A Comparative Analysis of Tawarruq and Murabahah in Islamic Home Financing in Malaysia and Indonesia
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This study compares tawarruq and murabahah in Islamic home financing in Malaysia and Indonesia, focusing on their normative foundations, Shariah authorities, contractual structures, transaction objects, banking practices, and the potential development of tawarruq in Indonesia. While Malaysia has established a more explicit institutional framework for tawarruq, murabahah remains the dominant contract in Indonesian Islamic home financing, creating a need to examine the regulatory and operational requirements for adopting alternative financing structures. This study aimed to evaluate the differences between the two countries and assess the feasibility of implementing tawarruq in Indonesia. A normative legal research design with a comparative approach was employed. Data were collected through a literature review of the National Shariah Board of the Indonesian Ulema Council’s fatwas, Bank Negara Malaysia’s Shariah resolutions, Financial Services Authority regulations, Islamic banking product documents, books, and relevant journal articles. The findings revealed that Malaysia has a more explicit institutional framework for tawarruq, supported by central Shariah resolutions, Property Financing-i products, and commodity trading infrastructure. In contrast, Indonesia continues to rely primarily on murabahah because of its established regulatory foundation and industry practices. Although the Indonesian National Shariah Board’s Fatwa No. 82/DSN-MUI/VIII/2011 provides a basis for Shariah-compliant commodity trading, it does not specifically regulate tawarruq as a home financing scheme. This study concludes that tawarruq offers a potential alternative for Islamic home financing in Indonesia, provided that a specific fatwa, operational guidelines, adequate commodity trading infrastructure, and robust Shariah supervision are established to prevent transactions from becoming merely formal arrangements that resemble interest-bearing loans.
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