MASB has proposed an accounting standard on Islamic leasing with final standard expected to be out in the first quarter of 2005. This will set the stage for other new standards on Islamic leasing in the near future.

The proposed standard will provide guidance for Islamic leases such as those undertaken by the leasing industry, financial institutions, and equipment and vehicle rental companies. Guidance on the treatment of other Ijarah based contracts such as leaseback, Ijarah Muntahia Bittamleek or Sukuk Ijarah will be looked at in the other new standards.

The proposed MASB ED i-2 Ijarah is timely with the growing importance of Islamic finance in Malaysia. Ijarah, Islamic leasing, represents about 29 per cent of Islamic banking products in Malaysia. Conceptually, Ijarah is a contract similar to a rental or an operating lease.

The proposed standard is MASB's second project on Islamic standards. Its first Islamic standard, MASB i-1 Presentation of Financial Statements of Islamic Institutions came into effect in 2003.

Apart from the accounting fraternity, the public is invited to give comments on the proposed standard until September 30 this year.

Copies of the proposed standard can be obtained at MASB office and have been circulated to the State Religious Councils, financial institutions, and regulators, as well as selected accountancy firms, members of academia and the corporate sector. Soft copies can be viewed online on www.masb.org.my.