Bank Indonesia and ISDB promote the expansion of the productive Waqf concept

TEMPO.CO, Nusa Dua Bank Indonesia (BI), together with the Islamic Development Bank (ISDB), promotes the expansion of the concept of productive Waqf in the country. Through this concept, the central bank hopes that waqf can become a tool for productive and inclusive infrastructure development.

“So far, waqf (land) is synonymous with the purpose of building public facilities such as cemeteries, madrassas or mosques, although it can be further developed,” said Arief Hartawan, head of Bank Indonesia’s Sharia economy and finance department after discussing the Sharia funding on the agenda of the 2022 Indonesia Digital Economy Festival (Fekdi) in Nusa Dua, Bali, Saturday 16 July 2022.

Conceptually, according to Arief, productive waqf conforms to Islamic law, namely that waqf land is used for the development of public interests. “But we want to expand its scope, waqf can also be used for infrastructure development such as schools, universities or commercial complexes,” he said.

In the meantime, Bank Indonesia and ISDB have opened a support program for projects productive waqf in the country. Currently, through the Awqaf Properties Investment Fund (APIF) scheme, Arief, BI and ISDB have selected ten proposals consisting of different types of projects to be built on Waqf land.

“Project development objectives are diverse, some apply to schools, hospitals, land and commercial complexes,” Arief said.

In this program, Bank Indonesia and ISDB will work with Nazir or the Wealth Manager of the Wakif (Waqf provider). “We will choose a professional and trustworthy Nazir, because the main thing in this scheme is trust.” In promoting this new system, ISDB will also provide technical support. In the future, standardization and certification for Nazir institutions is to take place.

As a pilot project, APIF ISDB commits to disbursing funds for the construction of selected waqf projects. However, Arief explained that ISDB did not disclose how much money they allocated to pilot projects in Indonesia. APIF itself sets the condition that the Nazis who will later direct the project must have a capital of 25 percent of the total project value. “The rest will be covered by APIF funding.”

BI and ISDB are also in the process of working out a scheme for repaying capital funds, which may take up to 10-15 years. “So once built, this project is expected to be economically viable but still within the Sharia corridor.”

Bank Indonesia hopes that in the future this productive waqf system can be adopted by many zakat administration institutions, infaq, sodakoh and waqf (ziswaf) in the country. Thus, there will be greater public participation in infrastructure development within the Sharia corridor. As for Indonesia, the potential ziswaf which is recorded at Rp 325 trillion per year. However, it is still less than 5 percent that has been worked on so far.

PRAGA UTAMA (NUSA DUA)

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