SARA 1Malaysia Fund, is it a free money? IS IT ACCORDING TO SYARIAH PRINCIPLE?

Skim Amanah Rakyat 1Malaysia (SARA 1Malaysia) that will be opened for application starting tomorrow (30 Jan) will offer 32.16% return on investment per annum, PNB president and group chief executive Tan Sri Hamad Kama Piah Che Othman said on last Friday. Too good to be true? See below.

Launched by Prime Minister, Datuk Seri Najib Razak on January 12, 2012
Kalau tiada simpanan, boleh mendapatkan pinjaman dari institusi-institusi kewangan sebanyak RM5,000. Pendapatan tiap-tiap bulan, ini kita gerenti, pendapatan RM134 sebulan. Kalau kita mendapatkan pinjaman dari institusi kewangan, kita kena bayar balik RM84. Erti, RM143 – RM84, RM50 sebulan bersih masuk dalam poket kita tiap-tiap bulan. Prime Minister said.

The investment is limited to RM5,000 per household and you will receive dividend of RM134 every month up to 5 years. Your monthly repayment to bank is RM84.

Total repayment = RM84 x 12 mth x 5 yrs = RM5,040. You borrow RM5,000 and your total repayment is only RM5,040, means the interest is only RM40. Wow!..this is equal to 0.16% interest per annum. Could be the lowest interest rate ever offered in the history. If this is true, this is FREE money from the government with almost 0% interest. Should I invest in SARA 1Malaysia? Since it is free money, why not. But if you are concern on syariah compliance, I guess guaranteed return investment is not allowed in Islam. Seek advise from Islamic Financial expert for better clarification.

Basically there are two ways to invest in SARA 1Malaysia.

Invest with your own money. You will get RM134 dividend monthly. And if you keep the accumulate dividend in the account, your investment account could reach up to RM13,000 in 5 years.
Invest with bank’s loan (from four participated banks). You will still receive monthly dividend of RM134, with monthly repayment of RM84. RM50 will go to you as profit.
Eligibility

Malaysians aged between 18 and 58 years old with gross household income between RM500 to RM3,000
Applicant must not be declared bankrupt throughout the loan funding period
Applicants and / or spouse do not have any investments in ASNB unit trust products OR applicants and/or spouse(s) (household) have a combined aggregate investment of less than RM10,000 in all ASNB products
Only one member of the household is eligible to obtain the loan funding
How to invest?

You can obtain forms and apply from participating banks namely Maybank, CIMB, RHB and BSN starting from January 30, 2012.
The total financing offered is RM500. Application will be opened for a duration of one year starting tomorrow or upon full subscription, with 100,000 householders.
You can find more details in www.sara1malaysia.com.my