Developing a shariah governance framework (SGF) for halal logistics industry: a comparative study of the SGF in Islamic finance industry / Sri Nor Haslina Saad

Governance is a method that an organization adopts to ensure that components of the
organization follow the set rules, regulation, policies and processes. Considering the
importance of developing Shariah Governance Framework (SGF) to another sector of
Halal industry, this research conceptually seeks to discuss the regulatory framework
currently in force with special attention given to the Halal Logistics industry. Reviews
of various related documents demonstrate that the loopholes within the governance part.
In view of the emergence of the Halal Logistics concept in 2010, the Malaysia standard
MS2400:2010 has been published. But, a thorough study of this standard only gives
more attention to the aspects of transportation, warehousing and retailing. There is less
attention given to address the aspects of Shariah governance. The research attempts to
have an overview regarding comparative analysis between Islamic Finance and Halal
Logistics industry in term of Shariah Governance Framework. Halal Logistics is a new
phenomenon where the Shariah is being applied to the logistics discipline. This growth
is quite similar to Islamic banking where a banking system is developed according to
the principles of the Shariah. Therefore, in Malaysia, unlike the Islamic Finance
industry, there is no proper SGF for other industries especially to the Halal Logistics
industry. This is an exploratory study with a series of face to face interviews were
conducted with two different industries; Islamic Finance and Halal Logistics industry.
The semi-structured interviews were conducted based on one-to-one basis. The ten
persons were considered experts in the Islamic Finance and Halal Logistics industry as
they were experienced, credible and knowledgeable. The finding showed there are five
comparison comprise of regulator, law and regulation, Shariah advisory role, criteria of
Shariah Committee (SC) and principles available in both industries. The results also
showed that a few components of Shariah Governance Framework in Islamic Finance
could be implemented into the Halal Logistics industry but certain modification is
needed in order to meet the difference of needs in the respective sectors. Among of the
features of SGF in Islamic Finance which is suitable to be implemented into the Halal
Logistics industry include the role of SC, principles of SGF (accountability,
independence, competency, confidentially and consistency) as well as Shariah functions
(Shariah review, Shariah Audit, Shariah Risk Management and Shariah Research). In
this study, the researcher proposed to develop a SGF for Halal Logistics industry and
suggested that the current SGF in IFIs could be well adopted as a good model of Shariah
governance for SGF in Halal logistics industry. In addition, its significance shall serve
as a reference for the public and private agencies. Hence, the implementation of this
framework in Halal Logistics industry can enhance the development of the Halal
Logistics industry in Malaysia.