Literature Review of Hibah Practice in Malaysia

Introduction

Pandiyan et al, (2016) stated that literature review is a classification and evaluation of what the accredited scholars and researchers have written on a topic, organized according to a guiding concept such as research questions or research objective, thesis, or the problem/issues that are wish to address. Besides that, it is an account of what has been published on a topic by the accredited scholars and researcher, which conveys to the reader knowledge and idea that have been establish on the topic. In this chapter, it will include the review of relevant articles which are related hibah practice in Malaysia that have been done by previous researcher.

The second section of this chapter contains the narrow aspect of this research topic. It includes determinant of the hibah practice in Malaysia. The secondary data will used to explain more about the definition, features and relationship such as published journals, articles and proceedings related to hibah.

Hibah practice in Malaysia

Hibah which means is a voluntary gift giving of one or several subject matters to recipient(s) by owners of wealth during their lifetime without any consideration or return. From the legal perspective, there are no special laws or acts which are related to hibah in Malaysia. However Islam permits Muslim to plan the estate division during their lifetime. This can be proved in primary sources of Al-Quran, Hadith and relevant Malaysian Acts, and secondary sources like published journal articles and proceedings which are related to hibah giving. Furthermore, hibah is becoming one of the instrument chosen by Muslim society in Malaysia in property planning.

In general, practice of hibah in Malaysia according to the Islamic estate planning is not widely practiced. This is because people is still unaware about the methods use in hibah and some of them don’t even know of its existence. Many researchers have highlighted this issue in their research and provide the results and recommendation to overcome the situations. Al-Ma‟amun Suhaili (2010) and Hassan (2005) mentioned that estate planning is not seriously considered by Malaysian Muslims as a method for managing their assets. Due to these circumstances, many people are the number of frozen asset is increased year by year.

Demographic factors

Demographic information provides data about the respondent who are research participants and is necessary for the determination of whether the individuals in a particular study are a representative sample of the target population for generalization purposes. Examples of demographic characteristics include age, race, gender, ethnicity, religion, income, education, marital status, family size, health and disability status, and others. Hibah practiced are influenced with these factors due to the different needs and wants. For example in Malaysia we have different cultural and religion, so the concept of giving is depends on the individual behavior.

Malays are the largest ethnic group in Malaysia with over 60 percent of the population and are predominantly Muslims. So the gift concept is depends on the cultural of religion that they are followed. The transfer of a gift on the conventional system only becomes effectual on the death of the giver but Islamic inheritance system is always explained in conceptual framework of faraid which is bequests and gift (Hibah).

Islam does not have limitation of wealth transfer in lifetime as well as during the death-bed. Unfortunately, the transfer of estate upon the death of a Muslim is strictly subject to faraid and bequest rules. A number of studies demonstrate that gender significantly affects the amount of inter vivos transfers in which females receive more gifts than males. The inter vivos transfer from parents when their children‟s age becomes their concerns as contended by Cox and Rank (1992) show that younger people are more likely to get transfer and with larger amount.

Economic factors

Economic is something that are related to the wealth management and distribution in order to maintain the resources. Islamic wealth distribution can be defined as an act of passing on assets through Islamic will and trust and it is one of the discipline under the scope of wealth management in Islamic financial market. Economics factors is comprised with the employment status, monthly income as well as total asset. Hibah giving behavior is depends on this factor where it differs between one people to another.

Therefore it is important to prepare the distributed plan on how to distribute the assets before the demise in order to avoid the assets from frozen. In addition in the article motivations of inter vivos transfers among Malaysian Muslims children stated that parents with higher income and education which indicate a better economic status, are more likely to receive more inter vivos transfer and a larger amount.

Other than that, based on another research conducted by Hassan (2005) stated that most of Malaysians feel estate planning is not too important as Malaysians feel that estate planning is only for the wealthy.

Family characteristics

Christopher Muscato (2012) stated that family means is a group of people affiliated by a specific relationship. Basically, the family is the most fundamental unit of social organization that with which we most intimately identify. Therefore, family will influences our personal, emotional, intellectual, and social development. Apart from this, estate planning in Malaysia is not widely practiced because most of Malaysians feel estate planning is not too important. Malaysians feel that estate planning is only for the wealthy.

Sharfina et al. (2013) have conducted the study on the determinants that contribute to attitude towards estate planning. She stated that the most difficult part of the planning is to reach decisions about guardians and conservators, and ensuring that appropriate decisions are made. The decision should provide protection and financial security for special needs of the family member who will need assistance for the rest of their lives.

In this paper, five determinants are proposed by the researchers; knowledge, media awareness, perceptions, family influence, religious/ethic belief and attitude. Results of this study suggest that knowledge have the strong effects on the attitude towards estate planning, followed by media awareness, perceptions, family influence and religious/ethic belief. Moreover, additional information from the others literature conveys that children with a lot of siblings are less likely to receive a transfer.

Knowledge

Darwin P. Hunt (2003) stated that knowledge is often defined as belief that is true and justified. Knowledge are comes from understanding of someone or something based on reading, searching, discovering as well as experience itself. Same with Islamic estate management, by appointing a family member or friend who does not have an appropriate experience or knowledge can increase the cost of managing the estate.

Low level of awareness and knowledge are the one of the factors contributed to the reason Islamic estate planning was not practice widely. Therefore, everyone should experience estate planning by them and must be knowledgeable about estate planning issues in order to reduce the frozen estate unclaimed. Moreover, Amrullah et el, 2018 addresses that the problems of delay in the administration of the estates and analyzes is because the lack of knowledge and the attitude of the beneficiaries.

Journal of instruments of hibah and wills stated by Zamro Muda (2008) has highlighted that many Muslims are still behind in the matters of hibah regulations and applications related to property planning. Therefore it is become the reason why there is approximately RM40 billion worth of Muslim estates that are still outstanding because they cannot be managed by the heirs. Empirical studies on the hibah practice among Malaysia Muslims are scare. Other studies conducted are more on the ruling of hibah which is analysis on the regulations and applications of hibah, acceptance of hibah as an alternative of asset management, and practice of conditional hibah in Malaysia.