The Cooperation as Business Institution

What is Cooperation?

Organization of a group of people who have the same interests with the goal of welfare for its members.

What is Business Institution?

Organizations that combine and coordinate resources for the purpose of manufacturing and producing goods or services.

Cooperative is an economic movement that is based on a family basis. Cooperatives in Indonesia has grown rapidly due to the members comprised of the general public have to know the benefits of the establishment of cooperatives, which can help the economy and develop the creativity of each member. In addition, the cooperative also can be said as a business organization for cooperative activities that occur in nature generate a profit or profits in general be a goal of a business organization.

Business organization is an organization that combines and coordinates the resources for the purpose of manufacture and produce goods or services. Conceptually, the Cooperative as a Business Organization entrepreneurs who hold a weak economy, have some potential advantages to participate solve social problems - the economy.

To build a business organization, the business environment is also required. The business environment is one of the activities that will be undertaken in the form perbisnisan someone in a business, where in the business we are in demand to run or manage a business with his best of every person must have the desire and establishing the right of a business and one that must be willing to live her business to success.

Cooperative as a business organization so that:

• Subject to the rules and principles of economics that apply
• Able to generate profits and to develop the organization and its business
• Members as the owner and user of services
• Requires a business management system (financial, technical, organizational and information)

Role of Cooperatives in the National Economy

Cooperatives as an economic institution formed of, by and for its members is expected to provide business development opportunities and in particular the members of the surrounding community at large in order to improve the economic and social welfare. A cooperative economic organization that is distinct (has distinctive characteristics), with the corporate philosophy, corporate culture (cooperative business practices must be able to present the values ​​that were able to grow and thrive in a competitive market environment).

Values ​​inherent in the organization and management of cooperatives is the ability to self-help, democratic management, justice and solidarity, with values ​​above suggests that the cooperative as an organization is capable of self-help (selfhelp organization) must have a clear economic objectives and togetherness management (Joint management) are professional, so that cooperatives can put functions and its role as a strategic economic institutions in developing the economic potential of the people, because the cooperative is a business entity related to the life and economy of most of the people were scattered throughout the county, town and village in Indonesia, which covers almost all types of existing business fields.

Cooperative potential in the market system requires and in any business plan or utilize the maximum benefit so that companies can make a profit or of net income that is able to hold reserves in order to further business development. In order for companies to compete companies must conduct market orientation to be able to excel in the competitive market competition.

Cooperative has two markets:

• Internal Market, in which the direction of the distribution of goods addressed to the cooperative members.
• External market, is a market demonstrated outside the members or to the public. Cooperative acts as a supplier or call the marginal cost and supply Coorperative equal to the revenue. Cooperative will choose determines the price based on the price at cost with no more shortage.Koperasi have a great opportunity in terms of pricing than the market because it does not hold on to the position of maximum profit.

Purpose Cooperative Company

The main purpose of cooperatives focused on improving the welfare of its members and the public, it is clearly seen in Article 3 of Law No. 25 of 1992 on
Cooperatives, said that the cooperative aims to promote the welfare of members in particular and the society in general and to help build the national economy in order to realize an advanced society, just and prosperous based on Pancasila and the Constitution of 1945.

To achieve this, although not as an organization cooperative associations profit-oriented capital, but capital is an important factor to achieve this goal in addition to factors other resources. Not that did not attempt to achieve cooperative maximum profit, as a business entity, the cooperative aims to make a profit that can serve as a tool to achieve the ultimate goal.

Cooperative goals as a company or business entity is not solely only on the orientation of earnings (profit-oriented), but also on the orientation of the benefits (benefit oriented). Therefore, in many cases co-operatives, co-operative management of non-profit as the company's goals as they work based on the service (service at cost)....

Cooperative is an institution that should be managed as befits the institution. Businesses. In a business organization required an effective management Known and efficient management.

Likewise in cooperative enterprises, management is a right that must exist in order to realize the desired objectives.

Cooperatives are people based and not based capital as a conventional business organization or company. Cooperative organizations often turn out to be a bunch of capital even openly cooperative play often proceeds from fees or deposits cooperative members, but it is running or distributing third-party capital (bank)

In addition to the cooperative institutions that have been known, at this time also developed institutions Baitul Maal wat Tamwil (BMT) is an agency supporting small economic activities under (low income) with an economic system based on Islamic Sharia. Legal Entity of BMT BMT can be cooperative for those who have had a wealth of more than USD 40 million and has been prepared by the administration to be a healthy cooperative in terms of cooperative and good management, analyzed in terms of worship, practice shalihan officials who have managed BMT Islam.Sebelum Sharia legal status of cooperatives, BMT can be shaped as SHGs (Self Help Groups) that can serve as a pre cooperative.

The Conclusion:

Cooperatives can be regarded as a business organization because of the cooperative nature yangterjadi activities generate a profit or profits in general be a goal of a business organization. But in fact the potential of cooperatives in the market system requires effort and planning into each gain or exploit the maximum so that companies can make a profit or of net income that is able to hold reserves in order to further business development....

Understanding, co-operative is not a business organization, although the implementation expects profit. But the profit is distributed to members of the SHU (Business Profits). Running now, the cooperative has forgotten what its primary purpose. Many of the cooperatives in Indonesia indirectly to business organizations by certain elements. So we see in terms of implementation, cooperatives and business organizations actually almost the same.

COOPERATIVE (Principle, Types, Superiority, Entrepreneurship, Admiistrator of cooperative)

1. Cooperative

Cooperative is a business organization owned and operated by people - a mutual interest . Bases cooperative activities based on the principles of economic movement is based on the principle of kinship .

2. Principle cooperative

Cooperative principle is a system of abstract ideas that are clues to build effective cooperative and durable cooperative principles developed for the International Cooperative Alliance ( Federation of international non-governmental cooperative ) is

• Membership is open and voluntary
• Management of a democratic ,
• Participation in member economies ,
• Freedom and autonomy ,
• Development of education , training , and information

In Indonesia alone has made ​​the Law no . 25 of 1992 on Cooperatives. Cooperative principles according to Law no . 25, 1992 are :

• Membership is voluntary and open
• Management is done through democracy
• Distribution of SHU conducted fairly in accordance with their respective business service members
• provision of fringe benefits that are limited to capital
• Independence
• Cooperative education
• Cooperation among cooperatives

3. Form and Cooperative Type

3.1. Type Cooperative by function

• Cooperative purchasing / procurement / consumption is a cooperative which has the functions of purchase or procurement of goods and services to meet the needs of the final consumer . Here the member acting as the owner and purchaser or consumer to cooperatives.
• Cooperative sales / marketing is a cooperative that organizes the distribution function of the goods or services produced by its members to get in the hands of consumers . Here the member acting as the owner and supplier of the goods or services to cooperatives.
• Cooperative production is a cooperative that produces goods and services , where members work as an employee or employees of the cooperative . Here members take ownership and worker cooperatives.
• Cooperative service is a cooperative which organizes services needed by members , for example : savings and loans , insurance , transportation , and so on . Here members act as owners and users of services cooperative.

If cooperatives organized a function called single cooperative effort ( single -purpose cooperative ) , while the cooperative that organizes more than one function called business cooperatives ( multi purpose cooperative ) .

3.2. Type cooperatives based on the level and the area of work

• Primary Cooperative - Primary cooperative is a cooperative that has a membership of at least 20 individuals
• Cooperative Secondary - Is a cooperative made ​​up of a combination of cooperative bodies and has a wide working area coverage compared to the primary cooperatives . 

Secondary cooperatives can be divided into :

• Cooperative center - is a cooperative made ​​up of at least 5 primary cooperatives
• Joint cooperative - a cooperative whose members are at least 3 cooperative center
• Parent cooperatives - are members of cooperatives minimum is 3 combined cooperative

3.3. Type of Cooperative according to membership status

• Cooperative producer cooperatives whose members are producers of goods / services and have a household business .
• Consumer Cooperative is a cooperative whose members are the final consumer or user of goods / services offered by suppliers in the market .

Position of members in the cooperative may be in one state or two. Thus according to the status of members of cooperatives grouping closely related to cooperative grouping by function.

4. Superiority cooperative

The possibility of co-operatives to obtain comparative advantages of other companies large enough considering the cooperative has the potential advantages such as economies of scale , real activity , precuniary factors , and others.

5. Entrepreneurship cooperative

Cooperative entrepreneurship is a positive attitude in trying to be cooperative , to take innovative initiatives and the courage to take risks and hold fast to the principles of cooperative identity , in the realization of real fulfillment and collective welfare . From these definitions , it can be argued that entrepreneurship cooperative is a positive mental attitude in trying to be cooperative

Wirakop main task is to take innovative initiatives , it means trying to find , find , and take advantage of opportunities that exist for the common interest . Entrepreneurship can be done by the cooperative members , managers bureaucrats who play a role in the development of cooperatives and catalysts , that is, those who care about the development of cooperative

6. Administrator

Cooperative board elected from among and by the members in a meeting of members . There are times when the member is not meeting to elect all members of the Board from among its own members . It thus happens for example if the candidates come from members of his own circles do not have the necessary ability to lead the cooperative is concerned , while it turns out that that can meet the requirements are those who are not members or not members of the cooperative ( probably also served by cooperative but has not officially asked to be a member )

7. Cooperative in Indonesia

Cooperatives in Indonesia, according to the 1992 Act , is defined as a business entity consisting of individuals or legal entities with the bases cooperative activities based on the principles of economic cooperation as well as people's movement that is based on a family basis . In Indonesia , the cooperative principles specified in this Law. 12 of 1967 and Law no. 25 of 1992 .

Cooperative principles in Indonesia is approximately equal to the internationally recognized principles with slight variations , namely the description of the SHU ( Business Profits )

7.1. History cooperatives in Indonesia

A brief history of the cooperative movement began in the 20th century , which generally is the result of that effort was not spontaneous and was not done by people who are very wealthy Cooperative grow from among the people , while the suffering in the economic and social field generated by the capitalist system mounting . Some people whose livelihoods are simple with limited economic capacity , driven by the suffering and economic burden of the same , spontaneously joined hands to help himself and his fellow man .

In 1896 a Civil Service Patih R.Aria Wiria Atmaja in Purwokerto set up a bank for civil servants ( gentry ) . He was driven by his desire to help those employees who increasingly suffer from trapped by moneylenders who provide loans at high interest rates mean the regent to establish credit cooperative models such as in Germany . Ideals are then forwarded by the spirit of De Wolffvan Westerrode , a Dutch resident assistant while on leave De Wolffvan Westerrode managed to visit Germany and advocated Aid Savings Bank will convert the existing Aid to Banks , Savings and Agriculture . In addition to civil servants farmers also need to be helped because they suffer even more because of the pressure of the pengijon . He also advocated changing Banktersebut be cooperative . In addition, he also founded the village granaries are encouraging farmers to save on the loan musimpanen and provide rice aid to famine He was trying to make it into barns Credit Cooperative Rice But the Dutch government at that time another opinionated . Bank Aid , Savings and Agriculture and Cooperative Village Office is not used but the Dutch government established a new village barns , village banks , pawnshops and Cash Centrale which later became the Bank Rakyat Indonesia ( BRI ) . All of that is a business entity 's authority and led by the people government

In the days of the Dutch -forming cooperatives can not be implemented because :

• There has been no government agencies or non- governmental agencies that provide information and education about cooperatives .
• There is no law governing cooperatives life .
• Colonial government itself was hesitant because of political considerations advocated cooperative , cooperative worry it will be used by the political objective harm to the colonial government .

Anticipate the development of cooperatives already socialized , Dutch government issued regulations regarding cooperatives . The first , issued Regulation No. Cooperative Society . 43 , 1915 , and in 1927 issued Regulation No. anyway . 91 , 1927 , which governs the Cooperative Society - Society for Bumiputra groups . In 1933 , the Dutch East Indies government stipulate Society General Cooperative Society - No . 21 , 1933 . Regulations 1933 , it is only applied to groups that are subject to the legal order of the West , whereas Regulation 1927 , applicable to class Bumiputra . Discrimination is enforced at the level of cooperative life

In 1908 , Budi Utomo is founded by Dr . Sutomo provide a role for the cooperative movement to improve the lives of the people . In 1915 the rules made ​​Verordening op de Cooperatieve Vereeniging , and in 1927 Regeling Inlandschhe Cooperatieve .

In 1927 established Islamic Trade Union , which aims to fight the economic position pengusah - indigenous entrepreneurs . Then in 1929 , the Indonesian National Party stood fighting for the dissemination of the cooperative spirit .

However , in 1933 a law came out like Law no . 431 so lethal cooperative efforts for the second time . In 1942 the Japanese occupation of Indonesia . Japan and establish cooperative kumiyai . Originally cooperative is running smoothly but its function has changed dramatically and become a tool to benefit Japan , and misery to the people of Indonesia.

After Indonesian independence , on July 12, 1947 , the cooperative movement in Indonesian Cooperative Congress held the first in Tasikmalaya . Today is then set as the Indonesian Cooperatives Day at a Time formed the Central Organization of Indonesian People's Cooperative ( SOKRI ) located in Tasikmalaya ( Bandung as the capital of the province is being occupied by the Dutch )

7.2. Fungction and cooperative role of Indonesian

According to Law no . 1992 25 Section 4 explained that the cooperative has the function and role of , among others, to develop the potential and economic viability and community members , working enhance the quality of human life , strengthen the economy of the people , developing the national economy , as well as develop creativity and spirit organization for the nation's students .

7.3. Cooperative based on law

Cooperative legal entity under the Act 12 of 1967 is the [ organization ] ] people's economic social character , consisting of the persons or legal entity which is a cooperative economic arrangements as a joint venture , based on the principle of kinship . Specifically about the performance of cooperative associations , cooperatives must work under the provisions of the general law on business organization ( proprietorship, partnership , etc. . ) And commercial law and tax law .

THE ECONOMIC PROBLEM: SCARCITY AND CHOICE

• Scarcity is the fundamental economic problem of having humans who have unlimited wants and needs in a world of limited resources
• Choice consists of the mental process of judging the merits of multiple options and selecting one of them.

Types of choices

• Command decisions
• Delegated decisions
• Avoided decisions
• "No-brainer" decisions

Three basic questions must be answered in order to understand an economic system:

• What gets produced?
• How is it produced?
• Who gets what is produced?

Capital refers to the things that are themselves produced and then used to produce other goods and services.

According to Adam Smith and David , factors of production:

• Land :naturally-occurring goods such as water, air, soil, minerals, flora and fauna that are used in the creation of products
• Labor : human effort used in production which also includes technical and marketing expertise
• Capital: human-made goods (or means of production), which are used in the production of other goods.

Production

Production is a process, and as such it occurs through time and space. There are three aspects to production processes:

• The quantity of the good or service produced,
• The form of the good or service created,
• The temporal and spatial distribution of the good or service produced.

Resources or factors of production are the inputs into the process of production; goods and services of value to households are the outputs of the process of production

Scarcity and Choice in a One-Person Economy

• Nearly all the basic decisions that characterize complex economies must also be made in a single-person economy.
• Constrained choice and scarcity are the basic concepts that apply to every society.
• Opportunity cost is that which we give up or forgo, when we make a decision or a choice.

Scarcity and Choice in an Economy of Two or More

• A producer has an absolute advantage over another in the production of a good or service if it can produce that product using fewer resources
• A producer has a comparative advantage in the production of a good or service over another if it can produce that product at a lower opportunity cost.

Specialization, Exchange and Comparative Advantage

• According to the theory of competitive advantage, specialization and free trade will benefit all trading parties, even those that may be absolutely more efficient producers

Capital Goods and Consumer Goods

• Capital goodsare goods used to produce other goods and services.
• Consumer goodsare goods produced for present consumption
• Investment is the process of using resources to produce new capital. Capital is the accumulation of previous investment.
• The opportunity cost of every investment in capital is forgone present consumption

The Production Possibility Frontier

• The production possibility frontier (ppf)is an expository figure for representing scarcity, cost, and efficiency. In the simplest case an economy can produce just two goods (say "guns" and "butter")

The Law of Increasing Opportunity Cost

• The slope of the ppf curve is also called the marginal rate of transformation (MRT).
• The negative slope of the ppf curve reflects the law of increasing opportunity cost. As we increase the production of one good, we sacrifice progressively more of the other.

Economic Growth

• Economic growth is defined as the increasing capacity of the economy to satisfy the wants of the members of society. Economic growth is enabled by increases in productivity, which lowers the inputs (labor, capital, material, energy, etc.)
• The main sources of economic growth are capital accumulation and technological advances
• Outward shifts of the curve represent economic growth
• An outward shift means that it is possible to increase the production of one good without decreasing the production of the other.
• From point D, the economy can choose any combination of output between F and G.

Measuring economic growth : Economic growth is measured as a percentage change in the Gross Domestic Product (GDP) or Gross National Product (GNP)
Capital Goods and Growth in Poor and Rich Countries

• Rich countries devote more resources to capital production than poor countries.
• As more resources flow into capital production, the rate of economic growth in rich countries increases, and so does the gap between rich and poor countries.

Economic Systems

• The economic problem: Given scarce resources, how, exactly, do large, complex societies go about answering the three basic economic questions?
• Economic systems are the basic arrangements made by societies to solve the economic problem. They include:Command economies, Laissez-faire economies, Mixed systems
• In a command economy, a central government either directly or indirectly sets output targets, incomes, and prices.
• In a laissez-faire economy,individuals and firms pursue their own self-interests without any central direction or regulation. 
• The central institution of a laissez-faire economy is the free-market system.
• A market is the institution through which buyers and sellers interact and engage in exchange.
• Consumer sovereignty is the idea that consumers ultimately dictate what will be produced (or not produced) by choosing what to purchase (and what not to purchase
• Free enterprise: under a free market system, individual producers must figure out how to plan, organize, and coordinate the production of products and services.
• In a laissez-faire economy, the distribution of output is also determined in a decentralized way. The amount that any one household gets depends on its income and wealth.
• The basic coordinating mechanism in a free market system is price. Price is the amount that a product sells for per unit. It reflects what society is willing to pay.

Mixed Systems, Markets, and Governments

Since markets are not perfect, governments intervene and often play a major role in the economy. Some of the goals of government are to:

1. Minimize market inefficiencies
2. Provide public goods
3. Redistribute income
4. Stabilize the macroeconomic:

• Promote low levels of unemployment
• Promote low levels of inflation

LOCATION STRATEGIES

Location Strategies

The objective of location strategy is to maximize the benefit of location to the firm

Location and Costs

• Location decisions based on low cost require careful consideration
• Once in place, location-related costs are fixed in place and difficult to reduce
• Determining optimal facility location is a good investment 

Location and Innovation

• Cost is not always the most important aspect of a strategic decision
• Four key attributes when strategy is based on innovation
• High-quality and specialized inputs
• An environment that encourages investment and local rivalry
• A sophisticated local market
• Local presence of related and supporting industries

Location Decisions

• Long-term decisions 
• Decisions made infrequently
• Decision greatly affects both fixed and variable costs 
• Once committed to a location, many resource and cost issues are difficult to change 

Key Success Factors

Country Decision

• Political risks, government rules, attitudes, incentives 
• Cultural and economic issues 
• Location of markets 
• Labor talent, attitudes, productivity, costs 
• Availability of supplies, communications, energy 
• Exchange rates and currency risks 

Region/ Community Decision

• Corporate desires 
• Attractiveness of region 
• Labor availability and costs 
• Costs and availability of utilities 
• Environmental regulations 
• Government incentives and fiscal policies 
• Proximity to raw materials and customers 
• Land/construction costs 

Site Decision

• Site size and cost 
• Air, rail, highway, and waterway systems 
• Zoning restrictions 
• Proximity of services/ supplies needed 
• Environmental impact issues 

Factors That Affect Location Decisions

 1. Labor productivity

• Wage rates are not the only cost
• Lower productivity may increase total cost 

2. Exchange rates and currency risks

• Can have a significant impact on costs
• Rates change over time

3. Costs

• Tangible - easily measured costs such as utilities, labor, materials, taxes 
• Intangible - less easy to quantify and include education, public transportation, community, quality-of-life

4. Political risk, values, and culture

• National, state, local governments attitudes toward private and intellectual property, zoning, pollution, employment stability may be in flux
• Worker attitudes towards turnover, unions, absenteeism
• Globally cultures have different attitudes towards punctuality, legal, and ethical issues

5. Proximity to markets

• Very important to services
• JIT systems or high transportation costs may make it important to manufacturers 

6. Proximity to suppliers

• Perishable goods, high transportation costs, bulky products 

7. Proximity to competitors

• Called clustering
• Often driven by resources such as natural, information, capital, talent
• Found in both manufacturing and service industries 

A. Factor-Rating Method

• Popular because a wide variety of factors can be included in the analysis
• Six steps in the method :

1. Develop a list of relevant factors called key success factors
2. Assign a weight to each factor
3. Develop a scale for each factor
4. Score each location for each factor
5. Multiply score by weights for each factor for each location
6. Recommend the location with the highest point score

B. Location Break-Even Analysis

•  Method of cost-volume analysis used for industrial locations
• Three steps in the method :

1. Determine fixed and variable costs for each location
2. Plot the cost for each location 
3. Select location with lowest total cost for expected production volume 

C. Center-of-Gravity Method

• Finds location of distribution center that minimizes distribution costs
• Considers :  Location of markets
         Volume of goods shipped to those markets
         Shipping cost (or distance) 

• Place existing locations on a coordinate grid
• Calculate X and Y coordinates for ‘center of gravity’

D. Transportation Model

• Finds amount to be shipped from several points of supply to several points of demand
• Solution will minimize total production and shipping costs
• A special class of linear programming problems

Service Location Strategy

1. Purchasing power of customer-drawing area
2. Service and image compatibility with demographics of the customer-drawing area
3. Competition in the area
4. Quality of the competition
5. Uniqueness of the firm’s and competitors’ locations
6. Physical qualities of facilities and neighboring businesses
7. Operating policies of the firm
8. Quality of management

The Call Center Industry

• Requires neither face-to-face contact nor movement of materials
• Has very broad location options
• Traditional variables are no longer relevant
• Cost and availability of labor may drive location decisions

Geographic Information Systems (GIS)

• Important tool to help in location analysis
• Enables more complex demographic analysis
• Available data bases include
• Detailed census data
• Detailed maps
• Utilities
• Geographic features
• Locations of major services

THE PRINCIPLE OF ISLAMIC BANKING

There are almost 2 billion Muslims worldwide, a statistic that cannot be overlooked even in the banking industry. However, Muslims have very strict laws governing financial transactions. Islamic banking must adhere to the laws of Sharia to be true Islamic banking centers.

The Sharia Law of Islamic Banking

Sharia law is the law of Islam. The rules concerning financial transactions are known as Fiqh al-Muamalat. The most prominent of these laws are the laws concerning the charging of interest or fees on loans or usury fees. This is known as Riba. Islamic banking laws also forbid investing in financial unknowns, such as trading in futures, and in businesses that participate in ventures that are against Islamic principles.

Islamic Banking Principles for Interest

To comply with the laws concerning interest, Islamic banks often require a large down payment on property or goods being purchased. They may also require collateral equal to the value of the transaction. Instead of granting “loans” in the conventional way, a bank will purchase the goods or property from the seller and enter into an agreement with the buyer to sell it to them at a higher price. Since this is an exchange of goods, not money, the banks are allowed to enter into this transaction and make a profit. This is known as Murabaha (cost plus) and is how all property is purchased through a Sharia compliant bank. Islamic banks do not issue mortgages.


These transactions can fall under specific categories and practices. Safe Keeping (Wadiah) is where the customer transfers funds to the bank to hold (Keep) until their debt is repaid. During that time the bank is allowed to invest those funds to generate a profit for the bank. The bank may also charge a service fee for keeping the account safe during this period. The bank is allowed to give a gift (Hibah) on the account in the form of a monetary payment at the end of the term if it wishes. The bank, however, must have all deposited monies readily available should the debt be repaid and the deposit claimed.

Banking Partnerships for Business

Mudharabah (profit sharing) is a partnership that is formed between an entrepreneur and a bank to start a business. The Bank will supply all the money necessary to start the business and as the business operates it will receive a set amount of the profit until the initial debt is repaid. The bank will also receive as a bonus, an additional percentage of the profits until the loan is paid. Musharakah (joint venture) runs on the same principal except there are more than one business partner when the business is created.

Governing Boards of Islamic Banks

Each banking institution employs a special governing board that makes sure that all Sharia laws are complied with within the institution. This board will review all practices and investments prior to a transaction being finalized. They are also responsible for reviewing any potential investments the bank may make to ensure they comply with investment rules.

While many of these practices may seem strange to western bankers, Islamic banking has taken its hold in the Middle East. Deposits into Islamic banking institutions have been growing between 25 and 40% a year since 1975. Currently it is estimated that almost 200 billion dollars a day transacts in Islamic banks world-wide.

Mudharabah, Musyarakah, Murabahah, Salam, Istina and Ijarah

Mudharabah > means that one party provides capital and the other utilities for business purposes under the agreement that profit from the business will be shared .

Musyarakah > means participation of two or more persons in a certain business with defined amount of capital according to a contract for jointly carrying out a business and for sharing profit and loss in specified proportions .

Murabahah >sale and purchase agreement between the bank and the customer. bank buys goods from another party and then sells it to consumers with the buyer to know how large the cost and benefits received by the bank


Different Mudharabah and Musyarakah

Mudharabah
- Profit sharing.
- Mudharabah capital represents savings for the owner or investor but is generally a source of livehood for the working partner or entrepreneur.
- As a basis of financial intermediation in the Islamic economy is offered as a viable basis for an interest free banking system
- Entrepreneur shall not be liable for any loss of the venture.Thus, if the Mudharabah business runs into a loss, only the investor will have to bear the loss.

Musyarakah
- Partnership
- Literally it means a joint venture agreement between 2 parties to engage in a specific business activity with an aim making profit.
- Both parties will provide capital and the investor or lender may also participate in the management.
- In the event of loss, all parties bear the loss in proportion to the share of financing

Different Salam and Murabahah

SALAM
-In salam purchased goods are differed , price is paid on spot .
-in salam price has to be paid in full in advance.
-salam is not executed in the particular commodity but commodity is specified by specifications.
-salam cannot be effected in respect of things which must be delivered at spot ( e.g ) salam between wheat and barley .

MURABAHAH
-in murabahah purchased good are delivered at spot , price may be either on spot or differed.
-in murabahah price maybe on spot or differed.
-murabahah can be executed in particular commodity.
-murabahah can be executed in those things

Different salam and salam parallel

Salam => application stage of contract > payment of purchase by the bank of a salam customer .at this stage of the contract, only one of credit or market risk is possible at the same time. To be prudent, higher of the two should be provided ._receipt of the purchased commodity by the bank,_the purchased commodity is sold and delivered to the buyer

Salam parallel => application stage of contract > payment of purchase price by the bank of salam customer _receipt of the purchased commodity by the bank . Asset available for delivery to the customer. If the bank has legal right to recoup from the customer any loss on disposing of the asset. The purchased commodity is sold and delivered to the buyer and the amount is received.

picture of Salam and Salam Paralel

Salam :
-Make a contract of salam between seller/muslam ilaih and buyer/muslim
-pay the obligation to seller
-seller sent the goods to buyer


Salam paralel :
-Bank negotiation and akad salam with farmer/muslam ilaih.
-bank negotiation and akad with buyer/muslim
- buyer pay the obligation to bank
-bank pay to farmer/muslam ilaih
-muslam ilaih send the goods and document to buyer/muslim
-muslam ilaih send the document to bank

Definition Istisna and istisna parallel
Istishna 'is the sale and purchase agreement in the form of ordering the manufacture of certain goods by criteria and specific requirements agreed between the buyer (buyer, mustashni') and seller (manufacturer, shani ').

Istishna ‘parallel is a form of contract "between the buyer (buyer, mustashni') with the seller (manufacturer, shani '), then to meet its obligations to mustashni', the seller requires the other party as shani '.


IJARAH

-In terminology, Ijara is an agreement for the transfer of rights (benefits) of goods or services within a specified time by the payment of wages (ujrah), without being followed by the transfer of ownership of the goods themselves.Objects in the ijara contract is the benefit itself, rather than the object.


Different ijarah mutahiyah bi tamblik and ijarah wal-iqtina

1.Ijarah Muntahiyah bi al-Tamlik (Assets and properties)
-To transfer the asset or property to another person in exchanged for rent claimed.
-Another word – Leasing
-Lessor – ‘Muajjir’
-esee – ‘Musta’jir’
-Rent payable to lessor – ‘Ujrah’

2.Al-Iqtina (Lease jarah wal-Iqtina’ to Purchase or Hire Purchase)
-A contract is just the same as that of the Al-Ijarah except that the business owner is committed to buying the equipment at the end of the lease period.
-Fees previously paid constitute part of the purchase price.
-This type of lease to purchase agreement is commonly used for home financing.

Wadiah yaid almanah and addamanah

- Al Amanah Wadiah Yad, is a pure deposit, the goods are entrusted may not be used (taken advantage) by the depositor, any deposit should be returned intact whether the value of physical goods and, if damage occurs during the day care then the party receiving the deposit is not burdened with the responsibilities as compensation for the care of day care charges may apply.

- Ad Dhamanah Wadiah Yad, is the development of Al Amanah Wadiah Yad adapted to economic activity. Surrogate recipients were given permission to use and benefit of the deposit. Storage have an obligation to be responsible for loss / damage to the goods. All profits earned from the deposit entrusted to the right recipient. As compensation to the owner of the goods / funds can be given some incentive in the form of bonuses, which are not required previously.

MYSTICISM, ESOTERISM, SPIRITUALITY, TAUHID RUBUBIYAH, TAUHID ULUHIYAH

Mysticism is the pursuit of communion with, identity with, or conscious awareness of an ultimate reality, divinity, spiritual truth, or God through direct experience, intuition, instinct or insight. Mysticism usually centers on a practice or practices intended to nurture those experiences or awareness. Mysticism may be dualistic, maintaining a distinction between the self and the divine, or may be no dualistic. Some mystic traditions can exclude the validity of other traditions. However, mystic traditions tend to be more accepting of other mystic traditions than the non-mystical versions of their traditions. This is based on the premise that the experienced divinity is able to bring other mystics to their own tradition if necessary. Some, but not all, mystics are even open to the idea that their tradition may not be the most practical version of mystic practice.

Esoterism is the religion of Islam that emphasizes the study of the inner aspect of which is the essence of religion. This includes the inner aspect of the religious purpose, namely to achieve a prosperous life, happy, and prosperous with clean streets and draw closer to God. Islamic teachings do not mind the esoteric aspects of symbols or language embraced by other religions, and also not debating the differences in the ways to achieve goals or Shari’a (nature). However, Islam does not mean esoteric or not underestimate the importance on the Shari’a.

Spirituality is the desire and drive behind what a person believes. It can either be accompanied by a religion/dogma or stand alone. If a person believes in something greater whether it is a deity (god), enlightenment or something unnameable, and acts upon that belief in some way (prayer, meditation, good will towards others, acts of kindness, living a “good life” or bad, pursuit of higher knowledge etc.) then that person could be seen as spiritual. Many people label themselves spiritual when they have the belief in something greater but cannot bring themselves to trust in a set religion or dogma.

Tauhid Rububiyah means belief that God is the servant of the only God who created all this with his own creation and the recognition that God is the only one who set the Essence of all creation, His own universe, the animate all life and the turning off all deaths.
Included is the faith in Tauhid rububiyah and Qadla ‘and Qadarnya. Tawhid is the foundation then rububiyah beginning of monotheism-tawhid others.

Tauhid Uluhiyah is the recognition and belief that God is the only one Essence is right to be worshiped. Recognition is then realized in the form of worship, prayer and hope of every prayers. Some scholars define as Tawhid Uluhiyah peak of love and obedience to God. With this Uluhiyah monotheism a slave could be called a Muslim, because it has been carrying out the commands of religion, that is worship. It can be argued that this form of birth of monotheism Uluhiyah is running the pillars of Islam. A servant could have been achieved rububiyah Tauhid, but has not reached Uluhiyah Tauhid, as someone who has believed in the existence of God but has not been willing to uphold the pillars of Islam.