by Helmi Hakim | Dec 21, 2016 | Miscellaneous
I just came back from Indonesia for holidays.
And had a good chat with a fellow Singaporean entrepreneur who recently set up his food business there. We had a good chat on shariah compliant franchise business model.
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Many of you might have known me, as the financial consultant that helps Muslim families plan their finance in a shariah compliant way in Singapore.
So. This time round, when I heard about shariah compliant franchise business model, I got very excited.
I began to ask questions.
“What is the difference between normal, conventional franchise business model and shariah compliant franchise business model?
What are the advantages and disadvantages of shariah compliant franchise business model?
How do you avoid riba, maysir and gharar in shariah compliant franchise business model?”
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I began to understand that under normal, conventional franchise business model, the franchisor charges a one time fee, and then a specific %, recurring fee on the monthly SALES of the franchisee.
Regardless, the franchisee makes a profit or loss, franchisee has to pay franchisor money because the recurring fee is on the SALES amount before deduction of operating expenses.
That goes against the spirit of Islamic Finance. Profit and Loss Sharing.
For a shariah compliant franchise business model, the franchisor charges a one time fee, and then a specific %, recurring fee on the monthly PROFIT of the franchisee instead.
Other than the one time fee, franchisor never earns anything if the franchisee don’t make a profit.
So it is to the best interest that the franchisor really helps the franchisee makes a profit from the business.
We discussed many more details but the above is just the essence…
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Over the years, I have many people who asked, how to set up a business, the shariah compliant way in Singapore?
Is my marketing technique halal or haram?
What are the best practices to conduct business transactions in accordance to Quran and Sunnah of our beloved Prophet Muhammad (P.B.U.H)?
What are my roles as a Singaporean Muslim entrepreneur?
Many more business related questions… Usually I would refer to my esteemed friends. 🙂
Alhamdulillah… Today, I have good news to share with you.
SIM Malay Cultural & Muslim Society in conjunction with Takaful.sg would like to present to you a FREE seminar series, *”Pillars of Entrepreneurship”* on this Saturday, 24th December 2016.
This event is FREE but only reserved for the 150 places. RSVP at mcms@mymail.sim.edu.sg.
Walk-ins are welcome too.
…
See you around. Insya’Allah… 🙂
by Helmi Hakim | Oct 3, 2016 | Insurance, Investment, Miscellaneous, Motivation
Some of you might have known me as the financial consultant that help Muslim families, plan their finance in a shariah compliant way in Singapore . You might have seen me in the papers, on national TV, dispensing financial advice specifically for Muslims in Singapore.
(Snapshot of my recent interview at a show, “Demi Cinta” in Suria. Picture from Toggle.sg)
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One of the most common questions that I always get, is how do I get the motivation.
The strength.
The energy to push forward, in my journey to promote Islamic Finance in Singapore.
I have to admit, that it seems an arduous task ahead.
As an entrepreneur running my own financial practice, sometimes, my business is up.
AND sometimes, my business is down.
When I feel down, I read on the translation of the Quran and Seerah (biograghy) of all the messengers of God, from Prophet Adam to Prophet Muhammad (May Peace and Blessings Be Upon Them All).
Here are some learning nuggets that I learnt, that motivate and inspire me to continue to work hard to promote Islamic Finance in Singapore.
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1) Follow the power of focus of Prophet Noah (Peace Be Upon Him)
When I am feeling down, I remembered reading about the story of Prophet Noah (Peace Be Upon Him).
Allah S.W.T commanded him to build a ship.
“And construct the ship under Our Eyes and with Our Inspiration and address Me not on behalf of those who did wrong; they are surely to be drowned.” (Quran 11:37)
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Prophet Noah (Peace Be Upon Him) chose a place outside the city and far away from the sea to build his ark.
Some mocked and laughed at him.
Making comments about the ship’s location, far from any water source.
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They had no comprehension of the power and magnificence of God.
SO they could not understand why Prophet Noah (Peace Upon Him) would build a ship, on the top of a hill, far away from the ocean.
They called him crazy and laughed out loud.
The ship began to take shape and when it was finished,
Prophet Noah (Peace Be Upon Him) patiently waited for the command from God.
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When others said, many Muslims in Singapore don’t mind taking riba (interest)… The market is not big enough… When others questioned me on why I need to talk about Islamic finance, I remember the story of Prophet Noah (Peace be Upon Him)
I ignore these voices. I stay focus.
If I can help even 1 client plan their finance in a shariah compliant way, I have done my job.
If I can show 1 client, how they can reduce their riba/interest payable by even 1%, I have done my job.
Even if I meet with rejections upon rejections, after proposing shariah compliant initiatives, I have done my job as a Muslim financial consultant in Singapore.
2) The Importance Of Planning
Prophet Muhammad (Peace be Upon Him) planned very well when doing his Hijrah from Mecca to Madinah.
The Hijrah of Prophet Muhammad (Peace Be Upon Him) is one of the most important episode in the history of Islam.
Allah S.W.T could have just instructed the Angels to carry Prophet Muhammad (Peace Be Upon Him) from Mecca to Madinah, without effort.
However, we all know that the Hijrah does not happen that way.
Our beloved Prophet Muhammad (Peace Be Upon Him) had strategies and plans, in place. Some of them are….
– Asking Sayyidina Ali (May God Be Pleased With Him) to replace him at his sleeping place
– Went out of his house, when the sun is scorching hot, something that those who were travellers wont do at that point of time
– Choosing Sayyidina Abu Bakar Assidiq as his companion for hijrah to Madinah
– Choosing alternative route to Madinah which is further and not the route commonly used by others
– Asma’ bt Abu Bakar and Abdullah Bin Abu Bakar to send information and food supplies while he is hiding at at Thur cave
– Amir bin Fuhairah, the individual to remove the footprints of Prophet Muhammad (Peace Be Upon Him) and Sayyidina Abu Bakar
(Source: “Panduan Cashflow, Apa Yang Kamu Tuai Simpanlah Bersama Tangkainya” book, by Suzardi Maulan (Pakdi))
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My take is that if our beloved Prophet Muhammad (Peace Be Upon Him) planned very well when he is doing his hijrah, we should also have a plan, in doing anything in our life.
Everyday, I think of strategies.
Strategies on how, to get more people to plan their finance in a shariah compliant way in Singapore.
How to get more people plan their finance the shariah compliant way in Singapore?
Facebook marketing.
Blogging.
Words of Referral.
Making Educational Videos etc2…
I work hard to introduce these systems in place.
Alhamdulillah…. Till date, I have over 600 clients who trust their finance with me, not only from Singapore, but also from Malaysia, Indonesia, Bangladesh, India and many other countries… 🙂
Remember, my friends.
Anything you do, plan and prepare in advance.
If you don’t have a plan, you will go haywire. Create a plan and stick through your plan. Follow the footsteps of our beloved Prophet Muhammad (Peace Be Upon Him).
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3) Motivation to get out of debts with interest
I adviced my clients on strategies to reduce riba, yet I have to admit that I am still servicing my housing loan. In Singapore, there is no murabahah financing, so its darurah, for us to take loan with interest to get our house.
We need a roof over our heads.
Everyday, I make doa/prayers/supplication to Allah S.W.T. to grant me the strength, the rezeki to accumulate as much cash as possible so that I don’t have to take loans with interest.
My motivation to stay away and get out of debts also propel me to me to work hard everyday, because interest/usury is haram. In addition to that, I need to walk my talk as an ambassador to promote Islamic Finance in Singapore.
I am also a firm believer of the ‘Man jadda wajada’ principle which means whoever puts in the effort, God willing, they will get what they work for.
Make doa. Put in a lot of effort and focus on your work. Tawakkal….
Insya’Allah…You will get what you work for.
4) Motivation to help my community grow strength by strength
Everytime, I read the news, I see Islam being potrayed in a negative light. What I learn in my part time madrasah (religious school) and what I see in the newspaper is totally different.
Of course, to explain the beauty of Islam is the jobs of our Islamic scholars. We seek their leadership to guide us, on how to live our life, in accordance to the Quran and Sunnah of our beloved Prophet Muhammad S.A.W.
I am glad that Asatizah Recognition Scheme (ARS) is now made compulsory, to ensure that our religious teachers and scholars are reliable guides for our community.
We need their expertise. We need their guidance. Reading and interpreting the Quran (God’s words) is not like reading a story book. We need… We depend on our Islamic scholars to interpet the verses of Quran and Hadith and apply them in Singapore’s context.
Nevertheless, I feel everyone has a role to play. Even in my position as a financial consultant in Singapore, I have a role to play. Empowering our Muslim community with financial knowledge is crucial. My job is real.
I advice my clients and their children, that whatever we do in life, we give our level best. Aim to be the best.
Prophet Muhammad (Peace Be Upon Him) says,
“The best of people are those that bring most benefit to the rest of mankind.” (Daraqutni, Hasan)
I hope, in the future, some of the children, I plan for becomes a scientist, becomes a lawyer, becomes a school teacher
or even become an Olympic Champion!
I hope, some days, I can see, my clients’ children names on the headlines of the newspapers, bringing glory to our community by being the best in their specialisation, in their chosen field.
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With the following reasons above, I am more determined than ever to help with the development of Islamic Finance in Singapore.
That is why, I created Takaful.sg.
Takaful.sg serves as a platform for me to educate.
Empower.
AND reach out to more Singaporeans who are interested to know more on the practicality and relevance of Islamic finance, in Singapore’s context.
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In Takaful.sg, you can sign up for “Your Financial M.A.P” session (Worth $500) for FREE.
“Your Financial M.A.P. Model” is A Standard Step By Step Guide.
To grow your money.
AND wipe off all your loans with riba,
using Shariah Compliant Financial Strategies.
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You will also learn on how you can calculate your net worth in less than 10 mins, which allows you to fully understand your financial situation and create a master plan to get started on your journey to achieve the financial freedom you desire.
You will discover bulletproof strategies on how you can increase your savings by 20%, even if you have not saved a single dollar before (It’s like having money growing from your pocket out of nowhere)
I will share with you 8 financial ratios that acts as a financial compass, giving you the direction to the oasis of financial promise land.
I will also share with you a Quick way to save up money for emergencies. This will give you a peace of mind, rather than panicking and trying to scramble up money from nowhere. You know, you have a safety net to protect you 100%.
Go to Takaful.sg now and sign up for your FREE session today! Insya’Allah… 🙂
by Helmi Hakim | May 29, 2016 | Insurance, Investment, Miscellaneous, Motivation
Alhamdulillah… My mentees and I, financial consultants from NTUC Income Cooperative were honoured to be invited to Islamic Banking & Investment Asia/Middle East Congress 2016 a few months back. 🙂
I received a lot of requests on my Facebook for me to share takeaways and learning points from the 2-day congress – but there was too much to share and I was really busy.
The event by itself, was really awesome! 🙂
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As most of you might have known, I work as a financial consultant that helps Muslim families, plan their finance in a shariah compliant way in Singapore . So being able to interact face to face with industry leaders who champions Islamic Finance in the world is a dream come true for a financial practionioner like me in Singapore.
(My mentees and I)
There are really a lot of learning points, and I will try to share with you one by one… I will also add on my perspective, in the context of myself as a financial consultant helping out with the development of Islamic Finance in Singapore. 🙂
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1) Understand Islamic Finance background
Firstly, let us speak about the status quo as of now.
Islamic Finance is 42 years old.
Considering its size of $2 trillion Islamic Finance over $460 trillion conventional finance, Islamic finance is still considered very small.
38 million Muslims touched by Islamic Finance according to Ernst & Young study and about 90 per cent of the Islamic Finance (IF) assets globally sit in six countries, namely Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates.
It was argued during the session that OIC members are not using Islamic Finance extensively. Part of the reason is because laws and regulations of the particular countries are not matured and developed. To their governments, Islamic Finance requires changes in laws, introduction of new things, and that is the main hindrance.
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Financial Consultant, Helmi Hakim’s Perspective:
I agree that there is an enormous opportunity to grow Islamic Finance further.
The very fact that only 38 million Muslims are touched by Islamic Finance, less than 1% of the global Muslim population, only means that there is a lot of work that needs to be done to educate and empower Muslims itself to undertake Islamic Finance products.
There is a huge opportunity for dakwah and it also means that there is a huge business potential and a relatively untapped market.
There are largely poor countries amongst the OIC countries, and I believe Islamic Finance noble principles and initiatives should be used to uplift the financial standard of the countries through economic and entrepreneurial activities/developments that will benefit the residents at large.
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2) Islamic Finance Positioning
The experts brought 2 salient points in terms of Islamic Finance positioning.
Firstly, the experts discussed that the brand, “Islam” itself has been a hindrance towards the globalisation of the Islamic finance industry.
A number of Non Muslim countries react rather adversely to that term. Even in China – where people are not averse to Islam but to religion in general – the pitch for Islam becomes difficult. We tend to use the term “Islamic Finance” globally even in places where people are not comfortable with it.
The second salient point is the usage of Arabic terms to all the contracts. In Malaysia, the population do not speak Arabic. However, when we talk about contracts, all the terms are in Arabic. The panel argued that the idea is not feasible in places where the locals cannot even pronounce the terms. In some countries, they don’t have the Arabic alphabet kh-aa and H-aa.
The panel suggested that we should call the terms, as it is. It is participatory by nature. Call it participation banking. Or call it risk sharing.
In addition to that, we should educate everyone that that Islamic Finance is good for all of mankind.
The experts proposed what the industry ought to do is to pitch Islamic Finance as it is and suggested that if syariah compliant instruments went by a religious-neutral name and with less Arabic terms, it would open more interest beyond the Muslim market.
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Financial Consultant, Helmi Hakim’s Perspective:
To a certain extent, I agree that we have to be flexible when marketing shariah compliant principles, financial products in the market. To me, the main thing is that the financial products need to be free from riba, maysir and gharar.
When I market shariah compliant financial products to Muslims in Singapore, I educate them how it works with all the Arabic jargons and substantiate them further with Quran and Hadith.
However, when I promote to non-Muslim clients, I use universal noble principles like transparency, putting people before profits, concept of profits and risk sharing etc2, which are consistent with the principles of Islamic Finance.
I educate that Muslims cannot take usury/interest because God told us in the Quran. We believe Quran is God’s words.
For those who never heard about Islamic Finance at all, I skip through all the jargons, and cater my presentation specifically for them using simple examples. The keyword here is know your target market, speak their language and “Be Flexible”! 🙂
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3) What Islamic Finance Advocates and The Status Quo Now
Islamic Finance has been known as profit and risk sharing.
Nevertheless, the current status quo, in the Islamic Finance world,
90% of the Islamic Finance transactions are of Murabahah or Ijarah, which is predominantly known as Debt Financing.
Only 10% of the Islamic Finance transactions are Musyarakah or Mudarabah (Equity Financing)
The panel discussed that, since Islamic Finance is all about profit and risk sharing, the industry itself should move more towards Musyarakah and Mudarabah.
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Why are all the financial institutions still advocating Murabahah or Ijarah?
We have to understand that Islamic Finance Institution are subject to the same liquidity capital requirement as conventional counterpart, similar to Basel requirements.
In transactions like Musyarakah, the capital charge is 400% on the Bank’s risk-weighted assets.
Whereas, in Murabahah, the capital charge is only 8% on the Bank’s risk-weighted assets.
Bank Regulatory capital charge is simply the amount of capital that the Banks are required to hold against their assets.
It is understandable that equity financing has more risk, and because its more risky, the capital charges, the capital cost are thus higher than debt financing. It is understandably too expensive to run a Musyarakah, thus most financial institutions will prefer a Murabahah or a Tawarruq.
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Financial Consultant, Helmi Hakim’s Perspective:
I understand. Musyarakah and Mudarabah are more reflective of the essence of Islamic Finance. It is more reflective of the nature of risk and profit sharing advocated in Islamic Finance.
Thus, I come out with a 2 throng strategies on how this can be done, over the long term.
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Firstly, the Islamic Finance industry that operates itself in markets with predominantly, high percentage of Muslim population should start to focus in developing and promoting shariah compliant instruments that are of Musyarakah and Mudarabah in nature aggressively.
Those countries with lower percentage of Muslim population, can start of with Murabahah, Ijarah or Tawarruq.
Its because, we would not want a situation where you try to promote more of Musyarakah and Mudarabah in countries with lower percentage of Muslim population, they see that it is not feasible, the whole idea of introducing Islamic finance instruments will not even proceed.
Like a Malay proverb says, “yang dikejar tak dapat, yang dikendong keciciran“, which means what you’re running after, you do not get and you lose what you have.
Countries with high percentage of Muslim population, should lead the way. 🙂
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The second strategy, to bring more of Musyarakah and Mudarabah is to educate the local population of the benefits of equity financing and at the same time growing their money through investment in equities or participating in commerce activities.
Encourage entrepreneurship, the concept of profit and risk sharing, the concept of doing research before investing your money, the concept of SWOT (Strengths, Weakness, Opportunities, Threats) analysis.
The very concept, we invest our money, when we make profits, we share it 70%:30%, or maybe 60%:40%, instead of regardless, we make profit or loss,
I will get a pre-determined rate of return (profit rate) of 10%.
It is because, we do not want Islamic Finance to be seen, just as a replicate of conventional finance with a shariah compliant label on it.
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I hope you learnt from my sharing above and do appreciate if you could share this blog post with your family and friends. Jazakallah Khayran… 🙂
by Helmi Hakim | Apr 6, 2016 | Insurance, Investment, Miscellaneous, Motivation
My wife and I went to a baking class last week, to learn how to bake macarons.
Some of my colleagues, were telling me,
“Aiyah… Why go for class? Just go to youtube and see how to make it!”
On that very day, when my instructor demonstrated to us in class, the procedures, step by step, I was telling myself… “Not bad… Mix here. Mix there, and its done! It looks pretty easy! :)”
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However, when it comes to our turn to do it on our own, I began to face difficulties. I started beating the egg white using the handheld mixer, while gradually adding the sugar, bit by bit .
I didn’t know when to stop beating the egg whites. When to add the colouring? When to add the almond mixture? Fortunately, the trainers were there to guide and show me how to test the texture of our batter, step by step, before adding the rest of the ingredients, one by one.
Even to stir the batter using a spatula has a technique to it! 🙂
From a stressful situation, it became a joyful experience for a novice baker like me, who has never operated a mixer before in my life. The experts were there to guide me and my wife. 🙂
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and finally the final product! 😛
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While learning to bake macarons, I listened to the experiences of my classmates on how they tried to learn to bake macarons on their own and failed.
The trainers shared useful tips with us. Example, the egg whites have to be refrigerated for 3 days, the particular type of food colourings to use and many other tips that I won’t be able to discover unless I learn it from a professional baker.
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When I returned home and consolidated my thoughts, I can relate this to my profession as a financial planner. Many times, our prospects out there thought they can manage their money and their portfolio on their own. They think they don’t need help.
When they face financial problems, they try to troubleshoot on their own. When they want to buy insurance, they try to do it on their own, without seeking advice from us, the financial professionals.
At last, what happens? Many were faced with helpless situations when in need. They don’t understand what they bought. Things that insurance doesn’t allow them to claim, they try to claim. Things that insurance allows them to claim, they don’t claim.
Worse – some lost their money in get-rich-quick schemes that promise them attractive returns in a very short period of time.
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After advising thousands of Singaporeans out there on personal finance since year 2007, I genuinely feel that everyone should seek professional help when it comes to managing their own money.
Qualified financial advisors like us, harness our skillset to troubleshoot, save and bail individuals from disastrous financial situations. I personally have created proven systems on how anyone can instantly have more money inside their pockets every month, how you can accumulate money fast and how you can grow your money in a shariah compliant way in Singapore..
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My friends… If you want to make superb macarons, you look for a professional baker. If you want to learn how to speak Arabic, you look for an Arabic Language teacher. If you want to learn more about Islamic Finance, you look for a financial planner who is trained in Islamic Finance.
Isn’t that simple to understand? 🙂
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And oh yes, talking about macarons – next week, I will be heading to Paris with some of my colleagues for our incentive trip award. I will sample the authentic French macarons there and test them out! Yes. Time to sample authentic macarons made by professionals!
Enjoy your day! 🙂
by Helmi Hakim | Nov 8, 2015 | Insurance, Investment, Miscellaneous, Motivation
Continuation from https://helmihakim.com/investment/is-there-really-potential-for-islamic-finance-to-grow-in-singapore-part-1/
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In my opinion, the secret recipe to the success in the development in Islamic finance in Singapore is to build our foundations and platform right locally first and then, scale it, expand globally.
I have listed the steps.
- Build up our strong foundation of Islamic Finance for our local population first and then expand globally.
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The first crucial step is to introduce murabahah financing for Singaporeans who want to purchase our properties the shariah compliant way, as an alternative to conventional mortgage loans.
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No individual or entities in Singapore will give Qard Hassan, also known as interest free loan to our local population.
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Even if there are willing, charitable individuals/organisations, they are too few among us. The most pragmatic way is to set up the strong foundation, where transactions with mutual benefits can be established, yet it is shariah compliant.
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The success of any business endeavour lies on MARKET DEMAND.
Everyone needs a roof on our head.
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Murabahah financing is a good start. Under Murabahah financing, financial institution earns profit from a mark up of the cost price payable over number of financing years, while the buyers pay instalment yet do away with interest based transactions. Mutual Benefit! 🙂
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There are other shariah compliant financial instruments, that financial institutions can look, to introduce or expand in the market.
Some examples:
Restricted and non restricted mudarabah account
Shariah Compliant Fund (already available in NTUC Income Cooperative)
Musharakah (Partnership between financial institutions and business owners on profit/loss sharing basis)
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2. Enhance Competitiveness Of Shariah Compliant Products in Singapore
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Example again in murabahah financing.
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The effective profit rate earn by financial institution needs to be comparable with the effective interest rate by conventional financing facilities.
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If we can create and maintain competitive shariah compliant instruments on a small scale on a profitable note, to make it bigger, and bring it to a global scale will be easier.
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In my interaction with Non Muslims from other countries, they like shariah compliant products in their country due to salient advantages.
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Example, competitive rates as compared to conventional ones and other benefits like, having one month “instalment holiday” at the end of the year, where they don’t have to pay for mortgage instalment for that particular month.
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3.Tax Exemption to smoothen certain process pertinent to Islamic Finance
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Again, example, in a transaction like Murabahah financing for properties.
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The seller has to transfer the ownership to the financial institution and the financial institution has to transfer again to the buyer.
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The transfer of properties or risk of ownership specifically is essential in Murabahah and cant be compromise.
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Remove in between tax from such transactions, as it will add cost and reduce competitiveness in such financing activities.
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4. Work with financial consultants and property agents
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Financial consultants and property agents are the frontline who deals with customers on financial transactions, every single day.
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Work with us.
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When sharah compliant instruments are introduced, we already have the database of clients, who are interested in shariah compliant products.
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Though our jobscope may seems more of an advisory role, we have been trained to sell. In order for the take up rate for shariah compliant products to skyrocket, it has to be sold. Incentivise the whole process. It is wishful thinking, to assume that shariah compliant products will move on its own, when introduce to the market.
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Education is also a key to the success of the promotion of a particular financial instrument. Engage us the practitioners by introducing educational grants and training schemes, that we can use to upgrade ourselves, specifically on Islamic Finance.
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5. Ability to sell cross borders transactions
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From my understanding, financial consultants in Singapore can only sell to locals.
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If we want to sell to foreigners, they must have a FIN number.
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Usually, they are PRs, Employment Pass, S Pass or Work Permit holders.
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Singapore has its advantages of its strong Singapore Dollar. Foreigners will love to diversify their investments, and if Singapore allows for such cross border transactions with stringent underwriting, that will help. Imagine money flows from neighbouring countries with sizeable Muslim population….
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Of course, this is just my thoughts as a practitioner in Singapore.
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After all the above has been done, only then Singapore is poised to attract the petro-dollars from the Middle East.
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Singapore, with its solid, working blueprint specifically on development of shariah compliant products, coupled with its inherent strengths is just a step away to champion Islamic Finance worldwide.
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What is needed then is just to identify what works on a small scale domestically, and expand it further, worldwide.
