ISLAMIC MARKETING: STRATEGY FOR MARKETING ISLAMIC AGRO PRODUCTS IN ISLAMIC BANKING INSTITUTIONS IN MALAYSIA

Muhammad Ridhwan Bin Ab. Aziz

Department of Banking & Finance, Faculty of Management & Muamalah, International Islamic University College Selangor. Authors to correspondence should be addressed via email: ridhwan@kuis.edu.my

Abstract Marketing strategy is one the most important areas that needs to be carefully examined by policy makers of Islamic banking institutions. A sound marketing strategy becomes imperative as Islamic banking institutions not only operate in an environment where service quality and financial returns are perceived as the essential criteria from customers viewpoint, but they must also compete with conventional banks which are known to have better experiences and expertise in the banking business. Thus, the objective of this paper is to explore the concept of marketing in Islam and marketing tools that can be the best strategy to promote Islamic agro products in Islamic banking institutions. Although agro initiatives are very risky to be embarked by agro entrepreneurs compared to other sector in business, proper marketing strategies used by Islamic banking institutions are needed in order to ensure good return to the banks. The methodology of research in this paper is a qualitative research through document analysis, interviews with relevant Islamic bank officers and observation from pamphlets and websites of the selected Islamic banking institutions in Malaysia. The finding shows that by applying proper marketing strategies can be a better tool for Islamic banking institutions in promoting Islamic agro products and minimizing risks that associated with the industry, which eventually maximizing financial return. Key Words: Islamic Marketing, Islamic Agro Products, Marketing Strategy.

1. INTRODUCTION. Islamic marketing concept combines the principle of value maximization with the principles of equity and justice for the welfare of the society. In a rapidly changing marketing environment the need to be costumer-focused has never been as important as it is today. At present where customers are becoming more demanding and increasingly mobile between competing financial providers, being customer-focused is not enough. Islamic banks need to be perceived by their customers as being Islamic. It is clear that agricultural projects seem less viable than any initiative in other sectors. It is also admitted that the risks in agricultural investment are higher due to various factors in respect to the effect weather and natural disasters on the production of primary produces. Nevertheless, with the appropriate strategies in marketing from the perspective of Islam these risks could be minimized. Proper channel in marketing also may place Islamic agro products at par with other financial products and services provided by the Islamic banks. As such, there are a number of questions need to be solved such as what is marketing concept in Islam and how marketing strategies can be used in order to secure profitable outcomes to Islamic banks and agro entrepreneurs in pursuing their agro projects. This paper will be divided into three topics namely Islamic marketing, Islamic agro products in Islamic banks and strategy for marketing Islamic agro products.

2. ISLAMIC MARKETING. The basic difference between Islamic and conventional banks lies in the fact that the former operate on an equity participation system in which a predetermined rate of return is not guaranteed, whereas the latters operations are based on both equity and debt systems that are mainly driven by interest (riba)1. The essential difference, resulting from the implementation of Shariah principles, provides the incentives for Islamic banks to search for different products and services to offer2. Although the idea of Islamic banking is relatively new, it has nevertheless attracted the attention of many investors around the world. From a strategic point of view, this newness is both advantageous and disadvantageous at the same time. On the positive side, Islamic banking has the potential for attracting new
1

Sudin Haron et. al. (2009), Islamic Finance and Banking System: Philosophies, Principles & Practices , Shah Alam: McGraw-Hill (Malaysia) Sdn. Bhd., pp.128-129; Kamal Khir et.al. (2008), Islamic Banking: A Practical Perspective, Petaling Jaya: Pearson, p.10. 2 Kamal Khir et.al. (2008), op.cit., pp.196-197.

customers and consequently, enhancing a banks market share. On the negative side, a high potential for expansion motivates new entrants to the industry and indeed, provokes more competition3. As a result of this development, an Islamic bank can be expected to face competition not only from the Islamic windows of conventional commercial banks, but also from other Islamic banks. Hence, the marketing strategy of an Islamic bank must be concerned with its ability to gain a competitive advantage and establish a strong competitive position. The Islamic marketing principles combine a valuemaximization concept with the principle of justice for the wider welfare of the society. These principles offer a means to create value and elevate the standard of living of people in general through commercial pursuits4. The Islamic marketing guidelines ensure respect for, and the individual freedom of, both bankers and customers. Islamic ethics dictate that under no circumstances should marketers exploit their customers or in any way involve themselves in dishonesty, fraud or deceit. Any unethical marketing practice does an injustice, which, by definition, negates the concepts of brotherhood and equality of humanity that form the core of the Islamic vision. Thus, adopting the Islamic marketing principles ensures that the seeds of harmony are planted and a proper order in society is provided, thereby enhancing the dignity of, and upholding the rights of human beings5. The need to be customer-focused in the rapidly changing marketing environment has never been more important for Islamic banks and financial services institutions than it is nowadays. Islamic banks and more specifically their contact employees (customer relation advisors) need to be perceived by their customers as ethically Islamic. The issue of marketing ethics and strategies in Islamic banking perspective is an under researched area. There is a lack of published literature from the Islamic perspective on marketing ethics and strategies applicable to banking system 6. The Five Ps of the Marketing-Mix from the Islamic Perspective in defining Islamic Marketing principles state that Islamic marketing is based on the principles of justice and equity in Islam, which differs from secular marketing principles in many ways. They discussed the three characteristics of market ethics from the Islamic perspective. Firstly, Islamic marketing principles are based on Quranic
3

Ataul Huq Pramanik (2009), Islamic Banking: How Far Have We Gone, Gombak: IIUM Press, p.108; Kamal Khir et. al. (2008), Islamic Banking: A Practical Perspective , Petaling Jaya: Pearson Malaysia Sdn. Bhd., pp.310-311. 4 Muhammad Nasri et. al. (2006), Etika Perniagaan: Pendekatan Perspektif Islam, Petaling Jaya: Prentice Hall, pp.98-99. 5 Ibid. 6 Dr. Mohd. Daud Bakar (2008), Essential Readings in Islamic Finance, Kuala Lumpur: CERT Publications, pp.101-103.

commandments and leave no room for ambiguous interpretation by marketing executives to suit their individual whims and desires. Secondly, the main difference is their transcendental aspect of absoluteness and non-malleable nature. Thirdly, the Islamic approach emphasizes value-maximization in view of the greater good of the society rather than the selfish pursuit of profit maximization. Such properties grant Islamic marketing a tremendous capacity to penetrate human conscience and are capable of influencing the behaviour of marketing executives from within. Banking or commercial activity from an Islamic perspective is governed by two principles: (i) submission to the moral order of God and (ii) empathy and mercy to Gods creations which implies refraining from doing harm to others and thus, preventing the spread of unethical practices 7. The five Islamic marketing Ps are: product, price, promotion, place and people. Product/ Production Process. The development of Islamic banking products should be visualized quite differently as compared to Western thinking. The Islamic perspective incorporates moral and transcendental elements within the production decision-making process in product development and is guided by the principles of Islamic business ethics. These principles dictate firstly, the product should be lawful and not to cause dullness of mind in Islamic Marketing ethics and its impact on customer satisfaction. Secondly, the product must be asset backed. Thirdly, the product must be deliverable since the sale of a product is not valid if it cannot be delivered (the existence of element of gharar). Fourthly, there is a need of identification of extra costadded features that might materially change the product or impact on the buyers purchase decisions. Fifthly, all parties intend to discharge their obligations, financial and otherwise, in good faith; and should be based on principle of the justice, fairness and equity8. Under the Islamic approach, the production process has to be guided by the criteria of the value and the impact of the product upon the whole society. This is due to the highest importance given to the actualization of the optimum welfare of a human being and society. The primary objective of the development of suitable banking product is to deliver, elevate and satisfy basic human needs, whereby Islamic marketing encourages a societal and welfare approach rather than decisions based on the profit maximization.

Ahmad Zaini Othman (2003), Pemasaran Produk Perbankan Islam: Satu Analisa, Prosiding Seminar Kewangan Islam, Kuala Lumpur: Akademi Pengajian Islam, Universiti Malaya, p.145. 8 Muhammad Nasri et. al. (2006), op.cit., pp.100-101.

Product Pricing. Pricing policies are, in the main, formulated to exploit and manipulate human psychology as witnessed by common practice, whereby the recommended retail price printed on a product is often substantially higher than what retailers actually charge. The aim of such pricing policies is to give customers a false impression that they are in fact getting a bargain. This type of practice is banned under Islamic law. Islam prohibits getting something too easily without hard labour, or receiving a profit without working for it9. Furthermore, it is not allowed to change a price without altering the quality or quantity of the product because this is cheating the easy-going customer for illicit gain. Islam also prohibits false propaganda or publicity on the part of marketers regarding the position of demand and supply through the media. It should be pointed out that Islam does not prohibit price controls and manipulations to meet the needs of the market. It means that the Islamic ethics allows some time in which to charge higher prices as a result of natural scarcity of supply of a given commodity or setting price ceilings to curb opportunistic tendencies among merchants10. As narrated by Anas Bin Malik, during the life time of the Prophet Muhammad ( s.a.w.) price levels went up. They (people) said: Prophet (s.a.w.)! Fix the prices for us . In this regard, the Prophet (s.a.w.) said: Prices are fixed by Allah. He (s.w.t.) contracts and expands the sources of livelihood and I hope to meet my sustainer in a state that no one may raise a claim of injustice against me in respect of blood or money (Reported by Tirmidhi and Abu Daud). From the tradition of Prophet Muhammad (s.a.w.) above, we can conclude that self-operating mechanism of price adjustments and healthy competition are to be encouraged. Allah ( s.w.t.) says in the Quran: The seal thereof will be musk: and for this let those aspire, who have aspirations . (Mutaffifin, 83:26). However, the essential conditions for the successful operation of such a mechanism dictate that there should be no corner market, no hoarding, no unjustified price manipulation, and no restriction on trade. Once the second Caliph Umar Ibn al-Khattab passed by Hatib ibn Abi Balta'ah and found him selling raisins at a much lower price with the intention of putting his competitors to loss. Caliph Umar Ibn alKhattab told him: Either enhance your rate or get away from our market. The hoarding of any product is strictly prohibited in Islam. But the system offers flexibility if competing marketers sell at one price amounts to coercion and distortion of the free market or if it means very high product prices. Under these circumstances, officials of the Islamic government can bring together
9

Hifzur Rab (2006), Economic Justice in Islam, Kuala Lumpur: A.S. Noordeen, p.43. Yusuf al-Qaradawi (1995), The Lawful and The Prohibited in Islam, Kuala Lumpur: Islamic Book Trust, p.260.
10

market leaders representing a particular region or a particular commodity, in the presence of others. The purpose is to reach a consensus on price level that would not be unjust to the consumer and at the same time reap reasonable profits to the marketers. The key impetus to intervene on such an ad-hoc basis is to prevent black-marketing and concealment of essential foodstuffs11. All unethical lapses in pricing are tantamount to injustice and are sinful. Hence, all profits earned through such unjustified prices are not only unethical, but they infringe upon the unique status of man/woman and his/her role and responsibilities as viewed under the Islamic framework. In order to eliminate this type of injustice, the marketer and customer must acknowledge that they have higher moral responsibilities on earth rather than be preoccupied with profit maximization alone. Product Promotion Rules. There is no room in Islam to justify any cover up of deceptive promotional behavior. Al-Quran condemns all forms and shapes of false assertion, unfounded accusation, concoction and false testimony. Allah (s.w.t.) says: And they make into females Angels who themselves serve Allah. Did they witness their creation? Their evidence will be recorded, and they will b called to account! (Zukhruf, 43:19). In terms of Islamic marketing ethics, it is unethical for the salesman or customer relation advisor (CRA) to over-praise his products and attribute to them qualities which they do not possess. Furthermore, giving a false impression of any kind to promote or sell a product is strictly prohibited within the Islamic ethical framework of international marketing practices. Therefore, in the area of product promotions, Islamic marketing ethics will follow the following rules: (i) avoidance of false and misleading advertising; (ii) rejection of high pressure manipulations, or misleading sales tactics; (iii) avoidance of sales promotions that use deception or manipulation. According to Islamic ethics, a seller is a person who feels accountable to God. He should be honest and fair in his marketing activities. Only true documents which reveal accurate specifications in terms of quality, contents, etc. will exchange hands. To practice otherwise constitutes disgraceful, dishonourable and shameful gain through pandering, deceit, treachery, theft or injustice. According to Islamic principles, marketers are required to disclose all faults in their goods, whether obvious or hidden; to do otherwise is to act fraudulently12.

11 12

Ibid., p.256. Joni Tamkin B. Borhan (1999), The Ethical Principles in Islamic Commercial Transactions, Jurnal Usuluddin, Kuala Lumpur: Akademi Pengajian Islam, Universiti Malaya, Vol.9, July 1999, pp.101-105.

It is obligatory for the seller to reveal all known defects which cannot be seen on the surface and cannot be found out by the cursory glance to the purchaser. In addition, it is dictated that A sale without any stipulation makes it necessary that the thing sold should be free from defect. Marketing disclosure is manifested either by assurance which will be given by word of mouth or in writing, or in some cases silence will mean assurance. The Prophet Muhammad (s.a.w.) expressly condemned all manipulative promotional behavior that may give bad consequences to the buyer or customers. Once, when passing by a grain merchant, the Prophets curiosity was aroused. He (s.a.w.) thrust his hand into the heap of grain and found it wet. He (s.a.w.) asked: What is this, O merchant? . The merchant replied: It is because of rain. The Prophet (s.a.w.) then said to him: Why did you not put it on top so that the people could see it? He who deceives us is not of us (Reported by Muslim). In Islamic ethics, promotional techniques must not use sexual appeal, emotional appeal, fear appeal, false testimonies and pseudo research appeal, or contribute to the dullness of the mind or encourage extravagance. Within the Islamic framework, these methods are unethical since they are utilized purely to exploit the basic instinct of consumers worldwide with a view to gain profits and greater market share. Furthermore, Islamic ethics strictly prohibits stereotyping of women in advertising, and excessive use of fantasy. The use of suggestive language and behaviour, and the use of women as objects to lure and attract customers are also not allowed13. Place: Distribution Channels. The ethical dimensions of decision-making pertaining to distribution are of great significance in the area of marketing. Physical distribution can be viewed as an integrated collection of information, people, equipment, and organization. In respect of distribution of product, therefore, Islamic financial institutions will follow the following principles: (i) Not manipulating the availability of a product for purpose of exploitation; (ii) Not using coercion in the marketing channel; (iii) Not exerting undue influence over the re-sellers choice to handle a product. It is not surprising to note that decisions made on the profit maximization principle are not necessarily the most appropriate for a societys welfare. Other cases of unethical practices in distribution include the usage of packaging designs without adequate security and protection for the product, inappropriate packaging, and dangerous and toxic products transported through public highways. From an Islamic perspective, such treatment of customers is unforgivable and equates to unjust marketing practices.
13

Ibid.

According to Islamic principles, distribution channels are not supposed to create a burden for the final customer, in terms of higher prices and delays14. People. Islam emphasizes the importance of free and independent judgment on the part of the customer. The ability to think rationally while making any decision relating to global marketing activities is a prerequisite in Islamic law. The society at large should not be deprived of honest, free from coercion marketing information. A customers right to acquire such information is his right and is indicative of the status given to him by Islam, as well as of the ingrained rights of his wealth which he spends in purchasing products and services15. It is the responsibility of the marketers not to resort to any form of coercion and they must, under all circumstances, have a regard for the intellectual integrity and a higher degree of consciousness of the consumers to ensure that the hard earned money of customers is not wasted. The Prophet Muhammad (s.a.w.) prohibited a transaction concluded under constraints. According to Islamic principles, sexual appeal, emotional appeal, fear appeal, subliminal advertising and pseudo scientific claims all have elements of coercion which cause them to be categorized as unethical as a means of marketing. An ethically sound marketing-mix, therefore, dictates that customers decision-making freedom must be protected from all elements of coercion16.

3. ISLAMIC AGRO PRODUCTS IN ISLAMIC BANKS.

In Malaysia, out of 17 Islamic banks and 9 Islamic banking schemes 17 offering Islamic banking products and services, only three Islamic Banks offer Islamic financing in agriculture namely Agro Bank, Bank Kerjasama Rakyat Malaysia Berhad and Maybank Islamic Berhad. For the purpose of this paper, not all of the products and services offered by these Islamic banks will be discussed comprehensively, rather a few selected of them only. i. Agro Bank18.
14 15

Yusuf al-Qaradawi (1995), op.cit., p.260. Ibid., pp.253-258. 16 Muhammad Nasri et. al. (2006), op.cit., pp.100-103. 17 Suhaimi Mohd. Yusof (2010), Isu-isu Perundangan Dalam Kewangan Islam, Convention of Islamic Banking & Finance 2010, Masjid Sultan Salahuddin Abdul Aziz Shah, Shah Alam, 13th March 2010. 18 Agro Bank was incorporated under the Company Act 1965 and had been registered as Bank Pertanian Malaysia Berhad. Agro Bank is an entity owned by Malaysia government and started its operation on 1 st April 2008. This bank originally known as Bank Pertanian Malaysia (BPM), which has been established

The facilities available for financing in agriculture sector, provided by Agro Bank can be classified into two categories which are commercial funds and special funds established by government to provide funds for agriculture sector (that are channeled through Agro Bank). The objective of providing these financing facilities is to give working capital for a new agriculture initiatives and expanding existing agro project19. a) Commercial Funds.

Financing under these funds are basically market and profit driven, hence the terms and conditions of these facilities are based on commercial considerations. The source of fund is the normal deposits by the depositors of the Agro Bank, and therefore usually regulated by market forces. The Agro Bank is keen to finance all activities related to the agriculture sector, with the scope of financing is expanded to production, processing and marketing of agriculture produces20.

Table 1.1 under Parliament Act, but has been operated as incorporated institution since 1970. Based on BPM Act 1969, the objective of BPM formation are to stimulate the development of agriculture sector in Malaysia, to supervise credit assistants for the purpose of agriculture projects as well as to provide loan facilities, deposits and credits for the development of agriculture sector including for the production and marketing of produces of agriculture. The main mission of Agro Bank is to provide comprehensive financial services based on market and customer demands to the target group namely agro entrepreneur, small and medium scale businessmen and also individuals. When the New Economic Policy was introduced in 1970, BPM took an attempt and responsibility to abolish poverty and re-arrange the society particularly among the Malays, who most of them are paddy cultivator, tobacco planter and fishermen. At that time, BPM had established credit scheme for paddy production, credit scheme for tobacco, scheme for crop loan, credit scheme for vehicle as well as scheme for fishery in order to support the target group in obtaining credit source at minimum cost. Agro Bank is a bank owned by government (GLC) under the supervision of Ministry of Finance and all financing policies for the agriculture sector is based on the requirement set by Ministry of Agriculture and Agro-Based Industry. See Dato Mohd. Rosli Abd Aziz (2000), Peranan Bank Pertanian Dalam Memajukan Sektor Pertanian Negara. http://banktani.tripod.com/gm1.htm. 9th November 2010; Agro Bank. http://www.agrobank.com.my/history.aspx. 15th December 2010; Agro Bank. http://www.agrobank.com.my/content.aspx?v=vissionmission. 15th December 2010; Agro Bank. http://www.agrobank.com.my/content.aspx?v=aboutus. 15th December 2010. Agro Bank has been chosen for the sampling purpose of this research since this bank is a major contributor for financing agriculture projects and for promoting sound agricultural development in Malaysia since its establishment. Agro Bank is being the only bank in this country specializing in agriculture and has 39 years of experiences and excellent record in assisting agro entrepreneurs. See for instance, Financing of Agriculture. http://banktani.tripod.com.gm5.htm. 9th November 2010. 19 Abd. Rahaman Rasid. Peluang Pembiayaan Dalam Sektor Makanan. http://banktani.tripod.com/arar.htm. 9th November 2008; Financing of Agriculture. http://banktani.tripod.com/gm5.htm. 9th November 2008; Agro Bank. http://www.agrobank.com.my. 15th June 2010; Agro Bank Pamphlet. 2008. Financing Facilities. 20 Abd. Rahaman Rasid. Peluang Pembiayaan Dalam Sektor Makanan. http://banktani.tripod.com/arar.htm. 9th November 2008.

Agro Bank: Agro Cash-i Features: Objective: Description: To provide financing facility for consumption needs related to agricultural and agro-based Eligibility: activities. Government servant (permanent or contract). Private servant. Financing Limit: Age between 18 to 58 years old. Up to RM150,000.

Up to 15 years. Category: Terms Financing. Shariah Concept Applied: Bay al-Innah. Collateral: No collateral, only one guarantor. Projects Eligible for Financing: All activities relates to agriculture. Source: Suhaimi Bin Yacob, Executive 2, Financing Division, Agro Bank, Jalan Padang Garong, Kota Bharu, Kelantan. Interview carried out on 14th December 2008 at 11.15 a.m. to 11.50 a.m.; Agro Bank Pamphlet (2008), Financing Facilities; Agro Bank, http://www.agrobank.com.my, 15th December 2010.

Table 1.2 Agro Bank: Agro Contract. Features: Objective: Eligibility: Financing Limit: Category: Shariah Concept Applied: Collateral: Projects Eligible for Financing: Description: To provide revolving credit facility to finance contract works. Malaysian citizens between 18 to 58 years old. Annual and renewable. Revolving financing. Bay Bithaman Ajil. Case by case. All agriculture indentures awarded by the

agricultural body. Source: Suhaimi Bin Yacob, Executive 2, Financing Division, Agro Bank, Jalan Padang Garong, Kota Bharu, Kelantan. Interview carried out on 14th December 2008 at 11.15 a.m. to 11.50 a.m.; Agro Bank Pamphlet (2008), Financing Facilities; Agro Bank, http://www.agrobank.com.my, 15th December 2010. Table 1.3 Agro Bank: Agro Business. Features: Objective: Eligibility: Financing Limit: Description: To provide agro entrepreneurs a continuous working capital via overdraft facility. Malaysian citizens age between 18 to 58 years old. Annual and renewable.

10

Category: Shariah Concept Applied: Collateral: Projects Eligible for Financing:

Revolving financing. Bay al-Innah. Case by case. Agriculture contract, working capital, raw

materials and salary for workers. Source: Suhaimi Bin Yacob, Executive 2, Financing Division, Agro Bank, Jalan Padang Garong, Kota Bharu, Kelantan. Interview carried out on 14th December 2008 at 11.15 a.m. to 11.50 a.m.; Agro Bank Pamphlet (2008), Financing Facilities; Agro Bank, http://www.agrobank.com.my, 15th December 2010. b) Special Funds. From time to time, the Malaysia government has established schemes and provided funds for financing agriculture sector. These funds can be considered as incentives to promote investments and give priority to agricultural sector. These incentives usually are taken in the form of low cost of financing, longer duration of financing period and higher margin of financing, with these schemes open to all institutions and companies incorporated in Malaysia (as long as the ownership by Malaysians is more than 50%), as well as to all Malaysian citizens21. Through these special funds, Agro Bank will continue its social responsibility to finance agriculture sector, as has been assigned by the government through Ministry of Agriculture and AgroBased Industry in achieving the related policies under Nineth Malaysia Plan (RMK-9)22.

Table 1.4 Agro Bank: Fund for Food (3F Loan). Features: Objective: Description: To promote investment in the food production activities at the reasonable cost. To promote primary food production (including sea-food, animal husbandry, vegetables and fruits). To promote the efficient distribution of food and food products.
21

Dato Mohd. Rosli Abd. Aziz. Financing of Food and Agricultural Production. http://banktani.tripod.com/gm3.htm. 9th November 2008; Dato Mohd. Rosli Abd. Aziz. Peranan Bank Pertanian Dalam Memajukan Sektor Pertanian Negara. http://banktani.tripod.com/gm1.htm. 9th November 2008; Financing of Agriculture. http://banktani.tripod.com/gm5.htm. 9th November 2008; Agro Bank. http://www.agrobank.com.my. 15th December 2010. 22 Habsah Dinin. Skim Pembiayaan dipelbagai. Berita Harian. August 8, 2008, p.30.

11

Eligibility:

Malaysia citizens residing in Malaysia. Malaysian owned institutions and companies (at least with 51% ownership). RM10,000-RM10 million. 90% of project cost. Up to 10 years. Bay Bithaman Ajil. Fully secured. Food production, processing and marketing (crops, livestocks and fishery). Eligible items for crops are vegetables, tea, paddy, roselle, maize, tapioca, production of seeds and planting equipment for food crops and fruits such as banana, mango, guava, watermelon, papaya,

Financing Limit: Maximum Financing: Financing Period: Shariah Concept Applied: Collateral: Projects Eligible for Financing:

pineapple, sugar cane, coffee, cocoa and etc. Source: Suhaimi Bin Yacob, Executive 2, Financing Division, Agro Bank, Jalan Padang Garong, Kota Bharu, Kelantan. Interview carried out on 14th December 2008 at 11.15 a.m. to 11.50 a.m.; Agro Bank Pamphlet (2008), Financing Facilities; Agro Bank, http://www.agrobank.com.my, 15th December 2010. Table 1.5 Agro Bank: Food Production Credit Scheme (SKPM). Features: Objective: Description: To increase the national food production. To provide fixed capital and working capital for Eligibility: the purpose of financing food production project. Malaysia citizens residing in Malaysia. Malaysian owned institutions and companies (at Financing Limit: Maximum Financing: Financing Period: Shariah Concept Applied: Collateral: Projects Eligible for Financing: least with 50% ownership). Not exceeding RM500,000. 90% of project cost. Up to 8 years or up to 10th September 2018. Bay Bithaman Ajil. Fully secured. All upstream and downstream food production

activities. Source: Suhaimi Bin Yacob, Executive 2, Financing Division, Agro Bank, Jalan Padang Garong, Kota Bharu, Kelantan. Interview carried out on 14th December 2008 at 11.15 a.m. to 11.50 a.m.; Agro Bank Pamphlet (2008), Financing Facilities; Agro Bank, http://www.agrobank.com.my, 15th December 2010. Table 1.6 Agro Bank: Paddy Credit Scheme (SKP). Features: Description:

12

Objective:

To increase production of paddy in the National Rice Bowl areas. To provide revolving credit for the production of paddy in eight Rice Bowl areas. Malaysia citizens residing in Malaysia. Malaysian age between 18 to 58 years old. Not exceeding maximum financing of RM15,000

Eligibility: Financing Limit:

per season. Maximum Financing: 100% of project cost. Financing period: Up to 6 months (1 season). Shariah Concept Applied: Bay Bithaman Ajil. Collateral: Case by case. Projects Eligible for Financing: All paddy planting production activities. Source: Suhaimi Bin Yacob, Executive 2, Financing Division, Agro Bank, Jalan Padang Garong, Kota Bharu, Kelantan. Interview carried out on 14th December 2008 at 11.15 a.m. to 11.50 a.m.; Agro Bank Pamphlet (2008), Financing Facilities; Agro Bank, http://www.agrobank.com.my, 15th December 2010.

ii. Bank Kerjasama Rakyat Malaysia Berhad (Bank Rakyat)23. Facility offered by Bank Rakyat with regards of agriculture financing can be divided by three types namely Financing Scheme of Land-i Ardhi, Term-i and Property-i as follows: Financing Scheme of Land-i Ardhi is offered for developing idle land with respect of agriculture project by customer. The facility for financing under the scheme of Land-i Ardhi uses the contract of sales based on Bay Bithaman Ajil (BBA) principle. Under this principle, the bank will buy property from the customer on cash basis and the bank will sell the property back to the customer based on deferred payment basis. Based on normal procedure, the bank initially will determine the owner of the land. If the land is owned by the customer, bank will act as a buyer for that property with cash basis purchase. The contract of selling will be undertaken after the contract of buying completed under the concept of BBA. If the land is not owned by the customer, the bank will ask for the letter of permission
23

Bank Rakyat was established in September 1954 under the Cooperative Ordinance 1948, following an expansion of the cooperative movement in Peninsular Malaysia. To facilitate the expansion of the cooperative movement, the co-operatives set up their respective union banks provide financial needs to their members. On 28th September 1954, 11 of these union banks decided to merge and form Bank Agong (Apex Bank). In 1967, Bank Kerjasama Malaysia Berhad replaced Bank Agong with its membership opened not only to the cooperatives, but also to individuals. Subsequent changes in the by-laws also resulted in the creation of its subsidiary companies and opening of branches to serve customers as well as members. On 6th January 1973, the name was changed to Bank Kerjasama Rakyat Malaysia Berhad or better known as Bank Rakyat. Bank Rakyat is governed by its by laws and Bank Kerjasama Rakyat (M) Berhad Act 1978 (Special Provision 202), which allows Bank Rakyat to provide financing to non-members. In 1989, Bank Rakyat was placed under the Ministry of Land and Co-operative Development and the Ministry of Finance. See Bank Rakyat. http://bankrakyat.skali.my/web/guest/sejarah. 21st December 2010.

13

from the actual owner in order to utilize and develop the land. The bank will use the concept of al-Wakalah in completing this contract. Both buying and selling contracts can be done between bank and customer using the concept of al-Wakalah. The contract of selling between bank and customer will be based on deferred payment basis under the concept of BBA24. The specific features and terms of this scheme are as below: Table 1.7 Bank Rakyat: Financing Scheme of Land-i Ardhi. Features: Eligibility: Description: Malaysia citizens. Malaysian aged between 18 to 65 years old. Category: Shariah Concept Applied: Margin and Quantum of Financing: Repayment Period: Not in the state of bankruptcy. Developing agriculture land. Bay Bithaman Ajil. 90% of project cost for the member of the bank. 80% of project cost for non-member of the bank. Up to 7 years. Grace period is allowed until 2 years whereby within this period, customer is still not obliged to Collateral: Insurance: Deposit for Security: Accredited Land Reviewer: pay for the financing. Fully secured on the land of the project. Optional- normally Mortgage Takaful Plan. 3 months of the financing will be deducted automatically from the total of financing. Only required for financing above than RM30,000. Report from the external land reviewer will be validated until 6 months. For financing below RM30,000, the bank will Process and Service Fees: Documents required: make own valuation. Not applicable. Agriculture Financing Form, Photocopy of I/C,

24

Mohd. Jozy Bin Mohd. Ghani, Executive, Financing Unit, Bank Kerjasama Rakyat Malaysia Berhad, Jalan Raja Perempuan Zainab 2, Bandar Baru Kubang Kerian, Kota Bharu, Kelantan. Interview carried out on 10th December 2008 at 3.30 p.m. to 4.15 p.m.

14

salary slip and grant, Financial Statement of company or Current Account Statement. Source: Mohd. Jozy Bin Mohd. Ghani, Executive, Financing Unit, Bank Kerjasama Rakyat Malaysia Berhad, Jalan Raja Perempuan Zainab 2, Bandar Baru Kubang Kerian, Kota Bharu, Kelantan. Interview carried out on 10th December 2008 at 3.30 p.m. to 4.15 p.m.; Bank Rakyat, http://www.bankrakyat.com.my, 15th December 2010. Table 1.8 Bank Rakyat: Term-i. Features: Objective: Description: To finance the working capital requirement for business expansion in various types of economic Eligibility: sectors. Private Limited Companies. Public Limited Companies. Category: Margin and Quantum of Financing: Cooperatives. All types of economic sector. Financing of up to 80% of the working capital

requirement. Repayment Period: Maximum 10 years. Shariah Concept Applied: Bay Bithaman Ajil/ Bay al-Innah. Collateral: Fully secured. Deposit for Security: 3 months of the total financing. Process and Service Fees: Not applicable. Source: Mohd. Jozy Bin Mohd. Ghani, Executive, Financing Unit, Bank Kerjasama Rakyat Malaysia Berhad, Jalan Raja Perempuan Zainab 2, Bandar Baru Kubang Kerian, Kota Bharu, Kelantan. Interview carried out on 10th December 2008 at 3.30 p.m. to 4.15 p.m.; Bank Rakyat, http://bankrakyat.skali.my/web/guest/term, 21st December 2010. Table 1.9 Bank Rakyat: Property-i. Features: Objective: Eligibility: Description: To purchase land and building. Private Limited Companies. Public Limited Companies. Margin and Quantum of Financing: Repayment Period: Cooperatives. Financing of up to 80% from the purchase price or 100% on the force sale value (whichever is lower). Maximum 20 years.

15

Shariah Concept Applied: Collateral: Deposit for Security: Process and Service Fees: Source: Mohd. Jozy Bin Mohd. Ghani, Executive, carried out on 10th December 2008 at
st

Bay Bithaman Ajil. Fully secured. 3 months of the total financing. Not applicable. Financing Unit, Bank Kerjasama Rakyat Malaysia 3.30 p.m. to 4.15 p.m.; Bank Rakyat,

Berhad, Jalan Raja Perempuan Zainab 2, Bandar Baru Kubang Kerian, Kota Bharu, Kelantan. Interview http://bankrakyat.skali.my/web/guest/property, 21 December 2010. iii. Maybank Islamic Berhad (MIB)25. For the time being, Maybank Islamic Berhad offers four types of Islamic financing facility with regards of agriculture sector, as follows: a) Short Term Revolving Credit (STRC-i).

STRC-i is a shariah-compliant short term revolving credit facility granted to corporate and middle market customers. This facility can be offered under the Islamic contract of either Bay al-Innah (sale with immediate repurchase) or Murabahah (cost plus profit sale). The salient features and general terms for STRC-i are as below: Table 2.0 Maybank Islamic Berhad: Short Term Revolving Credit (STRC-i). Features: Concept: Description: Based on the Murabahah concept. As such, an underlying asset is required for the sale and purchase transactions.
25

In Malaysia, the enactment of the Islamic Banking Act that came into effect on 7 th April 1983 marked its official introduction into the banking arena. On 1 st July 2002, Takaful business was launched by Maybank Takaful Berhad, which is licensed under the Takaful Act 1984. Maybank group is proud to play an important role in the development and promotion of Islamic Banking & Takaful in Malaysia and beyond. On January 1st 2008, Maybanks Islamic Banking began to operate under a new subsidiary of Maybank known as Maybank Islamic Berhad (MIB). By moving into MIB, customers will enjoy a better range of Islamic products and services. The aims of MIB are to continue to be market leader in the provision of Islamic products and services, to introduce financing facilities based on Musyarakah Mutanaqisah (MM) concept in order to improve the concept of BBA, introducing new facilities based on Ijarah Muntahiah Bittamleek (IMB), establishing International Currency Business Unit (ICBU) and actively involved in commodity Murabahah products. Yet, Maybank is the largest Islamic financial services provider in the Asia Pacific region and is set to further reinforce its leadership with the creation of its Islamic subsidiary. Maybank began offering Islamic financing in 1993 through the Islamic windows operations. To date, Maybank has 12 full fledged Islamic banking branches in addition to 376 branches and 20 private banking centers locally offering Islamic banking products and services. See Maybank Islamic Berhad. http://www.maybank2u.com.my/maybankislamic/corporate_info/index.shtml. 21st December 2008; Datuk Amirsham A. Aziz. 2007. Maybank Launches Maybank Islamic Berhad. http://www.maybank2u.com.my/maybankislamic/corporate_info/press_release/index. 21st December 2010.

16

Or based on Bay al-Innah, whereby the identified underlying asset required for the sale and purchase Eligibility: Tenor: Rate: transactions belongs to bank. All corporate customers. Middle market customer. 1 month, 2,3,6, 9 and 12 months. Variable rate i.e. Selling Price: BLR + 4 or 10% whichever is higher. Effective rate: To be pegged to cost funds i.e. KLIBOR + (liquidity/reserve cost) + margin. Source: Aizatul Akma Binti Arifin, Consumer Sales Executive, Financing Unit, Maybank Islamic Berhad, Jalan Sultan Yahya Petra, Kota Bharu, Kelantan. Interview carried out on 14 th December 2008 at 2.35 p.m. to 3.15 p.m.; Maybank Islamic
st

Berhad,

http://www.maybank2u.com.my/maybankislamic/products_services/index.shtml, 21 December 2010. b) BBA Term Financing-i. MIB offers two types of BBA term financing facilities. Firstly, Fixed Rate Term Financing-i. This facility offers a fixed financing cost throughout agreed tenure of financing. This enable customer to protect themselves against risk of rising cost of financing. Secondly, Variable Rate Term Financing-i. Under VRF, the selling price is fixed upfront based on a selling price rate while the effective rate levied on the account will vary based on charges in the Base Financing Rate (BFR), provided it does not exceed the fixed selling price rate26. If the BFR moves up to the extent that the effective rate exceeds the fixed selling price rate, the system will only compute profit based on the selling price. Customer will enjoy very competitive rate based on ongoing good market condition and yet protected by a fixed ceiling rate against adverse market condition27. BBA term financing is granted under the principle of al-Bay Bithaman Ajil (BBA) or deferred payment sale. The requirement for the presence of sale and purchase elements is compulsory under BBA financing. Under this facility, MIB will assist the customer to identify suitable asset for the purpose. The bank shall purchase the asset concerned and simultaneously sell it to the customer at an agreed price.

26

Aizatul Akma Binti Arifin, Consumer Sales Executive, Financing Unit, Maybank Islamic Berhad, Jalan Sultan Yahya Petra, Kota Bharu, Kelantan. Interview carried out on 14th December 2008 at 2.35 p.m. to 3.15 p.m.; Maybank Islamic Berhad, http://www.maybank2u.com.my/maybankislamic/products_services/index.shtml. 21st December 2010. 27 Ibid.

17

Payment of selling price can be paid by installment over an agreed period. The salient features of this facility are as below: Table 2.1 Maybank Islamic Berhad: BBA Term Financing-i. Features: Eligibility: Fixed Rate Financing: Individuals. Joint account holders. Firms and corporate customer i.e. companies incorporated under the Purpose: Companies Act. Purchase of assets such as landed properties, plants and machineries, share and etc. Investment portfolio. Business working capital. Tenure: Profit Rate: Refinancing of assets. Up to 10 years. Fixed at 1% over and above the Up to 20 years. At par with conventional rate at Variable Rate Financing:

conventional lending rate. the time of application. Source: Aizatul Akma Binti Arifin, Consumer Sales Executive, Financing Unit, Maybank Islamic Berhad, Jalan Sultan Yahya Petra, Kota Bharu, Kelantan. Interview carried out on 14 th December 2008 at 2.35 p.m. to 3.15 p.m.; Maybank Islamic
st

Berhad,

http://www.maybank2u.com.my/maybankislamic/products_services/index.shtml, 21 December 2010.

c)

New Entrepreneurs Fund 2 (NEF2).

Central Bank of Malaysia has approved the granting of NEF2 under Islamic banking. NEF2-i is offered by MIB and available at all Business Center of Maybank. The NEF2 funding is administered by Central Bank Of Malaysia and part of the governments continuous effort to promote the growth of small and medium sized Bumiputera enterprises by ensuring that they have access to financing at reasonable cost. The salient features and terms of this facility are as follows: Table 2.2 Maybank Islamic Berhad: New Entrepreneurs Fund 2. Features: Eligibility: Description: Bumiputera entrepreneurs who fulfill the following criteria: a) Shareholders funds of not exceeding RM10 million. b) Wholly-owned Bumiputera institutions

18

incorporated under the Companies Act 1965, the Cooperative Societies Act 1993, the Societies Act 1996 or Bumiputera Malaysia. c) Bumiputera entrepreneurs registered under the Registrar of Business or any Shariah Concept Applied: Tenure of Financing: Purpose of Financing: other authoritative bodies. Bay Bithaman Ajil. Maximum of 5 years from the first drawdown date by Central Bank of Malaysia. For expansion in productive capacity and/or working capital for eligible Bumiputera Financing Amount: entrepreneurs. No minimum amount of financing. Maximum financing of RM5 million per customer including financing approved under the earlier NEF scheme and financing approved for any other Profit Rate: Penalty/Commitment Fee: Processing Fee: Projects Eligible for Financing: related companies that have similar shareholders. Presently at 4.00%-6.00% p.a. based on credit rating exercised by the Business Unit of MIB. Not applicable. Not applicable. All projects which are viable under the sector of manufacturing, agriculture, services, commerce, tourism, construction, engineering, transportation, furniture, printing, film and quarrying. The small and medium sized Bumiputera industries participating under the vendor development programs of the Ministry of Entrepreneur Development or Ministry of Finance with at least 70% Bumiputera equity and management control. Source: Aizatul Akma Binti Arifin, Consumer Sales Executive, Financing Unit, Maybank Islamic Berhad, Jalan Sultan Yahya Petra, Kota Bharu, Kelantan. Interview carried out on 14 th December 2008 at 2.35 p.m. to 3.15 p.m.; Maybank Islamic
st

citizens

residing

in

Berhad,

http://www.maybank2u.com.my/maybankislamic/products_services/index.shtml, 21 December 2010. d) Musharakah Mutanaqisah Term Financing-i (MMTF-i).

19

MMTF-i is a shariah compliant financing facility offered for new and existing corporate and commercial customer for asset acquisitions and refinancing such as landed properties, plant and machinery, vessels, commercial vehicles and etc. This facility is based on Musharakah Mutanaqisah or diminishing partnership concept where both the customer and the bank jointly acquire and co-own an asset or property. Customers monthly installments for the financing paid to the bank will increase customers ownership of the asset or property. The ownership of the asset or property will progressively move towards the customer and the financing ends when the customer owns 100% of the asset or property. The product features of MMTF-i are as follows:

Table 2.3 Maybank Islamic Berhad: Musharakah Mutanaqisah Term Financing-i. Features: Purpose: Description: Financing purchases of asset or property such as landed properties, plant, machinery, vessels, commercial vehicles and etc. Shariah Concept Applied: Eligibility: Tenor: Pricing: Refinancing of the above assets and properties. Musharakah Mutanaqisah. Eligible commercial and corporate customers, local and foreign. Up to 20 years. The pricing is competitive as per the conventional loan which could be offered under: a) c) Fixed rate, or A combination of fixed rate and floating b) Floating rate, or rate. Source: Aizatul Akma Binti Arifin, Consumer Sales Executive, Financing Unit, Maybank Islamic Berhad, Jalan Sultan Yahya Petra, Kota Bharu, Kelantan. Interview carried out on 14 th December 2008 at 2.35 p.m. to 3.15 p.m.; Maybank Islamic
st

Berhad,

http://www.maybank2u.com.my/maybankislamic/products_services/index.shtml, 21 December 2010.

4. STRATEGY FOR MARKETING ISLAMIC AGRO PRODUCTS. Marketing strategy is commonly defined as a strategy employed by a firm to attain its marketing objectives, which in turn is related to the achievement of the firms business objectives. In other words,

20

marketing strategy refers to the marketing goals and action plans that address matters of product/ service price, distribution, communication, and the process of new product development 28. The adaptation of any strategy depends much on factors such as management style and experience of the top management, age of the institution, economic environment, and regulations. Generally, we can safely identify whether a particular bank is a market leader, challenger, follower and nicher by identifying its vision, mission, objectives, and marketing strategies. The market leader strategy is for those banks that occupy a dominating position in the market and have established their reputation as a leader. By virtue of having a leadership in the market, it is natural that the market share of the concerned bank is the biggest. Banks belonging to the challenger group are those occupying second, third and lower rank and are always formulating and pursuing strategies to expand their market share by targeting the territory of the market leader29. Whereas, strategies adopted by the followers would normally be to maintain its current customers base and win a fair share of new customers by bringing distinctive advantageous to their target market. The market nicher is for the smaller banks, which have limited resources and generally focused on selected customers. Banks that falls under this category often concentrates on only one market segment of the market. Usually, only one marketing strategy, which is well, tailored to meet the needs of a specific targetmarket group is developed. Hence, Islamic banks in Malaysia need to focus on specific strategies in order to market Islamic agro products in their banks by using effective marketing mix strategies as follows: Product Strategy. As a service oriented business, image is a central factor in a banks effort to differentiate itself from competitors. Goods can be viewed in terms of their physical attributes, but services are intangible. This creates two problems for the customer. First, it is often difficult to understand the service that is being offered. Second, because customer cannot check out a service in advance, they do not know in detail what they are going to receive and how they are going to receive it. The result is higher perceived risk. Fortunately, most services do employ some tangibles- facilities, people, equipments and advertising materials- alongside their core services. The most effective approach to generating confidence is usually to emphasize tangibles that customers can understand30. Generally, the way products or services are made available to customers helps to create the image of the particular institution in the mind of the customers. This image is reflected in the customers perceptions and feelings about the products or services offered. This is important because customers
28 29

Philip Kotler et.al. (1996), Principles of Marketing, New Jersey: Prentice Hall, p.54. Peter Doyle (1998), Marketing Management and Strategy, Great Britain: Prentice Hall Europe, pp.17-20. 30 Ibid.

21

experience with a particular product or services will affect their attitude towards the bank and other product and services as well even if they had never used the other products. Under product strategy, customer must also be able to link a specific image with a specific need since customers purchase products and services to satisfy their needs and wants, Islamic banks have to understand the nature of these needs and want in order to appreciate the kind benefits customers expect to receive. Among the different kinds of benefits that people expect to get when buying goods and services includes good value for money, novelty, availability, and ease of use. Benefits enter into the equation when a customer decides to use one product in preference to another. It is the benefits received, which makes a product or services attractive to a customer. In view of this, banks should give more attention to the benefits it creates for the users when marketing a product or a service31. Relating this to Islamic banks, they have to be able to communicate these benefits convincingly to public, either directly or indirectly, in order to persuade the public to use the facilities and products being offered. Since Islamic banking is an alternative to conventional banking, Islamic banks needs to innovative in terms of products and services. Only through innovation in products and services can Islamic banks sustain their competitive advantage against other conventional or foreign banks that offer similar Shariah compliance facilities. One of the innovations that can be introduced for Islamic agro product is through Shariah-based products by applying Bay al-Salam or al-Muzaraah as a mode of financing. These valid contracts if apply according to the rules set by Islamic commercial law ( Muamalat), will assure great advantages not only to the Islamic banks, but also to the agro entrepreneurs as well as to the increasing of food production and supply of a particular country. Pricing Strategy. The second element in the marketing mix is pricing. Pricing strategy is another marketing technique that can be used to improve a banks overall competitiveness. The key to success is to have a well-planned strategy, to establish policies and to constantly monitor prices and operating costs to ensure profits. An important part of the pricing strategy is determining how product or service is priced 32. It has been proven in many previous research that majority of customers do not use religion as the main factor when establishing a relationship with Islamic banks. In the case of corporate customers for example, they believe that it is the cost and benefit element that is the most important factor when selecting
31

Frank Bradley (2004), Strategic Marketing in the Customer Driven Organization , USA: John Wiley & Son Inc., pp.88-90; Philip Kotler et.al. (1996), op.cit., pp.660-661. 32 Ibid., p.365.

22

financial institution. Most customers still seek the highest return and lowest charges imposed when deciding which bank to place a deposit or obtain funding from. With regards of Islamic financing for agribusiness, the pricing factor is one of the many important factors that need to be emphasized by the Islamic banks since the return of any agro project is normally will be gained in longer term. Therefore, the lowest cost of financing will be an attractive motive for customer to apply for the financing. For example, Paddy Credit Scheme offered by Agro Bank, which provide financing of 100% of total project cost is considered as the best Islamic financing facility for the paddy farmer in this country. Place/Distribution Strategy. This component of the marketing mix is related to the distribution of services to the ultimate customers. Services that require the customer to go to the producer must be as accessible as possible. Hence, an important consideration in the distribution strategy for banks is location of their branches. The task before the management is to select the place where the actual sale is to take place and this should be in the face of conveniences and comforts to the customers. To the extent it is possible that they should reach to the doorsteps of the customers. Thus, it is pertinent that the branches are located at a suitable point 33. Islamic banking institutions that provide Islamic agro products should locate their branches near the agro initiatives areas or where most of their residents involve in the agriculture projects. For instance, Agro Bank, most of their branches are located in suburb and rural areas, and only few of them are situated at the centre of big town in this country. Meanwhile, other aspects that need to be observed by the Islamic banks in offering Islamic agro products are fast and efficient services, speed of transactions, friendliness of bank personnel, confidentiality of bank and full of knowledge of banks officers regarding the needs of the customers especially with regards of agro projects. Promotion Strategy. Promotion is the function of informing, persuading, and influencing the customers decision process. Usually the banks marketing manager will respond to the goals and objectives of the bank by formulating various elements of the promotional strategy i.e. personal selling, advertising, sales promotion, publicity and public relations. Promotional strategy is closely related to the process of communication. A standard definition of communication is the transmission of a message from a sender to a receiver 34. Marketing communication, then are those messages that deal with buyer-seller relationships. Marketing communication is a broader concept than promotional strategy, because it includes word-of33 34

Peter Doyle (1998), op.cit., pp.330-335 Ibid., pp.280-285.

23

mouth advertising and other forms of unsystematic communication. A planned promotional strategy, however, is certainly the most important part of any marketing communications. For Islamic agro financing, promotional strategies that are focus on lowest cost of financing and applying only valid Islamic principles of Shariah such as Bay Bithaman Ajil and Bay al-Innah are very important since most of the agro entrepreneurs and farmers in this country are Malay and Muslim who are traditionally low earner group of people and those who are very concerned about their religions. As in the case of Bay Bithaman Ajil and Bay al-Innah, these mode of Islamic financing have been approved by the Shariah Advisory Council of Bank Negara Malaysia, then no question about the validity of these contracts should be disputed.

5. CONCLUSION. This paper has discussed on the aspect of Islamic marketing, Islamic agro products in Islamic banks and strategy for marketing Islamic agro products in Islamic banks. An Islamic bank that aims to be morally responsible in adopting Islamic marketing policies often faces difficulties in determining how popular their products should be. This difficulty is compounded by the fact that economic costs attach to making products safe, at lowest price and comprehensively Shariah-compliance products. Thus, Islamic banks should sell Islamic agro products at a comparatively reasonably price compared to the conventional banks In gaining more returns to Islamic banks, they should adopt more risky steps by introducing other type of financing facility for agro entrepreneurs, which originally taken from Fiqh Muamalat for developing land such as al-Musaqat, al-Muzaraah and Bay al-Salam in order to be applied in Islamic financing arrangements and to attract foreign investors to our country.

6. REFERENCES. Ahmad Zaini Othman (2003), Pemasaran Produk Perbankan Islam: Satu Analisa, Prosiding Seminar Kewangan Islam, Kuala Lumpur: Akademi Pengajian Islam, Universiti Malaya. Dr. Mohd. Daud Bakar (2008), Essential Readings in Islamic Finance, Kuala Lumpur: CERT Publications. Frank Bradley (2004), Strategic Marketing in the Customer Driven

24

Organization, USA: John Wiley & Son Inc. Hifzur Rab (2006), Economic Justice in Islam, Kuala Lumpur: A.S. Noordeen. Kamal Khir et. al. (2008), Islamic Banking: A Practical Perspective, Petaling Jaya: Pearson Malaysia Sdn. Bhd. Joni Tamkin Bin Borhan(1999), The Ethical Principles in Islamic Commercial Transactions, Jurnal Usuluddin, Kuala Lumpur: Akademi Pengajian Islam, Universiti Malaya, Vol.9, July 1999. Muhammad Nasri et. al. (2006), Etika Perniagaan: Pendekatan Perspektif Islam, Petaling Jaya: Prentice Hall. Peter Doyle (1998), Marketing Management and Strategy, Hertfordshire: Prentice Hall Europe. Philip Kotler et. al. (1996), Principles of Marketing, New Jersey: Prentice Hall, Inc. Sudin Haron et. al. (2009), Islamic Finance and Banking System: Philosophies, Principles & Practices, Shah Alam: McGraw-Hill (Malaysia) Sdn. Bhd. Yusuf al-Qaradawi (1995), The Lawful and The Prohibited in Islam, Kuala Lumpur: Islamic Book Trust.

25