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Tuesday, December 3, 2013

The Pregnant Deer

In a forest, a pregnant deer is about to give birth. She finds a remote grass field near a strong-flowing river. This seems a safe place.
Suddenly labour pains begin. At the same moment, dark clouds gather around above and lightning starts a forest fire. She looks to her left and sees a hunter with his bow extended pointing at her. To her right, she spots a hungry lion approaching her.
What can the pregnant deer do? She is in labour! What will happen? Will the deer survive? Will she give birth to a fawn? Will the fawn survive? Or will everything be burnt by the forest fire? Will she perish to the hunters' arrow? Will she die a horrible death at the hands of the hungry male lion approaching her? She is constrained by the fire on the one side and the flowing river on the other and boxed in by her natural predators.
What does she do? She focuses on giving birth to a new life.
The sequence of events that follows are:
- Lightning strikes and blinds the hunter.
- He releases the arrow which zips past the deer and strikes the hungry lion.
- It starts to rain heavily, and the forest fire is slowly doused by the rain.
- The deer gives birth to a healthy fawn.
In our life too, there are moments of choice when we are confronted on all sides with negative thoughts and possibilities. Some thoughts are so powerful they overcome us and overwhelm us. Maybe we can learn from the deer. The priority of the deer, in that given moment, was simply to give birth to a baby. The rest was not in her hands and any action or reaction that changed her focus would have likely resulted in death or disaster. Where is your focus? In the midst of the storm keep it on Allah!

Monday, November 25, 2013


Tawarruq is a transaction where one party buys some goods on credit at a marked-up price and sells the same at a lesser value for the purpose of getting cash (i.e. the spot value of the goods). The purpose of this transaction is not the possession of the goods, but the obtainment of liquidity.
The parties to a tawarruq transaction are the seller or creditor ("musawwariq") and the purchaser ("mutawarriq" or "mustawriq").
Tawarruq contracts developed as a means of getting ready cash (and on the part of the party providing the cash, of granting financial assistance and being compensated for it) whilst circumventing the prohibition against the payment and charging of interest.
An illustration of the basic tawarruq process:

Nowadays, it is commonly used by Islamic banks as a mode of financing (for example, for personal financing) as well as an important tool for liquidity management (for example, by means of short-term placement mechanism involving the sale and purchase of commodities on the international commodities market i.e. commodity murabaha).
An example of the current utilisation of tawarruq is as offered by HSBC Amanah's Personal Finance, where the customer buys metals from the bank at a pre-agreed profit margin (which sum is payable in instalments), and then sells the metals on the customer's behalf to an international broker (wthe proceeds of which sale is transferred into the customer's account.
Bank Muamalat Malaysia Berhad also utilises tawarruq in its Muamalat Cash-Line Facility-i, which is offered for working capital purposes.
The basic form of tawarruq is considered permissible by all four schools of Islamic thought.
Types of Tawarruq:
"Classical tawarruq" or "real tawarruq" is the traditional method of tawarruq whereby the financier sells the goods to the mutawarriq, who then disposes of the goods in the open market.
"Organised tawarruq" or "managed tawarruq" is the term bestowed on the type of tawarruq practised by Islamic banks today, i.e. where the financier manages the tawarruq process. One example is when the financier sells the goods to the mutawarriq, financier or its nominee is then appointed the mutawarriq's agent to on-sell the goods on his behalf on the open market.
"Reverse tawarruq" is similar to organised tawarruq but where the bank is the mutawarriq/customer seeking liquidity.
The Difference Between Tawaruq and Bai Inah:
Bai Inah is a mode of financing wherein the financier sells goods to the customer on credit terms, with a mark up of the price, and subsequently purchases the same goods from the customer at the spot price.
Although Bai Inah is accepted in Malaysia, it has not been accepted as a shariah-compliant financing instrument in the Middle East as it is considered a legal fiction, in that there is a buy-back of the goods on the part of seller; therefore the sale and purchase transaction is merely to create a debt obligation which is no different from, or tends to lead to, usury.
Usury is not permitted in Islamic transactions, pursuant to the oft-quoted Quranic source, Al-Baqarah:275 -
"Those who consume interest cannot stand [on the Day of Resurrection] except as one stands who is being beaten by Satan into insanity. That is because they say, "Trade is [just] like interest." But Allah has permitted trade and has forbidden interest. So whoever has received an admonition from his Lord and desists may have what is past, and his affair rests with Allah. But whoever returns to [dealing in interest or usury] - those are the companions of the Fire; they will abide eternally therein."
Tawarruq is distinguished from Bai Inah in that there is no buy-back; rather, the mutawarriq is free to dispose goods to any other party on the open market. Therefore, it is seen as a true sale and therefore permissible.
Tawarruq Now:
As previously stated, tawarruq is, among others, an important tool for Islamic banks to manage their liquidity requirements. It is also seen as a shariah-compliant alternative to Bai Inah.
However, the Fiqh Academy of the Organisation of Islamic Conference ("OIC Fiqh Academy"), has, by its Resolution No. 179 (19/5) at its 19th Session held on 26-30 April 2009, held that although classical tawarruq is permissible (so long as it complies with the requirements of sale transactions), organised tawarruq and reverse tawarruq are not permissible.
Even so, in the absence of a more suitable mode of transaction, tawarruq continues to be utilised by Islamic banks. Indeed, some scholars have even argued for the continued use of tawarruq, albeit with some changes so as to strengthen the structure so as to avoid those practices which violate the shariah.

Tuesday, November 5, 2013

Manager vs Leader

A young manager was saying the other day. "I've been reading all about leadership, have implemented several ideas, and think I'm doing a good job at leading my team. How will I know when I've crossed over from being a manager to a leader?" he wanted to know.
I thought long and hard, and came up with three tests that will help you decide if you've made the shift from managing people to leading them.

1. Counting value vs Creating value

You're probably counting value, not adding it, if you're managing people. Only managers count value; some even reduce value by disabling those who add value. If a diamond cutter is asked to report every 15 minutes how many stones he has cut, by distracting him, his boss is subtracting value.

By contrast, leaders focuses on creating value, saying: "I'd like you to handle ‘A’ while I deal with ‘B’." He or she generates value over and above that which the team creates, and is as much a value-creator as his or her followers are. Leading by example and leading by enabling people are the hallmarks of action-based leadership.

2. Circles of influence vs Circles of power

Just as managers have subordinates and leaders have followers, managers create circles of power while leaders create circles of influence.

The quickest way to figure out which of the two you're doing is to count the number of people outside your reporting hierarchy who come to you for advice. The more that do, the more likely it is that you are perceived to be a leader.

3. Leading people vs Managing work

Management consists of controlling a group or a set of entities to accomplish a goal. Leadership refers to an individual's ability to influence, motivate, and enable others to contribute toward organizational success. Influence and inspiration separate leaders from managers, not power and control.

In the arabia, Mohammad (sallallah wasalam) inspired millions of people to believe in the true God, and he walked shoulder to shoulder with Muslims so they could achieve the success. His vision became everyone's dream and ensured that this nation's push for victory was unstoppable. The world needs leaders like him who can think beyond problems, have a vision, and inspire people to convert challenges into opportunities, a step at a time.

I encourage my colleagues to put this theory to the test by inviting their team-mates for chats. When they stop discussing the tasks at hand, and talk about vision, purpose, and aspirations instead, that's when you will know you have become a leader.