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Waqf –Takaful Compensation Model: The Documentation Framework Index (DFI) towards Good Governance Practices and Sustainability of Takaful Companies in Malaysia
Abstract
The concept of Waqf in Takaful refers to the distribution of Takaful contributor death compensation benefits to selected religious institutions for Waqf property. In this given context, the Waqf is established upon the contributor's death, and the compensation received by the Waqf beneficiary will be utilized for religious welfare until the culmination of time on the day of judgment. Therefore, this study focused on the level of implementation of the Waqf-Takaful Compensation Model toward good governance practices and sustainability of takaful companies, using a Documentation Framework Index (DFI) which was developed based on the data collected from 106 takaful agents who were involved directly throughout the introduction of Waqf-Takaful Compensation Scheme until 2022. It was found that 88% of Takaful Agency documented the percentage of the death compensation to participants by choice. Followed by 81% of Takaful Agency declared participants have the right to decide the percentage of the Waqf to be contributed to religious institutions and 79% of Takaful Agency restricted participants can only Waqf the percentage of death compensation not to an individual but to religious institutions. However, there are still some weaknesses in several elements of documentation and marketing of Waqf –Takaful Compensation Scheme by Takaful companies that needs some improvement. Therefore, the Waqf-Takaful Compensation Model, facilitated by the Documentation Framework Index, presents a forward-looking approach that aligns with Islamic principles based on waqf and Takaful compensation practices which promotes good governance, fosters sustainability, and contributes to the overall growth and positive impact of the Takaful industry in the country. However, successful implementation of the Waqf-Takaful Compensation Model requires collaborative efforts from various stakeholders, including regulators, Takaful operators, scholars, and the community. Adequate awareness, education, and buy-in are essential for the widespread adoption of this innovative model.
... Cash Waqf plays a significant role in the domain of Islamic finance and philanthropy, serving as a crucial tool that embodies the fundamental principles of solidarity and economic fairness. Waqf, originating from Islamic heritage, embodies a longstanding philanthropic custom wherein individuals or institutions allocate their financial resources, typically in the form of assets or monetary funds, with the intention of enhancing societal welfare [1][2][3][4]. ...
This structured literature review focuses on the implementation of technology in the context of cash waqf. The issue under consideration pertains to the necessity of conducting a thorough evaluation and integration of current scholarly investigations on the utilization of technology in the context of cash waqf. To address this, a systematic approach is employed, involving the collection and synthesis of relevant articles obtained from three databases (SCOPUS, ECONBIZ, and Mendeley). The findings of this study demonstrate the diverse methods in which technology is being incorporated into the cash waqf sector, encompassing digital platforms that facilitate donations as well as the utilization of cutting-edge financial instruments such as blockchain. The synthesis of the existing literature highlights the potential of technology to bring about significant improvements in the efficiency, transparency, and scope of cash waqf programs. In summary, this comprehensive analysis sheds light on the dynamic progression of cash waqf by examining its relationship with technology. It provides valuable perspectives on present patterns and potential avenues for further investigation and advancement in the crucial convergence of Islamic finance and contemporary technology.
The paper attempts to examine the effect of ownership structure on the Islamic corporate social responsibility (i-CSR) disclosure for Shari’ah Compliant Companies (ShCCs) in Malaysia. The Islamic corporate social responsibility (i-CSR) disclosure incorporated the five values of Maqasid Shari’ah and Maslahah. The content analysis was used to extract the i-CSR disclosure items from the ShCCs’ annual reports. The sample of 1,122 annual reports of 187 ShCCs from 2018 until 2013 was used. The data was analysed using STATA, and the robust standard error of the panel corrected of standard errors (PCSEs) was used to examine the relationship between i-CSR disclosure and the ownership structure. Namely, foreign ownership (FO), government ownership (GO) and Muslim director ownership (MDO) after statistical control by firm size (proxy by total assets) and profitability (proxy by return on assets, net profit margin and return on equity). The result, based on the PCSEs, indicated that government ownership is positively and significantly correlated with the level of i-CSR disclosure. In contrast, foreign ownership and Muslim director ownership are negatively correlated with i-CSR disclosure. The finding implies the presence of a higher government ownership is able to enhance fulfilling the reporting principles of full disclosure and transparency.
This paper aims to explore the readiness of takaful operators to integrate waqf as part of their product feature by assessing on the components of as proposed in the New Product Development Model: marketing supports; formalized development process and top management supports. Questionnaire was employed in this survey and takaful operators' employees who involved in product development were selected such as actuaries, business development managers and their executives. Unexpectedly, several takaful operators withdrew from participating in the survey (it was last minute)-which is limitation in this study. Accordingly, it caused the use of non-parametric tests in this study since the data is not normally distributed. Spearman rank correlation shows that formalized development process is the significant factor that influenced the readiness of the takaful operators to integrate waqf in their products. However, the other two independent variables which are marketing supports and top management supports depicted insignificant result. Nevertheless, the findings were still able to provide insights on the integration of waqf by takaful operators as their latest products' feature.
Purpose
This paper aims to present the viability of unit trust waqf (Islamic endowment) as an alternative asset class for waqf creation.
Design/methodology/approach
This paper starts with the conceptual exploration of the literature in the areas of waqf. The sources of the literature cover authentic sources of the Qurʾān and ḥadīth , as well as secondary sources such as books, journal articles and online resources.
Findings
This paper provides the conceptual framework of five models of unit trust waqf and their investment management parameters.
Originality/value
The novelty of this paper lies in its attempt to highlight the importance of waqf investment strategy in ensuring sustainable returns for waqf. It does so by introducing the conceptual models of unit trust waqf as viable mechanisms to pool more cash waqf from individual investors. The sustainability of the capital waqf assets in the form of unit trusts is maintained through the parameters for its application proposed towards the end of the paper.
Waqf is known as an endowment made by Muslims to charitable causes such as for education or religious purposes. Waqf is very important for the development of the Islamic ummah, and it is one of the practices recommended in Islam. However, there is no framework of Waqf management being developed in order to ensure that different types of waqf is managed efficiently. Therefore, this study would like to explore the Waqf management practices in Malaysia and propose a framework for Waqf Management. The study is conducted using qualitative approach which involved semi-structured interviews with the managers and employees of Waqf Johor Unit (UWJ) in Johor and the Waqf Selangor Corporation (PWS) in Selangor, Malaysia. The findings identified three important components that are crucial for efficient Waqf management, research management, investment management and property management. The existence of these components will enable the Waqf institutions to manage waqf effectively so that it will play an effective charitable role in developing the Islamic ummah. These findings will assist the policy makers and the management of waqf institutions to strategize Waqf as a driver for the social and economic development in Malaysia.
Purpose
The study aims to investigate the measurement model of four constructs, namely, spirituality at the workplace (SP), Islamic spirituality (ISP), organizational commitment (OC) and organizational citizenship behaviours (OCB). The study aims to contribute new knowledge to the existing literature whereby performance determinants comprising these constructs, serve to improve employee well-being which ultimately improves organizational performance.
Design/methodology/approach
Using disproportionate stratified random sampling, the survey data used for this empirical research were drawn from 482 employees working in takaful agencies in Malaysia. After yielding an instrument to measure SP, ISP, OCB and OC, principal component analysis (PCA) using SPSS and confirmatory factor analysis (CFA) using AMOS were carried out.
Findings
Good fit indices from CFA revealed that OC is explained by three variables, namely, normative, continuance and affective; SP is also explained by three variables comprising alignment with organizational values (AWOV), sense of community (SC) and meaningful work (MW); ISP is explained by three variables comprising belief, forgiveness and remembrance of Allah; and finally, OCB is explained by civic virtue, conscientiousness and altruism. The findings of this study will enable Islamic insurance companies to understand the importance of spirituality and Islamic spirituality on well-being and will further improve their function and performance by way of enhancing employees’ spirituality in the workplace. Moreover, Human Resource development professionals, organizational managers and government authorities may use the findings of this study to justify their efforts in designing appropriate learning and performance improvement interventions so that OC, OCB, IS and ISP among non-Muslim and Muslim employees can be monitored and further enhanced.
Originality/value
This study raises awareness on the importance of four critical constructs that can be used by corporate organizations, NGOs and other institutions, to justify their efforts in performance improvement interventions.
Takaful industry has witnessed an exponential growth across the world over the last decade, demonstrating an enormous demand for takaful products ranging from short-term general takaful to long-term family takaful. It has attracted considerable attention not only from the Muslim countries, but also from the non-Muslim countries. Despite its promising growth, however, the takaful industry continues to face numerous contentious Shari'ah issues. The present study aims to discuss some of the most fundamental Shari'ah issues in takaful, namely the issue of applying tabarru' concept in takaful and the issue of underwriting surplus of tabarru' fund.
The rapid growth of the Islamic finance industry invites the parallel progress of Takuful industry. The Takaful industry has grown based on various developing methods namely Mudharabah, modified Mudharabah, Wakalah, Wakalah-Waqf and even hybrid models. The Wakalah-Waqf model, an extension of Wakalah model was proposed to provide a better solution for the existing models of Takaful business that received numerous criticisms academics and its practitioners. However, there is a myriad of issues namely legal and Shariah issues pertaining to its operations that warrant intellectual discussion intended to provide proactive solutions for the benefit of the industry. Hence, the study aims to address the current legal and Shariah issues pertaining to its structure and practical operations. Eventually, the study seeks to suggest possible recommendations for the future growth of Takaful industry in Malaysia in particular and all over the globe in general. (C) 2012 Published by Elsevier Ltd.
Purpose
This study aims to examine and compare the current waqf governance practices in waqf institutions in Malaysia.
Design/methodology/approach
This paper reviews professional documents and literature to propose a new and practical waqf governance measurement. Waqf governance measurements were used to examine and compare the current waqf governance practices among waqf institutions in Malaysia. The annual reports of all waqf institutions under the State Islamic Religious Councils (SIRCs) were analysed using content analysis on the current waqf governance practices using binomial logic.
Findings
Overall, the results indicate moderate waqf governance practices under three waqf governance categories, namely waqf governance policy, waqf governance board and waqf governance processes. This study also found a significant impact of corporatisation reformation of waqf institutions on waqf governance practices.
Research limitations/implications
The findings indicate the need for all waqf institutions in Malaysia, especially for non-corporate waqf institutions, to enhance their waqf governance practices by disclosing all relevant information to the public. This is because the success of waqf fund management can be portrayed through the management’s transparency in waqf governance practices on how they deliver and use their resources to attain socio-economic objectives.
Originality/value
To the best of the authors’ knowledge, this study is among the first studies that examined and evaluated the current waqf governance practices in several waqf institutions in Malaysia.
Purpose
This paper aims to measure the financial sustainability and vulnerability of state-managed waqf institutions in Malaysia.
Design/methodology/approach
The study mainly applied the commonly used Tuckman and Chang’s (1991) model to measure the financial health of non-profits. Content and ratio analysis of the 2014 audited reports of seven institutions were used to determine their equity balance, revenue concentration, administrative costs and operating margin ratios.
Findings
The results indicate that only one waqf institution was financially sustainable in all the four components.
Research limitations/implications
Because the data used are not the latest and focussed only on a single year, the findings may not be necessarily true, currently. Second, the study focussed only on Malaysia. Thus, the results may not be generalisable to other waqfs in other countries or to privately managed waqf institutions. Accordingly, future research should address these limitations.
Practical implications
The findings provide useful insights into the financial sustainability of waqf institutions and highlight the need for policymakers in Malaysia and other Muslim countries to give due attention to the holistic accountability of waqf institutions to ensure waqf’s systematic revival.
Originality/value
The paper, being the first to investigate the financial sustainability and vulnerability of state waqf institutions in Malaysia, serves as a reference for future researchers.
Purpose
This paper attempts to contextualise the potential role of waqf (plural; awqaf, Islamic perpetual trust) in the contemporary world, particularly, in the developmental arena. The purpose of this paper is to provide a framework for awqaf to maintain its convergence with some of the fundamental goals of the SDGs which are also congruent with the maqasid al-shariah (the higher objectives of shariah).
Design/methodology/approach
This paper is based on a desk-based research, and it adopts the qualitative research paradigm for the analysis of the available literature.
Findings
This paper finds that most of the 17 developmental goals of the SDGs comfortably match with the long-term objectives of shariah and there is good scope for the stakeholders of awqaf to develop waqf-based development plan in line with the framework of SDGs. Additionally, it finds that the global awqaf enjoy sufficient financial capacity to help muslim majority countries to realise some of the most relevant and urgent maqasid-oriented SDGs in a timely manner.
Research limitations/implications
The scope of this paper is limited to analyse the potential role of global awqaf in realising some of the most urgent maqasid-based development objectives in congruence with SDGs. For the purpose of maintaining the coherence in the focus of the study, this paper does not undertake any comparison between the waqf and other forms of endowments/charities in fulfilling the similar objectives.
Practical implications
This paper provides a framework for maqasid-oriented waqf-based development plan followed by provision of some critical recommendations on how the global awqaf can potentially spearhead the initiative of Islamic charities in realising the maqasid-oriented SDGs among muslim majority countries.
Originality/value
This paper adds original value to the available literature on the potential of waqf in the arena of development. The paper analyses the role of waqf in achieving the most urgent maqasid-based SDGs, and thus, it fills the existing gap of a systematic research on the possible collaboration of global awqaf and SDGs.
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