Unlocking the Value of Waqf Sector in Indonesia

By: Fahmi M. Nasir

As a keen observer of waqf in Indonesia, I follow closely the development and the achievement in this sector last year. There were many initiatives taken by waqf stakeholders, government and private sectors alike, in order to push and expedite the development of waqf nationwide. 

On 14 October 2018, two new milestones of waqf development in Indonesia, Waqf Core Principles (WCP) and Cash Waqf Linked Sukuk (CWLS) were launched in Nusa Dua, Bali at the prestigious forum, The 2018 International Monetary Fund and World Bank Annual Meetings. Having a robust standard for waqf governance like WCP and a progressive waqf product such as CWLS could be a significant step towards realising the potential of waqf as well as reviving this institution to play an importance role in the socio-economic development of the society.

However, it appears to me that the waqf stakeholders have failed to unlock the value of waqf. This is based on the massive assets and huge potential of waqf sectors in our country which was not yet developed and managed properly. Ironically we even did not know the true value of waqf assets as no comprehensive census of waqf assets conducted in Indonesia. 

We only noted that a figure of USD60 billion was mentioned as the market value of registered waqf land in Indonesia. This estimation was given by Azmi Omar, former Director General of Islamic Research & Training Institute (IRTI) at Islamic Development Bank during last year forum on waqf & blockchain in Kuala Lumpur. Similar estimation was also given by Bambang Brojonegoro, Minister of National Development Planning, on 2016 during 41st Annual IDB Meeting in Jakarta.

It is against this backdrop, if my observation is correct, that some important steps should be taken to unlock the value of waqf in Indonesia. Among others is waqf census, structural reform of the Indonesian Waqf Board (BWI), revision of Waqf Law No. 41/2004, having pilot projects at provincial level and embracing the technological innovation.

Fahmi and Ihsan (2018) has highlighted that the existing literature on waqf often mentions the big potential of waqf assets, but no precise data is available so far. The sole reason for this situation is because no census has been done. Bambang Brojonegoro in his speech during the inauguration of National Syariah Finance Committee (KNKS) directors, last week, highlighted that among the immediate task that awaiting KNKS is census of waqf land.

A census on waqf is very crucial in mapping the current problems and status of waqf assets. The census will be able to give a clear picture of the real value of waqf properties in Indonesia. It also will provide the database of waqf properties across the country which in turn could influence the development and the governance of waqf in the future. It will also attract many investors to develop waqf properties as now the real value and the potential of the assets has been established. 

The next pressing matter is BWI as a body that was given huge responsibility to revive the waqf institutions nationwide by carrying out various functions as a regulator, facilitator, motivator and other supporting roles. As far as I am concerned, BWI commissioners are not working fulltime in discharging their tasks unlike, for example, the General Elections Commission (KPU) or Corruption Eradication Commission (KPK). Looking at the challenges and opportunities in waqf sector, the time has come for BWI commissioners to work fulltime.

The same goes on how BWI appointed their representatives at provincial levels. The normal practice of appointing the people from the Ministry of Religious Affairs office and people closely associated with them at respective provinces should be ended immediately. BWI commissioners at provincial levels should be selected through rigorous process involving local government and local parliament. The candidates should have necessary skill sets to develop waqf properties. 

As a guidance, we should look at how Warees of Singapore recruiting their staff. Most of their staff is professionals in various fields such as finance and accounting, real estate, engineering, architecture, economics and statistics, Islamic finance and syariah, business administration, marketing, construction management and project management. This is the secret of the exponential development of waqf sector in Singapore. BWI should embrace this practice as it has a proven track record.   

The other steps that should be taken immediately to unlock the value of waqf is by having a pilot projects in every province nationwide. Take Aceh for example, they have many waqf lands which are waiting to be developed to reach it true potential. In Banda Aceh alone, waqf land can be easily developed and increased the value of waqf assets manifolds immediately. Every year, there would be roughly eleven thousands of new students registered at Syiah Kuala University and Ar-Raniry State Islamic University. This is huge market to provide student accommodation. 

A development of a modern student accommodation which consist of hostel for student, commercial and office lots at waqf land there would immediately solve the problem of proper accommodation for thousands of students while at the same time increasing the value of waqf assets. I am wondering what would happened to waqf sector if waqf land in Banda Aceh were developed and managed properly by those who are great in creating and unlocking the value. This might be a game changer in waqf sector that can easily replicate in other provinces in our country.

Another significant change that will unlock the value of waqf is having a revision towards Waqf Laws No. 41/2004. Provision such as census, tax incentive, selection of BWI commissioners and waqf tribunal, to name a few, should be added to the existing law. Inclusion of census in the waqf law could enforce allocation for the purpose in the national or local budget. Meanwhile, the inclusion of tax incentive could encourage more people to create a new waqf.  As for the selection process, the inclusion in the law will ensure that only the right people with the right talent is taken onboard to be given huge responsibility of developing and unlocking the value of waqf sector in our country. Last but not least, the addition of waqf tribunal as a means to solve waqf disputes will ensure that any dispute in waqf matters will be resolved quickly and at minimum cost.

As we are now in the Fourth Industrial Revolution era, waqf sector in Indonesia should embrace the technological development especially blockchain. The technology of blockchain could offer the solution to the problematic documentation of waqf assets while at the same time may address the perennial problems of lack of funding for waqf development in Indonesia.

I hope that waqf stakeholders in Indonesia would put their effort to unlock the value of waqf sector to its fullest potential as this will definitely bring a positive and profound impact for the revival of waqf which in turn will play a big role in the effort to contribute towards a betterment of the Indonesian society.*

Sumber: themalaysianreserve.com

Editor: smh 

Fahmi M. Nasir is the founder of the Center for Study and Consultancy of Waqf, Jeumpa D’Meusara (JDM) and Ph. D Student in waqf law and governance at Ahmad Ibrahim Kulliyyah of Laws, International Islamic University Malaysia (IIUM). He can be reached through fahmi78@gmail.com and https://www.facebook.com/fahmi.m.nasir.