AWQAF forms consortium for digital banking licence

In a recent development, AWQAF Holdings, together with two other organisations have formed a consortium with the intention of applying for a digital banking license to facilitate and provide easy access to the practice of waqaf. This move aims to achieve the full potential of waqaf as the third economy in the Islamic economic system. The consortium is eyeing one of the 5 licences for digital banks issued by BNM to qualified applicants by the first quarter of 2022 (1Q22).

This initiative came at the back of BNM’s announcement on issuing digital bank licence in December 2020 through a Policy Document on Licensing Framework for Digital Banks (Policy Document).  This initiative is expected to introduce innovative applications of technology that can contribute to the financial well-being of Malaysians in particular to address the unmet needs of the underserved and unserved customer segments. This is the interview with AWQAF Founder dan  Deputy Chairman Mohamad Sahar (picture)

1. Tell us about waqf and corporate waqf. How can the corporate world and public contribute towards this purpose?

Answer: Corporate endowment plays a strong role in bringing a fairer approach into corporate institutions while enhancing a good culture such as the need to implement a strong and structured organizational layout, good governance and transparency in every decision. At the same time corporate institutions will be exposed to the formula of socio-economic justice because the objective of corporate endowment is not based on profit alone but puts full confidence that every investment implemented with full transparency and sincerity will generate good returns that will eventually be distributed to beneficiaries.

This in turn, prevents the desire to take as many opportunities as possible without taking into account the circumstances of others and the well-being of those involved. The existence of such an institution will give strong confidence to investors and the public that AWQAFs’ presence in the corporate sector is to take care of all stakeholders regardless of background.

2. How was AWQAF Holdings Berhad established?

Answer: The goal of AWQAF is to use business methods to empower the economically weak and catalyze future generations of Muslims especially in gaining access to business and corporate opportunities so as not to be marginalized by the exclusive private corporates with large capital as happened under the liberal capitalist system practiced globally.

AWQAF became the second corporate waqf entity after Waqaf An-nur (Wancorp) in Malaysia to continue to lead waqf institutions in facing the challenges of today’s open market which is generally dominated by capitalist players who did not prioritise socio-economic justice as the core of their respective corporations. As an initiative to promote corporate waqf to support and grow the Malaysian economy, AWQAF plays a role as a platform to build a stronger economy of the ummah.

3. What sets AWQAF apart from other waqf institutions in terms of services and business model?

Answer: Corporate Waqf is a unique institution that is different from foundations or trust bodies set up by privately owned companies. Mainly, ‘corporate waqf’ is not owned by any particular private entity or selected exclusive corporate group. It promotes an endowment culture for the good of the ummah.

The Corporate Waqf stands on the belief that the economy belongs to the ummah and all parties have a share in the nation’s wealth cake. Waqf Korporat was also established with the confidence that the assets and ownership of waqf will remain and continue to be preserved so that the reliance of waqf institutions on community contributions does not become a general burden.

4. What are the challenges faced and opportunities using the ‘corporate waqf ‘model?

Answer: The challenge to waqf administrators in Malaysia as the sole trustee to develop these waqf assets has resulted in many waqf properties still not being properly mobilized due to the lack of funds. In addition, there is still lack of awareness on waqf in general as well as ‘corporate waqf’ including its potential role in economic empowerment not only for the development of Muslim society but also for the community as a whole.

The Corporate Waqf model has not been fully tested because of the stigma among waqf players who see waqf as still traditional and stagnant. In the face of today’s world with a variety of facilities and technology, waqf players, especially corporate waqf, must dare to move more boldly and progressively in order to strengthen the foundation and understanding of society about corporate waqf and its struggle in becoming a disruptor to the capitalist economic system.

5. What are the strategies to improve AWQAF’s role as a corporate waqf institution?

Answer: Strengthening AWQAF based on key strategies through four (4) existing business strategic portfolios: (i) education; (ii) health; (iii) real estate and (iv) technology.

For the year 2020/21, AWQAF has embarked on an investment initiative in education consisting of taking over and continuing operations to develop the Al-Hamra International Integration School, Kota Damansara. An important investment initiative for AWQAF to jointly empower educational institutions that are the lifeblood of the development of the next generation.

AWQAF’s past experience will see us venturing into suitable medium-scale real estate project development, either on our own or through strategic collaboration with the Government and private agencies that will add value to the source of endowment funds.

Finally, seeing the huge potential in digital technology, AWQAF will also take on the role as one of the Founding Members for the establishment of a Digital Waqf Bank.

6. How can the corporate waqf model be effectively implemented with the establishment of a digital waqf bank?  

Answer: AWQAF welcomes the provision of this digital banking license, in line with the development of e-business innovations that give rise to new trends, practices, processes and competition in the financial world resulting in new industries, new businesses, new generations of entrepreneurs and new financial and physical wealth.

E-commerce and digital banking in China have brought tremendous progress and wealth to the people and the country in less than two decades. In Malaysia, e-commerce which reaches RM24 billion in 2019 is expected to double to RM52 billion in 2024. Digital banks are a mandatory component in the e-commerce ecosystem, performing functions different from the functions of existing banks.

Clearly, the consumer sector will drive economic development and progress around the world. The flow of E-commerce is irresistible and the most important institution in e-commerce, the digital bank, will take the place of conventional banks to dominate the global financial industry.

The digital banking system combined with waqf practices will enable all Muslims to be involved in the high -tech Islamic financial system and implement waqf practices while bringing the corporate waqf system to a more systematic, efficient, easy and secure way.

7. What will be your immediate next steps if BNM does allocate one digital bank licence for waqf?

Answer: AWQAF together with Halim Mazmin Berhad, and Karangkraf Magazine Group. Sdn Bhd and its shareholders will be raising funds amounting RM100 Million as initial capital to obtain the Digital Banking Licence from Bank Negara Malaysia.

AWQAF believes that when the objective of establishing a digital waqf bank is understood, which is to ensure that it meets the needs of the ‘unserved’, especially those who cannot be served by conventional banks, then the community will choose Awqaf Islamic Digital Bank as an alternative to carry out banking activities.

Contributions from the public are most welcome for this caring project and more information can be found on the Awqaf Holdings website and social media.