Paper Title: Waqf Management Through Fintech in Malaysia

Author:        Zaki Ahmad, Mushtaq Ahmed and Mahvish Nawaz Mokal

Publisher:    Journal of Islamic Finance, Vol. 12 (2), 114 – 125. 

Authors state that cash Waqf has gained acceptability in Malaysia, with the Malaysian National Fatwa Council issuing a fatwa allowing cash Waqf in 2007.

In Malaysia, Waqf is seen as a strong instrument that could help Malaysia’s poverty problems. Authors stress that Waqf management in Malaysia has to be strengthened and revitalized. Leveraging fintech can help to modernise the administration and investment.

Authors think that internet crowdfunding is positioned to assume a pivotal role in fundraising efforts catering to a diverse range of emerging Waqf needs, both domestically and internationally. Consequently, there is a pressing demand for an enhanced level of professionalism in Waqf fundraising, particularly when it pertains to the establishment of the financial mechanisms required for such endeavours.

Authors emphasize on the need for strong Shari’ah governance in order to gain and retain the trust of Muslim donors. To enhance the confidence of donors and uphold integrity of Waqf management, security, legal and governance frameworks along with transparency in reporting and enforcement are necessary.

Even though, the paper presents useful information, but it lacks novel perspectives and concrete solutions. The challenges need to be addressed and the solutions needs to be discussed thoroughly to show how the challenges can be overcome. Case examples of success stories in third sector, NGO sector and philanthropic sector from around the world can be used as a source on inspiring changes. Malaysia along with Indonesia are already ahead and frontrunner in Islamic social finance.

There are plenty of public private partnership projects which have been successfully carried out in Malaysia using the Waqf model. Likewise, Waqf model has been used in increasing house ownership among the middle class Muslims in Malaysia.

Having said that, Waqf administration in Malaysia faces certain challenges which the authors seemed to have overlooked. For instance,

• No land records in some areas since land has been existing for long even before independence. For unoccupied land in suburbs or in rural areas, development record is missing.

• Since ultimate ownership is not transferred on Waqf based property, apartments and assets, banks are sometimes reluctant to provide financing.

• There is no tax exemption on Waqf at the moment. Same charges are levied on sale, exchange and income. Hence, lack of tax incentives sometimes dampen the use of Waqf.

• Local authorities want the surrender of area where some public amenities exist or planned to be developed, such as power supply station, green area, pond, drainage, sewerage treatment plant and roads. However, looking at it from another way, a property or land area which had been dedicated in the way of Allah shall not be surrendered after its permanent dedication in order to ensure perpetuity and irrevocability.

• Majlis also faces a problem to develop Waqf land classified as heritage. This type of land is put under the auspices of the local authority and the museum department. 

• A lot of Waqf lands are located in scattered rural areas where potential for development and rise in value is relatively lower and due to scattered nature of lands geographically, there are limited economies of scale in development.

• A lot of people still do not have complete awareness of Waqf, its potential and impact.