AGRICULTURAL PRODUCT AND LOST SHARING (aPLS) AS A POTENTIAL SCHEME FOR ISLAMIC MICROFINANCE IN AGRICULTURE Muhammad Hakimi Bin Mohd Shafiai 1 Amira Ajeerah Binti Mohd Samsi 2 Siti Khadijah Ab Manan 3 Ismail Mahyudin 4 Fadhilah Abdul Rahman 5 ABSTRACT The agricultural sector works in an environment of its own. This sector is vulnerable to many natural risks such as droughts, floods, and also attacks from wild animals, and these need to be taken into account by the farmer and the landlord. Due to these risks, financiers are reluctant to invest or finance this sector. Comparatively speaking, these risks are not common in industry, trade, services, and other sectors. Structurally, agricultural projects in Malaysia are often in the form of small holdings owned by families and households in rural areas. Private ownership is, by and large, the predominant attribute in the ownership of properties and assets. Most of these small-scale agricultural and non-agricultural enterprises are left to themselves. They have limited capacity to generate revenues beyond the equivalents of subsistence needs of the families. This is a reflection of the production capacity which is small and depends on the immediate needs of the household in the rural sector. Therefore, this paper attempts to highlight the farmers’ lives in Malaysia and their problems in developing agricultural land. Based on the problems faced by farmers, Islamic solutions are proposed to be considered by the governing bodies. Consequently, this paper investigates the possibility of agricultural development utilizing Islamic microfinance schemes in order to help farmer’s sustainability. Keywords: Agricultural Land, Islamic agricultural finance, Malaysia. 1. INTRODUCTION There is no doubt that the Islamic finance industry is regarded as one of the fastest growing industries in the world. However, there are still many potential Muslim customers especially in rural areas whose banking needs are not being met, and who do not have access to lending products or credit products due to their poverty level. In the meantime, the agricultural sector is presumably the sector in which entrepreneurial projects would have the greatest impact on economic growth. Based on arguments from Hoshmand (1995), it was stated that the financial problems faced by the agriculture sector were caused by the risks of debt financing and a lack of access to the capital market 1 Senior Lecturer , 2 Postgraduate Student, School of Economics, Faculty of Economics & Management, The National University of Malaysia (UKM) 3 4 5 Accounting Research Institute (ARI), Universiti Teknologi MARA, 40450 Shah Alam, Selangor, Malaysia