History of Sharia Commodity
History of Sharia Commodity
Friday, 22 July 2022

Sharia commodities or commonly called Murabahah commodities were first practiced by a local Islamic bank in Saudi Arabia and subsequently followed by several other Islamic financial institutions. Then, in October 2000, Saudi British Banks pioneered the practice of Murabahah Commodity Banking and was followed by Al-Jazeera Bank at the end of 2002 (Dabu, 2007). In Saudi Arabia, The National Commercial Bank (NCB) was the first bank to issue financing products using murabahah commodities under the name Taysir in 2000.

Furthermore, Abu Dhabi Islamic Bank (ADIB) launched Al-Khair, an innovative sharia-compliant financial product based on the commodity concept of Murabahah (Ahmad, Shihama, Tarmizi, Jibril, Djama, Muneeza, 2017). Murabaha commodity transactions carried out by Islamic banks in the Middle East usually use the London Metal Exchange (LME) as a trading platform for commodities.

Meanwhile in Malaysia, in March 2007, Bank Negara Malaysia (BNM) issued the Commodity Murabahah Program (CMP) to facilitate investment and liquidity management (Ghazali, 2014). Furthermore, on 17 August 2009 Bursa Malaysia launched the commodity trading platform “Bursa Suq al-Sila' (BSAS) to facilitate liquidity management and financing in Islamic banking (Ghazali, 2014). In Indonesia, referring to the DSN MUI fatwa No: 82/DSN-MUI/VIII/2011 concerning Commodity Trading based on Sharia Principles on the Commodity Exchange, it is legally permissible to comply with the provisions stipulated in the fatwa.

For now, sharia commodities (murabahah commodities) in Indonesia are only intended for Islamic financial institutions aimed at managing liquidity management.

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