Revitalization of Waqf for Socio-Economic Development, Volume 2 9783030184490

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Edited by Khalifa Mohamed Ali · M. Kabir Hassan · Abd elrahman Elzahi Saaid Ali

Revitalization of Waqf for Socio-Economic Development, Volume II

Revitalization of Waqf for Socio-Economic Development, Volume II “The beneficial impact Zakat and Waqf on achieving SDGs can be achieved by integrating them with the financial sector. Providing interest free loans to poor and vulnerable people from Zakat and Waqf sources will assist them to become less vulnerable and more resilient, thus allowing them to take part in productive economic activities. It is imperative to expand the Zakat base, develop existing Waqf properties for income generation, and enhance the efficiency of these institutions to revive Zakat and Waqf for social development. The anthology of scholarly papers offers comprehensive knowledge about this important aspect of Islamic social finance.” —Dr. Mulya Effendi Siregar, Chief Commissioner, PT Bank Syariah Mandiri, Indonesia “This edited volume on waqf results from a workshop on the ‘Revival of Waqf for Socio-Economic Development’, jointly organized by the Islamic Research and Training Institute (IRTI) of the Islamic Development Bank Group, Islami Bank Bangladesh Limited (IBBL) and the Center for Zakat Management (CZM), in Dhaka, Bangladesh during November 4th–5th 2017. The focus is on sustainable development, legal issues and management strategy. This book represents a valuable addition to the literature on waqf from a contemporary perspective. It should be essential reading for both academic researchers and those involved in waqf management professionally.” —Rodney Wilson, Emeritus Professor, Durham University, UK “The institutions of zakat and Awqaf have jointly played an important role in socio-economic development of Muslim societies and are still capable of offering a universal solution to achieve SDGs. Along with the private and public sectors, Awqaf, in particular, is capable of serving as an effective vehicle for sustainable development. Waqf can provide an effective basis of channeling charitable funds in the private non-profit sector. The papers in this book offers comprehensive analysis of conceptual and practical implementation of Islamic social finance in society.” —Professor Datuk Rifaat Ahmed Abdel Karim, Henley Business School, University of Reading, UK

Khalifa Mohamed Ali · M. Kabir Hassan · Abd elrahman Elzahi Saaid Ali Editors

Revitalization of Waqf for Socio-Economic Development, Volume II

Editors Khalifa Mohamed Ali Islamic Research and Training Institute Islamic Development Bank Jeddah, Saudi Arabia

M. Kabir Hassan Department of Economics and Finance University of New Orleans New Orleans, LA, USA

Abd elrahman Elzahi Saaid Ali Islamic Research and Training Institute Islamic Development Bank Jeddah, Saudi Arabia

ISBN 978-3-030-18448-3 ISBN 978-3-030-18449-0  (eBook) https://doi.org/10.1007/978-3-030-18449-0 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2019 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Palgrave Macmillan imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

Foreword

Waqf has been historically a major source of support for socio-economic development in the Islamic world. The Islamic Development Bank is leading the revival of waqf to contribute towards the Sustainable Development Goals in our member countries. This book comprises of research papers analysing and proposing innovative applications of waqf. The book highlights the role of waqf management in socio-economic development, poverty alleviation, and the role that waqf institutions might potentially play in expediting inclusive and sustainable growth. On behalf of the Islamic Research and Training Institute, I thank the authors and editors who made this book a reality. We hope such efforts contribute to better understanding and creative formulations of waqf to meet the challenges of the twenty-first century. Jeddah, Saudi Arabia

Sami Al-Suwailem Acting Director General Islamic Research and Training Institute (IRTI)

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Acknowledgements

The two volumes of Revitalization of Waqf for Socio-Economic Development book result from an International Workshop on Revival of Waqf for Socio-Economic Development held at Pan Pacific Sonargaon in Dhaka, Bangladesh on 4–5 November 2017, under the auspices of Islamic Research and Training Institute (IRTI), Jeddah, Islami Bank Bangladesh Limited (IBBL) and Center for Zakat Management (CZM). We want to thank all workshop paper presenters, participants, session chairs, and paper reviewers for their timely and valuable contribution for the realization of this international workshop. The thought-provoking engagement of Islamic scholars in the two-day international workshop generated innovative ideas, new dimension and dynamics enabling waqf to mobilize resources for facilitation of health, education, poverty reduction, and other social services. This may open up a new source to shoring the resource gap for SDG goals and targets within the stipulated time frame. The workshop was planned when Professor Dr. Azmi Omar was the DG of IRTI, and Arastoo Khan was the Chairman of the Board of Directors of Islami Bank Bangladesh Limited (IBBL). Niaz Rahim, Chairman of Center for Zakat Management (CZM), joined this effort with open arms. The book publishing was approved with Palgrave Macmillan when Dr. Humayon Dar was the DG of IRTI. We want to thank the Honorable President of Bangladesh, His Excellency Md. Abdul Hamid for officiating this conference at Hotel Pan Pacific Sonargaon. We also want to thank the Governor of vii

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Bangladesh His Excellency Fazle Kabir, the Honorable Chairman of IBBL Board His Excellency Arastoo Khan and Chairman, Center of Zakat Management, His Excellency Niaz Rahim for contributing to the success of this international conference. Our special thanks go to Dr. Miah Muhammad Ayub and Mr. Arastoo Khan who played critical role at each stage of the workshop from original idea to completion of this conference. Without their much needed timely intervention and active engagement, this conference would not have been possible. Our sincere thanks are to Mr. Mohammad Habibur Rahman of IBBL International Wing for connecting us all across continents and different time zones in the world. We also thank Md. Abdul Hamid Miah, Ex-MD of IBBL and Md. Mahbubul Alam, ex-AMD and current MD of IBBL for their financial and logistical support for this international workshop. We want to thank Eman Ahmed Adam of IRTI and Sydul Karim of University of New Orleans for editorial and formatting assistance. We want thank Dr. Mamun Rashid, now at University of Brunei Darussalam, Dr. Mizanur Rahman of Islamic Bank Training and Research Academy (IBTRA), Dr. Mahmood Ahmed, DG of IBTRA, Abdul Awwal Sarker, GM of Bangladesh Bank, Professor Muhammad Muzahidul Islam of Dhaka University, Professor M. Kabir Hassan of University of New Orleans, Dr. Khalifa Mohamed Ali and Dr. Abd elrahman Elzahi Saaid Ali of IRTI for reviewing papers for this conference. We want to thank Professor Dr. Md. Nazmul Hassan, current IBBL Chairman, Professor Dr. M. Shamsher Ali, Professor Emeritus, Southeast University, Mr. Salahuddin Kasem Khan, Executive Chairman, SEACO Foundation, Dr. Mohammad Ayub Miah, CEO, Center for Zakat Management, Mr. Abdul Muyeed Chowdhury, Former Secretary of Government of Bangladesh, Mohammed Humayun Kabir, Director, IBBL, and Dr. Muhammad Abdul Mazid, Former Secretary of the Government of Bangladesh for chairing different sessions of the workshop. We also want to thank Dr. Hafizur Rahman, former Waqf Administrator of Government of Bangladesh, Dr. Manzur-e-Elahi, Professor Mokhtar Ahmed, Asian University of Bangladesh, Professor Muzahidul Islam of Dhaka University, Dr. Sheikh Abdul Rashid, former Additional Secretary of Government of Bangladesh, Dr. Zubair Mohammad Ehsanul Hoque, Dhaka University, Professor Dr. Mohammad Main Uddin of Rajshahi University, Professor Dr. Mahbubur Rahman of North South University,

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Professor Dr. Farid A. Sobhani of Daffodil University, AMM Nasiruddin, Former Secretary, Government of Bangladesh, Professor Dr. Syeda Sultana Razia of BUET and Dr. Shariful Alam, Chairman of ASEAB and Md. Shahidul Islam of the Office of Bangladesh Waqf Administrator for discussing papers in the different workshop sessions. We also want to thank the diplomats, high officials, bankers, industry leaders, and civil society for their participation and deliberations at the conference. Finally, we want to thank Tula Weis, Senior Editor of Palgrave Macmillan for her support gracious support for publishing this book and Jacqueline Young for helping us through the production process for this book. Khalifa Mohamed Ali M. Kabir Hassan Abd elrahman Elzahi Saaid Ali

Contents

1 Introduction 1 Khalifa Mohamed Ali, M. Kabir Hassan and Abd elrahman Elzahi Saaid Ali Part I  Waqf and Sustainable Development 2

Role of Waqf to Attain the “SDG-1: Ending Poverty” in Bangladesh 15 Md. Abdullah Al Zobair and Mohammad Azizul Hoque

3

Financing the Sustainable Development Goals (SDGs): The Socio-Economic Role of Awqaf (Endowments) in Bangladesh 35 Foyasal Khan and M. Kabir Hassan

4

Integrating Family Waqf into an Inheritable Going Concern Business: An Instrument for the Sustainable Welfare of Exempted Heirs 67 Umar Habibu Umar

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Part II  Legal Issues in Waqf Management 5

Exploring Dynamics of Private Giving as Income Support Institution for Endowment Deficient Consumers 91 Salman Ahmed Shaikh and Mohd Adib Ismail

6

Analysis of the Law of Waqf in Thailand 115 Anis Pattanaprichawong and Sulaiman Dorloh

7

Waqf Law and Islamic Religious Revenue: New Sources of a State Revenue 127 Abdul Ghafar Ismail and Wahyu Ario Pratomo

8

Legal Constraints to the Development of Waqf 153 Habib Ahmed

Part III  Other Issues in Waqf Management Strategies 9

Management of Mudaraba Waqf Cash Deposit in Islami Bank Bangladesh Limited: An Evaluation 177 Mahmood Ahmed

10 Cash Waqf and Preferred Method of Payment: Case of Malaysia Using an AHP Approach 187 Mohamad Isa Abd Jalil, Anwar Allah Pitchay and Sofri Yahya 11 The Indonesia Waqf Board (BWI): An Analytical Network Process Analysis 207 Qurroh Ayuniyyah, Abrista Devi and Tika Kartika 12 Waqf Management in the Light of Maqasid al Shariah: Bangladesh Perspective 229 Abu Ayub Md. Ibrahim and Shahadat Hossain Khan

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13 Decomposing Problems in Cash Waqf Fund-Raising in Indonesia 249 Khairunnisa and Anita Priantina 14 Do Religiosity and Socio-Economic Aspects Influence Zakat and Waqf Payment? 269 Permata Wulandari and Miqdad Rabbani 15 Mediating Role of Trust in Cash Waqf Donations 293 Rashedul Hasan, M. Kabir Hassan and Mamunur Rashid Index 319

Notes

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Contributors

Md. Abdullah Al Zobair  is a Lecturer (Political Science) in the General Education Department at Bangladesh Islami University. He is awarded UNDP Young Research Grants 2019 for doing research on resource mobilization strategy for strengthening local government. Mr. Zobair received his B.S.S. and M.S.S. degrees in Political Science with distinction from the University of Dhaka and now enrolling as an M. Phil. researcher with the same university. Mr. Zobair has four published academic articles in peer-reviewed journals and two dozens of post-editorial columns on sociopolitical issues in national and international dailies and magazines. Mr. Zobair holds the Executive Director position at Bangladesh Initiative for Policy and Development, Organization Secretary of Bangladesh Political Science Association, and member of several professional bodies and research groups. He worked for the country’s leading news media: Radio Today, The Daily Sun, The Financial Express, The Daily Star and United News of Bangladesh. He concurrently works as a Lead Writer at the country’s oldest daily The New Nation. Mr. Zobair received more than ten scholarships, research and travel grants for his outstanding academic results, and expertise in politics and governance. He participated in summer schools, peace camps, seminars and conferences in Nepal, Sri Lanka and Turkey. Professor Habib Ahmed  received his M.A. from University of Chittagong, Bangladesh, Cand. Oecon. from University of Oslo, Norway and Ph.D. (Economics) from University of Connecticut, USA. Before joining Durham xv

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University as Professor and Sharjah Chair in Islamic Law and Finance in 2008, Professor Ahmed was Manager, Research & Development, Islamic Banking Development Group, National Commercial Bank and worked at Islamic Research and Training Institute of the Islamic Development Bank Group in Saudi Arabia. He has taught at the University of Connecticut, USA, National University of Singapore, University of Bahrain and worked as Visiting Professor at Hamad Bin Khalifa University, Qatar. Professor Ahmed has authored/edited more than 100 research papers and publications, which include articles in international refereed journals, books, chapters in books and other academic papers/monographs/reports. He has also worked as consultant for organizations such as United Nations, World Bank, Islamic Development Bank (IRTI), Islamic Financial Services Board, COMCEC and CIBAFI. Dr. Mahmood Ahmed is an executive Vice-President and Director General of Islami Bank Training and Research Academy (www.ibtra. com), Dhaka, Bangladesh. Dr. Ahmed has published 32 research papers on Islamic Economics Finance and Banking in the academic and professional journals. He has been a consultant of Islamic microfinance development programme for Islamic Development Bank microfinance development programme in Bangladesh. He presented papers in international conferences of Islamic Development Bank (IDB), Jeddah. He was a member of Editorial Advisory Board of the Lahore Journal of Economics published from Pakistan and is a member of Editorial Boards of Journal of Islamic Economics Banking and Finance. Abd elrahman Elzahi Saaid Ali currently works at the Research & Advisory Services Department, The Islamic Research and Training Institute. Abd elrahman does research in Financial Economics, Econometrics and Behavioural Economics. Their current project is ‘Enhancing Women’s Capability and Financial Inclusion in Sudan, Yemen, Comoros and Morocco’. Dr. Khalifa Mohamed Ali is a Senior Research Economist at the Islamic Research and Training Institute (IRTI), Islamic Development Bank (IsDB), the leaders in promoting Islamic economics banking and finance and in knowledge dissemination. Before joining IRTI, he worked as assistant and associate Professor of Economics at the United Arab Emirates University and awarded merits of distinction (two times) for his outstanding contribution to the development of academic life in the

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University. Dr. Khalifa holds undergraduate degree in Economics and Statistics (with honors) from the University of Khartoum, Sudan and a graduate degree in Islamic Economics and Banking from The Islamic University, Sudan. He received his M.A. and Ph.D. in Economics from Iowa State University, USA, where he taught economics. Dr. Khalifa is the editor of the Islamic Economic Studies Journal, which one of IRTI’s flagship publications, his research and books are published by some of the world leading publishers such as Springer, Wiley, Taylor & Francis Group and IRTI. Dr. Khalifa has developed several publications for teaching Islamic banking and finance at various levels, which are currently used to create Massive Open Online Courses for IRTI on line learning program with edX. Qurroh Ayuniyyah, Ph.D. has just passed her Ph.D. viva on February 2019 with minor correction and CGPA 4.00 at Department of Economics, Kuliyyah of Economics and Management Sciences, International Islamic University Malaysia (IIUM). She was awarded as the Best Student at Bachelor degree level from Bogor Agricultural University in 2010 as well as the Best Student at Master of Economics level from IIUM in 2013. Currently she is working as a Project Manager of Program Usahawan Tijaari (i-Taajir), Centre for Islamic Economics, IIUM in collaboration with CIMB Islamic Bank Berhad Malaysia. She is also engaged as a lecturer at Department of Islamic Economics, University of Ibn Khaldun Bogor, Indonesia. She has been involved in various academic activities, such as international conferences, research activities, and community services. She has published several number of journal articles at national and international levels. She received Achievement Award for Best Presentation of the session of Shariah Economics Conference 2013 in Hannover University, Hannover, Germany. Abrista Devi  is currently working as lecture at Ibn Khaldun University, Bogor, West Java, Indonesia and researcher at SMART Consulting. She teaches Research Methodology and banking and financial institutions subject. Abrista Devi received her bachelor degree in Islamic Financial Management at Tazkia Islamic Business School and obtained Master degree in Islamic Economics at Ibn Khaldun University, Bogor, West Java, Indonesia. Abrista Devi has managed to publish a number of articles in various local and international refereed journals. She also actively presented her works in various conferences and has very well analytical in research. She also control in the field of the research

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methodology, i.e. Analytic Hierarchy Process (AHP), Analytic Network Process (ANP), Structural Equation Modeling (SEM)/Path Analysis, Measuring Efficiency using Data Envelopment Analysis (DEA), Vector Auto Regression (VAR)/Vector Error Correction Model (VECM), Interpretative Structural Modeling (ISM), Regression (Tobit, Probit, and Logistic Regression), etc. The most phenomenon published book was Islamic Economic Research Methodology which has been written with Hendri Tanjung. The last award she won was as “Best Paper” of the 4th International Islamic Monetary Economic and Finance Conference which was held by Bank of Indonesia, last December, 2018. Sulaiman Dorloh  is a faculty of Law and International Relations, Universiti Darul Iman Malaysia (UDM), Kusza Campus, Gong Badak, 21300 Kuala Terengganu, Malaysia. Dr. Rashedul Hasan is a Senior Lecturer in the Faculty of Business, Communication and Law at INTI International University, Malaysia. Dr. Hasan has completed his B.B.A. (Accounting and Finance) and M.B.A. (Finance) from American International University Bangladesh (AIUB) with Summa Cum Laude distinction and Ph.D. in Accounting from International Islamic University Malaysia (IIUM). His research interests include Islamic Finance, Corporate Governance, Voluntary Disclosure, Intellectual Capital and Sustainability. He has published papers in ABS, ABDC and SCOPUS indexed journals. Papers published by Dr. Hasan have appeared in Thunderbird International Business Review, Islamic Quarterly, Journal of Economic Development and Cooperation, Journal of Islamic Economics, Banking and Finance, Journal of Islamic Economic Studies and International Journal of Public Sector Performance Management. He has presented papers at international conferences and served as guest editor for the Journal of Business and Globalization. He has served as the editor of the Book of Proceedings for Asian Conference on Entrepreneurship. Dr. Hasan is actively involved in applied research and has worked on projects under the funding of the South-Korean and the Malaysian government. Prof. M. Kabir Hassan is Professor of Finance in the Department of Economics and Finance in the University of New Orleans. He currently holds two endowed Chairs-Hibernia Professor of Economics and Finance, and Bank One Professor in Business in the University of New Orleans. Professor Hassan is the winner of the 2016 IDB Prize in Islamic

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Banking and Finance. Professor Hassan received his B.A. in Economics and Mathematics from Gustavus Adolphus College, Minnesota, USA, and M.A. in Economics and Ph.D. in Finance from the University of Nebraska-Lincoln, USA, respectively. Professor Hassan is a leading authority on empirical Islamic finance scholarship and published Islamic finance papers in top academic journals. Professor Hassan has over 300 papers published in refereed academic journals. Dr. Professor Hassan is the Editor International Journal of Islamic and Middle Eastern Finance and Management (Scopus and SSCI). He has guest edited special Issues of Islamic finance for a number of leading academic journals. He has published a number of book on Islamic finance, law and entrepreneurship by Edward Elgar, John Wiley, Palgrave Macmillan, Routledge, Pearson, and Emerald publishing company. Professor Hassan has won several awards for his outstanding teaching and research accomplishments by USA and international bodies. Mr. Mohammad Azizul Hoque is a Research Assistant of Centre for Peace and Justice of BRAC University, Dhaka. He is concurrently holding a project officer position at “Community Based Learning project” in Cox’s Bazar of Bangladesh which promotes social cohesion, resilience and peace among the Refugees and the host community youths. Mr. Hoque received his Bachelor and Masters in Public Administration from University of Dhaka, Bangladesh and also received another Masters in Education from Institute of Educational Development of BRAC University, Bangladesh. Mr. Hoque is involved with various research project around the Rohingya refugee crisis and the host community. He has published a couple of research articles on governance, public policy, rule of law, poverty and sustainable development in refereed academic journals. He wrote dozens of editorial articles at national daily of Bangladesh on social justice, rule of law, democracy and poverty. Previously he worked with a couple of humanitarian organizations including Teach for Bangladesh, Centre for Social Integrity and Bangladesh Initiatives for Policy and Development. Dr. Abu Ayub Md. Ibrahim  is an Assistant Professor at the Center for Islamic Studies, Manarat International University, Dhaka, Bangladesh. He has published on Islamic Banking and Finance. Abdul Ghafar Ismail is a professor of Islamic financial economics, Johor Islamic Studies College and Chairperson, Organization of Islamic

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Economic Studies and Thoughts. He got his Ph.D. from University of Southampton, England. His experience includes Head of Research Division, Islamic Research and Training Institute, Islamic Development Bank; Professor of Islamic financial economics, Universiti Kebangsaan Malaysia and Universiti Islam Sultan Sharif Ali; Bank Supervision Advisor of the International Monetary Fund for Djibouti; AmBank Group Resident Fellow for Perdana Leadership Foundation; Consultant for Ministry of National Development Planning, Indonesia and Shariah Committee Member for Citibank Malaysia. He has published extensively in several refereed journals among others Journal of Business Ethics; European Journal of Law and Economics; Review of Islamic Economics; Journal of Islamic Economics, Banking and Finance; Humanomics; International Journal of Social Economics; Savings and Development; Global Journal of Finance and Economics; Review of Financial Economics; Journal of Financial Services Marketing; International Journal of Islamic and Middle Eastern Finance and Management; Research in Financial Qualitative Markets; and Investment Management and Financial Innovations. His papers have also been presented in many international and local conferences, such as International Seminar on Islamic Economics and Finance, IRTI International Conference and Malaysia Finance Association Conference. His research interests include learning process and growth theory, inter-temporal allocation of resources, earning management, capital adequacy standard for Islamic financial institutions, risk management and institutional economics. His recent books are Money, Islamic Banking and Real Economy; Ar Rahnu —An Islamic Pawnbroking; and Policy Discussion on Maqasid Shariah for Social Economic Development. Mohd Adib Ismail, Ph.D. is a Senior Lecturer at FEP, Universiti Kebangsaan Malaysia. Isa, J or formally known as Dr. Mohamad Isa Abd Jalil is Lecturer at Labuan Faculty of International Finance, Universiti Malaysia Sabah. He joined the university upon completing his Ph.D. in 2018 from the Universiti Sains Malaysia (USM). His research interests are in the area of Islamic Banking and Finance, Waqf and Philanthropy. He has published several articles related to Waqf and Islamic Finance in indexed and refereed journals, both local and international. Currently, he is holding several grants at the local and university levels in the area of philanthropy.

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Tika Kartika, S.Hut, M.ESy  has completed graduate studies at Tazkia University College of Islamic Economic (STEI Tazkia) with a degree Magister of Sharia Economic. Accomplishments ever achieved among others: Best Graduate of Faculty of Forestry, 3rd Best Graduate III IPB and 3rd Best Graduate Muamalat Officer Development Program Batch 4—Bank Muamalat Indonesia. The following are her employment experiences: Non-permanent lecturer of computer application program, Introduction to Informatics, and ecology at Faculty of Forestry IPB. As a sharia finance practitioner, has also been active in Bank Muamalat as a Product Manager of Research and Development of Individual Banking. Her current activity is as lecturer in Islamic economics at the university of Ibn Khaldun Bogor. In the field of social affairs, she has been also active as a caretaker of sharia finance applications in the community of mothers of entrepreneurs (LemaKs) in Sekolah Alam Bogor. Mrs. Khairunnisa is a Lecturer at Faculty of Islamic Economics and Business at University of Muhammadiyah Sumatera Utara. She received a Bachelor of Islamic Economics from Tazkia University College of Islamic Economics. She then obtained Master of Management specializing in Islamic Management from Bogor Agriculture University. Khairunnisa is now secretary of Head of Islamic Management Business Department. Mrs. Khairunnisa teaches a number of courses in Islamic Economics at undergraduate levels and already published several articles. Her particular research interest is in the field of ZISWAF and small micro-enterprises. Foyasal Khan is currently pursuing Ph.D. at the Department of Economics in the International Islamic University Malaysia (IIUM) with the generous support of the International Institute of Islamic Thought (IIIT). His Ph.D. thesis entitled “The Role of Religion in Sustainable Development: The evidence from OIC member countries”. He also completed a master in economics at IIUM in 2013 before joining in the Ph.D. programme. Earlier he received his Bachelors of Social sciences (BSS) and Master of Social sciences (MSS) from the Department of Economics, University of Dhaka (DU) of Bangladesh in 2009 and 2010 respectively. During his study period at IIUM, he got the rare opportunity being the first elected president of IIUM UNESCO Club for 2014–2015 session. Moreover, he was actively involved with the Centre for Islamic Economics (CIE), IIUM to organize a seminar series on the Economies of the Muslims. Previously during his DU period, he

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represented as president of the Economics Study Center for two consecutive terms in 2006–2007 and 2007–2008. His research interests include Social financing for Sustainable Development Goals (SDGs), Economics of Education, Maqasid al Shariah-based socio-economic policies, Economics of Religion and Religious Economics, Economics of Islamic banking and finance, etc. Dr. Shahadat Hossain Khan  completed his Ph.D. from the University of Sydney, Australia. He has been working as a professor of the department of Technical and Vocational Education (TVE), at the Islamic University of Technology (IUT), Bangladesh, since 2018. He was awarded Australian Leadership Award Scholarship (Australia), Graduate Research Scholarship (Brunei), Skill-Road Scholarship (Seoul University, South Korea) and Turkish Government Scholarship (Turkey) based on his outstanding academic results, teaching and research expertise. Professor Khan is a leading researcher on ICT-enhanced teaching and published papers in top academic journals and book chapters. He has a wide experience in ICTenhanced teaching and learning at national and international levels. He has wider expertise on TPCK (Technology, Pedagogy, Content, Knowledge) Framework, Curriculum development in tertiary level, professional development particularly focus on scholarship in teaching (student-centred teaching, ICT-integration, improving assessment technique). Dr. Anis Pattanaprichawong is Assistant Professor in the Academy of Islamic and Arabic Studies, Princess of Naradhiwas University, Thailand. Dr. Anwar Allah Pitchay is a Senior Lecturer at School of Management, Universiti Sains Malaysia. Currently, he is holding a position of Head of Islamic Social Finance and Development (ISFIND) research cluster. He joined the university upon completing his Ph.D. in 2015 from the International Islamic University Malaysia (IIUM). His research interests are in the area of Islamic Banking and Finance, Non-Banking Islamic Finance Institutions (NBFI) and Corporate Governance. He has published several articles related to waqf, Islamic Banking and corporate governance in indexed and refereed journals, both local and international. Currently, he is holding several grants at the international (such as Sumitomo, Indonesia education grant), local and university levels in the area of philanthropy. He has achieved numerous recognitions as reflections of his achievements such as the best paper award and postgraduate scholarships.

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Wahyu Ario Pratomo is a senior lecturer in the Department of Economics at the University of Sumatera Utara. Wahyu received his B.Sc. in Economics from Gadjah Mada University, Yogyakarta, Indonesia, and M.Ec. in Economics from Macquarie University, Australia. Currently, he holds Ph.D. candidate in Regional Economics from University of Sumatera Utara. Wahyu has published several academic journals in Islamic Banking, and Economics. Anita Priantina is currently Ph.D. student in Islamic Finance and Muamalah. She accomplished her Master of Economics (Honours) in 2010 from International Islamic University Malaysia and Bachelor of Economics (Honours) in 2006 from Sekolah Tinggi Ekonomi Islam Tazkia (STEI Tazkia), Indonesia. Anita is currently Director of International Office in STEI Tazkia, and previously was Head of Islamic Economics Department. She has been a full time lecturer in STEI Tazkia since 2010. Her main research interest is Islamic Economics and Finance. She has published several articles in national journal and presented in international conferences, some sponsored by IRTI-IDB in Jakarta, Dhaka, and Islamabad. Anita (with team) received research grant from Ministry of Religious Affairs for international collaborative research in 2018, and Empowerment Grant from Ministry of Religious Affairs for empowerment activity in 2017. She was also awarded STEI Tazkia Best Lecturer in September 2018. Muhammad Miqdad Rabbani is a research and teaching assistant in the Department of Management in Universitas Indonesia. He achieves his bachelor in Economics from Universitas Indonesia, and currently pursues his master study in Finance at Tilburg University, Netherland. Financial econometrics, financial management, and financial market and institution are several modules that have been taught. He actively involves in some research about small-medium enterprises. He also participates in some projects which assist the Indonesian government to improve SMEs quality. Mamunur Rashid holds a Ph.D. in Behavioural Finance and currently is a Senior Assistant Professor of Finance at Universiti Brunei Darussalam, Brunei Darussalam. He has been teaching International Finance, Financial Economics, Islamic Capital Markets and Corporate Finance for the last twelve years in different countries. An active researcher, Dr. Mamunur, publishes widely in financial economics, Islamic economics, investor behaviour and corporate social responsibility

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and has presented papers in 25 international conferences including the Harvard University Islamic Finance Forum. Dr. Mamunur has published over forty journal papers, edited a book for Emerald on Islamic finance and awarded a Ph.D. as co-supervisor. His papers have appeared in, among others, Pacific-Basin Finance Journal, Review of Financial Economics, Journal of Financial Economic Policy, Accounting Auditing & Accountability Journal, Tourism Analysis. In 2016–2017, Dr. Rashid has co-edited a special issue for International Journal of Business and Society on Islamic finance. Mamunur has worked on several corporate and government projects. Salman Ahmed Shaikh has completed Ph.D. in Economics at the National University of Malaysia in 2017. Currently, he is working as an Assistant Professor in Department of Management Sciences at SZABIST Karachi. He is a well-published author with 25 peer-reviewed indexed research papers, half of which have been published in either Web of Science, Scopus or ABDC ranked journals. He has also presented in 24 international research conferences held in Malaysia, Turkey, Brunei, Indonesia and Pakistan. He has also contributed 7 book chapters in book publications by Routledge, Springer, Palgrave, Edward Elgar and Gower Publishing. He has taught courses in Finance and Economics at undergraduate and graduate level at various top national universities in Pakistan including IBA, Karachi and SZABIST, Karachi. In professional corporate career, he has worked for Meezan Bank, BMC Pakistan (partner of Reuters in Pakistan) and Bankers’ Academy, USA. During his career, he has also worked for ABN AMRO and Citibank for management internships. He has also conducted corporate training at leading multinational companies like Coca Cola. Umar Habibu Umar worked for a short while with Ahmed Zakari & Co. (Chartered Accountants), Nigeria, before joining Northwest University Kano, Nigeria in 2013. He is currently a Lecturer in the Department of Accounting of the University. Umar obtained his B.Sc. and M.Sc. Degrees in Accounting from Bayero University Kano, Nigeria. He served as a member of various committees in the University, such as Committee for the Proposal of Establishment of Faculty of Islamic Banking and Finance and Committee for the Establishment of Center for Halal Products Development. He is a member of the Institute of Chartered Accountants of Nigeria (ICAN), which qualifies him to have been teaching Performance Management and Financial Accounting at

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the ICAN Center, Kano since 2013. In addition, he served as a member of the ICAN’s Committee for Mutual Cooperation Agreement with Tertiary Institutions (MCATI) during 2017/2018 presidential year. His major areas of research interest include Islamic accounting, banking and finance. Hence, most of his presentations at both national and international conferences as well as publications in both local and international journals were in these areas. Moreover, Umar develops a special interest in non-banking Islamic accounting research, particularly the one that links accounting to Islamic inheritance. Permata Wulandari, Ph.D.  is lecturer in the Department of Management Faculty of Economy and Business Universitas Indonesia. She has wrote many papers and journal in refereed academic journals. She got best young researcher Faculty of Economy and Business Universitas Indonesia in 2016 and best researcher Faculty of Economy and Business Universitas Indonesia in 2017. In 2018, she is awarded as best awardee from Indonesia eduction fund Management (LPDP) Ministry of Finance. Permata Wulandari received his B.A. in management from Faculty of Economy and Business Universitas Indonesia, M.Sc. in Islamic finance and Ph.D. in Islamic Banking and Finance from International Islamic University Malaysia as best Ph.D. award. She also appointed as reviewer in several referred academic journals. Currently, she also works in SMEs center Faculty of Economy Universitas Indonesia as research and laboratory microfinance manager which focus on Indonesia SMEs and microfinance improvement. She engage with several study related to SMEs and microfinance in Indonesia. Professor Dr. Sofri Yahya, Ph.D. is a Professor in Innovation and Strategy and the Deputy Vice-Chancellor of Academic and Research at DRB-HICOM University. Sofri graduated with a bachelor’s degree in Business Administration specialized in Accounting using a liberal arts curriculum from Eastern Michigan University, USA in 1987. After working with several organizations, in 1992 he pursued master’s degree in Accounting and Management Science and subsequently to Ph.D. in Accounting at Southampton University, UK. Being an educator and researcher since 1998 in the areas of Accounting, Innovation and Strategy and Islamic Finance. Sofri has published more than 50 publications in various international journals and more than 100 in the proceedings and others. Sofri has supervised and graduated more than 20 students from Ph.D., D.B.A. and Masters programmes. He has

xxvi   

Notes on Contributors

been appointed as consultant to several organizations such as Tenaga Nasional Berhad, Pharmaniaga Berhad, Intel, Seagate and Universitas Teknologi Yogyakarta, Indonesia. Sofri is a life member of the Malaysian Association of Certified Coaches and Senior Assessor of Malaysian Qualification Agency (MQA). Sofri has received several awards including the Best Teacher Award, Excellence Service Award and Best Paper Award. Sofri has served as the Vice-President for Asian Academy of Management and Editors to several internationally indexed and recognized journals and proceedings. Sofri is a regular reviewer to several internationally indexed journals. Sofri is frequently invited as keynote speaker and trainer/coach in Design Thinking and Service Design for Innovation, Strategy and Entrepreneurship.

List of Figures

Chapter 3 Fig. 1 Indifference curve (Source Mannan [2000]) 41 Fig. 2 The potential sources of financing SDGs and the role of waqf and zakat (Source Modified from United Nations [2014]) 46 Fig. 3 The conceptual link between waqf fund and Socio-economic development 48 Chapter 5 Fig. 1 a Log charity on log income. b Log charity on log savings 102 Chapter 7 Fig. 1 Government revenue: collection actors and processes 132 Chapter 9 Fig. 1 Money movements (Arrow indicates flow of funds) 183 Fig. 2 Trend of growth of IBBL’s MWCD (Source Table 1) 184 Fig. 3 Trend of growth of IBBL’s MWCD profit rate (Source Table 2) 185

Chapter 10 Fig. 1 AHP priority question example in questionnaire 198

Chapter 11 Fig. 1 The ANP model 218 xxvii

xxviii   

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Fig. 2 Synthesis of results for the opportunity cluster for waqf development in Indonesia Fig. 3 Synthesis of results for the strengths cluster for waqf development in Indonesia Fig. 4 Synthesis results for the threat cluster for waqf development in Indonesia Fig. 5 The synthesis of results for the weaknesses cluster for waqf development in Indonesia Fig. 6 The synthesis of results of the strategies to optimize the role of BWI in Indonesia

218 219 221 222 224

Chapter 13 Fig. 1 Fig. 2 Fig. 3 Fig. 4 Fig. 5 Fig. 6 Fig. 7 Fig. 8 Fig. 9

Stages of research Decomposing problems and solutions in waqf fund-raising Problems priority External problem priority Internal problems priority Overall problems priority Long-term solutions priority Short-term solutions priority Overall solutions priority

254 257 263 263 264 264 265 265 266

Chapter 14 Fig. 1 The influence of socio-economic and religiosity factors to zakat of fitra 275 Fig. 2 The influence of socio-economic and religiosity factors to zakat of wealth 275 Fig. 3 The influence of socio-economic and religiosity factors to cash waqf 276 Fig. 4 The influence of socio-economic and religiosity factors to land waqf 276

Chapter 15 Fig. 1 Mudaraba cash waqf deposit growth 296 Fig. 2 Modified key mediating variable model (MKMV) for Waqf institutions 300 Fig. 3 Structural modified key mediating variable (MKMV) model from AMOS 307 Fig. 4 Summary of the findings (Note Bold line indicates significant relationships, and the dotted line indicates non-significant relationships. *p ŽĐĂů 'ŽǀĞƌŶŵĞŶƚ ĞƉĂƌƚŵĞŶƚƐ

dĂdžƵĚŝƚŽƌ

WĂLJĞƌƐ

ƐƐĞƐƐŽƌ

>ĞŐĞŶĚ dĂdžĂŶĚKƚŚĞƌŝůůƐ

ZĞǀĞŶƵĞƐ ƵĚŝƚƐ dĂdžĂŶĚKƚŚĞƌZĞƚƵƌŶƐ ĞƉŽƐŝƚƐ ŝƌĞĐƚĞƉŽƐŝƚŽĨ ZĞǀĞŶƵĞWĂLJŵĞŶƚƐ ŽůůĞĐƚŝŽŶ/ŶĨŽƌŵĂƚŝŽŶ ĞůŝŶƋƵĞŶĐLJ /ŶĨŽƌŵĂƚŝŽŶ >ĞŐĂůEŽƚŝĐĞƐĂŶĚ ĐƚŝŽŶƐ

Fig. 1  Government revenue: collection actors and processes

of increasing the usefulness of the information to the user. Therefore, the auditor general office has the power, authority and duty to examine, audit and settle all accounts and expenditures of the funds and properties of the state government. Towards that end, it has the exclusive authority

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to define the scope, techniques and methods of its auditing and examination procedures. It also may prevent and disallow irregular, unnecessary, excessive, extravagant or unconscionable expenditures, or uses of government funds and properties. Local Revenue-Raising Authority1—The ability of government (at state, regional or province level and local level, hereafter we will refer it as local government) to raise taxes (such as land tax) and other revenues is affected by their status as either “home rule”2 or “Dillion’s rule” government.3 In states that allow home rule, local government is granted constitutional and statutory powers to provide services to their residents, raise taxes and other revenues to fund them, and issue debt for various public purposes, subject only to specific prohibitions.4 In states where Dillon’s rule is in effect, local government is granted authority to operate through statute, and no authority is granted through the state constitution. The countries such as Malaysia, Nigeria and Pakistan as shown in Table 2 have granted home rule to their local governments. However, home rule is a matter of degree. In the countries where local government are granted home rule authority, the extent of their powers varies widely. The states may also make a distinction between the powers granted to city and county governments, with some providing greater authority to states than cities. Local laws give the responsibilities of certain local government officials. Other Federal Law—Federal laws and regulations affect several areas of local government revenue, including the availability of funds through 1 Depending on the system of government. The federalism system such as Malaysia and Nigeria defines the relationship between the federal government at the national level and its constituent units at the regional, state or local levels. While the unitary system of government is a sovereign state governed as a single entity such as Indonesia and Brunei, the federal government is supreme, and the administrative divisions exercise only powers that the federal government has delegated to them. 2 Home rule is the power of a constituent part (administrative division) of a state to exercise such of the state’s powers of governance within its own administrative area that have been decentralized to it by the federal government. 3 John Forest Dillon, for whom the Dillon Rule is named, was the Chief Justice of the Iowa Supreme Court approximately in 1867. The Dillon Rule is used in interpreting law when there is a question of whether or not a local government has a certain power. 4 Local government such as Pasir Gudang and Putrajaya in Malaysia were allowed to issue sukuk to finance their activities. Refer to Ismail (2018).

Malaysia

Indonesia

• Borrow money • Charge • Zakat • Zakat Fitri • Waqf • Income tax • Grants • Value-added tax on • Rents, and royalty goods and services • Fee and fines • Sales tax • Income from state• Property tax owned enterprises • Customs tax • Civil administration • Import duties • Zakat • Export duties • Zakat Fitri • Waqf • Personal income • Stamp duties tax • Customs duties • Companies tax • Excise duties • Value-added tax • Petroleum • Capital gains tax • Petroleum profit tax • Goods and services tax None

None

None

None

Tax

Local government

• Parking charges

None

Non-tax

• Land Tax

• Zakat • Zakat Fitri • Waqf • Resource Revenues

• Assessment Tax

• Parking Charges • Fine • Business Licences

• Motor • Income from • Hotels • Income from vehicles tax provincial-owned • Restaurant local-owned • Motor companies • Advertisement companies transfer duty • Grants • Parking • Investment • Petroleum • Investment • Amusement licensing tax licensing tax retribution • Tobacco tax retribution • Water rate

None

None

Non-tax

Tax

Tax

Non-tax

State government

Federal government

Types of revenue

Bangladesh • Individual and corporation Brunei • Corporate tax • Stamp duty

State

Table 2  Federal government revenues in selected countries

134  A. G. ISMAIL AND W. A. PRATOMO

Pakistan

Nigeria

State

• Personal income tax • Companies tax • Value-added tax • Capital gains tax • Petroleum profit tax • Income tax • Federal excise • Sales tax • Export and import customs • Income from property and enterprises • Civil administration • Fees and grants • Waqf • Zakat

• Stamp duties • Customs duties • Excise duties

Non-tax

Tax

Tax

Non-tax

State government

Federal government

Types of revenue

• Property tax

Tax

Local government

• Fines • Earning and profits • Grants • Loan

Non-tax

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136  A. G. ISMAIL AND W. A. PRATOMO

the financial system, debt collection practices and the receipt of grant proceeds. It shows that laws vary widely and may restrict the function of the revenue collections office in a number of ways. For example, laws may establish responsibility of collections, determine what tools are available for enforcement of the tax and revenue laws and establish administrative standards for the operation of the collection function. As a summary, it shows that the law provides the administration of the revenues such as taxes, fees, levies and other revenues. This is the result of products of legislative enactments beginning from which of the tiers of government is empowered to make laws regarding various revenue items, and/or administer the laws enacted to regulate same. Taxes are the major sources of revenue for the first two tiers of government, and as such, the thrust of this discourse will be on taxes. 2.2   Sources of Government Revenues The sources of revenues for sample of countries are shown in Table 2. This table shows the sources of revenue for a selected sample of countries to the level of government. Since, the sources of revenues to selected countries depend on the system of government; therefore, we choose countries such as Malaysia, Nigeria and Pakistan who follow the federalism system, while countries such as Brunei, Bangladesh and Indonesia follow the unitary system. We refer to the following laws: (i) Bangladesh—Bangladesh’s Constitution of 1972, Reinstated in 1986, with Amendments through 2011; (ii) Brunei—state constitution of 2008; (iii) Indonesia—Undang-Undang Dasar Negara Republik Indonesia Tahun 1945; (iv) Malaysia—federal constitution 1957 (Amended in 2010); (v) Nigeria—Constitution of the Federal Republic of Nigeria, 1999; and (vi) Pakistan—state constitution of Pakistan— modified version February 2012. In Bangladesh—the state constitution of 2011, as reported in Table 2, has given the following provisions to federal government: (i) to impose, regulate, alter, remit or repeal of any tax such as individual or corporation tax; (ii) to borrow money or to provide any guarantee to debt holder, or to amend a new law relating to the financial obligations of the federal government; (iii) as the custodian for the consolidated fund, the payment of money into, or the issue or appropriation of moneys from, the fund; (d) to impose a charge upon the consolidated fund, or to alter or abolish such charge; and (v) to receive money and to be

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channelled to the consolidated fund or to create the public account of federal government, or as custodian or issuer of such moneys, or to audit the accounts of the federal government; and any subordinate matter incidental to any of the matters specified in the foregoing sub-clauses. The imposition, regulation, alteration, remission or repeal of any tax can be done by a local authority or body for local purposes. It shows that both revenues received and all loans raised by the federal government, and all moneys received by it in repayment of any loan, become one of the components in the consolidated fund. All other public moneys received by or on behalf of the federal government should be credited to the public account. In Brunei, all revenues and moneys raised or received by the federal government from whatsoever source should be transferred into the consolidated fund. The types of tax and its rate should be subject to the approval from the federal government. The statement of the estimated receipts and expenditure of the federal government for that year should be presented before the commencement of that year. The estimates of expenditure should show separately (i) the total sums required to meet expenditure charged on the consolidated fund; and (ii) the sums, respectively, required to meet the heads of other expenditure proposed to be met from the consolidated fund; (iii) the sums should not include sums representing the proceeds of any loan raised by the federal government for any specific purpose and appropriated for such purpose. The sums also cover any money, or interest on money, received by the federal government subject to a trust and to be applied in accordance with the terms of that trust. But, the sums do not cover the Islamic revenues such as waqf, zakat and nazar. In Indonesia, the federal government, as reported in Table 2, has been given the power to collect: tax, non-tax and grant. Tax consists of domestic tax and international trade tax. Domestic tax revenue is derived from income tax. International trade tax is derived from the import and export duties. Non-tax revenue is referred to as all federal government revenues that are received from natural resources, federal government’s portion of profit from state-owned enterprises as well as revenue from the public service agencies. Grant revenue is all state revenues either in the form of foreign exchange and/or foreign exchange denominated in rupiah, rupiahs,

138  A. G. ISMAIL AND W. A. PRATOMO

services and/or securities acquired from grantors. This grant does not have to be repaid and is not binding, either from domestic or from abroad. Since the state is based on Belief in the One, Supreme God, the state guarantees freedom to every resident to adhere to his respective religion and to perform his religious duties in conformity with that religion and that faith. Therefore, the state can also collect the Islamic revenues. In Malaysia, the revenues are quite similar as in Brunei, except that Malaysia imposes income tax, and goods and sales tax and non-tax revenue from petroleum and natural gas and tax on resources such as timber and cess on commodities. The state government has been mandated by federal law that they can raise zakat, Fitrah, Baitulmal or similar Islamic religious revenue and transfer it into a separate fund. In Nigeria, the revenue would of course, like other countries, come in terms of customs and excise duties, export duties, stamp duties, and taxation of incomes, profits and capital gains. Taxes collected by the federal government are companies’ income tax, withholding tax on companies, residents and non-resident individuals; petroleum profits tax; value-added tax; education tax; capital gains tax on residents, corporate bodies and non-resident individuals; stamp duties on corporate bodies and residents, and personal income tax, fees and levies. Taxes are the major sources of revenue for the first two tiers of government. The division of taxing powers in a country invariably depends on the system of government, whether it is federal or unitary. Nigeria runs a federal system of government. State government are given a power to collect: taxes and levies to be collected by the state government: personal income tax in respect of Pay-As-You-Earn (PAYE) and direct taxation (self-assessment); withholding tax (individuals only); capital gains tax (individuals only); stamp duties on instruments executed by individuals; pools betting and lotteries, gaming and casino taxes; road taxes; and business premises registration fee in respect of urban areas as defined by each state and rural areas; development levy (individuals only); naming of street registration fees in the state capital; right of occupancy fees on lands owned by the state government in urban areas of the state and market taxes and levies where state finance is involved. Taxes and levies to be collected by local government are: shops and, kiosks rates; tenement rates; on and off liquor licence fees; slaughter slab fees; marriage, birth and death registration fees; naming of street registration fee, excluding any street in the state capital; right of occupancy

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fee on lands in rural areas, excluding those collectable by the federal and state governments; market taxes and levies excluding any market where state finance is involved; motor park levies; domestic animal licence fees; bicycle, truck, canoe, wheelbarrow and cart fees, other than a mechanically propelled truck; cattle tax payable by cattle farmers only; merriment and road closure levy; radio and television licence fees (other than radio and television transmitter); and vehicle radio licence fee (to be imposed by the local government of the state in which the car is registered); wrong parking charges; public convenience, sewage and refuse disposal fees; and customary burial ground permit fees; religious places establishment permit fees; signboard and advertisement permit fees. Taxes and levies listed above are not conclusive of the powers inherent in the government to impose taxes. It may be appropriate to observe also that the focus of the above law is on which of the tiers of government can collect the items listed and not which can impose the taxes. In Pakistan, the revenues can be categorized into several items: (i) income and corporation taxes; (ii) taxes on the sale and purchases of goods imported, exported, produced, manufactured or consumed; (iii) export duties on cotton and other export duties as may be specified by the president; (iv) duties of excise; and other taxes. The federal revenues also come from duty of excise on oil and natural gas and profits from the generation of power. The revenues from taxes and non-taxes such as sale taxes, export duties and duties of excise are pooled under the federal consolidated funds. The federal consolidated funds exclude the federal duty of excise on natural gas and oil, and the net profits earned by the federal government or any undertaking established or administered by the federal government from the generation of power at a hydroelectric station are also not part of the federal consolidated funds. The revenues from oil, gas and electricity are paid to the province in which the well-head of oil and gas and the hydroelectric station is located as given in Item 160 (clause [3]) of state constitution.

3  Waqf Law and Government Revenue The results from Sect. 2 shows that waqf is one of the components of government revenues. Therefore, we need to look at the specific law that has been passed that we can learn how the waqf system operates in selected countries.

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Waqf law provides the framework within which waqf systems operate. The law determines the extent of a government’s revenue-raising authority, when such revenues can be collected and how they are to be collected. Therefore, waqf law is also important in governing the government revenue. In this section, we will visit selected waqf law and try to learn the methods of waqf contribution5 and why their use relieves the necessity for examining the revenue and to assist in the utilization of waqf’s benefits. 3.1  Bangladesh Bangladesh was originally part of British India. The family waqf was permitted under the Waqf Validating Act of 1913, and hence, the act was also valid in this country. While, in British Bengal, the waqf estates used to be administered under the provisions of the personal law of the Muslims and the Chief Kadı of the district was the guardian of the awqaf under his jurisdiction. But the district judge had no machinery to supervise or control the awqaf. Then, in 1934, the Waqf Act of Bengal was passed in order to remedy this situation and an autonomous office headed by the Waqf Commissioner of Bengal was created. The political situation did not permit centralized financing of this office and the Act stipulated that the expenditures of this office would be met by collecting contributions from the net income of the awqaf. The whole purpose of the Act was to impose some control over the mutawallis. When Pakistan was created, the Bengal Waqf Act of 1934 was adopted for East Pakistan and was applied. In 1962, another law the Awqaf Ordinance was enacted, but the 1934 Act was not repealed. The 1962 Ordinance promulgated that in case there was a conflict with any other law or enactment, the provisions of the Ordinance would prevail. The basic changes made in the Ordinance of 1962 were the following: a uniform rate of waqf contribution was fixed and the Waqf Commissioner became the Waqf Administrator with quasi-judicial and administrative powers. The Act provides, as shown in Table 3, the power on the following matters: (i) to register the newly established waqf; and to appoint 5 Here, we use the word of contribution (instead of collection), because of the voluntary act of individual. In the case of zakat, we use the word of collection because it is a compulsory act from individual.

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Table 3  Provision under Waqf Act State

Administration

Maintenance

Control

Bangladesh

Centralized

Clear governance

Brunei Indonesia

Centralized Decentralized and independent Decentralized and independent Decentralized and independent Decentralized and independent

• Ministry of Religious Affairs and Endowments • Ministry of Religious Affairs • Indonesian Waqf Board (BWI)

Malaysia Nigeria Pakistan

•S  tate Islamic Religious Council (SIRC) • Local government level • Awqaf department (at federal and local government level)

Clear governance Clear governance Clear governance Clear governance Clear governance

and remove the mutawallis; (ii) to settle waqf disputes; (iii) to investigate and determine the extent of the awqaf properties; (iv) to call from time to time for information regarding the accounts and returns from the mutawallis; (v) to ensure that the incomes generated by the awqaf are spent for the original purposes; (vi) to guide with a proper directions for the proper administration of the awqaf; (vii) to assure the direct management of certain waqf which, if necessary, he may take over; (viii) to fix the remuneration for the mutawalli if the waqf deed does not make a provision; and (ix) to invest any money received as compensation for the acquisition of waqf properties under any law. Generally, the above matters are essential for the proper control, maintenance and administration of awqaf. The Awqaf Ordinance also provides for establishing a waqf committee at the national level. The mutawallis are made responsible for the usual duties and if they fail in these, they are subjected to a fine or imprisonment. Initially, the Waqf administration was subject to the Ministry of Education but was transferred to the Ministry of Land Reforms and Administration and finally to the Ministry of Religious Affairs and Endowments. In Bangladesh, also, the Waqf administration is highly centralized. 3.2  Brunei In Brunei, Majlis Ugama Islam Brunei (MUIB) which is part of Ministry of Religious Affairs becomes the sole administrator of Islamic religious revenues. The revenues received are transferred to special funds known

142  A. G. ISMAIL AND W. A. PRATOMO

as the Consolidated Islamic Funds. Waqf properties are considered as one of the Islamic religious revenues. However, waqf properties and their revenues need to be transferred as the General Waqf Fund. Hence, the General Waqf Fund is one of the components in the Consolidated Islamic Funds. The matters about waqf are specifically given in items (96) to (113) of the Akta Majlis Ugama Islam dan Mahkamah-mahkamah Kadi. Hence, in performing its role, MUIB is given the following task: (i) MUIB acts as sole trustee for all waqf properties; (ii) to generate revenues from the waqf properties; (iii) to prepare annually the financial statement of the General Waqf Fund; and (iv) MUIB needs to disclose the list of waqf properties and revenues collected once in three years. It shows that the Act provides the general framework in managing the waqf properties. 3.3  Indonesia Before the establishment of a dedicated waqf law in 2004, waqf properties were administered under the Law No. 16 of 2001. In the later Act, waqf properties were managed under the charitable foundations.6 The fact that waqf is distinct from other voluntary matters (such as sadaqah), therefore it should be governed by a separate law. In 2004, the Law No. 41 was passed. The Law gives the following important provisions: first, the establishment of Indonesian Waqf Board (BWI) which is given a mandate to: (i) promote and develop the waqf in Indonesia; (ii) to act as a centralized body for all Nadhir at local government; and (iii) to manage and develop the waqf property in accordance with the objectives, functions and purposes. Second, a clear definition of waqf, as suggested by Indonesian Ulama Council—the waqf properties are not only non-current assets (such as land, buildings, plants and apartment units), but also can cover current assets (such as money,7 share certificates, securities, vehicles, intellectual property rights and lease rights). Third, power to regulate the waqf in

6 The charity foundation as a legal entity is founded on the reasons that it can utilize the wealth (waqf as wealth) to achieve a certain purpose in the social, religious and humanitarian fields. It also does not require to create a membership. 7 Money can also in the form of deposits.

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Indonesia, ranging from the formation of Nadhir to waqf property management. Fourth, to develop the productive waqf in Indonesia—for example a nominal retail cash waqf ranging from Rp 100 thousand per month.8 The productive waqf models are also so diverse, ranging from hospitals, schools, shop, warehouse or shop for rent, farms and universities. Waqf can also hand over cash waqf through Islamic financial institutions that is appointed by the Minister of Religious Affairs. In this case, the Islamic financial institutions do not directly manage the waqf, but appoint BWI as partner. 3.4  Malaysia In Malaysia, waqf belongs to state government, meaning that it has been decentralized from the beginning. The Malaysian law on waqf (or hereafter, enactment) can be divided into two categories: the old and the new. The old laws go back to a period prior to 1980s. The new laws may be categorized as such from the 1980s onward beginning with the Enactment of Kaedah Kaedah Wakaf (Johor) 1983. Similar enactments are introduced in other states such as Waqf Enactment of 2005 (States of Negeri Sembilan and Melaka), Administration of Religion of Islam (Selangor) Enactment, 2003, and Administration of Islamic Law (Federal Territories) Act, 1993. The enactments provide several provisions that affect the development of waqf in Malaysia. First, each State Islamic Religious Council (SIRC) is given by the enactment to be the “sole trustee” of all waqf, whether general or specific waqf. Therefore, each SIRC has an administrative framework for waqf management consisting of their board of trustee and staffs to carry out the due administration of the waqf property for the benefit of the beneficiaries named in the waqf. The administrative structure of waqf management recognizes SIRC at the top as the policymaking body that can give directions and decisions. The second layer involves the Waqf Management Committee whose role is to oversee the management of the waqf property.

8 The program aims to solicit funds from the public so that they would put aside part of his property to participate in the program productive waqf.

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Second, to issue policy related to waqf, for example policy on the beneficiaries of waqf and policy on the creation of new waqf properties. 3.5  Nigeria Currently, there is no existing law in Nigeria that provides for the management and administration of waqf, not even in the Muslim states in the northern part of the country. Like in Malaysia and Brunei, there is provision in the state constitution that deals with waqf. What is available in the constitution of the Federal Republic of Nigeria 1999 (hereafter, the Act) is the reference to issues pertaining to waqf which fall under the jurisdiction of the Sharīah Court of Appeal. For a proper understanding of the possibility of having a legal framework of waqf in Nigeria, it is suggested to refer to Oseni (2015). 3.6  Pakistan The waqf law in Pakistan has gone many developments. It started with the presence of waqf acts in different states such as The Punjab Muslim Awqaf Act, 1951, The Qanoon-e-Awqaf Islami, 1945 (Former Bahawalpur State), The North West Frontier Province Charitable Institution Act 1949, Mussalman Waqf Act (Sind Amendment), 1959 and Mussalman Waqf Act (Bombay Amendment), 1935. However, in 1959, the Government of Punjab promulgated the West Pakistan Waqf Properties Ordinance. The act granted the government the right to dispossess a mutawalli. Then, in 1961, the new act known as the Awqaf Ordinance and West Pakistan Waqf Properties Rules (hereafter, the Ordinance) and amended in 1979 gave the power to the state to manage the waqf properties. However, the centralized of waqf is only applied to only profitable waqf.9 The Ordinance gives the power on the following matters: first, facilitate the takeover of waqf property by an administrator; i.e., the Awqaf

9 The centralization of waqf was due to: (i) the administration wanted to control the religious elements in the country since waqfs were often associated with religious activities; (ii) the state had an eye on the financial resources of the endowments; and (iii) centralization meant bureaucratization of the religious establishment, which was thus denied any opportunity for autonomy.

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Department (at federal and local government level) whose position and powers are expected to strengthen the administration of waqf property. Second, the main objectives of the awqaf departments are: (i) to take over the administration and control of the waqf properties in order to ensure better management of the properties, to improve the standard of religious services and to ensure that incomes are used for the original purposes; (ii) to enhance religious education. Third, the Awqaf Department has its own budget. Having such a dedicated waqf law means that it has legal consequences. Once a waqf is complete, the following are the consequences: (i) dedication to God—the property vests in God in the sense that nobody can claim ownership of it. Hence, once the property is dedicated to God and only the usufructs are used by the descendants or public; (ii) irrevocable—a waqf once is declared and complete, it cannot be revoked. The waqif cannot get his property back in his name or in any other’s name; (iii) permanent or perpetual—perpetuity is an essential element of waqf. Once the property is given to waqf, it remains for the waqf forever. Waqf cannot be of a specified time duration; (iv) inalienable—since waqf property belongs to God, no human being can alienate it for himself or any other person. It cannot be sold or given away to anybody; (v) pious or charitable use—the usufructs of the waqf property can only be used for pious and charitable purpose. It can also be used for descendants in case of a private waqf; (vi) extinction of the right of waqif—the waqif loses all rights, even to the usufructs, of the property. He cannot claim any benefits from that property; and (vii) power of court’s inspection—the courts have the power to inspect the functioning or management of the waqf property. However, after reviewing the existing law in selected countries, we find that there exists an obvious difference on the procedures for waqf creation and its management given that waqf law has prescribed clear guidelines on what constitutes waqf property, the manner of creating waqf and the general principles of waqf management. Nevertheless, it is noted that there is a need for the standardization of methods to create waqf to facilitate the administration and management of waqf properties. A standardized method of waqf management (such as standard on creation and registration of waqf properties) will assist the regulator in preparing a comprehensive waqf law incorporating the use of the same procedures which would then empower the waqf on the basis of an easy and clear system. The efficacy of such a system would:

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(i) create confidence of the general public to create waqf over their property, (ii) generate revenues to government, and (iii) bring more benefits to the community.

4  What Are the Issues? In this section, we will address the issues behind the collection of waqf by looking at waqf as cash management profile, sources of government revenue, waqf in relation to consolidated funds and as tool of public policy. 4.1   Cash Management Profile Waqf law often dictates on how to generate the benefits of waqf property. This is important because a government’s particular cash flow profile is directly related to the dates on which it receives its major revenues from waqf property. Efficient cash handling and control systems increase certainty that payments are made properly by the due date and that receipts are passed without delay to beneficiaries. They also reduce operational risk and the scope for mismanagement or fraud. By minimizing the volumes of idle cash held by government bodies, most of which is unlikely to be fully remunerated, and reducing payment authorities (and cheques) in transit or awaiting clearance, there is a direct saving to government in the form of the borrowing that is no longer needed to finance that cash. The linkage of government accounts (so that balances are netted through a single account at the central bank), as presented in Appendix, not only reduces gross balances, it improves visibility of flows—opening up the opportunities for active management—and reduces risk, whether in terms of exposure to the financial system or to financial market movements. 4.2   Sources of Government Revenue As discussed in Sect. 3, waqf can be in the form of in kind or cash. Both can generate receipts. Currently, government receipts are divided into two groups—revenue receipts and capital receipts. Government receipts which neither (i) create liabilities nor (ii) reduce assets are called revenue receipts. These are proceeds of taxes, profit and dividend on government investment, cess and other receipts for services rendered by the

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government. These are current income receipts of the government from all sources. Government revenue is the means for government expenditure. Revenue receipts are further classified into tax revenue and non-tax revenue. The government receipts either creates liabilities (e.g. borrowing) or reduces assets (e.g. disinvestment). Thus, when government raises funds either by incurring a liability or by disposing off its assets, it is called a capital receipt. Two examples of capital receipts which create liability are borrowing and raising of funds from public provident fund (PPF) and small savings deposits. Borrowings are treated capital receipts because they create liability of returning loans. Similarly, funds raised from PPF and small saving deposits in Saving Banks are treated capital receipts because they increase liability of the government to repay these amounts to PPF holders and small savings depositors. Therefore, capital receipts may be debt creating or non-debt creating. Net borrowing by government at home, loans received from foreign governments and borrowing from central bank are examples of debt creating receipts. Capital receipts such as recovery of loans, proceeds from sale of public enterprises (i.e. disinvestment) do not give rise to debt. Therefore, waqf benefits are classified as revenue receipts; hence, it does not increase the government debt. Hence, the waqf properties need to be managed (by public sector enterprises [PSEs]). 4.3   Consolidated Account and State Revenue The process of having a plan of the government begins with the launching of the first five-year plan. The annual plans are the operational phase of the five-year plans. Over the years, both the scope of public sector plan and the administrative machinery involved have undergone changes. The setting up of waqf funds has emerged as important elements of the plan implementation machinery which did not exist earlier. Recently, there is a strong advocacy for waqf crowdfunding for infrastructure building such as roads, ports, airports and delivering other public services such as health and education.10 The size of the plan outlay is determined by the estimated plan resources. The total resources of the government are made up of

10 Refer

to Ismail and Pratomo (2017).

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estimated revenue receipts (benefits from waqf) and capital receipts. Both receipts are normally pooled together in consolidated account of state revenue. The total revenue receipts consist of both tax revenues and non-tax revenues but also benefits from waqf. The amount of revenue receipts left after meeting the estimated non-plan revenue expenditure is called balance from current revenue (BCR). The estimated capital receipts, on the other hand, may be divided into debt capital receipts and non-debt capital receipts. The non-debt capital receipt less than the estimated non-plan capital expenditure is called miscellaneous capital receipt (MCR). For financing the plan budget, the government also resorts to borrowings. The BCR, MCR and the fiscal deficit put together determine the size of gross budgetary support (GBS) for planning purposes. Out of total GBS, a portion is provided to states as central assistance for state plan. The public sector enterprises (PSEs) also mobilize some resources in the form of internal resources (IR) and extra budgetary resources (EBR), commonly known as IEBR. The GBS (net of assistance to state plan) and the IEBR constitute the plan resources of the government. Conventionally, different components of non-plan expenditure which are usually committed in nature are estimated at the time of budgeting. After providing for the committed expenditures like overdue payment, salary, pension, operation and maintenance of assets, what is left out of the total resources (non-debt and debt) is allocated for plan budget. In this sense, plan budget may be called residual in nature. However, in some countries like Malaysia, Brunei and Indonesia, waqf revenue is not considered as part of the consolidated funds; hence, the budget planning would be without waqf revenue. Hence, it would not be part of the annual plan or five-year plan. 4.4   Public Policy In International Labour Organization publication on World Social Protection Report 2014/2015 reported that only 20% of the world’s population has adequate social security coverage and more than half lack any coverage at all. ILO also actively promotes policies and provides assistance to countries to help extend adequate levels of social protection to all members of society. The protection covers the access to health care and income security, particularly in cases of old age, unemployment, sickness, invalidity, work injury, maternity or loss of a main income earner. In

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this section, we will argue that Islam also has its own view. Why we want to promote Islamic social security policy? The Islamic concept of social security originates from the following verses of the Quran and the hadith which enjoin upon the believers of Islam to help the poor and needy who are unable to fulfil their basic human needs11 and on how the government play her role.12 Hence, social security is a ruler’s duty to citizens or, in a more contemporary language, a government’s duty to its people as it has an obligation to enable them, at least to lead the minimum standard of life and to offer assistance to all who need it. Therefore, the social security policy (waqf as policy tool) should be directed to achieve the prosperity of society. By doing this, it can achieve its permanent happiness, goodwill, security, unity and peace. At individual level, each member of society should also help those in needs so that they can lead at least a decent life and meet their basic needs. In achieving the objectives of this policy, the assistance could be directed into financial and moral assistants. The financial assistance is aiming at making the poor reach the limits of “financial independence” or “prosperity”. In this sense, `Umar bin Al-Khattab, may God be pleased with him, said: “When you make a donation, grant financial independence”, which can be achieved through providing additional access to employment opportunities and assisting in starting, managing and growing small businesses and Ali bin Abi Thalib, may God be pleased with him, said: “God imposes a duty on the rich to donate as much money as adequate for the poor in their society”. On the other hand, moral assistant is represented by many forms because human needs are not only financial 11 “They ask thee, (O Muhammad), what they shall spend. Say: That which ye spend for good (must go) to parents and near kindred and orphans and the needy and the wayfarer. Moreover, whatsoever good ye do; Lo! Allah is Aware of it”. QS.2:215 and “And serve Allah. Ascribe nothing as partner unto Him. (Show) kindness unto parents, and unto near kindred, and orphans, and the needy, and unto the neighbor who is of kin (unto you) and the neighbor who is not of kin, and the fellow-traveler and the wayfarer and (the slaves) whom your right hands possess. Lo! Allah loves not such as are proud and boastful”. [QS.4:36] and also the following hadith “I am nearer to every believer than his own self; so whoever leaves behind a debt or children to support, it shall be our charge; and whoever leaves property, it is for his heirs, and I am the heir of the person who has no heir. – I inherit his property and pay his debt” [Narrated by Muslim]. 12 “The government is the guardian of anyone who has no other guardian” [Narrated by Abu Daud and Turmidzi].

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ones, but they also include different forms, such as consultation, advice, friendship, goodwill, education, consolation and other many forms of donation. Broadly speaking, social security embraces in its fold social assistance, provision of basic necessities of life, social insurance against risks of hazards (such as sickness, old age and unemployment), public maintenance, etc. The idea of social security originated in realization by the state of its responsibility to provide its citizens adequately against certain contingencies like want, poverty, disease, illiteracy, unemployment and old age.

5  Conclusions The study presents a visit on the state law in several jurisdictions and set the stage for the subsequent detailed discussions of the sources of revenue. Our results show that: waqf revenue has been recognized as the revenues of government, and there exists an obvious difference on the procedures for waqf creation and its management given that waqf law has prescribed clear guidelines on what constitutes waqf property, the manner of creating waqf and the general principles of waqf management. The implication from the results: there is a need for the standardization of methods to create waqf to facilitate the administration and management of waqf properties. A standardized method of waqf management (such as standard on creation and registration of waqf properties) will assist the regulator in preparing a comprehensive waqf law incorporating the use of the same procedures which would then empower the waqf on the basis of an easy and clear system. The efficacy of such a system would create confidence of the general public to create waqf over their property, generate revenues to government and bring more benefits to the community.

References Attorney General Office, Negara Brunei Darussalam. Akta Majlis Ugama Islam dan Mahkamah-Mahkamah Kadi. Retrieved from http://www.agc.gov. bn/AGC%20Images/LOB/Order%20PDF%20(BM)/Penggal%2077.pdf. Accessed 31 August 2017. Ismail, A. G. (2018). Money, Islamic Banking and Real Economy (2nd ed.). Singapore: Cengage Learning Asia Pte. Ltd.

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Ismail, A. G., & Pratomo, W. A. (2017). Crowding Out and Waqf Crowdfunding: Do They Create Macroeconomic Imbalances (IESTC Working Paper Series: No. 6). Mallinak, B. (2006). The Revenue Rule: A Common Law Doctrine for the Twenty-First Century Duke. Journal of Comparative & International Law, 16, 79–124. Retrieved from http://scholarship.law.duke.edu/cgi/viewcontent.cgi?article=1107&context=djcil. Accessed 28th August 2017. Ministry of Law, Bangladesh. Awqaf Ordinance of 1962. Retrieved from http:// bdlaws.minlaw.gov.bd/print_sections_all.php?id=326. Accessed 31 August 2017. Oseni, U. A. (2015). Towards the Effective Legal Regulation of Waqf in Nigeria: Problems and Prospects. https://www.researchgate.net/publication/228298207_Towards_the_Effective_Legal_Regulation_of_WAQF_in_ Nigeria_Problems_and_Prospects.

CHAPTER 8

Legal Constraints to the Development of Waqf Habib Ahmed

1  Introduction The voluntary (or third) sector is increasingly playing an important role in improving the welfare and promoting overall development globally by providing social goods and services that states often fail to provide.1 The rapid expansion of the third sector in the form of non-profits organizations (NPOs), non-governmental organizations (NGOs) and civil societies has attracted attention of development workers, researchers and national and international institutions worldwide. Whereas the interest in 1 Salamon and Anheier (1999) report that in 22 countries, this emerging sector had become a USD 1.1 trillion industry constituting 4.6% of the GDP and employing 19 million people towards the end of the last century. The third sector is known by various names such as “nonprofit”, “voluntary”, the “civil society” or the “independent” sector Salamon and Anheier (1999).

H. Ahmed (*)  Islamic Law and Finance, Institute of Middle Eastern and Islamic Studies, School of Government and International Affairs, Durham University, Durham, UK e-mail: [email protected] © The Author(s) 2019 K. M. Ali et al. (eds.), Revitalization of Waqf for Socio-Economic Development, Volume II, https://doi.org/10.1007/978-3-030-18449-0_8

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the voluntary sector’s role in the development is relatively recent, Islam instituted voluntary institutions that had wide economic and social implications since its inception. Among these is the institution of waqf (pl. awqaf) which has historically played a vital role in extending social services and improving the overall welfare in Muslim societies. The history of awqaf is rich with impressive achievements in enhancing the welfare of different segments of the population. Various forms of awqaf were established including those for public utilities, education and research, and health care. There were awqaf assigned specifically for research in science, physiology, pharmacology, mathematics, astronomy, etc. Other than these traditional activities, there were waqf of grain to be used as seeds, waqf to provide loans to people in need, and those providing services and supplementary income to low-income earners.2 While the recent expansion of the third sector witnessed the growth of NPOs such as trusts, foundations, non-profit corporations and endowments, waqf institutions have not shown similar trends in Muslim societies. There is a general feeling today that many awqaf institutions have stagnated and are not performing their designated functions of enhancing social welfare and alleviating poverty. This is reflected not only in the smaller proportion of new awqaf being established compared to other NPOs, but also in the dormant status of the existing waqf institutions. In fact, many new voluntary organizations in Muslim countries are being established as foundations, non-profit corporations and trusts, but not as waqf. One of the major impediments to the growth of the awqaf sector is the discriminatory legal treatment of these institutions compared to other non-profits. While it is easy to establish and operate independently NPOs such as trusts, foundations and non-profit corporations, awqaf laws are more restrictive. This paper explores the legal factors hindering the growth awqaf. In this regard, the paper addresses two related questions. First, is having a waqf law a necessary condition for the growth of the sector? Second, is a waqf law in itself sufficient for the growth of these institutions? To address these questions, the legal environments under which waqf operates are examined in two Muslim-majority countries, The Gambia and Bangladesh. After analyzing the constraints, the paper also suggests ways in which the waqf law can be reformed so that the legal impediments to the growth of awqaf institutions can be minimized.

2 For

a discussion on the various types of waqf, see Ahmed (2004, Chapter 2).

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The paper is organized as follows. Section 2 reviews the literature on legal regimes and organizations and examines the impact of laws on organizational formats. The section also discusses the basic features of waqf and legal issues related to it. While Sect. 3 presents the legal environment of NPOs in The Gambia, Sect. 4 does so for Bangladesh. Section 5 discusses the efficiency aspects of the waqf law and identifies the problem of legal asymmetry by comparing the waqf law to that of trust. Section 6 suggests some elements that an efficient and flexible waqf law should have to facilitate the growth of the waqf sector. Section 7 concludes the paper.

2  Legal Regimes and Organizations Milgrom and Roberts (1992, p. 19) define organizations as “entities within and through which people interact to reach individual and collective economic goals”. One main feature of organizations is that they have an “independent legal identity” which entitles them to enter and enforce contracts through courts. They discuss the architecture of organizations that includes, among others, “pattern of resource and information flows, authority and control relationships, expressed objectives and strategies and tactics employed” (p. 20). Salamon et al. (2000) indicate that a number of multidimensional and complex factors determine the size and nature of NPOs in different societies. The social origins of organizations include broader social, political and economic processes in determining the size and nature of NPOs. An important factor is the role of legal regimes under which these organizations operate. Edelman and Suchman (1997) review the literature dealing with the impact of the legal environments on organizations. Pointing out the modern organizations are “immersed in a sea of law” (p. 480), they identify, among others, the constructive legal environment which defines and empowers various agents and sets down the relationship between them. The constructive law provides the building blocks of organizations thereby determining the type of organizations that may exist. These laws define the legal status and functions of organizations and how they are created, governed, closed, etc. New institutional economists also discuss the role of legal environment on organizations by focusing on property rights and transaction costs. North (1990) identifies political, judicial and economic rules as formal constraints on organizations. Starting with the general rules laid

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down in the constitution and those specified in statutes, common law and by-laws, the specific contracts among stakeholders influence the nature and operations of organizations. Specifically, formal and informal institutions and rules define property rights and exchange structures. These rules in conjunction with technology determine transaction costs. In particular, laws affect transaction cost and determine the composition and growth of different types of NPOs. As different factors change the relative prices/costs over time, efficient institutions survive and the inefficient ones are weeded out (North 1990, p. 92). In the process, there is an evolution of efficient models of organizations and institutions. Thus, many aspects of organizational formats are derived from organizational laws in different countries. The “purpose” of public or mutual benefit is the identifying feature of NPOs in most legal jurisdictions. Once a NPO is formed under a specific law, its articles of association or deed determine its organizational architecture. Among others, type and process of providing social goods and services, mode of operations, governance structures, etc. will be outlined. Two types of laws are relevant to NPOs in most countries. First, laws of establishing and regulating NPOs, and second are the tax laws that determine tax exempt status of different organizations. The focus of this paper is the laws of the former type that determine the legal format of the organizations. 2.1  Waqf and Legal Environment Waqf, a form of continuous charity (sadaqah jariyah), is created by donating an asset that produces benefits/revenues for a targeted objective on a permanent basis. An important feature of waqf relates to its objective as it must be designated to the idea of birr (doing charity out of goodness). Waqf may be dedicated to the society at large, provision of religious services, socio-economic relief to the needy, the poor, education, environmental, scientific and other causes. Many scholars view the ownership of waqf asset/property “as if it were owned by God”. Through a deed, the founder (waqif) determines the objectives for which the waqf can be used and the modes of distributing its fruits, services and revenues. The founder also determines the waqf management and process of succession of managers. The founder can impose any restrictions or qualifications he/she likes on his/her waqf. Most awqaf are perpetual and very often so emphasized in the waqf deeds. While the cash waqf dates back to as early as the turn of first century of Hijrah, most of awqaf established are real estate based.

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Table 1  Types of awqaf institutions

Beneficiaries

Family General public

157

Type Religious

Philanthropic

A C

B D

Awqaf institutions are classified into two main categories (Ahmed 2004). First, awqaf can be categorized as religious and philanthropic. The former type would be dedicated for religious purposes (like mosques, graveyards, tombs, etc.) and the latter type would be an endowment of asset/property for use of a defined group of beneficiaries. According to the second classification, the beneficiaries of waqf can be either family members or the general community. These classifications are shown in Table 1. From the perspective of providing social services, waqf types, A, B and C, are not very relevant. Type A waqf is not common as family members cannot usually be the sole beneficiaries from religious waqf.3 Type B and type C awqaf cannot enhance the social welfare, as the former is meant for family members and the later are places of worship. Only type D waqf is meant for enhancing social welfare as the returns of the social waqf are used for providing services to the identified beneficiaries directly and/or indirectly. This paper concerns with the social waqf only. The legal issues related to waqf can be discussed at two levels: Islamic jurisprudence (fiqh) and national laws and statues. At the fiqh level, the rules related to waqf are the pronouncements made by different Shariah scholars and bodies. Traditionally, waqf law had very restricted rules of perpetuity, irrevocability and inalienability (Cattan 1955). Waqf had to be perpetual, and an asset dedicated to waqf could not be revoked. Earlier legal view also contended that the asset dedicated for waqf must be tangible. During recent times, however, the legal doctrines related to waqf appear to be easing. Among contemporary scholars, Zarqa (1947, p. 15) opines that changes in various aspects of waqf can be brought about through the process of ijtihad (rational thinking/deduction), as long as the objective of establishing the endowments is birr (good cause). More recently, the Islamic Fiqh Academy has made rulings that have relaxed some restrictions of the classical legal doctrines. For 3 In rare occasions, in some countries family members can benefit from religious waqf. An example of such waqf can be a graveyard for a family.

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example, the new pronouncement allows new class of assets like shares, sukuk, utilities, etc. as the corpus of establishing waqf. Furthermore, the resolution also makes allowance for temporary waqf.4 In contemporary nation states, however, the laws and statutes govern the status of organizations including waqf. It is these laws that determine various aspects of waqf in specific countries. Thus, the flexible fiqh views will not have any influence on the waqf unless these are incorporated in the laws/statutes related to waqf. The problem is that it takes long time and political will to change the existing laws of waqf. For instance, the Algerian and Indian laws of awqaf still emphasize the ideals of perpetuity in establishing a waqf. Depending on the law of organizations in different countries, other NPOs such as trusts, charitable corporations and foundations may be established in addition to waqf.5 The choice of specific organizational format will depend on the menu of organizational laws and also their relative efficiencies. To understand the impact of legal regimes on organizational formats, laws related to NPOs and waqf are examined for The Gambia and Bangladesh.6 While in The Gambia waqf law does not exist, Bangladesh has both awqaf and other non-profit organizational laws. Laws related to NPOs including waqf in both countries are outlined next.

3  Legal Regime for NPOs and Waqf in the Gambia The constitution of The Gambia (Section 7) recognizes the common law and principles of equity, the customary law and the Shariah (in family matters and inheritance among members of the communities to which it applies) as basis of law for the country. Furthermore, Section 25 (2) of the constitution gives individuals “freedom of association, which

4 As an organ of Organization of Islamic Conference (OIC), Islamic Fiqh Academy is the most authoritative organ to furnish legal opinions. Resolution number 181 (19/7) concluded at the Meeting in Sharjah, UAE, 2009 related to rules related to waqf. 5 Note that associations are excluded from the list as these organizations are functionally different from waqf. While waqf-type institutions involve wealth dedicated for public benefit, associations are membership-based organizations established mainly for mutual benefit of members. 6 Other than using information from secondary source, the legal documents of both countries were collected when the author visited The Gambia during 5–9 December 2006 and Bangladesh during 4–7 February 2007.

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shall include freedom to form and join associations and unions, including political parties and trade unions”. To understand the relationship between legal regime and NPOs in The Gambia, the laws related to NPOs are discussed below. 3.1   Laws Related to NPOs in the Gambia Given that individuals have the freedom to form voluntary associations, various types of associations and organizations involved with social welfare and developmental activities exist in the country. While organizations can operate without registering, they get the legal status of an entity by doing so. In The Gambia, however, NPOs can register only under the corporate law as non-profit organizations. Membership in some other public bodies earns them additional privileges and obligations. Thus, the status and stature of an organization depend on the type of registration with the government agencies and membership with various non-government organizations. The following is a brief description of the law and government agencies/bodies under which the NPOs in The Gambia can register. Companies Act 1955 NPOs register as “charitable” companies with the Registrar of Companies under the Department of Justice under the Companies Act of 1955. The process of registration as a charitable company is easy and simple. Other than having objective of public benefit (non-profit), the only requirement for registration is to have a constitution that indicates, among others, the governance structure of the proposed organization. Once deed stamps fee of GMD 500 and incorporation fee (stamp duty on capital) of GMD100 is paid, a non-profit company can be registered within a day.7 Registration as a charitable company gives the NPO a legal personality entitling it, among others, to own/dispose assets/properties and beneficial (tax-free) status. If a NPO is dissolved due to any reason, its assets can transferred to some other similar charitable organization after having fulfilled all obligations. A charitable company also can enjoy other benefits like excise free import of goods (by requesting the customs authority) and getting free land from the government to establish its premises. 7 The currency of The Gambia is the Gambian Dalasi (GMD) with the exchange rate 1USD = 31GMD (on 20 February 2012).

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Non-Government Organization Decree 1996, Decree No. 81 After registering as a charitable corporation, an organization can also register as a non-government organization (NGO) under jurisdiction of the Non-Government Organization Decree 1996, Decree No. 81. Registration of an NGO is done with the NGO Affairs Agency under the Department of State for Local Government, Lands and Religious Affairs is more stringent than that of a charitable company. Other than having operational requirements, the NPOs also have to meet certain governance and transparency requirements. To apply for NGO status, an organization must be registered as a non-profit company under the Companies Act. It is also required to be non-political having a mission of promoting well-being and socio-economic advancement of the Gambians. Furthermore, the organization should have a clearly delineated administrative system and having a minimum of seven board of directors. It should also have an account in the name of the organization and adopt an acceptable accounting/recording system that can be audited annually. The NPO should develop operational work plan along with a budget detailing the scope of activities and intervention. The organization is also required to be transparent and accountable to their donors, the government and the beneficiaries. Upon registering as a non-government organization, it is entitled to certain benefits and privileges. It enjoys tax and duty waiver on materials, motor vehicles and goods imported or acquired locally and income tax. Moreover, it enjoys certain other privileges that include special blue number plates on motor vehicles, assistance by the government against theft and fraud, etc. For foreign NGOs, the decree prescribes assistance for entry into the country, residence and registration for employment and provides for tax-free salaries and no customs duty on personal effects of expatriate staff. 3.2   Membership with Associations of Non-Government Organizations While laws related to NPOs are limited in The Gambia, some smaller NPOs do not register under these laws. Instead, they become members of associations of NPOs to gain quasi-legal status. There are two types of associations with which Islamic NPOs get registered in The Gambia. At a higher level, The Association of Non-Government Association (TANGO) represents all non-government and NPOs of the country. At a lower level, there are associations for Islamic NPOs only. While any

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Islamic NPO can be a member of The Gambia Supreme Islamic Council, only organizations involved with Islamic education become members of the General Secretariat for Islamic and Arabic Education in The Gambia. Some smaller NPOs in The Gambia that are not registered with the government as charitable companies acquire quasi-legal status by registering with the latter two organizations. The following provides a brief description of these bodies. The Association of Non-Government Association (TANGO) Founded in 1983, TANGO is an umbrella organization for national and international NGOs and NPOs operating in The Gambia. It acts as a consortium of NGOs, coordinating the efforts of its members. TANGO aims to support members in extending effective, relevant and sustainable services, maintaining a dynamic relationship with the government and developing internal communication and network among its members. Full membership requires a NPO to be legally registered both as a non-profit company and as a NGO, provision of information on organizational identity, constitution and by-laws, management and control, programme and project interventions, and financial management and control. NPOs that do not meet some of the criteria can get associate membership. With a secretariat and a 10 member board, TANGO provides a forum for NGOs to discuss issues of common interest and concern, provides technical assistance and information and training opportunities, maintains a database of the NGOs, links NGOs with potential donors and represents NGOs in government, regional and international forums. The Gambia Supreme Islamic Council The Supreme Islamic Council (SIC) was established in 1992 as an umbrella body for Islamic organizations and associations operating in the fields of propagation, education and social welfare. The objectives of the Council, among others, are to work for harmonization of Islamic societies, associations and organizations, teach Islam to the society, patronize Islamic educational institutions and preserve the religious and scientific heritage of Islam. The aims of the organization also include, among others, building the spirit of social security and solidarity with the community, protect the Muslim women gear and organize the energy of the youth to serve the interests of the community. To achieve its goals, the Council assists in establishing educational institutions, publishes books and periodicals on Islam and organizes various forums, seminars, conferences and training courses.

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The General Secretariat for Islamic and Arabic Education in the Gambia The General Secretariat (GS), an association of educational institutions providing Islamic and Arabic education, was established in 1996. Most of the schools providing Islamic studies and Arabic language are NPOs. Under a Memorandum of Understanding signed with the Department of Education, Government of The Gambia, the secretariat acts as a board of education for all these schools. It is responsible for providing standards and guidelines on the curriculum contents, conducting examinations, etc. Though the overall governance of the secretariat rests with the executive committee constituting of principals of member institutions, there are sub-committees for specific activities of the organization such as syllabus, examination, finance, etc.

4  Legal Regime of NPOs and Waqf in Bangladesh The constitution of Bangladesh provides every citizen right to “form associations or unions, subject to any reasonable restrictions imposed by law in the interests of morality or public order” (Article 38). Bangladesh has inherited a rich set of laws related to the NPOs from historical times. While the variation in laws gives NPOs options to choose appropriate format that suits their objectives, it is also likely to create confusion with regard to accountability, transparency and control. Khair and Khan (2004) identify two sets of laws concerning NPOs in Bangladesh. The first set of laws is related to formation and registration of NPOs, and the second are the laws related to regulation. While both sets of laws determine the legal/regulatory regime under which NPOs operate in Bangladesh, the laws of formation of NPOs are relevant for this paper and are discussed briefly below. 4.1   Laws of Formation of NPOs8 A brief description of different laws of formation of NPOs in Bangladesh is given below. The Societies Registration Act, 1860 Societies Registration Act of 1860, a remnant of the British colonial rule, is the most commonly used to establish a NPO. The Act outlines various 8 Most of the information on various laws in Bangladesh are taken form Khair and Khan (2004) and World Bank (2006, Chapter 4).

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aspects of formation, management and control of societies. Seven or more persons associated for some “literary, science, or charitable” purposes may apply to the Registrar of Joint Stock Companies, Ministry of Commerce with its memorandum of association and rules and regulations to form a society. Once it is inspected and cleared by the Registrar’s office, the society gains a legal status. Trusts Act 1882 Another law from the British period, the Trust Act of 1882 enables the establishment of charitable trusts. A trust deed identifies the assets to be transferred, the trustees, and its beneficiaries. According to the Act, trustees are obligated to manage the trust asset towards the fulfilment of the objectives identified in the deed and are liable for any breach. The trust law gives the donor or settlor of trust flexibility to determine the various aspects related to its operations and management. Issues like using a proper accounting system, using appropriate professional staff, maintaining periodical statements of account, etc. can be elaborated in a trust deed. A trust deed has to be registered with the Deed Registrar and the Sub-Registry’s Office. While the trustee becomes the legal owner and manages the trust, its status as a separate legal entity is not so obvious. Voluntary Social Welfare Agencies (Registration and Control) Ordinance 1961 A social welfare organization that depends on the donations of public or government aid is regarded as voluntary social welfare agencies. It may register with any office of the Ministry of Social Welfare under the Voluntary Social Welfare Agencies Ordinance 1961. As the social welfare department operates at local government level, it is easier for NPOs to get registered under this Ordinance. The registered organizations get legal status and become eligible for grants from the government and other sources including foreign ones. The Companies Act 1994 NPOs can register under the Companies Act 1994 as non-profit companies to undertake activities promoting useful activities like art, science, religion, etc. A Memorandum of Association and Articles of Association providing rules and regulations of the proposed company must be submitted to the Registrar of Joint Stock Companies with the Ministry of Commerce to register a non-profit company. As a corporate body, it

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enjoys the limited liability status and has to follow the rules and regulations of the act. The non-profit company has to fulfil the requirements of holding general meetings, periodic accounts, annual audit, etc. Unlike profit-seeking companies, however, it cannot distribute dividends. The Waqf Ordinance 19629 Any person (waqif) can dedicate his/her property as waqf by preparing a waqf deed that declares different features of the waqf. Among others, the waqf deed identifies the property, the beneficiaries and appointment of mutawalli who manages the property on behalf of the waqif. Under the Waqf Ordinance 1962, all awqaf properties are required to be enrolled with the office of the Administration of waqf. Upon enrolment, the Waqf administration Office takes the responsibility to oversee that the waqf property is being managed properly and the income used according to the waqf deed. The mutawalli of waqf is required to submit annual financial reports and pay the Waqf administration Office 5% of their income.

5  Laws and the Growth of Waqf Institutions Legal regimes in general and organizational laws in particular largely explain the trends in growth of different types of NPOs. Given the legal regimes under which waqf and other NPOs operate in The Gambia and Bangladesh, the two questions related to necessary and sufficient conditions of waqf law and its implications for the waqf can now be discussed. The answers to these questions depend on not only the menu of laws available, but also the legal asymmetries between the waqf and NPO laws. These specific issues and the role of laws on status of waqf institutions are discussed below. 5.1   Necessity of Waqf Law In countries with no specific waqf law, awqaf cannot be established legally. Under such a setting, the necessity of waqf laws will depend on the possibility of establishing waqf-type institutions under conventional NPO laws. The type of NPO laws that exist in the country and 9 The origin of the Waqf Ordinance 1962 was the Waqf Act of Bengal 1934, which was adopted for East Pakistan (now Bangladesh) in 1962.

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the flexibility of these laws to accommodate different organizational formats will determine the importance of waqf laws. In this regard, two conventional NPO laws from the countries examined (The Gambia and Bangladesh) are examined to explore the possibility of forming waqf-type organizations. Among different NPO formats discussed above, trust appears to be the closest to waqf conceptually.10 In case of Bangladesh, the Waqf Ordinance 1962 defines waqf as “permanent dedication by a person professing Islam of any movable or immovable property for any purpose recognized by Muslim law as pious, religious, or charitable,…” (Section 2.10) that can be created through deeds or instruments (Section 2.11). Similarly, under the Trust Law of 1882 of Bangladesh a trust can be created for a lawful purpose (Section 4) which requires a clear intention on part of the author declared in the trust deed or instrument. The trust deed specifies its purpose, beneficiaries and trust property to be transferred to the trustee. While the concept of waqf and trust is similar, there are some elements in the trust law that may not be compatible with the concept of waqf. Some of these issues can be resolved by carefully incorporating the desired features of a waqf in the trust deed. For example, under the law of Bangladesh, trust can be defunct or extinguished when its purpose is fulfilled or becomes unlawful, when the fulfilment becomes impossible by destruction of the property or otherwise or when it is revoked (Section 77). A trust can be revoked with the consent of all the beneficiaries of the trust (Section 78). The temporary nature of trust and the revocation right of beneficiaries may appear to contradict some principles of waqf. These issues can be resolved by framing the deed in a way that would make the features of a trust similar to that of waqf. For example, if the deed of a charitable trust identifies indefinite beneficiaries, it can exist in perpetuity. Whereas a trust deed can be framed in a way that can make it compatible with waqf, in some countries the possibility of creating a trust may not exist due to absence of trust laws. This holds true in countries having civil law frameworks and also those having relatively few NPO laws. For example, in The Gambia, a NPO can be only formed as charitable company established under the Companies Act. The companies act gives 10 The specific items in waqf and trust laws of Bangladesh are taken from Dhaka Law Reports (1998) and Ajad (2003), respectively.

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the NPOs flexibility in framing the articles of association that determines its objectives and operations. Thus, by preparing the articles of association appropriately, a company can be formed that has some of the features of a waqf. While some of the requirements in the company law can be easily adopted in the waqf-type institution, others may be more difficult to accommodate. For example, a company’s existence in perpetuity can be true for a waqf also. Furthermore, the company law requires a board to manage its affairs. This can be adopted too, even though traditionally waqf has had only one manager (or mutawalli). Having a group of people managing as Board of Mutawallis does not violate the basic principles of waqf. However, there are other notions in the company law that may be difficult to accommodate with the principles of waqf. For example, the concept of ownership of the assets of the corporation may deviate from that of a waqf. For example, the idea that waqf is a dedication of an asset for some specific purpose for life and, as such, cannot be sold may be difficult to uphold under the company act. The shareholders own the assets of a corporation which are used in ways decided by the management and law. While the articles of association can provide that upon dissolution of the company its assets would go to a charitable cause, this may not fulfil the concept of ownership in a waqf. For example, in case of bankruptcy or winding of the organization due to some reason, debtors will have the first claim on all assets of the charitable company. As a result, there is a possibility of loosing waqf assets and it is difficult to accord these assets the protection that the concept of waqf requires. The above discussions demonstrate that the growth of waqf sector in countries that do not have waqf law will depend on the menu of other NPO laws available and the flexibility of these laws to accommodate waqf-type entities. If supporting laws such as waqf or trust laws do not exist, growth of waqf-type of institutions will be hampered. In these situations, existence of waqf law becomes a necessary condition for the growth of the waqf sector. 5.2   Sufficiency of Waqf Law: Legal Asymmetry and Arbitrage Differences in the legal regime for waqf and different NPOs will determine the different incentives and affect the growth of the various types of organizations. Specifically, legal asymmetry can create incentives for legal arbitrage, whereby an organizational format with the least cost and

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burdens will be chosen.11 For example, if the waqf law is more stringent relative to other organizational laws, people will opt for other legal formats to establish organizations that are functionally equivalent to a waqf. Among others, issues like the extent of interference by the government in various matters of operations, the relative operational benefits and the flexibility in the laws in terms of enabling and promoting growth of different NPOs types will determine the choice of organizational format. While NPOs in Bangladesh can be registered as a society, social welfare organization and non-profit corporation, trust is closest to waqf conceptually. The laws of waqf and trust are examined to show legal asymmetry between the two and provide the implications of the differences in the choice of organizational formats. The first important difference between a waqf and a trust in Bangladesh is the level of control and regulation of the government over the former compared to the latter. This is reflected in the Waqf Ordinance 1962 itself, with its first 5 chapters (of a total of 12) devoted to the roles, powers, duties and regulatory aspects of the Office of the Waqf Administrator, the government body enrolling and regulating waqf institutions. The waqf ordinance requires all waqf properties to be enrolled with the Office of the Administrator (Section 47). After enrolment, each waqf is required to pay annually the Office of the Administrator 5% of its net income (Section 71). The Ordinance assigns many powers to the Administrator of waqf to oversee and interfere in the operations of waqf. While a mutawalli is appointed under the deed or instrument of the waqf to administer the waqf property (Section 2.6), the discretionary power of mutawalli can be revoked by the Administrator of waqf, if it is not exercised reasonably and in good faith (Section 68). The ordinance requires mutawallis to fulfil several requirements and follow a set of rules in managing the waqf. It limits actions that he can take and many actions require permission from the Administrator (Chapter 7). The mutawalli has to submit annual accounts (Section 52) and also provide all information related to any changes in the status of the waqf (Section 51) to the Administrator. Under certain conditions, the Administrator has the power to change the mutawalli (Section 32), 11 Enriques (2003, p. 4) defines regulatory arbitrage as “the action taken by market operators in selecting the best location for investment or economic activity depending on the local regulatory environment (or selecting the most advantageous law)”.

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transfer the waqf property (Section 33) and also can take over the waqf property (Section 34). A mutawalli can be fined if he fails to: maintain clear and accurate accounts; supply information or particulars as required by the administrator; allow inspection of waqf properties; deliver possession of any waqf property if ordered by the Administrator or the court; carry out directions of the Administrator; and pay annual contribution to Administrator (Section 61.1). In case of a trust, the trustee executes the trust by obeying the directions of the author of the trust and protecting the trust property (Section 13). A trustee is bound to keep accounts of the trust property and provide this information to the beneficiary whenever requested (Section 19). A trustee is bound to convert a perishable trust property that is of a wasting nature to a property of a permanent and immediately profitable character, unless the contrary is inferred in the instrument of the trust (Section 16). Where the trust is in money form, the trustee can invest the funds in promissory notes, debentures, stocks and other government securities (Section 20). Furthermore, a trustee can change investments from one type of securities to others at his discretion (Section 40). The government has no direct influence on the operations of a trust. A trustee, however, is liable to compensate the loss sustained when he commits a breach of trust (Section 23). A trustee can be discharged by means prescribed in the instrument of trust, extinction of the trust, completion of duties under the trust or by the court (Section 71). A civil court can discharge the trustee if it finds sufficient reason for doing so (Section 72). If the office of the trustee is vacated due to any reason (e.g., death or discharge), new trustees can be appointed by following means: nomination proposed by the instrument of the trust; the author of the trust (if alive); the surviving or continuous trustees; or the retiring trustees (with the consent of the court) (Section 73). When a trustee cannot be nominated by these means, the beneficiary may petition to the civil court to appoint a new trustee (Section 74). Some of the relative strengths/weaknesses of the waqf and trust laws on issues related to the establishment and regulation are identified in Table 2. The above discussions indicate that compared to waqf, the regulatory regime of trust is relatively lenient in Bangladesh. Trust remains in the private domain whereby a trustee is accountable to the beneficiary and liable for any losses due to breach of trust. Waqf law makes the mutawalli accountable to the Office of the Administrator and has invested a lot of power to the government body to closely oversee and interfere in

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Table 2  Asymmetry between trust and waqf laws Features

Trust

Waqf

Enrolment with government body Annual payment to government body Submission of accounts to government body Manager’s discretionary power restricted by law Manager can be discharged/appointed by government body Restrictions on activities of manager other than the deed Manager cannot upgrade/change asset for development (with prior permission)

No No No No No No No

Yes Yes Yes Yes Yes Yes Yes

the administration of waqf institutions. Other than the dominance of the government, there is an extra burden of 5% tax which waqf properties are required to pay that trusts do not have to pay. Furthermore, a trustee has more freedom to manage the trust than a mutawalli under the laws of the country. For example, a trustee has authority to convert an asset in order to either develop it or prevent it from getting lost. This cannot happen in case of a waqf without prior approval of the Administrator. Thus, legal asymmetry in the waqf and trust law can create legal arbitrage thereby creating incentives to choose other organizational formats instead of waqf. In conclusion, while a waqf law may be a necessary to establish a waqf legally, it by itself is not sufficient for the growth of the sector. What is required is an efficient waqf law that removes the legal impediments and keeps the costs similar to other NPO formats.

6  Legal Reforms for Growth of the Waqf Sector The discussions in the previous sections indicate that while waqf law may be necessary for the development of the sector, its mere existence may not ensure its growth. In order to identify the elements of a new waqf law that is conducive to the growth of the sector, it is necessary to understand the nature of activities and organizational architecture of modern NPOs and then devise flexible waqf laws that can accommodate the operational activities. This calls for enacting/revising waqf laws that are efficient and appropriate for contemporary times. While the scholars, jurists and lawmakers will ultimately provide the details of the new waqf law, some essential elements of this law are discussed below.

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Recent views of scholars and jurisprudential bodies indicate that there can be flexibility in the fiqh position related to waqf. As pointed above, this is confirmed by view of scholars such as Zarqa (1947) and also in the recent pronouncement of Islamic Fiqh Academy. Whereas the waqf deed will ultimately determine the nature and assets, governance structure and beneficiaries of the endowment, the waqf law will determine the opportunities and alternatives available to individuals to facilitate the growth of the waqf sector. While a complete code of waqf law requires careful study of the individual country needs and environment, which is beyond the scope of this paper, we outline some basic elements that must be present in an efficient and flexible waqf law.12 i. Efficient Waqf Law The sufficient condition for the growth of waqf is to have efficient laws that remove legal asymmetry. By lowering costs and burdens, the law will make establishing waqf institutions preferable to other NPOs. This calls for, among others, fewer restrictions in formation and operations of waqf and lesser government control. The waqf law should be flexible enough to accommodate the formation of both grant-making institutions and operational organizations producing goods and services. Laws can be made flexible by providing broad guidelines in the statute instead of detailed codes. This would give the waqf institutions the flexibility to adapt their organizational format to their needs. ii. Legal Status and Formation Many activities undertaken by contemporary NPOs would require them to have a legal personality, as they may have to buy property, sue, etc. in their normal lines of operations. Similarly, the management team (board of trustees/mutawallis) has to be protected by limited liability, except when there is a breach of entrusted fiduciary duties. Like the trust, however, waqf appears not to have a clear consensus with regard to its legal 12 In this regard, we use some of the relevant issues suggested in International Fellows in Philanthropy Program (IFPP) (2000). The document provides some basic elements of the positive legal environment for NPOs. International Fellows in Philanthropy Program (IFPP) issued a statement during the Sixteenth Annual Johns Hopkins International Fellows in Philanthropy Conference held in Nairobi, Kenya in July 2004. The conference was attended by over 100 civil society activists and experts form more than 30 countries.

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identity and does not explicitly take the form of organizations. The waqf law should clearly endorse the status of waqf, as legal entity as this is required for the development of waqf based organizations. Granting a legal personality to waqf does not contradict of the rules of Shariah. Recently, some scholars have identified the concept of legal entity in the classical fiqh in support of the entity of a corporation. For example, Chapra (1985) maintains that the concept of a separate legal entity does not appear to contradict any principles of Islam as institutions like waqf and baitul-mal have similar legal personalities.13 To obtain the status of a legal entity along with limited liability, waqf and other NPOs need to register with some public body. Registration of waqf should be done by some independent authority(ies) that is not bound by the policies of particular governments. The objective of registration would not only provide the legal personality status, but also improve public confidence. Registration procedures should be uniform and preferably with one competent authority. Like other NPOs, registered waqf should be required to present its deed specifying governance structures and the responsible officials. Information on registered awqaf should be stored by the registration authority, making it publicly available. iii. Organizational Governance While traditionally waqf has been governed by a single mutawalli, it is more appropriate to have a board of mutawallis when an organization is established by more than one person or bodies. The law should give opportunities for collective governance structures in the form of Board of Mutawallis. This may be required as there is a feeling that too much power in the hands of a single mutawalli increases the possibilities of misappropriation. The law should not impose any restrictions on the management of waqf to introduce policies and instruments that would enhance the value of the waqf after taking due risk management measures.14

13 Usmani (1999, p. 228) identifies another case that can be considered as an example of legal identify in classical fiqh. He indicates that the assets of a deceased person become a legal entity by itself before it is distributed to those who are entitled. Before distribution of the assets, the heirs or a nominated executor will manage the distribution of the assets. He argues that the assets of a deceased person can be considered similar to the legal entity of a corporation. 14 For example, the Board of Mutawallis should be able to issue waqf certificates for people to contribute to the corpus of the waqf.

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iv. Role of Government and Regulation While it is understandable that governments stepped in to oversee awqaf properties to protect these from corrupt mutawallis, the restrictive waqf laws that give too much power and control to the government can hamper the growth of these institutions. Waqf started as private sector social institution and should remain so. Like the trust, there should be a mechanism that would ensure that the operations of the waqf should fulfil its social requirements without the dominance of government in these institutions. One way in which this can be done is to have governance structures of boards that are accountable to, among others, the beneficiaries. Another option is to have private sector waqf protectors who ensure that endowment is protected and the operations of the waqf are conducted according to the deed.15 The law should encourage the waqf to be transparent in their operations. The public regulatory authorities should require waqf institutions to provide regular reports. Reporting requirements should not be unduly burdensome and be harmonized with other similar organizations. The public body should receive and store the required reports and make these available and accessible to the public. Though the paper has focused on organizational laws, tax laws are also important for the growth of waqf institutions. The tax laws of a country will determine the tax privileges that different kinds of NPOs get. Tax codes should treat all NPOs equally. Ideally, income of NPOs involved in providing public benefit services should be eligible for different types of tax relief. Similarly, charitable contributions made to awqaf involved with philanthropic activities should be eligible for deductions from income taxes.

7  Conclusion The overall legal regime and specific laws influence the types and operations of organizations. This paper examines the legal environment under which Islamic NPOs operate in two countries, The Gambia and Bangladesh. While in The Gambia a waqf cannot be established legally 15 There has been an emergence of trust protector’s office in Western countries to increase the donor’s control on the trustee for longer periods of time. For a discussion on trust protectors, see Alexander (2006).

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due to the absence of a waqf law, waqf-type institutions can be established using existing laws. Thus, a waqf law is a necessary condition for establishing a waqf legally during contemporary times. However, the example from Bangladesh shows that a waqf law by itself is not a sufficient condition for establishing waqf. Legal asymmetry can result in legal arbitrage whereby organizational format with the lowest costs and burden will be chosen. Even though a waqf law exists in Bangladesh, contemporary Islamic NPOs may opt for organizational formats other than waqf due to additional costs and government interference. In particular, if legal and regulatory regimes increase the transaction costs of waqf relative to other NPOs, people will opt for establishing waqf-type institutions using other conventional organizational formats instead of the waqf format to lower legal/regulatory/tax costs. The paper maintains that efficient waqf laws are required for the growth of the sector. It provides some broad principles of an efficient waqf law that can facilitate the growth of the sector. The law should not only be efficient so that waqf law is able to compete with other NPO laws, but also should be flexible enough to adapt to the needs of the voluntary sector in contemporary times. In other words, the waqf law should remove the legal asymmetries with other NPO laws and also be able to fulfil the operational needs of modern NPOs. Although the fiqh of waqf appears to be flexible and potentially accommodate these requirements, the national laws and statutes related to waqf have not adjusted accordingly. The growth of awqaf sector will ultimately depend on how the waqf laws and statutes in different countries can be made more efficient and flexible to meet the requirements of waqf during contemporary times.

References Ahmed, H. (2004). Role of Zakah and Awqaf in Poverty Alleviation (Occasional Paper No. 8), Jeddah: Islamic Research and Training Institute, Islamic Development Bank. Ajad, A. K. (2003). The Trust Act, 1882. Dhaka: New Owasi Book Corporation. Alexander, G. S. (2006). Trust Protectors: Who Will Watch the Watchmen? Cardozo Law Review, 27, 2807–2812. Cattan, H. (1955). The Law of Waqf. In M. Khadduri & H. J. Leibesny (Eds.), Law in the Middle East: Origin and Development of Islamic Law. Washington, DC: Middle East Institute.

174  H. AHMED Chapra, M. U. (1985). Towards a Just Monetary System. Leicester: The Islamic Foundation. Dhaka Law Reports. (1998). The Waqf Ordinance (I of 1962). Dhaka: Al Afsar Press. Edelman, L. B., & Suchman, M. C. (1997). The Legal Environments of Organizations. Annual Review of Sociology, 23, 479–515. Enriques, L. (2003). Silence Is Golden: The European Company Statute as a Catalyst for Company Law Arbitrage (Working Paper No. 07/2003, ECGI Working Paper Series in Law). European Corporate Governance Institute. International Fellows in Philanthropy Program (IFPP). (2000). Toward an Enabling Legal Environment for Civil Society. Baltimore: Institute for Policy Studies, Center for Civil Society Studies, Johns Hopkins University. Khair, S., & Khan, S. R. (2004). Philanthropy and Law in Bangladesh. In Asia Pacific Philanthropy Consortium, Philanthropy and Law in South Asia. Quezin City, Philippines. Milgrom, P., & Roberts, J. (1992). Economics, Organizations and Management. Upper Saddle River, NJ: Prentice Hall. North, D. C. (1990). Institutions, Institutional Change and Economic Performance. New York: Cambridge University Press. Salamon, L. M., & Anheier, H. K. (1999). The Emerging Sector Revisited: A Summary. Baltimore: Center for Civil Societies Studies, The Johns Hopkins University. Salamon, L. M., Sokolowski, S. W., & Anheier, H. K. (2000). Social Origins of Civil Society: An Overview (Working Papers of the Johns Hopkins Comparative Nonprofit Sector Project No. 38). Baltimore: The Johns Hopkins Center for Civil Societies Studies. Usmani, M. T. (1999). An Introduction to Islamic Finance. Karachi: Idaratul Maarif. World Bank. (2006). Economics and Governance of Nongovernmental Organizations in Bangladesh (Report No. 35861-BD). Washington, DC: The World Bank. Zarqa, S. M. (1947). Ahkam al Waqf. Damascus: University of Damascus Press (in Arabic).

PART III

Other Issues in Waqf Management Strategies

CHAPTER 9

Management of Mudaraba Waqf Cash Deposit in Islami Bank Bangladesh Limited: An Evaluation Waqf Collection and Management Strategies Mahmood Ahmed

1  Introduction Cash waqf is a trust fund, established with money, to support services to mankind, in the name of Allah (The Almighty), for all sorts of pious and social purposes inclusive for the investment objectives. It is recognized as one of the most effective mechanisms in realizing the socio-economic and welfare objectives of the institution of waqf. As a pioneer of welfare banking in Bangladesh, Islami Bank Bangladesh Limited (IBBL) introduced Mudaraba Waqf Cash Deposit (MWCD) in the year 2004 with specified options of purposes. There is a list of purposes, which are available to the waqif. The list of purposes includes four areas like family rehabilitation; education and culture; health and sanitation; and social M. Ahmed (*)  Islamic Bank Training and Research Academy, Islamic Bank BD Ltd, Dhaka, Bangladesh e-mail: [email protected] © The Author(s) 2019 K. M. Ali et al. (eds.), Revitalization of Waqf for Socio-Economic Development, Volume II, https://doi.org/10.1007/978-3-030-18449-0_9

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utility service (IBBL 2004, 836). Besides, there are 7 objectives of the MWCD. The waqif has a choice to create cash waqf with a lump sum amount given at once or on instalment basis where he/she may start with a minimum deposit of Tk10,000.00 (taka ten thousand) only, and the subsequent deposit shall also be made in thousand or in multiple of thousand taka. In case of instalment basis cash waqf, advance payment for any number of instalments will be received by the bank. In the event that the waqif fails to continue depositing the instalment(s), the amount accumulated so far throughout the period shall be counted for profit to be given to that account. Next year, the waqif will get the opportunity to deposit his/her instalment(s) again. Mentionable that, one particular waqif will not be entitled to repeat non-depositing of instalment(s) more than five times. Again, Sect. 2 of the rules states that the waqf amount may not remain intact as the fund is operated as per Mudarabah principle. As per the principle, if any loss is incurred in course of business the loss is to be realized by deduction of the MWCD. But the waqf asset must have perpetual entity ([email protected]). Besides, it was assumed that the MWCD product has a bright prospect in Bangladesh where 90% of the people are Muslim. Therefore, an evaluation of the growth structure and performance of the MWCD of IBBL may be contributory to the development of the product. 1.1   Literature Review Islam, Mohammad Monirul (2015) explained the concept of cash waqf and its implementation throughout the world. Since its implementation during the Ottoman Empire in the early fifteenth century, cash waqf has been debated and discussed due to its concept, which is unlike other endowment investments. A variety of cash waqf or liquid assets may be selected as an ideal financial mechanism. The cash waqf has encouraged all levels of people to participate and has been a successful practice throughout the Muslim world and even in some non-Muslim countries. [email protected] found that the management of cash waqf has a unique characteristic that conceptually is different from the management of foundation, charities or donation fund in Western Perspective, i.e. Ford, Rockfeller, Carnegie, British Trust, etc. Waqf has a principle of perpetuity that makes it differ from a foundation, charity or ordinary donation funds as widely practised in western countries.

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Perpetuity principle means that the principle of waqf should be preserved, but its benefit is available for repeating extraction whether for religious or philanthropic and righteousness purposes. Perpetuity in waqf means that once a property is devoted as waqf, it remains so that until the “Day of Judgment” and no one can change it later on. Islam, Mohammad Monirul (2015) found that the cash waqf has the potential to improve the domestic economic growth and plays a vital role in the socio-economic development by allowing the SMEs to have access to the financial services. In fact, the mechanism of cash waqf even goes further beyond expectation by providing some interest-free loan (qarde-hasan) to the SMEs through a safety mechanism discussed in the paper based on trusteeship model, equalization of profit reserve and the surplus fund of the cash waqf. The scope of cash waqf channelled to develop the SMEs has very wide business concept and scope which include the most active segments in the market such as banking, finance, takaful and capital market. Review of literature shows that no study was conducted ever before like this one. So, the study shall contribute a new knowledge in the literature of cash waqf management. 1.2   Data and Method The study is a library research work. A good number of literatures were reviewed to design and complete it. Time series data of the IBBL was used in the study. Data of 12 years (2005–2016) was collected from different issues of the annual report of the bank. Data was presented in tables and graphical charts showing trends. Trends of the MWCD and profit on it were analysed. The paper has been divided into three sections. After giving introduction in Sect. 1, Sect. 2 evaluates the growth structure and performance of the MWCD of IBBL. It also finds some issues for diversification of the product. Section 3 gives suggestions, and Sect. 4 draws conclusion.

2   Analysis and Findings It is observed from Table 1 that since inception, the continuous growth of MWCD is 300% in an average. It indicates that the MCWD is a popular deposit product. To make the special deposit products of the

180  M. AHMED Table 1  Growth of MWCD of IBBL since inception

Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Deposit amount (BDT in million) 9 51 80 108 160 204 261 367 436 533 634 749

Growth rate (%) 466.7 788.9 1100.0 1677.8 2166.7 2800.0 3977.8 4744.4 5822.2 6944.4 8222.2

Source IBBL: Annual Report, different issues

bank more popular, IBBL observed a 90 days’ campaigning programme in the year 2012. All Employees of the bank were instructed to open Waqf Account during the programme. As a result, the growth of the MWCD increased by BDT100 million plus per year. This growth structure indicates a good performance of the professional responsibility of the management of IBBL. But to give a “big push” to break the circle of BDT100 million growths, again a campaigning programme may be observed. Although the growth rate of MWCD is steady and continuous, Table 2 shows a continuous negative trend of profit on MWCD during the period 2007–2010. But the more the waqf investment returns, the more Mawquf Alaih benefit from the waqf deposit. Therefore, the profit trend was managed to turn to positive end in the year 2011 and reached at the pick in the campaign year of 2012, showing the highest rate of profit, which was 12%. It shows, again, the good performance of the bank. But, later on, the rate of profit was declining and reached at the lowest 8.6% in the last year. Therefore, the management of the bank may be concerned to it. Again, the holy Quran encourages providing qard-e-hasan (a benevolent loan) to the needy person (Al-Quran 2:245 and 73:20). Obaidullah (2005) mentioned that a borrower in need of a specific amount of fund, borrows the same from a lender as qard-e-hasan, with or without a clear stipulation, regarding the maturity date. The loan is

9  MANAGEMENT OF MUDARABA WAQF CASH DEPOSIT … 

Table 2  Growth of profit rate on MWCD of IBBL since inception

Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

MWCD profit rate in % 11.2 11.7 10.8 10.4 10.1 9.6 10.1 12.0 11.3 10.6 9.3 8.6

181

Growth rate (%)  – 4.2 –4.0 –7.8 –10.1 –14.4 –10.3 6.7 1.0 –5.3 –16.8 –23.6

Source IBBL: Annual Report, different issues

repaid on maturity without an increment or interest. When no maturity is stipulated, the loan is repaid when asked by the lender, again without any increment. The early loan schemes introduced by many interest-free credit societies, when the modern Islamic bank was yet to come into existence, were based on this concept. The lender is allowed to ask for an asset as collateral that is governed by the fiqh rules of ai-rihn. The lender is allowed to charge the borrower the actual administrative expenses incurred in operation of the mechanism. IBBL also practises quard, only for financing tube-well and sanitary latrine of the client of Rural Development Scheme (RDS), an Islamic microfinance programme (IBBL 2016, p. 96). But (Islam 2015) suggested that to activate the business sector and improve the performance of the enterprises, quard may be used. It seems therefore due to high risk of capital and low return of the Small and Medium Enterprise (SME) and Enterprise under Women Entrepreneurship Development programme (EWEDP), quard facility may be used for financing these sectors, which are also the most priority sector of bank financing. These sectors are contributory to micro-level development (Rezvi 2017) mentioned that micro-level development is more effective and efficient rather than macro-level development for breaking the vicious circle of poverty and help to build new Bangladesh without poverty. Financing the SME and EWEDP from quard fund is cost-effective and growthled (Islam 2015). So, IBBL can build a cost-free quard fund from the pool of profit of the MWCD. It will increase the deposit of the bank.

182  M. AHMED

The 6th rule of the Opening and Operation of the MWCD Account of the IBBL provided “freedom of choice” to the waqif to choose the purposes permitted by the Islamic Shariah. So, consent can be obtained from the waqif that a portion of the profit will be deposited in the quard fund for financing the SME and EWEDP. Khademolhoseini ([email protected]) mentioned that the ownership of waqf property lies outside the waqif (Person who perform waqf) or Mutawalli (Person/organization who is entrusted to manage) but it belongs to Allah. So the waqf property should be held, maintained, preserved and prohibited from disposing. He concluded that cash waqf is justified with Islamic Jurisprudence, providing, that, while it is making profit and earning income, it remains perpetual. But Sect. 2 of the rules of MWCD of the bank, mentioned earlier, does not match with it. It was learnt from the branches of the bank that there are some incidence of transfer of the MWCD to real estate waqf like mosque, madrasa, Eidgah, etc. It reduced both deposit and income of the bank. As per the rules of profit-sharing, the bank gets the share of 35% of the income from investment of MWCD or the percentage the bank decides from time to time derived from the deployment of all categories of Mudarabah fund in the investment during any accounting year according to their proportion applying the highest rate of weightage (1.35 at percentage). The proposed quard fund may help the bank to retain the MWCD as the perpetual entity. But the question is how? The proposed mechanism is as follows: The non-performing loan (NPL), shall be realized, at first, from the quard account to recover the loss of MWCD. Then, after realization of the same from the written-off account, the quard account shall be adjusted. Thus, the quard account shall be the buffer account between MWCD account and written-off account. The mechanism shall help to remove, to some extent, the current practice of provisioning against the NPL. Islami bank as a specialized bank may enjoy this facility, if allowed by the central bank. In the mechanism, the money movement shall be as follows: 1.  A portion of profit from MWCD account shall go to quard account, then from quard account to MCWD account against the NPL account. 2. From written-off account to quard account.

9  MANAGEMENT OF MUDARABA WAQF CASH DEPOSIT … 

Fig. 1  Money movements (Arrow indicates flow of funds)

183

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The model is as follows (Fig. 1). The basis of the mechanism is: (i) there is no time limit for realization of both quard money and written-of money; and (ii) no excess can be claimed against both of it. Nowadays, cash waqf has become increasingly well-known particularly because of its flexibility which allows distribution of the waqf’s potential benefit to the poor anywhere (Mannan 1999). Therefore, the following suggestions were made for further development of the MWCD.

3  Suggestion 1. To open a quard account parallel to written-off account of the bank. 2. To transfer a portion of profit of MWCD account, with the consent of the waqif to the quard account. 3. To transfer the money equivalent to loss, if any, from the quard account to the MWCD account. 4. To return the money from the written-off account, upon realization from the defaulter client, to the quard account.

184  M. AHMED

5. To replace the sentence, “The Waqf amount may not remain intact as the fund is operated as per Mudarabah principle” mentioned in Sect. 2 of profit-sharing and weightage of the rules of MWCD of IBBL, with the sentence: “The waqf amount shall remain intact although the fund is operated as per Mudarabah principle”. 6. Like before, a campaign programme may be observed.

4  Conclusion Various models and management structures have been justified to commercialize the cash waqf in the past (Islam 2015). The proposed mechanism shall ensure the perpetual entity of the MWCD. It will also remove chance of reduction of the MWCD, if any. So, transfer of MWCD may be stopped. Moreover, it will improve the management efficiency of IBBL (Figs. 2 and 3).

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Fig. 2  Trend of growth of IBBL’s MWCD (Source Table 1)

9  MANAGEMENT OF MUDARABA WAQF CASH DEPOSIT … 

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Fig. 3  Trend of growth of IBBL’s MWCD profit rate (Source Table 2)

Activity 1. Client approaches Bank for loan of L and offers collateral X whose market value exceeds L by the specified margin; 2. Bank lends an amount L to Client now; and 3. Client repays L plus expenses to Bank; in part or in full over future.

References Islam, M. M. (2015). Cash waqf: An Innovative Instrument for Development of Ummah. Banglavision, 15(1), 1–15. ISSN: 2079-567X. Islami Bank Bangladesh Limited (IBBL). (2004, June 1). Instruction Circular No. BCD/836. Islami Bank Bangladesh Limited. (2005, 2006, 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016). Annual Report (pp. 40, 63, 71, 103, 87, 68, 73, 95, 152, 175, 217, 66, 64, 81).

186  M. AHMED Khademolsoseini, M. ([email protected]). Cash waqf a New Financial Instrument for Financial Issues: An Analysis for Structure and Islamic Justification of Its Commercialization, pp. 1–15. Mannan, M. A. (1999). Cash waqf Certificate—An Innovation in Islamic Financial Instrument: Global Opportunities for Developing Social Capital Market in the 21st Century Voluntry Sector Banking. Presentation at the Third Harvard University Forum on Islamic Finance, October 1, 1999. Obaidullah, M. (2005). Islamic Financial Services (pp. 35–65). Jeddah: King Abdul Aziz University. Rezvi. (2017, April 30). Minhazur Rahman, Poverty Situation in Bangladesh. The Daily Sun. http://www.islamibankbd.com/prodServices/prodServWAQF.php. http://www.researchgate.net/publication/25781181-Cash-WAQF-Models-for-Financing-in-Education. http://www.bankislam.com.my.

CHAPTER 10

Cash Waqf and Preferred Method of Payment: Case of Malaysia Using an AHP Approach Waqf Collection and Management Strategies Mohamad Isa Abd Jalil, Anwar Allah Pitchay and Sofri Yahya

1  Introduction Classic Islamic scholars interpreted waqf as endowments, largely valuable assets that could be perpetually utilized (Othman 1982). Ibn Manzur (1990) claimed “Waqf” originated from the Arabic words Waqafa, alhabs or al-man which were translated to mean stop, to hold or resist, respectively. However, in the text of Shariah, the intimate terms for waqf are Sadaqah and Habs (Mohammad 2004). Most legal Islamic scholars frequently define waqf as “holding capital and take advantage of its benefits” (Laldin et al. 2008). As time evolved and financial tools become M. I. A. Jalil (*)  Labuan Faculty of International Finance, Universiti Malaysia Sabah, Labuan, Malaysia e-mail: [email protected] © The Author(s) 2019 K. M. Ali et al. (eds.), Revitalization of Waqf for Socio-Economic Development, Volume II, https://doi.org/10.1007/978-3-030-18449-0_10

187

188  M. I. A. JALIL ET AL.

complex, the definition and concept of waqf were required to be updated without deviation from the teachings of Al-Quran and Hadith. Monzer Kahf (1998) redefined waqf as holding an asset to avoid its usurpation for the aim of employing its value continuously for the righteous and charitable purposes. Recently, Malaysian Accounting Standards Board (2014) defined waqf as the commitment of a specified asset (mawquf) by a settlor (waqif) to the administration of a mutawalli through a legal instrument (waqfiyyah) such that the income or value derived from that asset benefits a stated beneficiary (mawquf alaih) or is utilized for an affirmed purpose. Aligned with previous clarification and permission to use cash waqf in Malaysia, this study will use Mohammad et al. (2005) redefinition of waqf as the dedication of valuable assets perpetually where the value is subsequently amortized, and its profits and proceeds are later expanded on the welfare of stated beneficiaries. As claimed by Mahamood (2006), the waqf had been put into practice by Muslims in Malaysia since the beginning of Islam there. Although the official trustee of waqf in Malaysia is solely the State Islamic Religious Council (SIRC), waqf is assured under the State List of the Federal Constitution 1957. This action provided every state with their own specific rules and regulations. The Malaysian federal government had endeavoured to coordinate with each state by launching Jabatan Wakaf, Zakat dan Haji (JAWHAR) in 2004 (Jabatan Arkib Negara 2012). Under the cooperation among SIRC, Jabatan Agama Islam Malaysia (JAKIM), and JAWHAR, a complete set of waqf land data for every state was recorded. With reference to the Master Plan Study for the Transformation of Waqf Property Development in Malaysia by YWM (2016), it shows the current statistics on waqf land in Malaysia (revised up to 15 November 2013) where the total waqf land area is 30,888.89 acres equivalent to 14,356 lots.

A. A. Pitchay  School of Management, Universiti Sains Malaysia, Penang, Malaysia e-mail: [email protected] S. Yahya  Graduate School of Business, Universiti Sains Malaysia, Penang, Malaysia e-mail: [email protected]

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189

The contributions and the roles of waqf to the Muslim Ummah are undeniable. From the time of Prophet Muhammad (p.b.u.h), through the period of Khalifah ar-Rasyidin, and to this day, waqf has provided humanitarian aid across borders of religion, race, age and geography. Among the things that received positive effects from waqf were Islamic religion affairs and sustainability, poverty relief, education development, healthcare enhancement, national debt reduction, and the promotion of fiscal development. For this reason, the sustainability and continuity of waqf must be maintained as well as possible. According to Taylor and Anderson (2008), the fundraisers (in this case, the waqf trustees) must understand the behaviour and the trend of donors as they are the primary sources of charity (waqf institution). Therefore, the main objective of this research was to examine the priority of payment method among cash waqf donors in Malaysia. The significance of this study could be discerned from theoretical and practical perspectives. From a theoretical perspective, this study was expected to fill the knowledge gap in the literature of waqf studies and an analytic hierarchy process methodology. There was still no study on the priority of payment methods among waqf donors, or even general donors. From a practical perspective, it was anticipated that this research would help waqf trustee to understand the behaviour of cash waqf donors and then fulfil their needs.

2  Problem Statement Despite the success story and contribution of waqf globally and specifically in Malaysia, the issues of the insufficient funding to develop idle waqf lands are still one of the primary subjects in literature (see Saifuddin et al. 2014). Mohd Ali et al. (2015) reported that there are 11,091.82 hectares of waqf lands of which 92.8% are still undeveloped in Malaysia. However, there are numerous efforts by the authority and proposals by academic scholars had been forwarded to reduce the problem of idle waqf lands. One way to handle waqf lands in Malaysia was to introduce a cash waqf scheme (JAKIM 1982). States Islamic Religious Council (SIRC) had appointed mutawalli (sole trustee) to collect, manage and distribute cash waqf to develop the available waqf lands. Nevertheless, the collection of cash waqf is still below the satisfactory level according to Pitchay (2015). The cash waqf collection comparison between states showed imbalance and fluctuation. Some states such as

190  M. I. A. JALIL ET AL.

Selangor, Penang and Johor demonstrated high volume of cash waqf collection, while others such as Melaka, Kedah and Perlis did not fare too well. Previous literature had pointed out several factors that influenced donors to stay committed to their donation. Sargeant and Woodliffe (2005) found that payment methods significantly persuaded donors to retain their contribution. The researcher noticed that there was still no study covering payment methods and cash waqf in Malaysia. Therefore, this paper tried to suggest a solution to increase cash waqf collection by proposed payment method which should be prioritized by SIRC based on the AHP empirical study.

3  Literature Review 3.1   Cash Waqf Regardless of the fact that cash waqf started in Mesopotamia, Greece and the Roman Empire, it only received recognition during the Ottoman Empire in Egypt and was eventually introduced in Malaysia in 1959 under the regulations of Waqf Control, Perak Islamic State Religious Council (Mahamood 2007). Cash waqf was critical during that period because the funds received were used to support Islamic expansion in Europe (Çizakça 2004). The majority of Islamic scholars did not consent to waqf collection in the form of cash. However, a small number of Islamic scholars approved cash waqf such as Imam Zufar and Imam Ibn Taymiyyah due to Maslahah (public interest), an opinion agreed upon by several contemporary scholars. The definition of cash waqf differs from waqf, and this study uses the definition of cash waqf from Saifuddin et al. (2014), which is the allocation of some money from one’s possessions; establishing a waqf based on that amount and offering it to the general benefit of people or allocating it to some sectors of the community. The application of cash waqf differs from other types of waqf. It is not permissible to lower the value of waqf assets since it is prohibited to use the property carelessly or leave them to be idle. Cash waqf can be transformed into capital and then invested, where the gains obtained would then be dispersed among the impoverished. Therefore, waqf is a collective and ever-increasing investment (Sanusi and Shafiai 2015) and this is consistent with the opinion of Munzer Kahf (1999), where

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a waqf asset may not be sold or disposed of in any form. It should be maintained perpetually, and any new waqf would be added to the existing waqf, implying that waqf assets increased rather than decreased. According to Ismail Abdel Mohsin (2013), there are six types of cash waqf schemes which are compulsory cash waqf scheme, corporate waqf scheme, co-operative waqf scheme, deposit cash waqf scheme, deposit product waqf scheme and waqf-shares scheme. Currently, the application of cash waqf in Malaysia has improved further through its collaboration with commercial banks such as Bank Muamalat Malaysia Berhad and corporate bodies such as JCorp. Cash waqf has a number of benefits over fixed asset waqf. Cash waqf can be a valuable tool for attracting more funds and generating liquidity. It may be the best tool in Islamic trusts to alleviate poverty, particularly if these trusts can effectively manage the funds (Sadeq 2002; Mohammad 2015). Cash waqf could also generate more economic stimulus and social improvement, and its investment could be diversified to produce a greater revenue generation opportunities and increase chances for growth (Ammar 2006). As pointed out earlier by Çizakça (2000), more than a quarter of the cash waqf founded in the city of Bursa during the reign of the Ottoman was reserved for more than a century and 81% of these existing waqf owed their resilience to either reinvestment of profit or receipt of more donations from various other smaller cash waqf. Çizakça (1998) posited that the yields from the cash waqf were in turn invested in public amenities ranging from education to food support for the deprived. Despite these benefits, cash waqf in Malaysia remains plagued by challenges, issues and the need for more improvement. According to some studies (Harun et al. 2012), several problems are associated with the effectiveness of Waqf administration such as the absence of qualified officers, limited expertise in database management systems, insufficient documentation, lengthy duration of estate registration and irregularities in waqf rules and regulations. Furthermore, cash waqf development in Malaysia is still at the formative stage (Osman et al. 2012) making it quite unpopular (Mahamood 2007). Many Muslims still think that waqf only entails fixed assets such as lands and buildings. Furthermore, there remains the issue of unsatisfactory cash waqf collection. The general purpose cash waqf schemes (Waqf al-Am) have not generated adequate funds to embark on more effective programmes (Alias and Diaw 2011). Therefore, Mokhtar et al. (2015) suggested the need to adhere to the

192  M. I. A. JALIL ET AL.

demands of stakeholders and recommended that the banks be mindful of their limitations as they may weaken customers’ trust in the cash waqf scheme. 3.2   Payment Methods Sargeant and Woodliffe (2005) defined payment methods as the type of payment employed by donors and identified it as a precursor of passive commitment. They also discovered that respondents feel that the availability of alternatives is a key factor that drives their level of commitment to an organization. The level of commitment may differ by nature of the contractual agreements that govern the relationship in the commercial sector. Commitment might vary depending on whether a contributor had chosen to give only a series of “cash” gifts, or decided to provide a regular gift through a direct debit or standing order (Sargeant and Jay 2011). Sargeant and Jay (2011) pointed out that from the donors’ perspective, paperless direct debit and direct debit reduce the number of stages and time involved in making a regular gift commitment. The general public has witnessed the notable transformation in the approaches taken by individuals to organize themselves and connect with each other. The advances in Internet connection significantly altered the way humans conduct daily affairs, including business dealings and money transfers (Boersma and Burgers 2013). These changes will continue with technological development through time. All parties including donation and charities, conventional or Islamic have witnessed the spread of this trend. This trend has also affected the method of payment among consumers and donors. The previous empirical research shows that in the case of consumer study, consumers do have different preferences on payment methods by regions. According to First Data and Market Strategies International (2011), consumers in Germany, Middle East and Poland prefer cash method while Australian consumers prefer credit cards and UK consumers prefer debit cards. Moreover, empirical study also shows that the consumer preferences of payment methods change over time. For instance, Foster et al. (2013) exhibit the increase of use in debit cards from only 10% in 1992 to 80% in 2010. Statistics by European Central Bank (2012) showed that the use of cheques declined while the use of card payment increased from 2000 to 2011.

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However, studies on the types of payment used or preferred by customers, particularly donors are too insufficient. The literature from some organizational reports exceeded journal articles. Past studies had focused on types of payments by retail customers (Angrisani et al. 2012, 2013; Foster et al. 2013; National Automated Clearing House Association 2000; Wright 2002), bank payments (Schreft 2006) and international payments (First Data and Market Strategies International 2011; Sirpal 2009). Cash payments by consumers, which had increased sharply in 2009, further increased by another 3% in 2010. Consumers’ credit card payments arose by 15%, reversing more than half from the 2009 decline, but the steady downward trend in paper check payments by consumers continued. Debit cards and cash advanced to comprise the two major shares of consumer payments, and end-user implementation of all types of prepaid cards increased remarkably (38.2%) in 2010. Mobile banking and mobile payments by consumers continued to show moderate increases through the end of 2010, in line with early stages of technology adoption (Foster et al. 2013). From the charities perspective, only two reports are available on types of payment utilized by donors. Blackbaud (2012) carried out a general survey in the UK, USA and Australia and discovered donors from the UK and Australia preferred cash as a method of payment while US donors preferred the cheque. Text messages or SMS was found to be the least preferred mode of payment in all three countries, while credit or debit card was the most selected method after cash. However, in 2013 Blackbaud reported a different position. The study analysed 17 types of contribution channels: check out donations, online donation, purchase of proceeds, honour/tribute gift, pledge, street canvassing, mailed check/credit card, email, third-party vendor, door to door, phone, mobile text, will/planned gift radio/ tv, social networking site online ad, and stocks, bonds, property. The study found that the American donors from Gen X, Gen Y and Boomers preferred to check out donations while mature donors preferred credit cards. Studies have also focused on the reasons customers or donors preferred a particular method of payment. For example, Galushkin et al. studied the determinants of using a payment card for commercial consumers, while Borzekowski et al. (2008) carried a research on the use of debit cards for shopping. Crane et al. (2005) studied the motives that drive donors to use gift cards as a payment method. In the field of

194  M. I. A. JALIL ET AL. Table 1  Type of cash waqf payment method offered at SIRC Malaysia (2015) Direct debit YWMa Johor N9 Selangor Melaka Pahang Terengganu Kelantan Perak Penang Kedah Perlis

Check

Postal order

Online

Payroll deduction

Cash

✓ ✓

✓ ✓ ✓ ✓

✓ ✓ ✓ ✓

✓ ✓

✓ ✓

✓

✓

✓

✓

✓ ✓ ✓

✓ ✓ ✓ ✓

✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

✓ ✓ ✓

✓ ✓ ✓

Kiosk

SMS

✓

✓

✓

Source Various state islamic religious council website aYayasan Wakaf Malaysia

waqf research, Pitchay et al. (2015) studied the issues that encouraged the behavioural goals of Muslim employees to contribute to cash waqf through salary deductions, while Amin et al. (2014) as well as Mohd Isa (2014) analysed the acceptance of online waqf in Islamic banking institutions. However, there are still no studies on the payment methods used or preferred by the waqif. Table 1 shows the types of cash waqf payment offered by SIRC in Malaysia. It is discernible from the table that most of the mutawalli (trustee) prefer the waqifs to pay waqf by cash except Negeri Sembilan and Selangor. Many states also offer payroll deduction. The least method offered is a kiosk, cheque and cash collected at the mosque. From the table, credit cards are a method that was not offered by any single one mutawalli, but this method is prevalent at Western. The other payment methods provided by mutawalli, as observed in Table 1, possibly to donate easier for the waqif included mobile transfers and bank drafts. Thus, this research would use these types of cash waqf payment method offered by SIRC shown in Table 1 as a variable to measure the priority of payment methods among Malaysian cash waqf donors. However, the method involving the kiosk will be considered as cash.

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4  Data and Methodology 4.1   Analytic Hierarchy Process The analytic hierarchy process founded by Saaty in mid-1970 is one of the methods for decision support in answering a multi-criteria decision-making problem. According to Ciptomulyono (2008), the AHP is based on sets of pairwise comparison of decision-makers that is represented on a human being’s intrinsic ability to structure the perceptions hierarchically, comparing pairs of similar things against a given criteria or a common property and judging the intensity of the importance of one thing over another. AHP is well-known as a simple mean to rank the importance of alternatives based on some defined criteria. The aggregate individual priorities (AIP) framework of AHP is one of the methods to obtain the rank-of-priority of certain criteria from a number of people when they are acting on their rights and the researchers’ concern about each result alternative priorities. This research utilized AHP because of its effectiveness in evaluating multiple criteria decision-making problems to enable the achievement of the research objective. AHP is a multi-criteria decision-making style that engages pairwise comparison to obtain a scale of preference among a set of alternatives (Saaty and Kearns 1985). As stated by Bushan and Rai (2004), there are six (6) steps in AHP when involving many respondents: 1. The problem is composed of a hierarchy of goal, criteria, sub-criteria and alternatives. 2. Data is collected from experts or decision-makers corresponding to the hierarchic structure, in the pairwise comparison of alternatives. 3. The pairwise comparisons of various criteria generated at step 2 are organized into a square matrix. 4. The principal eigenvalue and the corresponding normalized right eigenvector of the comparison matrix give the relative importance of the various criteria being compared. 5. The consistency of the matrix of order n is evaluated (less than 0.1 [Saaty and Vargas 2001]). 6. The rating of each alternative is multiplied by the weights of the sub-criteria and aggregated to obtain local ratings concerning each criterion.

196  M. I. A. JALIL ET AL.

The software automatically calculates the principal eigenvalue, normalized eigenvector, and the eigenvector (priority weight) at step four (4) and consistency ratio at step five (5) in this research. However, it is important to show the formula and steps to get the result. The normalized principal eigenvector can be obtained by averaging across the rows of summation with the division of each element of the matrix with the sum of its column of the reciprocated matrix (Teknomo 2006). Principal eigenvalue (max), an important element in measuring consistency is derived from the summation of products between each element of the eigenvector and the sum of columns of the reciprocated matrix. Consistency at the 5th step above concerns the extent to which the perceived relationship in the pairwise comparison is reliable. It is a vital process that is absent in the judgement consistency that may denote that the respondents did not understand the contrasts in the choices presented or the respondents lack honesty in their responses. Insufficiency of information about the compared criteria or absence of concentration during the judgement process can also cause inconsistency (Pitchay et al. 2014). There are three steps in measuring consistency ratio; (1) calculate consistency index (CI); (2) compare with a random consistency index (RI) and lastly; and (3) calculate consistency ratio (CR). The formula of CI is

CI =

max − n n−1

where, max is principal eigenvalue, and n is size of comparison matrix. After obtaining the value of consistency index, compared with a random consistency index could be done by referring to the random consistency index in Table 2 which has been proposed by Saaty and Kearns (1985). Lastly, the formula of CR is

CR =

CI RI

Table 2  Random consistency index Size of matrix Random consistency

1 0

Source Saaty and Kearns (1985)

2 0

3 0.58

4 0.9

5 1.12

6 1.24

7 1.32

8 1.41

9 1.45

10 1.49

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Saaty (1982) states that “the value of the consistency ratio should be beneficiaries 10% or less. If it is more than 10%, the judgement may be somewhat random and should perhaps beneficiaries revised”. The AHP can reveal which judgements are the utmost consistent consecutively, the value that best improves inconsistency. Following that, the decision-maker could then refine the information on the criteria. When more than one person take part in the decision process, Forman and Peniwati (1998) recommend the method of aggregation of individual priorities (AIP). There is another method call aggregation of individual judgement (AIJ). However, this approach is not recommended by Ramanathan and Ganesh (1994) due to its incapability to be equally weighted. This disapproval is also supported by Ossadnik et al. (2016) who prove it by conducting a comparative study between AIP and AIJ. For AIP, weighted arithmetic mean method (WAMM) is typically used (Ramanathan and Ganesh 1994) but weighted geometric mean method (WGMM) can also be utilized (Forman and Peniwati 1998). In aggregating individual judgements, the WGMM is the only method that meets few prerequisite axiomatic settings, such as separability, unanimity homogeneity and power conditions (Saaty and Peniwati 2008). Furthermore, AIP shows great potential in supporting decisions with diverging or conflicting goals, and the AIP (WGMM) is even more appropriate for a rational group decision support (Ossadnik et al. 2016). Using the WGMM, the formula is n wij gj = i=1 m where m is the number of elements, n is the number of respondents and wij is a normalized vector of individual priorities. However, it was also observed that with geometric mean, components of the final priority vector may not equal the sum to one, needing an additional normalization (de Carmo et al. 2013). 4.2  Data This study used the online web survey (SmartSurvey) to collect the data. Respondents who were among cash giving waqifs were approached based on convenient sampling technique in Penang, Selangor and Johor. A total of 84 respondents were willing to answer the survey questionnaire completely from 132 respondents who responded. However, after

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Fig. 1  AHP priority question example in questionnaire

undergoing Consistent Ratio analysis, only 34 respondents achieved the consistent ratio under 0.1 (Saaty and Vargas 2001). According to Stirn and Groselj (2013), all individual CR must be consistent before proceeding to the aggregate calculation. Based on ISAHP (2016), the amount of samples needed for an AHP research with a survey method is from 19 to 400 people. The questionnaire was prepared according to the conditions of the usage of the AHP as a tool of analysis. Table 1 shows the example of AHP questionnaire form used by this research to acquire the respondents’ opinion regarding the payment priority among Malaysian cash waqf donors. Three standard stages of the pilot study have been carried out to make sure the respondents understand how to answer the question (Fig. 1). The data automatically recorded in SmartSurvey database on the scale between 1 refer to “equally preferred” until nine refer to “extremely preferred”. For instance, if respondent A strongly prefers periodic direct debit than cheque, he or she will tick 5a, or, if he or she strongly prefers cheque instead of direct periodic debit, then he or she will tick 5b. This research then employed the Business Performance Management Singapore (BPMSG) AHP Online System1 to calculate priorities weights 1 http://bpmsg.com/academic/ahp_calc.php.

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for the criteria based on the pairwise comparison, the principal eigenvalue, and the consistent ratio (CR). This free web-based AHP solution offer automatic AHP calculation based is used as it saves time and cost. Unfortunately, this BPMSG AHP Online System does not support aggregated information with the presence of more than one individual in the decision process. The data was then manually calculated by utilizing Microsoft Excel to calculate WGMM.

5   Findings and Discussion 5.1   Demography and Respondents Table 3 shows that out of 36 respondents, 20 respondents (55.5%) were male and 16 respondents (44.4%) were female. The age distributions were with 12 respondents (33.3%) 18–34 years old, 19 respondents (52.7%) were 35–54 years old, and five respondents (13.8%) were 55 years old and above. For the academic background, four respondents (11.1%) were certificate or diploma holders, 24 respondents (66.6%) were Bachelor holders, five respondents (13.8%) were master’s holders and three respondents (8.3%) were PhD graduates. Table 3  Demography of the Respondent Variable

Level

Gender

Male Female 18–34 34–54 55 and above Certificate/diploma Bachelor Masters PhD Private Government Self-employed RM900–RM2000 RM2001–RM3000 RM3001–RM4000 RM4001–RM5000 RM5000 and above

Age

Education

Employment

Average income per-month

Frequency 20 16 12 19 5 4 24 5 3 7 27 2 6 10 7 5 8

Percentage (%) 55.5 44.4 33.3 52.7 13.8 11.1 66.6 13.8 8.3 19.4 75 5.5 16.6 36 19.4 13.8 22.2

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The majority of the respondents were government employees which comprised of 27 respondents (75%), seven respondents (19.4%) were working in the private sector and two respondents (5.5%) were self-employed. With regard to the monthly average income, most of the interviewees (36%) earnings were from RM2001 to RM3000 per month, followed by RM5000 and above (22.2%), RM3001 to RM4000 (19.4%), RM900 to RM2000 (16.6%), and RM4001 to RM5000 (13.8%). 5.2   Analytic Hierarchy Process (AHP) Table 4 shows the individual priorities based on pairwise comparison of the selected types of cash waqf payment methods in Malaysia and the consistency ratio (CR) of responses. All respondents’ judgement records the value of CR not exceed 0.1, as this is the prerequisites in WGMM method (Ossadnik et al. 2016). Table 5 presents the aggregate priority for payment method based on the method of aggregate individual priority (AIP)—weighted geometric mean method (WGMM). Online payment is found to be the top priority of cash waqf payment method with the relative weight of 23.74%, while cheque is discovered to be the least significant with the relative weight of 8.39%. The second priority is by cash with the relative weight of 20.74%, followed by periodic direct debit (15.88%), salary deductions (12.02%), SMS (10.65%) and postal order (8.58%). These findings are expected and in accordance with Blackbaud (2013), the use of online donations had increased by 39%. The periodic direct debit got a high priority weight in correspondence with the findings of Sargeant and Farthing (2005) who stated that donors feel unencumbered and secure with this method. The method of cash secured second priority weight is not something beyond expectation since this is the traditional method by consumers and donors until now. According to Foster et al. (2013) in cash payments by consumers, which had increased sharply in 2009, did not fall back but rather grew another 3% in 2010. This paper had to discuss the consumers’ behaviour since there is insufficient study that covered the area of payment method among donors, not to mention waqf. Lastly, parallel with the Boersma and Burgers (2013) as well as Foster et al. (2013) who emphasized the continual trend decrease in paper check payments by consumers continued

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Table 4  Respondent priorities of payment method n

Debit

Cheque

Postal

Online

Salary

Cash

SMS

CR

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36

0.062698 0.174846 0.085966 0.097996 0.136982 0.102083 0.064649 0.252744 0.074991 0.112831 0.041403 0.163774 0.231786 0.165618 0.051799 0.165085 0.207184 0.138098 0.502553 0.274387 0.130868 0.241193 0.037852 0.059662 0.107958 0.426731 0.239725 0.045486 0.149539 0.116071 0.182981 0.080042 0.244441 0.402778 0.101684 0.041546

0.017099 0.169652 0.129966 0.078651 0.136982 0.030182 0.081162 0.05055 0.022044 0.079495 0.02283 0.146188 0.29439 0.033408 0.045241 0.322224 0.164594 0.023711 0.024526 0.052137 0.170027 0.033334 0.045174 0.474418 0.086227 0.035434 0.076654 0.041687 0.121683 0.078183 0.027963 0.143482 0.131718 0.02232 0.072731 0.031194

0.021585 0.132383 0.129966 0.107884 0.200029 0.040334 0.079558 0.059647 0.022048 0.037286 0.018907 0.024979 0.190966 0.064909 0.031927 0.287112 0.223414 0.019193 0.077499 0.081747 0.130868 0.351704 0.051677 0.090856 0.031971 0.042122 0.028742 0.200373 0.075273 0.219644 0.028995 0.119021 0.145933 0.02232 0.059936 0.040926

0.355403 0.211825 0.380804 0.301718 0.11506 0.267719 0.267421 0.431476 0.396966 0.373946 0.406922 0.135565 0.146948 0.358363 0.34252 0.088098 0.065182 0.172737 0.153694 0.060517 0.22693 0.074801 0.193354 0.090856 0.413602 0.350062 0.035664 0.141456 0.232358 0.238367 0.198795 0.134931 0.130214 0.248288 0.080884 0.320341

0.050544 0.080194 0.085966 0.109689 0.136982 0.314642 0.141854 0.059647 0.050226 0.107338 0.101068 0.037872 0.030825 0.05409 0.080982 0.039294 0.111118 0.219205 0.04672 0.235745 0.135599 0.092484 0.040598 0.08478 0.221609 0.061408 0.195232 0.176552 0.169103 0.093112 0.194981 0.093881 0.120713 0.02232 0.199051 0.204855

0.355403 0.109948 0.090366 0.206067 0.136982 0.210031 0.283408 0.086289 0.275456 0.164006 0.278982 0.435494 0.025239 0.299094 0.402289 0.0427 0.097946 0.336704 0.129151 0.239889 0.07484 0.092484 0.561143 0.108573 0.085115 0.042122 0.377942 0.2222 0.122068 0.208307 0.250328 0.334763 0.133773 0.160047 0.138389 0.293578

0.137267 0.121153 0.096966 0.097996 0.136982 0.03501 0.081948 0.059647 0.158269 0.125098 0.129889 0.056128 0.079846 0.024517 0.045241 0.055488 0.130563 0.090352 0.065857 0.055578 0.130868 0.114001 0.070201 0.090856 0.053518 0.042122 0.046041 0.172245 0.129975 0.046317 0.115957 0.093881 0.093209 0.121928 0.347325 0.06756

0.088983 0.068925 0.086508 0.09223 0.037349 0.083291 0.062893 0.073192 0.097855 0.085648 0.08996 0.088565 0.05184 0.082646 0.086921 0.076071 0.082043 0.096591 0.081749 0.050848 0.079841 0.058888 0.08343 0.065236 0.093903 0.04332 0.079576 0.079502 0.086332 0.095875 0.041392 0.099427 0.084582 0.080276 0.067719 0.08054

n = Number of respondents, Debit = Periodic Direct Debit, Postal = Postal Order, Online = Online Payment, Salary = Salary Deduction, SMS = Short Message Service, CR = Consistency Ratio, CR