The Implications of the Ijārah ‘Ala Al-‘Amāl Contract on Competition Between Rice Milling Plants and Mobile Rice Milling Services

Abstract

This study aims to conduct an in-depth analysis of the legal implications of the Ijārah ‘ala al-‘Amāl contract on the dynamics of competition and consumer preferences within the rice milling industry, specifically between fixed rice mills and mobile rice milling services. This study employs a qualitative approach using empirical legal research (socio-legal), with a case study in Muara Tiga Sub-district, Pidie Regency. Data were collected through observation, in-depth interviews with mill owners (both fixed and mobile), and farmers as consumers. The results indicate that competition between the two types of business is intense, with mobile rice milling services emerging as a dominant new trend due to their offering of time efficiency and locational convenience for farmers. The majority of consumers’ preferences have shifted towards mobile services, even though the rates offered are often non-standard. From a Sharia legal perspective, the rice milling services provided by both parties are categorised as an Ijārah ‘ala al-‘Amāl contract. However, it was found that the pricing mechanism (ujrah) for mobile services often contains elements of gharar (uncertainty) regarding the volume of services and milled residue, which potentially violates the pillars and conditions for the validity of the Ijārah contract, thereby having legal implications for the validity of fair and ethical business competition based on Sharia principles.