A Review of Islamic Banking Products Offered Byagro Bank Between 2008 and 2012

Journal of Emerging Issues in Economics, Finance and Banking (JEIEFB)
An Online International Monthly Journal(ISSN: 2306 367X) Volume:1 No.4 April 2013
A Review of Islamic Banking Products Offered by Agro Bank between 2008 and 2012
M. Ridhwan, A. A. Faculty of Economics and Muamalat, Universiti Sains Islam Malaysia (USIM), Bandar Baru Nilai. Malaysia. E-mail: ridhwan.aziz@usim.edu.my
Abstract
As an organized religion, Islam goes into great detail on the subject of agriculture, which plays a very significance role in the daily life of a Muslim. The teachings of Islam puts a very high value on efforts to consolidate the agricultural industry. Nevertheless, with regard to Islamic financing facilities for agro entrepreneur, Agro Bank is considered as the champion for the rapid development of agricultural activities in this country. Agro Bank is a Government Linked Company (GLC) that functions under the supervision of the Ministry of Finance, Ministry of Agriculture and Agro-based Industry and the Central Bank of Malaysia. Agro Bank is unique because it focuses mainly on financing and banking in agricultural areas. Thus, the objective of this article is to compare the Islamic banking products and services offered by the bank between 2008 and 2012. This comparison will show the differences, development and improvements of Islamic banking products and services within the time frame, as the current aims of the bank is to be a full Islamic bank by 2015. The methodology of research in this article is qualitative, namely, through document analysis, interviews with relevant Agro Banks officers and observation from pamphlets and website of the bank. The finding shows that Agro Bank needs to improve in many areas especially in terms of product development in order to attain the status of a full Islamic bank by the year 2015. _______________________________________________________________________ Keywords: Agro Bank, Islamic Banking Products, Agro Entrepreneur, Muamalat, Islamic Bank
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1. Introduction
Production function in the Islamic economics has been regulated by the concept of livelihood (al-Rizq) as well as lawful (halal) and unlawful (haram) sources of earnings. The term al-Rizq is applied to connote livelihoods and means of further production, which has been intimated by the Prophet Muhammad (s.a.w.) and predetermined by Allah (s.w.t.). Agriculture has been an important source of food production for mankind since ancient times and therefore, should not be neglected. Earnings through agriculture and becomes agro entrepreneurship is regarded honorable endeavors from the Islamic spirit. The Prophet Muhammad (s.a.w.) was very mindful about the economic utilization of resources, with the concept that all the resources are a gift from God containing the suggestion that they should be utilized carefully. As such, the Holy Prophet (s.a.w.) has laid emphasis on intensive development of human resources, and assigned a high value on industry, efficiency and labor1. Parasitic dependence on others, idleness or beggary are discouraged by Islam. People are encouraged to put in hard work and earn livelihoods instead of wasting their energy in idle pursuits. It is in this spirit that pasttimes, which do not add any utilities have been disliked by the shariah2. In his prayer, Prophet Muhammad (s.a.w.) asked Allah (s.w.t.) to refuge himself from hunger, poverty and destitution. The Prophet (s.a.w.) said in the following hadith: Allah, I seek thy refuge from hunger for it is the evil bedfellow3. Allah, I seek thy refuge against poverty, and I seek thy refuge from paucity and humiliation, and I seek thy refuge that I do wrong or wrong is done to me4. Islamic law has therefore prohibited begging, with an exception for individuals in grave difficulties. The attitude of Islam towards mans position in the world is that Allah ( s.w.t.) has made the earth for the benefit of man, to whom He has given control over. It is the duty of man to profit from this favor and to exert himself to seek Allahs bounties throughout the earth5. Allah (s.w.t.) says to the effect:
Muhammad Akram Khan (1992), Economic Teachings of Prophet Muhammad, Delhi: Oriental Publications ,p. 214. 2 Ibid. 3 Sunan al-Nasai (1999), Riyad: Dar al-Salam, Kitab al-Istiadhah, Hadith No:5471, p.744; Sunan Abi Daud (1999), Riyad: Dar al-Salam, Kitab al-Witr, Hadith No: 1547, p.228. 4 This hadith was narrated by Abu Hurairah. See Sunan al-Nasai, op.cit., Kitab al-Istiadhah, Hadith No: 5464, p.743; Sunan Abi Daud, op.cit., Kitab al-Witr, Hadith No: 1544, p.227. 5 Yusuf al-Qaradawi, The Lawful And The Prohibited In Islam . Kamal El-Helbawyet.al. (trans.), (1960), Indinapolis: American Trust Publications, p.125; M. Umer Chapra (1992), Islam and the Economic Challenge, Leicester: The Islamic Foundation, p.203. 244 www.globalbizresearch.com

It is He who has made the earth manageable for you, so traverse ye through its tracts and enjoy of the sustenance which He furnishes, but unto Him is the Resurrection.
Surah al-Mulk (67):15. It can be inferred from the above verse that Allah has created the earth full with various kind of sustenance and sources for earnings, water, minerals, and therefore provided many things for man to cultivate and do business with, so that they may enjoy all sustenance for their benefit. As such, man has managed to make paths through deserts and over mountains, through rivers and seas by means of ships, through the air by means of airways, and bridges and tunnels and other means of communication6. Man has only been able to do so because Allah (s.w.t.) has given him the necessary intelligence and has made the earth tractable to that intelligence. Therefore, man should try his best to benefit for all sustenance provided to them and be thankful to Allah, the true creator for everything7. One of many ways to obtain benefits of all sustenance provided to mankind is through the agriculture initiative. From the general perception it is clear that agricultural projects seem to be less viable than any initiative in other sectors. While it is admitted that the risks in agricultural investment are higher due to various factors, these risks are very rare in respect to the effect weather and natural disasters on the production of primary produce.
With the introduction of high-technology farming and rapid advancement in the field of bio-technology, the impact weather on agricultural production has been minimized. Nowadays, many opportunities have been given in order to assist agro entrepreneurs not only to finance their projects but also to expand them in a larger capacity, especially by the local Islamic Banks. Agro Bank as one of the Malaysian local Islamic banking institutions has been given special task in ensuring agriculture sector well developed in this country. Since its inception, this bank has provided various types of banking and service facilities with regard of agricultural financing.
Sayyid Qutub (1986), Fi Zilal al-Quran, Beirut: Dar al-Shuruf, Vol.6, p.3637; Ahmad Mustafa alMaraghi (1998), Tafsir al-Maraghi, Beirut: Dar al-Kutub al-Ilmiyyah, Vol. 28, 29,30, p.154; The Holy Qur-an And The Translation Of Its Meanings and Commentary , Madinah: King Fahd Holy Qur-an Printing Complex, p.1786. 7 Ibid. 245 www.globalbizresearch.com

As such, there are number of questions need to be solved such as are all these financing facilities able to meet customers expectation for developing agriculture initiatives? Are there any value added features for all the banking products and services provided by the bank? Are there any significant differences of products offered by the bank between 2008 and 2012? All these questions will be analyzed and answered in this article based on the products and services provided by the bank between 2008 until 2012. The superior aim of this article is to explore the suitability and relevancy of all financing facilities provided by the bank since 2008 until 2012.
2. Methodology of Research
The methodology of research in this article is qualitative, namely through document analysis, interviews with relevant Agro Banks officers and observation from pamphlets and website of the bank between 2008 and 2012. Since the purpose of this research is to find out
the differences of all product and service facilities offered by the bank between 2008 and 2012, the qualitative approach is thus, more appropriate to be used for this research. The time frame between 2008 and 2012 is chosen because this period is considered as the critical point for the progressive movement of the bank, before it comprehensively transforms to full Islamic bank by 2015.
3. Literature Review
In terms of literature review, this article relied on various papers for instance, Financing in Agriculture, (http://banktani.tripod.com/gm5.htm.). This paper
comprehensively discusses all the funds, schemes and facilities provided not only by government sector but also financial institutions in promoting agriculture sector. Among those available funds are Fund for Food, Fund for Small and Medium Scale Industries and Fund for Rehabilitation of Small and Medium Scale Industries. Truly, this paper gave authentic information on the financing facilities available in todays market in this country. The article, Effects of the Farm Financial Crisis on the Profitability of Agribusiness Firms provides better understanding with regards of the effects that may occur when financial crisis happens on agribusiness firms. This article which has been written by James O. Wise and published in Journal of Agribusiness (1992), among others discusses the economic effects and hardships faced by farmers and agribusiness firms during farm

financial crisis period. Poor farm financial performance would be expected to have different impacts on different types of agribusinesses, whereby some purchases can be delayed (land and machinery), while some can be reduced (fertilizer, feed and storage). Rahji M.A.Y. and Adeoti A.I. (2010) explains the determinants that influencing commercial banks to ration agricultural credit in South-Western, Nigeria. It shows that farm size of the farmers, previous years income, enterprise type, household net worth and level of household agricultural commercialization are significant, but has negatively influenced the banks decision to ration credit to their customers and farmers. Joni Tamkin Bin Borhan et al. (2009) has listed down various Islamic financing facilities in agriculture provided by Islamic banking institutions in Malaysia. Indeed, this article is among the local published article in journal discusses in detail the availability of Islamic financing facilities in agriculture. According to Abd. Rahaman Rasid (2008), the financing facilities provided by Agro Bank can be classified into two categories, namely commercial funds and special funds. The commercial funds are basically market and profit driven, whereas special funds are special funds established by Malaysian government in providing funds for agriculture sector that are channeled through the Agro Bank. M. Ridhwan, A. A. (2011), explains that in Malaysia, not all Islamic banks or Islamic windows of conventional banks offer Islamic financing facilities for land cultivation and development projects. Nevertheless, because of the important of agriculture to the country, there are some Islamic banks and Islamic windows of conventional banks provide financial helps to agro entrepreneurs such as Agro Bank, Bank Rakyat and Maybank Islamic Berhad. According to him, Agro Bank provides the most comprehensive products and services to the agro entrepreneurs in the country.
4. Background of Agro Bank

Agro Bank is an institution which provides financial and banking facilities. Agro Bank gives utmost priority to the needs of customers by providing attractive products and services such as saving activities, banking services, loan facilities, insurance coverage and advisory services. As it trusted by the government, Agro Bank is likely to be a government-linked-company (GLC) under the Minister of Finance Incorporated (MFI). The banks financing of the agricultural sector is driven by a policy set forth by the Ministry of Agriculture and Agro-based Industries.

Agro Bank is a continuity of the former Bank Pertanian Malaysia, and they already has 40 years of experience in agricultural banking sector and outstanding track record in shaping and developing successful entrepreneurs. Agro Bank is highly confident in providing the best services to the community by its wide network of branches throughout Malaysia. The vision of this bank is to be a leading bank with a focus on agriculture. The bank will provide a full range of financial services in a market and client driven with specific target groups such as micro, small and medium entrepreneurs and private individuals8. The objectives of the bank are to promote Malaysias agricultural development, to coordinate and run the grant of credit from public funds for agricultural purposes by the various persons or bodies whether incorporate or unincorporated, to afford loans, advances and other credit facilities for the development of agriculture sector and agriculture related business, to mobilize savings with particular regard to the agricultural sector and to accept savings and time deposits, to encourage the well-being of the agricultural community and to carry on the general business and progressive financial services institution for the needs of its customers9.
5. Islamic Banking Products for Agro Entrepreneur in 2008

The facilities available for financing the agriculture sector, provided by Agro Bank, can be classified into two categories ; commercial funds and special funds established by government to provide funds for agriculture sector (that are channeled through Agro Bank). The objective of providing these financing facilities is to give working capital for a new agriculture initiatives and expanding existing agro project10. From time to time, the Malaysia government has
established schemes and provided funds for financing agriculture sector. These funds can be considered as incentives to promote investments and give priority to agricultural sector. These incentives usually are taken in the form of low cost of financing, longer duration of financing period and higher margin of financing, with these schemes open to all institutions and companies incorporated in Malaysia (as long as the ownership by Malaysians is more than 50%), as well as to all Malaysian citizens11.
8 9
Agro Bank, http://www.agrobank.com.my, 15th December 2008 and 23rd July 2012. Ibid. 10 Abd. Rahaman Rasid, Peluang Pembiayaan Dalam Sektor Makanan, http://banktani.tripod.com/arar.htm, 9th November 2008; Financing of Agriculture, http://banktani.tripod.com/gm5.htm, 9th November 2008; Agro Bank, http://www.agrobank.com.my, 15th December 2008; Agro Bank Pamphlet (2008), Financing Facilities. 11 Dato Mohd. Rosli Abd. Aziz, Financing of Food and Agricultural Production, http://banktani.tripod.com/gm3.htm, 9th November 2008; Dato Mohd. Rosli Abd. Aziz, Peranan Bank Pertanian Dalam Memajukan Sektor Pertanian Negara, http://banktani.tripod.com/gm1.htm, 9th November 2008; Financing of Agriculture, http://banktani.tripod.com/gm5.htm, 9th November 2008; Agro Bank, http://www.agrobank.com.my, 15th December 2008. 248 www.globalbizresearch.com

Through these special funds, Agro Bank will continue its social responsibility to finance agriculture sector, as has been assigned by the government through Ministry of Agriculture and Agro-Based Industry in achieving the related policies under Ninth Malaysia Plan (RMK-9)12. The examples of funds provided by the Agro Bank are as follows: Table 1.1 Agro Bank: Fund for Food (3F Loan). Features: Objective: Description: To promote investment in the food production activities at a reasonable cost. To promote primary food production (including sea-food, animal husbandry, vegetables and fruits). To promote the efficient distribution of food and food products. Eligibility: Malaysia citizens residing in Malaysia. Malaysian owned institutions and companies (at least with 51% local ownership). Financing Limit: Maximum Financing: Financing Period: Shariah Concept Applied: Collateral: Projects Eligible for Financing: RM10,000-RM10 million. 90% of project cost. Up to 10 years. Bay Bithaman Ajil. Fully secured. Food production, processing and marketing (crops, livestocks and fishery). Eligible items for crops are vegetables, tea, paddy, Roselle, maize, tapioca, production of seeds and planting equipment for food crops and fruits such as banana, mango, guava, watermelon, papaya, pineapple, sugar cane, coffee, cocoa and etc. Source: Suhaimi Bin Yacob, Executive 2, Financing Division, Agro Bank, Jalan Padang Garong, Kota Bharu, Kelantan. Interview carried out on 14th December 2008 at 11.15 a.m. to 11.50 a.m.; Agro Bank Pamphlet (2008), Financing Facilities; Agro Bank, http://www.agrobank.com.my, 15th December 2008.
12
Habsah Dinin, Skim Pembiayaan dipelbagai. Berita Harian, August 8, 2008, 30. 249 www.globalbizresearch.com

Table 1.2 Agro Bank: Bumiputera Industrial and Business Community Scheme (MPPB) Features: Objective: Description: To encourage and develop Bumiputera Entrepreneurs in the agriculture sector. To provide fixed capital and working capital to Bumiputera Enterprise in developing agriculture project or agro based businesses. Eligibility: Companies with paid up capital exceeding RM100,000. For farmer and fishermen institutions, they should have equity more than RM100,000. Priority is given to the individual entrepreneurs who are expanding their businesses. Financing Limit: Maximum Financing: Financing Period: RM10,0000-RM5 million. 90% of project cost. Not exceeding 10 years or up to 23rd October 2014. Shariah Concept Applied: Collateral: Projects Eligible for Financing: Bay Bithaman Ajil. Fully secured. Commercial agriculture sector, sectors of agriculture based manufacturing or processing and also agriculture services. Source: Suhaimi Bin Yacob, Executive 2, Financing Division, Agro Bank, Jalan Padang Garong, Kota Bharu, Kelantan. Interview carried out on 14th December 2008 at 11.15 a.m. to 11.50 a.m.; Agro Bank Pamphlet (2008), Financing Facilities; Agro Bank, http://www.agrobank.com.my, 15th December 2008.

Table 1.3 Agro Bank: Commercial Agriculture Graduate Entrepreneur Scheme (SUTKS) Features: Objective: Description: To reduce unemployment rate among graduates and to produce commercial farming graduates. Eligibility: Financing Limit: Maximum Financing: Financing Period: Shariah Concept Applied: Collateral: Projects Eligible for Financing: Unemployed graduates. RM50,000 and not exceeding RM100,000. 90% of project cost. Up to 6 years. Bay Bithaman Ajil. Case by case. All upstream and downstream commercial agricultural production activities (short and medium term or 1 to 5 years projects). Source: Suhaimi Bin Yacob, Executive 2, Financing Division, Agro Bank, Jalan Padang Garong, Kota Bharu, Kelantan. Interview carried out on 14th December 2008 at 11.15 a.m. to 11.50 a.m.; Agro Bank Pamphlet (2008), Financing Facilities; Agro Bank, http://www.agrobank.com.my, 15th December 2008. Table 1.4 Agro Bank: Youth Farmers Scheme-i Description: To assist youth in self improvement activities related to the agriculture and agro-based industry. Eligibility: Malaysian citizens. Individual or group of individuals. Financing Limit: Maximum Financing: Financing Period: Shariah Concept Applied: Collateral: Projects Eligible for Financing: RM15,000-RM50,000. 90% of project cost. Up to 7 years. Bay Bithaman Ajil. No collateral and guarantor are required. All upstream and downstream agriculture and agro-based industry projects.
Features: Objective:

Source: Suhaimi Bin Yacob, Executive 2, Financing Division, Agro Bank, Jalan Padang Garong, Kota Bharu, Kelantan. Interview carried out on 14th December 2008 at 11.15 a.m. to 11.50 a.m.; Agro Bank Pamphlet (2008), Financing Facilities; Agro Bank, http://www.agrobank.com.my, 15th December 2008.
6. Islamic Banking Products for Agro Entrepreneur in 2012

Listed below are some of the examples of current financing facilities offered by Agro Bank until July 2012: Table 1.5Agriculture Financing Provided by Agro Bank in 2012 Fund For Food (3F Loan) Financing Objectives ~ To increase the National food production. ~ To reduce food imports. Eligibility Sector ~ Commercial agricultural sector (crop, livestock, fishery). Eligibility for Financing ~ Production of commodities ~ Upstream and downstream projects in food producing industries ~ 50% financing of factory acquisition / construction. ~ Maximum financing of land acquisition lease up to 30%. Financing Limit ~ Up to 90% of project cost ~ Ranges from RM 10,000 to RM 10 million Eligibility of Applicant ~ Malaysians ~ Malaysian-owned companies Return of Investment/interest Financing Period Security/Guarantee ~ 3.75 % per year for RM5 million ~ 8 years ~ Full security/guarantee as follows: land for the project, buildings, fixed deposit, certificates, share certificates and other security acceptable to the bank.
Bumiputera Industrial and Business Community Scheme (MPPB) Financing Objective ~ To promote and develop Bumiputera

entrepreneurs in agriculture sector, particularly in the production of food crop, processing and marketing of agriculture products except for rubber, oil palm, tobacco, cocoa, pepper, forestry, drinks and vegetable oil. Eligibility Sector ~ Commercial agricultural sector (crop, livestock, fishery). ~ Agricultural sectors of manufacturing/processing food, feed, fish, food and chemicals. Eligibility For Financing Financing Limit ~ 20% financing of land acquisition/lease. ~ Up to 90% of project cost. ~ Ranges from RM10, 000 to RM5 million. Eligibility Of Applicant ~ Individual/group of entrepreneurs/ Bumiputera institution. ~ Bumiputera company with 70% Bumiputera equity Return of Investment/interest Financing Period Security/Guarantee ~ 3.75% per annum ~ Up to 120 months (10 years). ~ Full security/guarantee as follows: land for the project, buildings, fixed deposit certificates, share certificates and other security acceptable to the bank. Youth Farmers Scheme-i (SBT-i) Financing Objectives ~ To provide financing to assist youth to embark and expand business venture on full time basis. Eligibility Sector ~ Livestock including bee farming ~ Fishery, farming service ~ Short-term crop Eligibility for Financing ~ Written recommendation and support from the Youth and Sports Ministry

~ Fixed and working capital Financing Limit ~ Loan amount: RM5, 000 RM15, 000 (no guarantor) ~ Loan amount RM15, 001 RM50, 000 (guarantor with fixed income of at least RM800 per month) Eligibility of Applicant ~ Individual Malaysian citizen aged between 18-40 years old ~ Must register online as an applicant through the portal of Majlis Penggalakan Ekonomi Belia (MPEB) at www.mpeb.gov.my ~ Passed the screening test conducted by Ministry of Youth and Sport ~ No adverse record with financial institutions. Financing Period Security/Guarantee ~ Maximum 7 years ~ Full security/guarantee acceptable by Agro Bank are, fixed deposit, fixed assets (land/building) and others
Commercial Agriculture Graduate Entrepreneur Scheme (SUTKS) Financing Objectives ~ To encourage graduate to embark in the commercial agriculture sector as an alternative career development. Eligibility sector ~ Food production and processing involving crops, livestock and fishery ~ Upstream products for food production for example fish fry and feed meal ~ Projects with quick returns are encouraged Eligibility for Financing ~ Working capital and expansion in productive capacity e.g. purchase of fixed asset Financing Limit Eligibility of Applicant ~ Maximum financing RM500,000 ~ Unemployed graduates with keen interest to develop a full time career in agriculture sector.

Return of Investment/interest Financing Period Security/Guarantee
~ 3% per annum ~ 6 years ~ Full security/guarantee acceptable by Agro Bank.
Source: Norhidayu Binti Mohamed Nawai, Executive, Agro Bank, Leboh Pasar Besar, Kuala Lumpur. Interview carried out on 9th April 2012 at 11.15 a.m. to 11.50 a.m.; Agro Bank, http://www.agrobank.com.my, 23rd July 2012.
7. Analysis of Islamic Banking Products between 2008 and 2012

From the above table, we can conclude that most of the contracts used in the financing scheme is based on Bay Bithaman Ajil concept. Bay refers to an opposite word for buying namely selling13. Al-Bay from the fiqh terminology can be defined as the exchanging of property with property based on definite way14. Thaman means price or the value of certain goods in a transaction15. Furthermore, Ajil refers to defer or delay16. Therefore, Bay Bithaman Ajil (BBA) can be defined in many ways. It can be defined as the sale of goods on a deferred payment basis at a price which includes a profit margin agreed by both parties17. BBA also refers to a sale agreement between the owner of the goods and the buyer, whereby the buyer will defer the payment of the goods to a specific period of time or will pay by installment18. According to Dr. Masum Billah, BBA refers to the delivery of a product taken on the spot but the delivery of the payment is delayed for an agreed period, whereby payment can be made in a lump sum or in installments, provided there is no extra charge for the delay19. In terms of mode of financing, BBA operates when the bank initially determines the requirements of the customer in relation to the duration and manner of repayment. The bank then purchases the asset and subsequently sells the relevant asset to the customer at the agreed price, which comprises the
13 14
Ibn Manzur (2003), Lisan al-Arab, Riyad: Dar al-Alim al-Kutub, Vol.5, p.371. This view was given by Hanafi Scholars. See al-Kasani (1998), Badai al-Sanai, Beirut: Dar Ihya alTurath al-Arabi, Vol.5, p.133; Ibn al-Hummam (1995), Fath al-Qadir, Beirut: Dar al-Kutub al-Ilmiyyah, Vol.5, p.73. 15 Ibn Manzur, op.cit., Vol.8, p.233. 16 Ibid., Vol.7, p.10. 17 Bank Kerjasama Rakyat Malaysia Berhad, http://bankrakyat.skali.my/web/guest/syariahbankingconcept, 21st December 2008; Meezan Bank, http://www.meezanbank.com/glossaryB.aspx, 21st December 2008. 18 Sobri Salamon (1989), Ekonomi Islam: Pengenalan, Sistem dan Kemungkinan , Selangor: Ar-Rahmaniah, p.38. See also Nor Mohamed Yakcop (1996), Teori, Amalan Dan Prospek Sistem Kewangan Islam Di Malaysia, Kuala Lumpur: Utusan Publications & Distributors Sdn. Bhd., p.80. 19 Dr. Masum Billah, http://www.applied-islamicfinance.com/sp_finance_3.htm, 21st December 2008. 255 www.globalbizresearch.com

actual cost of the asset to the bank and the banks margin of profit that varies according to the value and type of the project20. Based on the explanation above, the contract of BBA is a form of Islamic financing with respect of selling and delivery of asset or property to the buyer at the time of contract (on the spot), whereas the payment for the price plus the profit margin will be delivered in the future time by installments21. The validity of BBA contract is obvious since it uses the sale concept as mentioned in the fiqh muamalat. Through this kind of contract, the customer will not borrow any money from the bank, instead the bank will buy the desired asset by the customer and the bank will sell it back to the customer at a mark-up sale price. The relationship between customer and bank is similar to the relationship between buyer and seller in the sale contract and not as in a loan contract, whereby the connection is between borrower and lender as being practiced by the conventional bank22. According to Associate Profesor Dr. Noor Naemah Bt. Abdul Rahman, the contract of BBA and Bay al-Innah is lawful since there is a current need to the society as a mode of Islamic financing in order to avoid the prohibition of riba in Islam as a temporary means before a better alternative of financing is found23. This view is also shared by Associate Professor Datin Dr. Paizah Binti Ismail24. She regards that the contract of BBA and Bay al-Innah is an alternative to conventional loan system which is based on interest or riba. This concept should be accepted in order to avoid the element of riba, which is clearly against the Shariah law. She also added that Agro Bank uses the contract of BBA and Bay al-Innah intensively for financing agro projects based on the public interest or general good of the society in this country on the basis of current
20
Bank Islam Malaysia Berhad (1994), Islamic Banking Practice from the Practitioners Perspective, Kuala Lumpur: BIMB, p.72. 21 Muhammad Uqlah Ibrahim (1987), Hukm Bay al-Taqsit fi al-Shariah wa al-Qanun, Jordan: Maktabah al-Risalah al-Hadithah, pp.12-13. 22 Mustafa al-Khinn et.al.,op.cit., Vol.3, pp.37-38; Mohammad Hashim Kamali (2002), Islamic Commercial Law: An Analysis of Futures and Options, Petaling Jaya: Ilmiah Publishers, pp.132-133; Norazlina Abd. Wahab (2005), Al-Bay Bithaman Ajil: Suatu Alternatif KepadaPinjaman Berasaskan Riba, in Abdullah Alwi Hj. Hassan et.al. (eds.), Teori dan Aplikasi Kontemporari Sistem Ekonomi Islam di Malaysia, Kuala Lumpur: Utusan Publications & Distributors Sdn. Bhd., pp.90-91. 23 Associate Professor Dr. Noor Naemah Bt. Abdul Rahman is a lecturer at Department of Fiqh and Usul, Academy of Islamic Studies, University of Malaya, Kuala Lumpur. Her expertise is in principles of Islamic jurisprudence, fatwa and also in contemporary fiqh. She is also a member of Shariah Committee for AMBANK Berhad since 2007. This interview was conducted on 12 th March 2009 at 11.00 a.m. to 11.35 a.m. at her office. 24 Associate Professor Datin Dr. Paizah Binti Ismail is currently teaches at Department of Islamic Law, Ahmad Ibrahim Kulliyyah of Laws, International Islamic University Malaysia, Gombak. Her expertise is in the field of fiqh and usul as well as in Islamic transactions. She is also a Shariah Advisor for Agro Bank since 2005. 256 www.globalbizresearch.com

reality (Waqi). Shariah experts cannot be too rigid in validated a shariah contract in the rapid growing and expanding of financial sector nowadays25. In terms of products offered by the Agro bank, in comparison between 2008 and 2012, the products are mainly the same expect in some aspects which have been adjusted in order to attract the customers such as the current profit rate for Fund for Food (3 F) financing is 3.75%, whereby previously was at 4%. To date, no new or latest product offered by the Agro Bank to expand the agriculture initiatives by the local Malaysian farmers and agro entrepreneurs.
8. Conclusion
This article has covered aspects relating to the financing facilities provided by Agro Bank in Malaysia in assisting agro entrepreneurs in their pursuit of agro projects. In the being of this article, there was a discussion of various financing facilities offered by Agro Bank for the agricultural initiatives. It can be concluded that there are various aspects that need to be altered in order to show the attractiveness of financing facilities for agriculture in Islam. Agro Bank for instance, needs to introduce different concept of Shariah contracts in the banks future products rather than only focuses on Bay Bithaman Ajil and Bay al-Innah concepts as well as try to introduce more attractive products for the young agro entrepreneurs . It is suggested that in the future research, more comprehensive products introduced by the bank are explored.
References
Buhuti. 1982. Kashshaf al-Qina, Beirut: Dar al-Fikr. Dardir.n.d.al-Sharh al-Kabir, Qahirah: Matbaah al-Azhariyyah. Ibn Hazm. 1970. al-Muhalla, Qahirah: Matbaah al-Jumhuriyyah al- Arabiyyah. Ibn al-Hummam. 1995. Sharh Fath al-Qadir, Beirut: Dar al-Kutub al-Ilmiyyah. Ibn Juzay. n.d. al-Qawanin al-Fiqhiyyah, Beirut: Dar al-Qalam. Ibn Manzur. 1994. Lisan al-Arab, Beirut: Dar al-Sadir. Ibn Arabi. 1978. Ahkam al-Quran, Qahirah: Matbaah Isa al-Halabi. Ibn Abidin. 1979. HashiyahRadd al-Muhtar, Beirut: Dar al-Fikr. Ibn Qudamah. 1999. al-Mughni, Riyad: Dar Alim al-Kutub. Ibn Taimiyyah. 1997. Fatawa, Qahirah: Dar al-Wafa. Jazairi, Abu Bakr al-. 1979. Minhaj al-Muslim, Beirut: Dar al-Jil. Kasani, al-. 1998. Badai al-Sanai, Beirut: Dar Ihya al-Turath al-Arabi.
25
Interviewed with Associate Professor Datin Dr. Paizah Binti Ismail on 26th March 2009 at 10.10 a.m. to 10.45 a.m. at her office in Gombak. 257 www.globalbizresearch.com

M. Ridhwan, A. A. 2012. Agriculture in Islam From The Perspective of Economics, Banking & Finance. Johor: UTM Press Publisher. M. Ridhwan, A. A. 2010.Contract of al-Muzaraah: Concept and Possibility of Its Application in Islamic Banking. Journal of Management & Muamalah. Vol.3. Bangi: Selangor International Islamic University College. M. Ridhwan, A. A. 2009. Financing Facilities for Agro Entrepreneurs in Islamic Banks. Journal of Management & Muamalah, Vol.2. Bangi: Selangor International Islamic University College. M. Ridhwan, A. A. 2010. Agribusiness and Financing Facility in Islam: From the Perspective of Agro Bank, Malaysia. Journal of Islamic Economics, Banking and Finance. Vol.6. No.4. Dhaka: Islami Bank Training and Research Academy. M. Ridhwan, A. A. 2011. Contracts of Land Revival in Fiqh Muamalat and Islamic Financing for Agro Initiative in Islamic Banking Institutions. The Journal of Muamalat and Islamic Finance Research. Vol.8. No.1. Bandar Baru Nilai: Universiti Sains Islam Malaysia. Maydani, al-. 1992. al-Lubab, Qahirah: Matbaah Subayh. Muslim . 1999. Sahih Muslim, Riyad: Dar al-Salam. Shaikh Mohd Saifuddeen Shaikh Mohd Salleh et.al. (eds.). 2006. Food and Technological Progress: An Islamic Perspective. Kuala Lumpur: MPH Group Publishing Sdn. Bhd. Sarakhsi, al-. 2001. al-Mabsut, Beirut: Dar al-Kutub al-Ilmiyyah. Sabiq, al-Sayyid. 1994. Fiqh al-Sunnah, Beirut: Dar al-Kitab al-Arabi. Sayyid Qutub. 1986. Fi Zilal al-Quran, Beirut: Dar al-Shuruf, Vol.6. Sunan Ibn Majah. 1952. Qahirah: Dar Ihya al-Kutub al-Arabiyyah.The Holy Qur-an: English Translation of the Meanings and Commentary (1410H),Madinah: King Fahd Holy Qur-an Printing Complex. Tirmidhi.1999. Jami al-Tirmidhi, Riyad: Dar al-Salam. Yusuf al-Qaradawi. 1960. The Lawful and the Prohibited in Islam, Indianapolis: American Trust Publications. Zuhaili, Wahbah al-. 1985. Fiqh al-Islam wa Adillatuh, Damshiq: Dar al-Fikr.
Interviews
Associate Professor Datin Dr. Paizah Binti Ismail on 26th March 2009 at 10.10 a.m. to 10.45 a.m. Associate Professor Dr. Noor Naemah Bt. Abdul Rahman on 12th March 2009 at 11.00 a.m. to 11.35 a.m.

Norhidayu Binti Mohamed Nawai, Executive, Agro Bank, Leboh Pasar Besar, Kuala Lumpur. Interview carried out on 9th April 2012 at 11.15 a.m. to 11.50 a.m. Suhaimi Bin Yacob, Executive 2, Financing Division, Agro Bank, Jalan Padang Garong, Kota Bharu, Kelantan. Interview carried out on 14th December 2008 at 11.15 a.m. to 11.50 a.m.

A Review of Islamic Banking Products Offered Byagro Bank Between 2008 and 2012

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A Review of Islamic Banking Products Offered Byagro Bank Between 2008 and 2012

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Journal of Emerging Issues in Economics, Finance and Banking (JEIEFB)

Journal of Emerging Issues in Economics, Finance and Banking (JEIEFB)

Journal of Emerging Issues in Economics, Finance and Banking (JEIEFB)

Journal of Emerging Issues in Economics, Finance and Banking (JEIEFB)

Journal of Emerging Issues in Economics, Finance and Banking (JEIEFB)

4. Background of Agro Bank

Journal of Emerging Issues in Economics, Finance and Banking (JEIEFB)

5. Islamic Banking Products for Agro Entrepreneur in 2008

Journal of Emerging Issues in Economics, Finance and Banking (JEIEFB)

Journal of Emerging Issues in Economics, Finance and Banking (JEIEFB)

Journal of Emerging Issues in Economics, Finance and Banking (JEIEFB)

Journal of Emerging Issues in Economics, Finance and Banking (JEIEFB)

6. Islamic Banking Products for Agro Entrepreneur in 2012

Journal of Emerging Issues in Economics, Finance and Banking (JEIEFB)

Journal of Emerging Issues in Economics, Finance and Banking (JEIEFB)

Journal of Emerging Issues in Economics, Finance and Banking (JEIEFB)

Return of Investment/interest Financing Period Security/Guarantee

~ 3% per annum ~ 6 years ~ Full security/guarantee acceptable by Agro Bank.

7. Analysis of Islamic Banking Products between 2008 and 2012

Journal of Emerging Issues in Economics, Finance and Banking (JEIEFB)

Journal of Emerging Issues in Economics, Finance and Banking (JEIEFB)

Journal of Emerging Issues in Economics, Finance and Banking (JEIEFB)

Journal of Emerging Issues in Economics, Finance and Banking (JEIEFB)

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