WEBINAR NASIONAL

WAQF UNTUK NEGERI, SERTA PELUANG DAN TANTANGAN BAGI PERBANKAN SYARIAH :
Perspektif Investasi Syariah dan Regulasi di Indonesia dan Malaysia

WAQF INSTITUTION IN PLACE OF

ISLAMIC BANK ( SYARIAH BANK )

Oleh
Barjoyai bin Bardai
UNIVERSITI TUN ABDUL RAZAK
 BANKING SYST EM IS NOT T HE IDEAL SOLUTION
FOR ECONOMIC PART ICIPAT ION OF THE CITIZ EN.

• The World Bank and IMF asserted that ‘Bank inclusivity’ is the best way to combat
poverty.
• While the latest World Bank report showed that more than 2.5 billions of the world
population do not have bank account ( bank exclusive). This include 1.1 billion that do
not have official identity and 1.7 billions that do not get any financial facilities.
• Association is made that the world population had became poor because they do not use
financial facilities – and hence lost the opportunity to leverage on the financial system.
The basic assumption is that ‘Other people’s money’ (OPM) is the best source of finance.
• With a banking deposit by household, they will receive income from the financial system
and hence can afford to spend in the market.
 THE REALITY OF THE FINANCIAL SYSTEM
AND THE GLOBAL BANKING SYSTEM

• More than 4 billions of the world population ( or more than half of the world
population faced the lack of financial facilities to improve their life.
• Even though more than 70% of SMEs have bank accounts but only 5% of them
have financial facilities and only 1% are enjoying the overdraft facilties.
• The banking system instead have been exploiting the household group
worldwide causing critical poverty as a result of the Riba’ system that have
been suppressing life and financial position of the consumers group.
 FINTECH SERVICES – MOBILE
MONEY IN CHINA

• In 2019 Mobile payment penetration reached 95.1% of internet users in China – There are
1.27 billion mobile internet user.
• Total value of mobile payment transaction grow in China had grown from 9.64 trillion
Yuan in 2013 to 108.22 billion in 2015 and 277.39 billion in 2018.
• Credit card system ownership in China was less than 0.5 cards per person.
• Two providers Alipay and Tenpay shared over 92% of the market in China.
• In Malaysia, the internet users’ rate was 87.4% in 2018, with 93.1% using smartphone
device. Broadband subscription however was only 37.84% in 2018.
• With 32.6 millions population, with GDP of RM 1.35 billion, the E-commerce market
was RM17.2 b in 2018, the Mobile commerce market is RM 8.17b and mobile commerce
covered 47% of the E-commerce with 85% penetration and the use of credit card ata
1.74 per capita.
• The target is we should start with E-Wallet and then penetrate into the E-currency within
the next two years.
 THE HISTORY OF BANK

• The word ‘Bank’ was originated from and Italian and Greek word ‘Banco’
which means ‘Bench’ because the founder of bank were mostly Italian Jews
who transact while sitting on the long bench.
• The Jews were traditionally live by ‘renting’ money. Then the goldsmith began
to accept deposit from friend and clients to be kept in his safe deposit ever
since 2,000 BC. The deposit owner received a receipt in return. This was then
used as cash to transact between networked clients.
• The Gold smith used the cash deposited with them as a basis (back up) to give
loans to other clients. Most of them use the religious institution as their base.
This tradition has actually been followed by the Indian and Chinese society that
then began the loans giving activities.
 BANK WAS NOT AN ISLAMIC
TRADITION

• Islamic bank was not formed based on the Islamic tradition. Islam do not
promote borrowing ( in fact there was no concept of personal loan or business
laons in Islam ( except for Qardhul Hassan – which is the benevolent loan for
the needy groups in the society).
• Bank institution itself is rather odd in Islam as Islam do not recognise a bank as
an industry to generate income or return on investment, Islam do not encourage
followers to keep excessive money and do not condonce Capitalism.
• Baytul Mal is the nearest concept to the financial system that have ever exist in
the Islamic tradition.
 THE MUSLIM ECONOMIST AND
THEIR INVENTION
Muslim economist have been known for their invention that have now been adopted by the western tradition.
• Ibn Khaldun (1332 – 1406) have introduced a dynamic interdisciplinary approach to understand economy and this was used to structure
socio-economics policy to improve the whole society’s performance.
• Ibn Khaldun was also the pioneer in the economics principle when he stressed that : “ a state is an important factor of production. With
government expenditure, production activities are being promoted and with taxation, production activities will decline.”- However it was
John Maynard Keynes 1883 – 1946) British economist, who got the credit as the pioneer of the ‘theory and practice of
modern macroeconomics’.
• Job specialisation, division of labour, specialisation, trade, exchange, money and banking was actually initiated by al-Sarakhsi (d.
1090) – where each worker work and help each other with the work result. David Ricardo was the one that got the credit.
- Ibn Khaldun ( 1350 ) - also refuted the the possibility and need to be self sufficient and emphasis on the need to be specialised and divide
work. Again, it was DAVID RICARDO (1817) who lived 500 years after that that got the credit.
- The Demand and Supply theory was actually initiated by Ibnu Taymiyyah ( d. 1328), when he wrote : ” what ever exist in the market
is cheap because the availability of supply and become expensive because the non-availability of it when it is needed. The basic principle
of demand and supply was only introduced in the western world in 1767.
• In the public finance and taxation principle, - Khalifah Umar (d. 644), Ali (d. 661) and Umar ibn Abd al-Aziz (d. 720), emphasised that
taxation should be collected equitably and diligently and must not be beyond the affodability of the taxpayers. This was only revealed by
Adam Smith (d. 1790), in his book the Canons of Taxation – on equitable, certainty, flexibility in the payment and collection.
 THE HISTORY OF ISLAMIC BANK

• Islamic bank is a new term in the Islamic shariah. The principle of Islamic financial institution was
introduced in the sixties, when Malaysia introduced Tabung Haji which is an institution to collect deposit
from fellow Muslim who were planning to perform Hajj to Mecca and Medinah. The institution is a deposit
taking institution and an investment body that serve the ummah.
• The concept of Islamic bank was introduced in Egypt, Pakistan, India and Malaysia until the incorporation of
Bank Islam Malaysia in 1982.
• When it was formed, Bank Islam was not intended to become a deposit and lending institution. It was meant
to assist Muslim entrepreneurs to create financial facilities through the Musharabah and Musyarakah
contracts – Equity based banking.
• Nevertheless, the banking system and the whole indastri worldwide have been trapped into the capitalistic
economics system where all businesses were own by investors. Investors need some return for their
investment. So, investors will determine the business model and profit rate that they will be satisfied with.
• In the end, a bank will have to land on a system that focused on giving loans to the customers - – Debt based
banking to meet the expectation of the customers and to achieve the business objective of maximising profit.
 BANK INSTITUTION

• Banks are generally defined as ‘financial intermediaries’ and ‘money makers’ who create
money by lending it to borrowers as well as creating deposit accounts to receive savings
from customers.
• Banking institutions in their original form date back to 8000 years BCE.
• Early ancient bank prototypes that provided wheat loans to farmers existed in 2000 BC in
Assyria and Babylonia.
 FEATURE OF BANK

• When Muslims want to change the existence of conventional banking in an effort to avoid
the symptoms of "usury" or interest on the money of Islamic investors still have to focus
on the concept of this conventional bank.
• Some bank criteria:
• As an intermediary institution - collect deposits from customers and lend them back to other
customers
• It is generally accepted that depositors in banks will receive rewards on savings in the form of
interest.
• It is generally accepted that the borrower will pay the interest rate on his loan.
• Conventional banks are managed as ‘interest margin management’ where profits are earned as the
difference between the loan interest rate and the deposit interest rate.
• It is generally accepted that the interest rate charged on a loan is higher than the deposit rate earned
by the depositor.
• The Bank is considered a profit-motivated business entity. The bank is owned by a set of
shareholders or owners who expect a return on investment in the bank.
LIMITATION OF CONVENTIONAL BANK

• The big problem with this conventional bank is that the benefits are 'illegal' and
are prohibited in Islam.
• So Islamic banks need to eliminate the practice of 'riba'.
• The first step in the establishment of Bank Islam was the abolition of Riba 'and
its replacement with a' profit rate '.
• Profits are created based on the Islamic principles of partnership -
‘Mudharabah’ and ‘musyarakah’.
 LIMITATION OF MUDHARABAH AND
MUSYARAKAH MODEL

• Bank Islam Malaysia initially focused on the above model and invested in business
projects especially with Muslim Entrepreneurs.
• However, success rates are limited and there are many 'failed investments' due to the
effects of the economic downturn and so on.
• The principle of trading and mark-up - ‘Murabahah’ as well as the principle of rental -
‘Ijarah’ were also introduced.
• Now this type of financing accounts for over 80% of bank transactions.
 DILEMMA OF ISLAMIC CONVENTIONAL
BANK

• Bank Islam needs to meet the goals of its three stakeholders:

• maximize returns to depositors
• maximize returns to the owner
• minimize the cost of financing and banking services.
• But the third goal above contradicts the two more important goals of the bank
• As a result, Islamic banks are said to have no Islamic spirit - compassion and generosity
 EXPECTATION ON ISLAMIC BANK ?

• The Muslim community expects Bank Islam to operate for the benefit of the ummah
alone - by downplaying the interests of depositors and their owners.
• In principle, what Muslims want is for Bank Islam to become a social bank-like bank
- which does not charge any fees for bank financing and services.
THE GLOBAL DEVELOPMENT TOWARDS THE
VOLUNTARY SECTOR

• Even western civilizations that are more capillary have now begun to change
emphasizing the creation of a third sector in the economy - called the voluntary
sector (apart from the public and private sectors).
• It is time for us to change the structure of Bank Islam to achieve the Bank's
superior goals.
 THE TRUE ISLAMIC BANK

• Based on the principle of 'lending' in a bank institution, the Qardhul Hassan

principle mentioned more than six times in the Qur'an should be the basis -
with lenders lending to banks and banks lending back to customers - both in a
spirit of ' good intentions' without expecting a return.
 THE PROBLEM WITH QARDHUL HASSAN BANK

• Although it has been organized for the past 15 years, the response has been rather cold -
in particular because it does not meet the needs of customers, especially the group of
depositors who still expect a return on deposit in the bank.
• In fact, the core issue is not this rate of return because in fact the bank only pays a rate of
1 - 2% per annum.
• The core issue is the structure of the bank itself
WAQF AS THE ANSWER TO THE CORE
OF ISLAMIC BANKING SYSTEM

• Muslims in Malaysia generally understand the principle of Waqf compared to Qardhul Hassan.
• In Malaysia the principle of waqf is based on a very specific definition in the strict Shafii
Mazhab - 'as an irrevocable gift to the perpetual beneficiary of one's benefit as a contribution'
• The more liberal Maliki sect in Waqf's definition allows for three important aspects of Waqf in
practice:
• First, the Maliki School allowed the ‘cash Waqf’ business to be carried out.
• Second, the Maliki School allows 'Waqf Investment'
• Third, the Maliki School allows Waqf to be performed for a limited period - usually 3o years
- after which the property is returned to the owner for them to decide to extend the waqf
period or terminate the waqf agreement.
 WA Q F B A N K A S T H E I D E A L A N S W E R

• Muslims are more willing and willing to invest in waqaf bank shares as the superior financial institution of
the ummah.
• Muslims are also willing to invest in the Waqaf Cash through banks - as is the case with Bank Muamalah.
• Both upperclassmen immediately transformed the bank's structure from an individual-owned financial
institution to a God-owned institution.
• It also changes the customer deposit status to waqaf cash contribution. What remains is the principle of
using the bank's financial assets.
 DEVELOPMENT OF WAQF BANK
WORLDWIDE
• In Turkey - since the Ottoman era in the 15th and 16th centuries. Now waqaf banks are owned by the
government - collecting waqf cash - Banks carry out bank business like conventional banks include
charging a profit rate - about 15% per annum.
• In Malaysia - we started with the introduction of cash waqf - through Islamic banks.
• In Pakistan - Waqaf Bank was established with waqaf contributions - doing regular bank business -
and making contributions to charitable and social projects.
• In India - waqaf banks are established with waqaf funds and do regular bank business.
• In Bangladesh - Grameen Bank is considered a waqf bank and assists in microfinance - charging a
profit rate of over 15%. Social Investment Bank is also established as a waqaf bank.
• Indonesia plans to set up a waqf bank that does not charge a profit rate and is set up with a waqf fund.
 WHY THE WAQF BANK MODEL IN TURKEY
DOES NOW GROW WELL ?

• The Otomman waqf bank model is based on the definition of Waqf based on the Hanafi
and Hanbali schools: ‘as withholding the mate of waqf property and donating or
endowing its benefits for charitable purposes’.
• Today's practice with cash waqf in Turkey is - inviting the public to make cash waqf
deposits for a period of time.
• At the end of the period, the waqf deposit and its profits are returned to the depositors
who will usually dedicate it to welfare.
 CAN MALAYSIA BE THE PIONEER IN
SETTING A TRUE WAQF BANK ?

• The limitation is the use of the word waqf itself.

• In terms of structure - it can be established initially as a limited company that
invites shareholders to invest in the company - Its shares are then waqfed.
• The company was later transformed into a waqf bank.
 WAQF BANK MANAGEMENT

• Waqf bank needs to be managed by the best team of professional bankers using
the existing Muslim Bankers team that exists today.
• They will initially manage a limited company with the target of managing a
planned genuine waqf bank.
 ACTIVITIES OF INSTITUTION WHILE
WOORKING TO BE A TRUE BLUE WAQF BANK

• It can start Islamic banking activities such as:

• Micro financing facilities as a finance company
• The convenience of al-Rahnu
• Qardhul Hassan facilities for the poor and desperate groups Facilities
• ijarah, venture capital and other Islamic financing.
 FINANCIAL ACTIVITIES OF WAQF BANK
• Receive waqf investments in the form of bank capital contributions on an ongoing basis.
• Accept cash waqaf deposits
• Implement regular Islamic banking - including receiving deposits in the form of mudharabah,
Musyarakah, wadiah and others.
• Provide loans in good name to the poor, needy and desperate.
• Creating Islamic financing facilities such as Mudharabah, Musyarakah, Venture Capital, Ar Rahnu,
Ijarah and other roads.
 LIMITATION IN THE
INCORPORATION OF WAQF BANK

• The use of the word 'Waqf' in Malaysia is restricted to Baytul Mal in each state
only.
• The use of the word bank will limit activity due to BASIL rules internationally.
• The capital requirement to set up a bank in Malaysia is huge - over RM 2
billion.
• Bank licenses in Malaysia have been suspended because BNM wants to
rationalize bank institutions by consolidating banks to make them stronger.
 SETTING UP AN UNUTILISED LAND
AND PROPERTIES CLEARING HOUSE
• Many Muslim families who have land, houses and other properties purchased, are saved because their value is
always rising above the annual inflation rate.
• This property is kept with the hope of being passed on to children and families.
• While waiting for the children to become big enough and ready to receive this legacy, the land and property are
abandoned.
• Some lands and properties are left vacant due to the issue of inheritance disputes.
• If the head of the family can first provide this property temporarily to the ‘Assets clearing house’ institution to
be managed, this property may be beneficial to Muslims.
• This property will be advertised to find users who can take advantage of it while it is not being used. The
results can be shared together including the owner.
• Some of the proceeds will go into the waqf fund.
• The waqf institution can manage this asset clearing house and earn income in the form of 'Professional fee'
based on the income of the property.
• This will indirectly mobilize the wealth of Muslims to be utilized to implement economic projects such as -
agriculture, livestock, manufacturing or any other business services activities.
 T H E TH I R D S E C TO R E C O N O M Y – T H E VO L U N TA RY S E C TO R
( I J T I M A’ I E S E C TO R )

• The whole world has been actively changing from a capitalistic economy to a volatile economy.
• Two world class economies - ASP - Anglo Sexan model based on free market and capitalism and ESP - European
social model based on social welfare.
• Although Malaysia is more like ASP due to the colonial history of Great Britain adopting ASP, as a nation that has
adopted Islam as a federal state, we should highlight the Ijtimaie sector as the backbone of economic development.
• The ijtimaie sector is a complementary sector in the economy based on charity.
• It is divided into three parts.
• The three components that make up the ijtimai sector:
• First, general charity.
• Second, charity is obligatory.
• Third, almsgiving lasts.
• All three of these gifts are donations or voluntary donations. Donations made without coercion with the intention of helping others
without expecting rewards.
 WA Q F A S A F I N A N C I A L I N S T I T U T I O N T H AT I S C L O S E T T O T H E I S L A M I C P R I N C I P L E O F
BAITUL MAL

• The word waqf is derived from the term "waqf" or "waqafa" (plural) in Arabic meaning "to hold," to "stop" or to "stop"
(Dictionary of Modern Written Arabic).
• Wakaf also means "freeze" of ownership of certain benefits when it is associated with property such as land or
buildings. Stopping means handing over the entire property to the original owner, Allah SWT.
• The hadith narrated by Imam Bukhari has become a locus classicus among Islamic scholars when discussing wakaf.
• The meaning of the hadith is: “That Saidina Umar ra once said: O Rasulullah SAW, I have obtained a property that I
have never acquired before and I want to approach Allah SWT through it, then the Prophet SAW replied, Hold
(wakafkan) the original property and donate the result.
• Then Saidina Umar made his fortune (land acquired in Khaibar as a gift that cannot be sold, bought and inherited
”(History of al-Bukhari, No. Hadith 938).
• The uniqueness and uniqueness of waqf lies in the concept of separation between ownership rights and usage rights.
• It is on this basis that the benefits that can be enjoyed from endowment assets are permanent as they do not depend on
the owner entity which is temporary in nature.
• Hadith narrated by Imam Bukhari and Muslim that Rasullullah SAW said which means, "If Adam's son is dead, then
give up all his deeds except three; alms jariah, knowledge that is utilized and pious children who pray for both "(Muslim
History, No. Hadith 3084).
 ROLES AND DEVELOPMENT OF WAQF INSTITUTION

• In the Middle Ages, most of the welfare and social services in the Islamic world were donated through waqf institutions.
• In fact, almost everyone at that time benefited from waqf resources in the Middle Ages, much of the welfare and social services
in the Islamic world were donated through waqf institutions.
• In fact, almost everyone at that time benefited from the source of wakaf.
• During the era of Seljukid rule and the Ottoman empire from the middle of the 8th century until the end of the 19th century,
thousands of individuals regardless of creed and self-interest endowed their property for the progress of society.
• Famous buildings called kulliye were built, supervised and implemented through the funding of wakaf institutions.
• According to Hussain Nagamia (1986) in his book "Islamic Medicine History and Current Practice" states that the idea of a
hospital as an institution to treat patients did not exist before the advent of Islam.
• During the time of the Abbasids (754-1258M), Ayyubiah (1171-1249M) and the Ottomans (1299-1924M), waqf institutions
continued to grow rapidly with the construction of thousands of schools, madrasahs, libraries and universities.
• There are more than 70 schools fully funded through the resources of the 12th century Jerusalem.
• Meanwhile, a total of 142 universities in Turkey, 87 schools and universities in Cyprus and 800 and 786 universities in
Cecennestan and Azerbaijan respectively were developed and funded by waqf resources.
• The al-Azhar University of Egypt, founded in 975 AD, is the oldest university in the world, fully funded from the sources of
education and free education from primary education to university education (Hashim 1990).
 FOUNDATION ROLES IN THE WESTERN TRADITION.

• A study by The Sutton Trust (2014) found that 10 top universities in the United States and the United Kingdom each
raised RM417.6 billion and RM55.25 billion respectively.
• A study by the National Association of College and University Business Officers found that RM1 trillion was funded
at 120 universities in the United States.
• Harvard University in the United States alone raised a total of RM86.9 billion in the form of financing used to fund
educational and research activities, library maintenance and scholarship fund operations.
• The Alfred P. Sloan Foundation, founded in 1934, has assets of RM5.2 billion aimed at helping and supporting the
development of science and technology, improving economic and life performance, education and civic programs.
• Establishment of trust funds and charitable foundations or foundations based on the concept of waqf established and
flourishing in Western countries.
 HISTORY OF WAQF INSTITUTIONS IN
MALAYSIA

• In the early 20th century - in 1918 the Sultan Umat in Trengganu has created
several forms of waqf to finance religious education.
• Waqf real estate then growing.
• The only institution that has established the waqf of Capitan Kling Mosque in
Penang in 1801 and then followed by the Waqf to Acehnese royal family also
in Penang.
 THE POWER AND ADMINSTRATION TO
ESTABLISH WAQF INSTITUTION IN MALAYSIA

• The Constitution of Malaysia, articles 74 (2) and (3) stipulates that Islam is the religion of the Federation.
• The State Islamic Religious Council (SIRC) or State Islamic Religious Council (MAIN) is established in
each state and is given the authority and responsibility to administer Waqif property for the benefit of the
waqif as specified in the Deed in the foundation.
• Previously, community leaders including Qadis, Imams and village heads were appointed as waqf
(mutawali) administrators - without specific documents and responsibilities.
• States such as Johor and Perak then enacted an enactment limiting the power of the public in managing
public waqf.
• Tun Abdullah Badawi, who was prime minister in 2005, reaffirmed Malaysia's position as an Islamic state.
• But to this day the court's court still stresses the special power of the civil court compared to the shari'ah
court which has caused many public waqf property to be left to private individuals.
 WAQF, SHARI’AH AND THE CIVIL LAWS

• Although the source of shari'ah on waqf is Al-Qur’an and al-Hadith the prominence of waqf institutions in the economic system in Malaysia is
still as an Islamic country is still limited.
• Although there are many forms of waqf that can be practiced based on Islamic principles - such as :
• Waqif fi Ahli (Waqif Zhurri) for family members,
• Waqif al awlad (mushtarak) special for specific purposes,
• Waqif Khayri for donations and donations,
• Waqif al-sabil for the public and
• Waqif al-awaridh for emergencies and unforeseen circumstances Waqif real estate, Waqf Company, Waqf cash,
• Waqf Mubashar (direct waqf) and
• waqf isithmari (Investment waqf) Results based waqf –
• istithamari waqf - investment waqf for income and
• waqf mubashar - waqf assets to provide public services
• Waqf in Malaysia is controlled under the state government, each of which has its own rules.
• Conflicts between shari'ah law and the secular legal system still exist.
• This makes reforms in waqf law not easy to do.
 CONSTRAINT AND LIMITATION OF THE
USE OF WAQF TERM IN MALAYSIA

• Due to the misuse of the waqf symbol in the practice of generating Ijtimaie economy in the
past, the State Islamic Religious Council (MAIN) has restricted the activities of the Waqf
and ensured that it was only done under the management of the Islamic Religious Council.
• This limits the activities of Waqf and Ijtimaie among the general public.
• This situation is exacerbated when MAIN is seen as an institution controlled by the state
government which is heavily influenced by the politics of the state government and the
ruling government in each state.
• The public is more confident and interested in waqf activities initiated and administered by
the private sector.
• The federal government is not even free to use Waqf institutions in Malaysia.
• The government needs to receive the blessing of the King in the Supreme Court to establish
the waqf and this waqf must be governed by the MAIN or its representatives as Mutawali.
• There are some MAINs such as Johor and the Negeri Sembilan State which are quite open
that allow private waqf institutions to be set up to administer waqf property
 THE ANSWER TO THE CONTROVERSIAL
ISSUE ON IJTIMAIE SECTOR

• How can Waqf institutions sponsored by institutions other than those under the
control of MAIN be established and activated in Malaysia.
• Several attempts have been made by some parties to establish public Waqf
which is not controlled by MAIN - in Selangor, Perak, Kedah, Melaka and the
Federal Territories.
• Perhaps the solution is to return to the basic principle of Ijtimaie (voluntary)
based on the principle of charity.
• The principle of almsgiving is broader and covers waqf which is limited to the
termination or limitation of ownership.
• The establishment of public institutions based on the principle of public
ownership such as the Foundation is a broader option.
• The foundation has been used for thousands of years along with Waqf in Islamic
civilization.
 FOUNDATION AS AN IDEAL INSTITUTION
FOR SADAQAH AND DONATION

• In America alone in 2014 over USD 55 billions were donated to the foundation.
• Foundation is derived from the old French word ‘Fondacion’ or from the Latin
word ‘fundationem’ meaning ‘a founding’ which means ‘to lay the foundation
or foundation’.
• The foundation or foundation is defined as 'the establishment of an institution
with an endowment system to finance it.' It is a 'fund that is backed up for good
deeds or donations.
 ENDOWMENT INSTITUTION FOR
UMMAH PROSPERITY

• Endowment is usually arranged as a trust, private trust or public charity.

• There are several types of endowments that can be created:
• Unlimited endowment - where assets can be used, stored and distributed at the discretion of the
donor institution.
• Conditional endowment - which stipulates that only after a certain period of time an amount of
original capital can be used.
• Endowment - quasi - where the fund is targeted for a specific purpose and capital (corpus) will
be maintained while the investment income from it can be expended under the conditions of
initial establishment.
• Limited endowment - where the original capital (corpus) will be held indefinitely while the
income from it will be spent according to the donor's wishes.
• Using original capital to pay off debt or operating expenses is considered invading and
requires government approval.
• The foundation will practice the principle of limited endowment in its operations.
THE BASIC STRATEGY OF FOUNDATION

• The general goal is to mobilize the capacity of the ummah to create maximum
capacity in contributing to the well-being of Malaysians.
• The strategy is broken down into several stages as follows:
• Short-term strategy
• To raise sufficient funds to implement the program is helping its special community to
address the urban poverty crisis.
• To structure the development of the foundation to make it a world-class Endowment
institution in administering endowment assets.
• To organize marketing and promotion programs at the global level in attracting donors and
investors to mobilize the financial capacity of the ummah.
 BASIC STRATEGY (CONT’D)

• Mid-term strategy
• To arrange strategic ventures with Bank Negara Malaysia, Securities Commission,
JAKIM and JAWHAR to launch virtual currency globally.
• To design and implement the establishment of a 'Waqf dinar' based on the principle of
'crypto currency using block chain technology.
• To plan marketing and promotion at the level of: Investors and currency users
Merchant (merchant) to receive currency International investors and traders
 BASIC STRATEGY (CONT’D)

• Long-term strategy
• To plan and implement endowment income management programs with the ultimate
goal of ensuring the well-being of Malaysians and Muslims around the world.
• To plan and implement programs attract more public funds to be mobilized to achieve
the highest common goals.
 FAMILY COPERATIVE
DEVELOPMENT CORPORATION
• 'Properties Development Cooperative' is a cooperative organization based on the cooperative's expertise in home ownership.
• The cooperative will invite individuals who can not afford but want to own a house to become members, with the number of
members limited to the number of houses to be built.
• The cooperative will then find suitable land to develop and begin real estate development activities with the help of a
contractor.
• This cooperative will seek funding from waqf institutions such as AFM which will lend capital for the purchase of land and
house purchase as well as the process of breaking down grants etc.
• When the house is ready to be built, each member will occupy the house of their choice before planning and occupying the
house.
• Tenants will pay the rent at a reasonable rate to repay the debt for the institution over a period of 20 years with a very low cost
of financing.
• At the end of 20 years after the debt has been paid off, the homeownership will be transferred to each member of the home
and the co-operative will be dissolved or turned into the Real Estate Manager of the residential area.
• AFM's goal is to build 100 - 200 houses in each cooperative and create 20,000 cooperative cooperatives within 20 years
(which only requires RM 4 billion in capital).
• This will allow more than 2,000,000 million homes to be built within the period at a minimum - less than RM100,000 each
(based on a 1,000 square foot home on 3,000 square feet, on the edge of the property).
• The goal is for each family to set up a cooperative like this for their relatives and neighbors.
 LAUNCHING OF E-DINAR AS AN E-
WALLET AS A STARTER
• As a first step in the launch of the Waqf Dinar currency, the Foundation will first launch its E-wallet which will be named
E-Dinar.
• E-Dinar will be the basis of virtual payment methods such as Touch & Go, Boost. AEON wallet and Mpay. There are
currently 42 e-wallet manufacturers in Malaysia with 37 by non-banks and 5 by banks.
• There are two types of ewallets - one called 'network based e-wallet' which stores digital money such as Touch'n Go, We
Chat Pay, Grab Pay and Boost.
• Another is called ‘Card based e-wallet’ which operates with credit cards such as VISA, Mastercard and China UnionPay.
• These are BigPay, Mpay wallet, AEON Wallet and Merchanttrade Money e-wallet. Basically customers will make top-ups
on e-wallt from bank accounts, credit cards, Debit cards.
• Online transfer or MOLPay cash at 7-Eleven. E-Wallet offers services - convenience, security, mobility, savings and
promotion AFM will collaborate with website administrators, virtual markets such as BMF, AliBaba, LAZADA and
mechants across Malaysia including a mini-station to accept e-Dinars as payment.
• The Foundation will promote donations into the Endowment Fund to e-Dinar holders.
• The Foundation will also receive service payments from merchants on payment services via e-Dinar.
WAQF DINAR PROGRAM LAUNCHING

• If well-planned and sustainable, the Waqf Dinar can be launched within 2 years.
• The proposed work schedule for this Waqf dinar is included in the next slide.
• Currency targets that will be released according to schedule are also included in the
following slides.
• Waqf Dinar is a new currency that acts just like ‘Bit-Coin’ and Ringgit (MR).
• It is a virtual currency based on the concept of e-wallet but is a further step in the
Mobile money system.
• The three forms of currency to be launched are:
• Investment token - Waqf dinar for investment
• Consumers token - Waqf dinar for trading Waqf token
• Waqf dinar for eternal investment – permanent waqf
 SEVERAL WAQF INSTRUMENT THAT
HAVE BEEN ATTEMPTED BEFORE

• Several Waqf instruments have been launched:

• Waqf Investment
• Bank Waqf Turkey
• Corporate Waqf - pioneered by the Johor Corporation
• Waqf Hartanah - Proposed development near Masjid Besi, Putra Jaya
• Waqf cash - pioneered by Baitul Mal Selangor and Bank Muamalat
• Waqf Crowd funding - launched by the Malaysia-Indonesia Waqf Crowd Fund.
• Waqf Sukuk - launched in New Zealand to process qurban animals.
 CRYPTO DINAR AS A WAQF
INVESTMENT

• This instrument will attempt to combine some of the following elements:

• Sukuk-based investment instruments
• Using Gold metal as the basis of ‘hedging’ using ‘Sallam’ contract
• Make the most of the funds raised for the waqf project.
• This instrument is created as a form of incentive to cultivate a culture of
waqf.
 CRYPTO DINAR

• Named Cyrpto dinar because it will be a form of currency based on Gold as a

backup.
• Crypto implies the criteria of indelible ledgar (Indeletable ledgar).
• It is also a retail sukuk instrument (retail sukuk) that will be traded in small volumes
- such as a gold gram as a minimum.
• It only exists as a virtual currency that will 'facilitate' investment in waqf projects
that promise potential profits to its investors.
• The currency will be weighed in the weight of gold - based on a piece of the virtual
Dinar of gold.
 INVESTMENT MANAGEMENT OF THE
WAQF INSTITUTION

• Waqf institutions will be created in the form of ‘International Waqf Foundation’.

• The foundation can be upgraded to an international Waqf Foundation at the right time.
• Its trustees will consist of the best personalities representing countries in the
archipelago - Indonesia, Malaysia, Thailand, Brunei, Philippines, Cambodia and other
interested countries.
• 'Crypto dinar' investment will be marketed worldwide through Internet media - social
media and e-commerce portals.
• The investment will be recorded in the crypto ledger system created and stored in
partnership with Bank Rakyat Bhd.
 WAQF MANAGEMENT INVESTMENT
PROGRAM

• Funds raised through the sale of Crypto dinars will be managed

through a team of Muslim professional fund managers.
• Funds will be divided into three sections
• Funds for the Waqf project 60%
• Affordable housing program for low-income rollers Education
programs and educational investments Microfinance program
• Funds for hedging in gold metal - As-Salam contract - 10%
• Funds for authoritative investments to create profits to pay
management costs and returns to investors. - 30%
 OPTION TO INVESTORS

• Investors will always be given a choice whether to:

• Waqf their investment permanently or continue to hold the investment as their
property in the long run. No fixed redemption period will be determined. Investors
can give 6 months redemption notice at any time.
• Waqf monthly investment return as a jariah (donation) effort.
• The goal is to cultivate the culture of waqf and encourage the public to give in the
form of Waqf,
 LAUNCHING OF CRYPTO DINAR

• The proposal is to launch the International Waqf Foundation and this Crypto Dinar
instrument as a form of retail sukuk investment throughout the archipelago.
• Crypto dinar will be a pioneering instrument of waqf-based investment that will
foster a culture of waqfing part of family wealth as a superior sustainable
investment.
• This investment will continue to be utilized to enable the planned waqf program.
 CONCLUSION

• What is outlined in this presentation is the vision, mission and program of the implementation
of Waqf as an institution and investment instrument with the aim of mobilizing the financial
capacity of Muslims.
• It is debated why we should shift the focus from the Islamic banking system (Muamalah) to
the Waqf institution as the main financial institution of Muslims worldwide.
• It emphasizes on the program to generate financial capacity of Muslims in addition to related
projects.
• A ‘downstream’ program specifically in an effort to eradicate poverty and distribute the
foundation’s income to the target group is definitely the ultimate goal of this Waqf foundation.
• In Shaa Allah this will be covered in the presentation of other panel members.
WAALLAHU A’LAM

THANK YOU