Year 2010 Budget For Malaysia

The 'Malaysian' Budget for Year 2010 seemed promising for some companies out there, but to what extent can you expect out of the budget to help your business grow faster?

It has been said in the main media that our Prime Minister, Mr. Najib has planned out a "Shrinkage of Budget Deficit" plan. Just to satisfy the technical people reading this - The Malaysian government intends to reduce expenses to falling offset revenues. Of course, you can read that anywhere. While the purpose of "The Accounting Digest" is to provide "between-the-line" explanations pertaining the finance and accounting industries, stories of what the Malaysian government is planning to do can vary.

Malaysia's Budget 2010 Injecting billions of Ringgit as stimulus packages often come with one main responsibility every receiver and giver has to handle - Discipline. It's quite impossible to expect small companies to positively response to economic downturns, albeit the fact that their management practices have good cash reserves, financed well or practices excellent financial management.

The RM67 billion stimulus plan is measured to encumber businesses from fallouts, at the same time allow small timers to grow competitively. Yet again:

- Malaysia has unveiled RM67 billion (US$19 billion) of stimulus measures to counter a global recession that policy makers predict may cause the Southeast Asian economy to shrink as much as 5 per cent in 2009.

- The additional spending will swell this year's budget shortfall to 7.6 per cent of gross domestic product, the biggest in 22 years, the government said in March.

- That prompted Fitch Ratings to lower Malaysia's long-term local-currency credit rating to A, the fifth-lowest investment grade, from A+, on June 9. It was Fitch's first rating cut for the nation's debt since the Asian financial crisis in 1998. -Business Times

Yet again, the Malaysian government has said to put focus in education & health infrastructures, public social frameworks, agricultural and export growth for the country. These are excellent to start with - But how long have we been putting focus on these basic needs?

Tax Measures to call for in 2010 Looking at everyday news and getting updates from the mass media can be informational and entertaining - But it comes down to evaluating your businesses from the very foundation of it. Since many financial analysts, experts and economists would charge you a bomb for just advices alone, The Accounting Digest will point out some highlights in tax functions to help you evaluate and understand better:

Filing tax returns is no joke. Don't expect the tax framework to benefit you. Instead, make it work for your business in particular.

• Withholding tax system - Income tax from employees paid directly to the Tax department. For small companies, a financial restructuring plan can be done, but multiply that by 20 - 100 employees. Ask us how you can perform proper financial restructuring on withholding tax on your company.
• Taxation Fees - Corporate tax return fees, bookkeeping (in some cases) fees, company secretarial fees, etc. Since tax filing is complicated and varies between businesses, your tax professional can now provide you a list of what to declare, what can be declared and to what extent.
• Tax losses and group relief - (In taxation) When total expenses are more than income, you can incur a loss for taxation purposes. For certain industries, tax losses are at 70%. If you're unsure about how to go about this, be sure to ask your local tax professional.

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Article Source: http://EzineArticles.com/?expert=Ken_Low

Malaysia Offers Wonders to the Tourist

Malaysia was first given the name in 1963 after the Federation of Malaya, North Borneo, Sarawak and Singapore formed a federation comprising 14 states. At that time other names were considered too, among them was Langkasuka which was the name of a historic kingdom in the same area.

In the year 1511 Portugal established a colony in Malacca, which is situated on the east coast of Malaysia, but they were always in conflict with the Sultanate of Johor and the Sultanate of Aceh. The conflict lasted on until 1641 when the Dutch allied with the Sultanate of Johor to gain control from the Portuguese of Malacca.

Jumping forward in time, in 1963 the Federation of Malaysia came about. Initially the Sultanate of Brunei had wished also to join the Federation but due to pressure from some members of their population and some other issues to do with oil payments, they pulled out of the agreement.

In the early years of the Federation and independence, troubles continually reared up from Indonesia and President Sukarno, and also with Singapore's exit from the Federation in 1965. Then, the Philippines made a claim upon the state of Sabah.

Furthermore, due to the large racial variation, mainly made up of Malays, Chinese, Indians and ethno tribes people such as the Iban, there is a very delicate set up with the proposed idea that all peoples are to be treated fairly. Many people however feel that the political system is very much in favor of the Malays at the expense of all other races - the Chinese feel themselves to be treated very unfairly.

The governmental system has been modeled upon that of the British system, which is a legacy of colonial rule. From the date of independence from Britain in 1957, Malaysia has used a multi-party coalition to govern, which is known as Barisan Nasional.

Malaysia is now made up of 13 states, 2 of these are in Malaysian Borneo - Sarawak and Sabah, and 3 federal territories. The states are subdivided into districts, which are individually referred to as mukim. Governance over the country is divided between both federal and state governments.

Malaysia is by land mass the 66th largest country in the world being 320,000 km square, which is a similar size to Vietnam, New Mexico and Norway. Total population is 28 million which makes it the 43rd most populated country in the world which is similar to Venezuela and Saudi Arabia.

Article Source: http://EzineArticles.com/?expert=Joseph_Archibald

Regulatory system in Malaysia good

MALAYSIA has developed a good regulatory system since the Asian financial crisis, said Malaysia Airlines chairman Tan Sri Dr Munir Majid.

“There are (healthy) capital adequacy ratios, corporate governance and proper risk management practices in place,” he said during an interactive session on Reshaping the World Economy.

The “repair work” that Malaysia did as a result of the crisis was “detailed and thorough”, he said.

“We did a whole host of things to make sure whatever shortcomings pre-1997/98 were addressed, for example, in terms of corporate governance, capital debt ratio, risk management and training of directors.

“We had disclosure and transparency, so many things we improved on.

“However, we must not be complacent now; things can happen,” he said.

Later, on the sidelines of the symposium, Munir said now that the global economic crisis appeared to be quietening down “a bit”, the “danger” was that everyone was concerned about “going for growth.”

“They forget the cause of the crisis, the excesses, the mismanagement, the promise for new international financial architecture and so on – we don’t want to be hit again,” he said.

Munir also called for greater trust among the major economies of the world.

“Trust means when I lend money to you, I trust that you will make good use of it, I trust that I will get it back, (and) I trust that when I get it back in my currency, it will not be less than what I lent you.

“In that trust, you must tell me what you are doing with the money, and you must keep me informed. But then, you just take the money and do whatever you want. This is what has been happening.

“Cooperation means that I must respect you, you must respect me. I must make sure I give you the money properly and you understand that I have to be kept informed on what the money is used for and vice versa.

“This sort of things must be built up, so we can move on together,” he said.

Article Source: http://biz.thestar.com.my/news/story.asp?file=/2009/8/11/business/4494415&sec=business

New Malaysian system for immigration enforcement

KUALA LUMPUR, 12 JUNE 2008 - The Malaysian Ministry of Home Affairs has signed an agreement, with local forensic solutions company Nexbis Sdn Bhd, to roll out a forensic- level national security solution for foreigners entering, or working in, Malaysia. Deputy home affairs minister Dato’ Chor Chee Heung witnessed the signing ceremony in Kuala Lumpur, during the Bali Process Conference that was attended by senior government officials from over 50 participating countries and international agencies.

The Bali Process is an inter-government initiative to foster collaboration in combating people smuggling, trafficking in persons and related transnational crimes in the Asia-Pacific region and beyond.

Home Affairs Ministry secretary-general Tan Sri Abdul bin Mohd and Nexbis deputy chief executive Dato’ Ahmad Faizal bin Datuk Wira Haji Jaafar signed the agreement that was also witnessed by the director general of Immigration, Dato’ Wahid bin Md. Don and Nexbis chairman and chief executive Dato’ Sri Johann Young.

Secure information accessed in real-time

Speaking at the signing ceremony, Dato’ Wahid Md. Don said that NexCodeTM would increase the immigration department’s nationwide enforcement capabilities with access to secure information in real-time. In addition, NexCodeTM would extend the same capabilities to deal with foreigner-related issues to other larger enforcement agencies within the ministry of home affairs, such as the PDRM, RELA and AADK.

“These advantages will promote higher efficiency, help to address issues of people smuggling, trafficking and fraud. This agreement paves the way for the Government of Malaysia to develop significant and coordinated inter-department and inter-government collaboration via NexCodeTM’s capability to cross-link between agencies and even governments to assist in internal and transnational crime,” said Dato’ Wahid.

Dato’ Wahid explained that current security solutions available in the market use first and second level security (L1S and L2S) technologies only. However, such levels of security had proved insufficient to provide comprehensive security coverage.

He said that RFID technology used in many security solutions, for example, had proven to have serious security flaws whereby identity information can be stolen and cloned. For example, the Government of Netherlands recently issued a public warning on the matter.

The use of NexCodeTM provides Level 3 Security (L3S), which is acknowledged the highest level of security available globally to meet with heightening demands of stronger security and to address increasing threats of local and international crime. The solution would give the Ministry of Home Affairs the final Level 3 Security, he explained.

Mobile phone-based enforcement

MSC status company (Multimedia Super Corridor) Nexbis will supply the immigration department with its National Security Solution, which involves the application of NexCodeTM security features onto existing immigration identity and travel authentication materials. This is expected to ensure information is correctly linked to intended identities and the detection of fraudulent activities that usually relate to other forms of crime.

In addition, all immigration enforcement officers would be equipped with secure mobile phone-based field enforcement applications to carry out identity verification operations around the country.

This completes the capabilities of the Immigration Department to perform forensic level enforcement on a nationwide basis with secure access to information and statuses from its live databases.

“We believe NexCodeTM is the solution to address a spectrum of issues faced today by many governments worldwide in terms of national security, identity protection and effective enforcement. NexCodeTM has patents filed in 140 countries and will pave the way for more efficient information sharing between ASEAN governments as well as other potential governments who may adopt our solution, whilst retaining their sovereign data integrity and security,” he added.

“Based on global security technology standards similar to that mandated by the U.S. Department of Homeland Security in compliance with the U.S. REAL ID Act of 2005, the NexCodeTM Level 3 Security solution not only includes identity protection but also crime and riot prevention, fraud control, terrorism deterrence, revenue assurance, intra and inter-government modules. In addition, NexCodeTM features unlimited data storage, availability of real-time statuses and truly mobile field enforcement capabilities,” Dato’ Sri Johann concluded.

Malaysia Progressively Liberalising Its Islamic Finance System To Attract Foreigners

Malaysia has been progressively liberalising its Islamic financial system to increase foreign participation, as it forms an integral and competitive component of the country's overall financial system.

The Islamic financial system operates in parallel with the conventional banking system, servicing both the Muslim and non-Muslim communities.

Pointing this out, the Raja Muda of Perak, Raja Dr Nazrin Shah Saturday said the syariah principles which underline Islamic finance have contributed towards its stability and resilience in facing issues such as the current global financial turmoil.

"Therefore, it comes as no surprise that during the current global financial turmoil, Islamic funds have seen less volatility and risk, and as a result have performed better compared with conventional funds," he said.

He said this in his speech at a luncheon talk with investors in conjunction with the Malaysia International Islamic Financial Centre (MIFC) roadshow to Kuwait and Saudi Arabia, here.

Liberalisation of Malaysia's Islamic financial system has taken the form of the issuance of new licences and increasing foreign participation in Islamic banks and takaful companies, coupled with new licences issued to foreign fund managers and foreign stockbroking firms.

Raja Dr Nazrin also cited syariah injunctions like those prohibiting excessive leverage and speculative financial activities as having insulated Islamic funds from too much risk exposure, thus limiting their exposure to the meltdown of the financial system in the United States and Europe.

"It therefore comes as no surprise that during the current global financial turmoil, Islamic funds have seen less volatility and risk, and as a result have performed better compared with conventional funds," he said.

Raja Dr Nazrin said Malaysia believed there was tremendous upside potential for Islamic finance and that the current financial turmoil provides an opportunity for Islamic finance to position itself as a complementary, if not alternative, to conventional finance by providing investors with other asset classes and markets that provide stability.

He said over the last few years, there has been increasing interest among the Middle Eastern investors in the Asian market with Saudi Arabia financial institutions already having made their presence felt in Malaysia including Al-Rajhi Bank and Rsud Bank's shareholding in Asian Finance Bank.

To date, one of the more prominent investments in Malaysia is the Saudi Telecom's US$3 billion stake in local telco firm, Binariang.

"We welcome the continued participation of Saudi financial institutions and investors in Malaysia, especially to take advantage of the numerous opportunities offered under the MIFC initiatives," he said.

Raja Dr Nazrin also explained that Malaysia could be the perfect gateway for investors to take advantage of the Asean region which comprises a potential market of about 600 million people and a combined gross domestic product of US$1 trillion.

The MIFC was launched in 2006 as part of Malaysia's initiative to globally integrate within the international Islamic financial community, and to position the country as an international Islamic financial centre.

Since then, significant progress has been made as the Islamic financial system in Malaysia today comprises the Islamic banking institutions, the takaful (insurance) and re-takaful industry, and the Islamic money and capital markets.

Raja Nazrin said significant progress has been achieved, in particular, in positioning Malaysia as a centre for the origination, distribution and trading of Islamic bonds or sukuk.

"The Malaysian sukuk market has now evolved into the world's largest Islamic bond market, accounting for about 60 percent of the global sukuk outstanding.

"Malaysia is also becoming a centre for Islamic fund and wealth management services and for international Islamic banking business, as well as a centre for Islamic finance education, training, consultancy and research," he said.

Malaysia has the craziest education system in the world

PETALING JAYA, July 14 — Lim Kit Siang slammed the Cabinet over the decision last week to scrap the use of English to teach mathematics and science starting from 2012. He said students caught by the transition while in Form 4 in 2012 have to flip to Malay for mathematics and science before flopping back to English for the next five or six years of tertiary education,

“I stand by my strong criticism of the Cabinet decision particularly for secondary schools from 2012, when I said that Malaysia will have the world’s most crazy educational system,” said Lim in a statement to the media. “Those who want to impose such an educational system must have their heads examined as to whether they are fit to be in the Cabinet in the first place!”

MCA and Gerakan presidents Datuk Seri Ong Tee Keat and Tan Sri Koh Tsu Koon were singled out by Lim for their comments in the Chinese media.

“It is no use that Ong and even Koh claim that English should continue to be used as a medium of instruction for maths and science in Forms 4 and 5 from 2012, when they were full parties to the Cabinet decision last Wednesday to turn the Malaysian education system into a crazy 9-2-5/6 system, with students going through nine years of the two subjects taught in English, two years in Bahasa Malaysia in Forms 4 and 5 and then reverting to English for five or six years of pre-university and tertiary education in maths and science,” said Lim.

The decision to scrap the use of English in teaching mathematics and science has been met with bouquets and brickbats — the former from Malay and Chinese language champions and the latter from many parents across all ethnic groups who see a strong command of English as essential in today’s world.

It also drew mixed responses from within both the Barisan Nasional and Pakatan Rakyat. Some have hailed the decision while other have called for the policy to be retained at either the secondary school level or that parents be given the choice of selecting either Malay, English or mother toungue languages for the teaching of science and mathematics.

Lim called on the Cabinet, which meets tomorrow, to immediately abolish the “one size fits all” approach for schools and adopt a flexible education approach that takes into account the urban-rural gap but with the important principle that advanced students not be held back by others who lag behind academically.

This would include giving the choice back to parents on which language should be used for teaching mathematics and science.

His call is supported by the Parent Action Group for Education (PAGE) chairman Datin Noor Azimah Abdul Rahim who has urged the government to make the English option available to schools that want it.

“If the minister is willing to accommodate vernacular schools, he should rightly do the same with schools that wish to maintain status quo, which have benefited from the policy and are confident that the intended objective has been met,” she said. “It appears that this decision will further split the races into their comfort zones. This reversion underestimates our rural children’s ability to learn Mathematics and Science in English, which will impede their access to the vast readily available resources in English.”

The government, however, has tried to assuage fears that English will be neglected by announcing several measures to strengthen English education including increasing time slots for English classes and recruiting retired English teachers locally and English language experts from abroad.

Malaysia Dilutes Its System of Ethnic Preferences

Najib Razak, Malaysia's prime minister, announced Tuesday a major rollback in the system of ethnic preferences that has defined the country's political system for almost four decades.

The new policy would severely weaken a requirement that companies reserve 30 percent of their shares for ethnic Malays, the country's dominant ethnic group.

The 30-percent rule was once considered politically untouchable, and Mr. Najib described the change in policy as a "tricky balancing act."

Malaysia has long given ethnic Malays and members of other indigenous ethnic groups — known as bumiputra, or sons of the soil — political and economic privileges. But that system has come under strain amid growing resentment by minority groups and poorer Malays.

The government offers bumiputra discounts on houses, scholarships and other perks. But some benefits, like government contracts and stock-market allocations, have been beyond the reach of working-class Malays.

Anger among Chinese and Indians, the country's main minority groups, over the ethnic preferences was perhaps the main reason that the opposition made large gains in elections last year that nearly dismantled the governing coalition led by Mr. Najib's party, the United Malays National Organization.

"We want to be fair to all communities," Mr. Najib said in a speech in Kuala Lumpur, the Malaysian capital. "No one must feel marginalized."

Mr. Najib's success in rolling back the ethnic preferences will depend in large part on his ability to hold together his coalition and fend off a resurgent opposition led by Anwar Ibrahim, a former finance minister.

Mr. Anwar, who leads a diverse group of opposition parties, has promised to undo the system of ethnic preferences.

By positioning himself as a reformer, Mr. Najib, who came to power in April, appears to be calculating that he can stave off opposition advances and be seen as an agent of change.

"The world is changing quickly, and we must be ready to change with it or risk being left behind," he said Tuesday.

The change would leave some ethnic preferences intact and come with caveats. But it would dilute one of the most important components of what is known as the New Economic Policy, introduced in 1971: the requirement that companies listing on the stock exchange sell 30 percent of their shares to ethnic Malays.

That requirement was scrapped for companies already listed on the stock exchange and reduced to 12.5 percent for initial public offerings. The requirement will remain in place for "strategic industries" like telecommunications, water, ports and energy.

Mr. Najib also said he would lower barriers for foreign investors. The government would eliminate a special vetting process for foreign companies wanting to invest in, merge or take over a Malaysian company, he said.

"The global economic crisis is amplifying the need to be a preferred investment destination," he added.

Malaysia's trade-dependent economy is expected to contract by 5 percent this year

Islamic Banking In Malaysia

1. Introduction

A significant development in the Muslim World in the seventies and eighties was the pan-Islamic movement. This movement aimed to revive the glory of Islam and began to demand the application of Shariah in all aspects of life. The effort to establish in Islamic Banking is one manifestation of this movement. The Muslim countries began to rediscover Islam and wanted to mould their economic and financial activities in accordance with Islamic values.

The seventies and eighties of the present century has witnessed the emergence of a number of Islamic banks and financial institutions whose modes of operation are distinct from those of conventional banks. The establishment of these institutions is one of the several manifestations of the 'back to religion' movement which is fast gaining strength in present day muslim societies (quoted in Abulhasan et al. 1991: 155)

The Muslim world has been over-burdened for too long by western modes of social and economic thought. A large portion of the Muslim world had been subjugated culturally, economically and politically by the colonial powers. Even though they have achieved independence from their colonial masters, the colonial principles are still deep rooted in the social, economic, political and cultural life of Muslim communities. Thus, the emergence and expansion of an Islamic banking system is the starting point of a new path breaking change in the Muslim world. It is a process of liberating the Muslims from the yoke of domination by western thought, values and institutions and remodeling their social and economic life in accordance with shariah.

The issue of Riba has long been a problem for Muslims. Even what constituted Riba itself has been a subject under serious discussion. The existence of Riba has been argued to be a major factor for the low participation of the Malays in the economic activities of Malaysia. The establishment of BIMB is a major step towards an interest-free financial system in Malaysia. This marked the establishment of more Islamic commercial institutions under the new mode of the Islamization Policy of Dr. Mahathir Muhammad.

2. The Emergence of Islamic Banks

The elementary concepts of modern Islamic banking date back to the mid 1940s. Models for Islamic banking appeared in the mid-1950s, but comprehensive and detailed concepts for interest-free banking only appeared in the late 1960s. The political environment during that time almost all Muslim countries was hardly favorable for a change in the entire system of banking and finance. In fact, the first experiment in Islamic banking was set up undercover in Mit Ghamr, Egypt in 1963. The model for the experiment was the German Savings bank modified to comply with Islamic principles, i.e. it was barred from charging and paying interest. Nevertheless, the charter of the Bank did not refer to Shariah.

The second Islamic Conference of Foreign Ministers in 1973 adopted a document on the "Institution of an Islamic Bank, Economics and Islamic Doctrines". In 1974, the Islamic Development Bank (IDB) was established as a result of this conference. The member states of the OIC became members of the IDB. The IDB helped to establish a number of Islamic banks in various countries.

Beginning in 1974, several Islamic banks have been established which include: Dubai Islamic Bank in 1975, Faisal Islamic Bank of Sudan in 1977, Faisal Islamic Egyptian Bank and Islamic Bank of Jordan in 1978, Islamic Bank of Bahrain in 1979, the International Islamic Bank of Investment and Development, Luxembourg in 1980 and BIMB in 1983. Today, there are more than a hundred financial institutions which claim to be operating partially or fully on an interest-free basis in 34 countries.

Islamic banking has been adopted at the national level in Pakistan, Sudan, and Iran, and they have decided to Islamize the whole banking system. Iran enacted a new banking law in August 1983 requiring complete abolition of interest by March 1985 (M.N. Siddiqi 1988: 48). Sudan opted for a total change when a presidential decree was issued in 1984, directing all banks to stop dealing with interest. The Central Bank of Sudan, on 10 December 1984, directed all commercial banks to stop dealing with interest with immediate effect, and to negotiate conversion of existing deposit into investment deposits or any other kind of deposits in accordance with shariah. All outstanding interest bearing advances were either to be settled through repayment or they had to be converted into one of the Islamic modes of financing. Foreign transactions were to continue on the basis of interest till an alternative way as available.

3. The Theory of Islamic Banking

3.1 Economic Impact of Interest

At the outset, the most important departure of Islamic banking from conventional banking is the prohibition of Riba, and promoting Profit and Loss Sharing (PLS) as an alternative to Riba. The prohibition of interest is obvious in the Quran as well as in the Sunnah. Riba originally meant 'increase and growth'. This meaning is taken from the Quran (22:5). Increase means the increase over capital or nominal amount, the increase being either large or small. According to Islamic law, Riba technically refers to the premium that must be paid by the borrower to the lender along with the principal amount as a condition for an extension in its maturity. In 1992, the Pakistan Federal Shariah Court ruled that:

It makes no difference whether the loan is for consumption purpose or for commercial purposes. It does not matter if the rate of interest is low or high, simple or compound for short or long times, between the two Muslims or between a citizen and a state or between two states. Any excess which is pre-determined over the principal sum in a loan transaction will constitute Riba in all circumstances (quoted in K. Zaheed 1994: 83)

This immediately leads us to the essence of Islamic banking; an Islamic bank is a financial institution that conducts its operations in accordance with Shariah principles. If we have to contrast the Islamic bank to an existing conventional bank, we may say that while the latter earns the major portion of its revenues and expenses on the basis of interest, the former earns the same on the profits. In the operation of an Islamic bank, profits therefore assume the place of interest in a conventional bank. 'Usury', the original name for modern interest.

BANK ISLAM MALAYSIA BERHAD (BIMB)

BIMB was established after the enacting of the Islamic Banking Act (IBA) in 1983, the IBA permitted the establishment of the first Islamic Bank in Malaysia. BIMB with a paid up capital of RM 100 million and an authorised capital of RM 500 million is carrying out its activities on an interest free basis. Tengku Razaleigh , the then Finance Minister described the Islamic bank as the:
First step in the government's efforts to instill Islamic values into the country's economic and financial systems as a replacement for the current Western-base economic system (NST 6 July 1982)

Takaful Malaysia

Syarikat Takaful Malaysia Berhad was incorporated on 29 November 1984, has an authorised capital of RM 500 million and a paid up capital of RM 55 million. It has been converted into a public quoted company with the listing of its shares on the Main Board of the Kuala Lumpur Stock Exchange since 31 July 1996. As a subsidiary company of BIMB Holdings Berhad, 65.5% of its equity is held by the BIMB.

Other major shareholders are the State Islamic Religious Councils / Baitulmals of Terengganu, Pahang, Negeri Sembilan and Amanah Saham Bank Islam (ASBI).

The company objectives is to provide takaful services (Islamic Insurance) at the highest standard of efficiency and professionalism to all Muslims and the population in Malaysia.

Lembaga Tabung Haji (Pilgrims Fund Board)

In line with the concept of Islam as Ad-deen, a way of life in this world and the Hereafter, every ibadah commanded by Allah S.W.T. is of benefit in this and the next world. To fulfill this desire to perform the Hajj pilgrimage, Muslims have to find enough money for the journey to the Holy Land. To avoid riba' (usury), which is haram (forbidden) in Islam, Muslims resort to various traditional methods of saving. Of course, there are those who dispose their animals or inherited properties for cash to cover their Hajj expenses, a practice which ultimately imposes economic burden on themselves and their families while they are on the pilgrimage or when they return from the pilgrimage. Such practice also does not augur well for the rural economy, besides retarding the country’s economic growth.

Realising this as well as to help Muslims to save enough money without involving in activities deemed haram in Islam, Perbadanan Wang Simpanan Bakal-Bakal Haji was set up in November 1962, and began its operation on 30 September 1963. The corporation to manage the savings of Muslims, intending to perform the Hajj pilgrimage, was the result of a working paper entitled "Rancangan Membaiki Ekonomi Bakal-Bakal Haji" presented by Royal Professor Ungku Aziz in 1959 to improve the economy of intending pilgrims.

Objectives:
Enable Muslims to gradually save enough money to meet the cost of performing the Hajj or other beneficial expenses; Enable Muslims, through the use of their savings, to take active part in capital investment in a way, halal to Islam, and Provide protection, supervision and welfare to Hajj pilgrims.

Pusat Pungutan Zakat (Zakat Collection Center)

Established by The Federal Territory Islamic Council, Kuala Lumpur (known as MAIWP). It started its operations in 1991. PPZ uses a corporate style of management through the setting up by the Council of a company called Hartasuci Sdn. Bhd. which is placed under a foundation called Yayasan Taqwa Wilayah Persekutuan Berhad controlled by the Council. PPZ's basic responsibility is to collect zakat for the Council. It is not responsible for zakat distribution which is done by other agencies/sections of the Council.

Organization Structure Externally, PPZ is placed under the foundation which is responsible to the Council. Internally, PPZ has a Board of Directors which supervises management headed by a General Manager. There are two divisions, namely the Operations Division (headed by a Manager), and the Finance & Administration Division. Each division in turn has various functional units. Basic functions of PPZ :

To explain to the public about zakat and the responsibility of paying zakat. To help payers, both individuals and companies, calculate their zakat. To collect zakat and to increase the collection, both in terms of amount and payers.

All Collection is immediately bank-in into the Baitulmal account (of the Federal Territory Islamic Council). Apart from the above mentioned responsibilities PPZ is also responsible in producing daily, monthly, quarterly and yearly reports, both for the management and Council use.

Style of Operation: The guiding philosophy in doing work at PPZ is to make the zakat payers feel that zakat payment is an ibadah or duty that is easy to perform; that helps to purify their wealth and soul; and can give them a great feeling of satisfaction and relief. PPZ focuses on reaching out to the Muslim community and reminding them of their religious duty. Talks, pamphlets, posters, explanations and reminders through the media or through direct mailing to prospects are some of the methods being used by PPZ. PPZ relies more on educating the Muslim public as opposed to using force or the law. Self awareness is more effective and more appealing to the educated public.

Payer's Preference: Most of the payers prefer to pay zakat in the month of Ramadhan so that they can pay both their zakat mal (zakat on wealth) and zakat fitr (zakat on self); and in the month of January, since a person could get their rebate from income tax payment for that particular year. These 2 months constitute 65% of yearly collections. Normally prayers prefer to come to the zakat counter to pay zakat because they like the act of akad (solemnisation) even though it is not a must. Other would pay through the mail, salary deduction, sending a representative to the zakat center and paying at selected bank counters where major banks in the country have been appointed as agents by the Islamic Council.

Islamic Banking Concepts

Al-Wadiah Yad Dhamanah (savings with guarantee)
Al-Mudharabah (profit-sharing)
Al-Musyarakah (joint venture)
Al-Murabahah (cost plus)
Bai’ Bithaman Ajil (deferred payment sale)
Bai’ al-Dayn (debt trading)
Al-Ijarah Thumma al-Bai’ (leasing and subsequently purchase)
Al-Ijarah (leasing)
Al-Qardhul Hassan (benevolent loan)
Bai’ as-Salam (future delivery)
Bai’ Al-Istijrar (supply contract)
Al-Kafalah (guarantee)
Ar-Rahnu (collateralised borrowing)
Al-Wakalah (nominating another person to act)
Al-Hiwalah (remittance)
As-Sarf (foreign exchange)
Al-Ujr (fee)
Al-Hibah (gift)

List of Financial Institutions Offering Islamic Banking Services

Islamic Banks
1.Bank Islam Malaysia Berhad
2.Bank Muamalat Malaysia Berhad

Commercial Banks
1.Affin Bank Berhad
2.Alliance Bank Malaysia Berhad
3.Arab-Malaysian Bank Berhad
4.Bank Utama (Malaysia) Berhad
5.Citibank Berhad
6.EON Bank Berhad
7.Hong Leong Bank Berhad
8.HSBC Bank Malaysia Berhad
9.Malayan Banking Berhad
10.OCBC Bank (Malaysia) Berhad
11.Public Bank Berhad
12.RHB Bank Berhad
13.Southern Bank Berhad
14.Standard Chartered Bank Malaysia Berhad

Finance Companies
1.Affin-ACF Finance Berhad
2.Alliance Finance Berhad
3.Arab-Malaysian Finance Berhad
4.EON Finance Berhad

Merchant Banks
1.Affin Merchant Bank Berhad
2.Alliance Merchant Bank Berhad
3.Arab-Malaysian Merchant Bank Berhad
4.Aseambankers Malaysia Berhad
5.Malaysian International Merchant Bankers Berhad

Discount Houses
1.Abrar Discounts Berhad
2.Affin Discount Berhad
3.Amanah Short Deposits Berhad
4.CIMB Discount House Berhad
5.KAF Discounts Berhad
6.Malaysia Discount Berhad
7.Mayban Discount Berhad

Legal systems struggle to keep up with Islamic finance

The issue is that Islamic economics have a different premise from conventional banking and applying the same legal principles to decide disputes for both markets does not work. MALAYSIA launched the world’s first syariah interbank money market and popularised interest-free bonds to establish itself as a leading centre for Islamic finance, but its legal system is struggling to keep up.

Malaysia is not alone. Rival Middle East centres in the US$1 trillion sector are also finding that their legal systems are ill equipped to deal with Islamic finance cases as the market grows at a furious pace.

The issue, bankers and lawyers say, is that Islamic economics have a different premise from conventional banking and applying the same legal principles to decide disputes for both markets does not work.

Unlike conventional banking’s capitalist conviction that winner takes all, Islam argues for a fair distribution of profit and loss and bans purely speculative activity.
“Strong legal systems give birth to strong banking, strong corporate markets and that will then be able to attract more foreign direct investment (FDI),” Rafe Haneef, managing director of Fajr Capital in Kuala Lumpur, said.

“FDI will come to markets where there is strong corporate governance and therefore a strong legal system is required.”

To be sure, few legal disputes have reached Malaysia’s high courts. In fact, only 20 cases have come before them in as many years, estimates Megat Hizaini Hassan, a Kuala Lumpur-based lawyer.

The government has not announced any specific steps to deal with the issue, but there are signs it is rising up the political agenda.

“Dispute resolution mechanisms should also be more accommodative to the application of Islamic legal rules and methods in order to avoid embarrassment to Islamic banking cases as a result of incoherent and anomalous legal judgments,” Deputy Prime Minister Datuk Seri Najib Tun Razak told an industry forum in November, making him the highest ranking government official to sound an alarm over the problem.

Malaysia has carved out a position as the world’s largest Islamic bond market, with US$66 billion, or 62.6 per cent, of global outstanding sukuk issuance as of the end of June.

CONTEXT

Islamic finance is based on the syariah, or Islamic law.

It avoids the interest-based formula of conventional banking and argues that gains must be derived from ethical investing and for profits and losses to be shared between venture partners.

Most Middle East Islamic financial centres use the syariah as one element of their law. They also use other sources of law, such as French law.

But Malaysian law does not draw on syariah. Islamic banking matters are heard in civil law courts staffed by judges who are not formally trained in syariah.

Jal Othman, a Kuala Lumpur-based Islamic banking lawyer, estimates that no more than 10 of Malaysia’s 12,000 or so lawyers are experts in Islamic finance. Fewer than 10 judges, or less than a tenth, are skilled in the subject.

“You don’t have sufficient precedent which means there may be time bombs ticking,” Jal said.

A 2006 mortgage case, the outcome of which was reaffirmed in a recent judgment, highlights the clash between two sets of legal principals confronting Malaysia’s court system.

A Malaysian court ruled that if an Islamic home mortgage is terminated prematurely, the lender cannot claim for the unaccrued instalments because they have not fallen due yet.

The loan was given based on a popular Islamic finance structure in Malaysia called bai bithaman ajil in which a bank first purchases a house before selling it to the client at a profit.

Islamic finance experts argue the civil court decision did not reflect the principles of the Islamic finance agreement, which created a contract from the outset where the customer has to repay the bank the entire sum, including the cost of the asset and the profit margin.

“This bai bithaman ajil concept is very heavily used in the housing loan market,” said Rasheed Khan, a lawyer. “The sooner this is resolved the better because otherwise it creates a bit of uncertainty.”

But reflecting the fractured nature of the Islamic finance market, the bai bithaman ajil structure is not used in the Middle East because it is viewed as too closely resembling interest-based financing.

WHAT SHOULD BE DONE?

Lawyers and academics have suggested Malaysia employ judges skilled in syariah banking law or create special courts to hear Islamic finance cases.

Some Islamic bankers suggest courts should be required to seek the guidance of Malaysian central bank syariah advisers when deciding Islamic finance matters. The central bank has not commented.

“Decisions of the civil court, however powerful they may be, must consider the fact that the underlying basis of the Islamic banking raison d’etre is to observe the syariah,” Ahmad Hidayat Buang, an Islamic law expert wrote in a law journal.

Even in the Middle East, where the legal system is much more sensitive to syariah, other issues arise.

In Saudi Arabia, which uses syariah as the only basis for its legal system, Islamic banking disputes are dealt with by a central bank panel, not a syariah court.

This was because of a view that the court may be expert in syariah, but judges are often not expert enough in banking, said Ayman Khaleq, a Dubai-based Islamic finance lawyer.

“Syariah knowledge alone is not the answer. Civil and commercial law knowledge is not the answer. A combination of the two is,” he said.

Malaysian Blogger Fights a System He Perfected

KUALA LUMPUR, Malaysia — In a vast office at the top of one of the world’s tallest buildings, former Prime Minister Mahathir Mohamad sits at a broad, glass-topped desk, scribbling his thoughts on a pad of unlined paper.

For 22 years, Mr. Mahathir was the most powerful person in this land, and his thoughts were commands as he reshaped the country in his own image.

But he has become an irritant and a spoiler five years after stepping down, turning against his handpicked successor, Abdullah Ahmad Badawi, and falling victim to the press controls he perfected as prime minister.

“Where is the press freedom?” he asked two years ago, apparently surprised at being suddenly ignored. “Broadcast what I have to say! What I say is not even accurately published in the press!”

This May, though, he discovered the power of the Internet. Like many other inconvenient critics, he joined what seemed to be a political wave of the future, creating his own blog — www.chedet.com — where he vents in English and Malay several times a week.

Around the region bloggers are becoming a Fifth Estate, challenging the government’s monopoly on information in Singapore, evading censors in Vietnam, and influencing events in places like Thailand, Cambodia and China.

In March, political experts said, Malaysia’s bloggers helped influence elections, contributing to the biggest upset that the governing party, the United Malays National Organization, had suffered since independence in 1957. For the first time in decades, it held fewer than two-thirds of the seats in Parliament, and it lost control of 5 of the 13 states.

Among the opposition winners in the national and state governments were several bloggers, most prominently Jeff Ooi, who claimed to have prodded Mr. Mahathir into starting his own blog.

“The government doesn’t have a clue how to handle bloggers,” Mr. Ooi said in an interview. “If I were a dictator, I would be despairing. What do you do against this?”

The Internet has become the main battleground against censorship in Malaysia, where a system of self-censorship in an atmosphere of government pressure and intimidation has produced a constricted press.

Mr. Mahathir, 82, seems to be reveling now in challenging the system he once controlled, and he is as acerbic as he was during his days as prime minister.

“It is time the so-called intellectuals realize they were being duped by the Master of Spin,” he wrote on Aug. 21, referring to his bitter enemy, Anwar Ibrahim, who was his deputy prime minister and now leads the main opposition party. He also accused Mr. Anwar of being “the pious Muslim, who is also the bosom pal of Paul Wolfowitz, the neo-con Jew,” referring to the former United States deputy secretary of defense.

Blogging on Sept. 3, he offered a sort of mission statement. Many are with him as he harasses the government, he asserted. “But they are not prepared to say it openly,” he wrote. “That was why I started my blog. About six million had visited my blog site, and tens of thousands have commented and supported me.”

In case anyone doubts this, he posts comments to his blog by the dozens and hundreds, page after page, day after day. It turns out he has a lot of fans.

“Amazingly brilliant!” reads one comment. “I can’t stop laughing...you made my day Sir!”

And just to clear up any possible misunderstanding, another writes, “You, sir, are the most brilliant politician Malaysia has ever been blessed with.”

Mr. Ooi, 52, a former advertising copywriter who was one of Malaysia’s first political bloggers, started in 2003 and built a loyal following at www.jeffooi.com.

The government began an assault on Mr. Ooi that included threats of imprisonment without trial, attacks in the government-friendly press and defamation lawsuits, which are popular among leaders in Southeast Asia.

But that seemed only to make him a hero, and when he decided to run for Parliament as an opposition candidate, he already had a big head start.

“As a person that has consistently faced threats as a blogger, I had a kind of iconism and imagery that this is someone you can trust, someone the government fears, someone you need to put into Parliament,” Mr. Ooi said.

But he said it was much harder to blog from the inside. “The trade-off is that I have to write with measured words,” he said.

Earlier this year, Mr. Ooi said, he attended a public forum with Mr. Mahathir. It was there that he claimed he persuaded Mr. Mahathir to begin a blog.

“I threw him a challenge,” Mr. Ooi said. “A blogger shares a few prerequisites. One, he is strongly opinionated. Two, he could be controversial. And, thirdly, he is an agent provocateur on issues.

“I thought Mahathir fulfilled all three.”

The result, Mr. Ooi said, was “a miracle, he scored about 10 million visitors within months.”

Now, a convert to free speech, Mr. Mahathir is using his blog to champion the most recent victim of government censorship, Raja Petra Kamaruddin, the country’s most prominent blogger, who posts on www.malaysia-today.net, his Web site. The site has been blocked, but readers are redirected to another Web site, which continues to be updated.

The government has fallen back on the kind of tactics that Mr. Ooi faced. It charged Mr. Petra with sedition and jailed him for two years without trial for comments he had posted.

Mr. Mahathir sounded almost like Che Guevara when he said in his blog that the arrest showed “a degree of oppressive arrogance worthy of a totalitarian state.”

Furthermore, jailing people is futile, he said in an interview in his office. There is no way the government can arrest all the bloggers, even if it wants to.

At least, he said, “I hope so. Otherwise I’ll be in, too.”

Malaysia's Centralised Federal System

There are three factors that have contributed towards Malaysia’s centralised federalism.

First, the constitutional design clearly favours the central over the state governments, both in terms of legislative jurisdictions as well as in terms of revenue assignments. The Ninth Schedule of the Federal Constitution details the distribution of legislative powers and responsibilities between the federal and state governments. Apart from foreign affairs, defence, internal security, and law and order, the purview of the federal government includes trade, commerce and industry, physical development such as communication and transport and human development such as education, health and medicine. By contrast, the state government’s purview is restricted to areas such as lands and mines, Muslim affairs and customs, native laws and customs, agriculture and forestry, local government and public services, burial grounds, markets and fairs, and the licensing of cinemas and theatres. The concurrent list covers social welfare, scholarships, town and country planning, drainage and irrigation, housing, culture and sports, and public health.

The Tenth Schedule of the Federal Constitution elaborates on revenue assignment, in part based on the division of jurisdiction spelt out in the Ninth Schedule. In the Tenth Schedule, income taxes, property and capital gains taxes, international trade taxes, as well as production and consumption taxes are all assigned to the federal government. The state government is allowed to collect natural-resource related taxes such as revenue from lands and mines, as well as forests.

But under the Petroleum Development Act (PDA) 1974, all states give up their rights to petroleum resources found within their states. Ownership and control of petroleum and gas, though natural resources, are transferred to the federally owned and controlled company, Petronas, which is tasked with exploiting and mining the resource. In exchange, Petronas pays the state and federal governments five per cent royalty each - Petronas receives 49 per cent while the producer-company receives the remaining 41 per cent - of the gross value of petroleum production. In addition, the federal government taxes the producer company (Sarawak Shell, Sabah Shell or Esso). Consequently, the federal government receives far more revenue from petroleum than do the petroleum-producing states.

The Constitution also stipulates that the federal government is obliged to provide two major grants to the state governments, namely the ‘capitation grant’, which is based on the population size, and the ‘state road grant’, which helps the states to maintain their network of roads, but is in effect also a grant that takes into consideration the geographical size of the state. Apart from these two, there are about 10 other tax-sharing taxes and levies that the state is allowed to collect or where the federal government has to reimburse the state. The petroleum royalty is one such case. In the past, ten per cent of the export duties on tin, iron and other minerals were also transferred to the states from which the mineral was derived.

At any rate, the federal government has sole jurisdiction, though perhaps not sole discretion over the disbursement of all development funds. The end result is a very uneven distribution of revenue assignment, and therefore financial resources between the federal and state governments. This fact highlights a major anachronism in fiscal federalism in Malaysia. In most countries, a fairer and more balanced distribution of revenue collection and resources has evolved through constitutional reform. The reverse has occurred in Malaysia.

What this means is that the federal BN government can, technically speaking, deny development funds to the five PR-state governments. However, since the federal government would not like to irk the wrath of voters in opposition-led states, who might further turn against them in future elections, the federal government usually continues to provide funds to these states with the proviso that these are channelled through federal agencies and the Federal Development Offices of each state. This was what happened in the cases of Sabah and Kelantan in the past.

Recall that the Pas-led Terengganu government was denied royalty payments from Petronas during 1999-2004, on the basis that the petroleum resources which the Terengganu government claimed were located beyond the state’s territorial waters. That said, the federal government continued to fund development projects in Terengganu under the basis of wang ehsan for the state.

Second, apart from the federal-bias in the constitutional design, the political process that has allowed a single political party, the BN, to control the centre for 50 years, has further facilitated a centralised federalism. This domination coincides with the increased role of the Executive in decision-making which has been legitimised in terms of the need to ensure Malaysia’s security and to preserve ethno-religious harmony in multi-ethnic, multi-religious Malaysia. The abolition of local authority elections in the 1970s has allowed the BN to further penetrate into the third tier of government where their appointed councillors dominate the municipalities, town councils and district councils.

Hence, not only can the federal government dictate the pace and direction of development in the states, including in opposition-controlled states. The federal Executive may also invoke party discipline to remove the Menteri Besar (MB) of constituent states whenever they challenge the prerogatives of the centre. In the early 1990s, several opposition leaders calling for greater autonomy for Sabah were detained without trial on the grounds of fostering secession while two Umno MBs who questioned or disobeyed their federal leaders were put into political limbo during the 1970s.

Third, the development process underscored by the implementation of the New Economic Policy (NEP) further contributed to the expansion and consolidation of the federal government. For in pursuit of the NEP, the federal government established numerous statutory bodies and public corporations. Implementation and monitoring of the NEP required the expansion of the public sector and tight control by the central authorities which shifted even more power from the states to the federal authorities. A case in point is the establishment of the Commercial Vehicles Licensing Board (CVLB), a federal authority, charged with ensuring bumiputera participation in the transportation industry while licensing commercial vehicles. Consequently, the licensing and even the routing of buses providing public transport in the states and local authority areas came under the purview of federal authorities, in this case, the CVLB.

As well, through the auspices of Felda and regional development authorities, the federal authorities also penetrated into the states. Hence although the goal was to create a ‘bumiputera commercial and industrial community’ to reduce inequalities and thereby foster national unity, the NEP also enhanced the powers of the federal over the state governments, indeed, the local authorities too.

Confidence In Malaysia's Banking System

APRIL 21 – Sometime earlier this year, Bank Negara summoned bank officials from every institution in the country to its offices and subjected each one to rigorous stress testing.

The upshot was that some banks, including Maybank, Public Bank and EON Capital, have announced plans to raise Tier One capital. Clearly, the lessons of the

1998 Asian financial crisis have not been forgotten and the central bank has decided that the price to be paid for banking stability is constant vigilance.

That can only be a good thing, because asset quality in the banking sector will undoubtedly deteriorate as the global financial crisis ripples through the Malaysian economy in the coming months.

International ratings agency Fitch expects Malaysia’s non-performing loans (NPL) ratio to rise to 6-6.5 per cent this year while the Rating Agency of Malaysia has projected a more pessimistic 9 per cent on a worst-case basis.

But it is nowhere near the 16 per cent seen in 2001 during the dot-com bubble – where all the banks survived unscathed – and the 19 per cent in 1998, when two banks went bust and had to be rescued.

However, asset quality at the banks will get worse because the sectors that will be hardest hit are the small and medium scale industries and consumers facing sudden unemployment. Loans disbursed to the SMEs constitute 17.2 per cent of total loans while the household sector accounted for 27 per cent of total financing.

But it won’t be so bad, because Malaysia’s corporate sector isn’t over-geared. The corporate debt to equity ratio, according to BNM figures, was around 39 per cent last year, way down from the 55 per cent level in 1998. And post-East Asian crisis, companies have resorted to private debt securities to raise money rather than depend on traditional bank loans.

Meanwhile, household debt has also declined to 63 per cent of gross domestic product from 69 per cent five years ago.

Adding comfort to borrowers is the fact that interest rates are at historic lows. Bank Negara cut its overnight policy rate by 150 basis points to 2 per cent last month: it has brought down the base lending rate to 5.55 per cent.

By contrast, the effective lending rate during the East Asian crisis was a whopping 20-odd per cent. To help the banks further, BNM, in January, relaxed the mark-to-market requirement that rules the trading portfolios of all banks: that has helped to shield balance sheets from volatilities in the share market.

Finally, the banks have helped themselves with tighter lending policies and improved risk management departments. The average loan-deposit ratio for the banking sector is around 72 per cent compared to the wild-west days of 1998 when ratios of over 90 per cent held sway.

Bank stocks have been trending upwards. This signals that despite the troubles ahead, there remains a degree of confidence in Malaysia’s banking system. – Business Times Singapore

Malaysia Telephone System

Telephone system: general assessment: modern system; international service excellent
domestic: good intercity service provided on Peninsular Malaysia mainly by microwave radio relay; adequate intercity microwave radio relay network between Sabah and Sarawak via Brunei; domestic satellite system with 2 earth stations; combined fixed-line and mobile cellular teledensity exceeds 110 per 100 persons
international: country code - 60; landing point for several major international submarine cable networks that provide connectivity to Asia, Middle East, and Europe; satellite earth stations - 2 Intelsat (1 Indian Ocean, 1 Pacific Ocean) (2007)

Definition: This entry includes a brief general assessment of the system with details on the domestic and international components. The following terms and abbreviations are used throughout the entry:


Arabsat - Arab Satellite Communications Organization (Riyadh, Saudi Arabia).


Autodin - Automatic Digital Network (US Department of Defense).


CB - citizen's band mobile radio communications.


Cellular telephone system - the telephones in this system are radio transceivers, with each instrument having its own private radio frequency and sufficient radiated power to reach the booster station in its area (cell), from which the telephone signal is fed to a telephone exchange.


Central American Microwave System - a trunk microwave radio relay system that links the countries of Central America and Mexico with each other.


Coaxial cable - a multichannel communication cable consisting of a central conducting wire, surrounded by and insulated from a cylindrical conducting shell; a large number of telephone channels can be made available within the insulated space by the use of a large number of carrier frequencies.


Comsat - Communications Satellite Corporation (US).


DSN - Defense Switched Network (formerly Automatic Voice Network or Autovon); basic general-purpose, switched voice network of the Defense Communications System (US Department of Defense).


Eutelsat - European Telecommunications Satellite Organization (Paris).


Fiber-optic cable - a multichannel communications cable using a thread of optical glass fibers as a transmission medium in which the signal (voice, video, etc.) is in the form of a coded pulse of light.


GSM - a global system for mobile (cellular) communications devised by the Groupe Special Mobile of the pan-European standardization organization, Conference Europeanne des Posts et Telecommunications (CEPT) in 1982.


HF - high frequency; any radio frequency in the 3,000- to 30,000-kHz range.


Inmarsat - International Maritime Satellite Organization (London); provider of global mobile satellite communications for commercial, distress, and safety applications at sea, in the air, and on land.


Intelsat - International Telecommunications Satellite Organization (Washington, DC).


Intersputnik - International Organization of Space Communications (Moscow); first established in the former Soviet Union and the East European countries, it is now marketing its services worldwide with earth stations in North America, Africa, and East Asia.


Landline - communication wire or cable of any sort that is installed on poles or buried in the ground.


Marecs - Maritime European Communications Satellite used in the Inmarsat system on lease from the European Space Agency.


Marisat - satellites of the Comsat Corporation that participate in the Inmarsat system.


Medarabtel - the Middle East Telecommunications Project of the International Telecommunications Union (ITU) providing a modern telecommunications network, primarily by microwave radio relay, linking Algeria, Djibouti, Egypt, Jordan, Libya, Morocco, Saudi Arabia, Somalia, Sudan, Syria, Tunisia, and Yemen; it was initially started in Morocco in 1970 by the Arab Telecommunications Union (ATU) and was known at that time as the Middle East Mediterranean Telecommunications Network.


Microwave radio relay - transmission of long distance telephone calls and television programs by highly directional radio microwaves that are received and sent on from one booster station to another on an optical path.


NMT - Nordic Mobile Telephone; an analog cellular telephone system that was developed jointly by the national telecommunications authorities of the Nordic countries (Denmark, Finland, Iceland, Norway, and Sweden).


Orbita - a Russian television service; also the trade name of a packet-switched digital telephone network.


Radiotelephone communications - the two-way transmission and reception of sounds by broadcast radio on authorized frequencies using telephone handsets.


PanAmSat - PanAmSat Corporation (Greenwich, CT).


SAFE - South African Far East Cable


Satellite communication system - a communication system consisting of two or more earth stations and at least one satellite that provide long distance transmission of voice, data, and television; the system usually serves as a trunk connection between telephone exchanges; if the earth stations are in the same country, it is a domestic system.


Satellite earth station - a communications facility with a microwave radio transmitting and receiving antenna and required receiving and transmitting equipment for communicating with satellites.


Satellite link - a radio connection between a satellite and an earth station permitting communication between them, either one-way (down link from satellite to earth station - television receive-only transmission) or two-way (telephone channels).


SHF - super high frequency; any radio frequency in the 3,000- to 30,000-MHz range.


Shortwave - radio frequencies (from 1.605 to 30 MHz) that fall above the commercial broadcast band and are used for communication over long distances.


Solidaridad - geosynchronous satellites in Mexico's system of international telecommunications in the Western Hemisphere.


Statsionar - Russia's geostationary system for satellite telecommunications.


Submarine cable - a cable designed for service under water.


TAT - Trans-Atlantic Telephone; any of a number of high-capacity submarine coaxial telephone cables linking Europe with North America.


Telefax - facsimile service between subscriber stations via the public switched telephone network or the international Datel network.


Telegraph - a telecommunications system designed for unmodulated electric impulse transmission.


Telex - a communication service involving teletypewriters connected by wire through automatic exchanges.


Tropospheric scatter - a form of microwave radio transmission in which the troposphere is used to scatter and reflect a fraction of the incident radio waves back to earth; powerful, highly directional antennas are used to transmit and receive the microwave signals; reliable over-the-horizon communications are realized for distances up to 600 miles in a single hop; additional hops can extend the range of this system for very long distances.


Trunk network - a network of switching centers, connected by multichannel trunk lines.


UHF - ultra high frequency; any radio frequency in the 300- to 3,000-MHz range.


VHF - very high frequency; any radio frequency in the 30- to 300-MHz range.

How Does The Court System of Malaysia Work?

The hierarchy of courts of Malaysia starts with the Magistrates Court as the first level followed by the High Court, Court of Appeal and the Federal Court of Malaysia, which is the highest level.

The High Court, Court of Appeal and the Federal Court are superior courts, while the Magistrates Court and the Sessions Court are subordinate courts.

There are also various other courts outside of the hierarchy. There are the Penghulu's Courts, the Syariah Courts and the Native Courts. A court, which is paralleled in jurisdiction with the Magistrates' Court, is the Juvenile Court.

Generally, there are two types of trials, namely criminal and civil.

(a) The Federal Court The Federal Court hears appeals from the Court of Appeal.

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(b) The Court of Appeal The Court of Appeal hears appeals from the High Court relating to both civil and criminal matters.

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(c) The High Court

A) CIVIL JURISDICTION The High Court has jurisdiction to try all civil matters but generally confines itself to matters on which the Magistrates and Sessions Courts have no jurisdiction. These include matters relating to divorce and matrimonial cases, appointment of guardians of infants, the granting of probate of wills and testaments and letters of administration of the estate of deceased persons, bankruptcy and other civil claims where the amount in dispute exceeds RM250,000. B) CRIMINAL JURISDICTION The High Court may hear all matters but generally confines itself to offences on which the Magistrates and Sessions Courts have no jurisdiction, for instance, offences which carry the death penalty. C) APPELLATE JURISDICTION The High Court may hear appeals from the Magistrates and Sessions Courts in both civil and criminal matters.

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(d) The Sessions Court

(A) CIVIL JURISDICTION A Sessions Court may hear any civil matter involving motor vehicle accidents, disputes between landlord and tenant, and distress actions. The Sessions Court may also hear other matters where the amount in dispute exceeds RM25,000 but does not exceed RM150,000. (B) CRIMINAL JURISDICTION A Sessions Court has jurisdiction to try all criminal offences EXCEPT those punishable by death.

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(e) The Magistrates Court The Magistrates Courts deal with the vast majority of cases, both civil and criminal, and sit in almost all major towns in Malaysia.

A) CIVIL JURISDICTION A Magistrates Court may hear a civil case when the amount in dispute does not exceed, RM25,000. Where the amount claimed does not exceed RM5,000 you may wish to file your claim in the small claims division of the Magistrates Court. If you do so however, you must be prepared to conduct the case yourself, as legal representation is not permitted. (B) CRIMINAL JURISDICTION A Magistrates Court may hear criminal matters of the following nature: - where the offence is punishable by a fine only - this would cover the majority of traffic offences. where the offence provides for a term of imprisonment not exceeding ten (10) years. A Magistrate may not, however, impose a term of imprisonment exceeding five (5) years.

The Banking System in Malaysia

Banking, Finance and Exchange Administration

1. The Banking System in Malaysia

The banking system, comprising commercial banks, investment banks, and Islamic banks, is the primary mobiliser of funds and the main source of financing to support economic activities in Malaysia. The non-bank financial intermediaries, comprising development financial institutions, provident and pension funds insurance companies, and takaful operators, complement the banking institutions in mobilising savings and meeting the financial needs of the economy.

1.1 The Central Bank

Bank Negara Malaysia (the Bank), the Central Bank, is the apex of the monetary and banking structure of the country. Its main objectives as defined in the Central Bank of Malaysia Act 1958 are to:

• Issue currency and keep the reserves safeguarding the value of the currency;

• Act as a banker and financial adviser to the Government;

• Promote monetary stability and a sound financial structure;

• Promote the reliable, efficient and smooth operation of national payment and settlement systems and to ensure that the national payment and settlement systems policy is directed to the advantage of Malaysia; and

• Influence the credit situation to the advantage of Malaysia.

To meet its objectives, the Bank is vested with legal powers under various laws to regulate and supervise the banking institutions and other non-bank financial intermediaries. The Bank also administers the country's foreign exchange control regulations and act as the lender last resort to the banking system.

1.2 Financial Institutions

The following table provides and overview of the number of financial institutions as at end-September 2008:

Financial Institution	Total	Malaysian - Controlled Institutions	Foreign - Controlled Institutions
Commercial Banks	22	9	13
Investment Banks/ Merchant Banks	15	15	-
Islamic Banks*	15	10	5
International Islamic Banks	1	-	1
Insurers	41	25	16
Islamic Insurers (takaful operators)	8	8	-
International Takaful Operators)	1	-	1
Reinsurers	7	3	4
Islamic reinsurers (retakaful operators)	3	1	2
Development financial institutions	13	13	-

*Includes one foreign Islamic bank that commenced operations in October 2008

Banks, including Islamic banks, operate through a network of more than 2,200 branches across the country. Six Malaysian banking groups have presence in 18 countries through branches, representative offices, subsidiaries and joint ventures. There are also 21 foreign banks which maintain representative offices in Malaysia. They do not conduct normal banking business but provide liaison services and facilitate information exchange between business interests in Malaysia and their counterparts.

The introduction of the framework for investment banks in 2005 provided for the development of full-fledged investment banks through consolidation and rationalisation between merchant banks, stockbroking companies and discount houses. Investment banking activities mainly include capital raising activities such as underwriting, loans syndication and corporate financing, management advisory services, arranging for the issue and listing of shares, as well as investment portfolio management. The development of investment banks will enhance the capacity of financial institutions in Malaysia to better serve its corporate customers through a wider range of financial and advisory activities on par with the services provided by international investment banks.

Malaysia also has a comprehensive Islamic banking system. Presently, Malaysia has fifteen full-fledged Islamic banks, three of which are from the Middle East, providing a broad spectrum of financial products and services based on Shariah principles. At the same time, there are five conventional banks three of which are major foreign banks, offering Islamic banking products and services via the Islamic banking window set up.

The entry of the three foreign Islamic banks enhances the competition and stimulates innovation among the Islamic banking players, and at the same time complements the Malaysian players in tapping into strategic growth areas such as investment banking and wealth management. In addition, these institutions also have plans to make Malaysia as their financial hub for this region.

In terms of product offering, more than 60 Islamic financial products and services are made available in the market. The emergence of new innovative products and financial instruments that incorporate globally accepted Shariah principles such as commodity murabahah deposits, Islamic profit rate swap, musyarakah mutanaqisah home financing and sukuk musyarakah in the industry have further elevated the domestic Islamic financial sector to the next stage of advancement.

Malaysia has several development financial institutions (DFIs) that were set up with specific objectives to develop and promote strategic economic sectors, including the manufacturing and export sectors, small and medium enterprises (SMEs), as well as the agriculture, infrastructure and maritime sectors. These DFIs complement the banking institutions by providing an array of financial and non-financial services to support development of the strategic sectors. These include the provision of medium to long-term loans, equity capital, guarantees for loans and a range of supplementary financial and business advisory services. ‘Bank Perusahaan Kecil & Sederhana Malaysia Berhad' or the SME Bank, which was established in October 2005, offers financial products such as term loans and working capital including start-ups and SMEs in new growth areas, particularly to those in professional services, export-oriented activities and franchise businesses. Bank Pertanian Malaysia has recently been corporatised to Bank Pertanian Malaysia Berhad (Agrobank) in order to strengthen its role to be more effective in meeting the needs of the entire value chain of agricultural activities, including the agro-based industries.

1.3 Malaysia as an International Islamic Financial Centre

Malaysia's continuous efforts in strengthening the Islamic financial system domestically and internationally have gained acceptance and recognition by the international financial fraternity. An important initiative that has been introduced is to enhance the position of Malaysia as a leading international Islamic financial hub.

On August 2006, the Malaysian Government launched the Malaysia International Financial Centre (MIFC) initiatives. The MIFC initiative is a collaborative effort formed by Malaysia's financial and market regulators together with top officials from relevant Government agencies and participants from the banking, takaful and capital market sectors. The establishment of the MIFC as one of the key intermediation linkages in the global market place, has an important role in accelerating the process bridging and strengthening the relationship between international Islamic financial markets and thereby expand the investment and trade relations between the Middle East , West Asia and North Africa with East Asia . Situated centrally in the Asian time zone, Malaysia presents itself as a meeting place for those with surplus funds and those who seek to raise funds from any part of the world.

Under the MIFC initiatives, Malaysia offers strong value propositions as a key provider of Islamic financial services, with five focus areas:

Sukuk Origination

A platform for sukuk origination, distribution and trading.

Islamic Fund and Wealth Management

A destination for financial investment with a wide range of world class capital market and treasury instruments.

International Islamic Banking

A centre for the establishment of Islamic banks providing international currency financial services.

International Takaful

A centre for international takaful and retakaful businesses.

Human Capital Development

A centre of excellence and thought leadership in education, training, consultancy and research in Islamic finance to create a supply of talent for the Islamic finance industry.

Major incentives introduced to attract more participants to MIFC include:

•	Issuance of new International Islamic Banking (IIB) licences under the Islamic Banking Act 1983 to qualified foreign and Malaysian financial institutions to conduct the full range of Islamic banking business with residents and non-residents in international currencies either as a subsidiary or a branch. The entity will enjoy full income tax exemption for ten years up to year assessment 2016 under the Income Tax Act 1967.
•	Issuance of new International Takaful Operator (ITO) licences to qualified foreign and Malaysian financial institutions to conduct full range of takaful business with non-residents and residents in international currencies, either as a subsidiary or a branch. The entity will enjoy similar income tax exemption as the IIB entity.
•	Islamic fund management companies (IFMC) are allowed to invest all their Shariah funds abroad. The entity will enjoy tax exemption on all fees for managing Islamic funds for foreign and Malaysian investors up to year of assessment 2016 under the Income Tax Act 1967.
•	Provision of start-up fund by Employees Provident Fund (EPF) for the establishment of foreign IFMC.
•	Up to 100% foreign equity ownership is allowed for IIB, ITO and IFMC.