MODERN ISLAMIC LAW & ECONOMICS Waqf (Endowment) Mohamed Firdaus Kader Mohideen Head, Group Shariah Malaysian Industrial Development Finance

Ladies and Gentlemen, The wealth that we have presently in hand is to fulfil responsibility and upholding trust (Amanah) that the Almighty Allah had bestowed upon us.

Our asset is considered as the worldly beautification in this temporary world. The existence of these adornment makes things easier for our life in this world, like the land which we had bought, it facilitates us to build house, farming, planting trees and vegetables, and creating space and any other activities that we wish and would like to do.

The cars that we owned allow us to move to and fro from one place to another place , carrying out our daily activities. Our home enable us to make transaction with people and so on. In other words, what is termed as wealth is a facility for us.

When we are busy every day accumulating wealth, Allah explained that we should give some of our wealth whether it is a mandatory donation like the payment zakat or voluntary charity (Sadaqah) like donation that is voluntary in action such as endowments, grants , wills, charity,.

The order for this charity is described in the Holy Quran in Surah Baqarah verse 195: And spend in the way of Allah and do not throw [yourselves] with your [own] hands into destruction [by refraining]. And do good; indeed, Allah loves the doers of good.

Waqf is one of the means to infaq or give charity that is required and should be implemented by the Islamic community. The command for this Waqf was declared by Allah the Almighty in Surah Ali Imran verse 92 : Never will you attain the good [reward] until you spend [in the way of Allah ] from that which you love. And whatever you spend - indeed, Allah is Knowing of it.

A companion of the Prophet, Abu Talhah (RA), when he heard of this verse, quickly meet Rasulullah S.A.W and read this verse to him and gave his most valuable wealth, his garden that he named “Bairuha” located in a prime position near the Masjid Nabawi as Waqf and also advised him as to its distribution i.e. to his relatives

This garden was frequently visited by the Prophet whether to rest or to drink the water from the pool and also because it was nearby the mosque. Once Abu Talhah had endowed his garden, Rasulullah S.A.W repeatedly congratulated him, for his wealth would certainly give him the advantage.

In fact, not only Abu Talhah but other companions were racing to give their property like Saidina Umar Al-Khattab, R.A endowed a piece of land "Khaibar", Saidina Uthman R.A endowed a well for the use of the Muslims and so on. It is also reported that every Sahabah (companion), including the abovementioned companion, made a Waqf. For example, Abu Bakr Siddiq, Uthman Ghani, Ali Ibn Abu Talib, Zubair, Muaz ibn Jabal, Zaid ibn Thabit, Saad ibn Waqqas, Khalid ibn Walid, Jabir ibn Abdullah, and Abdullah ibn Zubair (RA) had all made a Waqf.

It is reported on the authority of “Abdullah ibn ‘Umar (ra) that ‘Umar Ibn Al-Khattab (ra) acquired land in Khaibar (153 km to the north of Madinah) . 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)

When the Muslim migrated to Madina there was severe shortage  of water which troubled the Sahabah (RA). There was only one sweet water well (known as the well of Rauma) owned by a Jew who used to charge exorbitant amount of money for his water. Our beloved Prophet Sayyidina Rasulullah (Sallallahu Alaihi Wassallam, SAW) promised house in paradise for the one who buys this well and dedicates it to the believers for their water needs. Sayyidina Uthman Ibn Affan (RA) went to the Jew and offered to purchase his well which the Jew declined.

Sayyidina Uthman Ibn Affan (RA) persisted in his offer and paid enormous money for half of the well. It is mentioned that Sayyidina Uthman (RA) paid somewhere around 20,000 Dirhams for half of the well which is enormous price even by today’s standards. Sayyidina Uthman Ibn Affan (RA) then made an agreement to have the well to him for one day while the Jew had the other day, on his day Sayyidina Uthman Ibn Affan (RA) gave out free water to anybody. The Islamic Dinar is a specific weight of 22k gold (917.) equivalent to 4.25 grams. The Islamic Dirham is a specific weight of pure silver equivalent to 2.975 grams. 7 dinars is equivalent to 10 dirhams.

Nobody came to fill on the day of the Jewish brother so he eventually sold off his half share due to absence of business. Sayyidina Uthman Ibn Affan (RA) dedicated the well for free water and it continues to pump water even until today.

Over 1400+ years due to abundant water the area around the well become fertile and developed a garden of high quality dates with as many as 1550 trees during the Ottoman rule of Madina. The entire area was endowed to Muslims by Sayyidina Uthman Ibn Affan (RA) and he never took a penny while the profits keep growing and growing.

The Accounts (today) are kept in a Bank Account in Madina even today of all the profits in the name of Sayyidina Uthman Ibn Affan (RA). Saudi Government has decided to build a Hotel with this money and the yearly earning are estimated to be 50 million Saudi Riyals. Half of the profits will be spent on the poor while the other half (of the profits) will be deposited back into the Account. 

In this case, how can the property be beneficial to him again after he endowed it to Allah? This question is answered by the Prophet through the following hadith: Abu Huraira (Allah be pleased with him) reported Allah's Messenger ﷺ as saying: “When a man dies, his acts come to an end, except for three, recurring charity, or knowledge (by which people) benefit, or a pious son, who prays for him (for the deceased).” The rewards for Waqf and shadaqah will be continuous to the giver even if he died as long as it and is used for the welfare of the Muslim community.

Waqf are alms deeds that give profit to the owners even after they passed away and no more in this world. This means that the rewards will remain constant to the person donating the property as long as it continues to benefit the Muslim community and is allowed by the Islamic legislation.

This is exactly the business we're doing with Allah swt that He promised we will not be at loss forever. Allah said in Surah Fatir, verse 29: Indeed, those who recite the Book of Allah and establish prayer and spend [in His cause] out of what We have provided them, secretly and publicly, [can] expect a profit that will never perish.

DEFINITION OF CASH-Waqf The terms, Waqf, habs, tasbil mean ‘to stop, to restrain’ i.e. devoting in the way of Allah “The confinement of an amount of money by a founder(s) and the dedication of its usufruct in perpetuity to the welfare of society”  

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 What is meant by Waqf (singular); Awqaf (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 law.

In Malaysia, management of Waqf assets are under the purview of State Religious Islamic Councils (SIRCs) under the respective state rulers/sultans. Each state has its own Waqf enactment laws. Under these enactments SIRCs 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.

TYPES OF Awqaf Generally, the creations of Awqaf in Malaysia fall within 3 major categories: Waqf `am (General Waqf) Waqf khas (special Waqf) Waqf al-mushtarak (Hybrid)

Waqf `am refers to any form of Waqf dedication aimed at general welfare or khairat without specifying any particular beneficiaries (individuals or organisations/institutions) or specific purposes. This category of Waqf is applicable to things or objectives directed towards general social welfare and charitable purposes. In contrast, Waqf khas is a type of Waqf with specified beneficiaries or purposes. Under this form of Waqf, the Waqif will identify the persons who are to benefit from the Awqaf or the purpose for which the Waqf must be applied.

The combination of Waqf `am and Waqf khas forms the hybrid category called as Waqf al-mushtarak. Waqf which is created from any type of property or established under any type of scheme will use either the Waqf `am or the Waqf khas concept.

Each type is treated differently in accordance with Islamic principles. It follows that for a Waqf khas, the mutawalli or the trustee has the responsibility to implement all the stipulated conditions of a Waqif unless they are opposed to Shariah and the law of the country.

The development of Awqaf properties in Malaysia has increased a great deal. Various approaches have been applied and these centre on the physical type of Waqf land developments. Awqaf hotels are the recent trend in the development of Waqf property. Four hotels have been built under the Waqf concept in the states of Malacca (Pantai Puteri), Perak (The Regency Seri Warisan), Terengganu (Grand Puteri) and Negeri Sembilan (Klana Beach Resort). Klana Beach Resort hotel, Port Dickson Negeri Sembilan, which is located at the Baitul Hilal Complex, also has an observatory with the largest telescope in the country, measuring 26 inches in diameter. The above hotels were built on Awqaf lands entrusted to the mentioned SIRCs. These huge projects were funded by the Malaysian government, and the respective SIRCs of those states are the sole trustees for their administration. The hotels are operated by the appointed companies through leasing contracts. Credit to ISFIRE January 2014 article by Dr Siti Mashitoh Mahamood

Waqf development is also significant in the area of medical and health services. For example, JCorp, through WANCorp and in cooperation with some of the SIRCs and support from KPJ Healthcare Berhad has developed and manages 20 Waqaf An-Nur Clinics (KWAN); one hospital Waqaf An-Nur Hospital (HWAN); and two mobile clinics in Johor on the fundamental of charity through Waqf concept’s adaptation. The main objective of their establishment was to provide healthcare treatment and dialysis facilities to the general public, in particular those in greatest need, regardless of their ethnicity and religion. Up to June 2014, a total of 1,001,115 treatments had been given to patients in the chain of KWANs. Out of those, 73,542 treatments were given to non-Muslim patients. Credit to ISFIRE January 2014 article by Dr Siti Mashitoh Mahamood

The total number of patients with kidney failure that have been receiving dialysis treatment in HWAN and KWANs are now 124. In addition, HWAN and the chain of KWANs not only provide healthcare treatment for a nominal charge of RM5 inclusive of medication but also offer dialysis treatment at a subsidised rate to the needy. Credit to ISFIRE January 2014 article by Dr Siti Mashitoh Mahamood

Imarah Wakaf (Menara Wakaf) is another unique example of a Waqf development project in Malaysia. It is a 34-storey Waqf building under the administration of MAIWP, located at Jalan Perak within the Golden Triangle vicinity of Kuala Lumpur City Centre. The building was built on 1.21 acres of Awqaf lands endowed by a wealthy Gujarati Muslim, the late Ahmad Dawjee Dadabhoy. The building incorporates Islamic architectural features with the latest in international building design. It was developed using Build Operate, Transfer (B.O.T) as well as the Islamic concepts of wakala, ijara and istisna`. Imarah Wakaf was the first large-scale commercial development project in the country constructed on Waqf land. Credit to ISFIRE January 2014 article by Dr Siti Mashitoh Mahamood

It involved 3 leading Islamic organisations, namely the MAIWP, Tabung Haji (TH,Malaysia Pilgrimage Fund Board) and Bank Islam Malaysia Berhad (BIMB). The project was funded by the TH at a cost of RM151 million, and has a 25 year leasing period. MAIWP as the land owner (i.e., the trustee) will receive RM56.6 million over that period. Imarah Wakaf is now being used as the Bank Islam Headquarters and is well known as Menara Bank Islam.

MAIWP has been provided with one storey of the building and there is also a place for prayer called Surau(Musolla) Wakaf Ahmad Dawjee Dadabhoy, (SWADD) named after the Waqif. It is believed and trust that MAIWP will receive RM700 million worth of this commercial Waqf building upon the completion of the BOT period. The above mentioned types of development clearly show that Awqaf are not just confined to traditional subjects, such as mosques and graveyards which are always associated with ritual or `ibadah purposes only, but also take into account commercial aspects. Credit to ISFIRE January 2014 article by Dr Siti Mashitoh Mahamood

What is important is that the profits or revenues of such mawquf (beneficiary) should ultimately satisfy Waqf purposes and benefit mawquf `alayh (i.e., Waqf beneficiary/ies). In fact, there are many other instances of property developments in Malaysia established under the Waqf concept which aim to meet the various needs of society, such as orphanages, business premises, educational complexes and women’s shelters. Credit to ISFIRE January 2014 article by Dr Siti Mashitoh Mahamood

SIRC of Johor (5 percent), JCorp (70 percent) and ; The Corporate Waqf introduced by the Johor Corporation Berhad (JCorp) falls under the category of Waqf of shares, whereby part of the units of shares owned by this corporation in its subsidiary companies are dedicated as Awqaf. The dividend income from these Shariah Compliant shares are distributed as follows: SIRC of Johor (5 percent), JCorp (70 percent) and ; 25 percent to general purpose charities. Credit to ISFIRE January 2014 article by Dr Siti Mashitoh Mahamood

Waqaf An-Nur Corporation Berhad (WANCorp) has been entrusted with managing all equity shares transferred by JCorp to Awqaf. WANCorp is a company established under limited guarantee by the JCorp and the appointment of the Nazir Khas (Specific Manager) to manage the shares, particularly the Awqaf.

There are two kinds of Waqf: Immovable property Includes land, fields, farms, or buildings such as mosques, schools, hospitals, or basic infrastructures such as bridges, roads, water supply etc. Movable property Includes cattle, books, money/cash, crops and weapons, shares of Joint-Stock Company, etc. Movable and immovable properties have been made Awqaf for general and specific purposes or beneficiaries, depending on the wishes of Waqifs.

Previously, Malaysians preferred their Awqaf to be established from immovables, consisting of landed properties, especially for the erection of Masjids (mosques), graveyards and Islamic religious schools. In the current context, Awqaf from movables are also included. These include cash Waqf, Waqf shares and Waqf of gold. The latter is a new kind of mawquf accepted by Yayasan Waqaf Malaysia (YWM, the Malaysia Waqaf Foundation).

Cash Waqf is also accepted in the country Cash Waqf is also accepted in the country. Although its validity has been debated by some Muslim jurists in Islamic jurisprudence due to its impermanent character, the Malaysian Waqf authorities have approved a cash Waqf provided that it is converted into or used towards creating permanent benefits. Normally, the funds collected will be used to purchase immovable assets or be added to existing Waqf development projects.

Beneficiaries of Cash-Waqf Waqf Khayri, Waqf ‘Am (Public Waqf) is a cash endowment made by the founder to support the general good and welfare of society, the poor and the needy. Waqf Ahl, Waqf Khas al-Waqf al-dhurri and Waqf ‘al-awlad are all the same and refer to family Waqf/specific Waqf. Waqf Mushtarak (combined Public and Family Waqf) is a cash Waqf created by a founder to support both the public and his family or specify certain persons, group of people or needy areas.

Characteristics of Cash-Waqf Irrevocability: This means that once the founder created the cash-Waqf he cannot revoke it back, however, he/she can benefit from its investment/revenue. Perpetually: Once the cash-Waqf is created it must be perpetual. This will ensure regular and continual support from the cash-Waqf to financing needy areas in the Muslim society. Inalienability this means that once cash is created as Waqf no one can ever become the owner to alienate it, i.e. it becomes a ‘frozen asset’. It cannot be the subject to be given as gift, inheritance, or any alienation whatsoever.

Investment of Cash-Waqf Mudarabah (partnership) has been recommended by earlier Muslim jurists. The latest fatwa issued by Fiqh Academy Islam, agreed that cash Waqf can be invested in any Shariah compliant mode of investment, such as Mudharabah, Murabaha, BBA, Musharakah, Istisna, etc.

Can Non-Muslim Create Cash-Waqf Can Non-Muslim Create Cash-Waqf? The Shafie School permitted the creation of Waqf from a non -Muslim even if it is for the benefit of a Mosque. He based his opinion on the following hadith : عن انس بن مالك رضي الله عنه قال: قال رسول الله (ص) " ان الله لا يظلم مومنا حسنة يعطى بها في الدنيا ويجزى بها في الاخرة واما الكافر فيطعم بحسنات ما عمل بها لله في الدنيا حتى اذا افضى الى الاخرة لم يكن له حسنة يجزى بها” The Prophet (pbuh) said “Allah will not oppress any Muslim from his good deeds, as he gives it in this world and he will be rewarded in this world and in the hereafter. But for the non- Muslim he will be rewarded for all his good deeds only in this world”

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 countries and Muslim minority countries.

The Role of Waqf in Development The Waqf system had played a vital role in achieving development in the following areas: Reduces government expenditure Solve the problem of unemployment Creates cities and commercial activities Creates financial institutions. Enhances the different sectors in the Muslim countries, agricultural, health, industrial, hotel, social and financial services sectors.

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.

Redistribution of wealth and income Macro Opportunities Redistribution of wealth and income Macro Awqaf provided public utilities (roads, water and sewage), educational institutions and hospitals Micro Awqaf can also directly affect entitlements by providing education (scholarships) and health (service and medicines) for the poor

Therefore, let us reignite this charity practice again Therefore, let us reignite this charity practice again. Hopefully the endowments that we do, even if it is a little, would give benefits for us in this world and the Hereafter. Hopefully the endowments that we do will make us slaves who fear Allah.

May all of us benefit from the knowledge. Aaminn. Subhanallah Allahuakbar Praise to Allah Glory to Allah Allah is the Greatest Alhamdulillah Wallahualam and Shukran Jazilan