Viability of Cash Waqf-Linked Ṣukūk in Malaysia

Abstract

Purpose ‒ This research explores cash waqf-linked sukuk (CWLS) and ascertains its viability in Malaysia under relevant legal and regulatory framework of waqf and sukuk. This is with view to implementation of CWLS in Malaysia by Islamic social and commercial finance institutions. Design/Methodology/Approach ‒ The research adopts a qualitative methodology and uses content analysis in synthesising relevant data to determine viability and prospect of CWLS in Malaysia. Semi-structured expert interviews were conducted, and data obtained therefrom was analysed alongside published literature on CWLS in identifying issues in applicable waqf and sukuk legal and regulatory framework that pertain to CWLS viability. Findings ‒ The combination of cash waqf with sukuk is potentially an impactful financing mechanism for mobilising funds that links charity with productive and income generating economic activities. CWLS facilitates development of alternative social financing instrument that expedite social welfare and economic revival in the aftermath of the Covid-19 pandemic as Indonesia demonstrates. However, Malaysia’s waqf legal and regulatory framework have established a decentralised system of waqf administration that will rather downscale the structure and operations of CWLS in the country. Hence the research proposes a reform of the framework to enable establishing a more capable and viable CWLS structure for a digital, retail and institutional investors. Originality/Value ‒ This research discovers hindrance to the prospect of CWLS in the legal, Shariah and regulatory dynamics of waqf and sukuk in Malaysia which previous studies overlooked. This research provides an in-depth understanding of challenges to CWLS’ implementation in Malaysia with invaluable insight for regulators, policy makers, practitioners and researchers, thereby contributing to practical knowledge in the area.