Panel nel Sessi Session on 3 : Designin : Designing Islamic S Islamic Social F ocial Finance Ins inance Instr trumen uments ts fo for Develo Development ment an and Human umanita tarian ian Needs Needs OIC OIC Fo Forum m on on Islamic Islamic S Social ocial F Finance inance 12 Novem November er 2019 Wa Waqf Linked Suk qf Linked Sukuk uk for for SD SDGs Gs a and Zak nd Zakat at fo for r Mic icro H ro Hydro dro Ladies and gentlemen, first of all allow me to express my gratitude, and it is an honor for me to be invited as a panelist in this prestigious seminar History records the golden era of Islam, especially the era of the Abasiyyah Caliphate in the 8th century to the 15th century and the era of the Ottoman Caliphate are inseparable from the role of zakat and waqf as the economic pillars of the ummah. Together with other financial instruments such as jizyah, kharaj, fai, and ghanimah, etc they all enter into the country's economic mainstream and are used to prosper the people through public or private financing mechanisms.
Islam, a religion that has the concept of "rahmatan lil alamin" (mercy to all creations) has the quality of syumuliyah (total, complete, comprehensive, forever) and it is reflected in how Islam has very complete instruments in regulating the economic community to achieve prosperity. These instruments include the ZISWAF mechanism. Each instrument has a different mandate. The mandate of zakat is closely related to emergency conditions, where the allocation is limited to 8 asnaf, and the main goal of zakat is to raise society groups at the pre-subsitent level to subsistence level (self-sufficient), while infaq sadaqoh acts as buffer, so that groups that have been successfully appointed can continue to be above the self-sufficient level, amidst the dynamics of economic conditions. The waqf is alms from individuals where the principal assets cannot be used up. In contrast to zakat which must be utilized immediately, in waqf there are known concept of principal (corpus) and benefits, where the principal is sustained and the benefits are consumed by beneficiaries (mauquf alaih). Even though both of them have social goals, the waqf mandate is more directed towards things that are tahsiniyat (refer to those things which are at a tertiary level, after basic necessities (daruriyat – primary level), and conveniences (hajiyat – the secondary level) that is supremely powerful in developing civilizations such as health facilities, education, infrastructure, economy, etc. Satu kesatuan dan tidak ada dikotomi, seharusnya ada konektivitas dan harmonisasi baik ditingkat kebijakan, dan kelembagaan. Namun dalam kenyataannya sulit dilakukan karena kondisi dilapangan
Judging from the interrelated objectives, even in its application, the instruments of zakat, infaq, waqf must be integrated there is no dichotomy, there should be connectivity and harmonization at both the policy and institutional levels. But in reality, sometime it is difficult to do so, because of the conditions in the field , institutional and policy barriers as well Believed to be a product that is ijtihadi (due to the limited references sourced from the Qur'an and hadith), even though the spirit of waqf is the same, that is the prosperity of the people, but in its application will vary both between mazhab and across countries. This should be seen as a strength and space for innovation of waqf product development rather than as a weakness. Thus, waqf can deservedly act as a solutive instrument for the problems of the ummah that is truly specific, customized, situational and under real conditions in the field. Thus, if at this time we encounter the ZISWAF instrument has not been able to play an optimal role in alleviating poverty and equitable distribution of welfare, it is not because of the incapability of the instruments but improper application and management. Because truly God has never created poverty but sufficiency as stated in the Qur'an, "and it is He who gives WEALTH and ADEQUACY." (Qur'an, 53:48). Furthermore, world economic experts at the United Nations General Council on September 25, 2015 in New York, have formalized an agreement signed by 193 heads of state including Indonesia. With the theme Transforming Our World: "the 2030 Agenda for Sustainable Development", the SDGs (Sustainable Development Goals) which contain 17
Goals and 169 Targets are global action plans for the next 15 years (effective from 2016 to 2030), to end poverty, reduce inequality and protect the environment. SDGs apply to all countries (universal), so that all countries, without exception of developed countries, have a moral obligation to achieve the goals and targets of the SDGs. If we consider the 17 objectives in the SDGs are in line and can be grouped with the objectives in the Shariah maqoshid namely Protection of Faith or Religion (din), Protection of Life (nafs), Protection of Lineage (nasl), Protection of Intellect ('aql), Protection of Property (mal) One effort undertaken by the Indonesian Waqf Board in collaboration with Bank Indonesia, the Ministry of Finance and the Ministry of Religion seeks to integrate the challenges of the SDGs with waqf instruments as a solution. The design of this waqf product is done in such a way that 1) meets the safe investment criteria and the risk is measurable so that the corpus value is maintained 2) has an optimal investment return 3) has an optimal empowerment program for the people, is managed professionally and governs and 4) has a positive impact towards market in particular targeting the traditional philanthropic market segment that is not yet familiar with the sukuk market. So at the IMF & Worldbank annual meeting in Bali last October, the Waqf Linked Sukuk Cash concept was introduced. This instrument is essentially a temporary waqf cash with a span of 5 years, while BWI acts as Nazir. The collected waqf cash is going to be invested in the involved country's sukuk issued specifically for this activity. The money obtained from the ministry of finance is used to fund state expenditures that comply with Sharia principles such as social assets and public facilities. The number of coupons will follow the benchmark in the market, and because this is a waqf, the coupon does not return to the waqif, but by nadzir the coupon will be given
to the beneficiaries (Mauquf alaih). Payment methods are mixed mostly in the form of discounts (upfront) and the rest is monthly. The beneficiary of this initial batch is the Achmad Wardi Eye Waqf Hospital. This Hospital is the only eye hospital in Banten Province. This hospital until the end of August 2019 has served 10,333 outpatients and 811 cataract surgery patients who are generally a dhuafa (poor). As a referral hospital that focused on eye sicknesses, it is fitting to have a cataract center, retina center and glaucoma center, yet currently, the new hospital only has a cataract center. Therefore, a substantial result of discount at the beginning of the CWLS is used for capital expenditure for the establishment of the retina center, while the monthly coupon is used to subsidize the costs of treatments for those who can't afford them. Thus this instrument has a dual impact benefit that is the principal utilization by the state and the coupon by the mauquf alaih. Besides CWLS, BWI and OJK are also developing SLW instruments, in contrast to CWLS, which is based on waqf, SLW is a pure investment based instrument. SLW issuers can be
nadzir or other commercial entities, where the proceeds from the issuance of these sukuk are used to fund feasible commercial waqf assets. The background design of this instrument is to confront the low accessibility of businesses based on waqf assets (awqaf company), more due to waqf assets that cannot be used as collateral because they are not liquid (cannot be pledged, sold and inherited). So even though business activities are feasible, waqf business units generally incapable to have access to formal financial sources, especially banks. At present, there is an Islamic non-bank financial institution that intends to issue this instrument. Both our CWLS and SLW are showcased at the BWI booth on the island of Social Islamic Finance in the exhibition area. The next initiative is the empowerment of zakat. As an instrument whose mandate is clear, namely emergency needs, and allocated to 8 asnaf the main challenge is to create innovative programs that are on target. UN Development Program together with the Directorate General of New and Renewable Energy and Energy Conservation (DJEBTKE), under the Ministry of Energy and Mineral Resources (ESDM) and Provincial Government of Jambi with the support from the National Amil Zakat Agency (BAZNAS) and Bank Jambi in the year 2017-2018 initiated a micro-hydro development program in a number of rural areas of Jambi. This is based on the fact that electricity has become the primary needs of the society and at the same time is a prerequisite for the availability of other primary needs such as education, safety, production, etc. On the other hand, the rural areas of Indonesia are generally inhabited by dhuafa communities who fully meet the criteria of 8 asnaf, and do not have access to public facilities, especially electricity. The choice of micro-hydro technology is based on Indonesia's natural conditions which are rich in water resources, especially rivers,
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