THE INVOLVEMENT OF ISLAMIC BANKING IN WAQF ACTIVITIES

THE INVOLVEMENT OF ISLAMIC BANKING IN WAQF ACTIVITIES Nor Shahrina Mohd Rafien a*, Nur Hafidzah Idris, Nurul Izzat Kamaruddin & Siti Nurulhuda Ibrahim norshahrina871@melaka.uitm.edu.my Abstract Islamic Philanthropy is defined as charity contribution consists of zakah, sadaqah, waqf and infaq. The objective of Islamic Philanthropy is to assist those who are in need and to promote economy sustainability as well. Even though waqf is not an obligation for Muslim, its importance is as significant as zakat itself. Waqf has been proven as one of the tools in alleviating poverty around the world. Corporate bodies including Islamic bank act as one of the major contributors of waqf activities. Therefore, the study is to investigate the role played by the corporate bodies as an agent in spurring the economic growth as well as helping Muslims economy in general. It is hoped that this study can contribute to the development of philanthropy in Islam. Keywords: Waqf, Islamic philanthropy, corporate body, Islamic banking INTRODUCTION In Islam, Islamic philanthropy is introduced as a method of alleviating poverty. There are several instruments that are in use to assist the needy group such as zakat, infaq, sadaqah, hibah and waqf. Waqf is considered as a fund that cannot be withdrawn its right by the waqf giver (to be returned to Allah) and the benefit from the waqf property can be used for a perpetuates. Waqf has been practised during the lifetime of our prophet, Muhammad (PBUH) where the first waqf mosque is the Quba mosque in Madinah. This proven that waqf activities existed during in earlier era of Islam and continuously in practice till today. The types of waqf have now been enlarged to include modern instruments such as cash waqf and share waqf. Recently, awareness of corporate bodies in waqf activities gives huge impacts to the society and as a significant tool to alleviate the poverty in general. The involvement of corporate bodies in charity will lead less dependency on the government fund. In Malaysia, waqf giver (also known as waqf donor) will enjoy a tax exemption i.e. 7 percent for individuals and 10 percent for companies. Hence, in this study, Bank Islam Malaysia Berhad (BIMB) and Bank

Muamalat Malaysia Berhad (BMMB) were chosen as corporate bodies participating in waqf activities. The involvement of corporate bodies is to relieve the burden of the needy group as well as to alleviate the poverty. Monzern stated in his study, the categories of waqf beneficiaries are the poor, the needy, the orphans, the person in prison (jailed person) and others. AbulHasan, M (2002) focused on the role of waqf institutions in poverty alleviation. Poverty mostly is categorised as the lower income group or non-income factors due to poor health and low literacy rate and lack of access to opportunities such as physical facilities, resources and employment. This paper is organised as followed; the next section will discuss the overview waqf in general, followed by the role of waqf as an Islamic philanthropy instrument. Then, this paper will discuss in brief on cash waqf, followed by waqf and Islamic banking in Malaysia and ends with conclusion. THE CONCEPT OF WAQF Waqf come from the root word awqaf literally means To stop, to hold, to restrain, to detain, to prevent or preventing from disposition. Technically, it is referred as irrevocable dedication of a portion of one s wealth for the purpose of expanding its usufructs to legitimate causes or charitable & righteous ends with the overriding objective of getting closer to Allah. (ISRA, 2011). Ibn Manzur defines waqf as make an endowment of the land and give to the needy. Waqf is explained in Arabic word as hold, confinement or prohibition (K, Monzer). In Islam, waqf generally refers as holding certain property and preserving it for the confined benefit of certain philanthropy and prohibiting any use or disposition of it that is outside that specific objective. Some of legal evidences specifically focusing on Islamic philanthropy as a whole include waqf activities. It has been mentioned either through Qur anic verse or hadith. The Prophet (PBUH) mentioned in the hadith: Whence a child of Adam dies, his or her deed comes to an end except for three things; running and continuous sadaqah, knowledge that benefits (other) and righteous child who pray for him or her. (Hadith reported by Muslim, Tarmidhi, Abu Dawud, Nasa i and Ibn Majah).

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 goods you spend, Allah knows it well. (Al-Imran: 92) Based on the evidence mentioned earlier, Islam encourages Muslims to participate in charity activities especially to help or to reduce burdens of the needy, and the same time, the donor or giver will get the blessing from Allah not only in this world but also for hereafter. WAQF AS ISLAMIC PHILANTHROPY INSTRUMENT As mentioned earlier waqf is one of the contributor tools in alleviating poverty around the world. Therefore, it is also being used as a tool of wealth redistribution in achieving the economic development. Asmak (2009) stated that cash waqf was practised by the Uthmaniyyah period in bridging the gap between the needy group and the richest group by providing a variety community economic development activities such as education aid, health, welfare and other activities which benefited the community as a whole. To that extent, it can be seen that what we practice today in our community either through the involvement of the individual or corporate bodies in this kind of activity. Abd. Shakor (2011) highlighted that waqf is divided into two categories which are known as waqf khairi (solely on charities) and waqf zurri (family waqf). Waqf khairi is general waqf without concern on the waqf recipients while waqf zurri is specifically restricted to the benefit of the family. The researcher extended the form of waqf either immovable property or movable, where immovable property such as land and building such as mosque and school while movable property such as cash waqf and share waqf. CASH WAQF Other than physical property, modern instruments are also considered as the types of waqf. Cash waqf used to be established by well-off people for certain specific purposes (AbulHasan, M. 2002) either to be invested or generates income by giving loan out or utilising the earned income by financing the target project. Farhah et al (2014) defined cash waqf as the dedication of money from one s possession and establishing of waqf based on that amount and offering it to the benefit of people in general or allocating it to be used by some segment of the community only. As to date, the awareness of corporate bodies participating in waqf activities has been increasing tremendously. This is supported by studies (Khairi, K.F, Laili, N. H., N, & Sabri,

H, 2015) that review the cash waqf program of Maybank Islamic Berhad. It discusses the role of Maybank Islamic Berhad s Corporate Waqf Model in details. Thus, this study focuses on the involvement of full-fledged Islamic banking, namely Bank Islam Malaysia Berhad (BIMB) and Bank Muamalat Malaysia Berhad (BMMB). WAQF AND ISLAMIC BANKING IN MALAYSIA Malaysia has been practising dual banking system, namely conventional banking and Islamic banking sector. Currently, there are 43 banking institution operating in Malaysia either conventional or Islamic banking, local or foreign bank (Central Bank of Malaysia, 2013). For Islamic banking system, Islamic Banking Act 1983 (IBA) was introduced to allow the establishment of IBS alongside the Conventional Banking System. The IBS offers products and services in accordance with the Shariah law as well as principles which are subject to Bank Negara Malaysia regulation (Central Bank of Malaysia, 2006). The establishment of first Islamic bank in Malaysia was due to the success achieved by Lembaga Urusan Tabung Haji (LUTH) and to meet the needs of Muslim in Malaysia for a banking system that offers shariah based products and services. BIMB the first Islamic bank in Malaysia established in 1983 while BMMB was set up in 1990 to cater the increasing demand of Islamic banking to Malaysian, especially for Muslims. Currently, BIMB and BMMB are seriously participating in waqf or Islamic philanthropy activities. This is proven by the establishment of AMAL in 2015 by BIMB and Wakaf Selangor Muamalat by BMMB on 27 th September 2012 in collaboration with Perbadanan Waqf Selangor. The total waqf fund received by Wakaf Selangor Muamalat as at 31 st March 2014 is approximately at RM5, 687,238.39 and the disbursement amount is RM604, 133.80. There are some payment method to those who wish to channel their fund either through hibah from BMMB s Wadiah account from their deposit, cash payment and direct debit from saving or current account or by using a cheque. Meanwhile, the sources of fund for BIMB was from zakat payment, corporate responsibility (CR) funds, Amal Jariah, Bank Islam Infaq Sadaqah Programme and Surau Wakaf Ahmad Dawjee Dadabhoy. Activities or programmed conducted by BIMB and BMMB by using waqf fund can be illustrated in the following table.

Table 1: Aid disbursed by BMMB & BIMB Data Recipients Types of Aid Amount Bank Maahad Tahfid al-quran Wa Ulumuddin, Sungai Besar Hostel equipment 25,860.00 BMMB Pusat Jagaan al-fikrah, Kajang Medical equipment 35, 600.00 BMMB Mobile Clinic - 254,900.00 BMMB Pusat Dialisis Islam Makmur (PHIM), Kuantan 2 Units of Dialysis Machines 80, 000.00 BMMB Projek Bantuan Rumah Bantuan Rumah 4,700,000.00 BIMB School Adopted involving 18 schools Educational aid - BIMB Sources: Annual Report of Bank Muamalat Malaysia Berhad data & Annual Report of Bank Islam Malaysia Berhad (2014) CONCLUSION As a conclusion, the involvement of corporate bodies play a vital role in alleviating poverty, act an agent in spurring the economic growth as well as helping Muslim economy in general. This study reviews the role played by Islamic banking in Malaysia particularly fully-fledged Islamic banks. As mentioned earlier, both banks have their own initiatives by establishing AMAL and Wakaf Selangor Muamalat by organising charity activities or program. The programmes are divided into few categories activities such as community-building and educational support in protecting the environment and poverty alleviation. For further insight, the study can be expanded by conducting studies on other Islamic banks or conventional banking industry or other corporate sectors such as plantation, manufacturing, construction sectors involving Islamic philanthropy as a whole.

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