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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
This study analysis is primarily based on a case study of one of company that is listed on Bursa Malaysia Berhad.
The study focuses on whether the company had meet the criteria of halal products certification and also
whether the c
ompany’s financing is in compliance with the Shariah principle. The study focuses on Chemical
Company of Malaysia Berhad CCM as the unit of analysis.
Analysis is based on annual report year 2013 of CCM. This study also uses publicly available information,
particularly from CCM website to examine the details and background of the products and its financing.
6. FINDINGS AND DISCUSSION Background of the Company
CCM has had significant corporate presence in Malaysia and has since grown to a responsible and
independent Malaysian company to further enhancing quality of life for all. CCM aspires to contribute
significantly to the domestic and global Halal industries through its three Divisions by continually expanding its
market presence which is currently in more than 30 countries. Listed on the Main Board of Bursa Malaysia
with good returns to shareholders’ values, their vision is to provide innovative science and technology based
solutions to their consumers. CCM Group offers a wide range products and services to the chemicals, healthcare
and agricultural industries. CCM Group integrated
approach to business make us a unique “one-stop” agency.
Chemical products and applications Fertilizers and technical advisory services
Pharmaceuticals and healthcare products and services
Halal Initiatives of CCM
Chemical Company Malaysia Berhad CCM became the first pharmaceutical company to obtain the
renowned ‘Halal Malaysia’ certification of its range of health supplements under the brands CHAMPS,
Flavettes, Provition and Naturalle in 1999. This accomplishment is certainly a significant milestone to
be proud of as the halal certification manifests the high
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safety, efficacy, quality and hygiene aspects of CCM’s products. The vision and mission of Chemical Company
Malaysia Berhad CCM is to perform the fardh kifayah collective obligationduty by making available halal
products to consumers for worldwide. Besides to enhance quality of life, CCM provide products that are
consistently of high standard and quality.
CCM becomes the largest Good Manufacturing Practice GMP where the pharmaceutical certified manufacturer
in Malaysia with an expanded range of halal certified products of more than 100 including over-the-counter
OTC products. It’s the business expansion over the past years have also allowed CCM to provide a wide
range of health supplements. CCM’s has been
advocating the halal concepts. The company has apply the halal concepts consistently, particularly in the
company’s Chemicals Division. The division is the first ISO certified chemical manufacturer to obtain the
halal certification in 2004 for its liquid Chloride PAC and Ferric Chloride which are supplied to numerous
industries
like water
treatment, oleochemicals
including edible oil, food and beverages in Malaysia and the international market.
In April 2010, additional products of Calcium Nitrate and Nitric acid were also certificated halal by JAKIM.
Though currently halal certification is not extended to the fertilizer products, CCM Fertilizer
Division’s products which are mineral based comply with the
halal standards of hygiene and quality and are safe for use as plant nutrients. CCM Fertilizers Divisions is the
only compound fertilized manufacturer in Malaysia to have received both SIRIM MS49 and MS ISO 9001
quality awards.
CCM intends to play an important role in developing the Halal Standards for its various manufactured
products, collaborating closely with key Halal industry organizations such as JAKIM Department of Islamic
Development
Malaysia, HDC
Halal Industry
Development Corporation,
the Department
of Standards Malaysia, SIRIM, World Halal Forum WHF
and International Halal Integrity IHI Alliance. CCM believes that these standards will assist in alleviating the
challenges that come with the expanding Halal industry albeit
the different regulatory
requirements in
registering products in various countries. With CCM Halal Policy as the guiding principle and the
strong commitment from the top management via CCM Halal Council and its employees, CCM is focused
towards strengthening its Halal integrity, together with continuous capacity building and intensive marketing
activities to become the Halal Supplier of Choice worldwide.
Figure 2 shows the CCM Halal Council and Halal Commit
tees. The Council’s main focus is to strategise, plan, control, develop policiesguidelines and provide
leadership to drive, strengthen and promote halal initiatives of CCM. The Halal Council is chaired by the
company’s Group Managing Director. Members of the Council are consist of Muslim senior manager from
each of the company’s division. The halal initiates of CCM is strengthen by Halal Committees, which exist in
Pharmaceutical Division, Chemical Division and Fertilizers Division. Differ from Halal Council that
focus on strategic level, Halal Committees focus more on operational level. The Committees role is to ensure
that the operations of each divisions will always comply with the requirement of authorized Islamic certification
bodies and other related regulatory bodies.
Figure 2: CCM Halal Council and Halal Committees Source: CCM Halal Initiatives Booklet
Financing of CCM
Based on CCM’s financial statements, the liabilities of the company can be divided into non-current
unsecured financing and current unsecured financing. Table 1 shows CCM Group’s loans and borrowings for
the year 2012 and 2013.
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Table 1: CCM Group Interest Bearing Loans and Borrowings
2013 2012
Non-current-unsecured Sukuk musyarakah
Term loan 100,000
280,000 120,000
430,000
380,000 550,000
Current-unsecured
Banker’s acceptance Term loan
Revolving credit and trade facilities
Term loan and trade facilities
73,725 150,000
96, 675 49,234
88,560 -
124,130 80,953
369,634 293,643
Based on the above table, it can be observed that CCM has issued an Islamic security, sukuk. This
indicates that beside being a halal certified company, the company also use sukuk as one of its financing
instrument. Sukuk Musyarakah was issued by the company on 8 August 2011, where CCM issued RM120,
000 nominal amount of 5 year fixed rate unsecured and unrated sukuk at 4.35 per annum. MIDF Amanah
Investment Berhad MIDF Investment has been mandated as the Principal Adviser and Lead Arranger
for the Proposed Sukuk Issuance. The proceeds of the Sukuk Issuance is to be utilized to refinance wholly
CCM’s existing bridging facility of RM120.0 million with MIDF Investment. The purpose of the bridging
facility is to partly finance up to RM120.0 million of CCMs upcoming RM150.0 million Sinking Fund
Account commitment in respect of its existing RM500.0 million Musyarakah Commercial PapersMedium Term
Notes Programme. Some of significant covenants of the USM are as follows:
a
Financial covenants The company shall maintain the following ratios
throughout the tenure of the USM: i.
The finance to equity ratio of not more than 1.5 times.
ii. The profitinterest cover ratio of at least 2
times. b
Negative covenants The company will not, without written consent
from the trustee first, had and obtained for the followings:
i. Create or permit to subsist any security interest
over any of its present of future assets, other than permitted by the financing document and
trust deed.
ii. Reduce its authorized and issued shares save
and except for any decrease in its issued capital resulting from purchase or cancellation of its
own shares pursuant to section 67A of the Companies Act 1965.
iii. Add, delete, vary or amend its Memorandum or
Articles of Association on in manner inconsistent of the Financing Document other
than those permitted by the Financial Documents and Trustee Deed.
iv. Dispose any assets in excess of 25 of the
Group’s net assets as reflected in the latest consolidated annual audited financial statement
in any financial year other than those permitted by the Financing Document and Trustee Deed.
v. Undertake or acquire any other business or
subsidiaries where such undertaking or acquisition would have a material adverse
effect.
vi. Use the proceeds other than those permitted by
the Financing Document and Trustee Deed. However, other financing liabilities of CCM have no
sufficient information whether or not the instruments are Islamic financing. The company should disclose the
types of loans and trade facilities in the annual report, so that the shareholders and investors could make an
informed decisions.
7. SUMMARY