Waqf Management and Administration: Challenges, Opportunities and the Way Forward

1. Waqf Management and Administration: Challenges, Opportunities and the Way Forward 28 JUN 2013, ASIA PACIFIC UNIVERSITY (APU) By Prof. Dato’ Dr. Haji Mohammad Haji Alias Faculty of Economics and Muamalat/Center for Auqaf Development Financing Universiti Sains Islam Malaysia (USIM) hjmohd_99@yahoo.co.uk Dr. Hydzulkifli Hashim Omar Islamic Business School, Universiti Utara Malaysia (UUM) hydzulkifli@uum.edu.my & Dr. Fuadah Johari Senior Lecturer, Faculty of Economics and Muamalat/ Center for Auqaf Development Financing USIM fuadah@usim.edu.my Paper to be presented at Asia Pacific University (APU) on 28 June 2013

2. OUTLINE OF PRESENTATION • 1. INTRODUCTION • 2. WAQF: DEFINITION AND FIQF OF WAQF • 3. WAQF MANAGEMENT AND ADMINISTRATION 4. CHALLENGES AND OPPORTUNITIES 5. THE WAY FORWARD 6. SUMMARY AND CONCLUSIONS

3. 1. INTRODUCTION • Our interest on this subject: • Main author’s involvement with the effort by Darul Naeem Foundation, Songkla • Thailand to establish the Asian International University of Science and Technology • in Chana. • The Foundation has received two parcels of land as waqf to develop the campus • of the new university. • USIM’s initiative to seek waqf financing of projects to complement Government • financing (operating and development expenditures). • Learning from the experience of Al-Azhar University, Egypt. This world renowned • university, established in 975 AD, is a waqf-funded institution. It provides free • education to students from al over the world from primary school until university.

4. Waqf is an important Islamic institution. If it is properly mobilized and managed, it can be an important instrument in the socioeconomic development of the Ummah and society. Islam encourages and provides mechanisms for the redistribution of wealth from the rich to the poor and the needy. In this paper we look at issues relating to waqf management and administration. Factors that we look at are: waqf governance mechanisms; types of waqf assetsand their beneficiaries; in search of best practices; opportunities, challenges and the way forward.

5. 2. WAQF: DEFINITION AND FIQH OF WAQF 2.1 Guidance from the Al-Quran and Ahadith “By no meas shall you attain Al-Birr (piety, righteousness), unless you spend (in Allah’s cause), of that which you love; and whatever of good you spend, Allah knows it well” (Al-Quran 3:92) Abu Huraira reported Allah’s Messenger (pbuh) as saying: When a man dies, all his acts come to an end, but three; recurring charity, sadaqa jariya (donation for the awqaf), or knowledge (by which people benefit), or a pious offspring, who prays for him” (Muslim)

6. Continuation: It is reported on the authority of “Abdullah ibn ‘Umar (ra) that ‘Umar Ibn Al-Khattab (ra) acquired land in Khaibar. He went to the Prophet (saw) to consult him about it saying: “Oh Messenger of Allah, I obtained some land in Khaibar better than any I ever had, what do you suggest that I do with it?” The Prophet (saw) said, “If you like, you can give the land as an endowment and give the fruits in charity”. So ‘Umar gave the land as an endowment on condition that it would not be sold or given to anybody as a present and it would not be inherited, but its yield would be given in charity to the poor people, to the kith and kin, for freeing slaves, for Allah’s Cause and for the travelers and guests; and that there would be no harm if the guardian of the endowment ate from it according to his need with good intention, and fed others without storing it for the future” (al-Bukhari (5/354, no 2737, Muslim (3/1255, no 15/1632) 6

7. Continuation: 2.2 What is meant by waqf? The term waqf has not been specifically mentioned in the Al-Quran or al-hadith but are interpretations made by the fuqaha on sadaqa jariya (Abdul Shakor Borham, 2011) What is meant by waqf (singular); auqaf (plural)? ‘A waqf is an act of holding certain properties and preserving them for the confined benefit of certain philanthropic purposes that disallows any use or disposition of them outside the specific objective (Kahf, 1998). According to Imam Mohammad al-Khatib Syarbiniy waqf is holding something that could be used to perpetuate the form (‘ain). Therefore, all transactions are subject to the laws of Islamic[1] syariah. [1] al-Sharbiniyy, Mohammad Khatib, (1352H/1933M), Mughni Al-Muhtaj, Kaherah: Maktabah Al-Halabi, vol.2, p. 376. 7

8. 3. WAQF MANAGEMENT AND ADMINISTRATION 3.1 Malaysia In Malaysia, management of waqf assets are under the purview of State Religious Islamic Councils (MAINS) under the respective state rulers/sultans. Each state has its own waqf enactment laws. Under these enactments MAINS are deemed to be the sole-trustee of waqf assets in the state. The administration of waqf assets in Federal Territories of Labuan, Kuala Lumpur and Putrajaya is under the King and centralised under the Islamic Religious Council of the Federal Territory KL. Up to November 2011, total area of waqf lands – specific and general waqf – 11,091.82 hectares. This is a sizable area that has potential to create value. JAWHAR had estimated the overall value of the lands to be RM99,329,169.69. The trustees of the waqf lands (MAINS) have limited cash-flows to develop the waqf Lands. Often cost of maintenance and administration of the waqf assets exceed the annual returns.

9. 3.2 Singapore In Singapore, waqf administration is vested under Majlis Ugama Islam Singapore (MUIS), a statutory body established in 1968 under AMLA. Primary role of MUIS: i. To advise the President of Singapore/Government on all matters pertaining to Islam ii. To promote religious, social, educational, economic and cultural activities in accordance with the Islamic syariah (see Shamsiah Abd Karim, 2013) The promulgation of The Administration of Muslim Law Act (AMLA) in 1968 empowered MUIS to administer all matters relating to waqf. Being a sole trustee of waqf properties, MUIS has taken a bold step in founding its own subsidiary; Warees Plc, to handle, develop and monitor waqf projects. Good governance; strong legal framework; Innovative financing; professionalism/expertise, have all contributed to the success of waqf management in Singapore (Shamsiah Abd Karim, 2013)

10. 3.3 Waqf Management Structure in Thailand • Mosque Act 1947 – under this Act, the mosque affairs are administered by the mosque • committee (with at least 7 members). Management of the mosque property is included in • the Act (article 7). Rules for Mosque Committee Appointment and Dismissal 1949 – require • mosque committee to maintain the mosque and waqf property to be in good order. • Governance aspect – mosque committee is required to submit a financial report and list of • waqf properties to the Provincial Islamic Committee (PIC) in January each year. • The PIC and the Central Islamic Committee (CIC) have authority over waqf property; • can inspect and control and give advice to the mosque committee on matters related to • Waqf (Preeda, 1991; quoted in Ekarat Sitisan and Muhammad Syukri Salleh, 2009). • Land Code of 1954 – mosques are not allowed to hold more than 20 acres of land • (article 84). This does not include holdings before 1 December 1954 or to mosques in Pattani, • Satul and Narathiwat. • Waqf land in Thailand is subject to taxation. The donor has to pay an equivalent of 2% • of the value of the property. Often this is paid by the beneficiaries or the community • on behalf of the donor.

11. Mosques are able to establish foundations (non-profit organisations) which can • hold land and other waqf properties (Civil and Commercial Code, Article 81 and 97). • 3 types of foundations: • Foundations attached to the mosque – rent out waqf properties to gain more profits. • Foundations associated with educational centres of learning – Islamic school/pondoks, • Islamic information centres, libraries and • iii. Foundations for the general welfare and service of society (build playground for sports or • all purpose building)(Preeda, 1991) • According to a suvey by Preeda (1991) – conducted involving 175 mosques in Thailand – major • waqf properties are in the form of land donated to the mosque.

12. Comment: It has been reported there is no mosque in Thailand which abides by the law i.e reporting to the PIC on a regular basis; neither it was required to submit an expenditure report and list of waqf properties. The study by Preeda (1991) found that in most cases the waqf properties were not efficiently managed. The practice – waqf lands were only rented out thus generating only minimal rental incomes. Some waqf lands have not been formally transferred to mosque. Their donors have passed away and their heirs are not willing to donate the lands.

13. 4. CHALLENGES AND OPPORTUNITIES • 4.1 Challenges • Awareness and willingness of the Muslim society to contribute to the waqf fund. • There exists the perception that waqf assets are only in the form of mosques, • cemeteries, religious schools/madrasahs. However the religious scholars • have allowed other forms of waqf such as cash, shares, corporate waqf. • There is no complete data base on waqf assets. Not all waqf land had been • developed. The State Islamic Religious Councils have limited capital to develop • the waqf assets under their jurisdiction. • Shortage of trained manpower to manage waqf endowments.

14. 4.2 Opportunities • There is room to allow the development of a modern endowment/waqf model. • Combination of ijtihad and modern management techniques to come up with • a new ‘modern responsive doctrine of waqf’. Contemporary scholars such as • Monzer Kahf, Murat Cizakca and Muhammad Anas Zarqa have suggested • modern methods of financing waqf assets. Trustees of the waqf assets need to • find syariah compliant financing methods to develop the assets that have been • mandated by the endower/waqif. For instance in Singapore, MUIS has used the • sukuk musyarakah to develop and enhance the values of the assets. • Hifz al-mal under the maqasid syariah can be applied in order to avoid wastage. • Investment can be carried out to develop idle/unproductive waqf lands.

15. 5. THE WAY FORWARD • Waqf can be an important instrument in the socioeconomic development of the Ummah and • society if it is properly mobilized and managed. Among the critical success factors for this • to happen are the existence of a strong legal framework, good governance and management • and administration; and a significant increase in the awareness and participation of the • society. • The experience of Singapore – MUIS and its subsidiary Warees Pte Ltd – may provide good • insights.

16. 6. SUMMARY AND CONCLUSIONS • Waqf institution is an Islamic institution that can contribute towards the socioeconomic • development of the Ummah and society. Various means of waqf financing • to develop waqf assets that have been successfully adopted in the Middle East and Singapore • for example may be emulated. • The waqf financing methods adopted must of course be syariah compliant. At the same time • trustees of waqf assets need to have an open mind, not just restricting themselves to one • particular mazhab.

17. WA SYUKRAN KATHIRAN