The effectiveness of saham waqf on adequacy of funds for development projects in Malaysia

Abstract

It is often said that waqf is asset rich but cash poor. Hence, this paper aims to look at the effectiveness of saham waqf in providing adequate funds for the development of waqf properties. The explanatory study is of the concept of saham waqf and the practice of four waqf institutions in Malaysia. To determine risks to the effectiveness of the concept and practice of saham waqf, both have to be studied qualitatively. On the concept, the contents of the original fatwa and scholarly write-ups and literature were reviewed. To analyze the practice, available policy papers, documented archives, and contents of semi- structured interviews with their officials were used. Considering the nature of available data, performance of fund raising strategy (saham waqf) was measured by availability of adequate funds at the time of completion of a development project or the number of similar projects it has financed in a given period. It was found that in some cases of project-based fund raising exercises, saham waqf was unable to have sufficient returns that could cover full cost of the development. The study concludes that project based saham waqf may not be ideal fund raising strategy, and due to conceptual constrains, it might be an ad-hoc method as fund is exhausted once it is utilized. The study also implies that generally saham waqf make waqf assets lose return because of lack of value enhancement potential, which may have negative effect on overall capital adequacy of waqf funds for socioeconomic projects. The study calls for improvement of conceptual model of saham waqf.