Chapter 1 Introduction

Perception Accounting and Non-Accounting Student on Islamic Pawning
Chapter 1
1.0
Introduction
In Malaysia, there are two banking systems which are conventional and Islamic System. There is a different between conventional and Islamic finance which is the principle. Conventional banking has been created by western country fully based on man-made principle while as for Islamic system has been created based on our own religion which is Islam and by following the Quran and Sunnah (Zaharuddin, 2006). According to Iqbal and Mirahor (2007), Islam propounds the guiding principles and it prescribes a set of rules for all aspect of human life including economic aspect. This Islamic system has been created to help Muslim avoided riba. Many Islamic products has been develop to fulfill this obligation and to establish this system such as Murabaha, Mudharaba, Musharaka, Ijarah, Salam, Istisna, and so on. All Islamic banking in Malaysia is tied with Islamic Banking Act 1983 which establish on 7th April 1983 and has been monitored by Central Bank of Malaysia. Islamic pawnbroking also is one of the Islamic product and as an alternative to Muslim against conventional pawnbroking.
The history of conventional pawnbroking started in 15th century ago when Chinese merchant introduced the conventional pawnshop in sultanate Malacca. During this era no regulation or law created to protect pawnbroker or consumer. However after British conquer Tanah Melayu, licensing system have been develop call Pawnbroker Ordinance 1871. To standardize the regulation and law of pawnbroking in Malaysia, Pawnbroker Act 1972 created in June 1972. The idea of Pawnbroker Act 1972 was to give security and guarantee a healthy of pawnshop industry. Eventhrough there are rules and regulation in conventional pawnbroking that guide the pawnbroker and customer but, the principle of conventional pawnbroking was not supported the syariah compliance. Consequences from this situation, the Islamic pawnbroking have been introduced to the Muslim. Islamic pawnshop started in Malaysia since 1992. First state that takes challenge by implement or using Ar-Rahnu is Terangganu named Muassasah Gadaian Islam Terengganu (MGIT) created by Terengganu State Islamic Affair and Malay Custom in 23 January 1992. After Terengganu, Kelantan start its operation by subsidiary of Permodalan Kelantan Behad in March 1992. Bank Negara Malaysia, Malaysia Islamic Economic development Foundation or YPEIM, and Bank Kerjasama Rakyat Malaysia Berhad (Bank Rakyat) are assigning by Minister of Finance to introduce Ar-Rahnu. All these three institution have different duty to establish ArRahnu in Malaysia. YPEIM as supporter or funder, Bank Negara Malaysia is to provide the capability person in financing field, while Bank Kerjasama Rakyat Malaysia or Bank Rakyat is to deliver the infrastructure and managing the operation of Ar-Rahnu. In 1997, Bank Islam begins Islamic pawnbroking, and followed by other bank which is EON Bank in August 2002, Bank Pertanian Malaysia in September 2002 (Bhatt and Sinnakkanu, 2008; Safinar and Shamsiah, 2008).
Definition of pawn is to leave something valuable with pawnbroker in order to borrow money from them. Pawnbroker is who doing business by lends people money in exchange for valuable object while the definition for pawnshop is pawnbrokers shop which mean place where the transaction of pawn incurred (Longman Dictionary of Contemporary English pg.1039). According to Malaysia Islamic Economic development Foundation or YPEIM, Ar-Rahnu from Islamic law refer to valuable item that is use as collateral in a mortgage debt (loan), which is can be used to pay the debt if the debtor failed to pay it off. Ar-Rahnu from Arabic word mean stable and sustainable defined by Region Ar-Rahnu Secretariat (http://www.arrahnu.org/main.htm). YPEIM was establishing to provide Islamic pawnbroking. Region Ar-Rahnu Secretariat was setup under YPEIM to expand Ar-Rahnu as Micro Credit Programme.
1.1
Problem Statement
Conventional pawnshop in Malaysia had already been implemented long time ago compared to Islamic pawnshop. According to Prof. Dr. Abdullah (Utusan Malaysia, 2006) there are issue on conventional pawnshop such as interest rates charges on consumer and a situation where active direct transaction been conducted unfairly. Conventional pawnbroking lead to element of riba and Gharar which mean high interest rates of two percent per month or 24 percent per annum compared to Islamic pawnbroking. Even conventional pawnshop guide by Pawnbroker Act 1972, but does not protect and burden for lower income group. For example, with high interest rate it may be difficult to lower income group to pay and get back their jewellery. Islamic pawnshop are the another option or
alternative to avoid riba and Gharar in conventional pawnshop and already accepted by society (Azila, www.assaif.orgcontentdownload...Islamic%20Pawnbroking.pdf). According to Azura et. al, consumer of Islamic pawnbroking are housewife, pensioners, government servant, businessman, unemployed and also student so this study is conducted to indentify factors that influences and prevent accounting and non-accounting student on Islamic pawnbroking (ArRahnu) and to identify the ways to promote Islamic pawnbroking for accounting and nonaccounting student. 1.2 Research Objective The research objectives are: 1. To identify factors that influence and prevent accounting and non-accounting on Islamic pawnbroking. 2. To identify ways to promote Islamic pawnbroking for accounting and nonaccounting student. 1.3 Research Question Based on research objective, research question in this research are: 1. What are the factors that influence and prevent accounting and non-accounting on Islamic pawnbroking? 2. How to promote Islamic pawnbroking for accounting and non-accounting student?
1.4
Contribution Significance from this research will gain a more information, knowledge and benefits
about concept Islamic pawnbroking, will increase usage of Ar-Rahnu by accounting and nonaccounting student, and will overcome factor that prevent accounting and non-accounting student from choosing Islamic pawnshop. Besides that, from this research institutions that running or provide Ar-Rahnu will understand the perception of Ar-Rahnu among the accounting and nonaccounting student, and financial institution such as bank, YPEIM, and NGO will use this research to make further planning or research to expand Ar-Rahnu and Islamic finance in future. As for the result of this study, hopefully it can be used by other party as a guideline in order to strengthen Ar-Rahnu scheme and introduces Islamic principle to non-accounting.
Preferences Books Zamil Iqbal, Abbas Mirakhor (2007). An Introduction to Islamic Finance Theory and Practice. John Wiley and Sons. Singapore. Zaharuddin Abd Rahman (2006). Money, You & Islam ; View on Contemporary Financial & Islamic Banking Issues. True Wealth Sdn. Bhd. Selangor. Bala Shanmugam et, al. Kamal Khir, Lokesh Gupta (2008). Islamic Banking: A Practical Perspective. Pearson Malaysia Sdn Bhd. Sudin Haron, Wan Nursofiza Wan Azmi (2009). Islamic Finance and Banking System: Philosophies, Principles and Practise. MacGraw-Hill (Malaysia) Sdn Bhd. Internet Ar-Rahnu Pajak Gadai Islam Pertama Malaysia publish in Utusan Malaysia written by Zunainah (2006)

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Perception Accounting and Non-Accounting Student on Islamic Pawning

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