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Thread: For misc420 - I appreciate you

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    PakWheeler Follow
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    Default For misc420 - I appreciate you

    Please ignore my posting in this forum for being off-topic. Also this is no religious war or religious issue discussion. It should be considered as an intellectual and informative - Admin please.

    I appreciate misc420 for directing my efforts in finding a better solution to the question of PREMIUM. I am forwarding the reply of an Islamic Financial Scholar (www.islamonline.net) which partly supports misc420 view.

    it is further requested to please read it for your own judgement and no further discussion at least in this forum. Personal emails are always welcome. My question is at the end of his reply:
    ___________________________
    Answer
    Bismi Allah al Rahman al Rahim
    Al Hamdu li Allah Rabb al 'Alamin
    wa al Salatu wa al Salamu 'ala Sayyidina Muhammad wa 'Ala 'Alihi wa Ashabihi Ajma'in

    Dear Br. Ahmed,
    Al Salamu Alaykum Wa Rahmatullahi Wa Barakatuh
    for the first impression, this premium practice appears as a normal business since the demand for immediate delivery is different from the demand for 6-8 month delivery. Certainly for a normal buyer who finds it lucrative to invest in this kind of business (providing immediate delivery) it appears a permissible normal business. Every body pursue opportunities of buy in order to sell at higher prices.
    On the other hand, when individuals of influence and dealers create a shortage by advance booking of future production for the purpose of creating a surcharge on the price of immediate delivery, it becomes a monopoly practice. This kind of monopoly is literally what is prohibited in the Sayings of the Profit and unanimously agreed upon in Fiqh.
    So it appear to me that the regulatory authority can put guidelines to distinguish between the two cases of permissible business and prohibited monopoly. such guidelines may include limits on quantities, enhancing production to void this practice, requiring full payments from such individuals and dealers, etc.
    Wa Allahu A'lam
    Wa Alhamdu li Allah Rabb al 'Alamin
    Wassalam
    Sincerely,
    Dr. Monzer Kahf
    ____________________________

    Dear Scholar Assalam o Alaikum:



    I appreciate your time to read and directing me accordingly.



    The question is about earning premium on sale of car. The scenario is as follows:

    In Pakistan, in order to buy new car from the manufacturer one has to book it after paying complete advance payment. The normal delivery time is about 6-8 months. On the car display centers, people can see new models but immediate buying is not available unless they pay premium. For example if the manufacturer’s price is 1 million, the display center might ask 50,000 for immediate delivery. The other option is of course to wait 6-8 months for car delivery.



    Now apart from display centers who are authorized dealers of manufacturers even individuals do book the car and wait for 6-8 months, upon delivery of the car the individuals resell it without bringing it in their own use thus charging premium. Sometimes this happens even before the car registration in the name of original person who booked it. It is commonly considered that in order to make more money and dealers and influential individual involved in this business, many end buyers either have to wait for 6-8 months or pay premium on this transaction. Because of dealers and influential individuals long booking for business reasons, the end buyer remains in queue for long time. As a result there is more demand and short supply in the given time.



    My question is that if such premium is allowed? Or is it some kind of hoarding or “Zakira Andoozi”. i.e. buying something and storing it to create more demand and less in-time supply and charge extra money. Or this is a kind of business transaction and is not haram.



    I will be grateful to your advice in this matter.

    Wassalam

    soa sunhar ki, aik lohar ki!

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    I don't think that you can call it a business transaction. Its also not as such "zakheera andozi".
    The real problem is that demand is huge whereas supply is short. Assemblers working in their capacity are unable to meet the demands of public in time.
    Thru premium the dealers are taking advantage of the situation.
    While buying a car you think, "If i go thru booking period then i'll have to wait for 6-12 months. It may be possible that prices become higher and i'll have to pay extra sum." on the otherhand if i go thru premium stuff then a fixed sum will be paid to avoid risks associated with booking.
    So in simple words you're paying premium to avoid risks associated with booking. on the other hand dealers charge as they ain't letting you to wait. It seems logical that sum is being paid for something but that SOMETHING can't be justified. Actual price + margin is not what you pay. you pay Actual price + profit margin (by company) + Premium.
    In my opinion its not allowed at any cost.
    Correct me if i'm wrong.
    Regards,
    ALLAH HAFIZ.
    "Our coerced silence is the weapon that has been sharpened and brought to our throats" - Mohsin Hamid

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    Well, I believe PREMIUM is okii and cannot be extincted. The case of PREMIUM is similiar to the premium on CAT Bonds or T. BIlls(If anyone is fimiliar to it).

    Consumer Scenario is well described but I want ya guys to have a look on the dealers end as well. Dealer got couple of investors, thus he create kinda fund. The possible use of this fund is by and large limited to Automobiles only. He can trade in new or used. For a proper new agency it requires whole lotta money whereas in the other case used cars involve an element of risk concerned with the time reqd to sell the used car. So the best possible mod is to go and book a new car nd sell it with premium. Ur investment is thourughly save, profit certainity is ther along with certainity of period of time. After doin so much of botheration he deserves to earn tht. And incase if in ur opinion he dont then who cares, he is operating a business not a charity.

    To make it more crisp, we all know abt the so-called menance of premium. What is in ur opinion shuld be the solution of this problem in practical scenario. Kindly suggest quantitative methods regarding Govt & Industry.

    Thnx.
    Jayala....

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    Your arguments are right if seen only from the piont of view of a dealer. From point of view of public and the parctice in real world i don't think its right (as per my knowledge). If you can get a car within 40 dayz then who'd bother to pay hell lot money on same car. You see they are just taking advantage of situation.
    Well risks are associated with every business. even in new car business many risks are associated.
    Solutions according to my knowledge may be the following:
    1- Offcourse the basic solution is that assemblers work in their full capacity. They should also take their capacity to the level where they can meet public demands in reqd time. Just now you must have heard about new plant of Atlas Honda. It's increased its production capacity and that would help.
    2- You see in Pakistan the load is just on 4 companies. Indus Motors, Atlas Honda, Pak Suzuki and Dewaan Motors. thats it. there's no other option. offcourse majority doesn't want to take risks associated with using of imported car. If there'd be wide range of products available to ppl then the load on each assembler would significantly reduce. So govt must allow other assemblers to enter into Pakistan. By the entry of Renault may be to some extent the load would be reduced but lot more is still needed.
    These two solutions came in mind and i put these here.
    I'd look forward to your suggestions in this regard.
    (what abt my mail by the way? i sent that doc and you've not replied so far. whats wrong?).
    Regards,
    Allah Hafiz.
    "Our coerced silence is the weapon that has been sharpened and brought to our throats" - Mohsin Hamid

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