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The Principles and Practices of Shariah in Islamic Finance - page 22 / 49





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30. Cost of services integral to an asset such as installation cost may form the cost portion of the asset acquired.

Illustration 5: Cost of Services Rendered as Part of Cost Price

A customer seeks IFI financing to acquire and install machinery valued at RM1.2 million. The supplier of the factory plant and machinery provides the components to be assembled at the customer’s factory site. Assembly and customization services cost an additional RM300,000. With the given cost structure and a mark-up of RM500,000, the IFI’s Murabahah selling price is RM2 million for a 3-year financing period for the components, assembly and customization of the plant and machinery to be installed at the customer’s site.

  • 31.

    Whenever a purchase order involves a transaction requiring the issuance of a Letter of Credit (LC), commission for issuing the LC shall not be part of the acquisition cost. The IFI may include the commission as part of the total selling price.

  • 32.

    Upon acquisition of an asset and until the ownership is transferred to the purchase orderer, the IFI is liable for the asset, and may obtain akaful coverage on the asset acquired before selling it to the purchase orderer. The Takaful contribution paid by the IFI may be added to the cost of acquisition.

  • nclusion

of Letter of Credit’s fee in selling price


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