ISLAMIC FINANCE Joint Cooperation between MAINSPWNS and Universiti Sains Islam Malaysia

The 2015 International Conference of Management Sciences ICoMS 2015, April 23, UMY, Indonesia | 165 However the status Halal can be revoked if the comp anies do not fulfill JAKIM’s requirement. Under the governance of halal compliance, Trade Description Act 2011 is precisely explained about the monitoring the falsification of signage and image of Islam in the premises that do not being granted Halal Certificate from JAKIM.

4. ISLAMIC FINANCE

The main principle of Islamic finance, consequently, it is not consists of prohibition Riba, which is no receipt of interest. Besides, prohibition of activities of elements of Gharar uncertainty where are excessive of speculation is prohibited. It is based on Islamic norms such as morality, fairness, reasonableness and justice. Islamic finance also involved a willingness to share the consequences participants may reap gains as well as bear losses according to a pre-determined ratio. Therefore, an honest intention to take responsibility is the cornerstone of any Islamic business deal. Under the regulation of Islamic finance in Malaysia, there are several authorities body how are responsible and accountable to manage as well as to monitor the whole activities of business. In general, there are different sectors under the Halal industry are regulated by separated authority bodies. Similarly, the Islamic banking and financial sectors are also regulated by the different regulators with the different acts and regulations which are Bank Negara Malaysia controls the Islamic banks and takaful providers and Securities Commission Malaysia SC controls the Islamic capital Market. These regulations are to enhance the efficiency of the Islamic capital market, the SC issue list of Shariah compliance securities that can be used by investors as a guide for their investment. Shariah Advisory Council is the highest body for compliance. Shariah Governance SG is a means of corporate governance to unsure the compliance of business entities with Shariah. The SG is different from the traditional corporate governance CG in a way that the compliance with Shariah principle becomes the main objective of the governance in SG. The effective SG can improve the credibility of halal market participants and protect all stakeholders that are directly and indirectly connected with the industry. There are two main documents in Halal sectors which are Bank Negara Shariah Framework issued by BNM and Manual Prosedur Persijilan Halal 201 issued by JAKIM. Bank Negara plays an important role to set policies and supervise the Islamic Banking and takaful institution. There are two main levels of SG adopted by BNM. The first level is positioned at the central level of Bank Negara with the establishment of Shariah Advisory Council this aspect has been endosed in IBA 1983 and Takaful Act 1984. The second level is applied in individual Islamic banking institution. The SG of the individual Islamic banks and takaful is recognized through IBA 1983, Takaful Act 1984 and Bank Negara Shariah Governance Framework. However, Bank Negara Shariah Governance Framework provides more comprehensive aspect of SG that should be followed by these institutions.

5. RESEARCH METHOD AND DATA COLLECTION