by the SAC. The trust funds are also required to appoint a Syariah delegation or syariah consultant who must be approved by the Commission. As at October 25 th , 2002, the SAC has approved 684 securities 543 approved securities as at January 2 nd , 1999 (Arbi, 1999) listed on the KLSE and classified them as halal stocks thus can be bought by the Islamic trust fund managers