The Arabic word Waqf (plural Awqaf) in English may be understood as an inalienable religious endowment, typically donating a building or a plot of land or even cash for Muslim religious or charitable purposes. According to Chapra (1992:301): “The institution of Awqaf (charitable trusts) played an important role over the greater part of Muslim history….”
Awqaf is actually an important component in the concept of Islamic finance and economy.
To some extent, Awqaf shares some similarities, albeit with a possible difference in objectives, with what we know now as philanthropy in the West. However, unlike philanthropy in the West, which continues to flourish, Awqaf in the Muslim world has somehow not been exploited to its full potential. This situation raised the attention of the Islamic finance and economic community in Indonesia in the early 2000s.
In 2002, the Indonesian Ulama Council (MUI) issued a Fatwa that allowed cash as Waqf (prior to that Waqf was understood only as the endowment of a building and/or plot of land). In 2004, the government of Indonesia enacted Law No. 41/2004 which strengthened the Fatwa of MUI pertaining to cash Waqf. After a long process, at the end of 2006, the government issued a decree pertaining to the implementation of the above-mentioned law.
The decree was then followed by the resolution of the president of Indonesia No. 75/M year of 2007 (issued in July 2007) that decided and appointed the members of the Indonesian Waqf Body (BWI) for the period of 2007-10.
It is reported that there is a lot of potential for Waqf land in Indonesia. It is estimated that there are 428,355 plots of Waqf land in the republic with a size totaling to 4 billion squaremeters. Unfortunately, those lands have not been optimized fully, some have even been sold. So, it is expected that the establishment of the BWI could contribute in the optimization of the Waqf lands and cash Waqf in Indonesia.
One Waqf success story in Indonesia is what has been done by the Waqf Body of Modern Gontor Boarding School. Most of the Waqf land owned by the school is used for Islamic boarding schools and their economic units. It started with five hectares of land, and now it has expanded to 750 hectares. Those lands were used starting from boarding school cooperatives, paddy fields, printing houses, etc. Other than this, another success story is with regards to the Islamic Education Foundation of Al-Azhar. The foundation has given many scholarships out of its profit in managing its productive Waqf in the form of farms, hotel, apartment and houses.
However, there is still a lot room for the optimization of the Waqf lands and cash Waqf in Indonesia. In the future, Awqaf could be used as an important Islamic finance instrument to close the gap between the rich and the poor in the republic.
Farouk A Alwyni is the CEO of Alwyni International Capital (AIC) and the chairman of Center for Islamic Studies in Finance Economics and Development (CISFED). He can be reached at
[email protected]
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