Introduction
إِذَا مَاتَ الإِنْسَانُ انْقَطَعَ عَمَلُهُ إِلاَّ مِنْ ثَلاَثَةٍ مِنْ صَدَقَةٍ جَارِيَةٍ وَعِلْمٍ يُنْتَفَعُ بِهِ وَوَلَدٍ صَالِحٍ يَدْعُو لَهُ.
When a human dies, all his/her good deeds come to an end, except three things: Sadaqah Jariyah (i.e. Ongoing charity), beneficial knowledge and a righteous son who prays for him/her.
– Sunan an-Nasa’i 3651
Unlike the capitalist economic system, Islamic finance aims to benefit society, instead of purely seeking profits. Islamic social finance is the way forward, with zakah and waqf as the main tools.
Waqf can be seen as a type of charity that provides continuing benefits to the public or specific group of people. Specifically, ISRA (2018) defines it as a “sadaqah jariyah” (صدقة الجارية) based on Islamic piety.
Foundation of Waqf
Types of Waqf
Waqf can be classified in different ways.
Based on the flow of benefits, waqf can be categorised in the following manner:
- Direct waqf, where the asset donated is used directly for the intended purpose for the beneficiaries.
- Investment waqf, in which the asset may be used for commercial purpose (e.g. lease), after which the net profits will be channeled to charitable bodies as mentioned in the waqf deed.
Based on nature of the beneficiaries, waqf will be categorized differently as below:
- Religious waqf, with focus on the mosques and religious schools
- Philanthropic waqf (also known as waqf khayri), where the aim is to target mainly the poor such as preparing a well to provide water for villages, including providing education, health care and environmental protection.
- Family waqf. This is called waqf ahli or posterity waqf, where the children and descendants of the donor (i.e. waqif) shall have the first right to enjoy the benefits and revenue of the waqf, after which excess can be given to the public. This is also encouraged because the Prophet (SAW ) dislike a Muslim from leaving his family poor.
Waqf can also be classified based on the type of donated asset:
- Physical waqf, where the subject matter is a physical asset. Those assets will be endowed and either invested or used directly by the beneficiaries. Those immovable will include houses, wells and toilets, although it is also common to see movable ones like bicycles, boats and Koranic books with Braille, as long as they are non-perishable.
- Cash waqf, where the asset is generally cash or financial securities (e.g. stocks). This was practised by the Ottoman Empire. There is greater flexibility in using the monies to maximize returns while keeping risks manageable.
- Corporate waqf. This is unique, as it may not be found in traditional Islamic literature. Yet, it is an innovation as there is a legal entity with status of management-trustee to exercise powers for the intended beneficiaries per the waqf deed.
Rules & Characteristics of Waqf
The main objective of a waqf is to for the trustee to protect and preserve the waqf asset and the interest of the waqif. The waqf should remain properly maintained, productive and beneficial to society, not idle and abandoned. Hence, the trustee chosen must be responsible and capable. As waqf is a voluntary act of benevolence, it cannot violate any Shariah rulings, such as providing interest-based microfinancing to the needy. Usage of waqf must align with what are stipulated by the waqif in the waqf deed.
Many scholars agree that waqf have these following qualities:
- Perpetuity;
- Irrevocability; and
- Inalienability.
Most waqf assets should possess permanence nature, though some scholars do allow temporary waqf as long as the duration is clearly stipulated. ISRA (2018, p 716) clarifies that waqf of “books, agriculture, machinery, livestock, shares and stocks” are allowed and it plays an important to also developing human resource in capacity building so the poor can start working to get out of their impoverishing vicious lives.
In addition, waqf cannot be revoked, especially if the asset is a mosque. Under Shariah, a waqf becomes effective the moment the declaration is made by the donor, even without prior knowledge of the beneficiaries or witnesses. The subject matter of the waqf will technically goes back to Allah, so it should not be revocable. However, for ease of administration, such declaration should be formalised via an executed waqf deed, which will then have legal effects.
Waqf properties also must not be encumbered. It must be free from any charge, debenture or mortgage. Hence, in normal circumstances, they cannot be sold or transferred. However, some scholars allow istibdal, where there is a “process of exchanging the waqf property for another property of equivalent value with approval of judicial authorities.” (ISRA, 2018, p 717)
Lastly, it is necessary for waqf assets to be invested in Shariah-compliant business sectors. In some cases, kafalah (guarantee) by a third party is needed and a sophisticated diversification portfolio strategy is required. Risk management is necessary to ensure loss of principle is minimised.
Waqf Legislation in Singapore
There are about 6 million people living in Singapore and close to 15% of them are Muslims. Under Singapore law, the Muslims will refer to the Administration of Muslim Law Act (AMLA). The Muslim community is quite unique, being the only community in Singapore whose affairs are regulated in the national statutes. The objective is to promote legal pluralism and create a special status for Malays as indigenous people of Singapore. The AMLA empowers the Islamic Religious Council of Singapore (“MUIS”) to interpret Islamic law on behalf of all Singaporean Muslims. AMLA covers many areas for MUIS to look into, for example, the administration of yearly hajj pilgrimages, halal certification, waqf and zakat funds and alerting the Muslims concerning false Islamic doctrines spreading. However, MUIS do not have any power to impose fine or penalty to anyone who breaches the AMLA except when criminal breach is also involved.
Per AMLA requirements, all waqf properties, whether ‘am (general) or khas (specific), are vested in MUIS. There are a total of 91 waqf assets, of which 69 are managed directly by MUIS while 29 are delegated to trustees. In addition, MUIS is empowered to appoint and remove the waqf trustee. The total asset value is more than SGD800 million.
MUIS implemented plans such as Wakaf Revitalisation Scheme to identify waqf properties that can give better economic returns for beneficiaries, with assistance from its subsidiary entity, Warees Investments Pte Ltd. It aims to enhance the value waqf properties through asset enhancement and remodelling of real estate concepts aligned with real estate market and urban development in local context.
In addition, MUIS recently created a waqf ilmu. The objective is to fund Islamic education in Singapore. Monies donated by the waqif will be invested in Shariah-compliant investments, after which the returns will be utilised to fund the costs of providing Islamic education. This type of cash waqf is also done in Pergas Endowmen Legasi Ulama (PERLU) for PERGAS to collect SGD20 million to develop a sustainable source of income that ensures financial stability and independence to support the pool of religious teachers and its services for the Muslim community.
MUIS also announced that they will be establishing Wakaf Masyarakat Singapura (Singapore Community Wakaf) to financially support its religious institutions, development of religious teachers and community programmes.This was announced by the Minister-in-charge of Muslim Affairs Masagos Zulkifli during his Virtual Hari Raya Get-Together (Straits Times, 2021). To-date, about SGD4.9 million of waqf funds have been collected and will be distributed to mosques, Muslim organisations such as 4PM, Casa Raudha, Pertapis Children Home and United Indian Muslim Association and madaris (Islamic religious schools)
Waqf properties in Singapore
The first waqf in Singapore was the Masjid Omar Kampung Melaka endowed by Habib Syed Omar Ali Aljunied, a trader who originated from Yemen. Other developments include the following (Fazrihan, 2015):
- Residential properties at Duku Road, Telok Indah (Waqf Kassim)
- Service apartments at Somerset Bencoolen (Waqf Syed Omar Ali Aljunied)
- Commercial properties at Dunlop Street, Kandahar Street, Pagoda Street, South Bridge Road, Telok Ayer Street, Temple Street, Changi Road, North Bridge Road, Upper Dickson Road and Joo Chiat Road.
- Waqf mosques i.e. Masjid Haji Md Salleh (Makam Habib Nuh), Masjid Khalid, Masjid Khadijah, Masjid Kassim and Masjid Bencoolen.
- The Chancery Residence, an exclusive cluster housing in a prime district (Waqf Shia Dawoodi Bohra)
- Madrasah Al-Maarif Al-Islamiah at Lorong 39 Geylang (Asset Migration Waqf)
- Sale and asset migration to 11 Beach Road for enhancing returns to beneficiaries
Since 1970s, there has been no new waqf properties endowed. There are possible reasons (MUIS, 2021):
- Increasing property prices, making ownership of freehold properties costlier
- Sources of charitable acts have increased such that waqifs could have probably given their wealth elsewhere e.g. donations overseas
- Lack of literacy on waqf matters in Singapore, hence the Muslim philanthropists are unaware of the potential waqf could do for the local Muslim community.
Current Issues
In mid-2021, there was a commotion regarding a claimed misused of waqf. The Wakaf Haji Pitchay Meerah Hussain is a property at No 5 Lorong 9 Geylang that the waqif intended to be used as a madrasah. However, it was discovered that a Chinese temple was built on that area. After a thorough investigation by MUIS, it was confirmed that istibdal has taken place. The waqf asset was earlier transferred by MUIS back in 2002 to a 999-year leasehold property at 11 Beach Road. Crasco Building, a commercial building containing offices (Channel News Asia, 2021). MUIS clarified that as the place could not be made into a madrasah, MUIS has decided to implement the closest alternative to meet the waqif’s intention to generate some income. The idea of asset migration and wakaf redevelopment to achieve the objectives of the waqif were approved by MUIS Fatwa Committee way back in 1985.
Lastly, BNiaga Pte Ltd does waqf, as well as aqiqah and qurban for a specific beneficiary in Singapore i.e. Religious and Educational League of Radin Mas. The waqf items include bicycles, boats, al-Quranic books, pumping wells, small houses and toilets.
Integrating Waqf With Fintech
Digitized waqf systems can be made possible using smart contracts. Using blockchain technology, Hazik Mohamed (2021, p 201) clarified that “permissioned access can be given to state authorities to verify the previous ownership of the waqf assets, or the stipulated wishes of the waqf founder…”
A good example is Global Sadaqah online platform, which has an office in Singapore. It does CSR, zakat and waqf and has complied with Islamic Digital Economy (IDE) Standards Compliant with several waqf projects in Nigeria and Indonesia. Some waqf projects are as follows:
- Waqaf A Quran In Masjid al-Haram In Makkah (RM25,000)
- The Ultimate Waqf: Quenching Thirst in Africa (RM50,000)
- Safeguarding Modesty: Building A Women Only Maternity Clinic (RM35,000)
- Establishing a Waqf in the Heart of Nigeria (RM45,000)
- Digital Waqf – Stepping Into The Future: Intelligent Robo Shariah Advisor (RM50,000)
- Cash Waqf: Sustainable Housing in Indonesia (RM20,000)
Finterra is a technology-based company providing blockchain-based Islamic applications. Finterra’s product includes the WAQFChain to facilitate waqf using blockchain technology. It has the following in-built functions:
- Smart contracts
- Digital security and data integrity
- Cause management
- Fund accounting
- Crowdsourcing
- Reporting
Using such technology will provide an efficient way for Finterra to raise money (via crowdfunding) and transfer ownership of waqf, after which donations from Muslims can help operate social projects, such as mosques, religious schools and welfare homes. The digital assets are actually representative of a participant’s stake in that specific waqf. These blockchain platforms are testing on pilot waqf projects from existing endowments in Singapore, Malaysia and Indonesia.
Conclusion
In today’s economy, social welfare is everybody’s responsibility. Philanthropic institutions such as waqf are to boost social economy as it provides sustainable mechanism to provide education and health services and aid in poverty alleviation, in line with United Nations’ Sustainable Development Goals. The potentials of waqf is huge but the implementation will face several constraints. Hence, a concerted effort is needed at various levels.
- Micro level – Identifying waqf assets with the greatest potential for development
- Meso level – Better networking and consultation with various stakeholders in providing education, consultancy, accountancy, regulatory advisory, etc.
- Macro level – Implementing regulatory surveillance, treatment and reporting
لَن تَنَالُوا۟ ٱلْبِرَّ حَتَّىٰ تُنفِقُوا۟ مِمَّا تُحِبُّونَ ۚ وَمَا تُنفِقُوا۟ مِن شَىْءٍ فَإِنَّ ٱللَّهَ بِهِۦ عَلِيمٌ
None of you [believers] will attain true piety unless you give out of what you cherish: whatever you give, God knows about it very well.
- Holy Qur’an Surah Ali Imran, Verse 92
References
- Channel News Asia, MUIS refutes allegations of Muslim charitable endowment in Geylang being used for Chinese temple, https://www.channelnewsasia.com/news/singapore/muis-wakaf-haji-pitchay-meerah-hussain-5-lorong-9-geylang-15061682, accessed 11 July 2021
- Hazik Mohamed, Beyond FinTech – Technology Applications For the Islamic Economy, World Scientific, 2021, Singapore.
- International Shari’ah Research Academy For Islamic Finance, Islamic Economics – Principles & Analysis (2018), Lorong University A, Kuala Lumpur.
- Fazrihan Duriat, Fiqh Aqalliyyat & Maqasid As-Shariah – Case Study of Singapore, 2015, https://www.academia.edu/21626363/Fiqh_Aqalliyyat_and_Maqasid_As_Shariah_Case_Study_of_Singapore, accessed 09 July 2021
- Finterra, WaqfChain, https://finterra.org/waqfchain/, accessed 10 July 2021
- Global Sadaqah, Waqf Campaigns, https://globalsadaqah.com/waqf, accessed 10 July 2021
- MUIS, Wakaf, https://www.muis.gov.sg/wakaf, accessed 8 July 2021
- MUIS, WAKAF ILMU FOR EDUCATION, https://www.muis.gov.sg/wakaf/Creating-My-Wakaf/Wakaf-Ilmu-for-Education, accessed 9 July 2021
- MUIS, WAKAF REVITALISATION SCHEME, https://www.muis.gov.sg/wakaf/Strengthening-Wakaf/Wakaf-Revitalisation-Scheme, accessed 10 July 2021
- PERGAS, https://perlu.pergas.org.sg/, accessed 11 July 2021
- The Straits Times, Muslim organisations, mosques to get $4.9m from wakaf income https://www.straitstimes.com/singapore/muslim-organisations-mosques-to-get-49m-from-wakaf-income, accessed 8 July 2021.-/-
About Mr Fazrihan Duriat
Mr Fazrihan Duriat has a First Class Honours BSc in Finance from the University College Dublin; Master of Laws in Islamic Law & Finance (L.L.M) from the Singapore Management University. A Chartered Professional in Islamic Finance (CPIF), Mr Fazrihan currently works at one of Malaysia’s largest banks with an Islamic banking window and is responsible for Shariah Risk Management. A banker with more than 10 years experience he’s held managerial positions on Shariah advisory. He is also a pro bono consultant with Financial Syariah Advisory Council of Pergas Investment Holdings affiliated to the Singapore Islamic Scholars and Religious Teachers Association (PERGAS). He also assists the Shariah Committee’s endorsements of various projects of clients as Shariah-compliant. He is also a certified religious teacher under the Asatizah Recognition Scheme (Quranic Teacher) under Majlis Ugama Islam Singapura. Mr Fazrihan is currently pursuing his PhD with Euclid University.-/-
