Introduction
There are some in our Malay Muslims community still perceive that entrepreneurship is a gift and in-born talents that are rightly belong to other races. This old perception warrants to be changed. One must remember that race has nothing to do with entrepreneurship. One must realise that our beloved Prophet Muhammad (peace be upon him) and his companions (may Allah be pleased upon them) were great entrepreneurs of their era. For that many Quranic verses using commercial terms had been revealed to provide example for ease of guidance. For example, the word “commerce” or “business” or words similar in nature were mentioned in many places in the Quran, so as the words “sales”, “purchase”, “profits“; “losses“; “debts”; “agreement” or “contract”; and others. Moreover, also note that Islam expandinto the archipelago centuries agolargely through the efforts of trade and commerce. Therefore, the blood of entrepreneurship should already flow in the vein of the Muslims, including the Malays.
As it is now, many would be arguing that to embark on entrepreneurship endevour is easier said than done. Business undertaking is a venture full of risk, and there is no guarantee for success. Obviously, there is no one recipe, secret, tips or “one-formula fit all” that can automatically guarantee one’s success in business.Thus, the Malay Muslims youth may not be interested to pursue this noble course. This mindset reflects complacency, and the unwillingness to move from their comfort zone. Apparently, stories about successful entrepreneursare not a rarity in this country, let alone among Malay Muslims entrepreneurs. This reflects that successful entrepreneurshipis not the birth right of any particular race. Realising this, we have seen over the years tremendous efforts taken by the Government to increase the number of Malay entrepreneurs. These efforts come with billions of grants, incentives and soft-loans introduces one year after another. There are also various programmes and courses conducted by various agencies. Although these efforts are commendable, the participation of Malay Muslims youth in business endevour is still lacking. Perhaps, in this regard, the two most important factors that could be enhanced in order to influence the youth to take up entrepreneurship are the availability of capital and the proper guidance through mentor system.
Availability of Capital
Undoubtedly, capital is one of the most important and most difficult challenges to business enterprises. Typically, for start-up or new small business, business capital normally comes from personal assets and savings or from family funds. Capital funding from bank loans or financing may not be easy to obtain in view of the risk involve. To fill the gap, Government also provides incentives, grants, and soft-loans. Nevertheless, it is quite common to hear that there are young people who want to do business but they are unable to get capital funding due to certain requirements imposed by institutional financiers that they are unable to fulfill.
Apparently, Islamic finance in Malaysia has evolved tremendously over the past three decades. Over the years, we have witnessing the emergence of many contracts under the ambit of Islamic finance. Fundamentally, Islamic finance contract is based on risk-sharing concept which is firmly anchored under two main concepts known as “Mudarabah” and “Musyarakah”. In succinct, the “Mudarabah” is a contract between a capital provider and an entrepreneur, under which the former provides capital to be managed by the latter and any profit derived from the capital invested in the business is shared between both parties, according to mutually agreed profit sharing ratio, whilst financial losses are borne by the capital provider provided that such losses are not due to misconduct, negligence or breach of specified terms by the entrepreneur. This contract can be best suited to new entrepreneur who is still in the learning curve.
On the other hand, “Musyarakah” is a relationship established under a contract by the mutual consent of the parties for sharing of profits and losses, arising from a joint enterprise or venture. The fund comes from both parties which are known as partners, and profits and losses be distributed in the proportion mutually agreed in the contract. This contract may be suitable for professional services, consultancy business or more risky high-tech and innovative ventures.
Even though these contracts are currently practiced by institutional financiers, it is also appropriate that this contract also to be applied by individual financiers. In means that individuals who have surplus fund can use Islamic finance contracts as the means to provide capital directly to the entrepreneur. This provides an opportunity for individual financier to participate in a business venture, and to make capital available to the entrepreneurs, without the hassle of going to institutional financiers. It is an easy accessible route to capital as two individuals, who understand the risks of a particular business, one with the capital, while the other with the skills, joint together for a business venture. They may use the legal business structure such a private limited company (sendirian berhad) or partnership. For a “Mudarabah” type of capital funding, they may use private limited company as the vehicle, whereby, the contracting parties can be the two directors of the entity. On the other hand, if they opt for “Musyarakah” concept, they may now use the newly introduced Limited liability Partnership (LLP) vehicle. In both cases, the risk to capital provider is only the amount they invest in the business. This will not only make capital funding easily accessible, in turn, it may also reduce the cost of doing business. Moreover, because both parties understand the risks, the entrepreneur have the flexibility to engage in the high-risk innovative and high-tech ventures, without fear of being chase by banks or institutional financiers for periodical repayment.
The Mentor System
Often time, we may have heard storiesof successful entrepreneurs, but not many people realize that behind the success of an entrepreneur, standing behind him was a mentor who played an important role behind the scenes. This is often overlooked by new entrepreneurs because they feel the business can be done alone. Many successful entrepreneurs rely on mentors to provide guidance and educate them and put them on the right track. Sometimes business have to brave through hard times, but the guidance and tutelage of a mentor will provide strength for the entrepreneur to survive and succeed.
However, the selection of a mentor must be the right one. The mentor must also be the one who had gone through all thick and thin of business. It is not appropriate for a bureaucrat or a theoretician to be the mentor. Preferably, the mentor needs to be someone who had started a business from scratch and suffer hard times before become successful, so that the wealth of his or her experience can be shared. Only through real experience an entrepreneur can make a right decision, such as when to enter a business or market, and equally important but often ignored is when to exit a business or market.
Conclusion
Entrepreneurship is a noble endevour in Islam. The lack of participation of Malay Muslims youth in entrepreneurship may be attributed to capital and proper guidance. To address these barriers, Islamic finance contract can be used to make capital funding available through individual financiers rather than institutional financiers. In addition, mentor system need to be used to guide the entrepreneur in the right direction, and hence, what we might only need is a coordinating agency to facilitate the implementation.
This effort may not only provide a new dimension to attract the young Malay Muslims to undertake business venture, but also more importantly, to instill entrepreneurship as part of the Malay culture. Indeed there are many affluence Muslim individual—both in term of wealth and experience–would ever willing to come forward, in the spirit of Islam, to assist our aspiring entrepreneurs. This in line with the Quranic verse: “Help one another in furthering virtue and God-consciousness (taqwa), and do not help one another in furthering evil and enmity” (Quran 5:2), and also in the saying (hadith) of the Prophet (peace be upon him): “The relationship between one believer and another (in a community) is like that of a building where one part of the building strengthens the other parts.” Lastly, let’s give to our young society “the fishing rod” rather than “the fish”.