Revitalization of Islamic Trust Institut
Revitalization of Islamic Trust Institut
Revitalization of Islamic Trust Institut
ABSTRACT
Islamic trust, specifically waqf is one instrument to improve the welfare of Islamic society, namely the
ummah. Its importance is widespread among all Muslim countries with each country has different
method in implementing it. For the past decades, the issues pertaining to waqf have become the most
talk about agenda among the fiqh scholars, administrators and academicians. With its vast application,
it is not an easy task to utilize the concept of waqf within the society. There are so many problems
arising from lack of knowledge among the practitioners along with lack of knowledge among the Islamic
society themselves. The combination of these two scenarios has contributed to mismanagement and
corruption in many waqf institutions. Malaysia, as one of the well-known Muslim countries, is no
exception when it comes to managing its waqf institutions. There are a lot of efforts to improve the waqf
system in Malaysia in terms of management and administration of it. Even there are studies-although
limited and mostly conceptual- done into the waqf management system in Malaysia; some findings are
deemed to be useful and some are yet to be proven in their application to the waqf system. Therefore,
this paper will add to the literature of waqf management by going into the application of corporate waqf
which seem to be a success in reforming Malaysia’s waqf system. An insight into the meaning of waqf,
its characteristic, management structure and issues will also be laid down in this paper.
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1. Introduction
The western countries have prided themselves on their ability to create wealth and modernization
through the capitalist system. But since the break out of the economic crises in 2008, most of the
western leaders started to turn to Islamic way in developing the economy. To avoid more unexpected
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problems arising from the capitalist system, it is imperative for everyone to come up with new ideas to
recapture the once glorious world economy. Man (2011) stated that one of the methods now being
aggressively debated is benevolence system through charity.
Charity is not new to many people. It is the act of virtue in Islam as mentioned in Quran. Charity plays a
major role in improving spiritual, social economy and justice (Man, 2011; Mawdudi, 1948). The core
importance of charity is to portray kindness and good act. In fact, all Muslims are expected to help each
other in whatever circumstances. The act of charity includes not only giving away energy and knowledge
but also in sharing their wealth with the unfortunate ones. This giving culture is not to gain recognition
from the society, it is more to get blessing from Allah s.w.t. Allah mentioned that He is the creator of all
things and as such all things belong to him; as He is the most knowledgeable (Sura: Al-Baqarah, Verse:
29). There are many instruments in assisting the Muslims to perform philanthropy gestures such as
zakat, hibah and sadaqah. But the one recently gain popularity among practitioners, fiqh scholars and
academician is waqf.
Waqf is not compulsory practice to Muslims. It is performed to seek Allah’s blessing and a mechanism of
wealth sharing. Most importantly, waqf is in existence to improve the wellbeing of the ummah. As such,
waqf can be a tool to develop the economy of a country. As such, this paper is attempted to look into
the waqf management and the efforts in reforming its status as philanthropy act in improving the
economy of the society. The paper will start with the introduction of waqf covering its meaning,
characteristics, management structure and issues; giving special attention to the scenario in Malaysia.
Then, the application of corporate waqf which seem to be a success in reforming Malaysia’s waqf
system will also be discussed.
Islam has stipulated that a human being is to work in order to fulfill his needs and not be dependent on
others. Clearly, Allah S.W.T. wants all human being to manage their wealth in a fair manner as to aid in
enhancement of the ummah. The wealth should be distributed equally so all ummah can share the
prosperity as mentioned in Sura: Al- Hashr, Verse: 7, “..in order that wealth or property (merely) may
not make a circuit between the wealthy among you…” (Tohirin & Hudayati, 2011).
Waqf is one way to achieve this benevolent act. Waqf- also known as Islamic trust or Islamic
endowment- carries the meaning of retaining certain property with intention of using the benefits for
philanthropy act where there is prohibition of its use outside of its specific objective. Another words, it is
a “vehicle for financing Islam as a society (Toraman, Tuncsiper & Yilmaz, 2007; Hodgson, 1974, 124).
3. Waqf Concept
As mentioned earlier, waqf is an act of retaining something for the benefit of others. Kahf (1998) clearly
defined it as holding and preventing of a Maal (an asset) for the purpose of using the benefits in meeting
its objectives of philanthropy. According to fiqh scholars, waqf is to preserve and hold certain properties
solely to provide for certain effort of improving the mankind wellbeing and any utilization of it outside of
its main objectives are prevented (Zahrah, 2007).
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3.1 Foundation of Waqf
Although there is no definite mentioned of waqf in the holy Quran, Zahrah (2007) further mentioned in
his book “Wakaf: Menurut agama dan Undang-undang” that existence of waqf in islam based on three
foundations: First: The Prophet (p.b.u.h) mentioned as reported in a hadith by Muslim, Tarmidhi, Abu
Dawud, Nasa’i and Ibn Majah from abu Hurairah that: whence a child of Adam dies, his/her deed comes
to an end except for three things; running and continuous sadaqah, knowledge that benefits (others) and
a righteous child who pray for him or her. Second: Umar bin Al-Khattab, as reported by Ibn Umar, went
to the Prophet (p.b.u.h) and said “Messenger of Allah! I got a land in Khaibar. I never got a property
more precious to me than this. What do you advise me?” The Prophet (p.b.u.h) said, “If you want you
can make habs on (bequeath) it, and give it as sadaqah (charity); provided that it should not be sold,
bought, given as a gift or inherited”. Then, Umar gave it as charity for the poor, relatives, slaves,
wayfarers and guests. There is no harm for the person responsible for it to feed himself or a friend from
it for free, without profiting. Third: All the Prophet’s (p.b.u.h) companions proclaimed their land as
waqf. This evidenced through narrations and report by Thabit Bin Anas Jabir Bin Abdullah and Ibn Hazm.
These three foundations of the importance of charities further strengthened by a few more verses of
the Holy Quran as indicated in a paper written by Karim (n.d). Allah (SWT) says in the Holy Quran: ‘Those
who spend their wealth (in Allah’s cause) by night and day, in secret and in public, they shall have their
reward with their lord. On them, shall be no fear, nor shall they grieve’ (Sura: Al-imran, verse: 274). ‘By
no means shall you attain Al Birr (piety, righteousness-here it means Allah’s reward, i.e. paradise), unless
you spend (in Allah’s cause) of that which you love; and whatever of good you spend, Allah knows it
well.’ (Sura: Al-Imran, Verse:92). ‘Verify those who give sadaqat (i.e. zakat and alms), men and women,
and lend a goodly loan, it shall be increased manifold (to their credit), and theirs shall be an honorable
good reward (i.e. paradise).’(Sura: Al Hadid, Verse: 18)
From the verses of the holy Quran and Sunnah of Prophet Muhammad (p.b.u.h), it is obvious that giving
out donations for charities purposes are most encouraged in Islam. Muslims are required to share their
wealth with the needy and poor people as to improve the economy of the Muslims society as a whole.
Waqf can be divided into two categories. The first is general waqf (waqf kheyri) where the purpose is
solely for charities. There is no indication of who are the beneficiaries. The application of this type of
waqf can be used on general purpose to enhance the image of the society and Islam as a whole. An
example will be a founder who gives away his land for the use of the ummah and charity purposes. The
second one is the specific waqf (waqf khas). Here, the founder will specify specifically who the intended
beneficiaries whether it should be used solely for the needy or for the graveyard (Rahman, 2009). The
family waqf (waqf ahli) - which fall under specific waqf- serves as providing for family benefits. During
the Middle Eastern 19th century, it used to preserve the family wealth from the strict requirement of the
Islamic Inheritance laws (Bremer, 2004).
4. Principles of Waqf
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The implementation and validity of waqf constitute of four elements: founder, beneficiary, donated
property and declaration (lafaz) waqf. For each of this element, there is important condition attached to
it as to making sure that the waqf is valid and accepted (Rahman, 2009).
First, the founder (waqif) must be mature and of sound mind. He also is a free-man and qualified to
donate his properties and willingly give away his belongings. Second, the beneficiary (Mawquf Alaihi)
can be specified by the waqif whether it be for certain individual or general charity to the ummah. Third,
the donated property (Mawquf) must be an object that can be donated. It must belong to the waqif and
the benefits can be utilized for syariah compliance purposes. Most importantly, the mawquf must be
held in perpetuity. Lastly, the recite (sighah) waqf must consists of words easily understood and writing
that specify whether it is general waqf,specific waqf or family waqf. There are two types of sighah; lafaz
sorih and lafaz kinayah. Lafaz sorih is a clear declaration that carries a specified intention such as “I
proclaim my house as waqf for the poor”. On the other hand, lafaz kinayah is a declaration that carries
various intention such as “My properties donated for the poor” (Rahman, 2009).
There are two types of waqf properties; immovable properties and movable properties. For many years,
many Muslims believe that only fixed assets can be donated as waqf as interpreted by the Islamic law
where the property proclaimed as waqf must be immovable as characterized by the need for waqf to be
perpetual. According to Kahf (as cited in Osman, 2012, p.31), this inherited definition of waqf is due to
the nature of the benefit of immovable property where it is utilized without having to use up the
property itself. On the other hand, not all fiqh scholars agreed that movables properties such cash,
shares books and other things can be proclaimed as waqf. However, fiqh scholars such as Shafie, Maliki
and Ibn Hanbal allow the movables properties as waqf as long as it meets the requirement of perpetuity.
The State Islamic Religious Councils (SIRC) of each state in Malaysia is given the power and trust to
administer waqf property, replacing the old ways in the appointment of trusted individuals by the
founders. Among the responsibilities of the SIRC as set forth in the clause are: 1. all waqf properties are
solely trusted under the council of Islamic religion 2. the council must keep all the documents related to
waqf properties 3. ownership of waqf properties must be transferred to the council 4. the council must
use all monies from specific waqf properties for the intended purpose of the founder 5. the council must
keep all the monies from general waqf properties in the general fund of the council or the baitul mal
(Alhabshi, 1991).
The SIRCs have put up a lot of efforts in transferring the ownership of waqf properties to themselves
but due to the hardship in tracking all the waqf properties, some properties are still held in trust by the
original trustees. Some of the properties are even transferred to or sold to some other parties that
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definitely erased the original intention of the founders. The organizational structure of the waqf
institution in Malaysia is presented in the figure below.
Majlis
Advisory
Board
Waqf Waqf
management Corporatio
committee n
co
Majlis
Register
Trustees
Trustees Regulate Majlis
co Monitor
Corporation
Manage
Others
Historically, before the SIRC is the lawful trustee of waqf properties, a person donates his property and
chooses the manager (mutawalli) to manage the waqf property. The mutawalli can be the village leader,
trusted individuals or the mosque committees. Often, proof of donation is via verbal and there is no
written document that supports the transfer between the original owner and the mutawalli. The title to
the waqf properties normally transferred to the mutawalli and the original owner will lose any claims on
the properties. Due to this loose system, waqf properties are exposed to mismanagement and
corruption. This is practically so when the properties are not managed as according to the original
intention of the donor (the waqif). Not to say all mutawallis are corrupt but there are cases where
dishonest mutawalli transfer properties to their name and use all the revenues and benefits to
themselves defying the purpose of the founder. There were also cases where honest mutawallis passed
away and the heirs made claims on the waqf properties. The heirs will made claims to these properties
without any thought of how the properties should be managed.
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To resolve the problems abovementioned, new measures have become intense issues in waqf
development in most Muslim countries. One of the measures popularly discussed is reforming waqf
institution through corporate waqf.
It is no question that development of waqf is not confined to immovable property such as land. As the
needs of the ummah’s economy gone upscale, steps have been taken to introduce more contemporary
waqf development. The most contemporary and most discussed mechanism in waqf development is
corporate waqf where cash waqf and waqf share are also utilized in its application. Corporate waqf is an
innovative mechanism in generating income for the benefits of most society in the form of cash waqf,
waqf share and other assets investment methods. It is an initiative in combining perpetuity
characteristic of waqf to achieve the power of entrepreneurial dynamism. Example of corporate waqf is
evidenced in some of the Muslims countries. This example will be discussed in detail later in the paper.
In order to adopt the corporate waqf successfully, a practice of entrepreneurship, leadership,
accountability and transparency in the corporate implementation is an utmost importance. Institutions
who wish to incorporate their waqf property need to be aware of the principles and objectives of
corporate waqf (Ali, 2011).
The principles of corporate waqf are 1) to create an Islamic institution catering to the society’s need
with element of corporate entity 2) to carry out the responsibility to the ‘ummah’ for eternity 3) to
voluntarily share wealth, time and expertise 4) to generate wealth and protection of the income 5) to
establish an incorporation instrument that is trustworthy and wholly (slide MOF Final). Respectively, the
objectives of waqf are 1) ability to expand and generate wealth for individuals, private and public sector
in global arena 2) professional management 3) preservation of the ummah economic ownership through
protection of the assets 4) released of the ummah’s undeveloped assets 5) strengthening of the
ummah’s economic welfare 6) assist government in nation’s development and reduction of spending,
deficit and debts (Ministry of Finance, 2011).
Corporate waqf is seen to be the tools to give new lights in generating income to improve the economy
of the ummah. It is considered a modern innovation and an effective measure in delivering benefits
without going against the principles of waqf. It is expected that all issues pertaining to waqf
management such as management negligence, flaws and ineffectiveness can be solved through
corporate waqf.
The establishment of corporate waqf is one of the resolutions discussed in the Third Islamic Economy
Congress on the 12-15 January 2009 and States Islamic Council Malaysia Congress on 26-27 September,
2011. The resolution merely touched on how the corporate waqf can materialize the government and
economy transformation program. The 2011-2020 financial sectors concentrates on the Central Bank of
Malaysia, Bank Negara Malaysia’s (BNM) role in pushing the Islamic banking ability to create innovation
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by many parties and at the same token improvise Malaysia as center of excellence in Islamic banking
arena. Corporate waqf is also seen as a stepping stone to upgrade the implementation and
administration of waqf property as stipulated in the Corporate Management Code 2012 and Corporate
Management Action Structure 2011 under the supervision of the Securities Commission (Ministry of
Finance, 2011).
To realize the concept of corporate waqf in Malaysia, the IQRA foundation formed under the
Trusteeship Act 1952 (Act 258) established Baitul Awqaf Fund(BAF). Through BAF, IQRA foundation is
appointed as the Maukuf Alaihi who is authorized to receive cash waqf and waqf share from individuals
and corporations while the financial securities institutions are given power as Mutawalli registered
under BAF to manage the waqf as agreed in the waqf deed. As Maukuf Alaihi IQRA foundation plays a
major role in managing BAF based on the best corporate implementation and management practice
(Ministry of Finance, 2011). Table below shows the structure of IQRA foundation establishment of
corporate waqf.
The most contemporary corporate waqf in Malaysia is introduced by Johor Corporation Berhad (Jcorp).
It is believed this form of corporate waqf is the first ever implemented by business corporation in the
world and it is known as Waqaf Annur Corporation Berhad (WANcorp). Under the supervision and
guarantee of the Jcorp, Wancorp is entrusted to manage all Jcorp groups’ assets and shares that are
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donated as waqf. Wancorp also plays a role as a Maukuf Alaihi to all of Jcorp shares and other forms of
securities (Borham,2011).
Wancorp started its operation on the 25 th October, 2000 by the name of ‘Pengurusan Klinik Waqaf An-
Nur Berhad’. Through a signed agreement between Jcorp and State Islamic religious council of Johor
(SIRCJ) on the 4th December, 2009, WANcorp, appointed as the special nazir, has the authority to carry
out the duty in managing all assets and shares as specified in the Waqf Proedures 1983 under the 2003
Enactment of Islamic Administration Johor. Through the agreement, Jcorp is allowed to proclaim its
shares in accordance to corporate waqf procedures and guidelines where all the waqf shares will be
registered with SIRCJ under WANcorp management who in turn will make sure that all the shares are
administered and the cash or revenues are distributed as per instruction of the waqf deed (Borham,
2011). A corporate cash waqf model used by An Nur Corporation and applied by other countries such as
Turkey, Pakistan and South Africa is tabled below ((Khademolhoseini, n.d).
Corporation
Associated waqf institution established
by mother corporation
The benefits from the investment of Jcorp shares will be distributed to welfare and charity programs,
individual spiritual development, patients’ treatment and others. This program include Jcorp’s corporate
social responsibility through the operation of health services centres under Klinik Waqaf An Nur (KWAN)
chains and dialysis centres at a hospital managed by KPJ Heathcare Berhad, just to name a few.
WANcorp is also involved in management of the mosques and development of waqf land (Borham,
2011). The expansion of the Jcorp medical based institutions not only penetrates the Johor vicinity only
but also spread to Kuching, Sarawak through collaboration with the Baitulmal Sarawak (Hanefah, Jalil,
Ramli, Sabri, Nawai and Shahwan, 2009). The success of Jcorp in developing corporate waqf is largely
due to its unique strategy in adapting the corporate mission of Business Jihad where Jcorp pledge 25%
of its dividend into waqf. With this dividend, various activities-charitable and religious- for the Muslims
and Non-Muslims were organized to meet the needs of the society as a whole. It is no doubt, activities
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administered by Jcorp through WANcorp have Jcorp as one Muslim corporation that devote itself
towards it focal point of interest- ummah’s wellbeing- through corporate share and medical-based
institutions (Hanefah et al, 2009 ).
8. Conclusion
A very outstanding new waqf development as adopted by the Jcorp has shown a success story not only
to the eyes of Malaysian society but also to whole Muslims world. However, not all states in Malaysia
have followed suit to the success. Disappointingly, out of 14 states in Malaysia only about 5 states which
are quite rigorous in developing its waqf properties. Many put focus on zakat, baitul mal and sadaqah to
take care of the needy and the poor. Most of the SIRCs still depended heavily on these instruments and
fail to see the income generation potential of waqf properties if manage to its fullest potential. Not to
say that nothing have been done at this point to improve income generation of waqf. Former Prime
Minister of Malaysia, Tun Abdullah Bin Ahmad Badawi had taken a major step during his reign by
announcing the establishment Jabatan Wakaf, Zakat dan Haji (JAWHAR) in March 2004. JAWHAR is
expected to improve the administration and management of waqf, zakat and haj to be more organized,
systematic and effective as to achieve excellent in reaching the society (www.jawhar.gov.my). But the
expected progress is slow in coming. Malaysia cannot afford to lose all the time and possibilities in
gaining income from the many underdeveloped waqf available in all the states. It is beyond words what
can be achieved from developing the underdeveloped waqf properties. In India, for example, 100 waqf
properties developed increased nearly 1900% in revenues (Rashid, 2011). This is a very amazing figure.
Just imagine if Malaysia is to fully develop its waqf properties, it will have ample fund from the revenues
gain to improve the economy of the Malaysian society.
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