One of the questions that some of our Muslim clients commonly ask about is on Shariah-compliant financing.

In certain countries, like Singapore, Shariah-compliant financial solutions are limited. We are small country of less than 6 million people at the time of this writing and only about 15% of us are Muslims.

Thus, even though it is the duty of every Muslim to avoid what is forbidden, such products are simply not sustainable enough for financial corporations to consider seriously. Hence this has become somewhat of a dilemma for us.

But here’s a fact: “Shariah-compliance” accounts for a mere fraction of the multiple considerations needed for Muslims to make a holistic and sound financial plan.

Also, in order to find the best financial solutions (if you are a Muslim), one must first understand the difference between “halal” finance and “Islamic” finance. Because, despite their similarities, what may be Halal may not necessarily be Islamic.

As surprising as this statement may be, let’s look deeper into their very definition.

Halal Defines What is Permissible, Not What is Good

“Halal” means “permissible” in Arabic. Specifically, halal can be further defined as “permissible to Muslims”. It’s a very simple text definition, yet has more to it in application.

Essentially, Muslims can consume or partake in anything that is not expressly forbidden by the Quran or hadith. However, we must also understand that something that is permissible may not necessarily be good. Several hadith has shown that Islam sometimes frown upon some things that are technically halal in nature:

The reasoning: all the above can stem from (or lead to) unjustifiable excess, ill-discipline and/or non-justifiable outcomes. Simply put, they may perpetuate more bad than good.

That is why halal financing does not necessarily translate to something positive. Debt, whether permissible or not, is fundamentally negative. Hence it is much better to focus on proper financial management than seeking out to leverage on “halal’ financing that can only lead up to unnecessary added stress and worry.

Islamic Solutions: What It Actually Entails

Whereas defining halal finance entails analyzing on just its permissibility, Islamic finance as a whole is far more complex. Personally though, I define Islamic finance into three categories:

  • Conservation from personal financial hardship.
  • Communal support through shared resources and growth.
  • Charity to enable the financially disabled.

Below is a short summary explaining each aspect:


In terms of commercial viability, the conventional banking system may see Islamic finance’s restrictions of riba, gharar and maisir (usury, uncertainty and gambling) as disadvantageous to business sustainability or growth. But the command of abstinence from the above three is designed specifically for wealth conservation. Restrictions are placed to remove unfair advantage and injustice that may cause financial loss and hardship to any parties..

Another example of wealth conservation is the ruling on faraid distribution. In this case, however, it is about the conservation one’s family members from financial hardship after one’s passing.


Investing for personal profit is permissible. However, in Islam, financial growth is all about the community. For example, investing in a business offers shared benefits and risks to both the investor and investee. When there is growth, both stands to gain. When businesses sustains losses, the investor’s role removes some of the hardship of the investee (in Islam, removing hardship from one another itself is encouraged).

That does not mean that the investors should put themselves in a position that could cause severe set back, however (see above point on “Conservation”).


In Islam, though, wealth is never a pursuit. Every Muslim is obligated to protect what he or she already has and to maximise those resources. Beyond that, it’s a worldly distraction. Hence, Muslims are encouraged to channel access wealth to charity. Zakat, one of the five pillars of Islam, is the most obvious reference for this. On top of that, charity also encourages collective communal growth as opposed to personal achievements.

Non-Halal Solutions in Islamic Finance?

While it is in the best interest of the community to partake in halal solutions, Islamic finance advocates for Muslims to avoid hardship.

It may be a bit controversial to say it, but there have been instances in Islam where non-halal solutions are used as a necessary fall back. For example, the MUIS‘s Fatwa Committee has considered several economic and financial factors and has taken a neutral stand towards conventional insurance solutions in SingaporeThis is an example of how a rukhsah is decided by the Committee, with the purpose of ensuring prosperity for the community.

Let’s take a leaf from this and applying it to home financing in Singapore. As earlier mentioned there are currently no shariah compliant mortgage solutions available in Singapore for the individual consumers. Those who wish to partake in a fully permissible solution would have to either migrate to a country that provides it or rent a home throughout their life (the latter, as it turns out, is not economically viable).

However, having sound financial management is also part of Islamic finance. Hence, solutions such as refinancing, making home choices, and renting out can help to compliment the Islamic financial solution that you may be seeking out.


In summary, it’s good to be mindful of three things:

  1. What is halal may not necessarily be good.
  2. While anything that non-halal is often bad, avoiding them may sometimes be far worse.
  3. When non-halal is a choice, it should be based on “needs” and not “wants”.

The choice of halal finance solution may be restricted. Given the above concept, however, you will realise that good financial balancing is in fact much more closely rooted to Islam.

We do look forward for more halal offerings for SIngaporean Muslims in the future. In the meantime, you can start off your financial portfolio by re-looking at the interest-based liabilities for your home. Let us know if you wish to discuss with us on how we can help you in this!

About The Author

Armen Rizal Rahman

Armen’s interest in finance and investment was sparked in 2012 when he came across articles about the sub-prime mortgage crisis and how it almost crashed the entire world economic system.

He has since extensively read on the principles of Islamic finance and Shariah investing. He has also previously operated a gold and silver investing business. He credits his background in the creative industry as allowing him to be able to digest the “boring” aspect of finance easily, and seeks to use his skills to communicate others on economic literacy.