1 CLEANSING FUND Bandar Seri Begawan, 30 th Nov – 4 th Dec 2015

2 Cleansing Fund

Sharia Mutual Fund DES Stocks Sukuk Sharia Deposit Account Return Halal Income Non-Halal Income CLEANSING Cleansing is a mechanism to clean mutual fund return from non-halal income. CLEANSING DEFINITION 2

Bapepam Regulation-LK No. IX.A.13 Sharia mutual fund should be invested on securities which meets sharia criteria, such stocks included in the DES, HMETD and warrants Sharia, sukuk, as well as other securities that meet the criteria of Sharia. If these securities are no longer meet the criteria of Sharia, the Investment Manager of Sharia mutual fund is required to do the cleaning portfolios are deemed no longer meet the criteria of the Sharia. Fatwa DSN-MUI No. 20/DSN-MUI/IV/2001 (Pasal 11) Investment returns are distributed must be clean of the non-halal element, so that the Investment Manager must perform separation of the revenue that contain non-halal of which is believed to be halal income (tafriqal-halal-minal- haram). CLEANSING REGULATION 3

The proceeds cleansing regarded as social fund and allocated for social activities. (Preference will be given social institutions that also have Sharia Supervisory Board) Allocation and use of funds cleansing must be approved by the Sharia Supervisory Board Investment Manager and Sharia Supervisory Board Custodian Bank 4 USE OF FUNDS CLEANSING

Cleansing Fund is applied to: 1.Transaction Account  Current Account in Conventional Bank  Current Account Interest 2.Investment Portofolio  Sharia Stocks that are no longer included in the DES which has passed through periods of maximum selling, ie. 10 days (Bapepam-LK regulation No. IX.A.13)  Capital Gain earned after passing 10-day limit. CLEANSING 5 CLEANSING FUND METHOD

Revenue should be done Cleansing: 1.CAPITAL GAIN Revenue/profits through securities (stocks) non-Sharia, profits from stocks that have been out of DES and has passed the maximum sales period (10 days). DESMaximum Sales Period (10 Days) Non-DES If there is a capital gain income (profit), it must be done CLEANSING 6 CLEANSING FUND CALCULATION

The Sample Cleansing Fund – Capital Gain Stock X (DES) Declared out of DES (20 th November 2014) Stock X (Non-DES) Still haven’t sold by Investment Manager (30 November 2014) Has successfully sold by Investment Manager (5 December 2014) Selling Period Capital Gain Rp 100 Mn CLEANSING Note: If after a selling period, but the stock X losses (capital loss), then the amount of losses shouldn’t be charged to the Sharia Mutual Fund. CLEANSING FUND CALCULATION (Cont…) 7

Revenue should be done Cleansing: 2.DIVIDEND If the stocks are non-Sharia or out of DES within the calculation of the dividend, it must be done CLEANSING by proportional calculation. Example: The amount of Dividen : Rp 360 million The number of days there are Stocks Non-DES : 5 Days Then the amount of funds that must be done Cleansing: PERHITUNGAN CLEANSING FUND (Cont…) 8

CASE STUDY

In early June 2014, the portfolio of stock X on Sharia mutual fund A out of the DES. The stock X were sold on the 15th day after the announcement of the DES. Initial price of stock X is Rp 1.000, - per share and sold Rp 1.025,- per share. Sharia mutual funds A have 10,000 shares of stock X. Question: a)How much fund should be cleaned (Cleansing)? b)At the end of year the amount of dividends distributed Rp 50,000,000, -. What is the dividend fund that must be cleaned (Cleansing)? c)Keep a accounting journal! CASE STUDY 1 ST 10

CASE STUDY 2 ND 11 In early May 2014, the portfolio of stock X on Sharia mutual fund A out of the DES. The stock X were sold on the 18th day after the announcement of the DES. Initial price of stock X is Rp 1.000, - per share and sold Rp 950,- per share. Sharia mutual funds A have 15,000 shares of stock X. Question: a)How much fund should be cleaned (Cleansing)? b)At the end of year the amount of dividends distributed Rp 60,000,000, -. What is the dividend fund that must be cleaned (Cleansing)? c)Keep a accounting journal!