Understanding the musharakah mutanaqiṣah of Koperasi Pembiayaan Syariah Angkasa (KOPSYA)‎

Abstract EN

Purpose - In Malaysia, both Islamic financial institutions (IFIs) and Islamic co-operatives (ICs) provide musharakah mutamqisah (diminishing partnership) (MM) financing.

It was initially a preferred contract as it is deemed to be more Sharfah-compliant and free from the element of riba (interest) in comparison to other SharT'ah-compliant sale contracts.

Nevertheless, MM is now considered less appealing to IFIs due to its existing challenges.

This paper aims to emphasise on MM as practiced by ICs which will highlight approaches to default, pricing of rental rates, profit sharing method and early settlement which differ to the practice of MM by IFIs.

Design/methodology/approach - 'Phis study focuses on Koperasi Pembiayaan Syariah Angkasa (KOPSYA), an IC based in Malaysia, which the authors concurred as being an ideal organisation to study on the matter due to its strong stance in promoting SharT'ah-compliant financing products.

Findings - The research highlights the flexibility of MM implementation in KOPSYA to provide some insights on the rationale behind MM operations in KOPSY A.

Originality/value - The authors are hopeful that this paper will aspire further interest by giving the readers better understanding on the implementation of MM in KOPSY A and how it will benefit the customers.