university-income generated through waqfconference.kuis.edu.my/ifid/docs/ifid2016-speaker5.pdf ·...
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2 BANK NEGARA MALAYSIA CENTRAL BANK OF MALAYSIA
Takaful
Takaful in Malaysia developed as component of
comprehensive Islamic financial system operating in
parallel with conventional financial system
Dual
syst
em
Islamic
financial system
Conventional
financial system
Islamic
banking
Islamic
capital
market
Islamic
money
market
Four
main
pillars
The mandate for developing dual
financial system explicitly
codified in Central Bank of
Malaysia Act 2009
Dual Financial
System
Ensure sustained industry
viability via optimised
synergies from interlinkages
Underpinned by :
Strong & diversified
players
Wide range of products &
vibrant financial market
Comprehensive Islamic
Financial System
3 BANK NEGARA MALAYSIA CENTRAL BANK OF MALAYSIA
Regulatory framework for insurance broadly
applicable… but requires adaptation to be more
takaful-attuned
Regulatory and Supervisory Framework in Malaysia ...
Preserve financial stability & public confidence
Prevent risk of contagion & systematic failure
Ensure good market practices
Promote high standard corporate & Shariah
governance
Objectiv
es
Leveraging on established field of
conventional system
Separate rules to address takaful industry
peculiarities
o Shariah-compliant in all aspects of the
takaful operation
o Balance between interests of
shareholders & participants
o Separation of funds between
shareholders & takaful fund
Efficient and forward looking supervision
under Risk-Based Supervisory Framework
Pragmatic approach to regulation
Supervisory Assessment
& Intervention
Go
ve
rna
nc
e
Pru
de
nti
al
Ma
rket
Co
nd
uc
t
Takaful Operational
Framework
Regulatory &
Supervisory
Framework
Legal framework being strengthened by Islamic Financial Services
Act to enable more comprehensive regulation and supervision of the
takaful industry
4 BANK NEGARA MALAYSIA CENTRAL BANK OF MALAYSIA
Shariah Governance …
Foster Shariah innovation whilst
promoting stability in marketplace
via harmonization of Shariah
interpretation…
Proper governance provides assurance on Shariah
compliance & confidence on takaful operation:
1. SAC’s legislative stature as highest authority
accorded under Central Bank of Malaysia Act
2009
2. SC of takaful operator accountable on decision,
views & opinions
3. Board & senior management with sufficient
expertise & capability on takaful (Islamic
finance) issues
4. Function of Shariah risk management, research,
review & audit to provide check & balance
5. SC member of another takaful operator shall not
be appointed – avoid conflict of interest &
maintain info confidentiality
6. Shariah parameters provide guidance on main
features, principles & rulings
7. Institutionalise mutual respect by recognising
differences of Shariah interpretations
Shariah as overarching principle in
Islamic finance Shariah Advisory Council (SAC) of BNM
Shariah Compliance Functions :
Review
Audit
Shariah Governance
Framework Shariah Parameters
Shariah Resolutions &
Rulings
Manageme
nt
Board Shariah
Committe
e (SC)
Risk
Managemen
t Research
* 1963-1983
Establishment of Lembaga Tabung Haji Branding of Islamisation in the context of Transaction, Bank Islam, IIUM, Takaful Act
1998 Hong Kong Univ: House of Lords in England in Union Eagle case : 5 minutes late to complete the purchasing price was considered detrimental to the seller (Lord Lytton): Compared with Islamic Law of transaction
2000 Legal Education Association of England & Wales: Web-based learning for Islamic law Subjects as a core subjects for legal education in commonwealth countries
2004 Islamic Bank of Britain was set up
2002-2005
Research 400 decided court cases in England on disputes between H & W in banking Guarantee transactions where a husband is assumed to have exercised some “undue influence” over the wife.
2006 Prime Minister Depart on the prospects of Malaysia as the Hub for Global Islamic Finance with multi-racial populations
2008 Kyoto Univ, Japan offered a research grant on Comparative studies of the remedies offered by Islamic Banking to customers of non Muslims in Japan
( A 50 years Journey…) Global demands in Islamic
Finance Related-Impacts on Malaysia
NOVOTEL MELAKA KUIS
2010 Obama appoints Shariah Specialist for White House
2011 MOE Research grants on Earning Profits in Islamic Banking- Comprehension on Differences with Interests gaining for multi-racial population
2012 IFSAM in Limerick Ireland: Management-Re-imagined (critical management issues in Islamic Finance)- Yale Univ Conference 2013
2013-2015 Profit Sharing using Islamic finance scheme for Commercialisation of university’s research (Steven institute of Technology, USA & ISIS innovation Centre, Univ of Oxford (the fusion of dual legal systems tru-out commonwealth countries)
NOVOTEL MELAKA KUIS
Current trends lncongruity of Academic Research with lndustry in lslamic Finance:
“National Issues PERPADUAN: Kewangan Islam & Kesepaduan Sosial Wasatiyyah (Finance and Social Cohesion)
Current debates HARMONISING THE WORLD TRU WISDOM Amalgamation between knowledge + Wisdom
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“The Global University in Islamic Finance”
Voluntary
Waqf
Waqf means to stop, to withhold the thing (e.g. the house is withheld for the mosque, which means that the revenue of the rent of the house is withheld to spend on the mosque).
Waqf is a financial charitable institution established by withholding one's property to eternally spend its revenue on fulfilling certain needs depending on the choice and conditions made by the founder
Once the property been created as waqf, it can never be given as gift, or to be inherited, or sold. It belongs to Allah and the corpus/waqf property always remains intact.
“The Global University in Islamic Finance”
Waqf in the Hadith
إذا مات االنسان انقطع عمله إال من ثالث؛ صدقة جارية )
(.وعلم ُينتفع 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.
“The Global University in Islamic Finance”
Kinds of Waqf
There are two kinds of Waqfs:
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.
“The Global University in Islamic Finance”
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”
DEFINITION OF CASH-WAQF
“The Global University in Islamic Finance”
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.
“The Global University in Islamic Finance”
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.
“The Global University in Islamic Finance”
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 shari‟ah compliant mode of
investment, such as Mudharabah,
Murabaha, BBA, Musharakah, Istisna, etc.
“The Global University in Islamic Finance”
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 :
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”
Waqf for Education
UNIVERSITI OXFORD, UK
UNIVERSITI AL- AZHAR, MESIR
UNIVERSITI Cambridge, UK
UNIVERSITI Harvard, USA
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Objectives Waqf in Higher Education • 1) To strengthen the knowledge
ecosystem by way of waqf for education;
• 2) To recommend the flexible mode of financing, investment and higher learning development by way of waqf for education;
• 3) A potential of Waqf Legislation (Waqf Act) for Higher learning Institutions in Malaysia NOVOTEL MELAKA KUIS
Current Development on Waqf for Education in Malaysia
At the Central level • Research Wing: A new niche for
research by the MOE 2013 introduced ie: Science of Waqf education
• Higher Learning Institutions in Malaysia should give serious attention in generating money for the institution by way of Waqf for education
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Transformation of the Role of Waqf in Higher Learning Institutions in
Malaysia “the inter agencies codification system for waqf in Malaysia
The accommodation for students of Higher learning inst by way of waqf
The need of waqf corporate to
strengthen the ecosystem of
knowledge Strategic Planning and entrepreneurship invites the waqf for education
Holistic model for financing and investment for Universities trough Waqf concept
Waqf concept redefined
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Rooms for Collaborations with Financial
Institutions
Waqf concept
redefined to
include waqf
for
education
Corporate
waqf and HEis
Investments FOR
Students
Entrep/SHIP
Financing &
Investments
Accomodation
Financing For
Students
A CODIFIED
SYSTEM FOR
DATA on WAQF
FOR MOE
2
1
3 5
6
4 NOVOTEL MELAKA KUIS
Future Collaborations between Higher Learning Institutions and Islamic Financial
Institutions on WAQF FOR EDUCATION
FINANCING AND INVESTING CONCEPT ON WAQF FOR THE DEVELOPMENT OF HIGHER LEARNING INSTITUTIONS
Islamic Financial
Institutions –
Mudharabah and
Musyarakah on the Endowment
fund for eg
The rules and procedures of
Shariah for the Waqf
instruments in the context of
education
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Future Prospects
Integrated IT Sytems for the Waqf For Education-MOE-BANKS
Waqf Act-Bank of Waqf
WAQF FOR EDUCATION MARKS THE NATIONAL UNITY
SOCIAL IMPACT & WAQF
Roles of Islamic Financial Institutions
1 2 3 (beyond 2020)
The revisit of Waqf Concept to extend into the sphere of Education –Waqf for education
Endowments from Islamic Banks to the universities by way of Muamalat denotes the expansion of Mudharabah n musyarakah
investment and financiang needs a flexible
parameters by the Central Bank
Codification of Shariah rules and procedures across the country on Waqf for education with the Ministry of Higher Learning Education
4
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The issues are: 1. The clarification on how to develop the waqf according to the Islamic scholar's opinion (Shariah issues); 2. Legislation obstacles (Legal issues); and 3. The problem of Baitul Mal's administration that is inefficient and unsystematic (human resources and management issues).
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Methods of Development
: 1. Credit based finance; 2. Joint venture or equity and income sharing; and 3. Self-financing.
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Waqf & Islamic Finance
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•Integrating Waqf with the Financial Sector
•While there are different issues related to
development of waqf, here we examine how it
can benefit by integrating with the financial
sector
Waqf and the financial sector
•Demand side (input to waqf)
•Supply side (output from waqf)
Waqf and Demand for Services from the Financial
Sector
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•
Inputs for development of waqf institutions
•Financing
•Financing from financial institutions (FIs)
•Financing from raising funds from the market
•Management Services
•Issues in financing
•The benefit from waqf asset should continue
•Cannot use waqf asset as collateral
•Cannot sell waqf asset
Financing from FIs
NOVOTEL MELAKA KUIS
•
Like any other enterprise, waqf assets can be
developed by investments
•Example Awqaf Properties Investment Fund
•An entity financing the development of awqaf
properties worldwide
•Came up with innovative financing mechanism
(Built-Operate-Transfer)
Waqf Financing Through Sukuk
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•Cannot sell waqf assetcannot issue ijarah
sukuk
•Sukuk al IntifaaZamzam Towers in Makkah
•Waqf land leased land to Binladin Group for 28
years to build complex (4 towers, mall
hotel)
•Bin laden leased the project to Munshaat Real
Estate Projects for 28 years
•Manshaat raised 390 million issuing sukuk al
intifaa (time-share bond) for 24 years by selling
usufruct rights
Waqf Financing Through Sukuk (2)
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•SingaporeMusharakah sukuk used to raise
60
million to develop 2 projects
•Waqf provided the land, the investors (sukuk
holders) provided the funds for investment,
and Warees managed the project.
•In one case, a new mosque was built with
attached commercial property earning 200,000
annually
Services Provided by Waqf
Management Organization
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1.Services of Mutawalli
2.Custody Services
3.Estate Management Services
4.Investment Management
Services
5.Advisory Services
MANAGEMENT OF WAQF FUND
CASH WAQF DONATION FROM PUBLIC/INDIVIDUAL/COOPERATIVE/COMPANY
(All cash Waqf to Selangor Waqf Corporation are entitle tax relief under sub-section 44(6) of Income Tax ACT 1967.Allowable deductions from Income
Aggregates for Individual/ Cooperative (7%) and Company(10%). However Cooperative also entitle tax relief by paying dividend under section 65A &
65B.Original official MAIS receipt must be submitted for tax declaration).
AIR RITHS WAQF AIRLINE’S FUND
MANAGED
BY
PWS
70%
DIRECT COST FOR AIRLINE
OPERATION
MAINTENANCE LEASING OF AIRCRAFT
TAX FUEL
30%
OPERATION COST & OTHERS
HUMAN CAPITAL OFFICE RENTAL
OTHERS
34 AN INNITIATIVE BY SELANGOR WAQF CORPORATION / PERBADANAN WAKAF SELANGOR
THE FIRST AIRLINE OF WAQF CONCEPT
This fund is managed through joint management committee (JMC) comprised of Selangor Wakaf
corporation reps & Air Rith‟s Rep
WAQF AIRLINES
AIR RITHS SDN BHD
SELANGOR WAQF CORPORATION (PERBADANAN WAKAF SELANGOR (PWS))
PRODUCT
AIRLINE OPERATOR/ SPV
INITIATOR
ECORITHS TRAVEL & TOUR SDN BHD (ERTT) Appointed Company
for WAQF Airlines
Project Structure
35 AN INNITIATIVE BY SELANGOR WAQF CORPORATION / PERBADANAN WAKAF SELANGOR
THE FIRST AIRLINE OF WAQF CONCEPT