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UNIVERSITAS
INDONESIA
lnvestasi Provek dan Keuangan
r AKlJ I TA~

TEKNIK

ISLAMIC FINANCING TYPE

OF TRANSACTIONS

Ayomi D. Rarasati, PhD

2020
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Type of transactions
----------------
• Mudaraba
Equity
• Musharaka

• lstisna
• ljara
Debt • Murabaha/musawama
• Sukuk
• Salam
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Mudharaba
-------------------
• A limited partnership or fund management
with pre-determined share of profits
• Islamic fi!nancial institution raises funds from
investors and invests in a project
• An entrepreneur provides management skills
to operate the project
• The financial institution deducts its profits for
the entrepreneur to then ,d istributes the
remaining profits to its investors
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Musharaka
------------------
• General partnership or joint venture or equity
participation
• Financiers and fund managers are partners
• To provide long-term financing of a project
• The furnishing of capital and management of
the project entity are shared
• All parties share risks and rewards of the
project in agreed percentages
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ljara
-------------------
• Leasing contract
• The leasing rate is based on a market
benchmark rate and reviewed periodically
during the lease term and adjusted
• The financier owns the asset and bears the
risks of ownership
• The financier bears costs such as cost of
maintenance, asset insurance, taxes (if
applied)
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lstisna
-------------------
• Commissioned custom manufacture
• Used to provide advance funding for construction
or development projects
• The asset that has been made by the financier
must be bought by the customer; and the
customer agrees and commits to make payment
• The customer can buy (under murabaha contract)
or lease the asset (under ijara contract)
• The financier owns the asset until it has been sold
and earns profit from the sale or lease
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Murabaha/musawama
-----------------------
• Murabaha: 'Purchase and sale' or 'cost plus or markup
financing'
• Musawama: when the cost of financing does not being
mentioned
• Used to provide short . .term working of capital
• Financier buys an asset which customer has previously
selected. It then sells to the customer for delivery at a
later date at a higher pri-ce
• Customer is permitted to make installment payments.
• Profit/markup is usually based on market benchmark
rate and the amount is fixed, but it also depends on the
amount of risk to which the financier is exposed
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Sukuk
-------------------
• Undivided ownership share in an underlying
asset or pool of assets that are owned by the
sukuk issuer
• Sukuk holders are entitled to receive a
proportionate share of the returns generated
by the underlying assets
• The typical sukuk has the following basic
structure.
- eg. in sukuk al-ijara the asset would be embedded
in an ,ijara transaction
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Salam
------------------
• Forward purchase.
• Sale whereby financier undertakes to supply
specific asset to a buyer at a future date in
exchange of an advanced price fully paid on
the spot
• The asset is available in the market and not
custom manufactured
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Kafalah
------------------
• A guarantee scheme given by insurer to a third
party in order to fulfil obligation of second
party (letter of guarantee)
• A service-based financing.
• Guarantor receives a fee (ujrah) as long as the
fee does not incriminate the party.
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