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Management of cash waqf fund generation through the implementation of istibdal in Kedah

Authors:
  • Universiti Teknologi MARA, Cawangan Perlis.
  • Kolej Universiti Islam Perlis (KUIPs)

Abstract and Figures

Purpose The purpose of this study is to examine the management of cash waq f fund generation through the implementation of istibdal in Kedah. Design/methodology/approach The data are obtained through literature and empirical data. The authors first review the literature on the importance of waqf fundraising, the implementation factors of istibdal waqf and the relevance of istibdal method as a waqf fund generation medium to understand the extent to which the scholarly articles have discussed these topics. Furthermore, the authors conducted face-to-face interviews with two Kedah Islamic Religious Council (Majlis Agama Islam Kedah [MAIK]) officers, who were directly involved in the affairs of istibdal waqf to obtain holistic information regarding implementing istibdal waqf properties in Kedah. As a result, several themes are defined from the interview data before being analysed based on the content analysis method. Findings The results of the study show two istibdal implementation processes outlined by the Kedah Islamic Religious Council (MAIK), namely, the istibdal implementation process for waqf land registered title deed, and waqf land registered as reserve certificate for religious use like mosque and cemetery. The results also showed three factors in implementing istibdal in Kedah: the acquisition of waqf land by the state authority (PBN), istibdal application by the state education department (JPN) and istibdal application by the mosque committee. Out of eight cases of istibdal implementation, four have generated cash funds for MAIK through investment methods from the sale of waqf lands and rental of replaced shophouses that are able to cover the expenses of managing waqf properties in Kedah. Several suggestions are also recommended for MAIK to improve its istibdal policy, thus enabling the institution to generate cash waqf funds at the maximum rate. Research limitations/implications This study only focused on the implementation factors and the generation of cash waqf funds through istibdal in Kedah, while it can be expanded to other states like Terengganu, Kelantan and Penang. Furthermore, this study only interviewed officers who manage matters related to the affairs of waqf properties, as the session can actually be extended to other respondents, such as those specialising in cash fund generation investments and others. Practical implications This study proposed some improvements to the policy and guidelines of istibdal waqf property to MAIK after a few shortcomings were identified throughout this study. If improved, these proposals will have a significant impact, especially on the waqf properties involved in the implementation of istibdal , where it has the potential to bring cash generation and ensure the constant economic value of waqf properties. Social implications This study has a tremendous impact on society, in which their areas have cash waqf funds that can be developed. It can benefit the needy and increase funds for the welfare expenditure of Muslims through rental income, investment and development. Progress on waqf property provides a high indication of the efficiency of an organisation in managing the waqf property. Thus, the public, especially the rich, is motivated to fulfil their charitable practices through waqf mechanism and share their wealth with the needy. Originality/value This study contributes to comprehensive field data on the implementation factors and generation of cash waqf funds through the implementation of istibdal in Kedah. The results of this study are significant to be used by waqf property management.
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Management of cash waqf fund
generation through the
implementation of istibdal
in Kedah
Fathullah Asni
Shariah Department, Faculty of Islamic Studies, Kolej Universiti Islam Perlis,
Perlis, Malaysia
Afiffudin Mohammed Noor
Academy of Contemporary Islamic Studies, Universiti Teknologi MARA,
Perlis, Malaysia, and
Muhamad Husni Hasbulah
Faculty of Muamalat and Islamic Finance, Kolej Universiti Islam Perlis,
Perlis, Malaysia
Abstract
Purpose The purpose of this study is to examine the management of cash waqf fund generation through
the implementation of istibdal in Kedah.
Design/methodology/approach The data are obtained through literature and empirical data. The authors
rst review the literature on the importance of waqf fundraising, the implementation factors of istibdal waqf and the
relevance of istibdal method as a waqf fund generation medium to understand the extent to which the scholarly
articles have discussed these topics. Furthermore, the authors conducted face-to-face interviews with two Kedah
Islamic Religious Council (Majlis Agama Islam Kedah [MAIK]) ofcers, who were directly involved in the affairs of
istibdal waqf to obtain holistic information regarding implementing istibdal waqf properties in Kedah. As a result,
several themes are dened from the interview data before being analysed based on the content analysis method.
Findings The results of the study show two istibdal implementation processes outlined by the Kedah Islamic
Religious Council (MAIK), namely, the istibdal implementation process for waqf land registered title deed, and
waqf land registered as reserve certicate for religious use like mosque and cemetery. The results also showed
three factors in implementing istibdal in Kedah: the acquisition of waqf land by the state authority (PBN), istibdal
application by the state education department (JPN) and istibdal application by the mosque committee. Out of
eight cases of istibdal implementation, four have generated cash funds for MAIK through investment methods
from the sale of waqf lands and rental of replaced shophouses that are able to cover the expenses of managing
waqf properties in Kedah. Several suggestions are also recommended for MAIK to improve its istibdal policy,
thus enabling the institution to generate cash waqf funds at the maximum rate.
Research limitations/implications This study only focused on the implementation factors and
the generation of cash waqf funds through istibdal in Kedah, while it can be expanded to other states like
Terengganu, Kelantan and Penang. Furthermore, this study only interviewed ofcers who manage matters
related to the affairs of waqf properties, as the session can actually be extended to other respondents, such as
those specialising in cash fund generationinvestments and others.
This research was supported by Ministry of Higher Education (MoHE) of Malaysia through
Fundamental Research Grant Scheme (Ref: FRGS/1/2022/SSI13/UITM/02/25). The authors also thank
the management of Universiti Teknologi MARA for supporting the research work.
Implementation
of istibdal in
Kedah
Received 18 March2022
Revised 15 October2022
17 December 2022
30 January 2023
Accepted 2 February2023
Qualitative Research in Financial
Markets
© Emerald Publishing Limited
1755-4179
DOI 10.1108/QRFM-03-2022-0048
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1755-4179.htm
Practical implications This study proposed some improvements to the policy and guidelines of istibdal
waqf property to MAIK after a few shortcomings were identied throughout this study. If improved, these
proposals will have a signicant impact, especially on the waqf properties involved in the implementation of istibdal,
where it has the potential to bring cash generation and ensure the constant economic value of waqf properties.
Social implications This study has a tremendous impact on society, in which their areas have cash waqf
funds that can be developed. It can benet the needy and increase funds for the welfare expenditure of Muslims
through rental income, investment and development. Progress on waqf property provides a high indication of the
efciency of an organisation in managing the waqf property. Thus, the public, especially the rich, is motivated to
full their charitable practices through waqf mechanism and share their wealth with the needy.
Originality/value This study contributes to comprehensive eld data on the implementation factors and
generation of cash waqf funds through the implementation of istibdal in Kedah. The results of this study are
signicant to be used by waqf property management.
Keywords Istibdal, Waqf, Kedah state, Cash fund, Shariah resolutions
Paper type Research paper
Introduction
Waqf property is one of the Islamic property institutions that has contributed a lot towards
the infrastructure and social development of the Muslim community. This institution has
successfully developed and accommodated educational institutions, mosque development,
cemeteries, libraries, welfare homes and health centres (Abdullah, 2010). Waqf property
management has undergone a reform, where the focus is no longer on the immovable
property, but diverted to the movable property (Asni and Sulong, 2017a).
The benets and advantages of waqf have motivated many Muslims to practice waqf.In
Malaysia, waqf has been practised since the entry of Islam. Most Muslims used to endow the
lands they owned in the city or the village. They believe that as long as the land exists and
can serve benecially for the Muslim community, they will receive continuous rewards until
the Day of Judgment (Isamail et al., 2015).
Before the establishment of the State Islamic Religious Council (MAIN), waqf properties were
managed independently. However, after the establishment of MAIN, waqf properties were placed
under MAINs management and assisted by the federal government through the Department of
Waqf, Zakat and Hajj (JAWHAR) and the Malaysian Waqf Foundation (YWM). Thus, the state
and federal governments funded the management of waqf properties (Yaacob, 2013).
However, using the fund injection model is an excellent challenge for MAIN in managing
waqf properties due to insufcient funds in the long run. Furthermore, waqf properties
throughout Malaysia are numerous and involve lands in rural areas. This is because most of
the waqf lands are agricultural and not productive to benet the Muslim community. This has
caused most of the waqf lands to be in a state of disrepair, and no development can be carried
out (Mat Rani et al., 2014). The same problem was also raised in a study by Zakaria et al. (2019).
The problem occurs due to the previous waqf method practised by the Muslim community
in Malaysia for a long time in which when a waqif (an endowment donor) endows land with the
intention to build a mosque, school or orphanage, he is not giving the capital or allocation to
build the assets (Hasbullah et al., 2019). This is one of the examples that has caused a problem
for MAIN to develop the waqf land as intended by the waqif, where MAIN has to bear the
burden of obtaining sufcient funds to materialise the intention of the waqif (Othman, 2013).
Noor et al. (2021) stated that the Johor Islamic Religious Council (MAIJ) was facing
problems in managing and developing waqf properties due to limited funding sources,
which forced the body to borrow funds from the Johor state zakat. Mat Rani et al. (2014)
stated that almost all State Islamic Religious Councils (MAIN) in Malaysia suffer
from insufcient funds to cover waqf land development projects. As a result, most of the
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waqf lands are in a state of disrepair, and no development can be carried out. The income
earned by MAIN from waqf land activities is also minimal compared to the cost of the
proposed projects.
Thus, some researchers proposed many alternative methods to generate cash waqf funds
and cover expenses in managing the waqf property. Among the alternative methods is
through istibdal waqf property (Shulthoni and Saad, 2018;Noor et al., 2021). Majlis Agama
Islam Kedah (MAIK) carries out several istibdal methods on waqf properties in Kedah.
Regarding this matter, this study raises the question of whether implementing istibdal waqf
property in the state of Kedah leads to the generation of cash waqf funds or only involves the
usual replacement process. Subsequently, this study examines the generation of cash waqf
funds through the implementation of istibdal in Kedah.
There is a gap in the previous research concerning this issue. However, previous studies
have examined the implementation of istibdal in several states, for example, a case study
for Terengganu by Mat Rani (2014). A similar study by Noor et al. (2021) focused on
implementing istibdal in the state of Johor. Meanwhile, Asni and Sulongs (2017a,2017b)
study focused more on the standardisation of fatwas related to waqf. In addition, Asni et al.
(2020) studied the implementation of istibdal through the GIS method, which is modern and
sophisticated software that helps in storing, analysing, managing, manipulating and
presenting all types ofgeographical data.
The results of this study are potentially important in helping to solve the issue of a lack
of funding that waqf managers often face. The ndings and recommendations can be used
by waqf managers at the state level to improve the guidelines and practices of istibdal waqf
so that it can generate cash waqf funds. The rest of the paper begins with an examination of
relevant literaturebefore proceeding to methodology, results, discussion and conclusion.
Literature review
Concept of istibdal waqf
The word istibdal is taken from an Arabic word, badal, which means to change or substitute.
Ibdal and istibdal also carry the same meaning: to change something for something else. In
short, istibdal waqf means exchanging a waqf property and replacing it with another
property by selling the original waqf property and buying a new one (Abu Zahrah, 1971).
Islamic scholars on the other hand have different opinions about the istibdal of waqf
property (Asni et al., 2020).
According to the Hanaschool, the istibdal method is used to solve problems related to
the affected waqf property from its utilisation. If the waqf property can no longer be used to
achieve the original purpose for which it was endowed, then the istibdal method must be
implemented to achieve its objective. However, before implementing istibdal, the Islamic
judges consent must be acquired to effectively achieve the maslahah (well-being) without
being abused by certain parties (Ikrimah, 2008). Thus, the implementation of istibdal is
aimed at obtaining more benets and maslahah while not setting aside the objective of waqf
property (al-Zuhaili, 2005).
The Maliki school allows istibdal on waqf properties to be implemented for public use or
interest, such as expanding mosques, cemeteries, roads or other facilities (Malik, 2019). On
the other hand, the Shai school is rigorous in allowing the implementation of istibdal.
When a property has been made as waqf, it belongs to Allah and cannot be exchanged
in any way even if the property has been destroyed or asked to be returned to its
owner (al-Zuhaili, 2005). The argument is based on the opinion of Sayidina Umar, who
stated that waqf property could not be sold, gifted or inherited. The scholars also put
forward the proposition of qiyas (analogy) by stating that a waqf property cannot be
Implementation
of istibdal in
Kedah
sold even when there is a benetornobenet at all. However, some Shai scholars allow
the implementation of istibdal if there is an element of benet with the judges consent
(al-Ramli, 1967).
According to the Hanbali school, istibdal can be applied to all categories of waqf property.
The school argues that waqf property cannot be sold, given away and inherited as long as it
can be leveraged. However, when the waqf property is damaged and no longer useful, it
must be replaced with another property to maintain the purpose of the waqf, which is to
remain useful forever (Ibn Taimiyyah, 2005). Summarising this discussion, most schools of
thought adopted the concept of istibdal. This requirement signicantly impacts waqf
property management by making them more economical, competitive and meeting the
current needs.
Implementation factors of istibdal waqf
The implementation of istibdal by scholars has brought many benets to the waqf properties
(Laluddin et al., 2021). The benet is whether it can repair the waqf property or expand the
benets of the existing waqf property (Isamail et al.,2015). It is known that a property that
has gone beyond the passage of time will inevitably be run down, faded and damaged
(Mohamad et al.,2021). Damaged orphanage schools cannot accommodate the growing
number of students, or waqf land as cemeteries cannot accommodate the increasing number
of remains over time (Laldin et al.,2012). These problems need to be resolved by changing
the waqf property to a more suitable one. For example, the orphanage school building is
urged to be replaced with a new place that is more comfortable and low in maintenance
costs. This can also be applied to waqf hearse that constantly needs repair and all other waqf
properties in the country (Mar Iman and Haji Mohammad, 2017).
The implementation of istibdal can occur when there is an intention to expand
the utilisation of waqf property, even if it does not experience any problems. This
includes expanding the mosque area due to the increasing number of Muslims in the local
community, and converting agricultural waqf land to commercial centres with the
construction of several lots of shophouses, where the monthly rental income is higher and is
able to increase the revenue of cash waqf funds (Thaker et al.,2016). This is similar to the
study by Asni et al. (2020), where the authors proposed the expansion of mosques and
cemeteries to accommodate the growing local community, especially in urban areas.
Importance of waqf fund raising
Funds are critical elements in any development activities involving large capital, including
waqf properties development in Malaysia. Almost all MAIN have insufcient funds for waqf
land development projects. As a result, most of the waqf lands are in a state of disrepair, and
no development can be carried out. The income earned by MAIN from waqf land activities is
minimal compared to the cost of the proposed projects (Mat Rani et al.,2014). With limited
nances, MAIN has to bear all expenses for administering waqf properties, such as
repairing and maintaining them at a cost over its annual income (Mat Rani et al., 2014). At
the same time, MAIN has a more signicant responsibility in looking after the welfare of
Muslims and Islamic affairs with a limited number of staff.
In Malaysia, the main problem faced by MAIN in developing waqf lands is caused by
limited funding sources. In Johor for example, the total cost required by the Johor Islamic
Religious Council (MAIJ) to implement waqf development is RM19,364,820.00. The amount
includes the construction of a shop building at Fortune Point Nusajaya amounting to
RM1,573,560.00, replanting of oil palm trees in the Mersing waqf plantation amounting
to RM230,370.00, waqf of the Darul Furqan building of RM6,000,000.00, waqf of the
QRFM
Kluang tahzcomplex building of RM10,000,000.00, and a special project waqf ANGKASA
with the total of RM1,560,890.00 (File MAIJ 2018). Apart from using the funds through the
implementation of the Johor Waqf Shares, MAIJ also needs to borrow funds from the Johor
state zakat to assist in waqf development activities.
Based on MAIJs annual statement, the total zakat loan by MAIJ is RM20,318.428.00. The
amount is used to nance the development of Johor state waqf assets abroad, such as the
Malaysian studentshostel building in Egypt, the purchase of a house lot on Eden Street,
Australia and a mosque in Cambodia. In addition, the funds are also used for the purchase of
waqf haemodialysis machines (File MAIJ 2018). This shows that apart from the need for
funds to develop waqf assets, MAIJ also needs funds to repay the debt that has been
borrowed from the Johor state zakat fund. Apart from MAIJ, MAIPs has also borrowed
zakat funds from others to develop waqf assets in Perlis (MAIPs File 2018). This also led
many scholars who studied waqf development to raise the lack of cash waqf funds in
developing waqf properties in Malaysia.
In addressing insufcient funds to develop waqf properties, many parties have played
their role in assisting and channelling funds to continue the efforts of developing the
existing waqf assets. In addition to funds injected by local and federal governments, other
ways to generate cash waqf funds are through cash waqf, stock waqf,waqf shares, lease,
rental, istibdal and istisnamethod, which then help the authorised body to manage waqf
properties (Zakaria et al.,2019).
Relevance of istibdal method as a waqf fund generation medium
Strategic location is one of the important criteria for a waqf asset to effectively carry out
economic development activities (Ngadimon, 2011). However, the scattered position of waqf
lands and the different purposes of waqf make development difcult (Mat Rani et al.,2014;
Mohamad et al.,2021). Among the problems are the waqf lands are not situated in the prime
development zone. There are also waqf lands that are too far inland or in locations that are
not strategic and viable. Land issues involving physical conditions and less strategic
locations are among the challenges to developing waqf lands (Ismail, 2012). The problem can
be seen in several studies involving several states in Peninsular Malaysia.
Latif and Bahrom (2008) found that in Melaka, the waqf lands are too small and narrow,
and situated away from the main road and development centre. Hashim and Rahman (2012)
found that some waqf lands are abandoned and undeveloped. Mat Rani (2015) found that the
waqf land area is limited, scattered and most of the waqf lands in Terengganu are less than
half a hectare.
The study of Noor and Awang (2013) found that in Kedah, there is a small waqf land
which is located between the lands owned by non-Muslims. This situation also affects
MAINs plans to develop the land. A study in Kelantan found that most general waqf land
locations are scattered and not concentrated in one area (Hamat, 2014). While in Perak,
Ibrahim and Ibrahim (2018) found that waqf lands are not used optimally due to their non-
strategic and economic location. Although there are some strategic locations, the size is too
small for development. If these lands continue to be idle, activities involving the generation
of cash waqf funds cannot be implemented.
Researchers have put forward several recommendations to overcome the physical
barriers that hinder the development of waqf lands in Malaysia. According to Noor and
Awang (2013), many waqf lands in rural areas, growth centres or development corridors
have turned to imprisonment. The problem can be solved through the istibdal process, which
replaces the waqf property with strategically located property (Asni and Sulong, 2019).
Implementation
of istibdal in
Kedah
Ngadimon (2011) stated that developing waqf assets through the istibdal method is not
only focused on exchanging waqf property by selling and buying other property elsewhere.
An even more dynamic step is to perform an istibdal of waqf property from non-strategic
locations to more strategic locations to improve the asset quality capabilities. This is in line
with the proposal put forward by Zakaria et al. (2019), which is to sell waqf land that is not
strategic or too small, whereas the proceeds are used to buy more extensive lands that can
generate cash funds.
Among the examples of generating cash funds through waqf assets are the Waqf, Zakat
and Hajj Department (JAWHAR), the Malaysian Waqf Foundation (YWM) and the State
Islamic Religious Council (MAIN) that have formed a collaboration in developing the
Peoples Waqf Bazaar (BWR) project. The BWR project was created to develop business
waqf on waqf land owned by the State Islamic Religious Council (MAIN) in the mosque area
(Suhaimi and Ab Rahman, 2021). BWR is a single-storey bazaar with adjoining terrace units.
The area of each closed unit is between 150 to 200 square feet, and it is suitable for small
businesses as it is equipped with a covered structure, water drainage and electricity meters
separate from the mosque. For example, in Selangor through this project, a total of 24 BWR
units have been built in ve locations. As a result, the mosque has generated nancial funds
through the rental income of business buildings erected, which are used for the benet of the
mosque and the local community. In addition, this effort also plays a role in contributing to
economic development, especially for small traders (Suhaimi and Ab Rahman, 2021).
Among other examples is the Selangor Waqf Corporation, which has sold some waqf
land that is not in a strategic place by buying new waqf land in a more strategic area
through the istibdal method. Then, shophouse buildings were developed to be rented out
where the rental income was used by the parties determined by the endowment, while PWS
established a venture with a real estate company to develop the commercial centre project
(Noor and Ismail, 2016).
In addition, the Penang State Islamic Religious Council (MAINPP) is also not exempt
from implementing istibdal for waqf lands in non-strategic areas by buying land in more
strategic urban areas. Then, on the new land, business premises such as Seetee Aisah waqf,
Wisma Syeikh Abdullah Fahim, Kapitan Kling Waqf, Alimsah Waley Waqf and Melayu
Masjid Lebuh Acheh Waqf were established. MAINPP also implements the peoples bazaar
which is situated on the waqf land of Jamek Baru Mosque, Shaikh Eusoff Mosque, Jln Air
Itam, Masjid at-Taqwa, Bertam Kepala Batas and Jawi District Mosque in Nibong Tebal
(Abdullah et al., 2020).
The study by Zakaria et al. (2019) found that the number of uncultivated waqf lands is
increasing. Thus, the researchers suggested the development of affected waqf lands by
using sukuk instruments through the istibdal method. For example, land worth RM30m is
replaced with a building or property asset of the same value; the value of three uncultivated
waqf lands is the same as a non-waqf land with the same value of RM30m. In that case,
the waqf lands are exchanged for commercial land on the condition that its purpose is
maintained as a waqf asset, and then the old land is no longer waqf. Thus, the application of
the sukuk concept in waqf is suggested by Khan et al. (2023) for the development of waqf
properties to revive the role of waqf in societys social well-being.
Meanwhile, Huda and Santoso (2022) examined corporate waqf in two institutions,
namely, the Waqf Board Foundation of Universitas Islam Indonesia (YBW UII) Yogyakarta,
and Pesantren Tebuireng in Jombang. YBW UII Yogyakarta has developed productive waqf
assets and immovable objects through professional and protable multi-company
institutions, ensuring that the waqfs results expand and the benets y. Pesantren
Tebuireng, on the other hand, understands the implementation of CWCP in the framework
QRFM
of productive waqf administration and management by conceptualising the productivity of
waqf assets through corporate and institutional management. The two models of waqf
management methods ensure that waqf management within the corporate institutional
framework is more productive and can produce long-term outcomes and benets. Among
the efforts made by these two institutions in advancing corporate waqf is implementing the
concept of istibdal, by exchanging waqf assets that are not strategic and productive through
the purchase of new strategic and productive waqf assets.
Generating funds through waqf property such as rental, corporate and investment
returns is important because it can be used for covering maintenance, providing assistance
to the needy in the form of cash, repairing and renovating waqf buildings according to
current needs and others. Furthermore, in this post-COVID-19 era, many groups are affected
and need help (Ascarya, 2021;Umar et al.,2021). Thus, cash funds obtained from waqf real
estate investment can be used for welfare purposes.
Provisions of the law on istibdal waqf implementation in Kedah
In Malaysia, waqf properties are managed and administered by the state. This is because the
power and authority to manage and administer waqf property have been placed under
the State Islamic Religious Council (MAIN). Such provisions can be seen under the 9th
Schedule, List 2, State List, Federal Constitution. The Federal Constitution has given
jurisdiction to the state to enact laws on waqf based on Article 74 (2). Based on this basis,
statutes to govern waqf property have been introduced in all states in Malaysia through
state enactments. These laws cover specic statutes that provide for waqf, including Islamic
administrative statutes applicable in the states (Jawhar, 2010).
As the sole trustee of waqf properties in the state, MAIN has been authorised to carry out
the istibdal process on waqf properties under its responsibilities, as it deems necessary with
certain conditions. However, in Malaysia, only ve states have created a waqf enactment
and have specically provided for istibdal in the waqf enactment. Provisions for
implementing the waqf istibdal can be seen in the Selangor State Waqf Enactment, the
Melaka State Waqf Enactment, the Negeri Sembilan Waqf Enactment, the Perak State Waqf
Enactment and the Terengganu State Waqf Enactment (Jawhar, 2010).
While for other states including Kedah that have not created their respective waqf
enactments, all matters related to waqf are referred in the State Islamic Religious
Administration Enactment, while matters relating to the istibdal of waqf property will be
referred to the respective state fatwa committees. Thus, the management of waqf in the state
of Kedah is based on the provisions of the Administration of Islamic Law (Kedah)
Enactment No. 5 of 2008. The waqf management structure in Kedah is shown in Figure 1
(Kader, 2016).
Theoretical framework
Based on the highlights of theories related to the questions and objectives of this study, a
theoretical framework is proposed as shown in Figure 2.
Methodology
Research design
This study uses a cross-sectional narrative review using qualitative data collection methods,
specically semi-structured interviews. In this study, interview methods were used to
understand the subject matter of the current research with those used in previous studies
(Gunarathne and Senaratne, 2017).
Implementation
of istibdal in
Kedah
Narrative research design is a design of inquiry from the eld of humanities in which the
researcher studies the experiences of individuals and asks them to provide stories about
their experiences (Creswell, 2012). According to Creswell (2012), the researcher often retold
the information in a narrative chronology. In the context of this study, stories from
respondents about their experiences and knowledge were recorded and handwritten by the
researchers to obtain holistic information regarding implementing istibdal waqf properties in
Kedah. In addition, the researchers also used unstructured interview techniques to obtain
information from the respondents, as it provided an opportunity for the respondents to
present important new issues through open-ended questions (Wilson, 2014).
Figure 1.
Waqf management
structure for the state
of Kedah
MAIK
Waqf Unit
Baitulmal Division
Note: Modified from Kader (2016)
Figure 2.
Theoretical
framework of cash
waqf fund generation
through the
implementation of
Istibdal Note: By authors
Waqf Asset
Management
Depreciaon of Waqf
Assets
Relevant generaon
instruments
Cash Funds
Generaon
Legal provisions Isbdal concept
QRFM
Selecting the respondents, data management and analysis
This study chose the state of Kedah as the case study because based on the record of the
istibdal process in the states in Malaysia, Kedah is the state that implements the most
istibdal process compared to other states, which is 18 cases of istibdal. Thus, on that basis,
Kedah was selected to be the case study (Ofcial state istibdal le, 2021).
As this study aims to explore the implementation factors and generation of cash
waqf funds through istibdal in Kedah, the researchers need to engage with appropriate
interviewees through the purposive sampling method. Interviewees must have in-depth
knowledge of the factors and implementationof waqf istibdal in Kedah. In other words, it is a
non-random selection, but the participants can provide in-depth and trusted information
on their knowledge or experience (Etikan et al., 2016). In this regard, the researchers
interviewed two interviewees comprising two ofcers from the waqf department of MAIK.
The interviews lasted for about 60 minutes.
The interviews were conducted to determine the respondentsknowledge of the factors
and implementation of istibdal waqf in Kedah. This is because the information on istibdal
implementation cases is in the custody of MAIK. The interviews were recorded through
audio recording methods and manually written in notebooks as additional storage if the
audio recording is damaged or destroyed. After the process of transcription, the collected
information would be analysed based on the thematic method. This method enables the
researchers to segment, categorise, summarise and reconstruct the data into important
concepts (Given, 2008).
In fact, this method is a practical approach for analysing different perspectives among
interviewees, highlighting similarities and differences and generating unanticipated
insights (Nowell et al.,2017). All methodologies applied through this study could support
the researchers in obtaining a holistic view of the factors and implementation of istibdal
in Kedah. Meanwhile, in terms of discussion, it will reveal the factors of istibdal
implementation and identify waqf istibdal cases that generate cash waqf funds for MAIK. To
safeguard the respondentsinformation, their names were encrypted as requested by them
and they are known as IV1 and IV2.
Validity and reliability
To ensure the validity of the data, the interview is conducted with participants who are
considered the most expert group on this topic. In this regard, the researchers must ensure
that all interviewees have a Shariah background and are directly involved in managing
waqf affairs, especially in implementing the istibdal. Thus, the selection of respondents
consisting of MAIK waqf department ofcers is the right decision. In terms of the reliability
of the data, all interviewees are questioned with the same set of questions. One-to-one
interviews with standardised questions could improve the reliability of the study (Conway
et al., 1995). All facts mentioned by interviewees to the researchers have been conrmed
before leaving the session to avoid accidental errors. Before the interview, the questions
were submitted a week earlier to prepare for the best answers.
The data also were subject to triangulation. In research, triangulation helps in addressing
the limitations of a given methodology by complementing its weaknesses with the strength
of other methods (Brewer and Hunter, 1989). Denzin (1984) identied four forms of
triangulation, which are data source triangulation (retrieving data from several different
sources to form one body of data), investigator triangulation (using multiple observers
instead of a single observer in the form of gathering and interpreting data), theoretical
triangulation (using more than one theoretical position in interpreting data) and
methodological triangulation (using more than one research method or data collection
Implementation
of istibdal in
Kedah
technique). This study used data source triangulation to ensure its accuracy, credibility and
validity. Therefore, to strengthen the data accuracy, credibility and validity, the researchers
asked the respondents to show the ofcial documents related to the factors and
implementation of istibdal in MAIK to be cross-referenced with the interview data. This is to
mutually strengthen the data acquisition to achieve the objectives of the study.
Results
For the results of the study regarding the question on the implementation process of istibdal
waqf property by MAIK, respondents IV1 and IV2 stated:
There are two istibdal implementation processes outlined by MAIK, namely the istibdal
implementation process for waqf land registered with a title deed under MAIK and waqf land
registered as a reserve certicate (RC) for religious use such as the mosque and cemetery. Every
waqf property process taken by certain parties, especially by the State Authority (PBN) has a
detailed process to be fullled so that the implementation of istibdal is done in line with Shariah
requirements.
For each of the waqf property taken by the PBN or the developer, they have to pay
compensation or replace it with a property of equal value or better. This is as stated by IV1:
MAIK attends the land acquisition hearing. In the trial, it will be determined that the land price
compensation will be paid to MAIK, and the building structure compensation or the developer
will replace the construction involved with the equivalent value to the original or higher.
For each waqf property involved in the istibdal process, MAIK will rst obtain the views and
permission from the State Fatwa Committee, and this is as stated by IV1:
MAIK obtains the decision of the Fatwa Committee and informs the agency regarding
the implementation of the project. Suppose the Fatwa Committee agrees with the proposed
land acquisition or agrees with the land acquisition area amendment. In that case, the land
compensation money will be given according to the value of the land involved in the acquisition
or the land is replaced with the land of equal value or higher and used for the original waqf
purpose.
After the istibdal process is implemented, MAIK will replace the waqf property involved
using compensation money. This is as stated by IV2:
MAIK will identify the land purchased as a replacement for the land involved in the acquisition
using the compensation money paid. MAIK presented a proposal for acquiring the new land as a
replacement in the Waqf and Baitulmal Land Investment and Development Committee to
purchase new land using the compensation money.
The istibdal process involves building mosques and cemeteries. MAIK will ensure that
compensation or replacement of payments by PBN or the developer will be replaced or built
with a new structure of the same standard or better, and used for the original purpose of
waqf. This is as mentioned by IV2:
MAIK will ensure that the mosque building, or gravesite involved in the recruitment will be
replaced with a better one and meet the original purpose of the waqf.
Based on the results of this interview, the researchers were able to identify the rst theme,
which is There are two istibdal implementation processes outlined by MAIK, namely the
istibdal implementation process for waqf land registered with a title deed under MAIK and
waqf land registered as a RC for religious use such as the mosque and cemetery.
QRFM
While for the results of the interview for the question on the factors of istibdal
implementation in Kedah, IV1 and IV2 stated:
In general, there are three factors in implementing istibdal in Kedah, namely the acquisition of
waqf land by PBN, the application for istibdal by the State Education Department (JPN) and the
application for istibdal by the mosque committee.
The study also found six cases of istibdal implementation involving the acquisition of
waqf land by PBN; one case for istibdal application by the State Education Department (JPN)
and one case involving istibdal application by the mosque committee. Meanwhile, in terms
of details on all cases of istibdal implementation, especially from the point of waqf
land replacement involved in the acquisition by the parties mentioned, the respondents
provided copies of documents, recording the implementation of istibdal waqf property
in Kedah to the researchers during the interview session. This is as stated by both
respondents:
There are eight cases of istibdal implementation in Kedah where six of them involve the PBN, one
case involves an application by the State Education Department (JPN) and another case involves
an application by the mosque committee. In terms of the details of the implementations, all these
cases are stated in this le.
The details of each istibdal case obtained from the documents provided by the respondents
are summarised in Table 1.
Thus, for the second theme, the researchers have identied three factors in implementing
istibdal in Kedah, namely, the acquisition of waqf land by PBN, the application for istibdal by
the State Education Department (JPN) and the application for istibdal by the mosque
committee.
Several cases of istibdal implementation have successfully brought cash fund generation
to MAIK through consolation payments, shophouse rental income and returns from
mudarabah investments. This is as stated by IV1 through the question of whether there are
cases of istibdal implementation that generate cash waqf funds:
As a result of the implementation of istibdal, a total of four cases have brought cash fund
generation to MAIK. This can be seen in the case of the construction of the Beris Dam, apart from
the PBN making a replacement with compensation of the same value, the PBN also provided a
consolation payment of RM35,580.39 to the MAIK. Later in the case of the construction of Plaza
Aman Central, because of the compensation money for the waqf property, MAIK invested it in a
mudarabah scheme. Meanwhile, in the case of the expansion of the Sultan Abdul Halim Airport
and the road upgrading project, MAIK replaced the waqf lands taken by buying two lots of
shophouses for rent. The proceeds from the cash fund can cover the management expenses of
waqf properties in Kedah.
The third theme that can be produced is the generation of cash funds to MAIK through the
implementation of istibdal waqf property.
For the results of the interview regarding the openness and support of the Fatwa
Committee towards the istibdal implementation projects by MAIK, IV1 stated:
So far, the Fatwa Committee is supportive and open in providing Islamic legal views regarding
some of the implementation of istibdal by MAIK. Although it was found that the main reference of
the Fatwa Committee is based on the al-Shai school of thought which is quite rigid in the issue
of istibdal waqf property, but the Fatwa Committee is opened to refer to other recognised schools
of thought that are broader and open in the issue of istibdal such as referring to Hanaand
Hanbali. This can be seen when the waqf land can still be utilised, but it is also allowed to
implement istibdal on the land to develop its benets and well-being further.
Implementation
of istibdal in
Kedah
No. Case
1 Construction of Water Dam (Beris Dam)
The Ministry of Natural Resources has implemented the Beris Dam construction project through the
8th Malaysia Plan. This project involves the acquisition of two lots of waqf land, namely:
i. Lot 12613, HS (M) 88/85, located in Kampung Besar Sungai Batang. There is a mosque and
cemeteries on the waqf land
ii. Lot 2402, HS (M) 71/86 located in Kampung Charuk Bakong. This waqf land has been turned into
a cemetery for Muslims
As a result of acquiring the waqf land, PBN has replaced the two lots of waqf lands involved in the
acquisition at the same location. The replacement locations for the two waqf land lots are:
i. Lot 507, Bandar Baru Beris Jaya with an area of 0.7196 hectares to reconstruct a mosque
ii. Lot 514, Bandar Baru Beris Jaya with 2,750 hectares for the resettlement of graves removed from
Kampung Besar Sungai Batang and Kampung Charuk Bakong
Apart from replacing the waqf land involved, PBN also nances all construction costs of the new
mosque building. PBN also paid RM35,580.39 to MAIK for Lot 2402 and HSM 71/86 for the
cemetery. The cemeteries involved have been completely relocated to a new area, while the mosque
that had been ooded at the Beris Dam has been replaced with a bigger mosque
2 Expansion of the airport (Sultan Abdul Halim Airport)
The Sultan Abdul Halim Airport expansion activities have involved acquiring special waqf land by
PBN of four lots. The acquisition of the four lots of waqf land was made in 2001. The four lots of
waqf land are paddy eld agricultural lands, where the prots earned from the proceeds are
endowed to three different parties. The waqf land lots involved in the acquisition are:
i. Lot 35, GM 1002, Mukim Titi Gajah, Kota Setar District. The proceeds obtained from this lot are
a special endowment channelled to the Tuan Hussin Titi Gajah Mosque
ii. Lot 783, H.S (M) 600/87, Mukim Titi Gajah, Kota Setar District. The proceeds from the
agricultural activities are given to Maktab Mahmud Religious Secondary School
iii. Lot 121, SP 8907, Mukim Titi Gajah, Kota Setar District. This lot is also endowed with a special
waqf where the proceeds are channelled to the Bukit Pinang Mosque
iv. Parts of Lot 259, GM 289, Mukim Titi Gajah, Kota Setar District. Proceeds from this waqf land
have been reserved for the benet of Maktab Mahmud Religious Secondary School
As a replacement process for acquiring the four lots of special waqf land, PBN has allocated a total
compensation of RM387,210.00 to MAIK to obtain new assets to be used as waqf property. The
compensation was paid at different rates according to the lot, namely:
i. RM137,102.00 for Lot 35, GM 1002
ii. RM131,266.00 for Lot 783, HSM 600/87
iii. RM112,204.00 for Lot 121, SP 8907
iv. RM6,638.00 for part of Lot 259 GM 289
With the amount of compensation obtained by PBN, MAIK has purchased a shophouse (Plot 16-H.S
(M) 1634 PT 584), located in Taman Angsana, Mukim Bandar Pokok Sena, Pokok Sena District. The
shophouse was purchased for RM315,000.00 and registered under MAIK. The purpose of the
purchase is to be used as istibdal to the original waqf land that has been involved in the acquisition
by PBN. MAIK has rented the 128 square meters shophouse with a monthly payment of
RM2,200.00. The monthly rental income obtained is channelled to all three waqf recipients as stated.
The action of MAIK is based on the decision of the Fatwa Committee meeting. The monthly rental
income obtained by MAIK is more lucrative than the income from paddy eld agricultural activities
implemented on the original waqf land
3 Construction of an electried double-tracked railway (Ipoh-Padang Besar)
This electric railway twin-track was built from Ipoh, Perak and ended in Padang Besar, Perlis. The
project acquired four lots of waqf land from the two villages involved and was taken by PBN. The
four waqf land lots involved are:
(continued)
Table 1.
Cases of istibdal
implementation in
Kedah
QRFM
No. Case
i. Lot 3 with 650 square meters and Lot 1219 with 556 square meters located in Kampung Tok
Seron, Kota Setar District. A musolla (prayer room) and a cemetery for Muslims have been built
on the waqf land
ii. Lot 4 with 831 square meters and Lot 5 with 821 square meters located in Kampung Pegawai,
Kota Setar District. The waqf land has also been used as a cemetery for Muslims
Although the waqf lands have been taken to implement the double track project, PBN has paid
compensation on the waqf lands with a value of RM1,920,000.00 to MAIK. The compensation money
was paid to get other lands to replace the waqf land involved, relocate the graves and build a new
musolla. The land purchased as a replacement for the waqf land is Lot 1220 with an area of 0.2429
hectares and Lot 1221 with an area of 0.5530 hectares, located in Mukim Pengkalan Kundor, Kota
Setar District
The implementation of istibdal was based on the approval given by the Fatwa Committee on 29
July 2009. Pengurusan Izzah Sdn Bhd implemented the cemetery relocation activities of the two
villages by taking 16 days for the Kampung Tok Serun cemetery and 19 days for the Kampung
Pegawai cemetery. The work of relocating the cemetery has been supervised by Shariah ofcers
appointed by MAIK based on the Fatwa Committees decision. With this action, the graves which
are located separately in two different villages are consolidated in a new place that is wider, more
organised and orderly. At the same time, the demolished musolla building was rebuilt with a
complete infrastructure to facilitate musolla activities
4 Road upgrading project
The road upgrading project has resulted in PBN taking four lots of waqf land located in different
locations. The information for the four waqf land lots are:
i. Lot 728, GM 161 located in Mukim Kubang Rotan, Kota Setar District. This land has been
endowed with general waqf. This waqf land acquisition aims to build a Coastal Road from Kuala
Kedah to Kuala Sanglang
ii. Lot 1509, GM 763 located in Mukim Kubang Rotan, Kota Setar District. This waqf land is also a
public waqf land for charity purposes. The acquisition of waqf land was made on the same
factor, namely to build a Coastal Road from Kuala Kedah to Kuala Sanglang
iii. Part of Lot 3789, SPB 63305 located in Mukim Pulai, Baling District. This lot is a public waqf
land that PBN has taken to implement a road upgrading project in the district
iv. PBT 2078 GM 1377. This waqf land is located in Mukim Gurun, Kuala Muda District. This land
has also been endowed with the intention of general waqf for the benet of Muslims. The
acquisition of this waqf land was made to implement a project to upgrade the route from Gurun
to Sik
Following the implementation of waqf land acquisition for the four lots, PBN has allocated a total
compensation of RM278,151.94, which has been paid to MAIK. The compensation money is given so
that the waqf lands involved in the acquisition can be replaced. The compensation money was paid
in different values according to the lots separately. The values of compensation paid by PBN are
listed as follows:
i. RM105,527.93 for Lot 728 GM 161
ii. RM70,324.22 for Lot 1509 GM 763
iii. RM66,719.40 for Lot 3789 SPB 63305
iv. RM35,580.39 for PBT 2078 GM 1377
Based on the amount of compensation received, MAIK purchased a shophouse building, namely
Plot 15-H.S (M) 1663 PT 583 in Taman Angsana, Mukim Bandar Pokok Sena, to replace the waqf
land that has been taken. The 185 square meter building was purchased for RM250,000.00, while the
legal fees were RM7,010.00. Of the price, a total of RM14,438.45 was nanced from the compensation
money of Lot PBT 2078 GM 1377, while the remaining price of the building was nanced from the
total compensation of Lot 1509 GM 763, Lot 3789 SPB 63305. MAIK rented this building with a
monthly payment of RM2,310.00, and the monthly proceeds are channelled for general waqf use.
This lot is located next to Lot 16, which MAIK purchased due to the acquisition of waqf land by the
(continued)Table 1.
Implementation
of istibdal in
Kedah
No. Case
authorities for the Sultan Abdul Halim Airport expansion project located in Kepala Batas. With the
purchase of the lot, MAIK has owned two lots of shophouse buildings in Taman Angsana due to
the implementation of istibdal waqf property in Kedah. MAIKs action is also based on the decision
of the Fatwa Committee
5 Construction of business complex (Plaza Aman Central)
This complex involves acquiring a waqf site and building, namely Madrasah Salihiyyah, which is
located on Lot 623 GRN 95152 (new lot 418), in Jalan Tambang Badak, Mukim Kota Setar, Kota
Setar District. The location of the madrasah is next to an abandoned building, and the state
authorities have decided to expand the complex building to the site of Madrasah Salihiyyah
After examining the application from the Kedah State Development Corporation and obtaining
information and clarication from the Kedah State Government, then on 4 July 2011, the Fatwa
Committee decided that:
i. To preserve the trust of the party who endowed the Madrasah Salihiyyah site, the developer
must pay compensation according to the current value to MAIK as the trustee
ii. MAIK is responsible for the compensation money to obtain a new site to replace the original site
of Madrasah Salihiyyah
iii. The developer shall erect a separate musolla from the Plaza Tengku Yaakub shopping complex
or be built on the complexs ground oor
iv. The new musolla built shall:
a. Have a dome, tower or any other symbol that represents a musolla to highlight Islamic
teachings
b. The same or more area than the existing Madrasah Salihiyyah musolla
c. Construction costs are funded by the developer
d. A separate ablution place and bathroom between men and women in the musolla area
e. The Fatwa Committee advised that the existing Madrasah Salihiyyah Committee be involved
in the administration and management of the new musolla
PBN has paid RM893,592.39 to acquire the Madrasah Salihiyyah site and RM543,708.00 for the
Madrasah Salihiyyah building to MAIK. This shows that the total compensation payment for the
madrasah site and the building is RM1,437,300.39. Meanwhile, in the search for replacement
property for the site and building of Madrasah Salihiyyah that has been taken, MAIK has
invested the compensation money through mudarabah investment to generate waqf
funds. The amount obtained from the investment was RM125,401.72, making a total of
RM1,562,702.11
From the amount, a sum of RM1,438,418.46 was used for the purchase of new properties. Apart
from that, a total of RM3,500.00 was paid for the land valuation fee, RM2,000.00 for the surveyors
fee, RM10,000.00 was paid as MAIK service charge, and a total of RM27,846.00 was given to the
Madrasah Salihiyyah Committee for musolla expenses. After deducting the entire expenditure,
MAIK still has RM71,937.65, used as a waqf fund due to the investment carried out. The land
purchased by MAIK as istibdal to the land and building of Madrasah Salihiyyah is PT 1623 HS (D)
8022, Alor Setar Town with an area of 658.8684 square meters and part of Lot 2409 GRN 183063,
Alor Setar Town with an area of 227 square meters out of a total area of 913 square meters
6 Flood mitigation project of Sungai Muda
The construction of the ood mitigation project has caused PBN to take several lots of waqf land,
which are cemeteries and a mosque involved, namely Lot 322 RC 349, Mukim Pinang Tunggal,
Kuala Muda District. The waqf land covers an area of 443 jemba and is a special waqf land for
Masjid Pinang Tunggal
Apart from acquiring the waqf land, PBN has also decided to relocate the cemetery located in Lot
428 RC 350 Kampung Jawa, Mukim Pinang Tunggal, Kuala Muda District. The land has an area of
1 acre, 249 jemba and is the old cemetery of Kampung Jawa. This evacuation was done because the
graves are located on waqf land, which is the route to implement the ood mitigation project.
However, the waqf land is not involved in the acquisition and retains its status as waqf land
(continued)
Table 1.
QRFM
Therefore, the fourth theme that can be identied by the researchers is that the fatwa
committee is open to referring to the recognised Islamic schools of thought in the issue of
istibdal as well as supporting all proposals submitted by MAIK to expand waqf property
through the istibdal method.
No. Case
To approve the acquisition of waqf land and the transfer of the grave, MAIK held a site visit to
Masjid Pinang Tunggal on 19 November 2008 to obtain clearer information related to the
application. Accordingly, the Fatwa Committee decided:
i. The party concerned needs to build a high barrier or wall next to the sidewalk or porch of
Masjid Pinang Tunggal next to Sungai Muda
ii. The Committee supported 80 graves in the old Kampung Jawa cemetery to be moved to the
existing Kampung Jawa cemetery
iii. The Committee also supported one hundred and fty cemeteries in the Sidam Kiri Mosque
cemetery involved in the Sungai Muda ood mitigation project to be relocated to the same
cemetery
iv. All cemeteries of Kampung Jawa and Masjid Sidam Kiri involved in the Sungai Muda Kedah
ood mitigation project must be replaced in other areas with the same area
v. The Committee requested the party to submit the new Penang Tunggal mosque plan to the
Fatwa Committee to ensure that the mosque plan complies with Islamic requirements. It is
recommended that the new mosque can accommodate two thousand worshipers because of the
growing population in the future
Following the conditions set by the Fatwa Committee, the replacement of waqf land taken by PBN
to implement the ood mitigation project was implemented with the replacement in Lot 1381,
Mukim Pinang Tunggal, Kuala Muda District, with an area of 0.899 hectares
7Istibdal Al-Kausar Mosque Cemetery
The implementation of istibdal was also done on the waqf land of the Al-Kausar Mosque Islamic
cemetery in Kampung Titi Baru. The waqf land with an area of 0.92 acres is located in Lot 671 GM
313, Kampung Titi Baru, Mukim Bukit Pinang, Kota Setar District. The purpose of istibdal waqf
land for this cemetery is to facilitate the management of the remains in the area. This is because the
cemetery is located quite far from the Al-Kausar Mosque and makes it difcult for the mosque to
manage the remains in the event of death
Therefore, Masjid al-Kausar has applied to MAIK to change the cemetery located in Lot 671 GM
313 with land located in Lot 638 GM 388 next to Masjid al-Kausar consent of the landlord. Following
that, MAIK has brought the proposal to the Fatwa Committee to answer the proposed istibdal of the
waqf land
After that, the Fatwa Committee did not hesitate to support the mosque committeesproposalto
change the waqf land of Lot 671 GM 313 Mukim Bukit Pinang, Kota Setar District, with an area of 0.92
acres owned by MAIK with Lot 638 GM 388 Mukin Bukit Pinang Kota Setar District as much as 0.92
acres belonging to Zulkii bin Osman, Ilyas bin Osman, Nuriah binti Osman and Fatimah binti Mat Isa
8Istibdal cemetery of Sultan Abdul Hamid college
Through the State Education Department, the Sultan Abdul Hamid College Alumni Association applied
to MAIK to move the cemetery located near the college to be used as the association building site. The
cemetery is located on Lot 493 RC 188 with an area of 363 jemba 20 square feet
MAIK has brought the application to change the cemetery to the Fatwa Committee to seek views on
implementing istibdal in the cemetery. The Fatwa Committee, which met on 31 October 2011, decided
that there was no restraint in supporting MAIKs proposal for the state education department (Sultan
Abdul Hamid College) to be replaced with a new site near the Tanjung Bendahara Mosque cemetery
with the same area according to istibdal method. The new cemetery is located at Lot 132 RC 176,
Tanjung Bendahara, Mukim Derga, Kota Setar District
Note: By authors Table 1.
Implementation
of istibdal in
Kedah
Discussion
Istibdal implementation process by Majlis Agama Islam Kedah
Based on the results, two istibdal implementation processes outlined by MAIK are the
istibdal implementation process for waqf land registered title deed, and waqf land registered
as RC for religious use like mosques and cemeteries. In general, the processes outlined by
MAIK are adequate for the continuity of waqf property in Kedah and the guidelines meet all
the good elements in the implementation of istibdal. Majlis Agama Islam Kedah (MAIK) will
get the muftis opinion before a waqf asset goes through the istibdal process to ensure that
the implementation is in line with the Shariah requirements. In addition, MAIK will identify
potential and strategic lands to be purchased as a replacement for the land involved in the
acquisition using the compensation money. This will ensure the property replaced is of the
same value or higher than the previous property outlined by Shariah (Hisham et al.,2013).
Similarly, MAIK will ensure that the waqf land registered for religious purposes such as
mosques and cemeteries are maintained and the improvements in area and infrastructure in
the new place replacing the waqf lands are to be taken by the PBN.
However, there are some suggestions for improvement in the istibdal guidelines. Among
them are guidelines on identifying non-productive waqf assets such as the area of waqf
property that is narrow and difcult to develop, waqf property that is idle and cannot be
developed to benet the Muslims, the position and location of waqf properties that are far,
scattered and not suitable for development, as well as results and benets that cannot meet
the goals and objectives of the waqf (Romli, 2019). In addition, guidelines for acquiring waqf
land by the state authority should also be added. The implementation of istibdal in Malaysia
is due to the acquisition of waqf land by the PBN. This is important for preventing waqf land
from being misused, which can affect the value of the waqf land, such as only taking part of
the land to affect the area of waqf land and causing it to lose its economic value (Noor et al.,
2021).
Similarly, PBN or other parties need to replace the value of waqf assets with higher-
valued assets because it belongs to the public welfare. Additional guidelines are used to
raise funds from the istibdal process. If there is a strategic plan for replacing waqf assets,
then every waqf property that undergoes the istibdal process can generate cash funds for
MAIK. If the above recommendations are considered, it can strengthen good governance in
implementing istibdal waqf property. Strengthening an administrative system through
structured guidelines can further strengthen waqf assets (Sabri and Mahamood, 2020 and
Mohamad, 2020).
Factors in the implementation and generation of waqf funds
Based on the study results, 18 lots of waqf land are involved in the istibdal implementation,
which consists of four lots of general waqf lands and 14 lots of special waqf lands. Some of
the waqf lands consist of agricultural land, cemetery, mosques and musolla. The istibdal
implementation in Kedah is due to the acquisition of waqf land by PBN for public purposes,
istibdal application by the state education department (JPN) and istibdal application by the
mosque committee.
The researchers will analyse eight case patterns of istibdal implementation based on the
study results, i.e. the extent to which it brings cash waqf funds to MAIK. The
implementations of istibdal are as follows:
The rst case is the original and replacement waqf property caused by the construction
of the water dam (Beris dam) as shownin Table 2.
Based on Table 2, it is found that the implementation of istibdal provides cash waqf funds
to MAIK amounting to RM35,580.39. However, the waqf fund is not generated by any
QRFM
development activity through any method after the istibdal is implemented. To be precise,
the waqf fund is obtained through a grant by PBN. Although istibdal was implemented to
replace the same property which is land, PBN paid a consolation amount of RM35,580.39 to
MAIK. For Lot 12613 HS (M) 88/85, PBN did not give additional money to MAIK. However,
the authorities have funded the reconstruction of a new mosque to replace the old mosque
involved in constructing the dam.
The second case is the istibdal of the original and replacement waqf property for the
expansion of the airport (Sultan Abdul Halim Airport) as shown in Table 3.
MAIK rented the shophouse building, which was replaced with the original waqf
property at a monthly rate of RM2,200.00. The rental proceeds are channelled to three waqf
recipients, whom each receive RM733.33 per month. The three recipients are Tuan Hussin
Titi Gajah Mosque, Maktab Mahmud Religious Secondary School and Bukit Pinang
Mosque. This means that the implementation of istibdal has resulted in the generation of
regular cash waqf funds to the three recipients of the waqf.
The third case is the istibdal of the original and replacement waqf property for
constructing the electric railway double track (Ipoh-Padang Besar)as shown in Table 4.
Table 3.
Istibdal of original
and replacement
waqf property for
airport expansion
(Sultan Abdul Halim
Airport)
No. No. Lot and No. Grant Location
Types of waqf
land
Original waqf asset
1. Lot 35 GM1002 Mukim Titi Gajah, Kota Setar District Rice eld
2. Lot 783 H.S(M) 600/87 Mukim Titi Gajah, Kota Setar District Rice eld
3. Lot 121 SP 8907 Mukim Titi Gajah, Kota Setar District Rice eld
4. Part of Lot 259 GM 289 Mukim Titi Gajah, Kota Setar District Rice eld
Replacement waqf asset
No. No. Lot and No. Grant Location Types of waqf land Waqf fund
raising activities
1. Plot 16-H.S (M) 1634 PT 584 Taman Angsana,
Pokok Sena district
1 Lot of Shop House
Building
Rental
Note: By authors
Table 2.
Original and
replacement waqf
property caused by
the construction of
the water dam (Beris
dam)
No. No. Lot and No. Grant Location
Types of waqf
property
Original waqf asset
1. Lot 12613 HS(M)88/85 Kampung Besar Sungai Batang Mosque and Land
Cemetery
2. Lot 2402. HS(M) 71/86 Kampung Charuk Bakong Land Cemetery
Replacement waqf asset
No. No. Lot and No. Grant Location Types of waqf property Waqf fund
raising activities
1. Lot 507 Bandar Baru Beris Jaya Mosque and Land Cemetery None
2. Lot 514 Bandar Baru Beris Jaya Land and Cash (RM 35,580.39) None
Note: By authors
Implementation
of istibdal in
Kedah
Based on the table, the istibdal method implemented did not generate cash waqf funds for
MAIK. This is because the waqf property that implemented istibdal is in the same property
category land and musolla.
The fourth case is the istibdal of the original and replacement waqf property for the road
upgrading projects as shown in Table 5.
The shophouse building, which has been used as a replacement for this waqf property, is
registered under MAIK. To generate waqf funds, MAIK has leased the building at a rate of
RM2310.00 per month. MAIK manages to generate waqf funds consistently every month for
public benet. This is because the waqif did not set special conditions when the waqf is
performed. If MAIK collects the rental payment for the building for a year, MAIK will obtain
a total fund of RM27,720.00, which can then be used to manage the waqf property.
The fth case is the istibdal of the original and replacement waqf properties for
constructing the business complex (Plaza Aman Central) as shown in Table 6.
Based on Table 6, it is found that it did not generate cash waqf funds to MAIK
consistently. This is because the land that was replaced has been acquired to build a new
musolla to replace the old one that has been demolished in the project. Therefore, the
Table 4.
Istibdal of original
and replacement
waqf property for the
construction of
electric railway
double track (Ipoh-
Padang Besar)
No. No. Lot and No. Grant Location Types of waqf land
Original waqf asset
1. Lot 3 Kampung Tok Seron, Kota Setar district Land and musolla
2. Lot 1219 Kampung Tok Seron, Kota Setar district Cemetery
3. Lot 4 Kampung Pegawai, Kota Setar district Cemetery
4. Lot 5 Kampung Pegawai, Kota Setar district Cemetery
Replacement waqf asset
No. No. Lot and No. Grant Location Types of waqf land Waqf fund raising
activities
1. Lot 1220 Pengkalan Kundor, Kota
Setar district
Cemetery and musolla None
2. Lot 1221 Pengkalan Kundor, Kota
Setar district
Cemetery None
Note: By authors
Table 5.
Istibdal of original
and replacement
waqf properties for
road upgrading
projects
No. No. Lot and No. Grant Location Types of waqf land
Original waqf asset
1. Lot 728 GM161 Mukim Kubang Rotan, Kota Setar district General Waqf Land
2. Lot 1509 GM763 Mukim Kubang Rotan, Kota Setar district General Waqf Land
3. Lot 3789 SPB63305 Mukim Pulai, Baling General Waqf Land
4. PBT 2078 GM1377 Mukim Gurun, Kuala Muda district General Waqf Land
Replacement waqf asset
No. No. Lot and No. Grant Location Types of waqf land Waqf fund raising
activities
1. Plot 15-H.S(M) 1663 PT 583 Taman Angsana, Pokok
Sena district
1 Building Lot
Shophouse
Rental
Note: By authors
QRFM
replacement land cannot be developed with activities that can generate cash waqf funds for
MAIK. However, the investment activities carried out by MAIK on the compensation of
RM1,437,300.39 paid by PBN before the purchase of replacement property have succeeded
in generating RM125,401.72. This brings the accumulated amount to RM1,562,702.11.
If the compensation money is not invested, all replacement arrangements for the waqf
property taken will be disrupted due to a lack of funds to purchase new property. This is
because the replacement property value amounts to RM1,438,418.46 compared to the
total compensation of RM1,437,300.39. Meanwhile, the land valuation fee is RM3,500.00,
the surveyors fee RM2,000.00, MAIK service charge is RM10,000.00 and Madrasah
Salihiyyahs expenses is RM27,846.00, which makes the total cost of RM1,490,764.46. Thus,
the investment initiated by MAIK is not only able to cover all costs related to replacement,
but there is still a surplus of RM71,937.65. The money can be used to nance new waqf
properties or continue to be invested to generate more cash waqf funds.
The sixth case is istibdal original and replacement waqf properties for Sungai Muda ood
mitigation project as shown in Table 7.
Based on the table, it is found that the implementation of istibdal does not generate cash
waqf funds for MAIK.
The seventh case is the istibdal of the original and replacement waqf properties for
Al-Kausar Mosque cemetery waqf land as shown in Table 8.
According to the table, there is no fundraising activity for MAIK because the
implementation of istibdal only occurs by exchanging cemeteries for the benet of the
Al-Kausar Mosque.
Table 6.
Istibdal of original
and replacement
waqf properties for
the construction of
the business complex
(Plaza Aman Central)
No. No. Lot and No. Grant Location Types of waqf land
Original waqf asset
1. Lot 623 GRN 33480 Alor Setar, Kota Setar district Land and musolla
Replacement waqf asset
No. No. Lot and No. Grant Location Types of waqf
land
Waqf fund raising activities
1. PT 1623 HS (D) 8022 Alor Setar, Kota
Setar district
Land Investment of Compensation
Money Before Purchase of
Replacement Land
2. Part of Lot 2409 GRN 183063 Alor Setar, Kota
Setar district
Land Investment of Compensation
Money Before Purchase of
Replacement Land
Note: By authors
Table 7.
Istibdal of original
and replacement
waqf properties for
Sungai Muda ood
mitigation project
No. No. Lot and No. Grant Location Types of waqf land
Original waqf asset
1. Lot 322 RC 349 Mukim Pinang Tunggal, Kuala Muda district Land and Mosque
Replacement waqf asset
No. No. Lot and No. Grant Location Types of waqf land Waqf fund raising activities
1. Lot 1318 Kota Setar district Land None
Note: By authors
Implementation
of istibdal in
Kedah
The eighth case is the istibdal of the original and replacement waqf properties for Sultan
Abdul Hamid College cemetery as shown in Table 9.
Based on the table, the implementation of istibdal in the grave relocation does not
generate cash waqf funds for MAIK as each grave involved has to be relocated to a new
cemetery. The building will be used as a management ofce for former students of Sultan
Abdul Hamid College without any commercial activities that can generate cash waqf funds
for MAIK.
As a result of the analysis, of all istibdal implementations on waqf properties in Kedah,
only four cases provided cash waqf funds to MAIK. The fundraising details are shown as
follows in Table 10.
Table 8.
Istibdal of original
and replacement
waqf properties for
Al-Kausar Mosque
cemetery waqf land
No. No Lot and No. Grant Location Types of waqf land
Original waqf asset
1. Lot 671 GM 313 Kampung Titi Baru, Kota Setar district Cemetery
Replacement waqf asset
No. No Lot and No. Grant Location Types of waqf land Waqf fund raising activities
1. Lot - GM 638 Kampung Titi Baru, Kota
Setar district
Cemetery None
Note: By authors
Table 9.
Istibdal of original
and replacement
waqf properties for
Sultan Abdul Hamid
College cemetery
No. No. Lot and No. Grant Location Types of waqf land
Original waqf asset
1. Lot 493 RC 188 Mukim Derga, Kota Setar district Cemetery
Replacement waqf asset
No. No. Lot and No. Grant Location Types of waqf land Waqf fund raising activities
1. Lot 132 RC 176 Mukim Derga, Kota
Setar district
Cemetery None
Note: By authors
Table 10.
Results of cash fund
generation to MAIK
No. No. Lot and No. Grant
Type of substitute
property Sources of generation Fund raising rate
1. Cash Consolation Payment RM35,580.39
2. Land Investment of
Compensation Money
RM125,401.72
3. Plot 16-H.S(M) 1634 PT 584 Shophouse Rental RM2,200.00/ Month
4. Plot 15-H.S(M) 1663 PT 583 Shophouse Rental RM 2,310.00/Month
Note: By authors
QRFM
The Beris Dam (Tasik Beris) construction project was the rst implementation of istibdal,
which provided cash fund generation to MAIK. However, the fundraising following the
project was not in large amount, nor was it consistent. It is considered as a consolation
payment by PBN to MAIK. Similarly, for the second case, the cash waqf funds are generated
by investing the compensation money while obtaining suitable land to replace Madrasah
Salihiah.
Although the fundraising activities were inconsistent, interestingly, the investment
scheme in the Madrasah Salihiah case brought an increase in waqf funds. This method is
ideal for waqf lands or assets in a strategic place with high and competitive land value
(Ghani et al.,2019). Thus, if the non-strategic waqf land sale revenue is moderate, the
revenue can be increased through investment schemes that bring lucrative returns. This
strategy allows MAIK to purchase more strategic waqf assets. Therefore, MAIK can extend
the istibdal method to all waqf lands, where sales funds can be expanded through investment
schemes. Waqf administrators in other states can also emulate this strategy.
According to the table above, the two istibdal implementation cases provide cash waqf
funds consistently with a xed monthly income. This is because the two shophouses
purchased by MAIK through the istibdal method have been rented for a xed fee.
The efciency of MAIK in buyingshophouses as a replacement for the original waqf land
is signicant, where the cash waqf funds obtained enable MAIK to manage waqf properties
and benet the Muslim community. This is in contract with the proceeds from the original
agricultural waqf land. Apart from that, the purchase of a shophouse is also very protable
because the assets value will also increase yearly. The concept of istibdal can solve the lack
of waqf funds for waqf administrators (Shulthoni and Saad, 2018) and can benetwaqf
stakeholders. Among the models that can be formed based on the generation of cash funds
through the istibdal method by MAIK are stated in Figure 3 and Figure 4 as follows:
Figure 3.
Istibdal
implementation
model that generates
cash fund generation
to MAIK (Model 1)
Implementation
of istibdal in
Kedah
Based on Figure 3, the steps to istibdal implementation are as follows: rst, the waqf
property involved is identied by MAIK, and MAIK applies for a decision to implement
istibdal from the Fatwa Committee; second, the waqf property involved is handed over to
PBN; third, PBN pays compensation to MAIK; fourth, MAIK buys a new waqf asset in the
form of a shophouse and rents out the asset; fth, MAIK obtains rental income incash and is
used as a waqf fund.
Based on Figure 4, the steps to istibdal implementation are as follows: rst, the waqf
property involved is identied by MAIK, and MAIK applies for a decision to implement
waqf istibdal from the Fatwa Committee; second, the waqf property involved is handed over
to PBN; third, PBN pays compensation to MAIK; fourth, MAIK invests the compensation
money through mudarabah investment; fth, MAIK obtains investment proceeds and
makes it a waqf fund.
In addition, the permission of the Fatwa Committee to permit MAIK to perform
istibdal on waqf lands shows that it is open to Hanaand Hanbalis opinions in applying
the istibdal method. The Fatwa Committees primary reference in the fatwa process is the
al-Shai school of thought (Asni and Sulong, 2017b). However, according to Abdullah
(2010), al-Shai is very strict and limited in the istibdal implementation. Hence, even if
there is still a small benet to the waqf property, it is forbidden to be replaced, sold and
developed, because it needs to be maintained. Thus, to meet the enactment requirements,
the suitable approach needs to be referred to other recognised schools of the Islamic law
that are more maslahah and can maximise the function of waqf lands so that the waqf
properties do not continue to be idle and undeveloped. Extensive reference to several
schools of thought on this waqf issue is strongly supported as it can bring great
maslahah to waqf assets as stated by Kader (2016),Noor et al. (2017) and Hasbullah et al.
(2019).
Figure 4.
Istibdal
implementation
model that generates
cash fund generation
to MAIK (Model 2)
QRFM
Study implications on policy, practice and social
This study gives implications to the policy where MAIK is proposed to improve the existing
guidelines regarding the istibdal of waqf property. The suggestions are regarding the:
Guidelines on identifying non-productive waqf assets such as the area of waqf
property that is narrow and difcult to develop, waqf property that is idle and
cannot be developed to benet the Muslims, the position and location of waqf
properties that are far, scattered and not suitable for development, as well as results
and benets that cannot meet the goals and objectives of the waqf.
Guidelines for the acquisition of waqf land by the state authority to prevent waqf
land from being misused or things that can affect the value of waqf land, such as the
act of taking only part of the land to affect the area of waqf land and losing its
economic value, then it should be avoided.
Guidelines on the PBN or other parties need to replace the value of waqf assets
taken with a higher because it belongs to the public welfare.
Guidelines on fundraising as a result of the istibdal process. This is because each
implementation of istibdal has the opportunity to generate a cash waqf fund that can
cover management costs.
Guidelines on the regulation of waqf assets that have been corporatised need to be
comprehensively prepared, so that they are not misused by certain parties. This can
ensure that the funds released can be used to the maximum.
In addition, the guidelines of a comprehensive istibdal method can be emulated by other
states. The guidelines can be standardised in the implementation of istibdal on all waqf
properties. The absence of clear guidelines on implementing istibdal can cause the
implementation of istibdal to be non-standard and affects waqf property. Similarly, the
wisdom of MAIK in generating cash waqf funds through investment instruments and
the replacement of shophouses for rental purposes are good examples to be emulated by
other waqf administrators.
Among the social implications of the istibdal method are, when the waqf property can be
developed, it can provide signicant benets and increase funds for the welfare of Muslims
through rental income, investment and development. This can undoubtedly full the
purpose or maqasid of a waqf property allocated by the Shariah. In addition, the progress
and signicant impact on waqf property can provide a high indicator of the efciency of an
organisation in managing waqf property. This can indirectly motivate the public, especially
the rich, to always full their charitable practices through the waqf mechanism and share
their wealth with the needy.
Conclusion
This study examines the implementation factors and generation of cash waqf funds through
istibdal on waqf property in Kedah based on the problem statements of previous studies,
which stated that waqf property could not be developed due to a lack of cash funds. This
study explores the factors for implementing istibdal waqf property and how far the istibdal
method can generate cash waqf funds in Kedah.
The results showed two istibdal implementation processes outlined by MAIK, namely,
the istibdal implementation process for waqf land registered title deed under MAIK and waqf
land registered as RC for religious use such as mosque and cemetery. The results also
showed three factors in implementing istibdal in Kedah, namely, the acquisition of waqf land
by PBN, the istibdal application by the state education department (JPN) and mosque
Implementation
of istibdal in
Kedah
committee. Out of eight cases of istibdal implementation, four of them generated cash funds
for MAIK through the mudarabah investment method from the sale of waqf lands and rental
of the replaced shophouses, and it can be used to cover expenses in managing waqf
properties in Kedah.
Limitation and recommendation
This study only focused on the factors and the generation of cash waqf funds through the
implementation of istibdal in Kedah. Thus, it is recommended that future studies expand
their focus to other states such as Terengganu, Kelantan, Penang, Sabah and others. In
addition, this study only interviewed ofcial ofcers who manage waqf property affairs.
Future studies can include respondents who specialise in fundraising activities to diversify
the methods of generating cash waqf funds more effectively.
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QRFM
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About the authors
Fathullah Asni is a Senior Lecturer at Faculty of Islamic Studies, Kolej Universiti Islam Perlis. He
holds PhD degree and a masters degree from Universiti Sains Malaysia in Islamic nance. Also, he
holds a bachelors degree from Yarmouk University in Jordan in Islamic Jurisprudence and Islamic
Law. Fathullah Asni is the corresponding author and can be contacted at: fathasni90@gmail.com
Afiffudin Mohammed Noor is a Senior Lecturer at Academy of Contemporary Islamic Studies,
Universiti Teknologi MARA. He holds PhD degree and masters degree from Universiti Teknologi
MARA in Shariah. Also, he holds bachelors degree from Mutah University in Jordan in Islamic
Jurisprudence and Islamic Law.
Muhamad Husni Hasbulah is a Lecturer at Faculty of Muamalat and Islamic Finance, Kolej
Universiti Islam Perlis. He holds masters degree from Universiti Kebangsaan Malaysia in Islamic
Economics (Islamic Banking). Also, he holds bachelors degree from University Malaya in Syariah
and Economics.
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Implementation
of istibdal in
Kedah
... It involves three lots of waqf lands arising from applications. Research conducted by Asni et al. (2024) on Majlis Agama Islam Kedah (MAIK) highlighted that there are three factors in implementing istibdal in Kedah, namely the acquisition of waqf land by State Authority (PBN), the application for istibdal by the State Education Department (JPN), and the application for istibdal by the mosque committee. In addition, some factor of successful waqf project was mentioned by Ibrahim and Ibrahim (2018) in their paper, where they discovered the waqf land is categorised into three categories: Majlis Agama Islam Perak (MAIPk), ownership of the government gazette (Pemilikan Warta Kerajaan), ownership of the Government Meeting Council (Pemilikan Majlis Mesyuarat Kerajaan (MMK)). ...
... In the istibdal waqf project performance, registration of waqf land is one of the indicators used to measure performance measurement input. Previous research suggested that to implement istibdal, waqf land needs to be registered with a title deed under MAIK and as Reserve Certificate (RC) for religious use, such as a cemetery and mosque (Asni et al., 2024). In Terengganu, to ensure the successful istibdal, waqf lands have been registered under MAIDAM to ensure the government will replace them with compensation money (Mat Rani, 2015). ...
... The first indicator is that the waqf institution has to fulfil the intention of waqif. This is supported by Asni et al. (2024), who mentioned that MAIK will ensure the waqf properties are used for the original purpose of waqf. Meanwhile, the second indicator of the waqf institution is that it can distribute the benefits to the beneficiaries. ...
Article
Full-text available
Istibdal waqf is one of the methods conducted to optimise waqf property to become more productive. In Malaysia, scholars have agreed that istibdal can be applied to all categories of waqf property. It is also used to solve the problems related to waqf land, which includes urban development, roads, land acquisition, and unproductive waqf land. Istibdal waqf can also be implemented if a waqif has expressed the intention to implement istibdal if the waqf properties can no longer benefit the beneficiaries. Therefore, this study aims to explain the indicators proposed for measuring the performance of the istibdal waqf project in waqf institutions in Malaysia. This study used qualitative research based on the library method. Facts and arguments are drawn from library materials such as high-impact journals and articles, newspapers, and conference papers. The result of the study discovered some indicators for the performance measurement in istibdal waqf. The indicators are divided into four categories: input, output, outcome, and network. To maximise the potential of waqf in a country, the performance measurement of waqf institutions must be measured to ensure that the waqf projects can benefit the community.