Singapore (15 August 2020) – Ar Rahnu Singapore Pte Ltd (ARSPL) and SGX-listed ValueMax Limited soft-launched today their first Shariah-compliant pawnbroking shop at Joo Chiat Mall located in the heart of Singapore’s Malay town.
The Shariah-compliant pawnbroking outlet is ValueMax’s 36th outfit and the listed company’s first venture into the area of Islamic pawnbroking.
Ar Rahnu Singapore Pte Ltd’s director Adi Rahman, a well-known public figure with a sizable fan base amongst the Malay community said, “ Alhamdulillah, we are delighted to work with ValueMax. Both parties bring their unique know-how to make this an exciting venture – Value Max with its vast knowledge in operating pawn shops and Ar Rahnu Singapore which ensures that its operations are Shariah-compliant.”
ARSPL has appointed Ustaz Kamal Mokhtar as the outfit’s Shariah adviser. Ustaz Kamal who also sits on the Shariah Committee of Maybank Islamic Berhad has been tasked to ensure the operations of Ar Rahnu outlet are in compliance with the Shariah.
The outlet, according to Adi Rahman, is the culmination of months and months of hard work behind the scenes.
“We had numerous meetings with ValueMax on the changes needed to be made on their existing operations to meet the requirements of the Shariah. We also had to present our proposals to the Ministry of Law to ensure it complies with the existing Pawn Broking Act,” he said.
Ar Rahnu Singapore Pte Ltd was registered with the Registrar of Companies in the year 2012 and has since tirelessly working on setting up a Shariah-compliant pawnbroking house in the city-state.
It has been engaging the Singapore’s Ministry of Law to ensure that the venture falls within the ambit of Singapore’s Pawn Broking Act. The engagement first entails explaining how an Islamic pawnbroking, which does not involve the payment of interest, works. The other aspect involves explaining terminologies such as Qardhu Hasan – a benevolent loan.
Ar Rahnu Charges Storage Fees, Not Interest
Under the conventional system, a customer who pawns a jewellery item for instance will receive between 60% – 80% loan on the value of the item. The customer will be charged a maximum flat interest rate of 1.5% on the loan per month – or 18% interest per annum — on the loan. If at the end of the tenor of the loan, the customer is unable to redeem his collateral, he is able to extend the loan at the same interest rate.
In the case of Ar Rahnu pawnbroking, customers are charged storage fees for the item they bring in for safekeeping. They are given a qardu hasan loan. But in line with Islamic principles, the item pawned is the security that a customer needs to place as a guarantee for the loan.
The storage cost takes into account the insurance costs, rental allocation, security cost, staff cost and variable profit margin. A small and highly valued piece of jewellery for instance will incur a higher insurance cost compared to an item of a lesser value, but also lower rental cost depending on its physical size. The dynamics between the variables set the final storage fee, Ar Rahnu said. The implied fee could also come up to 1%-1.5% per month of the loan.
A customer who is in default is usually given time to honour his obligations. An unavoidable default, however, will result in the item being forfeited and item auctioned to recover the loan.
The Ar Rahnu ValueMax outlet is open daily from 8.30am to 8pm and is located at the entrance of Joo Chiat Complex.-/- www.halaluniverse.net
