AIJSS Volume 1 No 1 April 2012

Graduate School (PPs-Unsyiah)
Syiah Kuala University, Indonesia

ISSN: 2089-9976
Aceh International Journal of
SOCIAL SCIENCES
AIJSS
A Publication of:

Volume 1, Number 1
April 2012
ACEH INTERNATIONAL JOURNAL OF
SOCIAL SCIENCES

Volume 1, Number 1, April
2012 ISSN 2088-9860

Contents

Student Engagement at The Higher Learning Institutions: The Case of Malaysia and the
United Arab Emirates
Nurahimah Mohd. Yusoff

Linguistic Impoliteness : A Small Corpus Analysis on the Use of Impolite. Languange by
Children
Sri Minda Murni and Mutsyuhito Solin

Time Varying Integration among ASEAN-5 Economies
Salina H. Kassim, and M. Shabri Abd. Majid

Examining Accounting and Accountability Issues in Religious Context :
Insights From Literature
Hasan Basri, and Siti Nabiha Abdul Khalid
1 - 10

11 - 15

16 - 23

24 30

A Critical Evaluation of the Compatibility between Traditional and Contemporary
Applications of Murabahah Transactions
Olorogun Lukman Ayinde
31 - 37
Aceh International Journal of Social Sciences, 1 (1): 1-10
April 2012
ISSN: 2088-9976
1

Student Engagement at The Higher Learning Institutions:
The Case of Malaysia and the United Arab Emirates

Nurahimah Mohd. Yusoff
Associate Professor, School of Education and Modern Languages,
College of Arts and Sciences, Universiti Utara Malaysia
E-mail: nura@uum.edu.my

Abstract - Universities in Malaysia and the United Arab Emirates (UAE), just like other Higher
Education Institutions (HEIs), strive to be at the forefront of academic excellence. Towards this
end, HEIs endeavour to provide their students, their primary clientele with the most conducive
learning environment in order to maximise their potentials and prepare them to the real world of
work. Do the students really make the most of the learning experiences in the university? Are the
students really actively engaged in the teaching programmes and learning activities provided by
the university? What might be the implications of student engagement to curriculum, instruction,
policy and decision making, and educational administration? This paper focused on the level of
academic challenge provided to students. In this study, academic challenge was based on study
time and course requirements for reading, writing, and application of higher-order thinking skills
rather than on student judgments of the difficulty of the coursework (Carini and Kuh, 2003).
Specifically, this investigation attempted to ascertain the types of engagement activities at the
HEIs of Malaysia and the UAE. Interesting findings are presented, and recommendations are
offered in light of student engagement in the context of higher education.

Keywords: Student engagement; Academic challenge; Educational experience; Active and
collaborative learning

Introduction
The National Survey of Student Engagement (NSSE) measures student engagement by asking students questions
about their campus experiences, such as their classroom activities, their interactions with faculty, their interactions
with other students, their study habits, and their universitys support of their efforts (NSSE, 2001; 2003). The specific
objectives of the study were:
1. To ascertain the level of academic challenge provided to students;
2. To identify students experiences on active and collaborative learning;
3. To determine the extent of student-faculty interaction;
4. To find out the extent of enriching educational experiences afforded to students; and
5. To investigate the extent of supportive campus environment provided to the students.
This paper however, focuses on only one of the five constructs of the NSSE survey, which is the level of
academic challenge provided to students. In this study, academic challenge was based on study time and course
requirements for reading, writing, and application of higher-order thinking skills rather than on student judgements of
the difficulty of the coursework (Carini and Kuh, 2003).
Findings from the study help to explore and better understand the process of teaching and learning in general.
Specifically, the findings of this study serve as a useful assessment instrument for one dimension of the undergraduate
educational experience. In other words, "it serves as a tool to improve the undergraduate education by creating
pathways to engagement that are clearly marked so that students can easily find their way to become involved in
purposeful activities" (NSSE, 2004). It is hoped that findings from the study will also help to promote and enhance
the quality of the education program offered by the institutions. The insights gained in the study will help to
streamline the curriculum of the program as a whole in meeting standards for accreditations and benchmarking.

Review of The Literature
According to Leithwood and Jantzi (2000), student engagement has both behavioural and affective components. The
behavioural component refers to the activities that student participates, both inside and outside the classroom while
the affective component is the degree to which students identify with the institution and feel they belong. Alvarez
(2002) believed that if students are not engaged in work at hand, there is little learning that is taking place. He stresses
that engagement should not be equated with busyness; students who are engaged have a personal stake in the activity.
In short, they are taking part in personally meaningful and relevant activities. According to Painter and Valentine
(1996, quoted in Quinn, 2002), students are being engaged if they participate in authentic project work, cooperative
learning, hands-on learning, demonstrations, active research and the use of higher-order thinking skills. Other

April 2012
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2

indicators of engagement include making class presentation, having conversations with professors outside of class,
writing papers that were at least 20 pages long, and wanting to enrol in the same college or university a second time
(Gose, 1999).
Student engagement researches have taken the limelight in colleges and universities in the United Sates. A case
in point, which serves as the anchor of the present research, is the national yearly survey on student engagement
conducted by Indiana University Bloomington. The measures taken by the university in carrying out empirical
investigations on student engagement are rooted from its purpose of finding out whether and how students are
actually utilising their institutions resources to provide deep and meaningful learning experiences. Undertaken by the
universitys Center for Postsecondary Research and Planning since Spring 2000, the National Survey of Student
Engagement (NSSE) aimed at providing data to colleges and universities to use for improving undergraduate
education, inform state accountability and accreditation efforts, and facilitate national and sector benchmarking efforts
among 470 different four-year colleges and universities and among 155,000 students thus far (NSSE, 2001). NSSE
examined certain benchmarks deemed to be effective educational practice, such as level of academic challenge
(emphasis on the importance of academic effort and setting high expectations for student performance), active and
collaborative learning (intensity of involvement in students education and application of learning in different settings),
student-faculty interaction (learning first-hand and solving practical problems by interacting with faculty members
inside and outside the classroom), enriching educational experiences (complementary learning opportunities inside and
outside classrooms), and supportive campus environment (college/university commitment to students success and
working and social relations cultivated among different groups on campus).
The benchmarks examined by NSSE attempted to prove that there are educational practices that promote
students active and meaningful learning as well as indicate positive image of the college or university. In other words,
the benchmarks seem to refute the traditional way of looking at exemplary institutions through their publicised
excellence or public perceptions of high standards.
Researches related to student engagement abound in the West, and the reports are all thought-provoking in
terms of improving students experiences in the learning processes. For instance, Zhao and Kuh (2003) did a research
on the relationships between participating in learning communities and student engagement in a range of educationally
purposeful activities of 80,479 randomly selected first-year and senior students from 365 four-year institutions in the
United States. It was shown that learning communities are uniformly and positively linked to engagement as well as
student self-reported outcomes and overall satisfaction with college.
In the Asian context, especially in Malaysia, there seems to be a dearth of investigations along this line. One
particular study which was conducted by a group of researchers (Norzaini et al., 2003) from Universiti Kebangsaan
Malaysia, studied on the extent to which the undergraduate students engage in good educational practices. The survey
was administered in a form of random sampling of the final year students whereby the results of the scores are
compared across faculty. The focus of the study is to provide information in improving students educational
experiences.

Methodology
This study employs a survey method. It is a descriptive-exploratory study whereby questionnaires were self-
administered to the respondents. Universiti Utara Malaysia (UUM) students were selected from three English language
classes, which include English for Higher Education, Public Speaking and Report Writing. These courses, which are
required university courses, provide samples of students from different semesters. The questionnaires were given to
the coordinator of each course who then distributed them randomly to other instructors teaching the same course.
In the case of the Ajman University of Science and Technology (AUST), United Arab Emirates (UAE),
students were given questionnaires in three different classes. They were those taking the General Psychology,
Research Methodology, and Educational Technology classes. These courses were selected because they are
compulsory subjects for all students to be taken from the list of the University Required Courses. Similar to the UUM
situation, the questionnaires were given to instructors teaching the courses, who then distributed them to their
students in the respective classes.
Using the stratified random sampling technique, a total of 1,022 was selected from the UUM 5,101 student
population of the three courses. However, only a total of 872 (85%) questionnaires were then collected. A total of 358
were selected from the 1,750 AUST student population of the three courses selected but only a total of 259 (72%)
questionnaires were then collected. The limitation of the study was dependent on the number of students who
attended the class on the day the questionnaires were distributed.
Items for the questionnaire were adapted from the annual National Survey of Student Engagement (NSSE).
The questionnaire consists of 87 items, which were categorised using the five benchmarks. Prior to using the
questionnaire, a pilot study was conducted to determine the reliability and validity of the instrument for the local
context for both groups. For the UUM questionnaire, the overall Cronbach Alpha was 0.93 and 0.69 for the levels of
academic challenge construct. For the AUST questionnaire, the overall Cronbach Alpha was 0.84 and 0.73 for the
levels of academic challenge construct.

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3

Result and Discussion

The Respondents Profile
In terms of UUM demography, most of the respondents were female (80.5%), while the remaining were male students
(19.5%). Malays constituted the majority of respondents with almost 64.4%, followed by Chinese (27.7%), Indians
(4.6%) and others (3.3%). About 20% of the respondents were from the Faculty of Business Administration (FPP).
This is followed by the Faculty of Information Technology or FTM (15.0 %), Faculty of International Affairs or
FPA (10.7%), Faculty of Economics or FE (10.4%), Faculty of Accountancy or FPK (8.8%), Faculty of Human and
Social Development or FPSM (8.7%), Faculty of Cognitive Sciences and Education or FSKP (6.8%), Faculty of
Finance and Banking or FWB (6.4%), Faculty of Public Management and Law or FPAU (4.7%), Faculty of
Communication and Modern Languages or FKBM (3.4%), Faculty of Tourism, Hospitality and Environmental
Management or FPHA (2.3%), Faculty of Management of Technology or FPT (1.7%), and finally Faculty of
Quantitative Sciences or FSK (1.0%).
More than half (56.7%) of the respondents in this study were in their third semester. This is followed by
students in their fifth semester (31.2%), seventh semester (4.8%), fourth semester (4.1%), second semester (1.3%),
sixth semester (1.1%), and finally the first semester (0.8%). The entrance qualification for most of the respondents
was Malaysian Higher Education Certificate or STPM (66.4 %), followed by matriculation (23.6%), diploma holders
(9.0%), advanced diploma (0.5%), and other qualifications (0.6%). Respondents seemed to gain relatively high range
of CGPA with more than half (51.7%) having between 3.01-3.51 and then followed by 2.52-3.00 (31.7%), 3.52 4.00
(8.9%), and 2.00-2.51 (7.0%). Only 4 students (0.6%) have CGPA below 1.99. About half (48.6%) of the respondents
father completed their education at the secondary level. This is followed by those at the primary education level
(39.1%), diploma holders (6.9%), bachelors (2.7%), masters (1.9%), and doctoral degree (0.7%). Similar findings to
the fathers level of education, the level of education of the respondents mothers is also at the secondary level
(47.8%). This is followed by 46.1% at the primary education level, diploma holders (3.6%), bachelors (1.8%), masters
(0.5%), and finally, doctoral degree (0.2%).
With regards to AUST students profile, similar pattern emerged in the gender analysis. Male only constituted
26.9% of the population while majority were female students (73.1%). About half of them were Dentistry students
(45.8%), then followed by those taking Educational Technology (20.7%), and Teaching of English as a Second
Language or TEFL (17.6%). The remaining were students from the Engineering, Architecture, Pharmacy, Computer
Science, Accounting, Business and Management, Communication and Finance. Of the 259 respondents, 92.5% were
of Arab origin while the remaining 6.3% and 1.3% were Persians and Indians, respectively. The student population
also showed that 32.6% were in the 8
th
semester, 20.9% in the 6
th
th
nd

semester and the remaining were in the 1
st
, 3
rd
, 5
th
and 7
th
semesters. Both the fathers and mothers education
background is similar, with a number of fathers who did not finish high school (27.2%), and 25.9% having a
Bachelors degree. More than one-third (38.5%) of the mothers did not finish high school, while 21.3% had a
Bachelors degree. Unlike the UUM students parental background however, the parents having a Masters and
Doctoral degrees were higher than that of the UUM analysis. Data showed that 13.2% of the fathers of the AUST
respondents have a Masters degree and 11.1% have a Doctoral degree while 7.4% of the mothers level of education
at Masters and 3.3% at Doctoral degree. Respondents who have CGPA between 3.01-3.51 were 22.2%, between
2.52-3.00 (27.6%), between 2.00-2.51 (23.2%) and between 3.52 4.00 (18.7%). Only 3.0% of the AUST students
have CGPA below 1.99.

Table 1. Levels of Academic Challenge
UUM AUST
Worked harder than you thought you could to meet
an instructors standards or expectation.
Never
Sometimes
Often
Very Often

14 (1.6%)
221 (25.4%)
525 (60.4%)
109 (12.5%)
M=2.84

13 (5.1%)
114 (44.7%)
80 (31.4%)
48 (18.8%)
M=2.64
Memorising facts, ideas, or method from your
courses and readings so you can repeat them in
pretty much the same form.
Very Little
Some
Quite a bit
Very Much

9 (1.0%)
246 (28.4%)
496 (56.9%)
119 (13.7%)
M=2.83

14 (5.5%)
64 (25.1%)
100 (39.2%)
77 (30.2%)
M=2.94
Analysing the basic elements of an idea, experience,
or theory, such as examining a particular case of
Very Little
Some

20 (2.3%)

19 (7.5%)
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UUM AUST
situation in depth and considering its components. Quite a bit
Very Much
288 (33.1%)
454 (52.2%)
108 (12.4%)
M=2.74
75 (29.4%)
93 (36.5%)
68 (26.7%)
M=2.82

Synthesising and organising ideas, information, or
experiences into new, more complex interpretations
and relationships.

Very Little
Some
Quite a bit
Very Much

18 (2.1%)
293 (33.7%)
477 (54.9%)
81 (9.3%)
M=2.71

27 (10.6%)
77 (30.3%)
95 (37.4%)
55 (21.7%)
M=2.70
Making judgments about the value of information,
arguments, or methods, such as examining how
others gathered and interpreted data and assessing
the soundness of their conclusions.
Very Little
Some
Quite a bit
Very Much

25 (2.9%)
293 (33.7%)
472 (54.3%)
79 (9.1%)
M=2.70

25 (9.8%)
82 (32.0%)
83 (32.4%)
66 (25.8%)
M=2.74
Applying theories or concepts to practical problems
or in new situations.
Very Little
Some
Quite a bit
Very Much

20 (2.3%)
264 (30.4%)
470 (54.1%)
113 (13.0%)
M=2.78

25 (9.8%)
86 (33.6%)
76 (29.7%)
67 (26.2%)
M=2.82
The extent to which your examinations during the
current school year have challenged you to do your
best work.
1Very Little
2
3
4
5
6
7 Very Much

4 (0.5%)
7 (0.9%)
28 (3.4%)
207 (25.2%)
311 (37.8%)
182 (22.1%)
84 (10.2%)
M=5.06

4 (1.6%)
12 (4.9%)
16 (6.5%)
62 (25.1%)
66 (26.7%)
50 (20.2%)
37 (15.0%)
M=4.91
Number of assigned textbooks, books, or book-
length packs of course readings.
None
Between 1and 4
Between 5 and 10
Between 11 and 20
More than 20
15 (1.7%)
503 (58.0%)
252 (29.1%)
76 (8.8%)
21 (2.4%)
M=2.52

23 (9.1%)
76 (30.0%)
86 (34.0%)
31 (12.3%)
35 (13.8%)
M =2.96

Number of books read on your own (not assigned)
for personal enjoyment or academic enrichment.
None
Between 1and 4
Between 5 and 10
Between 11 and 20
More than 20

44 (5.1%)
445 (51.4%)
231 (26.7%)
96 (11.1%)
50 (5.8%)
M=2.61

31 (12.3%)
110 (43.5%)
69 (27.3%)
25 (9.9%)
18 (7.1%)
M=2.56
Number of written papers or reports of 20 pages or
more.
None
Between 1and 4
Between 5 and 10
Between 11 and 20
More than 20

33 (3.8%)
372 (42.9%)
318 (36.7%)
95 (11.0%)
49 (5.7%)
M=2.72

50 (19.8%)
65 (25.8%)
47 (18.7%)
47 (18.7%)
43 (17.1%)
M=2.87
Number of written papers or reports between 5 and
19 pages.
None
Between 1and 4
Between 5 and 10
Between 11 and 20
More than 20

30 (3.5%)
426 (49.4%)
289 (33.5%)
87 (10.1%)
30 (3.5%)
M=2.61

28 (11.2%)
81 (32.4%)
62 (24.8%)
46 (18.4%)
33 (13.2%)
M=2.90
Number of written papers or reports of fewer than 5 206 (23.7%) 37 (14.7%)
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UUM AUST
pages. None
Between 1and 4
Between 5 and 10
Between 11 and 20
More than 20

458 (52.8%)
132 (15.2%)
47 (5.4%)
25 (2.9%)
M=2.11
94 (37.5%)
42 (16.7%)
33 (13.1%)
45 (17.9%)
M=2.82
Numbers of problem sets that take you more than
an hour to complete.
None
Between 1 and 2
Between 3 and 4
Between 5 and 6
More than 6

16 (1.8%)
277 (32.0%)
349 (40.3%)
112 (12.9%)
112 (12.9%)
M=3.03

30 (11.8%)
92 (36.1%)
92 (36.1%)
35 (13.7%)
6 (2.4%)
M=2.59

Number of problem sets that take you less than an
hour to complete.

None
Between 1 and 2
Between 3 and 4
Between 5 and 6
More than 6

291 (33.7%)
343 (39.7%)
159 (18.4%)
50 (5.8%)
20 (2.3%)
M=2.03

30 (11.8%)
101 (39.6%)
56 (22.0%)
38 (14.9%)
29 (11.4%)
M=2.76
In a typical week, how many homework problems
take you more than 15 minutes each to complete?
None
Between 1 and 3
Between 4 and 6
Between 7 and 10
More than 10

127 (14.6%)
328 (37.8%)
296 (34.1%)
68 (7.8%)
48 (5.5%)
M=2.51

26(10.2%)
88 (34.5%)
80 (31.4%)
28 (11.0%)
32 (12.5%)
M=2.80
Preparing for class (studying, reading, writing, doing
homework or lab work, analysing data, rehearsing,
and other academic activities).
None
Between 1 and 5
Between 6 and 10
Between 11 and 15
Between 16 and 20
Between 21 and 25
Between 26 and 30
More than 30

10 (1.2%)
378 (43.5%)
174 (20.0%)
109 (12.6%)
100 (11.5%)
52 (6.0%)
21 (2.4%)
24 (2.8%)
M=3.31

22 (8.7%)
72 (28.3%)
46 (18.1%)
29 (11.4%)
39 (15.4%)
20 (7.9%)
16 (6.3%)
10 (3.9%)
M=3.65
Working for pay on campus.
None
Between 1 and 5
Between 6 and 10
Between 11 and 15
Between 16 and 20
Between 21 and 25
Between 26 and 30
More than 30

737 (84.8%)
61 (7.0%)
26 (3.0%)
18 (2.1%)
14 (1.6%)
9 (1.0%)
1 (0.1%)
3 (0.3%)
M=1.34

152 (60.1%)
40 (15.8%)
26 (10.3%)
17 (6.7%)
7 (2.8%)
6 (2.4%)
2 (0.8%)
3 (1.2%)
M=1.92
Working for pay off campus.
None
Between 1 and 5
Between 6 and 10
Between 11 and 15
Between 16 and 20
Between 21 and 25
Between 26 and 30
More than 30

761 (88.0%)
47 (5.4%)
29 (3.4%)
13 (1.5%)
6 (0.7%)
8 (0.9%)
1 (0.1%)
0 (0.0%)
M=1.25

158 (62.5%)
34 (13.4%)
25 (9.9%)
11 (4.3%)
11 (4.3%)
6 (2.4%)
0
8 (3.2%)
M=1.98
Participating in co-curricular activities
(organisations, campus publications, student
government, social fraternity or sorority,
None
Between 1 and 5
Between 6 and 10

163 (18.8%)
450 (51.8%)

97 (39.1%)
67 (27.0%)
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UUM AUST
intercollegiate or intramural sports, etc). Between 11 and 15
Between 16 and 20
Between 21 and 25
Between 26 and 30
More than 30
126 (14.5%)
57 (6.6%)
33 (3.8%)
19 (2.2%)
7 (0.8%)
13 (1.5%)
M=2.42
32 (12.9%)
16 (6.5%)
22 (8.9%)
6 (2.4%)
4 (1.6%)
4 (1.6%)
M=2.41
Relaxing and socialising (watching TV, exercising,
etc).
None
Between 1 and 5
Between 6 and 10
Between 11 and 15
Between 16 and 20
Between 21 and 25
Between 26 and 30
More than 30

56 (6.4%)
523 (60.2%)
139 (16.0%)
61 (7.0%)
47 (5.4%)
30 (3.5%)
5 (0.6%)
8 (0.9%)
M=2.62

12 (4.7%)
85 (33.6%)
48 (19.0%)
46 (18.2%)
27 (10.7%)
14 (5.5%)
12 (4.7%)
9 (3.6%)
M=3.50

Providing care for dependents living with you
(parents, children, spouse, etc).

None
Between 1 and 5
Between 6 and 10
Between 11 and 15
Between 16 and 20
Between 21 and 25
Between 26 and 30
More than 30

391 (45.2%)
241 (27.9%)
107 (12.4%)
36 (4.2%)
42 (4.9%)
21 (2.4%)
6 (0.7%)
21 (2.4%)
M=2.18

33 (13.3%)
67 (27.0%)
51 (20.6%)
27 (10.9%)
28 (11.3%)
17 (6.9%)
8 (3.2%)
17 (6.9%)
M=3.48

Commuting to class (driving, walking, etc).

Between 1 and 5
Between 6 and 10
Between 11 and 15
Between 16 and 20
Between 21 and 25
Between 26 and 30
More than 30

383 (44.0%)
154 (17.7%)
98 (11.3%)
73 (8.4%)
48 (5.5%)
28 (3.2%)
86 (9.9%)
M=3.61

123 (48.6%)
57 (22.5%)
34 (13.4%)
19 (7.5%)
9 (3.6%)
6 (2.4%)
5 (2.0%)
M=3.00

Respondents Responses to their Engagement at the Universities
Respondents were asked the question to what extent they worked harder than they thought they could to meet an
instructors standards or expectations. As reported in Table 1, responses of the majority seemed to differ between the
two institutions. 60.4% of the UUM students gave a very positive answer often while 44.7% of the AUST students
responded sometimes. Across the two institutions however, students ranked similar responses for never as the
least, i.e. 1.6% for UUM and 5% for AUST.
Many (56.9% of the UUM students and 39.2% of the AUST students) seemed to agree that the coursework
emphasised memorising skill. The overall mean score of the institutions was 2.83 and 2.94, respectively. AUST
students (30.2%) seemed to respond higher than UUM (13.7%) in terms of the scale very much. Pertaining to the
analysing skill emphasised in the coursework, more than half of the UUM students (52.2%) responded quite a bit
while only 36.5% of the AUST students thought so.
The overall mean score of the synthesising skill emphasised in the coursework was the same for UUM
(M=2.71) and AUST (M=2.70). However, almost 55% of the UUM students responded quite a bit while only
37.4% of the AUST responded so. More AUST students (21.7%) responded very much than the UUM students
(9.3%) on the same item.
In terms of whether the coursework incorporated the skill of making judgement about the value of
information, arguments or methods, it was found that similar pattern of responses emerged between the two
institutions. From the highest to the lowest, the responses were: quite a bit, some, very much and very little.
The AUST students however, seemed to have almost the same response to quite a bit (32.4%) and some (32%).
More than half of the UUM respondents agreed quite a bit (54.1%) that the coursework required them to
apply theories or concepts to practical problems or in new situations. The AUST students agreed to some (33.6%)
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on the same item. More AUST students (26.2%) responded very much than the UUM students (13.0%) on the
same item.
When asked whether the examinations during the current school year have challenged the students to do their
best work, more than one-third of the UUM students (37.8%) and more than one-fourth of AUST students (26.7%)
selected the scale of 5 from the range of 1 (very little) to 7 (very much). The scale 4 and 6 received almost the same
score for both institutions, i.e. 25.2% (UUM) and 25.1% (AUST) for scale 4 and 21.1% (UUM) and 20.2% (AUST)
for scale 6.
Respondents in both institutions also pointed out that they seemed to read between 1 and 4 books (58.0% for
UUM and 30.0% for AUST) during the current school year. However, more AUST students (13.8%) seemed to read
the assigned course readings for more than 20 than the UUM students (2.4%).
In terms of whether the students did their readings on their own for personal enjoyment or academic
enrichment, results showed that many students read between 1 and 4 (51.4% for UUM and 43.5% for AUST).
Reading books between 5 and 10 received almost similar scores between the two groups i.e. between 26 and 27%
respectively.
With regard to whether the students have done 20 pages or more of written papers or reports during the
current school year, a majority of them agreed to the scale between 1 and 4. The scale between 5 and 10 received
the second highest score and between 11 and 20 third for both groups. However, the AUST students had the same
score for the second and third ranking, i.e. 18.1%. In addition, more AUST students responded to the scale none
and more than 20 than the UUM students.
Responding to the question of whether the students have done between 5 and 19 pages or more of written
papers or reports during the current school year, the UUM students seemed to show similar scores for none and
more than 20 at 3.5%. This score is rather low compared to the percentage of the AUST students for both the
scales. The findings also indicated that the majority of students for both universities have written papers or reports
between 1 and 4.
The number of written papers or reports of fewer than 5 pages was also assessed. Of the two groups of
respondents, only 2.9% of the UUM students reported writing more than 20, while the scale was the second highest
rank for the AUST students (17.9%). Results also showed that the AUST students scores were somewhat more
spread out between the 5 scales from none to more than 20. On the other hand, more than half of the UUM
students (52.8%) responded to the score between 1 and 4 written papers or reports and more than one-third
responded for the AUST students (37.5%) for the same scale.
In terms of whether the homework problem sets that the students take more than an hour to be completed in
a typical week of the current school year, the UUM students had the same score for between 5 and 6 and more
than 6 at 12.9%, while the AUST students had the same score for between 1 and 2 and between 3 and 4 at
36.1%. It should also be pointed out that the overall mean score is higher for UUM (M=3.03) than AUST (M=2.59).
As for the number of problem sets that they take less than an hour to complete, both UUM and AUST had
almost the same score for the scale between 1 and 2 at 39.7% and 39.6%, respectively. The data also disclosed that the
mean score is higher for AUST (M=2.76) than UUM (M=2.03). The data obtained for the UUM respondents showed
a wide difference of score from a relatively high percentage (33.7%) for none and a relatively low score of more
than 6 (2.3%). The pattern is in contrast for the AUST students. The score is rather similar for the scales none
(11.8%) and more than 6 (11.4%).
Respondents of both groups seemed to select the scale of between 1 and 3 and between 4 and 6 as the two top
scores for the number of homework problems that take them more than 15 minutes each to complete. Data from the
AUST indicated that there were almost as many students who select the scale of none and the scale between 7 and
10. In contrast, the UUM data showed that there were more students who had none than between 7 and 10 and
more than 10.
In terms of the number of hours that students spent in a typical 7-day week preparing for class, the UUM data
received higher score than the AUST for the scale between 1 and 5. As a whole, the UUM respondents indicated three
scales as the lowest: none (1.2%), between 26 and 30 (2.4%) and more than 30 (2.8%). The AUST had between 21
and 25 (7.9%), between 26 and 30 (6.3%), and more than 30 (3.9%) as the lowest three scales. As high as 8.7% of the
AUST students do not come to class prepared.
A majority of the UUM and AUST respondents indicated that they neither work for pay on campus or off
campus. Only 13 UUM students (1.4%) work between 21 and 30 and more than 30 hours per week and 11 AUST
students (4.4%) work for the same number of hours. No UUM students work for more than 30 hours for pay outside
the campus and no AUST students work between 26 and 30 hours. However, about 8 AUST students work for more
than 30 hours for pay outside the campus. About the same number of AUST students i.e. 11(4.3%) work between 11
and 15 and between 16 and 20 hours for pay outside the campus. Compared to other items, the mean scores for both
groups were low (M=1.34 and M=1.92 for work for pay on campus while M=1.25 and M=1.98 for work for pay off
campus).
In terms of whether or not the UUM and AUST students participated in the co-curricular activities, results
showed that half of UUM respondents (51.8%) spent between 1 and 5 hours per week while more than one-third of
the AUST respondents (39.1%) do not take part in such activities. Only 27.0% of the AUST students spent between 1
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and 5 hours in the activities. Less than 6.0% of both groups of respondents spent more than 21 hours on the co-
curricular activities.
Looking at the distribution of the responses for the time spent for relaxing and socialising, the AUST students
spent more hours between 6 and 20 per week (a total of 47.9%) compared to the UUM students (a total of 28.4%).
Majority of the UUM students (60.2%) spent between 1 and 5 hours per week to relax and socialise.
A high percentage (45.2%) of the UUM respondents did not spend time on providing care for dependents
living with them. More AUST students (27.0%), however, did the same for between 1 and 5 hour per week. Results
also showed that the AUST students in general had higher scores in terms of the number of hours spent for all the
other scales in the item than the UUM group.
As far as the question on whether the students spent time commuting to class, it was found that the majority
of the respondents spent between 1 and 5 hours per week on travelling. More UUM students (9.9%) travel more than
30 hours per week compared to the AUST students (2.0%).
All in all, there were significant differences in the mean scores between the UUM and AUST respondents for
15 out of the 22 items. The items in which AUST students mean scores were higher include:
1. Memorising facts, ideas, or method from your courses and readings so you can repeat them in pretty much the
same form;
2. Number of assigned textbooks, books, or book-length packs of course readings;
3. Number of written papers or reports of 20 pages or more;
4. Number of written papers or reports between 5 and 19 pages;
5. Number of written papers or reports of fewer than 5 pages;
6. Number of problem sets that take you less than an hour to complete;
7. The number of homework problems take you more than 15 minutes each to complete;
8. Preparing for class (studying, reading, writing, doing homework or lab work, analysing data, rehearsing, and
other academic activities);
9. Working for pay on campus;
10. Working for pay off campus;
11. Relaxing and socialising (watching TV, exercising, etc); and
12. Providing care for dependents living with you (parents, children, spouse, etc).

Only 3 items showed higher mean scores for the UUM respondents. The items were:
1. Worked harder than you thought you could to meet an instructors standards or expectation;
2. Numbers of problem sets that take you more than an hour to complete; and
3. Commuting to class (driving, walking, etc).

Conclusion and Recommendations
On the whole, the utilisation of the NSSE instrument was appropriate and helpful in providing explanations between
the two HEIs and useful insights about the students educational experience in general, and their levels of academic
challenge specifically. Based on the findings, the following conclusions were drawn.
Generally, the respondents were involved in somewhat high levels of academic challenge in their universities.
This was rationalised by the data, which showed that the two universities seemed to promote high levels of student
achievement by setting high expectations for student performance. Students at both institutions were willing to work
harder than they thought they could to meet instructors standards and expectations. This finding supports the
findings from the NSSE Annual Report (2001, 2003). Overall, students at UUM responded more positively whereby
more than 70% answered often and very often as compared to about 50% for AUST. The curricula for both
institutions also seemed to be on track. Students indicated that there was a blend between theory and practice.
Responding to the question on whether the curricula applied theories to practical problems or in new situation, more
than 65% of UUM students and around 55% of AUST students responded quite a bit or very much. Additionally,
the examinations at both universities have also managed to challenge students to do their best work. On a scale of 1 to
7, the mean was at 5.01 for UUM and 4.91 for AUST. This finding once again points out that both higher institutions
are heading in the right direction with regards to students engagement as noted in Alvarez (2002) and Painter and
Valentine (1996).
On a less positive note is the fact that students at both institutions were less involved in higher-order learning.
Their responses to the question of how much their coursework emphasised the mental activities of memorising,
analysing, synthesising, applying, and making judgments, indicated that memorising seemed to receive the highest
mean score for both institutions. For UUM, the mean score was 2.83 while for AUST it was even higher at 2.94.
Almost 71% of UUM students and 69% of AUST students responded quite a bit and very much to the item on
memorising so that it can be repeated in pretty much the same form. The other items which were higher in the level
of thinking skills received lower mean scores. The lowest mean score for UUM was for making judgements (M=2.70)
while for AUST was synthesising and organising ideas (M=2.70). This finding is almost similar to the study by
Norzaini et al. (2003).
Another disappointing finding is on the time devoted to preparing for class. According to the NSSE report,
students should spend more than 25 hours a week preparing for class in order to be successful. The data of this study
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indicated that students at both institutions spent only minimal hours for this activity. More than 60% of UUM
students and 55% of AUST students spent less than 10 hours per week. There were also responses in the none
category. Almost 9.0% of the AUST students came to class unprepared. Relatively, fewer, only around 1% of the
UUM students turned up unprepared for their classes. A similar pattern also emerged from the data on the number of
readings of course related materials. Almost 70% of the UUM students and almost 40% of AUST students read four
or less books (textbooks, books, book length packs of course readings). However, in terms of books for personal
enjoyment and enrichment, the UUM students seemed to read more than the AUST students. In contrast to the
NSSE reports, UUM and AUST students in general seem to read less than their counterparts in the United States.
The data on the number of written papers or reports confirmed that students were not particularly involved in
activities that require higher order thinking skills. About 43% of UUM students and 25% of AUST students wrote
only between 1 to 4 papers or reports of 20 pages or more during the school year that the questionnaires were
administered. There were about 20% of AUST students who responded to none for the item. Significantly fewer
UUM students (3.5%) choose none. A similar trend was also observed in the item on the number of problem sets
to complete in a typical week.
With regards to co-curricular activities, a majority of AUST students (37.6%) did not participate in any
activities at all. This is sharply in contrast to the UUM data which showed that more than half (51.6%) of the student
population were involved in between 1 and 5 co-curricular activities in a typical week.
When asked about the number of hours in a week spent on relaxing and socialising, the mean score of the
AUST respondents were much higher. The overall mean score was 3.50 while the UUM mean score was only 2.62.
This finding indicated that because the AUST students were not involved in any co-curricular activities, they would
spend more time to relax and socialise. This could also be related to the fact that more AUST students live off
campus, in an environment which may not be as conducive as staying on campus. Clearly, this finding is consistent
with the finding from the first round of NSSE data which states that students living off-campus are less engaged.
Respondents were also asked to what extent they spent time in a week on providing care for dependents living
with them. Since a majority of the AUST students did not live on campus, they spent more time with their extended
family members. This explained the fact that a majority of them spent between 1 and 5 hours a week while about half
of the UUM students (45%) who stayed in hostels responded none.
In light of the findings and discussion of the study, the following recommendations are advanced. Firstly, more
effort should be put into getting students to be involved in higher order learning. Activities that require students to
brainstorm and solve problems may develop this much needed skills. Additionally the case studies approach will also
contribute to the development of higher order thinking skills as students will have to apply, analyse and make
judgements. Secondly, as bridging the gap between theory and practice is crucial, both institutions should continue to
strengthen their existing curricula to ensure that students are able to apply the theory that they have learned in the
classroom to the workplace. These two recommendations above are also listed as the 21
st
century skills needed for
graduates in higher education institutions. Thirdly, both institutions need to devise methods and techniques to ensure
that students come to class prepared. One of the ways is to provide students with uninformed tests and pop quizzes.
Another more important measure is to shift from a teacher-centred to a more student-centred approach. Instead of
relying on the lecture method, instructors should explore methods such as discussion, problem-based learning,
discovery and cooperative learning. These student-centred methods will ensure that students come to class prepared.
One issue, however, that may hinder the use of such methods is the large class size. Both institutions will have to look
into this matter. Finally, if students are given longer and more challenging papers or reports to write as well as more
complex problem sets, they will have little choice but to read wider. This will inadvertently lead to students reading
more books as well as using their higher order thinking skills.

References
Alvarez, D. (2002), Engaging students in their learning, Leadership, pp. 12-15.
Carini, R. M., & Kuh, G. D. (2003), Tomorrow's teachers: Do they engage in the "Right Things" during college?
Retrieved June 18, 2003, from http://web.epnet.com/delivery.asp?tb=1&_ug=dbs+0%2C2%2C3+1n+en-
us+...
Gose, B. (1999), A new survey of good practices could be an alternative to rankings, Chronicle of Higher Education,
Vol. 46, No. 9, pp. 65.
Kuh, G. D. (2002), The national survey of student engagement: Conceptual framework and overview of
psychometric properties. Framework & Psychometric Properties, [On-line] Available:
http://www.indiana.edu/~nsse
Leithwood, K., & Jantzi, D. (2000), The effects of transformational leadership on organizational conditions and
student engagement with school, Journal of Educational Administration, Vol. 38, No. 2, pp. 112-129.
National Survey of Student Engagement (2001), NSSE Facts, NSSE Viewpoint, 6, Blooming, IN: Indiana University
Centre for Postsecondary Research and Planning.
National Survey on Student Engagement. (2003), NSSE 2003 Annual Report: Converting data into action: expanding
the boundaries of institutional improvement, Blooming, IN: Indiana University Centre for Postsecondary
Research and Planning.
http://www.iub.edu/~nsse/2003_annual_report/pdf/NSSE_2003_Annual_Report.pdf
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National Survey on Student Engagement. (2004), NSSE 2004 Annual Survey Results: Student Engagement: Pathways
to collegiate success, Blooming, IN: Indiana University Centre for Postsecondary Research and Planning.
http://www.iub.edu/~nsse/2004_annual_report/pdf/annual_report.pdf
Norzaini Azman, Manisah Mohd Ali, Mohd Halim Tamuri & Zalizan Mohd Jelas. (2003), Student Engagement and
Effective Higher Educational Practices, Proceeding of The 4
th
Comparative Education Society of Asia (CESA) Biennial
Conference, Bandung, Indonesia, 21-22 July 2003.
Painter, B., & Valentine, J. (1996), Instructional practices inventory: Instrument for identification of the level of
classroom engagement for students and teachers. In Quinn, D. M. (2002), The impact of principal leadership
behaviors on instructional practice and student engagement, Journal of Educational Administration, Vol. 40, No.
5, pp. 447-467.
Quinn, D. M. (2002), The impact of principal leadership behaviors on instructional practice and student
engagement, Journal of Educational Administration, Vol. 40, No. 5, pp. 447-467.
Zhao, C. M., & Kuh, G. D. (2003), Adding value: Learning communities and student engagement, Paper presented at
the 43
rd
Annual Association for Institutional Research Forum, Tampa, Florida, USA, 18-21 May 2003.
Zhao, C. M., Kuh, G. D., & Carini (2001), A comparison of international student and American student engagement
in effective educational practices, [On-line] Available: http://www.indiana.edu/~nsse.

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Linguistic Impoliteness:
A Small Corpus Analysis on the Use of Impolite
Languange by Children

Sri Minda Murni
1*
and Mutsyuhito Solin
2

1,2
Universitas Negeri Medan, Indonesia
*
Corresponding author: srimindamurni@gmail.com

Abstract - Speaking politely is one of the pragmatic competencies of language users. The
fact shows that Indonesian children Muslim writers produce impolite utterances through the
characters and conflicts they create in the story books published by the Islamic publishers.
The impolite utterances are interpreted as violating the principles of speaking politely as
suggested by the Holy Quran. A small corpus analysis used in this study is aimed at finding
preliminary data on the impolite language used by children for further research, while at the
same time showing how the data present children pragmatic incompetence and violation of
the Quranic principles of being polite. The findings show that affective and coercive
impoliteness are presented in the stories. In addition, the study finds the following: a) the
issues which drive impolite utterances are competition between siblings, schoolmates, and bad
teacher-student relationship; b) the lexicon used include animals, physical appearance, and
behavioral assessment. In the level of syntax, declarative, interrogative, and imperative moods
are used; c) the Quranic principles violated by the impolite utterances are Qaulan Marufa
(speaking nicely), Qaulan Karima (speaking honorably), and Qaulan Layyina (speaking softly);
and d) the violation of the Quranic principles is seen as reflecting the pragmatic
incompetence of the characters and the authors in the way that they fail to create dialogues
with refinement which reflect principles of Islam in the context of conflict.

Keywords: Impoliteness; Children writers; Children stories; Small corpus analysis; Quranic
principles of politeness

Introduction
Speaking politely is one of the pragmatic competences of language users. Recently, speaking politely has been one of
the main issues in education specifically when building the national character promoted as the main theme of the
Indonesian national education. As the concern toward politeness increases so as the concern toward impoliteness.
Recent discussion on negative effects of television on children at the University of Indonesia held in May 2011, for
example, raised the issue of children impoliteness as one of the bad effect of the television programs. Impoliteness, as
suggested by Locher and Bousfield (2008), is behavior that is face-aggravating in a particular context. Culpeper (2011)
classifies impoliteness into three categories: 1) affective impoliteness which is an angry response to frustration and/or
provocation; 2) coercive impoliteness which means the use of rudeness to get power; and 3) entertaining impoliteness
which has the characteristics that the participants who are entertained are aware of the impoliteness or the probable
impoliteness effects for the target.
The facts show that Indonesian children are not merely the consumers or the victims of impoliteness. As
observed from story books written by children aged 8-12 years, children writers have been the creators or the
producers of impolite utterances through the characters and conflicts they create in the stories. Since the books are
written by Muslim students and published by Mizan, one of the most popular Islamic publishers, impolite utterances
are judged as violating six rules or principles of speaking politely as suggested by the Quran (Sauri, 2004). They are: a)
Qaulan Shadida (speak the truth) (Q.S. an-Nisa: 9); b) Qaulan Ma'rufa (speak nicely) (Q.S. an-Nisa: 8); c) Qaulan Baligha
(speak effectively) , (Q.S. 4 An-Nisa: 63),: d) Qaulan Maysura, (Q.S.17 Al-Isra: 28) speak properly: e) Qaulan Karima
(speak honorably) (Q.S. al-Isra: 23); and e) Qaulan Layyina (speak softly) (Q.S. Thaha: 44). Violating the Islamic
principles of politeness is considered as reflecting the characters as well as the authors pragmatic incompetence as
pragmatic competence is defined broadly as the ability to use language appropriately in a social context (Taguchi,
2009). Competence involves both types of knowledge and the skills in processing the knowledge in communication.
So pragmatic incompetence means the inability to use language appropriately due to the incompetencies in knowledge
and in processing the knowledge in the context of Islam.
Although the characters and the conflicts play important roles, judgement on the impact of the impolite
utterances on the quality of the books is not discussed. The problems to discuss in the study are: a) What are the
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driven issues of linguistic impoliteness in story books?; b) How are the impolite utterances realised lexically and
syntactically?; c) What Quranic principles are violated by the impolite utterances used by the characters?; And d)
How do the violations reflect the pragmatic incompetence of the characters and the authors?

Methodology
Corpus analysis (Ghadessy, 2001; Ghani and Zaiton, 2001; Wilson, 2006; Adolphs, 2008) will be conducted on
impolite utterances used by the characters in story books written by children. Six books of Kecil-Kecil Punya Karya
(KKPK) published by the Mizan Media Utama are chosen as they source of data. They are: Roxy! Roxy! (Putri, 2010),
Sophaholic (Nabila, 2010), Laboratorium Liliana (Salsabila, 2010), Shekefarellor (Naqiyya, 2010), Special Twins
(Izzatunnuha, 2010), and the Eccentric School (Auldina, 2010), with the total size of corpus is 62,063. All impolite
utterances are identified and then categorized based on the driven issues. In this step, the types of impoliteness are
discussed. Next, the realisations of impoliteness are categorized lexically and syntactically. The data are analysed based
on the violation of polite language and on how the violations reflect the pragmatic incompetence of the characters as
well as the authors.

Result and Discussion

The issues which drive impolite utterances
The data shows that there are at least two settings where impolite utterances occured: at home and at school. The
issues which drive impoliteness deal with the issue of the two settings. The examples taken from the story books
written by children show that the driven issues for impoliteness include competition between siblings, competition
between friends, and teacher-student bad relationship.
The driven issue of impoliteness in the home setting includes the competition between siblings, as follows: a)
Mom, aku mau sarapanku dijadikan bekal saja, kata Laudya (Mom, I would like to take my breakfast to school); b)
Biarkan dia pergi, Mom! Kata Chelsea ketus (Let her go, Mom! said Chelsea irritated); and c) Diam Chelsea! Aku kesal
sama tingkah lakumu! seru Laudya... (Shut up Chelsea! I dont like your behavior! said Lidya (The Special Twins, p. 52)
In example a) Laudya and Chelsea are twin characters. As narrated by the author: Mereka sangat suka jika punya
benda yang sama dan berpenampilan sama. Anehnya, mereka tidak suka bersama-sama. Mereka tidak akan pernah akur kalau
bersama-sama,... (p. 23) (They like the same things and styles. However, they do not like to be together. They never get
along when being together). It is explicitly shown that the twins are created to be offensive rather than living in
harmony with each other. In the exerpt, it is seen that the twins are using impolite utterances and freely exposing their
anger toward each other even in front of their parents. They use coercive impoliteness towards each other. On the
other hand, parents reaction on the argument is not educative either as the following:

Mrs. Rich:Ada apa kalian? Berantem lagi? tanya Mrs. Rich khawatir. Kenapa kalian tidak jawab pertanyaan Mom?
tanya Mrs. Rich dengan suara parau (What is the matter now? Are you fighting again? Why didnt you answer me?
asked Mrs. Rich). Dia memukul meja dan berdiri. (She hit the table and got up)
Mr. Rich: Morish! Tenangkan dirimu! Seru Mr. Rich (Morish! Calm yourself! Mr. Rich exclaimed).
Mrs. Rich: Tidak!...(No!...)
Mr. Rich: Richie Morish Rich! Bentak Mr. Rich (Richie Morish Rich! Mr. Rich shouted)
Mrs. Rich: Pollie Mike David! Sekarang kamu urus si kembar. Aku tak mau melihat mereka lagi!!!(Pollie Mike David!
Now you take care of the twins. I do not want to see them again!!!) (The special Twins, pp. 53-54).

The above quotation shows that the parents can not control themselves either. They use affective impoliteness
to each other. Instead of helping the twins to solve their problems, the parents are trapped in the problems and shout
at each other in front of their twins.
In the school, the driven issue is the competition between schoolmates and the bad relation between teacher
and student. The competition between schoolmates is acknowledged through impolite utterance as follows:Anak yang
tak tahu diri yang kau maksud sahabat dekatmu? Sungguh, aku tak menyangka, Patricia. Anak sebaik kau bisa mendapatkan teman
sebadung dia,sambung Alicia dengan tajam. (Such an ungrateful child you consider as a close friend? I really do not
understand Patricia. Such a kind girl like you gets a delinquent girl as a close friend (The Eccentric School, p. 24).
In the story, it is written that Patricia and Isabel are once close friends but a new student, Alicia, tries to break
their good relationship. Alicia tries to put bad image of Isabel in Patricias mind to win Patricia. Clearly, Alicia uses
coercive impoliteness.
Impolite utterances also used by the students when they talk about their teachers. The following quotation is
one of the evidence: Li, Kamu Udah Mengerjakan Pe-Er Pelajaran Ibu Guru Yang Menyeramkan Itu? Untung Aku Sudah.
Jadi, Bedebar Jantungku. Kan Kamu Tahu, Kalau Marah, Seperti Ratu Singa. Kalau Menjerit Seperti Srigala. Pendengarannya Lebih
Dari Aris, Sorot Matanya Tajam Banget. Makanya Aku Bilang Menyeramkan, Ujar Olivia (Li, have you done the
assignment given by that horrific teacher? Luckily, I have. My heart is pounding. You know that if she is angry, she is
like a lion queen. When she screams, she is like a wolf. Her hearing is more than Aris, her eyes are incredibly sharp.
That is why I said she is horrific (Laboratorium Liana, p. 72)
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From the quotation, it is very clearly seen that the students do not perceive teachers as honorable persons.
They express affective impoliteness towards the teacher through the statement above. It seems that they have good
reasons to do so since the teacher is also pictured as killer and impolite such as,

Hentikan merapikan rambutmu, Hillary!! bentak Nona Kathrine. Sudah berapa kali saya ingatkan! Siapa saja yang
memasuki kelas Nona Kathrine harus berpakain rapi!! teriak Nona Kathrine. Dan kalau sudah beberapa kali melanggar
peraturan itu. Sekarang, keluarlah. Rapikan dulu rambut emasmu itu. Jika ingin memasuki kelasku lagi, aku harus melihat
rambutmu terikat dengan rapi, tambahnya. (Stop tidying your hair, Hillary!!! snapped Miss Katherine. I have told
you many times! Whoever enters Miss Katherines class has to dress neatly!!! shouted Miss Katherine. And
you have broken the rules many times. Now, go out. Tidy yourgolden hair. When you enter the room, make
sure you have tied your hair, she added) (The Eccentric School, p. 15).

The above example shows that the teacher has spoken very impolitely to the students even on minor cases
such as students hair style. In this situation, the coercive impoliteness is clearly used by the teacher towards her
students.

The Realisation of Impolite Utterances
The realisation of linguistic impoliteness are categorized into, i.e. the lexicon and the mood.

The Lexicons
The lexicons used are categorized into three, namely: animal, physical appearance, and behavioral assesment. The
names of animal of particular characteristics are used in the story to refer to certain character such as: a) Ratu Singa (A
lion queen) (Laboratorium Liana, p. 72); b) Srigala (wolf) (Laboratorium Liana, p. 72); c) Monyet aneh (weird monkey)
(SheKeFaRellor, p. 15); and d) Kutu kupret (kupret lice) (SheKeFaRellor, p. 51). The animal used to describe human is
the indicator of impoliteness. The animal categorization include lion and fox to express wildness, monkey and louse to
express teaser and trouble-maker.
Some metaphores which are related to bad judgement on the characters physical appearance are used in the
stories such as: a) Muka busuk (rotten face) (The Eccentric School, p. 59); b) Mulut ember (bucket mouth) (The
Eccentric School, p. 76); c) Mulut pedas (spicy mouth) (The Special Twins, p. 20); d) Suara emas karatan (rusty golden
voice) (Roxy! Roxy!, p. 95); e) Keras kepala (stubborn) (Shopaholic Girl, p. 74); f) Metaphors such as muka busuk
(rotten face), mulut ember (bucket mouth) given to the characters physical appearance is also judged as impoliteness.
The characters behavior is also judged by using bad terms such as: a) Somse (arrogant) (Laboratorium Liana, p.
10); b) Norak (tacky) (Laboratorium Liana, p. 10); c) Matre (materialistic) (Laboratorium Liana, p. 87); d) Tak tau diri
(ungrateful) (The Eccentric School, p. 24); e) Konyol (incompetent) (Roxy! Roxy!, p. 22); f) Cupu (cupu) (Roxy! Roxy!,
p. 31); g) Nyebelin (sucks) (Roxy! Roxy!, p. 34); g) Norak banget (very tacky) (Roxy! Roxy!, p. 93); i) Menor banget (too
much make-up) (Roxy! Roxy!, p. 93): j) Ge-er genit rakus (flirty and greedy) (Diary Runa, p. 54); k) nggak gaul (having no
friends) (Diary Runa, p. 130); l) Oon (stupid) (SheKeFaRellor, p. 33); m) super jorok (super dirty) (SheKeFaRellor, p.
37); n) Oneng (stupid) (SheKeFaRellor, p. 37); o) Brojol (SheKeFaRellor, p. 48), p) Bloon (stupid) (SheKeFaRellor, p. 59);
q) kamu jangan terlalu...lebay... (Dont be too excessive); kamu lebay (you are excessive) (The Special Twins, p. 17); r)
kata-kata yang ngebosenin! (boring words) (The Special Twins, p. 20); and s) berbuat licik (foxy) (The Special Twins, p. 49).
Bad terms used to assess the behavior of the character are considered as impolite since they are all aimed at
humiliating the characters. Based on the data, it is found out that there are 94 lexicons used by children writers to
express impoliteness. Some of the impolite lexicons are used by particular writer such as silly which is used seven
times by an individual writer. However, there are also some impolite utterances shared by two or more writers such as
diam (shut up).
The types of impolite language used by children writers are affective and coercive impoliteness. By affective
impoliteness, the characters express their angry responses to frustration and/or provocation. By coercive impoliteness,
the characters use rudeness to get power. The lexicons used in expressing impoliteness are categorized into: 1)
mouth and its varieties; 2) negative adjectives such as arrogant and tacky, and 3) animals such as lice and
monkey. The mouth and its varieties cover 24% of the lexicons used and they have both coercive and affective
purposes. The negative adjectives cover 68% and the animal lexicons cover 6% of the total use of impolite lexicons.
The purpose of the use of the negative adjectives as well as the animals is to mock, ridicule, make fun of, and express
anger, so it is coercive and affective.

The Moods
The moods that are used to express impoliteness include declarative, interrogative, and imperative moods. They are
regarded as impolite since they directly express anger. There is no refinement in the ways the characters speak to each
other. The types of impoliteness are both coercive or affective.
Some examples of declarative mood to express impoliteness are: a)Aku tak akan pernah mau memaafkanmu!
kata Isabel (I will never forgive you, said Isabel) (The Eccentric School/40); b)Nggak gaul, deh lhomaksudnya mana
kutahu! (You are outdated... How could I know (Diary Runa/130); c) Mulutmu kayak si Felix, kucing-ku. Kalau belum
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makan, mulutnya nyerocos melulu! imbuh Kevin. (Your mouth is like Felixs, my cat. If he has not eaten, he talks a lot)
(SheKeFaRellor/49); and d) Kau memang pembawa kehancuran, Hillary! teriakku. (You bring disaster, Hillary!!! I
shouted (The Eccentric School/70).
The utterances used in declarative mood are affective impoliteness. Example a) shows I declares something
on the hearer due to her anger and/or frustration, while examples b), c), and d) are labelling the hearer due to the
same reasons.
Some examples of interrogative mood to express impoliteness are: a)Apakah kau bisa, sekali saja, tidak
mencampuri urusan orang lain?! bentakku dengan suara lantang. (Can you for once not to bother others business? I snapped
him (The Eccentric School, p. 32); b)Apa,lihat-lihat? balas Reechery tidak menyenangkan (What are you looking at?
Eplied Reechery unhappily (Shopaholic Girl, p. 79); c) Kamu punya otak, enggak? Kalau punya, letaknya di mana? ejek
Farhan lagi (Do you have brains? If yes, where is it?, mocked Frahan) (SheKeFaRellor, p. 59); d) Bisakah kau tutup
mulutmu, Jean? kataku membentaknya (Will you shut up, Jean? I snapped her (The Eccentric School, p. 31).
The interrogative utterances used are coercive and affective. They are not meant to ask questions but to order
the hearer to do something (example a and d), not to do something (example b), and to label the hearer (example c).
Utterances a, b, and d are are coercive since the characters express rudeness to get power. Utterance c is affective
because they show angry response.
The imperative mood used in the stories are: a)Tutup mulutmu, Patricia! Jika kau hanya ingin membuat gara-gara di
sini, keluarlah dari ranjangku!katanya dengan kasar. (Shut up, Patricia! If you are just causing a mess, get off my bed! (The
Eccentric School, p. 26); b)Buang muka busukmu itu, Hillary. Jangan pernah kau perlihatkan lagi di hadapanku!!! jawab Jean
(Throw away your rotten face. Dont ever show it to me again!!!, answered Jean).
The lexicon tutup mulutmu or buang muka busukmu are clearly not only intended to command or to order
the other characters to do so. They aslo explicitly expresses power over the addressee. They are the expression of
coercive impoliteness. Thus, three types of mood were used by children writers to create conflict in the stories. The
data show that the use of the moods are to express coercive and affective type of impoliteness.

The Violation of the Quranic Principles of Politeness
The violation of the Quranic principles of linguistic politeness in the story books written by children are categorized
into three types, namely: a) The violation of Qaulan Marufa (speaking nicely); b) Qaulan Karima (speaking honorably);
and c) Qaulan Layyina (speaking softly).
The data show that the characters violate the principle of Qaulan Marufa which means speaking nicely. The
examples found in the stories show that the characters emphasize rudeness in the utterance, such as: a)Udah,
deh...kamu jangan terlalu...lebay...! jawab Chelsea sinis (Stop... dont be too excessive) (The Special Twins, p. 17); b)Hoooiii!
Laras-e! Laras-e matre-e jerawat-e sini!!! Hoii!! Pesan es jeruk satuuuuu!!! Jangan pakai lama yaaaaNgerti? Heh! Jangan terlalu
dingin! Dan ingat, bayarnya sekarang dan jangan kebanyakan gula! bentak Kayla kepada kak Laras. Hal itu membuat Laras sakit
Hati. (Hooooiiii! Laras-e! Laras-e materialistic pimple come here!!! Orange juice one!!!! Quickly ....understand? Hey,
not too cold! I will pay now and not too much sugar! Kayla snapped Laras. Laras was very sad (Laboratorium Liana, p.
87); c)Mau pergi kemana pun, itu bukan urusanmu! Kata Gabriella kepada Elssy (It is not your business where I go, said
Gabriella to Elssy (Shopaholic Girl, p. 77); d) Alaaaaahbilang aja rumahmu, tuh, jelek! (Just tell us the truth that you
have a poor house) (Diary Runa, p. 123); e) Huuu! Kamu juga dari zaman purba sudah oon kayak gitu, sanggah Farhan
(You are also from the primitive era, stupid, argued Farhan) (SheKeFaRellor, p. 33); f)Capek,dehkenapa harus daftar
sama si Kutu Kupret itu, sih! sesal Sherina (Very boring ... why should we register with this kupret lice, said Sherina
irritatedly (SheKeFaRellor, p. 51); g)Biarin!Terserah aku! Aku,kan, anak orang terkaya disini. Bukan salah satu dari kalian
ya,ya! Semua perintahku harus ditaati. Enggak boleh ada yang membentakku! teriak Lutfi (Its up to me. I am the richest girl.
Not any of you. My words must be obeyed. Nobody can snap me! (Me and Mermaid, p. 26); h) Waktu aku naik ke
panggung, disebelahku ada..ada.. SILLY ALLY! Alias Ally Royalen. Dia memakai rok tiga perempat bertingkat warna pink dengan
ikat pinggang pita emas, bando pita warna pink emas, sejenis high heels pink emas, pokoknyasemuanya serba pink dan emas. Dan
dia, aku jujur lhoNORAK BANGET! Rambutnya, sengaja dibikin keriting. Benar-benar berlebihan. Menor banget! Kosmetiknya
juga benar-benar tebal, jadi membuatnya kelihatan seperti badut! Hahahaa(When I got on the stage, I saw SILLY ALLY!
Ally Royalen. She was wearing a pink medium skirt with a golden belt, ribbon golden headband, pink golden high
heels, all is just in gold and pink. And she is, to tell you the truth is so tacky! Her hair is made curly. Too excessive.
Very excessive. Her make-up is also excessive like a clown! Hahaha... (Roxy! Roxy!, p. 93)
The data also show that the characters violate the principle of Qaulan Karima which means speaking honorably.
The examples found show that the characters use impolite utterances when they talk about their teachers without
honor, such as: a) Li, Kamu Udah Mengerjakan Pe-Er Pelajaran Ibu Guru Yang Menyeramkan Itu? Untung Aku Sudah. Jadi,
Bedebar Jantungku. Kan Kamu Tahu, Kalau Marah, Seperti Ratu Singa. Kalau Menjerit Seperti Srigala. Pendengarannya Lebih Dari
Aris, Sorot Matanya Tajam Banget. Makanya Aku Bilang Menyeramkan, Ujar Olivia (Li, have you done the assignment
given by that horrific teacher? Luckily, I have. My heart is pounding. You know that if she is angry, she is li ke a lion
queen. When she screams, she is like a wolf. Her hearing is more than Aris, her eyes are incredibly sharp. That is why I
said she is horrific (Laboratorium Liana, p. 72); b) Aku tidak menyangka, Mister Baron yang begitu pintar bisa ku bohongi
dengan mudah. Aku bilang, seragam sekolah ku basah. Padahal, tidak. Aku memang sengaja mengenakan kaus ini kesekolah agar
semua orang tahu bahwa akulah si Shopaholic itu, cerita Reechery kepada Rachel (I have never thought that smart Mr. Baron
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can be easily cheated. I said, my uniform was wet. The truth is it is not. I am wearing this t-shirt just to let everybody
knows that I am the Shopaholic girl, said Reechery to Rachel (Shopaholic Girl, p. 47).
The violation of Qaulan Layyina (speaking softly) is characterised by speaking rudely mostly to snap other
characters such as the following: a) Udah, deh, mending kamu minum soft drink aja. Daripada mulutmu makin pedas ngeluarin
kata-kata yang ngebosenin! (It is better for you to have some soft drink than saying boring things (Special Twins, p. 20);
b) Diam kamu, Laudya! teriak Chelsea (Shut up, Laudya! Shouted Chelsea) (The Special Twins, p. 69); c) Pagi-pagi
sudah norak, somse banget sih, kamu! Apa enggak ada model lain, Princess Ariel? celetuk Sheza (It is still early and you have
been so tucky, you are very arogant! Dont you have another model, Princess Ariel? Sheza interrupted (Laboratorium
Liana, p. 10); d) Buang muka busukmu itu, Hillary. Jangan pernah kau perlihatkan lagi di hadapanku!!!jawab Jean (Throw
your rotten face Hillary. Do not ever show it to me anymore!!! Answered Jean (The Eccentric School, p. 59); h) Kau
memang pembawa kehancuran, Hillary! teriakku. (You are bringing disaster, Hllary! (The Eccentric School, p. 70); i) Heh, kau
tuh nyebelin banget, sih? Asal tahu saja,yaaku ini ratu! And itu bakal jadi selamanya, tahu? jangan coba-coba menyingkirkanku.
KAMU yang bakal tersingkir! Aku bakal menang terus dan bukan kamu. Ya, AKU PASTI MENANG. Karena aku RATU.
(Hey, you are a suck. You have to know that I am the queen! Forever a queen. Do not ever think of getting rid of me.
I will be the one who get rid of you. I will win, not you, since I am the queen (Roxy! Roxy!, p. 34); j) Kamu punya otak,
enggak? Kalau punya, letaknya di mana? ejek Farhan lagi (Ou you have brain? If yes, where is it? mocked Frahan)
(SheKeFaRellor, p. 59)

Conclusion
Home and school settings are considered as the two most responsible settings where building children good character
is of the first priority. This simply means that children are expected to have good perception on the institutions where
loving, caring, and protecting are values they believe to find in them. Since life is not merely about agreement which
implies that disagreement is also available at homes and schools, the pragmatic competence to deal with the
conflicting situation in these particular settings are highly expected. As the fact shows that Islam is the religion of the
children writers and Mizan is the Islamic publisher, it is expected that the principles of the Holy Quran should be the
mindset in designing the conflict in their stories. Rather than expressing anger coarsely for example, the children are
expected to be creative in composing dialogues with refinement. In addition, they are expected to show respect to the
elders such as parents and teachers and talk to and about them with respect too (Qaulan Karima). Siblings and friends
should be perceived as loving character and when conflict occurs between them, it is expected that they are competent
in polishing the utterances in such away based on the principles of Qaulan Marufa and Qaulan Layyina.
The increasing number of Muslim children writers in writing and publishing their books are higly appreciated.
However, the guidance in creating conflicts in the stories to follow the principles of the Holy Quran is seen to be
more important. Building Indonesian character involves building the pragmatic competence of using the Indonesian
language. As pragmatic competence include knowledge and skill, so as the writing process. Designing the conflict in
the stories does not merely requires knowledge of how to create conflicting dialogues, but also skill on how to express
the conflict which shows pragmatic competence. The mindset, the values, the beliefs in the mind of the writers is as
the result of the character building process they are through and at the same time will be reflected in the way they
write about the characters in the story.
For further corpus analysis, the finding on the realisation of impoliteness found in the study such as mulutmu ,
singa, etc can be referred as to see which words are commonly used together with them, which words are used more
frequently than others, and which meanings of a word are most frequently invoked, etc.

References
Adolphs, Svenja. (2008), Corpus and Context, John Benjamin Publishing Company, Amsterdam.
Auldina, Riza Dwita. (2010), The Eccentric School, Bandung: Mizan Media Utama.
Bousfield, Derek. (2008), Impoliteness in Interaction. Philadelphia: John Benjamins Publishing Company.
Bousfield, Derek and Miriam A. Locher. (2008), Impoliteness in Language, Berlin: Mouton de Gruyter.
Culpeper, Jonathan. (2011), Impoliteness. Using Language to Cause Offence, UK: Cambridge University Press.
Ghadessy, Mohsen. et al. (2001), Small Corpus Studies and ELT, Amsterdam: John Benjamins Publishing Company.
Ghani, Rusli Abdul dan Zaiton Darois. (2001), Soal Hati: Suatu Kajian Korpus, Paper Presented at Konvensyen Bahasa
Kebangsaan, 2-4 Mei 2001, Hotel Nikko, Kuala Lumpur.
Izzatunnuha, Salma. (2010), The Special Twins, Bandung: Mizan Media Utama.
Nabila, Alya. (2010). Shopaholic, Bandung: Mizan Media Utama.
Naqiyya, Maryam. (2010), Shekefarellor, Bandung: Mizan Media Utama.
Salsabila, Fatimah. (2010), Laboratorium Liliana, Bandung: Mizan Media Utama.
Putri, Ghizadhia Amira. (2010), Roxi! Roxy!, Bandung: Mizan Media Utama.
Sauri, H. Sofyan, (2004), Ingin Mabrur Berbicaralah dengan Santun, Gema Haji 2004/2005. Pikiran Rakyat Cyber
Media.
Taguchi, Naoko (Ed.). (2009), Pragmatic Competence, Berlin: Mouton de Gruyter.
Wilson, Andrew. (2006). Corpus Linguistic Around the World, Amsterdam: Rodopi.
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16

Time-Varying Integration among Asean-5 Economies

Salina H. Kassim
1*
,

and M. Shabri Abd. Majid
2

1
Associate Professor, Kulliyyah of Economics and Management Sciences,
International Islamic University Malaysia, Kuala Lumpur, Malaysia,
2
Faculty of Economics, Syiah Kuala University, Banda Aceh, Indonesia.
*
Corresponding author: ksalina@iiu.edu.my

Abstract - This study explores the economic integration among the ASEAN-5 economies over
two sample periods; the pre-crisis period (1990 to 1996) and post-crisis period (2000 to 2006).
Using the output-price approach, it attempts to determine if the nature of integration among these
economies has changed due to the Asian financial crisis in 1997. In methodology, the study adopts
the Autoregressive Distributed Lag (ARDL) approach and Vector Error Correction Model
(VECM). The results show that the crisis has a deep imprint on the degree of economic
integration among these countries. The results provide important inputs for macroeconomic
policy formulation at the regional level.

Keywords : Economic integration; ASEAN; Financial crisis; ARDL; VECM

Introduction
The commitment of the Association of Southeast Asian Nation (ASEAN) to achieve greater economic integration is
well-reflected by the various efforts aimed towards this direction. Of particular importance is the establishment of the
ASEAN Vision 2020 which intends to achieve a holistic growth of ASEAN in general. By 2020, ASEAN is
envisioned to achieve a greater degree of economic integration where member countries would be able to share
synergistic relationships in order to create an outward- and forward-looking ASEAN. In realizing this vision, in
December 1998, member nations concluded the Hanoi Plan of Action (HPA) which outlined several major initiatives
to promote economic integration within the region. Subsequently in October 2003 at the Ninth ASEAN Summit in
Bali, the member nations decided to form the ASEAN Economic Community (AEC) by 2020. The realization of the
AEC would bring the ASEAN economic integration to greater heights with the AEC to be a single market and
production base that would facilitate free flow of goods, services, investments, capital and skilled labor.
Ever since, the intention to create the AEC was announced, extensive research has been embarked to study the
various aspects of the AEC including its viability as well as the possibility of policy harmonization such as exchange
rate and monetary policy management within the region. Most of the existing studies on the ASEAN economic
integration focus on the trade and investment aspects of integration. For instance, Rana (2006) finds increased
integration among the ASEAN countries as reflected by the higher trade among the countries. In particular, trade
integration among the ASEAN countries has increased from 17.9 percent in 1980 to 24.0 percent in 2005, indicating
that these countries have become increasingly dependent on each other for trade. Kawai (2005) arrives at similar
findings that the integration among the ASEAN economies has increased as reflected by the increased intra-regional
trade from 35 percent of total East Asian trade in 1980 to 54 percent in 2003. Meanwhile, several other studies analyze
the integration among the ASEAN economies based on the financial integration aspect. For example, by analyzing the
stock market integration among the ASEAN economies, Click and Plummer (2009) document that the financial
integration among the ASEAN economies has weakened due to the Asian financial 1997/1998.
An area which is currently lacking in the ASEAN economic integration literature is the determination of
economic integration at the macro-level based on major economic indicators such as output and price. The output-
price approach in assessing economic integration has been commonly adopted in the case of the developed
economies. For instance, in the case of the G7 countries, Den Haan and Sumner (2001) study the short-run and long-
run co-movements between output and price in Canada, France, Germany, Italy, Japan, United Kingdom and the
United States using VAR forecast errors and frequency domain filters. The study finds several patterns of correlation
between output and price across all the countries. In particular, the output-price relationship is found to be
significantly negative in the long run and significantly higher in the short run. Similar approach is adopted by Fiorito
and Kollintzas (1994) for the G7 countries and Backus and Kehoe (1992) for ten OECD countries. These studies
provide the support that prices were pro-cyclical in the pre-war period but turned counter-cyclical in the post-war
period.
Clear understanding on the relationship between real activity and price is highly relevant in the context of
economic grouping since it has important implications for the strategic formulation of possible harmonization of
macroeconomic policy. Understanding the degree of output and price integration enables policymakers to evaluate the
extent of integration among these economies and formulate suitable policy to achieve the intended degree of
April 2012
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17

economic integration. Subsequently, policies to facilitate greater degree of economic integration can be implemented
so that policy harmonization in the context of the economic community can be realized.
This study aims to assess the economic integration among the ASEAN-5 economies, namely Malaysia,
Indonesia, the Philippines, Singapore and Thailand in two sample periods: the pre-crisis period (1990 to 1996) and
post-crisis period (2000 to 2006). The study attempts to determine if the nature of integration among these economies
has changed due to the financial crisis in 1997. Using output and price as the economic indicators, the study adopts
the Autoregressive Distributed Lag approach and Vector Error Correction Model to arrive at the empirical evidence.
A major point of departure of this study from the existing ones is that it explores the inter-relationship between
output and price across the selected countries in the economic grouping. The findings of the study would provide
important inputs for the policymakers to evaluate the possibility of macroeconomic policy harmonization in the
ASEAN context.
The rest of the study is organized as follows: Section 2 highlights the data preliminaries and methodology of
the study. Section 3 discusses the empirical findings. Finally, Section 4 summarizes the major findings and draws the
policy implications.

Data and Methodology
In efforts to investigate the degree of integration of output and price among the ASEAN-5 economies, we use the
Industrial Production Index (IPI) to represent output and Consumer Price Index (CPI) to represent price. While the
data for the CPI are consistently available for all the countries in the study during the period under review, this is not
the case for the IPI. In cases where data on IPI are not available, we use the manufacturing index instead. For the
case of Thailand where both the data on IPI and manufacturing index data are not available for the period under
review, we use the export data as a proxy for real sector output. Price level is defined as inflation which is calculated
by changes in CPI, while real output is derived by taking the logarithm of industrial output divided by inflation. For
consistency, all data are gathered from the International Financial Statistics 2007 database published by the International
Monetary Fund.
To determine if the degree of economic integration among these economies has changed since the region was
hit by the financial crisis in 1997, the study period which spans from 1990.Q1 to 2006.Q4 is divided into the pre-crisis
period (1990.Q1-1996.Q4) and post-crisis period (2000.Q1-2006.Q4). Based on this, we have an even length period of
observation of seven years before the crisis and seven years after the crisis. Moreover, the study purposely ends at
end-2006 so as not to include the 2007 US sub-prime crisis so as to only account for the crisis which originates from
within the region.

Autoregressive Distributed Lag (ARDL) Bound Testing Approach
The ARDL model is employed to empirically examine the existence of dynamic relationships of outputs and prices
among the ASEAN-5 countries. The approach was initially introduced by Pesaran et al. (1996) and has numerous
advantages. Firstly, unlike the most widely used method for testing cointegration, the ARDL approach can be applied
irrespective of whether the series are I(0), I(1), or fractionally integrated (Pesaran and Pesaran 1997; and Bahmani-
Oskooee and Ng, 2002), thus avoids the problems resulting from non-stationary time series data (Laurenceson and
Chai, 2003). Secondly, the ARDL model takes sufficient numbers of lags to capture the data generating process in a
general-to-specific modeling framework (Laurenceson and Chai, 2003). Finally, the ARDL approach provides robust
results for a smaller sample size of cointegration analysis. Since the sample size of our study is 24 for each period, this
provides further motivation to adopt the ARDL model in the analysis.
In this study, the ARDL models used for testing the long-run relationship between outputs and prices across
the ASEAN-5 countries can be written as in Equations (1) and (2), respectively:
Y
it
=
0
+
1
Y
ASEANt
+ e
t
(1)

INF
it
=
0
+
1
INF
ASEANt
+ e
t
(2)

where Y
it
and INF
it
are real output and inflation for country i (i.e., Indonesia, Malaysia, the Philippines, Singapore and
Thailand) at time t, Y
ASEAN
and INF
ASEAN
are the real output and inflation for ASEAN-5 countries, respectively and e
t

is an error term.
The error-correction version of the ARDL framework pertaining to the variables in the Equations (1 and 2) can
be reproduced as follows:

=

=
A | + A c + o = A
p
0 i
i t
ASEAN
i i it
p
1 i
i 0
it Y Y Y
t 1 1 t
ASEAN
2 1 it 1
u Y Y + + +

(3)

=

=
A | + A c + o = A
p
0 i
i t
ASEAN
i i it
p
1 i
i 0
it INF INF INF
t 1 1 t
ASEAN
2 1 it 1
u INF INF + + +

(4)

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18

The terms with the summation signs in the Equations (3 and 4) represent the error-correction dynamic, while the
second part (terms with s) correspond to the long-run relationship. The null of no cointegration in the long run
relationship is defined by H
0
:
1
=
2
= 0 is tested against the alternative of H
1
:
1

2
0, by the means of familiar F-
test. For a small sample size study which is lesser than 80 observations, Narayan (2004) has tabulated two sets of
appropriate critical values. Thus this study uses Narayan (2004) critical values instead of that of Pesaran et al. (1996).
One set assumes all variables are I(1) and another assumes that they are all I(0). This provides a bound covering all
possible classifications of the variables into I(1) and I(0) or even fractionally integrated. Finally, to determine the
optimal lag-length and select the ARDL model, the study employs the Schwartz Bayesian Criteria (SBC).

Vector Error Correction Model (VECM) Framework
The study employs the VECM framework to examine the short- and long-run dynamic relationships of the variables
among the ASEAN countries. The VECM can therefore be formulated as follows:

Zt = o + i Zt-1 + .+ k Zt-k + HZt-k + t (5)

where Zt is an n x 1 vector of variables and o is an n x 1 vector of constant, respectively. In our case, Z
t
= (Y, INF). I
is an n x n matrix (coefficients of the short run dynamics), H = o| where o is an n x 1 column vector (the matrix of
loadings) represents the speed of short run adjustment to disequilibrium and | is an 1 x n cointegrating row vector
(the matrix of cointegrating vectors) indicates the matrix of long run coefficients such that Z
t
converge in their long
run equilibrium. Finally,
t
is an n x 1 vector of white noise error term and k is the order of autoregression.

Results and Discussions
Cointegration Test based on ARDL
The results of the cointegration test based on the ARDL model is presented in Table 1. By assessing the cointegration
property of outputs and prices between the individual country and the rest of the selected countries as a group, we are
able to show if the individual countries output or price is cointegrated with that of the other countries. For the pre-
crisis period, the results show that the F-statistics for Malaysia, Singapore and Thailand are significant at lag-length
equals to 1 at least at the 10 percent significance level, suggesting that the outputs of these countries have cointegrating
relationships with the outputs of the rest of the ASEAN-5 countries. Since the results indicate that the outputs of these
countries have long-run equilibrium relationships with the ASEAN-5 countries as a whole, it can be implied that the
outputs of Malaysia, Singapore and Thailand is significant in predicting the output of ASEAN-5. However, in the post-
crisis period, the results show that only the output of Singapore has cointegrating relationship with that of ASEAN-5,
indicating that the output integration among the ASEAN-5 countries has changed and weakened following the 1997
financial crisis.

Table 1. F-statistics for ARDL Cointegration Test of Output and Price among ASEAN-5
Lag-Length
Pre-Crisis Period
Real Output
Indonesia Malaysia Philippines Singapore Thailand
1 3.0394 6.6842
*
3.2787 4.4022
**
6.0795
*

2 0.2285 1.2826 0.9001 1.6416 0.9127

Inflation
1 3.4352 2.5922 1.5405 0.5701 1.6728
2 2.4685 0.6902 1.3724 1.7711 1.2561

Post-Crisis Period
Real Output
1 0.4676 1.0992 1.5494 1.1666 1.2273
2 0.6743 1.7631 3.0277 5.0319
**
2.7209

Inflation
A I A I A
April 2012
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1 1.8103 5.2803
**
3.4056 2.7783 1.0630
2 2.6454 0.8367 1.6461 0.5171 2.6280
Notes: The relevant critical value bounds are taken from Case II with a restricted intercept and no trend and number of regressors
= 4 (Narayan, 2004). They are 4.280 5.840 at the 99 percent; 3.058 4.223 at the 95 percent; and 2.525 3.560 at the 90 percent
significance levels respectively.
*
,
**
, and
***
denotes that F-statistics falls above the 90 percent, 95 percent and 99 percent upper
bound, respectively.

As for prices, the results of the ARDL test show that there is an increased degree of price integration among
the ASEAN-5 after the 1997 crisis. While none of the countries price level is cointegrated with that of the ASEAN-5 in
the pre-crisis period, in the post-crisis period, the price level of Malaysia is shown to be significantly cointegrated with
the rest of the ASEAN-5 countries. In essence, this result suggests that the price level of Malaysia is significant is
predicting the price level of ASEAN-5 as a group. Learning from the experience during the crisis on how damaging
high inflation can be on the real economy, the ASEAN-5 economies seem to be more careful in managing inflation in
the post-crisis period, resulting in a stable inflation environment in the region. This is one positive effect that the crisis
has on the macroeconomic management of the ASEAN countries.

Long-Run ARDL Estimates
Next, we estimate the long-run ARDL model among the outputs and prices of the countries which are shown to be
cointegrated with the rest of the ASEAN-5 (Table 2). In the pre-crisis period, there is indication that Malaysias output
is significant in affecting Singapores output, vice versa. In other words, there is a bi-directional causation in the
outputs of Malaysia and Singapore, mainly due to close trade linkages between these countries. The results also show
that Indonesias output is significant in affecting Thailands output, that an increase in Indonesias output has a
positive association with Thailands output.

Table 2. Long Run ARDL Model Estimates among Real Outputs of ASEAN-5
Country
Pre-Crisis Period Post-Crisis Period
Malaysia
[1,1,0,0,0]
Singapore
[0,0,0,0,0]
Thailand
[1,0,1,0,0]
Singapore
[1,0,0,1,0]
Constant
-1.5295
(-1.0251)
-1.0111
***

(-1.8592)
4.2737
*
(6.8295)
-3.2628
***

(-1.8707)
Indonesia
0.0927
(.31836)
-0.0720
(-0.6386)
1.1263
***

(1.8098)
-0.3771
***

(-2.0484)
Malaysia -
0.4587
*
(3.4735)
-0.9084
(-1.2389)
-0.0668
(-0.0936)
Philippines
-0.0407
(-0.0778)
0.2589
(1.1467)
0.8543
(1.1860)
0.1056
(0.2062)
Singapore
0.6556
***

(1.6900)
-
1.2295
(1.5507)
-
Thailand
0.2825
(0.9635)
0.1757
(1.6940)
-
0.6108
*

(1.7815)

Adj-R
2
= 0.904
D-W = 2.4573
Adj-R
2
= 0.886
D-W = 1.8910
Adj-R
2
= 0.970
D-W = 2.6885
Adj-R
2
= 0.930
D-W = 1.9413
Notes: Figures inside the parentheses are the values of t-ratios.
***
and
*
denotes significance levels at the 1 percent and 10 percent,
respectively. Adjusted R
2
is the adjusted R squared and D-W is the Durbin-Watson d-test for autocorrelation.

In the post-crisis period, there is an indication that Indonesias output shows significant negative association
to Singapores output, while Thailands output has significant positive association to that of Singapore. These results
imply that the weak economic performance of Indonesia is detrimental to the ASEAN-5 economies as a whole and
could frustrate the efforts towards business cycle synchronization in the region. There is no association between the
outputs of Malaysia and Singapore as was being the case in the pre-crisis period.
In the case of price, the long-run ARDL estimates suggest that Indonesias and Thailands price levels are
significant in affecting Malaysias price level (Table 3). Since the earlier results have indicated that the Malaysian price
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20

level is reflective of that of ASEAN-5, it can be implied that the price levels in Indonesia and Thailand are significant
in influencing the price level in the ASEAN-5 as a whole. Apart from providing further support for the increased
price integration among the ASEAN countries in the post-crisis period, this study documents the increased sensitivity
of the neighboring countries to the changes in the price levels in the Indonesian and Thai economies. Perhaps,
coordinated efforts to contain inflation at the regional level will prove to be beneficial for the ASEAN-5 in general.

Table 3. Long Run ARDL Model Estimates of Inflation among ASEAN-5 (Post-Crisis Period)
Country
Malaysia
[0,1,0,0,0]
Constant
-0.0003
(-0.1608)
Indonesia
0.1087
**

(2.2971)
Philippines
0.1161
(1.1907)
Singapore
-0.1267
(-0.6342)
Thailand
0.2255
**
(2.4257)

Adj-R
2
= 0.280
D-W = 1.8302
Notes: Figures inside the parentheses are the values of t-ratios.
***
and
*
denotes significance levels at the 1 percent and 10
percent, respectively. Adjusted R
2
is the adjusted R squared and D-W is the Durbin-Watson d-test for autocorrelation.

Multivariate VECM Causality
For further inferences, we adopt the multivariate causality analysis based on the VECM which enable us to explore
both the short- and long-run dynamics of the outputs and prices among the countries. Here, we regress the changes in
both the dependent and independent variables on the lagged deviations as in Equation 5. The estimates of the error
correction representations are presented in Table 4. The long-run coefficients reported for all the models are employed
to generate the error correction terms. The adjusted-R
2
values of more than 0.8 for all the models suggest that such
error correction models fit the data reasonably well. In addition, the computed F-statistics clearly reject the null
hypothesis that all regressors have zero coefficients for both cases.
Based on this test, the long-run relationship is measured by the error-correction terms (ECTs). The statistically
significant ECTs for Indonesia, the Philippines and Singapore in the pre-crisis period suggest that the outputs of all the
ASEAN-5 countries are important in affecting these countries outputs in the long run. However, for Malaysia and
Thailand, the outputs of the ASEAN-5 countries are not influential on their outputs in the long run. In the post-crisis
period however, the VECM results suggest that the outputs of the ASEAN-5 countries are significant in affecting the
output of only two countries, namely Singapore and the Philippines, implying a lesser degree of outputs cointegration
of the ASEAN-5 countries in the long run in the post-crisis period. It is important to note that the VECM results are
supportive of those of the ARDL model that there is lesser degree of output integration among the ASEAN-5
countries following the crisis in 1997.

Table 4. Multivariate VECM Causality of Output among ASEAN-5

Dependent
Variables
Independent Variables
May Indo Phil Sing Thai ECTt-1
P
r
e
-
C
r
i
s
i
s

P
e
r
i
o
d

May
-
0.2037
[0.8181]
0.8432
[0.4510]
0.1272
[0.8816]
0.9584
[0.4073]
-0.0025
(-0.7173)
Indo
0.8634
[0.4430]
-
1.8158
[0.1990]
2.5820
[0.1110]
8.1833
***

[0.0044]
-0.0214
***

(-4.9628)
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Phil
1.8666
[0.1912]
0.5384
[0.5953]
-
2.5414
[0.1144]
2.3645
[0.1304]
-0.0239
***

(-4.8415)
Sing
0.8076
[0.4656]
0.4252
[0.6618]
2.0315
[0.1680]
-
2.7862
*

[0.0958]
-0.0039
***

(-3.1945)
Thai
3.5505
*

[0.0566]
0.6558
[0.5342]
0.4555
[0.6432]
2.7410
*

[0.0990]
-
-0.3107
*

(-1.7946)
P
o
s
t
-
C
r
i
s
i
s

P
e
r
i
o
d

Sing
0.4071
[0.7522]
0.2545
[0.8561]
0.4435
[0.7284]
-
1.5346
[0.2788]
-0.0827
**

(-2.4291)
Indo
0.3492
[0.7910]
-
0.1046
[0.9951]
1.1098
[0.4003]
0.3565
[0.7861]
-0.1782
(-1.4441)
May -
0.2621
[0.8508]
2.4551
*

[0.0978]
0.3077
[0.8194]
1.1719
[0.3792]
-0.1378
(-0.2753)
Phil
0.7022
[0.5768]
0.2576
[0.8540]
-
0.1556
[0.9232]
0.5582
[0.6573]
-0.3352
*

(-2.0384)
Thai
1.4431
[0.3008]
0.9252
[0.4716]
0.8423
[0.5081]
0.7914
[0.5320]
-
0.2081
(0.3499)
Notes:
***
,
**
and
*
represent significance at the 1 per cent, 5 percent and 10 percent levels, respectively. ECTt-1 is derived by
normalizing the cointegrating vectors on the dependent variables, producing residual r. By imposing restriction on the coefficients
of each variable and conducting Wald test, we obtain F-statistics for each coefficient in all equations. Figures in the parentheses and
squared parentheses represent t-statistics and probabilities for F-statistics, respectively.

The short-run analysis reveals several interesting findings (Table 4). The significance of the individual
countries output in causing the output of the dependent country in the short run is being reflected by the F-statistics
stated under the variables coefficients. The short-run causalities shed some lights on the directions of causation as to
which countrys output are significant in affecting the output of the other country. In the pre-crisis period, there is a
significant short-run causation running from the outputs of Malaysia to Thailand, Singapore to Thailand, Thailand to
Indonesia, and Thailand to Singapore. This reflects some degree of economic inter-connection between these
ASEAN-5 economies. In the post-crisis period, however, there is only a weak causation running from the Philippines
to Malaysia. The earlier short-run causations have been non-existence due to the crisis in 1997.

Table 5. Multivariate VECM Causality of Inflation among ASEAN-5 (Post-Crisis Period)

Dependent
Variables

Independent Variables
Indo

May

Phil

Sing

Thai

ECTt-1

May
0.4059
[0.6740]
-
1.1087
[0.3573]
2.2143
[0.1460]
4.9239
**

[0.0240]
-0.1172
***

(-4.3870)
Indo -
1.7490
[0.2099]
1.2682
[0.3118]
0.0627
[0.9395]
4.5789
**

[0.0295]
-0.0106
**

(-2.6288)
Phil
1.6878
[0.2205]
3.1304
*

[0.0752]
-
0.9139
[0.4236]
3.7923
**

[0.0483]
-0.1203
**

(-2.6106)
Sing
1.3916
[0.2810]
0.6014
[0.5616]
1.4421
[0.2695]
-
3.5998
*

[0.0548]
-0.1107
*

(-1.9053)
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Thai
3.1723
*

[0.0731]
0.8999
[0.4289]
0.6413
[0.5414]
2.9748
*

[0.0838]
-
-0.1814
**

(-2.3822)
Notes:
***
,
**
and
*
represent significance at the 1 per cent, 5 percent and 10 percent levels, respectively. ECTt-1 is derived
by normalizing the cointegrating vectors on the dependent variables, producing residual r. By imposing restriction on the
coefficients of each variable and conducting Wald test, we obtain F-statistics for each coefficient in all equations. Figures in
the parentheses and squared parentheses represent t-statistics and probabilities for F-statistics, respectively.

With regard to prices, it is encouraging to note that the ECTs for all the ASEAN-5 countries are significant,
suggesting that the price levels of all ASEAN-5 countries are important in affecting these countries price levels in the
long run (Table 5). This finding is supportive of the earlier results that there is greater degree of price integration among
the ASEAN-5 following the crisis in 1997.

Conclusion and Policy Implications
The results of this study show that the crisis has a deep imprint on the degree of economic integration among the
ASEAN-5 countries. In particular, during the post-crisis period, the degree of co-movement in real output is shown to
be weaker compared to the pre-crisis period. This implies that the ASEAN-5 countries would have to expedite on the
economic integration efforts so as to make up for the damages done by the 1997 crisis. The finding that output
integration between the ASEAN nations has weakened after the crisis suggests that increased efforts need to be done
in achieving business cycles synchronization in these countries. This result implies that macroeconomic policy
harmonization in the spirit of the AEC could be cumbersome unless serious efforts are put in place to increase the
degree of economic integration such as increased trade linkages, intra-ASEAN investment flow as well as greater
degree of macroeconomic policy alignment. ASEAN needs to increase in efforts in all possible economic and social
aspect in efforts to bring the ASEAN Vision 2020 into a reality.
On the other hand, there is evidence pointing towards higher degree of price integration among the ASEAN-5
countries in the post crisis period compared to the pre-crisis period. It is important to note that the increased price
integration among the ASEAN-5 countries in the post-crisis period as indicated by the results of the study could
facilitate the efforts of more coordinated monetary policy implementation across these countries. The greater degree
of price integration among these countries not only provides a conducive environment for macroeconomic
harmonization but also facilitate greater degree of economic integration to take place. Macroeconomic policy
harmonization among these countries would be made possible if the governments through the central banks are
committed to maintain a low and stable price environment in the region. The policymakers could take the price level
in Malaysia as an indication of the price level environment for the ASEAN countries in general since the results of this
study suggest that the Malaysian price level is reflective of the overall price level of the ASEAN-5 countries.
Furthermore, since the study documents the increased sensitivity of the neighboring countries to the changes in the
price levels in the Indonesian and Thai economies, coordinated efforts to contain inflation at the regional level will be
beneficial for the ASEAN-5 in general.
There are several potential avenues for extension of this study. First, future research could focus on the
economic integration among these countries in the post-crisis period by incorporating longer and more updated data
after the 1997 crisis. The inclusion of more member nations in the study would definitely increase the credibility of
the study. Second, it would be interesting to explore the impact of the 2007 US sub-prime crisis on the economic
integration. Since the recent crisis originates from outside the region, it could have an emphasizing impact on the
integration nature of the ASEAN countries. This would expedite the process of economic integration among the
ASEAN nations.

References
Backus, D. K. and Kehoe, P. J. (1992), International evidence on the historical properties of business cycles,
American Economic Review, Vol. 82, pp. 864-885.
Bahmani-Oskooee, M., and Ng, R.C.W. (2002), Long-run demand for money in Hong Kong: an application of the
ARDL model, International Journal of Business and Economics, Vol. 1, No. 2, pp. 147-155.
Den Haan, W.J. and Sumner, S. (2001), The co-movements between real activity and prices in the G7, NBER
Working Paper Series 8195, National Bureau of Economic Research.
Fiorito, R. and Kollintzas, T. (1994), Stylized facts of business cycles in the G7 from a real business cycles
perspective, European Economic Review, Vol. 38, pp. 253-269.
Kawai, M. (2002), Exchange Rate Arrangements in East Asia: Lessons from the 1997-98 Currency Crisis, Monetary
and Economic Studies, Vol. 20, No. 1, pp. 167-204. Institute for Monetary and Economic Studies, Bank of
Japan.
Laurenceson, J and Chai, J. C. H. (2003), Financial Reform and Economic Development in China, Cheltenham, UK: Edward
Elgar.
Narayan, P.K. (2004), Reformulating critical values for the bounds F-statistics approach to cointegration: an
application to the tourism demand model for Fiji, Discussion Paper No. 02/04, Department of Economics,
Monash University.
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23

Pesaran, M.H., Shin, Y., and Smith, R. J. (1996), Testing for the existence of a long-run relationship, DAE Working
Paper No. 9622, Department of Applied Economics, University of Cambridge.
Pesaran, M.H., and Pesaran, B. (1997), Working with Microfit 4.0: Interactive Econometrics Analysis, Oxford University
Press.

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Governance In Religious Context:
Analysing Accountability Issues

Hasan Basri
1*
, and Siti Nabiha Abdul Khalid
1
Faculty of Economics, Syiah Kuala University, Banda Aceh, Indonesia.
2
Associate Professor, Graduate School of Business, Universiti Sains Malaysia, 11800 Penang, Malaysia.
*
Corresponding author: P_haasan@yahoo.com

Abstract - Religious organizations play an important role in delivering social services in society
and tend to control a sizeable proportion of human, financial and other resources of society.
However, various financial scandals and lawsuits involving them have raised questions regarding
the governance and accountability of these organizations. As such, the insights from the
literature on the issues of accounting and accountability in the religious based organizations,
especially the Islamic religious organisations are discussed. In so doing, the nature of religious
based organizations, and the practices of philanthropy institutions in an Islamic context are
elaborated. In addition, the scale of accountability in and insights from previous researches on
accounting and accountability practices of religious organizations are presented in this paper

Keywords: Accountability; Accounting; Religious organizations

Introduction
Religious based organization plays a very important role in society, especially in Muslim world and tends to manage a
sizeable proportion of human and financial resource. Their activities focus not only on traditional domain of charity,
but also include other services such as community and economic development, refugee placement and many others
(Berger, 2003, Alterman et al., 2005). Major sources of these religious-based organizations funding come from
membership dues, grant from government and private donors as well as society at large. Therefore, they are
accountable to society for the resources they receive and benefit they provide.
However, the literature on accounting and accountability practices in non profit organizations indicates that
accounting and accountability in religious organization are less developed and lacking of financial accountability (see
for example, Siino, 2004; Hamilton, 2006). Thus, not surprisingly, questions about financial improprieties, self dealing,
conflict of interest, public disclosure are as likely to be raised about religious organizations as about secular ones (Hall,
2002). The purpose of this paper is to gain understanding of the accounting and accountability of religious
organizations by evaluating the accounting and accountability researches literature on non-profit organizations,
particularly religious institutions. Various aspects of accounting and accountability and its related topics will be
discussed in this paper. The paper begins by looking at the nature of religious-based organizations, and then followed
by the review of the practices of philanthropic institutions in an Islamic context and discussion of accountability in
Islam. The final part of the paper will elaborate the insights gained from previous researches on accounting and
accountability aspects of religious organizations

The Nature Of Religious Based Organizations
Literature on religious studies indicates that religious organizations are among the oldest of human institutions. These
kinds of organizations or communities have been providing assistance to those afflicted by natural disaster,
persecution, uprooting and war long before international humanitarian law was formalized in treaty law (Elizabeth,
2005). However, there is no single accepted definition of what constitutes a religious-faith based organization.
Martens (2002), as quoted by Berger (2003, p. 1), defined religious organizations as:

formal organizations whose entity and mission are self-consciously derived from the teachings of one
or more religious or spiritual traditions and which operates on a non-profit, independent, voluntary
basis to promote and realize collectively articulated ideas about the public good at the national or
international level.

Kramer et al. (2002, p. 2) define a religious based organization as an organization that holds religious or
worship services, or is affiliated with a religious denomination or house of worship. They claim that these
organizations include congregations or houses of worship, and non-profit organizations affiliated with religion.
Although, there is no generally accepted definition of religious based organizations, they are characterized by
having one or more of the following:

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affiliation with religious body; a mission statement with explicit reference to religious values; financial support from
religious sources; and/or a governance structure where selection of board members or staff is based on religious beliefs or
affiliation and/or decision-making processes based on religious values (Ellizabeth, 2005, p. 312).

The World Conference on Religion and Peace (2001) claimed that religious organizations are the largest and
best organized civil institutions in the world today, due to the allegiance of billions of believers and bridging the
divides of race, class and nationality (Berger, 2003).Furthermore, religious based organizations have a long history of
transforming individual lives and helping to raise people out of poverty and despair. They provide services to tackle
issues ranging from hunger to education with or without support from government.
Religion has been a primary motivator and shaper of many efforts to improve the life of human kind. Islam,
for example, contributes to the welfare of ones community through the giving of alms and doing works of mercy,
which is essential to the practice of Islam. Buddhism teaches that acts of compassion are steps along the path to
enlightenment, and Christianity promotes providing charity to the poor, medical care to the sick, and education for
children. Since a society will be judged by the way it treats its weakest members, it is argued that the most important
contribution of a religious organization is the commitment to act in the interest of others (see Ellizabeth, 2005;
Jeavons, 2003). This means that religious organizations exist for the benefit of others, not for the management or
stockholders.
However, there are two characteristics that set religious organizations apart from secular non-profit
organizations: they are motivated by their faith and they have a constituency which is broader than humanitarian
concerns. For believers, to be a Jew or a Muslim or a Christian implies a duty to respond to the needs of the poor and
marginalized (Ellizabeth, 2005, p. 316). This means that religious-faith based organizations are more focussed on
social services, volunteer management and fund raising. Thus, religious-faith based organizations are not simply
another type of organization; they are a link to God, moral, faith, and have the absence of ownership.
This absence of ownership and the lack of a profit motive have caused these organizations to become more
dependent upon the external environment for resources to operate. In addition, the broader public interest missions
of religious organizations also contrast with the narrower focus of profit making organizations, as they are not
established in order to make profit. Certain phenomena, such as donations are likely to occur in the religious faith
based sector, something that rarely occurs among business organizations. These phenomena very frequently involve a
significant contribution to the financial support of the organization that serves to guarantee the continuance of their
activities. These donations are usually in cash, but they can also take other forms such as goods. Clearly, faith based
organizations have some particular characteristics that distinguish them from business organizations. In spite of this,
they also share some common features with profit organizations. For example, these kinds of organizations buy goods
and services. They provide services and sometimes sell goods and services. This means that religious based
organizations have to manage their resources just like any other non-profit organization.

The Practices Of Philanthropy Institutions In An Islamic Context
The Islamic principle of property suggests that the poor have a right to the wealth of a rich person because everything
belongs to God and He has gracefully bestowed some property on some so that they can be grateful and help others.
The believers are advised to be proactive in philanthropy by using their wisdom to ascertain needs and provide charity
to the needy instead of waiting for them to ask for it.
It is not surprising that the Islamic world has a long tradition of philanthropic institutions. As noted by
Bremer (2004, p. 5), Islamic societies have a rich heritage of philanthropic institutions, a heritage that reflects the
central place of philanthropy within Islam. Civil society, particularly philanthropic institutions, is not a new
phenomenon in the Islamic world. These institutions play an immeasurably important role in delivering social services.
Philanthropy is defined as the voluntary transfer of resources for charitable, civic and social purposes (Saidi, 2001,
p. 1).
Waqaf or Islamic endowment has been identified as the oldest form of charitable institutions in Islam.
According to Bremer (2004, p. 5), the waqaf is the most important charitable institutions, taking the span of Islamic
history as a whole, but it is by no means the only in Islamic world. As the scope for civil society broadens, old forms
of institutions are being reinvented to meet societys new requirements. Therefore, many other Islamic charitable
institutions emerge as a new form of Islamic philanthropic organizations such as Islamic boarding schools, and
institutions that collect and channel zakat (alms).
The Islamic charitable institutions including waqaf and zakat have been instrumental in promoting social
welfare in Muslim society throughout the ages. As part of their religious duty, Muslims are required to give a
proportion of their incomes for the societys welfare and for the economically disadvantaged in society. Some recent
estimates indicate that in Muslim society the sums of money involved amount to one trillion dollars annually
(Alterman et al., 2005).
In Indonesia, for example, the Muslim community constitutes almost 90 percent of the Indonesian population
and the giving tradition is formally practiced through the mobilization of zakat, infaq and sadaqah (Saidi, 2001). Based
on the Islamic teachings, a Muslim who has reached a certain level of income (nisab) must pay the zakat, excluding, for
example, jewellery that is worn and zakat fitrah, which is paid at the end of the month of Ramadhan. There are rules for
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calculating zakat obligation. In addition, Muslims are encouraged to voluntarily donate other forms of zakat, infaq and
sadaqah, irrespective of their level of income.
In connection with individual giving, Saidi (2001) notes that the government of Indonesia has been mobilizing
resources through official arrangements since the 1960s. The government encourages and controls a quasi-state
institution for zakat, infaq and sadaqah mobilization called Badan Amil Zakat, Infaq dan Sadaqah (BAZIS). Indonesian
society has enjoyed a long tradition of philanthropic giving, especially motivated by religious causes, mainly Islam,
since the population of Indonesia is principally Muslims.

The Scale Of Accountability In Islam
The Islamic view of accountability is based on two main themes. These are the concept of Tawhid and the concept of
ownership (Maali and Napier, 2007). The first main theme is the concept of Tawhid, which implies total submission to
Gods will, and adherence to the religious requirements in all aspects of life. Muslims have to devote themselves to
God as the fundamental aspect of their behaviour. A Muslim is required to believe in the things mentioned in the
Hadith of the Prophet and in the Holy Quran (see Al Safi, 1992).
According to Hameed (2001, p. 9), the concept of Tawhid (Unity and Oneness of God) implies that since
there is only one God who is the Creator and Sovereign of all (human and non humans). Islam (literally meaning
submission) requires total submission to him in all aspects of life. It is argued that the concept of Tawhid has a
broader concept of accountability than the one which exists in Western societies. This is understandable as the
Muslims belief in Gods judgment implies that every act in this world will have to be accounted for to Allah. In the
Islamic framework, human beings are accountable to God on the Day of Judgment for their actions during their lives
as stated in the Holy Quran:

Certainly, Allah is ever a careful account taker of all things (an-Nisa: 86)
(Taqi-ud-din and Muhsin 1984, p. 122).

The second main theme is the concept of ownership in Islam. God is the ultimate Owner of everything. God
has appointed man, His vicegerent on earth and entrusted him with stewardship of Gods possessions (Lewis, 2001,
p. 110). This does not imply that Islam does not recognize private ownership. Everyone has the right to own
property, but ownership is not absolute. Ownership of property is a trust (amanah) to be enjoyed conditionally so long
as man follows the shariah and remains worthy of the trust. Therefore, a person holds property in trust for God, and
should use this property according to the Gods will. Individuals are seen as trustees for that which they have been
given by God in the form of goods, property and tangible assets (Lewis, 2001, p.110).
Seen in this light, the concept of accountability in Islam is parallel with the concept of trustworthiness in
which man, in his or her judgment of his or her actions, is influenced by the fear that he will be held to account by
Allah. This concept of trustworthiness is one of the highly regarded virtues in Islam. The Holy Prophet says a
truthful merchant will be raised on the day of Judgment together with the truthful and the martyrs (Hadith narrated
by Hakeem and Turmidhi) (Asri and Fahmi, 2004, p. 5). Therefore, every individual within an organization is required
to subscribe to ethical and moral practices while carrying out their activities and they are seen as trustees.
Good governance, the whole system of rights, process and controls established internally and externally over
the management of an entity with the objective of protecting the interests of all stakeholders (see Hameed, 2007), is a
necessary pre condition for accountability in Islam. An organization committed to the highest standard of
accountability also needs to foster practices that create an environment of transparency, accountability and integrity.
An effective system of good governance requires an effective system of financial reporting, and an effective system of
financial reporting requires good accounting and accountability practices, as at the institution level good governance is
essentially about how the organization is managed and controlled, and the manner of ensuring proper accountability
for those in charge (Aziz, 2005). As far as Islam is concerned, the management of the organization should perform
their duties with the objective of satisfying the needs of the stakeholders and to Allah as well. There should be no
fraud, materials misstatement or other malaise in the organization.
There is no doubt that control mechanisms play a very important role in achieving an appropriate level of
accountability practice. However, these control mechanisms alone cannot make such improvement, as explained by
Parvez (2004, p. 9):

From Islamic perspective, control and laws that are to be employed for guiding personal and business conduct should be
enacted to protect minimums of standards or deterrents to wrongdoing. More than this there is a need to cultivate a higher
consciousness, morals, and a sense of accountability as a prerequisite since they develop an inner respect for societal values
and laws.

Seen from this point of view, accountability in Islam is broader than what is generally understood in the
traditional view of accountability. In Islam, accountability is designed not only to the stakeholders, but it also to Allah.
This clearly differentiates the Islamic accounting model from that of the western model, where accountability to
stakeholders such as owners is given priority.

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Insights On Accounting And Accountability Practices Of Religiou Organizations
Research on accounting and accountability in religious organizations is challenging since it is necessary to understand
and classify the various activities undertaken by religious organizations. Religious organizations are unusual in their
variety and complexity. These kinds of organizations are usually founded by charismatic individuals who feel some
sort of divine purpose that they believe is more important than following man made rules or regulations.
Another challenge to better accountability is that much of the work and output of such organizations deals
with issues concerning the soul, which is not easily measured. The mission statements of religious organizations
usually emphasize worthy goals such as spreading the gospel, saving souls and ministering the poor. It is difficult to
fully measure the results of these activities. Furthermore, one of the major products of religious organizations and
their activities is religion itself. How is it measured? It is very difficult to measure the true result of religious activi ties.
However, it is argued that religious organizations face the same demand for accountability as other secular
organizations. Consequently, the need for regulations concerning their accountability has intensified.
The majority of the researches on religious organizations, particularly those published in academic journals,
relate mainly to Christian organizations, especially the Western churches. Only a small number of studies deal with
other religious organizations. To date, the existing researches have been dominated by issues such as the authority,
structure, size, and other administrative components of such organizations. However, recently, other issues
concerning the accounting and accountability aspects in religious organizations have emerged (See, Rahim and
Goddard, 1998; Lewis, 2001, 2006; Booth, 1993; Jeavons, 2003; Maali et al., 2003; Murtuza, 2003; Siino, 2004;
Laughlin 1988, 1990; Hall, 2002; Jacobs and Walker, 2004; Carmona and Ezzamel, 2006). An extensive study
conducted in this area, especially concerning Islamic organizations, was undertaken by Rahim and Goddard (1998).
Similar researches into Christian organizations, such as churches, were conducted by Laughlin, (1988, 1990). To gain
some insights into accounting and accountability in religious organizations, the following will review the studies
conducted on Islamic religious organizations, and Christian organizations, specifically the western churches.
Concerning the investigation of accounting practices in Islamic religious organizations, Rahim and Goddard
(1998) conducted case studies on two State Religious Councils (SRC) in Malaysia, namely, ASRC and BSRC. The
objective of their study was to examine accounting practices in these two organizations by using an interpretive
methodology.
Unlike the Christian church organizations, the dichotomy of the sacred and secular world is not applicable to
the cultural mechanisms of Islamic religious organizations. This is because Islam does not concede to such a
dichotomy (Rahim and Goddard, 1998). They argue that the worldview of Islam encompasses both worldly and
religious activities. The worldly must be related in a profound and inseparable way to the religious aspect, but the
religious aspect has ultimate and final significance. The worldly activities are seen as preparatory to the religious
aspect. Everything in Islam ultimately focuses on the religious aspect without thereby implying any attitude of neglect
or heedlessness of the worldly aspect.
In this perspective, the practices considered as secular in Christianity are part of the sacred domain in Islam.
Accountability in Islam encompasses both the vertical accountability to Allah, and the horizontal accountability to
other individuals and the community. Both accountabilities are essential to a Muslims faith (see Sulaiman, 2005, p. 31;
Lewis, 2006).
The findings of Rahim and Goddards (1998) study indicate that the use of sophisticated accounting
techniques is minimal in the two aforementioned Islamic religious organizations. The role of accountants in these
organizations is meaningful only as an organizational practice but does not enhance accountability. Thus, accounting
is regarded as no more than a technology to record accounting and financial information and the role of the
accountant has been reduced to the role of bookkeeper.
Rahim and Goddard (1998) note that there is no separation between accounting works and other religious
activities in both organizations because the organizations need accounting to function properly to financially organize
the activities, which could not otherwise be properly carried out. Such studies of Islamic religious organizations have
indicated the existence of the interaction between religious belief systems and accounting practices. Similar to the
findings of other research on religious organizations, religious belief systems have a dominant role in organizational
practices within Islamic religious organizations. Lewis (2001) highlights the differences between Islamic and Western
business practices. He claims that the Islamic accounting and financial perspective is based on the strict enforcement
of the Holy Quran. The examples for that are the payment of riba and taking of interest as occurs in a conventional
banking system (Lewis, 2001, p. 117). This is also stated by Karim (1990, p. 34) in his study of the independence of
religious and external auditors in Islamic banks the distinctive feature of Islamic banks is that Islamic precepts govern
their financial transactions. Clearly, the studies demonstrate that the belief systems have a strong influence over all
aspects of organizational practices within the religious organization, including accounting and accountability practice.
Similar studies on Christian institutions have also been carried out by Booth, 1993); Laughlin (1988, 1990);
Jacobs and Walker (2004); and Siino (2004) just to name a few. Booth (1993), in his review of accounting literature on
churches, found that it was mainly concerned with the accounting practices in churches. However, he notes that those
studies mainly focused on prescribing good accounting practices based on the criteria of accounting practices set in
commercial organizations.
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Booth (1993) then develops a skeletal framework of further research on accounting in churches. He identifies
three main groups of research in this area. The first group belongs to those concerned with the inferiority of
accounting practices in the churches. The researchers in this group assert that churches have primitive accounting
systems, poor internal control, and lacking of expertise in financial administration.
The second group, in contrast to the first, finds that there are good accounting practices in some churches
even though this is not the case for the majority. Both groups utilize a similar measurement in judging the fairness of
accounting practices in the churches, i.e., those of the commercial accounting standards. The third group, utilizing a
more prescriptive approach, recognizes the role of the so-called secular and non-secular aspects in the practice of
accounting in churches. Such aspects are considered to play an important role in the design of any accounting system
in the church. Both find that accounting belongs to the secular world and has to serve the spiritual or divine goals of
the organizations. Therefore, this group questions the appropriateness of commercial practices that are translated
into and adopted by the churches as their accounting systems.
Another detailed case study investigating accounting practices in relation to the particular nature of religious
belief systems was undertaken by Laughlin (1988, 1990). His study demonstrates how accounting practices interact
with religious belief systems held by the participants of the Church of England. In Laughlin's view, accounting
practices are closely related to the financial elements of the organization. He says current accounting practices in the
Church of England (as with other institutions) are related to and located with the financial elements of the
organization (Laughlin, 1988, p. 21). Four major units of the organization, which are financially interrelated, are
identified in his study. First, the parishes and dioceses, which are considered as the primary units of the church both
are geographically based and cover the whole of England. The other two units are the Church Commissioners who
are responsible for managing past endowments of the church and the central board, which, primarily, involves the
ongoing governance of the Church of England.
Laughlin (1988) found that accounting systems in the four major units of the church are unique. The design of
the accounting systems in each unit is partly determined by the financial arrangements in the unit in which the
accounting systems are located. Laughlin (1988) notes that parish accounting systems, in general, are highly
rudimentary and are deemed largely irrelevant to the ongoing life of a parish. Where they do intrude into evaluating
and determining parochial behaviour, they are seen as an unhealthy intrusion. Budgets are occasionally produced, but
are not usually seen as binding on future parochial activities. Annual accounts are always produced, but are invariably
simple receipt and payment accounts that are largely ignored, and rarely used to evaluate past actions. The Diocesan
accounting systems are considerably more elaborate. However, they are not used to determine and rationalize
expenditure, which is made up of a number of clearly defined items over which little control is permitted. Instead, the
accounting systems are primarily aimed at ensuring that the income required to meet a largely fixed expenditure is
generated. The accounting system of the Church Commissioners is more concerned with accountability and decision-
making. It does not have to generate the required resources to meet these demands. It does not need to sell its budget,
but needs to make itself accountable for its actions. Laughlin (1988) viewed the financial accounts used to discharge
this accountability concern by the Church Commissioners, as highly sophisticated and a dominant element in the
accounting systems, while the accounting systems of the central board are indicated as being less constrained. The
traditional function of the accounting systems in the central board is to make the activities manageable by ensuring
that they are set in clearly defined responsibility centres. However, the influence of the accounting system is also
restricted, and is not seen as an appropriate vehicle for actually formulating what the particular responsibility centres
should be doing.
Laughlin (1990) also presented an analysis of the accounting practices of the Church of England. He argues
that the underlying structure of financial accountability in the main Church-based units was dominated by the sacred-
secular divide. In this context, he argues that all Church organizations are dominated by this perception. Laughlin
(1990) notes that accounting and accountability matters are seen as secular and secondary to the organizations.
However, the findings of Laughlin (1990) and Booth (1993), concerning the sacred-secular division of
accounting in church, are opposed by Jacobs and Walker (2000). The findings of their study show that the sacred-
secular divide is not supported in the research of accounting and accountability practices in this community.
According to Jacob and Walker (2000) the findings indicate that within the Iona community accounting served to
support the sacred practices and spirituality of individual members through a process of socialising accountability.
Thus, accounting and accountability in this community are regarded as part of the observance by its members of the
rules and as an integral component of their Christian practices.
Another research on Churches was conducted by Siino (2004) who surveyed 548 Southern Baptist Churches.
This survey found that Churches lacked basic control against mismanagement or abuse of their funds. More than 70
percent of the Churches surveyed did not have written financial procedures. Twenty percent of the Churches did not
require any written documentation before funds were disbursed. Only 22 percent required written explanation for
budget variances, and only 52 percent reported monthly the budgeted versus actual spending.
Furthermore, Carmona and Ezzamel (2006) presented an analysis on the relationship between accounting and
religion or religious institutions. They show some historical-based studies and contemporary research that have been
conducted relate to religion or religious institutions. One of the papers is that by Quattrone (2004) who examined the
accounting and accountability practices in the society of Jesus, Italy during the sixteenth centuries. Quattrone (2004)
notes that the emergence of accounting and accountability practices was tightly linked to the absolute ideology of
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Roman Catholic doctrine of the Counter-Reformation (Carmona and Ezzamel, 2006, p. 119). It is argued that such
doctrine was the site of compromises involving theological, religious, political, institutional and social dimension.

Conclusion
The literature suggests that there is no generally accepted definition of religious based organizations. The best way to
recognize organizations as religious-based organizations may be by identifying the characteristics of such
organizations, because these kinds of organizations are unique and distinct from other Non-Profit Organizations
(NPOs). As other NPOs, these religious-based organizations are not established in order to make profit. This
phenomenon very frequently involves a significant contribution to the financial support of the organizations, which
serves to guarantee the sustainability of their activities. This means that religious based organizations have to manage
their resources the same as any other NPOs.
In the context of Islamic religious organizations, it is well documented in the literature that Islamic societies
have a rich heritage of philanthropic institutions, a heritage that reflects the central place of philanthropy within Islam.
Waqaf or Islamic endowment has been identified as the oldest of charitable institutions in the Islamic history.
However, as the scope for civil society broadens, old forms of institutions are being reinvented to meet societys new
requirements. Therefore, many other Islamic charitable institutions have emerged as a new form of Islamic
philanthropic organization.
As far as Islam is concerned, the management of the organization should perform their duties with the
objective of satisfying the needs of the stakeholders as well as accounting to the God, because from the Islamic point
of view, accountability encompasses both the vertical accountability to the God and the horizontal accountability to
other individuals and the community. This means that organizations should comply with all the applicable laws and
ethical standards, adhere to the organizations mission, be ethical and protect the rights of their members. Therefore,
those in charge of economic resources are obligated to present an account of the execution of their stewardship,
irrespective of whether the transactions and resources in question are those of government, business or NPOs.
Even though research into these organizations is relatively limited, along with the growth of this sector
academic interest in religious-based organizations has increased as well. During the past few years there has been a
growing number of studies in this sector, particularly relatingto the issues of accounting and accountability, including
those conducted by Laughlin (1988, 1990), Booth (1993), Rahim and Goddard (1998), Lewis (2001, 2006). However,
the research, particularly those published in academic journals, relate mainly to Christian organizations, especially the
Western churches and only a small number of studies deal with other religious organization. In the studies of Laughlin
(1988, 1990) and Booth (1993), it is argued that accounting belongs to the secular world and is subservient to sacred
needs. Consequently, resistance to the use of accounting is very strong in the church domain. Whereas, the findings of
Rahim and Goddard (1998) indicate that in Islamic religious organizations the interaction between accounting and
religious belief systems exist because there is no separation between accounting works and other religious activities.

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A Critical Evaluation of the Compatibility Between Traditional and
Contemporary Applications of Murabahah Transactions

Olorogun Lukman Ayinde
Department of Insurance School of Business and Management Sciences
The Federal Polytechnic Offa, Kwara State Nigeria,
and Postgraduate Student, IIUM Institute of Islamic Banking and Finance (IIiBF)
International Islamic University Malaysia (IIUM)
E-mail: yinluk2000@yahoo.com

Abstract - The present study explores the extent of conceptual resemblance between traditional
and contemporary murabahah contracts. In order to assess the discrepancies, qualitative and
quantitative content analyses are applied as research methodology. In particular, discrepancies of
the conceptual basis of the two contracts are evaluated by content analysis through graphical
presentation. The results of this study affirm that the critique raised against contemporary
contracts is indeed justified. The comparative analysis of the conceptual differences between
traditional and contemporary murabahah contracts leads to the conclusion that the contemporary
murabahah contract is in inverse relation to the traditional murabahah contract.

Keywords: Promise; Traditional murabahah; Contemporary murabahah; Compatibility; Islamic
finance

Introduction
Wad murabahah is defined as a unilateral promise from the purchase ordering party to the institution that upon the
institution making available a commodity he/she will fulfill the agreed conditions (Fiqh Academy Resolution 5, Vol.
2). Muwadah is the bilateral promise of the institution and the customer. Islamic finance introduced both contracts in
order to allow for modern trade financing in accordance with Islamic injunctions. A financial institution runned by
Muslims and providing services to its Muslim customers which limits itself to conventional finance fails to fulfill its
role as an Islamic institution if it does not offer legally permissible forms of transactions. Given the predominance of
the Western financial system in the global economy, Muslims are committed to create new financial institutions in
accordance with Islamic law. In addition to the creation of Islamic financial institutions (IFIs) in order to ensure
permissible financial transactions, the present inequalities of distribution of wealth grounded in the capitalist system
are to be minimized if not entirely eradicated.
The conventional banking system generates profit from both rich and poor populations. However, the
distribution of wealth is favouring the rich who have collateral securities to guarantee repayment in case projects
financed by the loan do not yield profits or are not executed. Loans are based on high interest rates which perpetuate
or even increase debt and can end in bankruptcy. Since interest (riba) is prohibited in Islam, IFIs established new
loaning systems which were interest-free. The fair redistribution of wealth and introduction of interest-free
transactions is exercised by financing projects by way of murabahah transactions which account for 70% of current IFI
financing projects. Hegazy (2007), Masood (2010), Wiryono et al. (2011) reported the domination of Murabahah in
Islamic banks financing in Indonesia. Murabahah transactions give customers the opportunity to acquire capital, such
as industrial machinery, buildings, etc. on loan and pay back the cost in installments plus mark-up. The contract is
made on the basis of a promise.
This study aims to discuss the degree of variance between promise and its application in both classical and
modern Islamic financial institutions. The objective is to verify the degree of resemblance and difference of the
contemporary and traditional modes of murabahah contracts by plotting the conceptual features of each contract on
graph. Assigning quantities to the graph with assumption that other economic determinants remain constant. Finally,
provides a recommendation to rectify the anomalies. The research is arranged in the sequence of discussion of legal
principles derived from original sources of Islamic law, its application in the traditional literature on Islamic
transactions, the juristic views on promise and current applications in the IFIs, followed by graphical plot of the
conceptual features, explanations and conclusion. This study adopts both qualitative and quantitative methods of
analysis. The qualitative approach is based on the existing literature on the same topic area. The quantitative part of
the analysis is based on content analysis, specifically the conceptual analysis of the principles underlying the traditional
and the contemporary murabahah contracts. The design of a histogram graph is based on the assumed data, the actual
measure being the percentage of risk exposure the customer bears in both contracts, while the curve justifies the type
of the existing relationship between traditional and contemporary murabahah contracts.

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Wad (Promise) in the Original Sources of Islamic Law
Historically, trading is the most predominant feature of Arab nomadic culture and economy. Makkah was the
commercial capital of pagan Arabia, a center for pilgrimage and annual trade fairs where all major commercial
transactions took place. Traditionally, the fulfillment of trading responsibilities and promises was regarded a moral
obligation and reflected in the honour and reputation of the tribesmen. Islamic tradition contains accounts of Prophet
Muhammad (peace be upon him) before his call to prophethood making a trade agreement in the form of
mudarabah with the wealthy widow Khadijah who would later become his wife. After the establishment of Islam as
religion and law, some of the traditional characteristics of transactions practiced at the time were retained since they
did not contradict with the Islamic principles.

Promise (Wad) in Quran and Sunnah
Exchanges of goods and services are recognized and permitted in the original sources of Islamic law. No individual or
community can live completely autonomous, and humans rely on one another to cover their material needs. The
geographical limitation of resources necessitates the exchange of goods, and mutual dependence upon the reliability of
trade agreements foster and encourage trade which benefits both sides. Allah the Lawgiver knows human weakness
and greed, and the constant temptation of breaking a made agreement for short-term gain. He admonishes mankind
to fulfill such promises: Oh you who believe! Fulfill your trade promises (Al-Maidah: 1). In another verse Allah
says do not eat one anothers wealth unlawfully except on trade which is out of wishful of the person (Al-
Nisa: 29).
Muslims are under absolute obligation to fulfill their promises, either as the promisor or the promisee, in
actions and words. The Prophet (peace be upon him) said that Muslims are on their precondition or proviso (on
transactions) (Hadith Narrated by al-Bukhari, Vol. 8/2112). However, in many transactions, one party usually has an
advantage over the other party, especially in agency or representative transactions. In modern terms this is known as
information asymmetry. For this reason there are restrictions imposed by the Prophet in the case of murabahah. The
Prophet (peace be upon him) said He who purchases something in absence among you reserves the right to accept
or reject it when it is finally presented to him (al-Darqatni, Vol. 3/8). This last tradition complies with this purchase
ordering partys promise to buy the article in absence when advance payment is made and the customer only sees his
purchase after delivery. Al-Islambuli (2003) reported al-Jassas to have said Promise is permissible in transactions.
The traditional practice of the early murabahah Amir bil-shira murabahah to the purchase orderer is based on
trust. If a consumer lives in a remote area where a product is not available, he requests a trusted and experienced
merchant to purchase it on his behalf. Also, the potential buyer relies on the merchants relay of information regarding
the original price of the requested article, the transportation costs for delivery, and the margin of profit charged. The
classical murabahah is classified as one of the forms of sales of trust. On his side, the potential buyer gives a revocable
promise to buy the ordered product upon delivery, and no deposit is required. The merchant is responsible for
purchasing, transporting and delivering the product, including the risks associated (ownership risk). The ordering
partys promise is not binding, i.e. he or she reserves the right to decline to proceed with the transaction (cancellation
risk). Such a form of revocable promise is accepted as legally permissible according to most recognized schools of fiqh.
Upon delivery, the ordering party inspects the article and either accepts or rejects it (Al-Masri, 970H; Al-Qurtubi 2000;
Hegazy, 2007).

Classical Juristic Views on Promise on Ordering Contract (Murabahah)
In order to properly understand the legal details surrounding the traditional practice of promise in murabahah contract,
it is compulsory to study the classical juristic views on murabahah and its conditions. According to all four Sunnite
schools of fiqh, a promise of purchase is irrevocable for the promising party. The Malikite School stipulates that
hoarding an article in order to sell it at a later date is not permissible in murabaha -- save if the distance between two
markets that is the distance between where it is produced and the consumers market results in the delay of the sale
(al-Zarqani 1936; al-Qarafi, 1994). Also, mark-up or additional profit without reasonable specification in marabahah is
not permissible (Al-Qurtubi, 2000). Ibn Abidin (2000) concluded that hoarding of a commodity with the ultimate aim
of selling (murabahah) it without informing the buyer and making the deferred payment time equal to the initial
procurement is preferable. Abu Thawri ascertained the permissibility of murabahah based on total truth. However,
where there was fault with the article of sale, Malikite jurists conceded to the buyer the right to accept or decline the
purchase (al-Tabari, 310 A.H.; al-Qurtubi, 2003 A.H.). Thus, the Malikite School was not opposed to murabahah
contracts, contrary to the findings of Hegazy (2007). Similarly, the Hanafite, Hanbalite, and Shafiite schools ruled in
favour of the permissibility of murabahah and the profits gained thereof, on the condition that the selling party
sincerely disclosed all facts surrounding the purchase beforehand (al-Tabari, 310 A.H.). Their ruling was founded on a
tradition related back to Ibn Masud who had reportedly expressed his dislike of taking profit on expenses. In
agreement with the latter, Ibn Musayb was reported to consent to buying an article at ten and selling it at twelve
(Al-Qurtubi, 671 A.H.).

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33

Contemporary Jurists on Promise on Ordering Contract (Murabahah)
Given the legal permissibility of murabahah in classical Islamic jurisprudence, contemporary Muslim scholars involved
in developing Shariah compliant banking products have introduced a modern form of murabahah transaction which
has been approved by all Islamic financial institutions and has served as a mechanism for financing projects
accounting for 70% of IFIs dealings (Hegazy, (2007; Masood 2010; Wiryono et al., 2011). The Bank Negara Malaysias
(Malaysias Central Bank) Shariah Advisory Council resolved on its 13th meeting held on 10th April 2000 / 5th
Muharram 1421 that promise (wad) in sale and buy-back agreements is permissible provided that it is not stipulated
as a condition for the sale and purchase of assets. In that case, a unilateral promise should be concluded which is
binding to the promising party (BNM, 2007). Likewise, the AAOIFI Shariah Standard of 2003-2004 No. 8 2/3,
2/3/1-2/3/5 acknowledged the difference between revocable and irrevocable promises. In a revocable promise, the
promising party is under no legal obligation to fulfill the promise, but his or her moral obligation to do so requires the
payment of compensation. On the other hand, in an irrevocable promise the promising party is legally bound to fulfill
the promise (AAOIFI, 2003-4). In short, modern jurists have agreed on the permissibility of the modern application
of murabahah, yet have retained a feature close to the traditional murabahah which is the buyers option to revoke the
promise.
Contemporary Practices of Promise (Wad) Fulfillment of Murabahah
Despite the shared basic principles of the classical and contemporary promise of murabahah, there are differences
between both practices. In the traditional practice, the ordering party asked the merchant to purchase on his behalf
and promised to buy the article upon arrival (Al-Masri, 970H; Al-Qurtubi, 2000; Wiryono et al., 2011). In the present
practice the buyer has full knowledge of the different components of the mark-up price, that is, the original price,
shipping cost, mark-up margin, and the like. Moreover, the ordering party is considered the ultimate buyer, not the
financial institution which spends the time and effort locating the desired goods and negotiating the price with the
original seller (Hegazy, 2007; Masood 2010; Wiryono et al., 2011). However, it is also common practice for an IFI to
appoint the murabahah customer as the agent to negotiate and purchase from the supplier (Hegazy, 2007).
Since it is the buyer who decides the supplier and chooses the goods him or herself, the IFIs are able to
circumvent or shift any involved risks to the murabahah buyer. IFIs are thus able to minimize the ownership risk "by
restricting the time period between the two sales [the sale from original supplier or merchant to the IFI and the sale
from the IFI to the customer] to minutes, if not seconds (Hegazy, 2007; Wiryono et al., 2011). Some IFIs require their
customers to provide a third-party guaranty for the customer's performance of its obligations under the murababab
arrangement. Furthermore, IFIs usually add to the mark-up margin the cost of insuring the goods during
transportation between the two sales, even though in practice this period typically is limited to a few minutes or even
seconds. Furthermore, IFIs succeeded in completely eliminating the cancellation risk by stipulating in their murabaha
contracts that the promise (wad) of the buyer is irrevocable (Hegazy, 2007).

Critical Comparison of the Contemporary and Traditional Promise (Wad) on Murabahah
A critical evaluation of the similarities and differences of the classical and contemporary usage of promise (wad) on
murabahah which includes both qualitative features is shown below:

Table 1. List of Salient Features of the Both Traditional and Contemporary Murabahah

Traditional Murabahah Contemporary Murabahah
1. The customer orders a product unavailable in his
or her locality.
2. The product is not in his or her capacity.
3. The customer does not know the original cost.
4. Only the merchant knows the original supplier.
5. The merchant searches for the product in
question.
6. The merchant locates, negotiates, and orders the
product.
7. Transactions take days or months to complete
depending on the distance, availability of product,
mode of transportation, etc.
8. The customer does not act as agent
9. The merchant bears all the risks of purchase and
transport.
10 The customer has the right to cancel the contract
upon inspection of the article
1. The customer knows where the product is
available.
2. The product is in his or her capacity but
exceeds his or her financial capacity.
3. The customer knows the original cost.
4. The customer knows the original supplier.
5. The customer himself searches for the
product.
6. The customer locates, negotiates, and
orders the product.
7. Transactions take only a few minutes.
8. The customer can be appointed as agent on
behalf of the IFI to purchase the article.
9. The customer bears all the risks of purchase
and transport.
10.The customer is the ultimate buyer of the
product and cannot revoke the contract.

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34

Figure 1. Graphical Conceptual Features of the Traditional and Contemporary Murabahah at 100%

The histogram depicts the inverse relationship between the merchant and customers position in traditional
and contemporary murabahah contracts. The traditional murabahah contract curve displays the characteristics of a
demand curve while the contemporary murabahah contract curve displays the characteristics of a supply curve.
In the traditional murabahah contract the risk of the customer is minimal to the waiting period at 100%. The
waiting period covers the cost incurred until delivery of the ordered article by the merchant which only cost RM10.
Ibn Abidin (2000) affirmed that according to custom time can be translated into monetary value. Therefore, the
potential loss incurred by the customer is minimal because the merchant bears all financial burdens and risks from the
beginning to the end of the transaction. The merchants minimum risk exposure amounts to RM100 with a minimum
time investment of 10%. This means that even though the merchant can acquire the article of sale in minimum time
his potential financial loss (exposure) stands at RM100 because the customer may ultimately reject the contract. The
demand curve represents the obligations imposed on the merchant in the authentic murabahah contract. In Figure 2,
the Traditional Murabahah Contract Demand (TMCD) curve supports the conventional principle of demand that says
The higher the demand, the higher the price, and the higher the price, the lower the quantity demanded. The
TMCD is low, and the price changes in proportion to it.

Figure 2. Traditional Murabahah Contract Demand Curve (TMDC)

100%

Risk Murabahah customers risk
Exposure curve

TICD
0 Financial cost of murabahah
In contrast to the traditional contract, in the contemporary murabahah contract the risk undertaken by an IFI is
minimal to the waiting period (minutes or seconds) at 10%. If an IFI is to incur any loss, it would be at a minimum
level since it is the customer who bears all costs and risks from the beginning to the end of the transaction. The
customers financial risk exposure minimum is RM100 while the minimum time invested is 100%. If the customer can
acquire the article of sale at a minimum time, it still amounts to 100% which is ten times more than what the customer
0
10
20
30
40
50
60
70
80
90
100
10 30 50 70 90
v
a
l
u
e

i
n
v
e
s
t
e
d

(
%
)
Contract time Frame quantified in Amount (RM)
contemp
traditional
Customers Risk
Exposure
Customers Risk
Exposure
April 2012
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35

bears in the traditional system. However, his exposure or financial risk stands at RM100 as the ultimate purchaser of
the article. The supply curve movement is the imposed or supply-oriented transfer of responsibilities on the customer.
In Figure 3, the Contemporary Murabahah Contract Supply (CMCS) curve does not support the conventional law of
supply which states The higher the supply, the lower the price as it is expected to be but the reverse is the case here.
If the CMCS curve shows the price is higher in proportion to the supply.

Figure 3.
Contemporary Murabahah Contract Supply Curve (CMCS)

100% CICS

Risk
Murabahah customers risk
exposure

0 Financial cost of murabahah

Figure 3 is graphical representation of inverse conceptual relationship between contemporary and traditional
murabahah contracts. The proponents of the contemporary murabahah contract argue that the protection of the
investors and the IFIs is of paramount importance, while the traditional murabahah contract is customer oriented
because it protects the interests of the customers. Contemporary murabahah contracts make up 70% of the IFIs
financing modes which is percentage that certainly speaks for its success. On the other hand, the popularity of the
contemporary model of murabahah contracts does not constitute the focal point of this research. The question is
whether contemporary murabahah contracts qualify to be offered to customers under the term murabahah contracts or
not. As the researcher have demonstrated above, contemporary murabahah contracts are not based on the same
principles and do not offer terms similar to the traditional murabahah contracts.
The present promise (wad) on murabahah does not qualify as a sale of trust because the potential buyer no
longer relies on the professional judgment or expertise of the seller. Also, there is no need to rely on the
trustworthiness of the seller since the buyer has full knowledge of the different components of the mark-up price, that
is, the original price, shipping cost, mark-up margin, and the like.
Moreover, unlike traditional murabahah where the potential buyer acts as the promising party, it is the ultimate
buyer, not the IFI, who spends the time and effort identifying and locating the desired goods and negotiating the price
with the original seller. It is common practice for an IFI to appoint the murabahah customer as the agent to negotiate
and purchase the goods from the supplier on behalf of the IFI. IFIs have eliminated exposure to ownership and
cancellation risks to which a seller in traditional murabahah was exposed. They are able to circumvent or shift such
risks to the murabahah buyer. Hegazy (2007) states:

IFIs are able to minimize the ownership risk by restricting the time period between the two sales [the
sale from original supplier or merchant to the IFI and the sale from the IFI to the customer] to minutes,
if not seconds." As an additional form of security, some IFIs require their customers to provide a third-
party guaranty for the customer's performance of its obligations under the murabahah arrangement.
Furthermore, IFIs tend to build into the mark-up margin the cost of insuring the goods during
transportation and during the time period between the two sales, even though in practice this period
typically is limited to a few minutes or even seconds.

Ownership lasting only a few seconds legalized the contemporary promise of buy-back sale agreement. In the
traditional practice of promise, the merchant and the customer know nothing concerning the good or commodity in
question, and no third party acts as the agent of the merchant in the purchase of the commodity. The traditional
practice of murabahah promise as developed and approved by Muslim jurists of the past has not been replaced by an
equal form of contemporary practice. The contemporary model violates these basic principles and features of the
traditional model. Thus, modern Shariah advisors appointed by the IFIs have undoubtedly with full knowledge and
deliberation sanctioned a model of murabahah promise and declared it permissible according to Islamic law which
actually bears no resemblance to the original murabahah promise. The fact that both models bear the same name thus
leads the unassuming average Muslim customer to the wrong assumption that contemporary murabahah promise
constitutes a modern equivalent to the traditional model. Critics like Hegazy (2007) further add that the IFIs decision
April 2012
ISSN: 2088-9976
36

to make the promise irrevocable has been vehemently objected by a number of outspoken Muslim jurists in the form
of official legal rulings (fatwas) who did not hesitate to accuse the proponents of the contemporary murabahah promise
of performing a controversial juristic stratagem known in Islamic jurisprudence as amalgamation (talfiq).
The main point of argument is that the murabahah with its components of binding promise is not legally
permissible in any of the schools of fiqh. According to Hanafite, Shafi'ite, and Hanbalite law, the contract would be
enforceable but the purchasing party still owned the right to revoke the order and the purchase promise. In Malikite
law, the contract would not be enforceable in the first place on the basis of ambiguity (gharar). The irrevocability of
promise is based on the AAOIFI Shariah standard with the effect that the promising party must either fulfill the
promise or pay compensation for any losses incurred. Laldin (2009) pointed out that IFIs have adopted the
irrevocable promise clause in order to eliminate any potential risks for the banks and their investors. The fact that
such an elementary alteration to the original traditional murabahah promise was negating fundamental principles of
Islamic finance seemed not to have deterred any of the parties involved. Surprisingly, the irrevocability of promises
which is to the sole benefit of financial institutions and their investors, perfectly agrees with the Prudent Investor Act
of 1830 stated by Judge Samuel Putnum
1
. This Act was passed to guarantee the assurance of investors returns and
constitutes part of secular capitalist legislation serving the interests of Western capitalist finance the very same
system modern Islamic finance was supposed to oppose and provide with an alternative. The Investor Act of 1830 did
not regard customer protection as paramount but modern Islamic finance has been expected and supposed to ensure
exactly that.

Conclusion
This study revealed that the present practice murabahah promise offered by IFIs as a permissible mode of financing is
indeed not Shariah compliant. The comparative analysis of all elements of the contemporary usage of murabahah
promise and the traditional reveals striking and disquieting differences. Classical Muslim jurists allowed murabahah
promise on the condition that it constituted a revocable promise while modern IFIs have altered it into an irrevocable
promise which modern Muslim scholars have declared as equally permissible. Secondly, our graphical illustration has
demonstrated the 100% inverse relationship between traditional and contemporary murabahah contracts, the traditional
murabahah being a demand-oriented contract while the contemporary murabahah being a supply-oriented contract.
Similarly, todays customer risk exposure lies at 100%, while in the original murabahah contract it only amounted to
10% representing the waiting period. Since modern murabahah contracts were officially pronounced as permissible and
in perfect accordance with Islamic law, the uninformed Muslim public has been grievously misled into entrusting their
capital into the hands of these scholars. Many critics have continued to express the need to alter the present condition
of Islamic finance and demanded the issuance of new and binding legal rulings on IFIs dealings because the presently
practiced Islamic financing models bear more or less the same conventional traits as its secular capitalist counterparts.
The challenge of modern Islamic finance is to achieve a viable synthesis of the traditional Islamic murabahah
contract and modern elements without altering the basic structure and principles it was based on and was declared
permissible and in accordance with Islamic law. However, in order to successfully implement this approach, IFIs and
their regulators will have to show more creativity and authenticity in developing future financing models to address
the particular types of risks associated with their operation. They must learn to truly and sincerely serve the interests
of the communities they operate in, not merely their own.
Notes: The learned Judge Samuel Putnum defined in 1830 how a professional money manager should conduct
himself and stated as follows: Those with responsibility to invest money for others should do so with prudence,
discretion, intelligence, and regard for the safety of capital as well as income. Retrieved 21
st
June 2011;
www.investorwords.com
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