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JIMA 1,1

Shariah observation: advertising practices of Bank Muamalat in Malaysia

Ahasanul Haque, Khaliq Ahmed and Syeada Irfath Jahan
Department of Business Administration, International Islamic University Malaysia, Kuala Lumpur, Malaysia
Purpose The purpose of this paper is to assess the existing advertising practices in Malaysia and their compliance with the Shariah (Islamic Law). Design/methodology/approach Using descriptive observations, the promotional tools and practices used by the prominent conventional banks were compared to those used by the Islamic banks. A total of 40 different advertisements were assessed as well as staff and personnel from 30 branches were interviewed. Findings The paper reveals that customers remain unaware of the Islamic banks products. Shariah-based promotions will help increase customer awareness of these banks and their offerings. Research limitations/implications Future research on Shariah-based promotions and advertising will improve banks effectiveness and help position them as role models for other advertisers, both Islamic and non-Islamic. The producers of Islamic advertisements need to apply precise screening procedures that ensure the delivery of their message through Shariah-compliant methods. Originality/value The paper contributes to research through improving understanding of the main issues relating to the effect of advertising practices in Islamic societies. Keywords Advertising, Promotional methods, Islam, Banks, Malaysia Paper type Research paper


1. Introduction Marketers consider several factors in order to create and deliver effective messages. These factors include, but not limited to, restrictions on the type of media used, the ability to promote certain products, advertising images, social groups, and government restrictions (Waller and Fam, 2000). Simultaneously, the inuence of religious beliefs on individual and social behavior is inevitable (Greeley, 1977; Hirschman, 1983; Luqmani et al., 1987; Michell and Al-Mossawi, 1999; Waller and Fam, 2000; Brich et al., 2001 in Waller et al., 2004). As a result, elements of the advertisement might be seen as contradictory to the religious beliefs of certain groups of people. Advertisements perceived as contentious will not be effective in capturing the attention of people or changing their attitudes towards the advertised products (Michell and Al-Mossawi, 1995). For the Islamic banking sector, launching Islamic products requires that two factors are considered. First, how to promote these products in compliance with the ethical gauges of the Holy Quran, Sunnah, Ijma, and Qias. Second, keeping pace with the Shariah, the incentive the product provides to attract potential customers needs to be more focused
Journal of Islamic Marketing Vol. 1 No. 1, 2010 pp. 70-77 q Emerald Group Publishing Limited 1759-0833 DOI 10.1108/17590831011026240

The authors gratefully acknowledged Adnan Holden, Director, Institute for Language Advancement, International Islamic University Malaysia, for his valuable inputs, especially language editing.

and innovative compared to the conventional system. This study reports previous assessments that show the success and failure of Islamic banks in different countries and analyzes advertising incidents in order to provide guidance and enable Islamic advertising and promotional campaigns to be more sound and effective. 1.1 The Islamic market There is signicant growth of Muslim consumers who have considerable purchasing power around the world in countries such as Egypt, Iran, India, Malaysia, Morocco, Saudi Arabia, and South Africa. Among the ten biggest emerging markets targeted by the USA, two are Muslim nations (Turkey, Indonesia) and the other two have substantial Muslim minorities (India and South Africa). Muslim consumers are increasing in other developed countries (Rice and Al-Mossawi, 2002). In the USA, Islam is the fastest growing religion with estimates of a Muslim population ranging from six to eight million (Abdul-Rahman and Tug, 1998). As a result, different non-Muslim owned businesses like Mr Wimpy, Burger king, McDonalds, Pizza Hut, Hardees, and Dairy Queen have been trying to build a Shariah image of halal products through their advertising campaigns and legal activities. Marketers or the advertising producers in the Muslim world would benet by gaining an understanding of Muslim values (Rice and Al-Mossawi, 2002). In such a context, the most potential and contemporary issues in Islamic Banking products should be carefully introduced, developed, and offered through appropriate advertising and communication messages which meet the commitment of ethics as guided in the Islamic Shariah. 2. Literature review Research and literature on recent practices of advertising in Islamic banking have been reviewed and assessed under three broad categories; ethical and Islamic marketing, current advertising, and effective marketing in the Muslim world, and corrective advancements in the evaluation of advertisement. 2.1 Conception of the Islamic ethical system It is well understood among marketers nowadays that when addressing ethics and ethical practices in advertising, one should delicately assess the potential reactions of the public. Communication messages should not depart from the basic norms and fundamental aspects of the established social order and ethical boarder. However, this was not always the case. Over the centuries, as state and church separated, particularly in the western societies, religion became a private matter. The value-free society developed and economists focused exclusively on the mechanics of economics. Postmodern thinkers have advocated changes over the past few decades and there have been a reintroduction of a moral dimension in the business (Rice, 1999). These were the initial conceptions concerning ethics and its implications in the business. On the other hand, conception of the Islamic ethical system has followed an opposite bath, i.e. it is based on religion. To Muslims, the term ethics means Gods commands. Muslims derive their ethical system, approaches, principles, and teachings of ethics directly from the Holy Quran and Sunnah. The term Sunnah means the messages, instructions, and lifestyle of Islams Prophet Muhammad based on Allahs (Gods) holy messages in the Holy Quran. A Muslim is subject to Gods punishments if he/she deviates from the moral principles and ethical rulings in the Quran, but also to his blessings and rewards if he/she adheres to these ethical principles.

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Islam requires that people satisfy their needs through proper means. Ethical marketing was introduced and implemented by Islam nearly 14 centuries ago, long before postmodern marketing experts even realized that term (Rice, 1999). Proper implies, among others, humane treatment without regard to peoples identities, races, creeds, colors, customs, or religious or national origin. Islam teaches Muslims to be sincere and to pay due respect to the rights of all humankind. However, it is often hard to place ethics before self-interest. Therefore, Islam invites humanity to value actions not only on faith, but also on rational grounds (Rosly and Bakar, 2003). 2.2 Advertising practices in the Muslim world Marketers need to observe the cultural traits, environments, norms, beliefs, and values of a particular country or region to obtain an understanding of whether their future behaviors will be perceived as ethical. The marketer should focus on those who are their target markets and place the advertisements in ways that must be consistent with the cultural, religious, and social sensitivities of the people in those markets to effectively win their hearts and create market charisma. For example, in west Malaysia, different ethnic groups (Malay, Chinese, and Indian) have been living together. Making a commercial ad among this multi-ethnic culture must recognize their feelings and cultural traits in a way that is considerate to their ways of living. According to Hirschman (1983), the religious afliations of Catholics, Protestants, and Jews signicantly shaped their attitudes towards dancing, magazines, restaurants, and political ideas. There is also a strong relationship between religious persons and greater concern for moral standards (Wiebe and Fleck, 1980), being conservative (Barton and Vaughnan, 1976), and possessing more traditional attitudes (Wilkes et al., 1986). Lately, the virus that has been affecting and inuencing society through fraudulent exposure is called surrealism in advertising. Research has found that due to visual imaginary mnemonics and surrealism surreal ads are likely to be processed more extensively than non-surreal ads (Mostofa, 2005). Advertising a product and its promotion towards reecting extra value that is non-existent in reality and pursuing the customers to purchase is unethical and construed as a factor of deceptive advertisement. In the Islamic system, moderation in living is encouraged, while prodigality and waste are denounced. Costly promotional efforts and massive commercial advertisements by businesses are considered unnecessary. The processes of production, distribution, and pricing are inuenced by market mechanisms and government regulation. Monopoly, price xing, hoarding, fraud, and deception in business are categorized as illegal practices. Producers of advertisements must make sure that their advertising campaign does not overstep any social or legal norms although many advertising campaigns in Muslim countries or outside reect the free values of western society, which affects the social norms of other societies. In Malaysia, Unilevers ad for Ponds skin lightening moisturizer showed a Malay college student using the product for a fairer complexion to attract a boys attention. The ad is deemed offensive to the Muslim ethnic culture. At the same time, the young generations of Malay Muslims are more likely to be impressed by this kind of advertising, which holds the risk that they may be diverted from their religious prohibitions, sentiments, established norms, and values. The Quran does not prohibit advertising and, indeed, advertising is used to promote the Islamic faith (Al-Makaty et al., 1996). However, advertising containing excessive exaggeration is regarded as form of lying, whether it is exaggeration of

description by metaphor or by embellishment. Kavoossi and Frank (1990) observed a lack of hyperbole or exaggeration compared to American advertising. They noted the emphasis was on longer-lastingness, tradition, quality, and the overall integrity of the goods and the seller. For example, an agency for computer services claimed our purpose is quality computer service and not prot. The question was whether this was a non-prot organization or non-business organization. Such deceptive advertising should be avoided in order to maintain integrity. A statement of Prophet Muhammad, he who cheated is not one of us is always made in the context of sales incident in the marketplace. According to the Islamic teachings, a seller who knows a defect in what he is selling is obliged to disclose it (Keller, 1994). Religious terminology is used in advertisements to reassure consumers of the Islamic integrity of products and services. For example, in a television advertisement, a Saudi Investment bank in Egypt had used religious terms to show that it had no unlawful transactions and that all of its nancial products Shariah compliant. The use of selected Quranic injunctions and words can enhance the mood of the advertising communication to make it more appealing to Muslim consumers. Examples are the words Bismillah (in the name of God) or Allahu akbar (God is almighty) or Assalamu Alaikum (peace be upon you). Luqmani et al. (1989) provide an example of a manufactured water pump that uses a verse from the Quran in advertising: A Spring 2000 advertising campaign targeted at the Gulf market for the Ford excursion sports utility vehicles uses the words Maashallah. These words are commonly used by Muslims when they see something beautiful such as a small child, someones achievement such as obtaining a degree or a new job, or some ones acquisition of new goods or property (Rice and Al-Mossawi, 2002). Although it is obviously welcome to keep in mind that the Islamic regulations related to business and marketing, appropriate implementation of precise Islamic terms is crucial. Contrary to this, a business may face unexpected troubles in gaining markets in Muslim populous areas if somehow its advertisements create feelings that are inconsistent with religious sensitivities. 2.3 Advertising practices and Shariah observation Research in consumer behavior has established that customers expertise facilitates their learning of new and more complex types of information (Alba and Hutchinson, 1987; Cowley, 1994; Mishra et al., 1993). In addition, expert customers are likely to have developed skills in distinguishing between important and unimportant information, as well as between relevant and irrelevant information (Alba and Hutchinson, 1987). Therefore, the advertisers must explain their products and services in their advertisements in such a way that specically conveys the appropriate messages. This is particularly true for Islamic banks in order to reduce the confusion, so that there is no confusion about their products and services. Since religious compliance is an integral part of the devout Muslims, their judgments are affected by the degree of their devotion. Advertisements to them need to make the right appeal and to be consistent with their religious understanding, knowledge, and feelings. For Islamic banks, meeting these fundamental criteria and being Shariah compliant is a critical factor for the development and growth of their business. The criteria for the advertising of Islamic banking products must be different from the conventional advertising. In this study, we have evaluated the recent practices of Islamic advertising that Bank Muamalat had undergone and we have carefully examined some of their recent advertisements based on the Holy Quran and the Sunnah.

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In this study, we have used a descriptive methodology for extracting Table I. A total of 40 different advertisements with different incentives were collected and assessed since the bank began its commercial operations in October 1999. To obtain an understanding of the incentives offered, the collected advertisements were thoroughly analyzed. Moreover, staff and management personnel were interviewed in 30 branches. The bank has 53 operating branches. Observations show that managers of different branches described the particular incentive of the advertisements from different perspectives. Their interpretations were classied according to the objectives of the products, which were reected in the advertisements. This was done in order to gain sufcient understanding of the differences in these interpretations. In many cases, it was observed that the incentives were common and the targeted audience remained the same. Our sorting and screening process of the advertisements led to a list of ten advertisements with a differentiated offering of incentives. The classication of incentives helps assess the advertisement in light of the Quran and the Sunnah; the sample advertisements were further studied to establish meaningful links with Islamic teachings and, then, the exact verses that could be applicable for incentives of advertisements are specied in Table I. 3. Implications and direction for further research It is being increasingly recognized that advertising practices need to incorporate appropriate ethical standards. The Islamic Shariah, with its detailed ethical guides can play an important role in that regard. According to Muslims, the Holy Quran is recognized as the complete code of life in which God provided complete ethical guidelines. A follower of Islam needs to adhere to the Shariah principles, commits to the Islamic lifestyle, and refrains from committing sins as outlined in the Shariah, including sins against oneself or society. For example, for Islamic advertisements to be Shariah compliant they must reect true and fair communication to the public and that all facts about the product are disclosed. Advertisers must not resort to any form of deception to promote their products. To implement this, practitioners of Islamic advertisements need to convert the Islamic ethical guides and codes into precise screening steps that ensure advertising campaigns adhere to the Shariah principles. Islamic banking, economics, and nance are engaged in efforts to establish an independent Islamic economic system where all aspects are Shariah compliant. Banking and nance have received considerable attention over the past 30 years while Islamic marketing has been so far neglected. The development of the Islamic economic system will be signicantly hindered unless immediate and due attention is given to Islamic marketing. This study aimed to ll part of that gap through addressing one of the components of Islamic marketing, i.e. advertising from an Islamic perspective. It is exploratory in nature and provides insights about the status of advertising as practiced by a major Islamic bank in Malaysia. Its contribution is in the fact that it is an eye-opening study that provides a methodology for assessing advertisements according to the teachings of Islam. However, its sample of 30 branches remains limited. Results could be signicantly improved if future research examines a larger and more inclusive national sample that will allow researchers to draw conclusions on whether the advertising campaigns of Islamic banks in general are in line with the Islamic guidelines. This study is an initial step for shaping the advertisement of Islamic banking. It explored a path along which future researchers can travel. Efforts on further research would lead to improve advertising for Islamic banks and make it role model for other Islamic and non-Islamic advertisers.

Name of the products 1. Takaful Nasionals product (motor vehicle, re, house owner, personal accident, marine cargo)

Incentives Strategic alliance with comprehensive Islamic banking facility

Shariah specication with verses of Quran

Comments under assessment Teamwork, international business, workforce diversity and co-operation to achieve any business or investment which is highly encouraged by Islam Common facility should not be presented as extra facility to the customers Some facilities endeavor to make the customer draw more than their savings

Shariah observation

O mankind! We created you from a single (pair) of a male and female, and made you into nations and tribes, that you may know each other (Quran 49:13) Only RM2.00 charge for [. . .] dont outbid one 2. MEPS Inter-Bank another in order to raise GIRO, electronic fund each transaction, transfer possible in any the price transfer payment Wear your beautiful bank in Malaysia system apparel at every time Inter bank giro crediting time is faster and place of prayer; eat and drink: but waste than cheques. It can not by excess (Quran be held without physical attendance of 7:31) customer Allah does not like 3. Muamalt Cash Line Seven years duration Facility-i (Mcash) with renewable facility, those who are self deluding and boastful, irrespective of base lending rate uctuation, the vainglorious (nor) those who are prot rate is xed, niggardly, enjoin effective cash ow niggardliness on under xed payment others (Quran 4:36-7) regime 4. Muamalat Personal Provided to 18-55 years If you are on a journey and cannot nd a Financing-i range customer, 60 percent market value scribe, then a security deposit (should be) of the property is nanced, as a collateral taken (Quran 2:283) Mudarabah Investment Certicate provided 5. Muamalat Istisna Aset Tetap Financing


Islam prohibited hoarding. Encouraged to spend logically, for the circulation of wealth

6. Muamalat Trade Finance-i

Security deposits or collaterals are not encouraged in Islam unless the agreement held on journey or cannot nd scribe in such a situation Truthfulness and Flexible payment to suit O you who have believed, fear Allah and directness should be the cash ow. There more precise in case of speak words of will be no additional advertisement from cost even when there is appropriate justice Islamic organization (Quran 33:70) a rise in their base nancing (xed prot rate) Concept of Halal Comprehensive Islamic O People of the trade nance facilities Scripture, why do you (authenticated by ethics) transaction mix the truth with for local and global falsehood and conceal should not be mixed transactions with conventional the truth while you irrespective of the transactions know? (Quran 3:71) conventional or Shariah-based banks of the world (continued )

Table I. Bank Muamalat overall advertising practices and assessment comments under Shariah observation

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Name of the products


Shariah specication with verses of Quran Those who consume charged rates (like interest) beaten by Satan into insanity. That is because they say, Trade is just like interest. But has permitted trade has forbidden interest (Quran 2:275) [. . .] and spend of your substance in the cause of Allah, and make not your own hands contribute to its destruction; but do good (Quran 21:195)

Comments under assessment The price will be higher than the actual cash purchase (for attractiveness and capturing a competitive rate) which is about two times higher, but the promised incentive kept it ambiguous Common services should not be exposed in a way that may tempt the consumer to spend unwisely


Duration seven years. 7. Muamalat High margin of nance Commercial & attractive and Industrial HP-I. Flexible, simple, and competitive rates, xed monthly installment, reliable open to all types of vehicles/machinery and equipment 8. Electronic Share Application Service Low charge, fastest trading, ATM slip considered to be as drive of transaction

Table I.

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Michell, P. and Al-Mossawi, M. (1999), Religious commitment related to message contentiousness, International Journal of Advertising, Vol. 18, pp. 427-43. Mishra, S., Umesh, U.N. and Stem, D.E. (1993), Antecedents of the attraction effect: an information-processing approach, Journal of Marketing Research, Vol. 30 No. 3, pp. 331-49. Mostafa, M.M. (2005), An experimental investigation of the Egyptian consumers attitudes towards surrealism in advertising, International Journal of Consumer Studies, Vol. 29 No. 3, pp. 216-31. Rice, G. (1999), Islamic ethics and implication of business, Journal of Business Ethics, Vol. 18 No. 4, pp. 345-58. Rice, G. and Al-Mossawi, M. (2002), The implication of Islam for advertising messages: the middle eastern context, Journal of Euromarketing, Vol. 11 No. 3, pp. 71-96. Rosly, S.A. and Bakar, M.A.A. (2003), Performance of Islamic and mainstream banks in Malaysia, International Journal of Social Economics, Vol. 30 No. 12, pp. 1219-65. Waller, D.S. and Fam, K.S. (2000), Cultural values and advertising in Malaysia: views from the industry, Asia Pacic Journal of Marketing and Logistics, Vol. 12 No. 1, pp. 3-16. Waller, D.S., Fam, K.S. and Erdogan, Z.B. (2004), The inuence of religion on attitudes towards the advertising of controversial products, European Journal of Marketing, Vol. 38 No. 5, pp. 537-55. Wiebe, K.F. and Fleck, R. (1980), Personality correlates of intrinsic, extrinsic and non-religious orientations, Journal of Psychology, Vol. 105 No. 2, pp. 181-7. Wilkes, R.E., Burnett, J.J. and Howell, D. (1986), On the meaning and measurement of religiosity in consumer research, Journal of the Academy of Marketing Science, Vol. 14 No. 1, pp. 47-56. Further reading Churchill, G.A. and Surprenant, C. (1982), An investigation into the determinants of customer satisfaction, Journal of Marketing Research, Vol. 19 No. 4, pp. 491-504. Joseph, A. and Wesley Hutchinson, J. (1987), Dimensions of consumer expertise, Journal of Consumer Research, Vol. 13 No. 4, pp. 411-54. Corresponding author Ahasanul Haque can be contacted at:

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