Post on 14-Aug-2019
Revitalizing Cash Awqaf as a core of impact investing instruments
DR . I MAM T. SAPTONO
VI CE CHAI RMAN OF I NDONESIA AWQAF B OARD
hig
hFi
nan
cial
Ret
urn
Social Return
Imp
act
Flo
or
Financial Floor
Low
HighLow
Source: Adapted from Monitor Institute (2009) via Rockefeller Foundation (2011)
Philanthropy/Altruism
TradisionalInvestor
Low Impact & Low Financial Returns
Impact Investment
Impact First
Financial First1. There is a dichotomy in traditional
business, namely the separation of financial return and social return, in which both trade off is occurred between the two
2. So far, we are still busy creating possible products which may suitable
3. The biggest challenge is how to change the dichotomy paradigm by changing traditional business concept (financial business model) into “celestial” business concept. This is because in Islam the right and appropriate business exist only in a green quadrant (impact investment)
The Paradigm of Trade Off between Financial Return and Social Return
Transaction in Islam
In principle, Islam doesn’t separate social and commercial transaction, because both are using same basic parameter which is mashlahat.
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SHARIAIslamic Law
IBADAHRites
MUAMALAHDealing
MALIYAHRelated with wealth
GHAYRU MALIYAHUnrelated with wealth
INTEGRATED
Although there are clear profitable (commercial) and non profit (
social) purposes, each valuable cent should lead to one goal
which is uphold of syariah, for the benefit of mankind on earth
and afterlife (mashlahat).
Abu Ishaq Al Shatibih has formalise this benefit in a Syariah
maqoshid terminology ( Syariah purposes) which encompass the
care over religion (hifdz ad diin),care of spirit/soul (hifdz an-
nafs),care of mind (hifdz al’aql), the care of offspring (hifdz an
nasb) and the care of wealth (hifdz al maal) .
hig
hFi
nan
cial
Ret
urn
Social Return
Imp
act
Flo
or
Financial Floor
Low
HighLow
Source: Adapted from Monitor Institute (2009) via Rockefeller Foundation (2011)
Philanthropy/Altruism
TradisionalInvestor
Low Impact & Low Financial Returns
Impact Investment
Impact First
Financial First
dharuriyah
Tah
sin
iyah
Y
X
Z
M2
M1M0
M = mashlahah (benefit)
Islamic Perspective
The Linkages among maqosid, maslahah & instruments
Tahsiniyyat
(The embelishm
ents)
Hajiyyat
(The complements)
Durruriyat
(The essentials)
Rel
igio
n
Life
Inte
llect
s (m
ind
)
Lin
eag
e (O
ffsp
rin
g)
Wea
lth
KPI of Maslahah Islamic Financial Instrument
The economic cushion
The economic savior
WHAT’S NEW? : CREATING SHARED VALUE (2006)
Creating Shared Value (CSV) is a concept in business strategy that emphasize the importance of ttaking into account the social issues and needs in company’s strategic design. CSV is the development of corporate social responsibility concept (CSR).This concept were first introduced by Michael Porter dan Mark Kramer in 2006.
CSVconcept was based on the idea of interdependence correlation between business and social welfare. Porter has critisized there always been gaps between business and social
The Social Responsibility of Business is to Increase its Profits" in The New York Times Magazine (13 September 1970) – Milton Friedman
Trickle-down economics is a myth. Enriching corporations - as the TPP would - will not necessarily help those in the middle, let alone those at the bottom - Stiglitz
CSR = KONSEP MEMBAGI SISA MAKAN MALAM
Sales XXXCOGS XXX Gross Profit XXX Overhead XXInterest XXEBT XXTax XNet Profit XX
Who’s interest
Shareholders
Community
?
ACTUAL PROBLEMS incompatibility between current developed business framework with Islamic model
Current Traditional/Conventional
Approach & Regulation
• Paradigm• Infrastructure• Organization• Regulation & Legal
Framework• Products
The Awqaf Case : “Has been systematically undermined & destroyed”
Cut offCut off
Traditional awqaf i.emosque, graveyard, school, etc
Waqf was the main vehicle for financing both commercial as well as public ventures, a role that has been replaced by banks and other financial institutions (Hodgson, 1974; Kuran, 2001).
However, underdevelopment through the passage of time has made them “dysfunctional” through its inflexibility as a trust (Kuran T. , 2004).
... ... How ironic that contemporary reformers want to promote ‘civil society’ institutions, when authentic Islamic models, honed over centuries of service, have been systematically undermined and destroyed.”(Alawi, 2009)
i..e awqafcorporation, initial waqif offering, awqaf bank, sukuk linked awqaf, etc.
How to overcome Incompatibility perception between celestial instrument and mechanism of conventional market
❑ Increase people’s literacy on syariah economic paradigm
❑ Minimizing gap between shariah practical & concept with institutional aspect and positive regulation as well : institutional innovation, harmonizing of regulation (i.e institutional, incentive system such as tax and subsidy, etc) and strengthening capacity of organization
❑ Encourage the birth of contemporary fatwa ulama to accommodate the modernization of civilization and technology
❑ Product innovation becoming more simple, flexible , compatible and innovative
❑ Infrastructure discrepancy: increase people’s access in transaction through technology platform such as e-ZISWAF, fintech, blockchain
❑ Create eco-system of ZISWAF
Returning back the Syariah maqoshidparameters as the KPI for formal Syariah financial institutions (i.ebanking, insurance, stock market, etc)
Encourage product innovation and development syariah instrument, to accommodate umat problem thesedays. Especially on ijtihad area by developing comtemporer fatwa
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WE ARE NOT RE-INVENTING THE WHEELBEGIN FROM STORY OF ISLAM GOLDEN ERA
T H E G O L D E N E R A O F I S L A M 8 0 0 - 1 4 0 0 M
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UMAR ABDUL AZIS(lead 818-821M)
Start from zakat and waqf, start from family
• Nobody entitled to receive zakat, someone with debt but honest and modest, are paid for, and one who wants to get married will be covered by country.
• Umar instructed “ Look for ordinary men who pays jizyah dan kharaj. IF lack of capital , give them loan for them to cultivate their land.We will not require the return but wait until 2 years or more.”
• “ Give back all your jewelries and assets to the treasury fund, or we shall divorce.” The wife replied “ For the sake of Allah, I didn’t choose a companion who is more noble thatn you, Amirul Mukminin. Here all my jewelries and diamonds..” Later Khalifah Umar bin Abdul Azis receive the jewelries and submit them to Baitul Mal
Yusuf Qaradhawi (1995) “Islam tips in overcomePoverty (Musykilah al-Faqr wa Kaifa ‘Alajaha al-Islam)
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Almost 75% of all plantable land in Daulah Khilafah Turki Usmani are wakaf land
Half (50 %) of land in Aljazair, during French colonial in the middle 19th century , were waqf land
During the same period, 33% of land in Tunisia were waqf land
In Egypt, up until 1949; 12,5% of farmland were waqf land
Year 1930 in Iran, approximately 30 % from planted land were waqf land
During 15-16th century,there were records of 233 certificated waqf land with 890 building on it in Palestine and there were only 92 certificated private land with 108 building . Records of 64 schools managed by waqf institution and the quantify are larger compare to mosque.
What we have achieved
Modern Awqaf Assets
Infrastructure (i.eHejaz Railway)
Vakiff Bank
Infrastructure (i.eAin Al AzziziyahDrinking Water)
Property (i.eZam-zam Tower)
Infrastructure (i.eLarkin Central Bus Station)
Universities
Hospitals
Financial Institutions
Corporations
Plantations
Transportation (Aeroplane)
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AK
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IND
ON
ESIA
POTENTIAL AWQAF IN INDONESIA
Waqf Tengku Habib Bugak from Aceh who donate his land and residence near Masjid Haram in year 1800M. Until now, Acehnese Haj receive additional living cost from the above waqf.
Presidential aircraft RI 001, the government owned Presidential plane post independence, were bought from Acehpeople gold waqf .
Presidential aircraft RI 003, the government owned Presidential plane post independence, were bought from West Sumatera people gold waqf.
Land where Stadion Senayan were built, and half of gold used to build “fire top”of Monas monument in Jakarta, were waqf fromTeukuMarkam
Role of Waqf in Building a Nation
DPR Plenary Building were built on land belongs to founder of PondokDarunnajah
Role of Waqf in Building a Nation (continued )
Islamic Boarding school and University Gontor
University and Hospital Sultan Agung Semarang
Islamic University Malang
Indonesia Islamic University -Yogyakarta
Several RSU PKU Muhammadiyah
PERFORMANCE OF NATIONAL WAQF
CASH WAQFSince its declaration by Presiden SBY in 2010, the cash waqf has not yet developed.Data at LKS PWU (receiver banks) shows insignificant changes with trend to stagnate until March 2018 ,amount collected only Rp199 Billion.
LAND of WAQF
More than 74 become mosque or mushala , 5% cemetery and 13% Islam boarding and regular school.
REAL AMOUNT TO BE BELIEVE LARGER CONSIDERING SOME NADZIR STILL HOLD THE OWNERSHIP CERTIFICATE TO LATER USE IT AS BANK COLLATERAL
LAND WAQF
# piece of land
Certificated to awqaf deed
Not yet certificated
Total area
435.395 288.429 146.966 4.1 billion m2
10 generous countries’World Giving Index
2018
Ch
ari
ties
Aid
Fo
un
da
tio
n, O
cto
ber
20
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Generation Z & Religion Conciousness
Survey Deloitte shows half of world youth opinioned that religion gives bad impact to the world
Varkey’s Survey involving 20.000 milenial in 20 countries shows differently, with highest happiness rate from religion impact in Indonesia
• 85% Moeslem, with avg spending USD 5-10 per day
• 63 % segment consists of conformist, universalist dan rasionalist (27% segmen apatis are taken out)
• 2,5% spending on waqf per year from 5% spending ZISWAF (donation/philantrophy)
• Come up with potential cash awqaf USD 2,7-5 bio/year or IDR 40,5 – 75 trilyun/year
Midle Class Muslim by Yuswohady
What I got ?
Islam is more important
I don’t care
Anything must be Islam
Considered to be taken out
waqf
Temporary money waqfor perpetual
LKS PWU (bank)
Non LKS PWU (nazhir FWP)
PARTNER NAZHIR
management & development
of national and international
scale waqfassets
NAZHIR
FINANCE MINISTRY
Mauquf Alaih(beneficiaries)
Utilize SBSN fund for government project specifically social and public service
Funding on social project
Payment of couponCoupon distribution according to MoU
Distribution of benefit towards beneficiaries
BI, BWI, MoF and Religious Dept1. Keep transparency and
governance2. Provider waqf information
system 3. Government partner in
monitoring project utilization as the WLS funding result.
4. Public education on WLS related matters
Money waqf
Repayment WLS (temporary)
Placement
MoU
Instrument SBSN of investment
SBSN
Due date of SukukRepayment
1
2 3
4
6
5
1st
Wave o
f
Benefit
2nd Wave of
Benefit
WAKAF LINKED SUKUK
Publishing structure of sukuk linked waqf OFFEREDProto Type where Bank Syariah act as Publisher of Sukuk Linked Wakaf
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Islamic Bank as
a Sukuk Issuer
Investor
Waqf Land/
Country Land
Nadzir
Manager
Mauquf Alaih
Social-
Productive
Waqf f Asset
Customer
12
3
4
5
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PT HYDRO RETAILINDO(75% shares owned by Global Waqf Corp)
200 Unit ConvinientMart in Jakarta
PR
OFI
T M
OTI
VES
Empowering Community
EmergencyPurposes
NORTH - LOMBOKPT TRIHAMAS FINANCE SYARIAH(~10% shares owned by Global Waqf Corp)
GWC
How Awqaf Corporate Works, case Global Wakaf Corp -ACT
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Challenge in developing
national waqf
Stakeholder
Wakif
Nazir
• Adjustment of UUPT, UUPM, UU Wakaf, dan PBWI to accommodate the use of waqf instrument in formal business management
• Change of share owner status through waqf has not yet recognised in UUPT
• Tax Incentive• Infrastructure national waqf Information System• Support of National Syariah Banking System ( ie: funding
regulation waqf asset, etc)
• Literature and curriculum about national waqf• Product innovation• Information system and waqf reporting• Payment accessibility, blockchain
(regulation, infrastructure,etc)
• Profesionalism and nazhir transparancy →WCP (Waqf core principle)
• Suitability of object and waqf asset management• Supervision system and reporting• Coaching nazhir
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"
JAZAKALLAH
“….. And there are those who bury gold and silver and spend it not in the way of Allah. announce unto them a most grievous penalty. On the Day when heat will be produced out of that (wealth) in the fire of Hell, and with it will be branded their foreheads, their flanks, and their backs - "This is the (treasure) which ye buried for yourselves: taste ye, then, the (treasures) ye buried!"" (QS. At-Taubah [9] : 34-35 )