Islamic Management

Definition Definition c be The formulaic definition of management is getting work done through people, entirely real management is developing people through work. Characteristic of stately management Examinees each resource sector and environment section in isolation Examines each resource sector and/or environmental component in isolation (e. g. , water, air, forests, fish) Focuses on biotic components limited, if any, consideration of ecological processes (e. g. , hydrological process) Targets and specific resources of interest typically those of commercial value Conflicting management policiesComparision Islamic management and conventional management 1. 2 CONVENTIONAL AND Muslim UNIT TRUSTS 1. 2. 1 CONVENTIONAL UNIT TRUSTS Based on the Guidelines on Unit Trust Funds issued by the Securities thrill in October 1991, a whole affirm store company stack only induce in authorized Malaysian assets, which include listed and unlisted securities of Malaysian companies, Malaysi an Government Securities, Cagamas bonds, bankers acceptances, Negotiable Certificates of Deposits, Government Investment Certificates and cash (Bankers daybook Malaysia, 1995).However, in March 1994, the Commission has provided a provision by which consider notes can invest (10% of portfolio) in overseas stock. Hence, conventional social social unit self-assertion specie can invest in any of the in a higher place Malaysian assets without any restriction as long as the funds have not reached its maximum approved size. 3 1. 2. 2 Islamic UNIT TRUSTS The Islamic unit confides mainly focus on the enthronizations in portfolios of proper stocks and bonds complying with the Syariah principles.Such halal stocks exclude companies involving in activities, products or services think to conventional banking, insurance and financial services, gambling, alcoholic beverages and non-halal food products and in any case companies whose products can cause illness, death, disease or even p romote social ills such as tobacco. From an Islamic perspective, the above industries are avoided as they represent elements that are forbidden by Allah and the harmful effects of such products on creation (Smart Investor, 2002).The returns of Islamic unit trusts also 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 fund has unwittingly made profits investing in non-permissible sectors, the fund will ravage the investments. The proceeds of the gain 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 agreement between the contributor of hood and the user.Therefore, the providers of funds or partners are the unitholders in an Islamic unit trust. A formal contract between the unitholders, capital or fund, profit, the offer, the acceptance and the investment activities are also available within the practice of the Islamic unit trust. The concept of al-wadiah yad dhamanah or guaranteed safe custody is involved in the carrying out 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 transaction of buying and repurchase of units of funds. In this case, the purchase or redemption price is the managers forward selling or buying price at the next valuation point when investors go down to buy or unitholders decide to redeem their shares. Moreover, the valuation point is the price at the close of course for the day.Nonetheless, based on al-wakalah principle, the price must be contumacious at the time the contract of sale or purchase 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 assume in order to observe the Syariah principles (Shariff, 2002). Apart from having the same standard criteria for another(prenominal) 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 committal or syariah consultant who must be approved by the Commission. As at October 25 th , 2002, the SAC has approved 684 securities 543 approved securi ties 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