Takaful: the Islamic System of Mutual Insurance-the Malaysian Experience

Abstract

Islam occupies a peculiar position in the Malaysian constitutional and legal framework. The Constitution which is the supreme of the land1 declares Islam to be the religion of the Federation2 but does not make the Syanah, that is, the principles of Islamic law, the basic or even the guiding of the land.3 In fact, the definition of the word law in the Constitution does not include the Syanah.4 If there is a lacuna in the law, recourse is to be had to the relevant principles of the common and rules of equity or in some cases to English statutes of general application.5 The only reference made to Islamic in the Constitution (or as used therein, Muslim law) is vis-a-vis the distribution of legislative powers between the Parliament and the State Legislative Assemblies. Even so, this term is used only in the orthodox sense, that is, as being synonymous with the personal laws of the Muslims, such as those relating to maxTiage, divorce, maintenance and succession.6 This constitutional set-up reflects the fact that in recognising Islam as the religion of the state, the architects of the Malaysian constitution regarded Islam as just a religion and not as it is regarded by Muslims, as a complete and comprehensive way of life. Hence no inconsistency was seen in the fact that while Islam is made the religion of the state, the of the land does not include Islamic law. This watertight compartmentalisation between and religion also enabled the state, whilst giving due recognition to Islam as a faith, to be simultaneously responsible for the development of a disiinctly un-Islamic lqCal, econoc and cornmercial irnework within the country. In the light of the above factors, Islam has not, until recently, played any significant role in influencing the course of development of Malaysian generally and Malaysian commercial particularly. Commercial practices which wansgress certain aspects of Islamic such as the Western-style, interest-based, systems of banking