Malaysia's operations of Islamic endowments could rely on banks

KUALA LUMPUR: Malaysia's Shariah-compliant banks should be roped in to manage the country's 1.2 billion ringgit ($375 million) worth of properties held as Islamic endowments, a top banker in the sector said on Tuesday.
Prime Minister Najib Razak announced this month that the Malaysian Wakaf Foundation will be turned into a corporate entity to derive more value from assets held by the trust.
"Wakaf should be professionally managed by those holding the right qualifications," Badlisyah Abdul Ghani, chief executive of CIMB Islamic, the Islamic arm of CIMB Group Holdings Bhd, told reporters on the sidelines of a conference in Kuala Lumpur.
The move to open wakaf (endorsement) management to the private sector may boost business for Malaysia's Islamic banks towards growing their share of the country's total banking assets to 40 percent by 2020 from 24.1 percent presently.
Wakaf operates social projects such as hospitals, mosques and schools with donations received from Muslims in the form of land, cash or other valuables. Poor financial returns and a lack of economic efficiency led to a review of Malaysia's wakaf by the government, Reuters reported in March.
"What is missing in the market today is wakaf done in a commercial manner. We need an effective legal framework that will allow wakaf to be done in the financial market,"
"I am hoping the framework that they come up with will help facilitate its application as a component of the Islamic financial market, and allow industry players to come onboard as professional wakaf managers."
The Malaysian Wakaf Foundation is still considering the involvement of banks and corporate entities. It will meet the government's Economic Planning Unit this month to finalize its immediate plans, a source told Reuters.