Tawarruq has become a preferred choice of contract for bankers, not just for working capital requirements, but also for asset financing, mortgages, trade financing, fixed deposits, structured investments, and even savings accounts. Seen by market practitioners as convenient and relatively simple to execute, Malaysia has experienced a rapid growth in Tawarruq-based products across a wide range of financing activities.

However, due largely to the fact that Tawarruq imitates conventional finance structures the contract has attracted its fair share of criticism, not least from Shariah scholars. In a continuously developing Islamic banking and finance market such as Malaysia, alternatives to Tawarruq do most certainly exist.

This topical two-day courses will provide a refresher of what Tawarruq represents, relevant regulatory guidelines, and how the contract is commonly applied in today’s dynamic Islamic finance market. We also offer a timely reminder of the risks associated with Tawarruq structures, such as Shariah non-compliance and potential areas of contention. Through case studies and live examples, we then explore how we can move beyond some of the traditional Tawarruq concepts, by evaluating alternative structures such as Musharakah, Salam, Ijarah and Wakalah. We also discuss how Tawarruq and its alternatives have been successfully structured and applied in other Islamic financial centers. Important concepts such as financing portfolio construction are also covered in detail.

1. Understand the principal uses and applications for Tawarruq structures and assess pertinent regulatory guidelines.
2. Examine potential operational pitfalls, including Shariah non-compliance and common areas of contention.
3. Understand viable alternative structures to Tawarruq and their uses, including Musharakah, Salam, Ijarah and Wakalah.
4. Assess the composition of Islamic banks’ financing and deposit portfolios using Tawarruq and its alternatives.