SINGAPORE (7 September 2021) – Singapore’s Ministry of Manpower (MOM) and Ministry of National Development (MND) have received proposals from service providers keen to offer Shariah-compliant home financing facilities to the Muslim community in Singapore, a spokesperson from the Ministry of Manpower said.
The proposals are based on a number of financing methods including the commodity murabaha and the partnership models.
“Service providers have approached (government) agencies on Shariah-compliant home financing models, including the commodity and the partnership models,” the spokesperson said in an email response to queries from Halal Universe.
The Ministry of Manpower is the parent ministry of the Central Provident Fund Board (CPF), while the Ministry of the National Development is the parent ministry of the Housing Development Board (HDB), the statutory board responsible for the city-state’s public housing.
Relevant stakeholders will assess the models taking into consideration the need to protect CPF members’ retirement savings, she said.
“As allowing the use of members’ CPF savings depends on what home financing models are, or will be allowed; MOM, MND, CPF Board and HDB will assess such proposals together with the other relevant stakeholders, taking into consideration the need to protect CPF members’ retirement savings,” the spokesperson added.
Halal Universe reported on 24 August that Maybank Singapore is in talks with relevant stakeholders in its efforts to introduce a Shariah-compliant home financing facility in the city-state. (https://www.halaluniverse.net/personal-finance/singapore-may-have-its-first-shariah-compliant-home-financing-facility-hopefully-soon/)
Demand for a Shariah-compliant home financing facility from the Muslims in Singapore is on the rise, but to this date there hasn’t been a service provider offering such a product.
Adherents of the Islamic faith ought not to tap into conventional loans for their financing needs whether these are in areas of vehicle purchase, property and personal financing. This arises from the Islamic injunction forbidding the consumption and the incurrence of interest among its adherents.
The structure of a Shariah-compliant home financing facility has been a bone of contention amongst stakeholders here in Singapore. While banks leaned towards a financing structure based on the commodity murabaha model, Singapore’s existing regulatory framework – specifically the Central Provident Fund (CPF) Act – could not accommodate such a structure. Under the CPF Act, members’ retirement savings could only be utilised to fund the purchase of immovable assets.
Singapore’s real estate industry is unique in that unlike elsewhere in the world, the majority of Singaporeans utilise their CPF funds meant for retirement to purchase their homes and their monthly CPF contributions to service their home loans. -/- www.halaluniverse.net
Credit Photo: Adisoon, StockFreeImages
