The Securities Commission Malaysia (SC) proudly hosted the first-ever “Waqf and Islamic Capital Market Conference” with the theme “Exploring the Potential of Waqf Through the Islamic Capital Market” on July 20.
This momentous event brought together captains of industry, Shariah advisors, government agencies, and academic figures to discuss and explore the immense potential of Waqf as a major social financial instrument in Malaysia.
The conference aimed to encourage cooperation, knowledge sharing, and collaborative discussions among stakeholders to mobilize the development of Waqf in a more structured and planned manner.
With the Islamic capital market expected to play a crucial role as a leading source of funds, the focus on Waqf as an essential instrument is aligned with Malaysia’s efforts to create a more conducive and comprehensive Waqf ecosystem.
The Honorable Senator Dato’ Setia Dr. Haji Mohd Na’im Bin Mokhtar, Minister in the Prime Minister’s Department (Religious Affairs), graced the event and delivered the keynote address. His presence marked a significant catalyst for the two-day discussion that took place.
Waqf Landscape in Malaysia: Unlocking Social Finance Potential
Addressing the participants, SC Chairman Dato’ Seri Dr. Awang Adek Hussin emphasised that Islamic social finance has gained traction worldwide, and Waqf holds the potential to be an essential instrument of Islamic social finance. It can play a crucial role in achieving socio-economic development goals, including addressing poverty, unemployment, and financing healthcare, education, and infrastructure development.
Globally, Waqf assets are estimated to range from USD 100 billion to USD 1 trillion, offering substantial potential to bridge the sustainability funding gap estimated at over USD 1.7 trillion annually. In Malaysia, Waqf assets are estimated to be worth more than RM 1.3 trillion. However, only 13 percent or approximately 30,000 hectares of Waqf land in the country is currently developed, showcasing the untapped potential of Waqf in catalysing socio-economic development and expanding investment opportunities.
SC Initiatives in Developing Waqf
Recognising the positive impact of Waqf, the SC has been actively promoting its development through the Islamic capital market. This includes the publication of the book “Waqf Assets: Development, Governance and the Role of Islamic Capital Market” and the establishment of the Sustainable and Responsible Investment Sukuk Framework (SRI Sukuk Framework), which includes the development of Waqf as an eligible project for the issuance of SRI Sukuk.
The Islamic Fund and Wealth Management Blueprint (IFWMBP), launched in 2017, outlines SC’s strategy in promoting the development of Waqf assets through Islamic collective investment schemes. The Waqf-Featured Fund Framework (WQ-FF), introduced in 2020, allows investors to allocate a portion or all of their dividends from unit trusts and wholesale funds to charitable projects.
Since its launch, the WQ-FF Framework has fostered greater collaboration between Islamic Fund Management Companies (IFMCs) and State Islamic Religious Councils, resulting in six Waqf featured funds with an aggregate fund raising of RM 46.7 million as of December 2022.
To further incentivise issuers and investors, the SC expanded its SRI Sukuk and Bond Grant Scheme in 2021 to cover all Sukuk under the SRI framework, including Sukuk issued for the development of Waqf assets.
Challenges and Collaborative Efforts
Despite these significant initiatives, the full potential of Waqf in Malaysia remains largely unexplored and untapped. The conference emphasised the need for continued collaborative efforts to engage and discuss, harness data for better decision-making, and create awareness about the importance of developing Waqf assets.
Conclusion: Advancing Islamic Social Finance
In conclusion, the “Waqf and Islamic Capital Market Conference” successfully shed light on the immense potential of Waqf as an essential instrument of Islamic social finance in Malaysia. By uniting stakeholders with a common goal, Malaysia aims to position itself as a “thought leader” in the Islamic finance industry, while addressing socio-economic imbalances and promoting sustainable development.
