Transformation toward Productive Indonesian Waqf
On Wednesday noon, 16 June 1948, in Blangpadang Square, Kota Raja, now Banda Aceh, President Soekarno delivered a speech before hundreds of thousands of people from all parts of Aceh.
On Wednesday noon, 16 June 1948, in Blangpadang Square, Kota Raja, now Banda Aceh, President Soekarno delivered a speech before hundreds of thousands of people from all parts of Aceh.
Like his other speeches, President Soekarno’s address was filled with great zeal. On the same day, in front of Acehnese entrepreneurs and traders, President Soekarno made a brief speech about the importance of political diplomacy and that an airplane as a means of transportation was needed. The businessmen and people of Aceh were motivated to assist President Soekarno and the fledgling Republic of Indonesia.
It was the beginning of a wakaf or waqf (charity endowment) movement in Aceh that succeeded in raising 130,000 Straits dollars to purchase the first aircraft Seulawah RI-01. The plane was used by the Indonesian government during the struggle to maintain independence. Various dangerous flight missions were carried out by Seulawah to help preserve Indonesia’s diplomatic relations as well as trade ties with neighboring countries. Seulawah later also became the embryo of the state-owned enterprise Garuda Indonesia.
Apart from the waqf movement of Acehnese society, history records that the gold plating of the National Monument (Monas), the Gelora Bung Karno Main Stadium and the main building of the House of Representatives/People’s Consultative Assembly DPR/MPR also came from a waqf movement hitherto still in proper utilization.
Also read: Becoming the Catalyst of the Economic Recovery
Waqf is one of Islamic teachings bearing the values of care, sharing and effort to ensure equitable distribution of public welfare. Besides its religious devotion dimension, waqf also has a social dimension as it can serve as an instrument to overcome disparity and promote economic welfare in society.
In a hadith related by a Muslim Imam, the Prophet SAW said: “When a man passes away, his meritorious deeds cease, except for three cases (which are): charitable alms, beneficial science, and a pious child’s prayer”.
Waqf is more oriented to utilization or funding for long-term purposes, such as the provision of land and buildings.
Ulema indicate that what is meant by sedekah jariah (charitable alms) in the hadith is waqf. Waqf is a form of alms, but it’s unlike general alms. Waqf is more oriented to utilization or funding for long-term purposes, such as the provision of land and buildings. It is called charitable alms in the sense of charity the reward of which will keep flowing to the benefactor (wakif), as long as the property endowed still exists and its benefits are utilized for virtuous deeds.
Since long ago, Muslims in Indonesia have been practicing waqf in daily life. In the past historical period, Islamic communities in the sultanate era prior to the state of the Republic of Indonesia already practiced waqf for the purpose of building mosques and madrasah Islamic schools), cemeteries as well as other social facilities.
However, in its developments in Indonesia, it is increasingly realized that waqf property is not solely meant for educational and religious worship needs, but also for people’s economic development. Waqf is expected to have the advantage of activating the economy, at the same time generating benefits that can be used to assist social activity and other virtuous activity (mauquf alaih). This awareness has prompted the development of waqf of a productive nature, which is the utilization of waqf that has a business or investment dimension, wherein its business or investment returns are used to aid charitable activity.
Also read: 2021 is the Starting Point of the Acceleration of Economic Recovery
In the past, when waqf was still had social orientation, the entire waqf in the form of land, buildings, machines and equipment was used for socio-religious activity. Even when waqf benefactors handed over their waqf in the form of money, the money would be spent on land, buildings, machines and equipment to be further utilized for socio-religious activity. Such a practice was later known as cash waqf after the enforcement of Law No.41/2004 on Waqf. This law stipulates the definition of waqf: “waqf is the legal deed of wakif to separate and/or give up part of their wealth to be utilized for good or for a certain period according to necessity for purposes of religious worship and/or public welfare in line with sharia”.
Importance of transformation
In 2018, the Indonesian Waqf Agency (BWI) revealed that the potential of cash waqf in Indonesia reached Rp180 trillion annually. Aside from its largest Muslim population in the world, Indonesia is also a country with a
fairly high degree of philanthropy in society. In a report of World Giving Index 2019, Indonesia was rated as one of the most charitable countries in the world. It means the charity potential of Indonesian society to practice cash waqf is comparatively high. But this potential cannot yet be optimized so that its advantage is not yet significantly enjoyed by society.
The high cash waqf potential cannot yet be fully optimized. In fact, today the mobilization and utilization of cash waqf is badly needed. Cash waqf has an advantage over waqf in other forms because it has to do directly with business and investment activity. While waqf in the form of other assets still has the possibility of being only utilized for social activity, virtuous pursuit and religious worship, cash waqf has to be utilized for productive economic development activity.
In the Edict of the Indonesian Ulema Council (MUI) No.2/2002 on Cash Waqf, it is specified that cash waqf (Waqf al-Nuqud) is waqf executed by an individual, a group of people, an institution or statutory body in the form of cash. The meaning of cash also includes securities. The edict stipulates that cash waqf is under the jawaz (permissible) law and only allowed to be channeled and used for all things that are acceptable in terms of syar ’iy (Islamic law). It is also indicated that the continuance of the principal value of cash waqf has to be guaranteed, it is not allowed to be sold, granted and/or bequeathed.
The movable waqf in cash form is issued in a cash waqf certificate and it is delivered by the sharia financial institute to wakif and nazhir (beneficiary) as evidence of the giving up of waqf wealth.
In line with the MUI edict, Law No.41/2004 explains about movable waqf in the form of cash through the sharia financial institute appointed by the minister. The movable waqf is executed by wakif with a statement of the will of wakif in writing. The movable waqf in cash form is issued in a cash waqf certificate and it is delivered by the sharia financial institute to wakif and nazhir (beneficiary) as evidence of the giving up of waqf wealth. Later, the sharia financial institute in the name of nazhir registers the waqf wealth in cash form to the minister not later than seven working days from the issuing date of the cash waqf certificate.
Cash waqf that is accumulated from wakif will be utilized through the investment instrument. The investment chosen can be that in the real sector of financial sector that yields profits or returns. Cash waqf investment returns can be used for various needs. According to the Waqf Law, if waqf money is invested, 10 percent of investment returns is for nazhir and 90 percent for mauquf’alaih (social or religious activity).
Also read: Economic Recovery Priorities
The cash waqf management model as recommended by the Waqf Law and various experiments of cash waqf implementation seem to be not yet optimum. The public has not yet been motivated to carry out cash waqf while nazhir has not yet managed and benefited from waqf to the maximum. The outcome has not yet been concretely felt in society.
There should be new points of view and measures to further optimize cash waqf in Indonesia. The Sharia Economic and Financial National Committee (KNEKS) as the state agency for sharia economic and financial development coordination and synergy in Indonesia realizes the need to improve the management of cash waqf by involving all stakeholders of waqf in Indonesia. KNEKS has initiated a working program for national waqf management transformation as a joint program of relevant ministries/institutions to respond to the challenge of cash waqf development in Indonesia.
National cash waqf management transformation aims at supporting the accelerated growth of waqf assets and the advantage of waqf for public welfare promotion. Cash waqf transformation also aims at increasing public knowledge and awareness so as to be motivated to practice cash waqf. Over a long term, through this transformation, cash waqf can be significantly accumulated. In addition, in the aspect of data and information consolidation, national cash waqf management transformation has the target of presenting more comprehensive information about national waqf management performance.
National cash waqf transformation needs the support of effective regulations, waqf management and institutional systems. This support is very important because such elements can speed up the implementation of waqf management, especially that of appropriately productive waqf. Productive waqf management also needs a proper system of waqf information and data to become one of the main enablers of qualitative and quantitative improvement of cash waqf management. This information system can be beneficial for the creation of an accurate and updated waqf data base so that it may be used as the material for decision making and policy adoption to cope with poverty and promote public welfare.
Cash waqf transformation steps
National cash waqf management transformation at least requires three very fundamental major steps. The first step is to conduct cash waqf business process reengineering. The elements of cash waqf business process reengineering cover the whole process of cash waqf management. They start from the phases of education, socialization or marketing involving wakif candidates, the method of payment to nazhir, the issue of certificates, management and development (of investment), the distribution and efficient use of benefits, to the routine reporting to supervisors and also wakif.
No less important is the digitalization of each phase of the cash waqf management process that is at the same time connected with the national economic and sharia finance ecosystem. The cash waqf business process reengineering leads up to the creation of a national cash waqf management platform, which will support the realization of a national waqf data center.
The second step is to lay down a national waqf strategic program. Among the many waqf utilization programs drawn up by nazhir, it is important to present a waqf strategic program as a joint synergic program of all nazhir in Indonesia. This strategic program can have one or several major schemes considered most needed by Indonesian society today, the funding of which involves waqf investments or the channeling of mauquf alaih allocations from many nazhir in Indonesia. The national waqf strategic program management can be coordinated by the BWI in cooperation with several nazhir in the form of a nazhir consortium.
Also read: Taking Care of Indonesia
This national strategic program also needs the support of many figures, ulema and various Indonesian Islamic mass organizations. In this way, there’s mutual encouragement for mobilization and sharing in the effort to realize the achievement of the waqf program that is seen as the common interest of society on a national scale.
In this phase it’s important to facilitate waqf payment by the public on a mass and digital basis.
The third step is to launch a joint campaign in the accumulation of cash waqf, at the same time undertaking literation and education so that the public execute waqf collectively by giving up cash to be managed and its returns will be used to finance the national waqf strategic program. This campaign movement is to be further expanded in a number of regions with different professional groups as well as various organizations and associations in society. The movement will finally aim at raising as high public awareness as possible to join waqf. In this phase it’s important to facilitate waqf payment by the public on a mass and digital basis.
When all the key steps and their supporting factors can be properly implemented, cash waqf transformation will progress in accordance with the objective expected. The outcome is management capable of mobilizing cash waqf to the maximum, realizing optimal investments and enjoying benefits to support increasingly expanding social activity. In this condition, national cash waqf management will concretely contribute to economic development and Indonesian people’s welfare promotion.
Ma’ruf Amin, Vice President of the Republic of Indonesia
(This article was translated by Aris Prawira).