ISLAMIC BANKING AND FINANCE

ASSIGNMENT: MICROFINANCE CREDIT

TEKUN NASIONAL

PREPARED BY :
MARYAM KHALILAH BINTI KADRI (3140356)

LECTURER NAME : PROF. DATO' DR. MUHAMAD BIN

MUDA
COURSE CODE : MBA 8033

Introduction
Microfinance is a broader concept which refers to loans, savings, insurance,
transfer services, microcredit loans and other financial products targeted at lowincome clients. While Microcredit is a very small supply of loans (microcredit) to
the poor who usually lack collateral, steady employment and a valid credit
history..

It

is

designed

to

enable

the

poor

to

start

small

businesses

(microenterprises). This concept is founded in Bangladesh in 1983 through the

establishment of Grameen Bank. Micro is very important in economic growth in
Malaysia. Thus, starting from 2006, the Malaysian government has partnered
with the National Bank to encourage more financial institutions offering microcredit products. Tabung Ekonomi Kumpulan Usaha Niaga (TEKUN) formerly
known as the National TEKUN Foundation is one of the examples of microfinance
agency.
Background of TEKUN
It is an agency under the Ministry of Entrepreneur Development and
Cooperatives established on 9 November 1998. The goal of the National TEKUN is
to provide financing facilities to Bumiputera easy and quick to start and develop
their businesses. Now, TEKUN is under the Ministry of Agriculture and Agro-based
Industry.
Starting in 2008, TEKUN have made changes and reforms in line with the current
requirements to make this institution as an institution of strategic business
development and not only provide business capital alone. TEKUN now become an
institution that provides business opportunities as well as opportunities to
generate income, capital financing business, guidance and support and
entrepreneurs network.
It is hoped that with the new direction and re-branding, TEKUN will become a
participating institutions (executing agency) dynamic and able to play its role
more effectively to meet its target in line with the government's intention to
establish a Bumiputera Commercial and Industrial Community (MPPB). With the
success of this MPPB, Malaysia desire to uplift the Malays and Bumiputeras in the
economy will be achieved.
Microfinance product offered

There are five types of microfinance product offered by TEKUN. The first is
National Financing Scheme. This financing scheme is responsible for
providing small business loans (micro credit) easily and quickly.
The total financing offered consists of three categories. There are:
Types of financing

Micro finance scheme

Small finance scheme
Medium finance scheme

Total

Payment

RM 1,000 RM5,000
>RM
5,000

RM10,000
>RM
10,000

RM50,000
>RM
50,000

RM100,000

duration
3 years
5 years
5 years
10 years

Business areas that can be participating by entrepreneurs are agriculture and

agro-based enterprises, service, manufacturing, sub-contracting and business
online.
The eligibility conditions of applicants to apply National Financing Scheme are as
follows:
1.
2.
3.
4.
5.
6.
7.
8.

Bumiputera, and Malaysian citizens

Aged 18-60 years (tenure expires up to 65 years)
The applicant is not a bankrupt
company 100% Bumiputera ownership and citizen
Has license / permit / List of Business valid (SSM)
Have a place / location specific business / trade the move (mobile)
directly involved and part-time
The funding for a single household (unless a separate business and
business register (SSM) are different and good payment records for

households.
9. Minimum paid-up capital not exceeding RM300.000
10.Financing existing business (example: MARA, AIM, SME, civil servants and
so on) not exceeding RM100,000.
11.The applicant was doing business. As for applicants who want to start a
business deal required to have a minimum capital of its own cash
contributions from 20% funding as a commitment to conducting business
deal ( project progress).
12.For the purchase of a commercial vehicle / heavy equipment, the amount
of funding is 10 from the price of a commercial vehicle / big machinery
(subject to cash flow and financial position of the applicant).

13.For Enterprise (Partnership), must obtain a letter of authorization allowing

partners to create a funding applicant and partners must be Bumiputera
and Malaysian.
14.For Private Limited Company (Sdn. Bhd) shall provide the Company
pursuant to Resolution format which gives permissibility.
15.Finance portfolio on behalf of the Company for the financing of RM20,000
and above.
16.Financing approval on behalf of Enterprise (Sole Proprietor) for the
financing of RM20,000 and above can be considered feasible by using the
current account of the individual applicant or Enterprise.
To overcome the Non-Performing Loan, the second product that is offered by
TEKUN is Teman Financing Scheme. This product uses the concept of group to
provide financing more easily, quickly and efficiently to the needs of businesses.
The process on implementing this financing scheme is; Firstly, the entrepreneur
must self-select members into group of five. All members have to identify the
purpose of their loan. And finally, after all process done, TEKUN will disburse the
loan to their personal account. This is the advantages of implementing the Group
Financing model. All the process is within 7 working days. TEKUN started
implement TEMAN TEKUN only on March 2015 and as to date, the loan
disbursement are RM 45,043,500.00 and create 1,361 groups.

Based on the

achievement, the repayment rate is 197%.

The eligibility conditions of applicants to apply Teman financing scheme are as
follows:
1. Bumiputera aged 18-60 years
2. Has been doing business or have a business proposal or plan that has the
potential ventures and viable.
3. Have a license / permit / Business Register (SSM) are valid.
4. Has a place / location specific business or trade for a move (mobile)
5. Financing existing business does not exceed RM50, 000.
Briefly, the financing conditions of Teman Financing Scheme are:
1. Repayment period up to 5 years.
2. Form a group with 5 members who believed (male or female) and running
basic training of Teman Financing Scheme.
3. Attending meetings every week in the business / branch office TEKUN /
where appropriate with TEKUN officer.
4. Repay a weekly basis.
5. Protection under Insurance Financing and Life and Accident Insurance.

Customers from these two types of financing are asked to pay a contribution of
TEKUN Management Fund, 4% from the total funding each year during the term
of the financing. Besides that, the entrepreneurs were asked to make savings of
5% of the loan each year. Both of this payment and savings should be made
together with repayment of loans.
Thirdly, I-Factoring Financing Scheme is offered by TEKUN which is a process
to finance and supply contracts directly obtained from the Federal Government,
State Government, Government Agencies and Statutory Bodies. It is also a
financial instrument that allows a company to obtain financing by pledging
service and supply contracts. In other words, this instrument can help keep the
cash flow turns of the business entrepreneur. Financing through factoring aimed
at providing immediate financing to entrepreneurs who have obtained an
employment contract but lack capital. In addition, receivers no need to wait for
payment from the owner of the contract until the contract is completed. The
amount of financing offered is from RM 1,000 to RM 100,000 and contract
funding period must not be more than 6 months. Entrepreneurs are asked to pay
TEKUN management charge of only 1.5% per month of the total financing until
the end of the financing period. The benefits from this scheme are no guarantor,
flexible financing terms, low management charges and no deposit needed.
The eligibility conditions of applicants to apply Financing Scheme I-Factoring are
as follows:
1.
2.
3.
4.
5.
6.

Malaysians and bumiputera

age of 18-60 years only
To have a license / permit / list of legitimate business.
Have a place / location specific business / businesses run full time.
Existing funding cannot exceed RM 100,000.
Business ownership is 100% Bumiputera-owned and paid-up capital must

not exceed RM300, 000.

7. The offer letter must be from the Federal Government, State Government,
Government Agencies and Statutory Bodies.
8. Have a license from the Ministry of Finance, Construction Industry
Development Board (CIDB), Treasury (PMS), the Contractor Service Centre
(PKK), Bodies licensing or other relevant valid registration.
9. The Company is the main contractor appointed by

the

Federal

Government, State Government, Government Agencies and Statutory

Bodies.

TEKUN aims to contribute towards further improving the living standard of the
Bumiputeras, through their involvement in business and entrepreneurship. The
objectives and roles of TEKUN are to provide small loan financing to Bumiputeras
in a quick and easy way. Bumiputeras, on the other hand, may start and develop
their businesses with the loans that are provided by TEKUN.
At present, TEKUN has been an institution that provides business financing,
entrepreneurship

information,

business

opportunities

and

profit

making

opportunities. In addition, TEKUN also helps these entrepreneurs with guidance

and support, to help these entrepreneurs grow their business. Based on TEKUNs
experience in implement Islamic Concept, TEKUN are established in 1998 as a
company limited by guarantee (non-profit organisation) under the Ministry of
Entrepreneur. Since 1998 2013, TEKUN are running the program with
conventional practices. In 2013, TEKUN implement Qarhul Hasan and start the
awareness of implementing Tawarruq. Starting 2015, TEKUN are looking to
implement Tawarruq concept.
In simple word, Tawarruq means cost plus mark-up. Meaning to say that tawarruq
is purchasing a commodity on a deferred price in a form of murabahah, later
selling it to a third party with the objective of obtaining cash. While Qardhul
Hassan means benevolent loan which is a debt or borrowing contract between
two parties in which repayment of the borrowed amount must be of the same.
The diagram of tawarruq is as follows:

1.
2.
3.
4.
5.
6.

Tekun purchase commodity from Bursa Suq Al Sila (Broker A)

Tekun pay Bursa Suq Sila (Broker A) in cash
Tekun sells the commodity to entrepreneur
The entrepreneur sells the commodity to Bursa Suq Sila (Broker B)
Bursa Suq Sila (Broker B) pay the entrepreneur in cash
The entrepreneur pays Tekun on deferred payment.

Ar-Rahnu TEKUN
TEKUN also offering Ar-Rahnu scheme which is Islamic pawn scheme using
Shariah compliance Al- Qardh and Ar-Rahn which are very flexibility and allow
gold jewellery accepted as collateral for cash loans "Gold Change to Cash". This
scheme will keep gold jewellery as security and storage. Wage Charge (Ujrah) for
storage services will be charged according to the value of gold (marhun).
Ar-Rahnu TEKUN will lend to customers where the amount granted will be
assessed based on the current market price of gold. Total loans and advances
depend on the value of gold and margin loans are determined by this scheme.
Jewellery storage period and storage shall be determined prior six months and
agreed by both parties (Ar-Rahnu and Customers).
The syariah concept applicable is Qard Al-Hassan, safekeeping with guarantee
(Wadi'ah Yad Dhamanah) and Ujrah. In term of Wadi'ah Yad Dhamanah, Ar-Rahnu
TEKUN provides gold storage service. Customers are obliged to pay storage
wages (Ujrah) 50 cents per RM100.00 value of gold (marhun). The storage period
is 6 months and no extension had previously provided the storage fee is paid in
full. The minimum storage period is not less than 15 days. All items are kept fully
insured by Ar-Rahnu TEKUN. This scheme provides a secured storage for all the
gold as an alternative to the safe deposit box. Moreover, margin up to 70% of the
marhun. The minimum amount is RM 100 and total maximum Ar-Rahnu financing
for individuals is up to RM100, 000. Ar-Rahnu financing period is 6 months and
the extended period of 6 months.
The eligibility conditions of applicants to apply this scheme are as follows:
1. An Individuals aged 18 years and above as follows; Malaysian; or
Becoming a permanent resident;
2. Must have valid identity cards / documents.
3. TEKUN employees, including spouses, mothers, fathers and children are
not allowed to apply for this facility.
Standard Gold Fund:
GOLD QUALITY

CONTENTS OF

24.0 Karat

GOLD
99.90%

22.8 Karat

95.00%

22.0 Karat

91.60%

21.0 Karat

87.50%

20.0 Karat

83.50%

18.0 Karat

75.00%

Conclusion
Since 1998 until 2015, TEKUN has disbursed USD 844 million to 322,474
entrepreneurs. With the strength of 970 staff all over Malaysia and 222 branches
in parliamentary constitution, TEKUN will be successful microfinance provider
that will help in increasing the economics of Malaysian.

References
TEKUN Nasional (2016), Pengkalan Data TEKUN Nasional; Ibu Pejabat
TEKUN Nasional, Kuala Lumpur, Tel: 03-9058 8550 / 9058 8999.
Skim TEKUN. Retrieved 13 May, 2016, from TEKUN TV Saluran Pilihan Usahawan:
http://tekuntv.com/tekun-media/
Usahawan Tekun. Retrieved 13 May, 2016, from TEKUN Nasional:
https://www.tekun.gov.my/ms/
Ar-Rahnu TEKUN Skim Pajak Gadai Islam. Retrieved 18 May, 2016, from Ar-Rahnu
TEKUN: http://www.arrahnutekun.com.my/

Appendix
1. Repayment schedule for National Financing Scheme

2. Repayment Schedule For Teman Financing Scheme

3. Repayment Schedule For I-Factoring Financing Scheme.