Tawarruq Application in Islamic Banking: A Comparative Study between Malaysia and Indonesia

Muhamad Yusuf Abdillah, Mighfari Elsha Rabi, Rizal Nazarudin Firli


Tawarruq contract is one of financing instrument or product used by Islamic banks in solving cash liquidity issue, but unfortunately this tawarruq contract is still debatable since the Islamic scholars have different views related to the ability of this contract. Some allow, and some do not allow. The Sharia Committees in Malaysia through their fatwa have approved and legitimated theapplicationof tawarruqin Islamic Banks. While in Indonesia, DewanSyariahNasional (The National Sharia Board) does not allow Islamic banks to use thistawarruq contract. This paper aims to make comparative studies between Indonesia and Malaysia in the application of tawarruq contract which has been practised in Islamic banking based on the qualitative data which will explore more on its back ground, view of Islamic scholars, and legal framework used by both countries i.e. Malaysia and Indonesia. Recently tawarruqis applicable in Malaysia but not in Indonesia. Despite Malaysia has been earlier in establishing Islamic Banking than Indonesia, however Indonesia and Malaysia have similarities in many things such as social, culture, historical and even madzhab.This paper also aims to analyze specific reason of DSN in relation of impermissible tawarruqused by Islamic banking in Indonesia.


Tawarruq Contract, Shariah Committees, Comparative Studies, DewanSyariahNasional (DSN) and Islamic Bank.

Full Text:



Asmak, AbRahman, Shamsiah Mohammad &ImanMohdSalleh. (2010). Bay ‘ al-tawarruqdanAplikasinyadalamPembiayaanPeribadi di Bank Islam Malaysia Berhad, 18(2), 333–360.

Bouheraoua, S. I. (2013), "Tawarruq in the banking system: a critical analytical study of juristic views on the topic”, presented in: 19th Session OIC Fiqh Academy, United Arab Emirates, [Online] available from:http://www.iefpedia.com/english/wp-content/uploads/2009/10/Tawarruq-In-The-Banking-System-A-Critical-Analytical-Study-Of-Juristic-Views-On-The-Topic.pdf [Accessed on 6 January 2017].

Bilal, M. and Meera, A. K. M. (2015), “Al-Muqassah model: An alternative Shariah-compliant Islamic credit card model for Islamic financial institutions in Malaysia”, International Journal of Islamic and Middle Eastern Finance and Management, Vol. 8, No. 4, pp. 418 – 438. https://doi.org/10.1108/IMEFM-06-2014-0052.

Dusuki, A. W. (2007), “Commodity Murabahahprogramme (CMP): An innovative approach to liquidity management”, Journal of Islamic Economics, Banking and Finance, Vol. 3, No. 1, pp. 1-23.

Dusuki, A. W. (2010), Can Bursa Malaysia's Suq Al-Sila Resolve the Controversy over Tawarruq. I-FIKR/ISRA. [Online] available from:https://islamicbankers.files.wordpress.com/2010/04/suq-al-sila-and-tawaruq-controversy.pdf [Accessed on 6 January 2017].

Dusuki, A. W., Ali, M. M., &Sandrego, Y. D. (2013), “The Application of Commodity MurabahahIn Bursa Suq Al-Sila'malaysia Vis-A-Vis Jakarta Future Exchange Shariah Indonesia: A Comparative Analysis”, ISRA International Journal of Islamic Finance, Vol. 5, No. 1, 191.

Ahmed, E. R., Yahaya, S., &Harashid, M. (2012), “Shubuhat on Matter of Bai’alinah and Tawarruq”, International Journal of Business and Technopreneurship, Vol. 2, No.1, pp. 85-101.

Dabu, I. F. (2007), Tawarruq, Its Reality and Types. [Online] available from: www http://www.iefpedia.com/english/wpcontent/uploads/2009/09/.pdf [Accessed on 6 January 2017].

Hasan, Z., 2008, The Effectiveness Of The Legal Framework Of The Islamic Banking System In Malaysia. Retreived from https://zulkiflihasan.files.wordpress.com

Ibraheem Musa Tijani.(2013).A Snapshot of Tawarruq in Contemporary Islamic Finance.Fatwa in Islamic Finance.Bloomberg ISRA.

Noor, F.B &Nuzul A.B. (2014), “KontrakShariah Al Tawarruq: KonsepdanAplikasinyadalamProdukPerbankan Islam”, E-proceedings of the Conference on Management and Muamalah (CoMM 2014), 26-27 May 2014.

Md Nor, M.Z. et.al., 2016, “The development of Islamic finance in Malaysia: in Trakic, A. and Tajuddin, H.H.A. (Ed.) Islamic Banking & Finance Principles, Instruments & Operations.2nd ed., Kuala Lumpur: CLJ Publication, pp. 601-617.

Mohamad , N. and Rahman, A. A. (2014), “Tawarruq application in Islamic banking: a review of the literature”, International Journal of Islamic and Middle Eastern Finance and Management, Vol. 7, No. 4, pp. 485 – 501 https://doi.org/10.1108/IMEFM-10-2013-0106.

Sobol, I., 2016, “Development Of Islamic Banking In Indonesia”. Research Papers OfWrocław University Of Economics. Asian Economies in the Context of Globalization, Wroclaw: Publishing House of Wrocław University of Economics.

Saeed A., 2008, Indonesian Islamic Banking in Historical and Legal Context, (in:) Lindsey T. (ed.), Indonesia: Law and society, Federation Press, Sydney.

Siregar, M.E. and Ilyas N., 2011, “Recent Developments in Islamic Banking in Indonesia”, Proceedings of the Fifth Harvard University Forum on Islamic Finance. Islamic Finance: Dynamics and Development. Cambridge, Massachusetts. Center for Middle Eastern Studies, pp. 189- 196

ResolusiShariahdalamKewanganIslam,MajlisPenasihatSyariah: Bank Negara Malaysia(2010:2011) dan 2005.


  • There are currently no refbacks.

Creative Commons License
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

AL-ARBAH: Journal of Islamic Finance and Banking
Department of Sharia Banking
Faculty of Islamic Economics and Business
Universitas Islam Negeri (UIN) Walisongo Semarang Indonesia