INS510 MAC-AUGUST 2022_INDIVIDUAL ASSINGMENT

Takaful: Maintaining compliance of Shariah rules is the core of Takaful

Ummi Syafiqah binti Radzman1

Universiti Teknologi Mara

Abstract— According to a previous survey, Malaysia's frozen asset problem is

increasing every year and will reach RM70 billion by 2020. Recently, Hibah has been
proposed as one of the leading methods of distributing Islamic property in Malaysia. In
fact, this effort is seen as an attempt to facilitate the problem of frozen assets in Malaysia.
Keywords—Hibah, Assets, Estate, Shariah, Internet.

1.0 INTRODUCTION
Takaful is based on Shariah laws or Islamic principles. It is a system in which money is
aggregated and invested. The Takaful business is driven by the concept of risk sharing between
members, with the aim of helping each other through the loss or damage by shared contribution.
The sole intention of the business are not profits, but more to helping others financially
(Takaful or Islamic Insurance - Takaful VS Insurance | AIMS UK, 2022).

There are major differences between takaful and conventional insurance, even though they
essentially have the same purposes. The differences can be specified into three aspects: (1)
intent- The individual signs an agreement to contribute to a fund capable of helping those in
unfortunate circumstances. Meanwhile, in conventional insurance the insurance purchased is
considered as personal financial security for an individual, and the insurance company is the
bearer of the risk. (2) investment- Conventional insurance investors will typically invest based
on their assessment of what fits their profile. However, takaful’s investment will be subject to
strict guidelines. Takaful must not invest in anything with an element of gambling, uncertainty,
or lending money at unreasonably high interest rates. (3) Returns- If additional funds are
available due to low claim rates from Takaful's insurers, it will be distributed among the
participants. While profits from investments will be divided among participants and
shareholders. Takaful operators make money through performance fees or by sharing the
surplus. But the total amount of overpayments received by Takaful operators cannot exceed
the amount paid to Takaful participants. Under conventional insurance, however, the
additional money and profits belong to the shareholders of the insurance company (The
Difference Between Takaful and Conventional Insurance, 2022).
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2.0 BACKGROUND STUDY

2.1 Issues
Why does the use of Hibah as an alternative method to distribute frozen assets still relatively
low in Malaysia? Can the internet used as a medium to spread awareness of hibah products to
the public?

2.2 Evidence
Malaysian Muslims' income levels and wealth holdings are increasing year by year.
According to Hidayah Halim et al. (2018) this is one of the factors contributing to the increase
in frozen assets. It has been reported that there is between 70 billion and 90 billion in assets in
Malaysia has been frozen as of 2020, and 90 percent of it is are own by Malay (Ayamany,
2021).

Today, a total of 5 billion people around the world use the Internet. This represents 63% of
the world's population. Internet users continue to grow, and according to the latest data, the
connected world population has increased by about 200 million in the 12 months to April 2022
(Digital Around the World, n.d.). Therefore, the internet is more than capable to be used as a
medium to spread awareness of the hibah product to the public as it reaches most people easily.
Internet has been used as the search engine to attract public attention to seek for any information
they need or want to know. Besides that, with the development of social media, promoting and
advertising a product has been a trend as it is one of the best methods to reach the public
audience.
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3.0 ISSUES

3.1 Hibah / Cause and Effect

According to (MyGOV - The Government of Malaysia’s Official Portal, n.d.) Hibah can be
defined as to grant ownership of property from one party to another, without consideration
(Iwad) made during the lifetime of the Hibah provider, and is voluntary and intended to praise
someone with Ijab and Qabul or similar expressions. Hibah simply means a gift or an act of
voluntarily giving someone or an organization the ownership of property owned during the life
of the settler. We can see that hibah are one of the most effective distributions of property
methods in Malaysia based on the various agencies and institutions involved in promoting
Hibah products. Therefore, hibah should be considered as one of the alternative distribution
methods of property in Malaysia. It must take not that the implementation of hibah must strictly
follow the Shariah rules in Islam, and it should not overtake the concept of wasiyyah and
faraidh in Islam (Halim et al., 2020).
Despites the growth of hibah products in Malaysia, with varieties of product introduced in
the market such as hibah takaful, hibah mudharabah, hibah trust and significantly more, public
are still ill-educated about it. Most of the Malaysian are unclear about the concept of Hibah
because of the lack of knowledge and exposure about the implementation of its (Ahmad et al.
2019). Besides that, according to Kamarudin et al. (2018), Malaysia still not yet establish any
specific law concerning hibah. The absence of law regarding hibah and the lack of awareness
among the public regarding the implementation of hibah should be tackle sternly, so that the
practice of hibah could be settled successfully.
According to Hasan and Mohamad Zaizi (2020) there are varieties of hibah that have been
accredited to be practiced in Malaysia. The first kind is hibah associated with asset control for
Muslims and the second one kind of hibah is called business hibah carried out as a helping
monetary tool in Islamic monetary institutions. Apart from that, takaful enterprise has
additionally been the usage of hibah tool with the aid of using supplying takaful merchandise
to contributors wherein it'll gain the beneficiaries upon the adulthood of the takaful certificate.
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4.0 SOLUTION / RECOMMENDATION

In order to understand the management and enforcement of Hiba, it is necessary to understand

that Hiba does not have any special laws in Malaysia. Interestingly, proposals to pass the Hiba
Act have been proposed on various occasions and seminars since 2004, but these proposals
have been ignored by legislators (Nor Muhamad et al., 2019). Therefore, Malaysia should
introduce legal provision to clearly address hibah in details.
The use of Internet as one of the tools for information, communication and entertainment,
and the average daily time spent with the internet per capita is increasing every year for each
user (Johnson, 2022). Media that are shared through the internet are easily accessible by
anyone regardless of location compared to the traditional method. This can surely help the user
to gain information regarding property management issues. Furthermore, with the invention
of social media, the knowledge of hibah could be spread easily and effectively, as the public
will find the information they need and made a comparison by themselves. This will give them
a sense of trust as they gain the information by exploring it personally. Therefore, with the use
of internet to spread the awareness of using hibah as the alternative distributor raise public
interest and resolve the matter of frozen assets in Malaysia.

5.0 MOVING FORWARD

5.1 Conclusion

In conclusion, Hiba is considered to be the best mechanism for the family to claim the
property of the deceased, as the process of to perform Hiba is simple and straightforward. As
a Muslim, you need to manage your wealth properly by distributing all your wealth equally
and equitably to future recipients, as one considers appropriate. Hibah basically serves as a
way to help families in need and avoid conflicts between them. But the biggest problem society
is currently facing, is the lack of certain laws regarding Hiba. In fact, among Muslims itself is
still vulnerable to the implementation of Hiba. Therefore, promoting Hiba using internet will
ensure a smooth process of management of inheritance issues and raise unclaimed real estate
issues involving Malaysian Muslims. From this, we can conclude that internet is an important
media for disseminating knowledge and information about Hiba throughout the community.
 INS510 MAC-AUGUST 2022_INDIVIDUAL ASSINGMENT

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