ENHANCING GOOD GOVERNANCE PRACTICES OF WAQF INSTITUTIONS: LEARNING FROM SHARIAH GOVERNANCE FRAMEWORK OF ISLAMIC FINANCIAL INSTITUTIONS

Abstract

Throughout Islamic history, waqf is proven as an excellent mechanism for the development of the socio-wellbeing of the Muslim community. Waqf assets can be used for religious and social welfare purposes like building mosques, public health, transportation and education and others. However, due to the limited regulatory framework and control over waqfinstitutions, there are many undesirable issues regarding the waqf management authority. If these issues continue, the waqf institutions will have a negative public image and undermine the objective of the Waqf. This paper highlights the issues on lack of good governance practices in waqf and proposes that waqf institutions should be learn from the established Shariah Governance Framework of Islamic Financial Institutions. The Shariah Governance Framework for Islamic Financial Institutions has been established and well-practiced in the Islamic Finance industry for nearly 10 years. Throughout these years, the industry has seen the excellent impact of good Shariah governance practices in terms of enhancing administration and management of the Islamic financial institutions and thus supporting tremendous growth of the industry. Both waqf and Islamic Financial Institutions share the common basis that they are Shariah compliant based institutions. As such, learning from the success of the other is highly advocated. Thus this paper will examine the governance framework for waqf which is based on trust, accountability, God consciousness, hisbah, and mutual consultation. These principles will be examined and analyse in the context of Shariah Governance Framework of Islamic Financial Institutions to see how Waqf can benefit and learn from the good practices of Islamic Financial Institutions. It is submitted that having a good governance system is a vital way to resolve the issues faced by waqf institutions, which leaves governance an unquestionable aspect for the success of waqf institutions.