For illustration purpose only. -FILE PIC
For illustration purpose only. -FILE PIC

ONE of the highlights of the 12th Malaysia Plan (12MP) is the intention to create a national waqf fund.

According to the prime minister, the concept of waqf will be extensively employed to diversify financial resources to finance businesses and increase Bumiputera equity.

It is also part of government strategy to further develop the Islamic economy. To ensure a successful implementation of the strategy, the government will soon introduce a National Waqf Master Plan.

Actually, the plan had been raised in the 2021 Budget last year. The plan's goal is to ensure a more efficient waqf management, which in turn will maximise the mobilisation of future waqf assets.

In the 12MP, several roles of wakaf instruments will be mobilised to achieve goals outlined in the plan.

Apart from being a source of funding for entrepreneurial programmes, waqf has been identified as one of the new approaches to eradicate hardcore poverty.

In this instance, waqf funds will be considered as a financing source — other than zakat and donations from government linked companies and private entities as well as individuals — for poverty alleviation programmes.

Given the fact that many waqf lands are still undeveloped, the government, with the cooperation of state religious councils, should continue to provide more affordable housing for selected target groups.

The 12MP also recognised waqf as an instrument in helping to provide healthcare services.

Throughout history, waqf has eased the burden of government in providing public amenities to the public. Nevertheless, the potential possessed by waqf has yet to fully materialise.

We should strive to reach the level achieved by waqf institutions in Turkey, to the extent it could contribute to massive reduction in government expenditure.

In Malaysia, besides some administrative and management concerns, the issue of funding and low level of awareness among the public about the imperative role of waqf in improving human welfare have prevented the instrument from functioning effectively.

Nevertheless, one cannot deny that our government has several times provided allocations to finance waqf land development projects. For example, in the 10MP, the government allocated RM1.9 billion to develop waqf land.

The allocation was made following the success of several development projects under 9MP.

For the purpose of comparison with 10MP, under 9MP, the allocation was only RM256.4 million, meant for the implementation of 18 physical development projects and four non-physical projects in the country.

However, in 12MP, aside from government funds, perhaps waqf stakeholders should also try to increase the collection of waqf funds, and in particular waqf cash, by looking at other sources of funding, particularly with technology.

There are research findings showing that the use of technology by waqf institutions in the country is still minimal. Waqf institutions are not for profit institutions that manage financial and non-financial assets.

With the pandemic and the need to maintain social connection, customers' acceptance of digital banking and online financial services becomes more apparent and strengthened.

As such, to keep them relevant to potential donors and the public, waqf institutions should not be left behind in the paradigm shift that took place in the financial sector.

The intensive use of financial technology and other supporting technologies, such as blockchain, big data and artificial intelligence, are therefore imperative.

Not only could technology enhance the efficiency of waqf institutions, it could also provide a better experience and convenience for users.

Besides, the adoption of certain technology, such as blockchain, built on the concept of shared ledger, could improve trust and transparency of waqf management.

The writer is a fellow, Centre for Economics and Social Studies, Institute of Islamic Understanding Malaysia