Singapore to use Waqf to promote Islamic Education

The Singaporean government is planning an endowment fund to promote Islamic education in the south-eastern Asian country, The Straits Times newspaper reported.

“I am confident that MUIS’s move to create new waqf will pave the way to revive the philanthropic spirit in the community,” Yaacob Ibrahim, Minister-in-charge of Muslim Affairs, told parliament on Thursday, March 8.

“It is a progressive move to keep pace with evolving giving trends and the growing complexity of our financial environment", he added.

The three-million-dollar fund will be created by the Islamic Religious Council of Singapore (MUIS). It will be used to promote Islamic education in the south-eastern Asian country.

Waqf is a permanent dedication of movable or immovable properties by a Muslim for purposes recognized by Islamic Sharia. MUIS handles and develops 200 waqfs properties in Singapore, with a total asset value of S$250 million. These properties, held in trust, yield an annual rental income of millions of dollars, makes Singapore the region’s most advanced country in the development of waqfs.

MUIS is the largest body that caters for the needs of Muslims, who are estimated at between 450,000 to 500,000, making around 15 percent of Singapore’s population.

Yaacob said that he hopes the new waqf fund will revive the philanthropic spirit among Singaporean Muslims.

Over the past years, Muslim philanthropists have created waqfs, whose annual funds are used in funding religious and charitable programs.

He expressed pleasure that more Muslims nowadays are doing financial planning and drawing up wills in accordance with Islamic inheritance law.

As a form of “planned giving”, he suggested that Muslims could pledge up to one third of their estates for the new waqf fund.

The minister gave tribute to the role played by waqfs in Singapore.

He cited the example of a mosque which created a new waqf through the purchase of two properties to sustain the mosque operations.

The minister also called on MUIS to find an appropriate way to promote and adapt waqfs to the modern context.

He said he expects many well-to-do Muslims would like to contribute to the community.

http://www.ummid.com 

$105bn Waqf sector 'can boost Islamic finance'

Shari’a compliant philanthropy, or planned giving, is on the rise with the Waqf sector (Islamic endowment) estimated at around $105 billion globally, according to research conducted recently by Ernst & Young on the sector.

Ashar Nazim, director and head of Islamic Financial Services at Ernst & Young, says: “The Shari’a compliant endowment sector provides a unique impetus for the growth of Islamic finance including the nascent asset management industry.

“While Waqf has always been an integral part of Islamic countries’ economic system, it is only now that a more formal structure is evolving for professional investment management of this pool of money, with an emphasis on making a sustainable impact. More investment firms are eyeing this opportunity, adding a new dimension to the Islamic asset management industry.”

 

A significant majority of the Waqf assets are in the form of real estate, and could be as high as 70 to 80 percent of the total sector assets.

“The remaining money is deployed in Shari’a compliant money markets mostly with regional financial institutions.  Between Awqaf institutions (organizations that manage Waqf assets) and other entities, the Cash Waqf alone is estimated at $35 billion,” explains Nazim.

Investment management of Waqf pool, now a substantial amount globally, has not traditionally been the strength of Waqf administration entities. The institutions command good donor loyalty and are also strong in disbursing to the relevant social causes. However, the historical returns on managing these investments have been dismal, with the Cash Waqf mostly earning bank savings return. 

“The opportunity cost in terms of foregone wealth is staggering. The Cash Waqf sector would potentially generate an incremental $2-3 billion annually, simply by aligning with professional investment managers. The need is most critical given the high fiduciary responsibility of the trustees to manage the wealth in the best possible manner,” Nazim says. 

Islamic funds industry is still evolving, having been able to tap only 11 percent of the estimated $480 billion wealth pool at its disposal. Most of the products relate to vanilla equity markets and there is an urgent need to innovate and diversify to new asset classes. Islamic endowments, both real estate and cash pool, is likely to be the next breakthrough opportunity for the Islamic fund managers.  

  

Tapping into the multi-billion dollar Waqf pool first requires ensuring a credible governance and operational infrastructure to safeguard the sanctity of the Waqf charter. In addition, understanding the donor segment and their unique touch points is critically important to raise endowment funds. For Islamic financial institutions their existing investor base, comprising high net-worth individuals and family offices, makes for a good starting point, the research said. – TradeArabia News Service