ASB/ASN Investment from the

Maqasid al-Shariah Perspective

Assoc. Prof. Dr. Mohamed Azam

Mohamed Adil
Deputy CEO, IAIS Malaysia.
 Introduction
Lately, debate over the permissibility of
ASB/ASN occurs again.
Ever since ASB(1990) and ASN(1978 )
were introduced by PNB (1978), the
government faced many challenges.
Bear in mind that majority of Malays/
Muslims are not used to invest in unit
trusts.
 Introduction
In the early stage, the government made a
massive campaign including in the month
of Ramadhan to convince Malays/Muslims
that PNB is a reputable agent that can
elevate their economy through ASN
investment.
Later, in order to give a better return for
the Malays/Muslims, ASB was introduced
by PNB in 1990.
 Introduction
The National Fatwa Council has issued a
fatwa in 2008 that investing in
ASB/ASN is considered permissible from
the maqasid/macro perspective.
But if one wants to judge a product merely
from the micro view, the maqasid
approach that to preseve the maslahah of
the ummah would not be achievable.
 Introduction
Problem arose recently when the
Securities Commission (SC) categorised
the investment of ASB/ASN as Shari'ah
non-compliant simply because 30% of
PNB shares are in Malayan Banking
Berhad.
 Introduction
The Shari'ah Advisory Council of Bank
Negara (BN) and Securites Commission
(SC) are the highest Shari'ah authorities in
determining whether a product is Shari'ah
compliant or not.
Any investment that involves less than 5%
in unIslamic activities is considered as
Shari'ah compliant whereas above 5% is
regarded as non-Shari'ah compliant.
 Introduction
From the surface, there is a conflict
between the fatwa issued by the National
Fatwa Council and the SC that leads to
confusion among Muslims in Malaysia.
Bear in mind that there are 8.6 million
Malay/Muslim investors in ASB which
amounted to RM137 billion (PNB-ASB
Report, 2014).
Where shall they put their money should
they pull out from investing in PNB?
 Fundamentals of Maqasid al-
Shari'ah
Maqasid al-Shari'ah is to serve the
interests (jalb al-masaleh) of all
humankind and to save them from harm
(daf al-mafasid).
Al-Ghazali: concerned with safeguarding
of 5 objectives faith, life, intellect,
posterity and wealth.
 Fundamentals of Maqasid al-
Shari'ah
Al-Shatibi: stressed on epistemological
(aqidah) dimensions to free man from
the grip of his own whims, so that he may
be the servant of Allah..
Ibn Ashur: broader angle to preserve the
social order of the community and to
ensure its healthy progress by promoting
the well-being and virtue of the human
being.
 Principles of Maslahah

To promote public benefit and to

prevent social evils or corruption.
Al-Ghazali reinforced the importance
of preservation of the ends of the
Shariah as the fundamental meaning
of maslahah.
 Principles of Maslahah
Al-Shatibi: maslahah is a principle which
concerns the subsistence of human life, the
completion of mans livelihood and the
acquisition of what his emotional and intellectual
qualities require of him, in an absolute sense.
Maslahah as being the (only) overriding
objectives of the Shariah comprise all
measures that are deemed beneficial to people.
 Characteristics of Maqasid al-
Shariah (MS)
i) To serve the interests of all human
beings and save them from harm.
ii) MS are universal, aiming to serve the
interests of mankind and requiring the
adherence of all human beings. We have
not sent you (O Muhammad) except to
mankind as a whole (34:28).
 Maqasid al-Shariah in Investment
Majority Muslim scholars have agreed that the
ultimate MS is to serve human interests and to
avoid harm.
This main objective of Shariah is governed by
the principles/concepts of mercy and guidance
(al-Anbiya, 21:107) & (Yunus, 10:57).
Based on the maqasid am the main aim of
investment in Islam is to preserve one of the five
dharuriyyat (essentials/ necessities) , i.e. the
preservation of wealth.
 Maqasid al-Shariah in
Investment
This can be seen in the following legal
maxims

Acts are judged by intentions

Necessity renders prohibited things
permissible.
 Maqasid al-Shariah in
Investment
MS are inclusive (absolute) covering all
human acts. It encompasses all human
acts whether they are related to ibadah or
muamalah.
MS are definitive they have not been
derived from only one text or item or
evidence, but from a multiplicity of texts
and different aspects of evidence.
 Maqasid al-Shariah in Investment
In the context of preservation of wealth,
products and services offered by Islamic
institutions must not circulate among wealthy
groups only.
The Quran has clearly mentioned the need to
prevent wealth from remaining in the hands of
certain people:
Whatever (spoils taken) from the people of those villages that God
has turned over to His Apostle (all of it) belongs to God and the
Apostle, the near of kin (of deceased believers), the orphans, the
needy, and the wayfarer, so that it may not be (a benefit) going
round and round among such of you as may (already) be rich
(59:7).
 Maqasid al-Shariah in
Investment
In one hadith, it is reported that the
Prophet SAW said:
Whoever monopolises a commodity with
the intention of overcharging Muslims is a
wrongdoer (Musnad Ahmad, 2:351, no.
8602 in al-Maktabah al-Shamilah).
 Maqasid al-Shariah in
Investment
On this note, it is very important that
wealth must be circulated in the
community as many hands as possible
without causing any harm to those who
have acquired it lawfully.
Thus, this preservation of wealth through
its circulation (Rawaj) is to ensure that the
poor and needy also get benefits.
 Maqasid al-Shariah in
Investment
The wealth circulation can guarantee a
balanced and harmonious society and
ensure sustainable economic
development.
Promoting investments and prohibiting
hoarding of wealth.
Prohibiting all types of manipulation and
monopolisation the channeling of wealth
to a small group of wealthy people at the
expense of the majority.
 Maqasid al-Shariah in
Investment
From the fundamentals of MS point of view, the
three objectives of Shariah namely dharuriyyah
(essentials), hajiyyah (complimentary) and
tahsiniyyah (embellishment) are very important
priorities set up by Muslim scholars.
Protection of wealth is largely embedded in the
muamalah, and therefore listed under the
priority of dharuriyyah which is a basic necessity
in MS.
 Maqasid al-Shariah in
Investment
Because the nature of the complimentary
(hajiyyah) objectives is secondary, it
supports the safeguarding of the 5
objectives promoted under dharuriyyah.
In an attempt to avoid difficulties, rukhsah
is introduced in Islamic law for the sake of
normal life.
Fatwa on ASB/ASN Investment
The National Fatwa Council (3 February 2008);
the Federal Territories Fatwa Committee (27
May 2008); and the Kelantan Fatwa Committee
(27 December 2009) concluded:
putting an investment in ASB/ASN is permissible
mainly because it is the only institution that can
provide Malay-Muslim investments the highest
profit, taking into consideration the low and poor
economic background of the majority of Malays.
Fatwa on ASB/ASN Investment
If PNB which is the agent of ASB/ASN
pulls out its share from Maybank which is
considered the largest bank in the Asia
Pacific, it will easily harm the economy of
the Malays who are Muslims.
What is so important is that, PNB does not
invest in gambling and liquor activities.
Fatwa on ASB/ASN Investment
In its investment, PNB has managed to
invest 70% of its investment activities
which are Shariah compliant.
The remaining 30% invested in Maybank,
which is non-Shariah compliant, is strictly
monitored by the Shariah Advisors
appointed by PNB under the Special
Project.
Fatwa on ASB/ASN Investment
According to the National Fatwa Committee:

Muslims are permitted to invest in companies

that invest in both halal and haram activities
under certain circumstances based on public
interest (maslahah ammah).
The Committee is of the view that protecting the
interest (maslahah) of Muslims is more
important, and avoiding harm (mafsadah) should
be the main criteria in this regard.
Fatwa on ASB/ASN Investment
Taking into consideration on the maslahah
of the ummah does not mean that the
National Fatwa Committee rejects the
Islamic principles.
Preserving maslahah is also one of the
Islamic principles considered in
determining a ruling.
Fatwa on ASB/ASN Investment
Islamic principles that are based on
maqasid al-Shari'ah should safeguarde the
five objectives faith, life, intellect,
posterity and wealth must be preserved.
If any of these five objectives is neglected,
it could tarnish the reputation of Muslims
and the religion of Islam itself.
Fatwa on ASB/ASN Investment
However, the States of Selangor and
Penang have prohibited it because,
ASB/ASN investment was apparently
found to be involved in interest (riba)
transactions and thus non-Shariah
compliant.
They shared the same argument pointed
out by the SC, basically based on the
companies in which they invested.
Fatwa on ASB/ASN Investment
Based on these investments, SC,
Selangor & Penang Fatwa Committee
have concluded that investing in ASB/ASN
is haram.
This has led to a conflict of fatwas
between the National Fatwa Committee
and the State Fatwa Committees.
As a result, it leads to confusion among
Muslims in Malaysia.
Fatwa on ASB/ASN Investment
At the time being, PNB has an important
responsibility to elevate the economy of
the ummah.
On this note, to serve the interest of the
ummah and save them from harm is given
the priority.
At present, no other institution other than
PNB can take this role.
 Conclusion
PNB as an agent established by the
government has been playing a major role
in elevating the economy of
Malays/Muslims.
Since its establishment in late 1978, PNB
has proven to be the most successful
agency that has achieved its objectives.
 Conclusion
But if one wants to look at the macro
perspective, preserving maslahah and
avoiding mafsadah of the ummah must be
given the priority.
One should not make a ruling merely on
Shari'ah compliant per se because
Shari'ah is universal and progressive.
 Conclusion
PNB has been rewarding its customers a
compatible return of dividend and bonus
from 20% in its early years to almost 9%
lately.
If we were to combine both Bank Islam
and Tabung Haji, they are not capable to
take up the huge fund managed by PNB.
 Conclusion
From the maqasid perspective, investing
in ASB/ASN is permissible.
Arguments that investing ASB/ASN is
haram simply because PNB has invested
in non-Shari'ah compliant activities is
basically based on a micro view, mainly
looking at the investment per se.
 Conclusion
My humble view is that, since the
economy of the Malays/Muslims is really
backward, elevating the economic status
for this group is a must from the maqasid
perspective.
Lastly, it is our duty to safeguard the
wealth of the ummah which is under the
dharuriyat (essential) category.