INCEIF
2/5/2014
1
CONTENTS 1. 2. 3. 4. 5.
Flexible Shariah Aspect of waqf Main objectives of creating waqf Current situation of waqf properties Parameters for redeveloping the waqf properties Innovation and creativity in redeveloping old waqf properties (current cases) 6. Modern applications of cash –waqf 7. Proposal for CWFI as a fund raising scheme 2/5/2014
INCEIF
2
1. FLEXIBLE SHARIAH ASPECT OF WAQF i. ii. iii. iv.
2/5/2014
Definition of Waqf Essence of Waqf in Al-Quran & Hadith Flexibility in deriving its law Activating the ten stipulations to meet the current needs
INCEIF
3
i. DEFINITION OF WAQF The terms, waqf, habs, tasbil all mean ‘to stop, to restrain’ i.e. devoting in the way of Allah “The confinement of an asset, movable or immovable, by a founder and the dedication of its usufruct in perpetuity to the beneficiaries” 2/5/2014
INCEIF
4
ii. ESSENCE OF WAQF IN AL-QURAN & HADITH َّللا ِب ِه َعلِيم ِ لَنْ َت َنالُوا ْال ِبرَّ َح َّتى ُت ْنفِقُوا ِممَّا ُت َ حب َ َّ َُّّون َو َما ُت ْنفِقُوا ِمنْ َشيْ ٍء َفإِن
By no means shall ye attain righteousness unless ye give (freely) of that which ye love; and whatever ye give, of a truth God knoweth it well. (Surat al-‘Imran, 3:92) إذا مات االنسان انقطع عمله إال من ثالث؛ صدقة جارية وعلم يُنتفع به وولد صالح يدعو له
The Prophet (s) said: When a man dies his acts come to an end, except three things, recurring charity, knowledge (by which people benefit), and pious offspring, who pray for him. 2/5/2014
INCEIF
5
iii. FLEXIBILITY IN DERIVING ITS LAW No clear reference to the word waqf in the Qur’an, Early Muslim jurists relied on the Sunnah of the Prophet (pbuh) and the practices of his companions to derive its laws.
Being a deduced law, this allows the different schools of fiqh a certain measure of flexibility in deriving its law, based on the following Qur’anic verse; ي ُِري ُد ه َّللا ُ ِب ُك ُم ْاليُسْ َر َوالَ ي ُِري ُد ِب ُك ُم ْالعُسْ ر
God intends every facility for you; He does not want to put you in difficulties (Surat al-Baqarah, 2:185). 2/5/2014
INCEIF
6
iv. ACTIVATING THE TEN STIPULATIONS (Give flexibility according to current needs)
1. Ziyadah (Increase) and Nuqsan (Decrease) 2. Idkal (Addition) and Ikhraj (Removal) 3. I‘ta’ (Granting) and Hirman (Dispossession) 4. Taghyir (Replacement) and Tabdil (Conversion) 5. Istibdal (Substitution) and Ibdal (Exchange)
2/5/2014
INCEIF
Beneficiaries
Waqf Assets
7
2. MAIN OBJECTIVES OF CREATING WAQF Avenue for founders to get continuous rewards. Fulfill the needs of beneficiaries according to the different societies and the different needs. Opening jobs for the majority of people. Ensuring the perpetuity of the waqf property.
2/5/2014
INCEIF
8
3. SITUATION Of WAQF PROPERTIES
WITHIN THE PAST DECADES Huge number of old waqf properties are undeveloped. Founders’ condition are not fulfilled for many years. Rights of the beneficiaries are not met. Many unresolved court cases between trustees and family members. Role of waqf becomes idle, unproductive, and a burden to the different governments. The recent revival of this institution in Muslim and Muslim minority countries shows an optimism approached in galvanizing its role again.
2/5/2014
INCEIF
9
4. PARAMETERS FOR REDEVELOPING WAQF PROPERTIES i. ii. iii. iv.
2/5/2014
Legal conditions Types of waqf Economics and investment climate Financing options
INCEIF
10
i. LEGAL CONDITIONS WAQF DEED/WAQFIAH Land title – registered as waqf (masjid, religious school, hospital, agricultural land, etc.) Founder’s condition (has to be respected) Beneficiaries (rights have to be met) Perpetuity of the waqf (has to be ensured)
2/5/2014
INCEIF
11
ii. TYPES OF WAQF Religious waqf: Mosques, Islamic school, cemeteries, shrines, etc. Investment waqf: Residential, commercial agricultural, industrial, cash. Social waqf: Schools, universities, hospitals, clinics, orphanages, elderly homes, etc.
2/5/2014
INCEIF
12
iii. ECONOMIC AND INVESTMENT CLIMATE Legal feasibility: Legal requirements – fatwa/permits Market and sector study: which project to selected, and how to be implement it without violating founder’s condition Project description: Location environemtn / religious, investment or social. Total cost: Budgeting of waqf project and which mode of finance to select.
2/5/2014
INCEIF
13
iv. FINANCING OPTIONS Traditional Modes of Finance Modern Modes of Finance Cash waqf finance
2/5/2014
INCEIF
14
5. INNOVATION AND CREATIVITY IN REDEVELOPING OLD WAQF PROPERTIES 1. 2. 3. 4. 5. 6. 7. 8.
Rumah well waqf in Madinah Waqf al-Baghdadi in Sudan Al-Awqaf al-Sinnariah of Sudan in Makkah Mosque in Bencoolen in Singapore Mujama‘ al-Zahab al-Tijari in Sudan Redeveloping old waqf buildings in Kuwait Al-Khan Residential Building in Sharjah Bandar Abbas in Iran
2/5/2014
INCEIF
15
CASE 1: RUMAH WELL WAQF/MADINAH • Founder: S. Uthman Ibn Afan (during the 1st century of Hijrah he bought the well from a Jewish for 20 thousand Dirham and donate it as waqf to benefit the community • Waqf property: Rumah well • Beneficiaries: Muslims and Non-Muslims to drink water
2/5/2014
INCEIF
16
Cont…
2/5/2014
As time past and during the Ottoman, the trustees realized that the surrounding area is a fertile land to grow date palm tree. This act was continued and more trees were planted during the current Saudi Regime until 1550 date palm trees were grown. Through selling the dates, half its revenue is spend on poor and orphanage and the other half was saved in the bank. Objectives met: Continuous rewards to the founder. Feeding beneficiaries rather than providing water to drink Open jobs for farmers and traders. Saved money as a source of capital to finance other projects according to community’s need. INCEIF
17
Cont…
2/5/2014
Recently the amount saved in the bank was used to buy a land near al-Haram and build 5 stars hotel. Again objectives met: - Continuous rewards to the founder from other channel. - Open more jobs for contractor, workers and hotel staff. (initial stage) - Shelter for visitor from the different countries The revenue generated from this hotel half of it for the poor and orphanage and the other half will be saved again in a bank under the name of S. Uthman for new productive project in the future. INCEIF
18
CASE 2: WAQF AL-BAGHDADI/SUDAN Waqf Property : Waqf al-Baghdadi, a waqf land established in 1930. Trustees: Islamic Endowment Corporation IEC Beneficiaries: Part for the medical students of Khartoum University, part for the maintenance of the medical faculty, and part to create new waqfs. Finance: The IEC entered with the Islamic bank through traditional mode, long lease contract to redeveloped this idle waqf property into 8 story commercial building for 99 years. To ensure its perpetuity: Renting contract follows ijrat al-mithl /market price. IEC put a signboard on this property declaring it ‘Waqf Property’. Note: objectives of waqf has been met. 2/5/2014
INCEIF
19
CASE 3: AL-AWQAF AL-SINNARIAH SUDANESS WAQF IN MAKKAH
Founder: Sultan of Sinar created a waqf in Makkah in 1880s Trustees: Islamic Endowment Corporation Beneficiaries: Sudanese pilgrims Mode of investment traditional: al-istibdal /substitution (since extension is needed for al-Haram in Saudi Arabia, the trustee agreed to this mode - general Maslahah). The Saudi government replaced the Sudanese waqf, with another property in Makkah for the same beneficiaries. Note: objectives of waqf has been met. 2/5/2014
INCEIF
20
CASE 4: MOSQUE IN BENCOOLEN/SINGAPORE Waqf property: Mosque in Bencoolen Founder: Syed Omar Ali Aljunied in 1845 (simple structure) Trustee: In 1906 Rajab Ally bin Kassim Jeammedah requested that the mosque to be used as a place of worship and to receive rent and profit for the maintenance and payment of salaries to the khatib, Imam and Bilal. (inclusion of beneficiaries) (In 2000 the government wanted to make istibdal to this mosques in order to build a huge commercial building) 2/5/2014
INCEIF
21
Cont… Trustees: MUIS Provider of funds: Baitualmal/Muslim treasure Mode of Finance: The project was financed through Musharakah Sukuk ($35million Musharakah sukuk was issued for the development of a mixed-use property) Warees : Provide the management expertise. In 2001 the mosque was redeveloped as part of a mixed development comprising of a commercial block and a 12-storey residential complex which was operated in May 2004. The mosque accommodate about 1,100 Muslims. 2/5/2014
INCEIF
22
INNOVATION/CREATIVITY IN DEVELOPMENT Objectives of waqf has been met. Met government demand. Condition of the founder respected Right of beneficiaries were met. Open jobs for a number of sellers, and provide goods and services to a number of customers. Provide accommodation for many people. 2/5/2014
INCEIF
23
CASE 5: MUJAMA‘ AL-ZAHAB AL-TIJARI /SUDAN Waqf property: Waqf land left idle for almost a century, situated in the capital city of Kharotum Founder: unknown Beneficiaries: unknown Trustees: The Islamic Endowment Corporation Financer: The IEC entered with an Islamic bank through Musharakah Mutanaqisah/Decrease Sharing to redevelop the old waqf property into Gold Commercial Center which is situated in a good location. New Beneficiaries: Gold trader, sellers, works, customers, besides part of the rent is channeled to the poor and needy. 2/5/2014
INCEIF
24
CASE 6: REDEVELOPING OLD WAQF BUILDINGS/KUWAIT 2004-2009
Waqf properties: idle waqf buildings (in total generated KD 511,968 only) Trustees: Kuwait Awqaf Public Foundation KAPF Financer: Islamic bank through Murabahah managed to reconstruct 38 old waqf buildings into new residential towers generating KD2,563,560 (5 times the previous amount) Beneficiaries: Accommodation for many families in Kuwait and a channel for poor and needy people in other countries. 2/5/2014
INCEIF
25
KAPF - PROJECT DEVELOPMENTS Old waqf buildings
.
.
Redeveloped
2/5/2014
INCEIF
26
Case 7: AL-KHAN RESIDENTIAL BUILDING/SHARJAH UAE • Founder: Ruler of Sharjah • Trustees: Sharjah Awqaf Trust. • Financier: IDB finance the construction of 12-storey residential building under ijara//lease finance worth $3.22 million. • Beneficiaries: Poor and needy children of Comoros Islands, (situated off the south-east coast of Africa, to the east of Mozambique and north-west of Madagascar)
2/5/2014
INCEIF
27
AL KHAN RESIDENTIAL BUILDING – SHARJAH, UAE Objectives of waqf has been met. Founder conditions has been fulfilled. Open jobs for contractors and workers to build it (initial stage) Accommodation for 48 families in Sharjah (i.e. 48 apartments). Open job for grocery shop/supermarket to service these area. Beneficiary are poor and needy people in other country (Comoros Islands) 2/5/2014
INCEIF
28
CASE 8: BANDAR ABBAS, IRAN
• Trustees: Iran Endowment Fund. • Financier: IDB finance the project worth $8.04 million under Build-Lease-Transfer BLT for the construction of a residential and commercial complex. • Beneficiary: 300 medium cost housing units.
2/5/2014
INCEIF
29
RESIDENTIAL AND SHOPS, BANDAR ABBAS, IRAN
2/5/2014
INCEIF
30
6. MODERN APPLICATIONS OF CASH -WAQF The last two decades witness the revival of the institution of waqf and the creation of movable waqf i.e. cash waqf in almost all Muslim and Muslim minority countries. Definition: “The confinement of an amount of money by a founder(s) and the dedication of its usufruct in perpetuity to the welfare of society” 2/5/2014
INCEIF
31
HOW TO CREATE CASH-WAQF {MOVABLE WAQF}
2/5/2014
THREE PARTIES
TWO KINDS
1. Waqif/founder 2. Mutawalli/trustee 3. Beneficiaries
1. Direct 2. Indirect
INCEIF
32
DIRECT CASH-WAQF 2. Mutawalli/Trustee
1. Waqif/founder Individuals
Organizations
cash-waqf
INSTITUTION/ORGANI ZATION/ NGO ====== Accumulated cashwaqf
3. Beneficiaries 80%
accumulated amount
Waqf school, college/university
Waqf hospital, clinic,
Old Waqf properties
Institutions 20%
To ensure the perpetuity of direct cash-waqf the accumulated funds must be channeled directly to re-develop waqf buildings.
INDIRECT CASH-WAQF 2. Mutawalli/Trustee
1. Waqif/founder Individuals
Organizations
cash-waqf
INSTITUTION/ORGANI ZATION/ NGO ====== Accumulated cashwaqf
3. Beneficiaries
10% management
20% SFD
Institutions School/college/ University
Invested according to shariah
evenue Hospital/clinic
70% Beneficiaries
Any specified property
To ensure the perpetuity of indirect cash waqf the accumulated funds must be invested in any halal project and only the revenue generated can be channeled to the beneficiaries, the management expenses and to add to the capital as a SelfFinance Device (SFD). 34 2/5/2014
CASE 1: WAQF SHARES/SUDAN • Waqf property: Idle waqf land located in the capital city (AbuJinzir) • Founder: Unknown • Beneficiary: unknown • Trustees: Islamic Endowment Corporation • Financier: self funding through waqf shares, the IEC issued waqf shares for an amount of SP 90 million the cost of building 10-storey shopping complex (i.e. 88 shops). • Beneficiaries: open jobs for trader, sellers and services for customers, besides allocating part of the rent to the poor and needy. 2/5/2014
INCEIF
35
CASE 2: COMPULSORY CASH-WAQF MODEL/SINGAPORE • Trustees: MUIS • Founders: - Semi-compulsory monthly contributions are made by Muslim employees in Singapore depending on their monthly gross income through an automatic check-off system. • The amount deducted from the salaries is channelled through the Central Provident Fund CPF, to Singapore Islamic Council (MUIS) who acts as the trustee. • Beneficiaries: The collected amount is channelled to finance charitable purposes such as building mosques, educational programs dau‘a centre, building old waqf buildings, etc. 2/5/2014
INCEIF
36
7. PROPOSAL FOR CWFI AS A FUND RAISING SCHEME Trustees: Islamic religious councils Founders: individuals, institutions, organizations, companies, banks etc. Fundrasing: cash waqf through salary dedication scheme similar to zakah Beneficiaries: redeveloping the old waqf buildings to regain their role in fulfilling the condition of the founders and in meeting the beneficiaries rights.
PAYMENT OF ZAKAT THROUGH TAX REBATE Monthly income RM
2,500 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 11,000 12,000 13,000 14,000 15,000 16,000 17,000 18,000 19,000 20,000 21,000 22,000 23,000 24,000 25,000
Income tax payment Zakat Payment RM RM Considered 1 wife & 1 Considered 1 wife & 1 child child
Nil 0 130 250 424 620 860 1100 1352 1612 1872 2132 2392 2652 2899 3172 3432 3692 3952 5460 5720 5790 5980 6500
30.42 41.92 64.92 87.92 110.92 133.92 156.92 179.92 202.92 225.92 248.92 271.92 294.92 317.92 340.92 363.92 386.92 409.92 432.92 455.92 478.92 501.92 524.92 547.92
Taxed amount RM
--65.08 162.08 322.08 486.08 703.08 920.08 1149.08 1386.08 1623.08 1860.08 2097.08 2334.08 2558.08 2808.08 3045.08 3282.08 3519.08 5004.08 5241.08 5288.08 5455.08 5952.08
Cash waqf
100
500
1000
1500
3000
ENCOURAGING PEOPLE TO CREATE CASH WAQF THROUGH TAX REBATE If we assume 10 million person would like to create cash waqf through tax rebate paying RM100/mth on average: 10,000,000.00 x RM100= RM 1Billion RM 12 Billion/year i.e. $3billion/year
This amount can be doubled and multiplied if all organizations are called to participate in CSR through this CWFI for few years (2-3 years) for the development of all waqf properties.
ESTABLISHMENT OF CASH WAQF FINANCIAL INSTITUTION CWFI .ri
Individuals Organization s
Banks
Institutions
Companies
Islamic Religious Councils as a Trustees to manage the Accumulated cash waqf e.g. RM 1 billion and to direct it to redevelop the old waqf buildings
List of old Waqf properties
2/5/2014
INCEIF
41
