Waqf (wakaf) in Islamic Asset Management – A Singapore perspective

Legal Updates
Abstract :

After many years of relatively low profile, there appears to be a reinvigoration in the development of waqf . At the 8th World Islamic Economic Forum ( WIEF) in Malaysia from 4 to 6 December 2012, the buzzword on many lips was on ‘harnessing the Waqf for the Muslim Ummah ‘. Speakers from the  South-East Asia, the Middle East and even Bosnia-Herzegovina, shared their countries’ experiences in waqf and the common thread running through all the different countries is that waqf is an area which has been severely neglected over the years but that there is great potential in utilising this concept to bring about a host of economic and social benefits , while serving God. This paper takes a brief look back  at the evolution of the waqf over the course of Islamic history and  how we can learn from the lessons of the past as well as look forward and consider what are needed to give new life to waqf, especially in realising its potential as a value-creating asset which can be of benefit to the Muslim community . 

Background on concept of waqf 

The word ‘waqf’ literally means ‘detaining’ . In his book Mahommedan Law , Ameer Ali states that the term ‘waqf’ signifies the dedication or consecration of any property , either in express terms or implication, for any charitable or religious object, or to secure any benefit to refers to human beings3.

Waqf has sometimes been confused with zakat . While zakat is a quranic injunction , the concept and practice of waqf was emphasised by the Sunnah ( prophetic traditions) and Ijma ( consensur of Islamic scholars). Islamic scholars and jurists have traced the concept of waqf to several hadiths and one of the most famous one is from Ibn Majah :

” The best things that a man can leave behind are three : A righteous son who will pray for him, ongoing charity whose reward will reach him , and knowledge which is acted upon after his death”.

It has been quoted by various scholars too that the first waqf in Islamic history was the mosque of Quba’ in Madina , after the arrival of Prophet Muhammad.  This is often held as the prime example of a religious waqf . However, waqf has been created for wider purposes , there have been awqaf established for the benefit of the poor, social services, health care ,l libraries, roads and bridges , parks and animals.   A well-known hadith recounts the donation to charity of an orchard and its fruits by one of the Prophet’s companions/followers upon the direction of the Prophet as follows :

“If thou likest , make a property itself to remain inalienable , and give ( the profit from ) it in charity .So Umar made it a charity on the condition that it shall not be sold, nor given away as agift, nor inherited, and made it a charity among the needy and the relatives and to set free slaves and in the way of Allah….”

The proceeds from the sale of fruits thus became the revenue generating waqf  for social development . This spurred the creation of  awqaf by other companions of the Prophet and in particular , the family waqf , whereby one of the conditions stipulated that the children and relatives of the original owner of the waqf property  (the waqif)   have priority over the revenues generated .

There is considerable literature on how waqf expanded during the Umayyad and Abbasid dynasties .It has been documented that at the founding of the Turkey republic in 1923, about 75% of the country’s arable land were awqaf properties . At the end of the nineteenth century, vast lands in Algeria and Tunisia were aqwaf.

Decline of the waqf

The profile of the waqf over the course of Islamic history  to the modern day era has been described as  being in a ‘precipitous decline’8.  Commentators and scholars such as Professor Wael Hallaq have pointed out that colonialism and   government interventions in affected  Islamic countries are among the key reasons behind its decline9 . There are academics who expound that ‘a more likely reason for  the waqf’s decline may be the contemporary inflexibility of waqf doctrine and reluctance to respond to the rapid internal and contextual changes of the modern Islamic world’10.  What appears indisputable is that the reasons for the decline are manifold and are both intrinsic and extrinsic  to the Muslim ummah.

Why the renewed interest ?

Given the general consensus that waqf had been declining for a long time , it is curious as to why there is today a sudden interest in waqf . Is this just passing fascination tinged with nostalgia ? Is there really a benefit, when compared to conventional alternatives  ( like Trusts and Foundations) in today’s world ?  Who are the beneficiaries of the awqaf ?  If awqaf  were to be redeveloped as a system , how  do we ensure that it can be sustained and not fall into another precipitous decline ?

It is noteworthy that increasingly in the last few years , Singapore has been mentioned at various international forum as a model for the development of waqf .  Singapore’s experience with the issuance of Sukuk and more recently, the waqf Ilmu  as a cash waqf , has been cited favourably by several countries, especially given the fact that the Muslim community is a minority in Singapore . The factors that have driven this revival will be shared later in this paper .

Looking back and lamenting over the decline is not as worthwhile as using the past as an appreciation in the lessons from history and ensuring that the mistakes  of our forefathers are not repeated , while adapting the good practices from yore . One of the most crucial lessons goes right deep into the core – that of coming to a more uniformed understanding of the meaning of and hence the applicability of waqf .

Understanding the waqf  

Several authors have embarked on learned studies on waqf and through the vast literature  available  , we can summarise the essentials of waqf as follows :

(1)   the motive in waqf is always religious

(2)   waqf is a foundation endowed in perpetuity ( it belongs to God)

(3)   except in the case of the Hanafi, a wakf is not entitled to take any benefit in the wakf property

(4)   any property capable of being endowed in perpetuity can be the subject-matter of wakf

(5)   a mutawalli is merely a ‘procurator’, manager or superintendent , the property is not vested in him and he is not a trustee in the technical sense

According to Fyzee, waqfs may be divided into three classes :

(1)    in favour of the rich and poor alike

(2) in favour of the rich and then the poor

(3)    in favour of the poor alone

The common understanding in most literature of Islamic Law is that there are two forms of waqf, waqf am and waqf khas, where in the former , the waqf property is meant for religious and charitable purposes recognised by the Muslim Law and in the latter , the waqf property is specifically for certain persons or purposes stipluated in the waqf itself .

Waqf – in the Courts 

The history of the evolution of the waqf in the last two centuries is marked with years of uncertainty over how waqf would stand up in the overall legal system , particularly in countries which lived through long periods of colonialism . This is one of the manifestations both intrinsic and extrinsic forces at work . Countries which were once under the British empire , namely India, Malaysia and Singapore, have had their share of litigation over waqf properties and to a large extent, they stem from differences in understanding over the  definition of  waqf itself .

In India and Pakistan,  the courts grappled with their interpretations of the waqf over a span of more than  a hundred years. The difficulty in India and Pakistan were largely brought about by the different positions taken by the different madhabs. Even under the same school of law, Hanafi , there can be differences . In an 1892 case, Bikani Mal v Shuk Lal Poddar ( 1892) 20 Cal 116, the Calcutta court heard arguments under different sets of followers Hanafi . The followers of Abu Yusof and Imam Muhammad believed that the ownership of the waqif over the property abated in favour of God while those under Abu Hanifa believed that the waqf was revocable until there was a decree of court .There was also a divergence in views as to whether the perpetuity of a wakf must be expressly stated or could be presumed.

In his well-known book, ‘MUSLIM LAW : The Personal Law of Muslims in India and Pakistan’, distinguished academic and lawyer Faiz Badruddin Tyabji carefully stated  that ‘waqf in India and Pakistan implies ( my emphasis) the permanent dedication by a Muslim of any property for charity , or for religious objects or purposes, or for an object of public utility’.  The use of the word ‘implies’ was the most polite way for Tyabji to describe the various legal opinions from the Courts at that time . There were so many differing opinions that it was difficult to rely on any decision as conclusive in the eyes and minds of the practitioners of the waqf  . Putting it mildly, some judicial decisions were hard to respect.

It was in the second half of the twentieth century that some judges openly  described some of the famous decisions of the Privy Council as ’embarrassing’. In the Privy Council case of Abu Fata Mahomed Ishak v Russomoy Dhur Chowdury (1894) 22 IA 76;ILR 22 Cal 619  the Board effectively nullified the family waqf by holding that the wakaf in issue was  ‘invalid if the primary object is for the aggrandisement of the settlor’s family and the gift to charity is illusory either because of its small amount or of its uncertainty or remoteness of objective’. This decision was greeted with shock and fury by the Muslim scholars and jurists in India as it went against a practice that had become more and more prevalent in India . Great pressure was forced upon the authorities by these scholars and jurists , finally leading to the promulgation of the Mussalman Waqf Validating Act 1913  ( or commonly known as the Waqf Act 1913) .

While the Waqf Act stipulated that that the applicable law would be “the Hanafi school of Mussulman law”,  it did not solve the problem as the Indian High Courts hearing disputes on waqf were mainly presided by English judges with no background in Islamic law. An illuminating comment made in a Court judgment in Mt Rahiman v Mt Baqridan (1935) 11 Luck, 735 gives an idea of the state of affairs at the time .  The sarcasm is most replete in its statment  that ‘ strictly, dedication ought to be with religious motive , but that has been more or less lost sight of in India’.

Instead of taking heed on what happened in India after Abu Fata’s case, the Privy Council in 1952 case of Fatumah v Mohamed Bin Salim (1952) AC 1 , made another startling pronouncement that, contrary to wideheld belief that the decision in Abu Fata’s case had been confined only to Muslim Law as applied in India only , the Privy Council outrightly declared that the ‘interpretation of the Mohammedan Law given by this Board ( the Privy Council in Abu Fata’s case) is not confined to the law as applied or administered in India only”.

Fatumah’s case was an appeal from a decision of an East African court . The repercussions spread across the British empire .

The Privy Council decision was binding in Malaysia and led to Suffian FJ in  a Federal Court of Appeal judgement of Commissioner for Religious Affairs v Tengku Mariam ( 1969) 1 MLJ 110 , lamenting that he had no choice but to declare a particular waqf made in favour of the setllor’s family and relatives for religious purposes as invalid .Suffian FJ wrote in his judgement that ‘ the decisions of their Lordships of the Privy Council on waqf were binding upon the Court’and suggested ‘that the embarrassing situation should be rectified by legislation’. This was subsequently done in Malaysia and a history of the legislation amendments can be found in the Malaysian Federal Court of Appeal case of Haji Embong Bin Ibrahim v Tengku Nik Maimunah Hajjah Almarhum Sultan Zainal Abidin (1980) 1 MLJ 286 where the Court upheld the waqf by relying upon the saving provision in an amendment to the legislation that no wakaf is to be held invalid ‘if otherwise valid under Islamic law’.

The Court of Appeal in Haji Embong’s case made a pertinent statement that the  major factor which led  the judgements in the Privy Council could have been that the judges were  influenced by the concept of charitable trust and the rules against perpetuities as understood in English Law . To remedy this , the Court of Appeal sent a clear signal that the basic question of whether a waqf is valid or not should be answered by relying on pure Islamic Law . It quoted a renowned author Fyzee  that ‘it is clear that the objects of a waqf may be different from the objects of a charitable trust as understood in English Law’.

Even though legislation can and have been passed in various countries to redress the problems over the validity of waqf , there can continue to be differing views on what constitutes a valid waqf , for example, whether the beneficiaries must be the poor or  cannot be strangers ? There have been ample court cases on these ( mainly in India ) and it would be useful to have more research done and a closer study of the comparisons between the different madhabs , which is beyond the scope of this present paper .

Waqf as State Law

Today, the definition of Waqf are invariably entrenched in various written laws or judicial  pronouncements of specific countries .By way of illustration, theAdministration of Muslim Law Act ( AMLA) in Singapore defines a waqf as ‘ a permanent dedication by a Muslim of any movable or immovable property for any purpose recognised by the Muslim Law as pious, religious and charitable’. As has been shown in the earlier Privy Council cases , what is lacking however is not definitions but the deeper understanding of the principles behind these definitions .

The applicable law in ascertaining validity of waqf 

In Singapore , legislation has also made it clear that where any any question arises as to the meaning of any instrument creating or affecting any waqf, such question shall be determined in accordance with the provisions of Muslim Law .  The Singapore courts have had to rule on the validity of waqf, most notably inLS Investments Pte Ltd v Majlis Ugama Islam Singapura (1998) SGCA 55, where the Court of Appeal pronounced that ‘a waqf is a religious or pious endowment and although it often provides for charities, it should not be confused with a charity or trust as understood in English Law ‘.  A close reading of LS Investments will show how careful the Singapore Courts have been in the approach to be taken and its pointed reminder that ‘ Muslim law is part of the law of the land which the Court would take cognizance of ‘. Putting into practice what it preached , the Singapore Court of Appeal in LS Investments quoted very extensively the scholarly works on this subject of waqf such as AA Fyzee’s Outlines of Muhammadan Law ( 4th Edition), Ameer Ali’s Mohammedan Law ( 5th Edn) and  Baillie on Digest of Moohummadan Law . Such an approach , where a non-Muslim judge in a secular jurisdiction , goes to great lengths to understand Islamic Law , is remarkable .It gives confidence to those seeking to develop the waqf .

It is unlikely that a secular country like Singapore will create any special court just for Islamic Law matters apart from the existing Syariah Court system which deals primarily personal law matters of marriage and  divorce .  The current practice where it is the civil courts that hear disputes on waqf will continue for a long time . Although cases like LS Investments have shown that our civil courts are equipped to handle such disputes , this cannot be taken for granted and in this new issues may crop up in future . The judiciary would require the lawyers who handle such cases to also be familiar with Islamic Law and developments in the awqaf system.

The Administration of Muslim Law Act sets out procedures and even directs the texts to be relied upon when an Islamic Law issue arises but it does not go far enough to explain what the Islamic law is on the validity of the waqf . Lawyers and other practitioners must strive to enhance their expertise so that they can help the community and assist the judiciary better. Only then can there be better development of the institution of waqf.

Sharia Standards of AAOIFI 

It is a step in the right direction that the AAOIFI ( Accounting and Auditing Organization for Islamic Financial Institutions have come up with a set of Sharia standards as a guide to the creation and documentation of waqf. In an exercise spanning about two years and involving several meetings between the Sharia Standards Committee and the Sharia consultants engaged to specifically prepare a study on waqf, the Sharia Board of the AAOFII adopted the Sharia Standard on Waqf in 2008. It is an extremely useful piece of reference for anyone with an interest in waqf as the basis for each standard is explained . It covers a comprehensive range including the definition, rationale of permissibility and types of waqf, the conditions in waqf, supervision and management of waqf, application of modes of investment for development of waqf income and maintenance, renovation and replacemen of waqf assets.

Where there are differences in views between  the different school of laws, the Sharia standards contain an explanatory note as to why a particular school of law’s position has been adopted  . For example,’ the permissibility of temporary waqf is based on the viewpoints of the Maliki  and the Imamiyah Schools of fiqh, in adition to what has been reported about the viewpoint of Abu Yusuf of the Hanafi School ‘.

While this set of Standards is an indispensable tool for anyone who requires a quick and concise understanding of the technical and legal positions on waqf creation , I believe it can also be cited as the applicable guide or reference to parties in any jurisdiction in the resolution of any disputes arising from waqf . In contrast to the ’embarrassing situation’ sparked by the decisions in the  earlier mentioned Privy Council cases , the Sharia Standards of the AAOFII can be the agreed reference on the issues surrounding the validity of the waqf. It can , if it is not already is , be factored into arbitration agreements as well as in other forms of alternative dispute resolution . Even the Courts in the various jurisdictions would probably find the Sharia

Standards an attractive resource , given the stringent and rigorous thinking that went into the drafting of the Sharia Standards and the gravitas of the Shariah scholars who contributed their expertise .

Better documentation of waqf  

On the ground , guides such as the AAOFII’s Sharia Standards could and should lead to  greater care in  taken on the drafting of stipulations by the waqif  ( or their advisers ) . There have been litigation in Court over the intention of the waqif which could well have been prevented if more precise language had been used in the instrument . For example, in the Haji Embong case in Malaysia ,  parties litigated over whether the endowment was for both the capital and income or just the capital . In LS Investments in Singapore, there was not even an express statement that the property was dedicated to constitute the waqf .The Court had to make a finding based on inferences and it did so by relying on the approach set out in Ameer Ali’s Mohammedan Law (5th Edn)  where he wrote that ‘in case of ambiguity…….intention is to be gathered from the surrounding circumstances, and the evidence of the manner in which the proceeds of the property have been applied”.

Registration of waqf 

In LS Investment, the Court of Appeal in Singapore upheld the High Court’s decision that  the Trustees had no legal right or title to deal with the waqf property other than to carry out the waqif’s wishes . Accordingly, the sale from the Trustees to LS Investments was void as under the AMLA, all waqf property automatically vested in MUIS ( Majlis Ugama Islam Singapura or Islamic Religious Council of Singapore ) and the Trustees could not legally sell the waqf .  Although the LS Investments argued that they were bona fide purchasers, the Court ruled that this ( common law ) was not applicable given the fact that the Court could not create a title in these circumstances.

The LS Investments case stands out as an expensive lesson on the perils and pitfalls of not having a waqf registered . The misfortune on the purchasers in discovering belatedly that the property they bought turned out to be bad can have a huge impact on the commercial industry as a whole . Fraud can take place too by unscrupulous trustees and the overall reputation of waqfs may be affected . To this end , it becomes necessary for waqf to be registered to prevent incidents such as LS Investments, so that innocent buyers do not end up with nothing . Property lawyers ( conveyancers) would also be walking on  a tight rope as they would find it hard to advise on title without any mechanism to rely on as to whether it was waqf or not .

It is important that legislation is constantly reviewed and updated to plug loopholes and in this regard , the LS Investment case led to the 1998 amendment of AMLA where it became mandatory to register with MUIS all waqf , regardless of whether or not it was created before the enactment of AMLA into Singapore law.

Under section 64(3) of AMLA ( since 1998) , it is a strict legal requirement that the mutawalli , when registering the waqf, must furnish the following particulars :

(a)  a description of the wakaf properties sufficient for the identification of the properties;

(b)  the gross annual income from the wakaf properties;

(c)  the amount of rates and taxes annually payable in respect of the wakaf properties;

(d)  an estimate of the expenses annually incurred in the realization to the income of the wakaf properties;

(e)  the amount set apart under the wakaf for –

(i)     the salary of the mutawalli and allowances to the individuals;

(ii)   purely religious purposes;

(iii)  charitable purposes; and

(iv)  pious and any other purposes; and

(f)   any other particulars required by the Majlis

The Mutawalli – and the supervision thereof 

The role of the  mutawalli is an extremely important one  . His task is to oversee the investment of the property , its maintenance and the distribution of revenues to the beneficiaries .The discretion of the mutawalli is derived from what he is accorded  under the stipulations of the waqf. There is a belief that he is answerable only to God since there  are no specific accountability mechanisms provided for in any holy injunctions .

In Singapore , AMLA provides for MUIS to have oversight of the mutawallis .  In Syed Abbas bin Mohamed Alsagoff v MUIS ( Islamic Religious Council of Singapore) ( 2010) 2 SLR 136 , the High Court , in dismissing the applicant’s request to remove MUIS as trustees of the waqf , emphasised that section 58(2) of AMLA had empowered MUIS to clearly oversee the administration of all waqf in Singapore . Sections 58(4) and 58(5) of AMLA  granted MUIS the power to remove a mutawalli and to replace  him with another . In 1998, further amendments were made to AMLA whereby a mutawalli could be convicted of a criminal offence for faliures to do specific acts .

Section 64(11) provides that :

(11) Any mutawalli of a wakaf who fails to –

(a)  apply for the registration of the wakaf;

(b)  furnish statements of particulars as required under this section;

(c)  supply information or particulars as required by the Majlis;

(d)  allow inspection of wakaf properties, accounts, records or deeds and documents relating to the wakaf;

(e)  deliver possession of any wakaf property, if ordered by the Majlis;

(f)   carry out the directions of the Majlis; or

(g)  do any other act which he is lawfully required to do by or under this section, shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5,000 or to imprisonment for a term not exceeding 12 months or to both.

At the 2012 WIEF Forum , Haji Alami Musa , the President of MUIS , informed the audience present that the powers granted to MUIS under the AMLA was an effective tool towards the overall management of the waqf in Singapore . There have been reports of waqf

mismanagement and corruption in several countries  , but lack of efforts ( or political will )  in bringing the persons responsible to task. While it is acknowledged that the mutawallis final accountability is before God only , the threat of a criminal prosecution as in Singapore can be real deterrent in the here and now on this earth .

Difficulty in Management and Supervision 

At this juncture, I do acknowledge that the Singapore system where a central authority like MUIS has so much power and say over the administration of awqaf may not be applicable or feasible in many other countries . In a sense, Singapore is unique especially given that Muslims constitute less than 15% of the population . AMLA is very much a legacy of Singapore’s past as a British colony as well as its shared history with Malaysia .  MUIS is a statutory board created by AMLA , an Act of Parliament . It is hard to imagine any other country, where the Muslim population is so small, having similar institutions and powers like MUIS.

Even MUIS itself created a privately owned subsidiary , WAREES Investments Pte Ltd in 2000 so that it could focus on its administrative and regulatory roles while WAREES concentrated on the income -generating development of the waqf assets .

Wasted Potential 

In a recent Reuters report on the setting up of a fund management venture set up in Dubai in March 2013 specifically tragetting at waqf , there is an open acknowledgement that many of the awqaf  held for a long period of time operate with ‘little or no profit’ and are a ‘wasting asset’. Potentially they are worth billions as they are mainly in the form of real estate . The report’s conclusion was simple – the waste was due to the fact that few of the managers of these assets are good asset managers . It is ironic that while many parts of the Middle East have moved in an upward economic trajectory  over the last few decades and there have been an increase in awqaf in terms of quantity , the value of these assets have not kept pace with the growth . There is a need to relook at the management of these assets and be brutally frank as to the skill quality of the people entrusted to manage these assets .

The advent of new players into the awqaf sector under the bigger umbrella of the Islamic wealth management leads one to think that there could be more innovation in the future . Banks which have offices in Middle East and Europe have ventured into the world of awqaf as can be seen from their annual reports . The Bank Sarasin & Co Ltd , in its publication of its Islamic Wealth Management Report 2010  , even devoted a substantial portion on how to create a trust which replicates the waqf by preserving capital but allocating income to beneficiaries . It also recommended investments in alternative energy and water and environmental management as these sectors are in line with the important goal of waqf of perpetuity . Clearly , the efforts by such banks must be accompanied by the relevant expertise and capabilities, and if the old style mutawallis do not take heed, the assets they hold will appear even more stagnant if these new forms of waqf assets take off .

Development of the awqaf 

While the focus in the past has mainly , if not overwhelmingly been tied with social and economic improvement of the ummah, there are now calls for awqaf to embark on a wider focus, through business . As argued by Mohd Hisham Dafterdar at the 8th WIEF Forum, ‘the importance of the awqaf sector is seen in terms of the huge assets it controls, in its massive social expenditure, in the large number of people it employs, and its significant contribution to the economy which accounts for as much as 10 per cent of the GDP of some countries…it is a growth sector and represents a market niche with huge potential’.

Innovative Schemes 

Various countries have had different experiences in the development of awqaf . The Social Islamic Bank Limited in Bangladesh initiated a cash waqf scheme where the donors contribute cash waqf as permanent deposits , without any options for withdrawal.  Based on on information on its website , the cash waqf grew by 20 per cent between 2011 and 2010  , but this scheme is still relatively new and not much details have been made public yet .

In Malaysia . there have been mixed experiences . A well-known example is that of the Syarikat Takaful Malaysia Berhad which introduced in 2001 the “Takaful waqf Plan’, where clients would give a contribution every month towards an accumulated amount at the end whereupon a waqf would be created. The monthly contributions were supposed to be invested in Islamic mudaraba schemes and the returns added to the waqf fund . The bank would provide a list of institutions as potential beneficiaries ( orphanages, education funds, mosques ) . However , after some initial excitement, the interest in this scheme declined and In 2010, it was unceremoniusly withdrawn . This was partly due to uncertainty of its legality as under Malaysian law, the mutawalli had to be the Malaysian Supreme Religious Council but in this plan , it was the Takaful  company .

The building of the ZamZam Towers in Makkah , Saudi Arabia , through the leasing of waqf land , has also been held up as an epitome of innovation . The principle of perpetuity of the waqf was not diminished by the development of this project as there was no transfer of ownership. At the end of the 28-year lease , this property will be transferred back to the waqf . The Shariah Board took into account not only the above but also the purpose ( accomodation of pilgrims on Haj ) and  that the financing was through  a Sukuk backed by the Government of Saudi Arabia itself .

In Bahrain, a cash waqf was established in 2006 by the Central Bank of Bahrain where cash contributions from several banks were placed in a common pool and subsequently invested in Islamic financial products . The returns therefrom were then used to fund Islamic finance educational and research activities , thereby building up greater capacity and enhancing capability in the Islamic Banking field in the country .

The Singapore experience 

As alluded to at the early part of this paper , Singapore has received attention in the Islamic world for its success in the development of waqf. The factors that have contributed to this have been its strong legal framework, pro-development policies , innovative financing , progressive fatwa thinking, good governance and the professionalism and expertise acquired through collaboration .

The above factors are linked to one another . The push to step up the development of waqf has largely been due to the realisation that the waqf assets managed by MUIS  were mainly in inertia . Most of the properties were in terrible state of neglect and there was a real possibility then that the government could exercise its powers under the Land Acquisitions Act to develop the areas where these properties were sited. This propelled MUIS to move and the Fatwa Committee  issued a ruling allowing The concept of Istibdal (exchange) to be applied for the redevelopment of waqf properties which had deteriorated into a dilapidated state, or in danger of acquisition or located in inappropriate areas such as the red light districts .The proviso was that the asset, if relocated and redeveloped, must bring about better yield returns.  The ruling by the Fatwa Committee was a progressive one as hitherto, MUIS had not sought redevelopment as it adhered to the strict ruling (of most jurists) that it is forbidden to sell waqf property. It was indeed a bold move as there were no precedent. In the Saudi Arabian ZamZam Towers , the project was based on leasing and there had been no sale or transfer of ownership of the waqf land .

Value creation  

MUIS took the innovative step in applying Istibdal in  redeveloping a project involving 4 houses at  Duku Road . After selling 2 of the 4 houses , the land area of the original waqf had naturally reduced . But the main point was that the value in the waqf had increased . The income from the waqf had increased from  a pathetic $68 per annum to a respectable $106,357.00 in 2006 . The net asset value had also grown from a mere $14,281.00 in 1990 to $2.8million in 200633 . Although the ideal position would have been to leave the original waqf land size intact , the sale of 2 of the houses was necessary to finance the redevelopment of the project .

The opportunity to redevelop the waqf , without the downsizing of the land itself, came about in the Bencoolen project.  The original waqf consisted of a mosque and some shophouses which were in a rundown condition. Recognising the vast potential of the area which is sited within a prime business and shopping area ( and in close proximity to a brand new university ) , it was envisaged that the waqf could be redeveloped into a mixed  project comprising a mosque equipped with modern facilities as well as a commercial complex and a suite of a hundred service apartments.

Together with partners from the private sector with long established track record in corporate finance ( Allen & Gledhill ) and WAREES, MUIS issued the Sukuk ( Musharakah Bond)  to finance the project . MUIS brought in Bai-tul-mal to provide the amount needed to help develop the project . Today, the waqf has a brand new mosque , which is of course a benefit to the mosque-goers and a modern commercial property complex which brings in regular income for the mosques . The service apartments run on a lease which is renewable and the income goes to Baitul-mal as the party which bore the most risk in developing the $35 million project. In his speech at the 2007 Singapore International Waqf Conference, the former Prime Minister of Singapore Mr Goh Chok Tong cited the Bencoolen project and its use of the musharakah bond as an innovative way to  ‘unlock the potential of waqf’.  The Bencoolen

project has indeed sparked considerable interest in future projects as investors take cognizance of the knock-on effect it has on other economic sectors such as retail and food .

I anticipate that the Istibdal concept will be applied in more situations and more creatively too. There are already signs of this in a project involving the sale of several dilapidated houses in the suburban areas being sold off ( rather than being redeveloped ) and the proceeds being used for one major building ( at Beach Road which is near hotels and the business district)  . In fact, this building is where the present WAREES office is housed .


These appear to be exciting times for waqf . However , we must be mindful that in our quest to create value for the waqf, we should never lose sight of the waqf as a social institution too . In this regard , it is worth noting that a number of non-governmental organisations have called for there to be awqaf projects with social asistance in mind . There are ongoing debates on this , including arguments that provision for social services through waqf may reduce a state’s tax base , and I believe more research needs to be done on the implications , especially given each country’s own unique circumstances . One lesson from history we can draw upon though is how  ,in Istanbul during the Ottoman period, there resulted an oversupply of soup kitchens provided through awqaf created without a coordinated study of needs and services .

Singapore’s approach in awqaf development seems to be a balanced one . On the one hand, more innovative and progressive thinking  should be employed in developing the huge numbers of properties that MUIS has on its records as waqf . They should no longer be allowed to just rot away . With real property in Singapore appreciating in value at an astronomical rate in the last few decades , the returns are hugely attractive . The benefits it can bring to the community are immeasurable. The Muslim community must however be made to feel that they have a part to play in the development of waqf too .In this regard , the latest push by MUIS for cash waqf is welcomed . By giving cash, of any amount, towards Islamic education (the project is called Wakaf Ilmu ( knowldege) , the  Muslim will be made aware  that waqf is not just for rich people with houses and land to give .

Muslims in Singapore have been participating in cash waqf for some time, even if they do not fully realise this. This is through the Mosque Building Fund  where every Muslim employee is required by law in Singapore to contribute a stipulated amount to this Fund by way of deduction of salary. This scheme which started more than 30 years ago have enabled MUIS to build 22 mosques with an accumulated amount of more than $130million . The Wakaf Ilmu is different this time around as it is purely voluntary and a person can give any amount he wishes , knowing that the specific purpose is towards Islamic education in Singapore .

Ultimately, it is necessary for the management of waqf to be up to par with the latest developments in the financial world. While I am not saying that the mutawallis in the past, mainly relatives and religious persons , are no longer of use, there could be more exploration of tie-ups and co-opting of those whose professional knowledge and financial savviness can add value to the waqf . Last but certainly not least is the need to  constant study and adapt what we know of the past to the present and future . As shown by the Fatwa Committee in allowing the Istibdal in the Singapore example, there is room for progressive thinking in applying the Fiqh to the current realities on the ground . God willing, this will continue as we look towards a promising future for the waqf .



Ahmad Nizam Abbas