THE ROLE OF CASH WAQF IN REJUVENATION OF

MALAYSIAN WAQF ASSETS

BY

ANWAR BIN ALLAH PITCHAY

A dissertation submitted in fulfilment of the requirement for

the degree of Doctor of Philosophy in

Business Administration (Finance)

Kulliyyah of Economics and Management Sciences

International Islamic University Malaysia

MARCH 2015

ii

ABSTRACT

The motivation of the study arises out the concern for the current state of affairs of

Malaysian Waqf assets development. Various findings revealed that the Malaysian

government mainly funds the development of Waqf in Malaysia. This therefore poses

a threat to the sustainability of Waqf development because the government funding for

Waqf development has been dwindling over the years. Hence, Waqf assets lack

liquidity for development. Therefore, this study looks at the possibility of rejuvenating

the role of Waqf in Malaysia by the Waqf institutions through cash Waqf to address

the liquidity problem. However, various factors can influence Muslims to contribute

cash Waqf. In addition, lack of attractive and inconvenient models of cash Waqf can

demotivate Muslims’ to contribute cash Waqf. In this study, we proposed a new cash

Waqf model where Muslim employees and, Islamic businesses and institutions

(MEIBI) model, can contribute periodically for the sustainability of the liquidity

supply. The first part of the study describes and proposes the MEIBI model. This

model is a combination of employees salary deduction and corporate philanthropy

schemes in form of CSR. The second and third objectives of the study assess the

behavioural intention of Muslim employees and IBIs to contribute cash Waqf

respectively. These objectives are divided into two essays. The first focuses on

examining the behavioural intention of Muslim employees to contribute cash Waqf

through employee salary deduction. Theory of Reasoned Action (TRA) developed by

Ajzen and Fishbein (1980) is used to examine the behavioural intention of Muslim

employees in this regards. Two propositions, i.e. Attitude and Subjective Norm to

contribute cash Waqf are developed based on the TRA framework and analysed using

structural equation modelling. The findings show attitude and subjective norms of the

Muslim employees do have the potential to influence Muslim employees behavioural

intention to contribute cash Waqf through employee salary deduction. The second

essay examines the behavioural intention of IBIs to contribute cash Waqf. Theory of

Planned Behaviour (TPB) developed by Ajzen (1985) is used to examine the

propositions. Four main variables, i.e. economic attitude, political pressure, perceived

behavioural control and personal moral obligation were tested and analysed using

structural equation modelling. The findings show the first three variables significantly

influence the behavioural intention of the top management to contribute cash Waqf.

Nonetheless, personal moral obligation of the top management was found to be

insignificantly. In conclusion, the present study finds that the MEIBI model as

proposed in this study has the potential to generate cash Waqf and provide a positive

impact on the development of Waqf in Malaysia.

iii

ABSTRACT IN ARABIC

MEIBIMEIBIIBIS

IBIs

TRATRA

TPB

MEIBI

iv

APPROVAL PAGE

The dissertation of Anwar Bin Allah Pitchay has been approved by the following:

______________________________________

Ahamed Kameel Mydin Meera

Supervisor

______________________________________

Muhammad Yusuf Saleem

Co-Supervisor

______________________________________

Mustafa Omar Mohammed

Internal Examiner

_______________________________________

Muhammad Shukri Salleh

External Examiner

_______________________________________

Magda Ismail Abdel Mohsin

External Examiner

________________________________________

Badruddin Bin Hj. Ibrahim

Chairperson

v

DECLARATION

I hereby declare that this dissertation is the result of my own investigation, except

where otherwise stated. I also declare that it has not been previously or concurrently

submitted as a whole for any other degrees at IIUM or other institutions.

Anwar Bin Allah Pitchay

Signature…………………………. Date………………………

vi

COPYRIGHT PAGE

INTERNATIONAL ISLAMIC UNIVERSITY MALAYSIA

DECLARATION OF COPYRIGHT AND AFFIRMATION

OF FAIR USE OF UNPUBLISHED RESEARCH

Copyright © 2015 by Anwar Bin Allah Pitchay. All rights reserved.

THE ROLE OF CASH WAQF IN REJUVENATION OF

MALAYSIAN WAQF ASSETS

No part of this unpublished research may be reproduced, stored in a retrieval system,

or transmitted, in any form or by any means, electronic, mechanical, photocopying,

recording or otherwise without prior written permission of the copyright holder except

as provided below.

1. Any material contained in or derived from this unpublished research may

only be used by others in their writing with due acknowledgement.

2. IIUM or its library will have the right to make and transmit copies (print

or electronic) for institutional and academic purposes.

3. The IIUM library will have the right to make, store in retrieval system and

supply copies of this unpublished research if requested by other

universities and research libraries.

Affirmed by Anwar Bin Allah Pitchay.

…………………………………. ……………….……..

Signature Date

vii

DEDICATIONDEDICATION

To My beloved parents

Allah Pitchay & Fatimah

viii

ACKNOWLEDGEMENTS

All Praise is to Allah, the Beneficent, the Most Merciful, and the Most Generous, Who

taught with pen and taught man that which he knew not. I am thankful to Allah for

His countless blessings, in particular, for His easing my ways towards acquiring

knowledge.

I would like to acknowledge the contribution of the individuals who have

helped me in many ways in the completion of this thesis. First of all, I express my

gratitude to my supervisors, Prof. Dr. Ahamed Kameel Mydin Meera and Dr.

Muhammad Yusuf Saleem for their unconditional support and able guidance at every

step of my PhD journey. Their critical and constructive comments and suggestions

have been instrumental in shaping this work. They have been graceful in allowing me

the freedom to explore my potential and satisfy my intellectual curiosities. Under

their tutelage, my PhD journey has been an immensely rewarding experience.

I thank Emeritus Prof. Dr. Mohamad Sulaiman, Prof. Rafikul Islam, and Dr.

Azura Omar for exposing me to the different forms of research and research

methodologies. Dr. Mustafa Omar Muhammed and Dr. Jelili, my research proposal

examiners, provided valuable inputs for data analysis and model testing. My

professors and senior lecturers at IIUM, Prof Aslam, Prof Tahir, Prof Jarita, Prof

Zarina, Prof Hassanudeen, Assoc. Prof Dzuljastri, Assoc. Prof Salina, Dr. Mustafa

Omar Muhammed, Dr. Abideen, Dr. Abduh and Dr. Turkhan and, my professor at

USM, Dr Effiezal, Assoc. Dr. Sofri, and Assoc. Dr. Azlan, who deserve a special

mention for their role in honing my academic and research skills.

I take this opportunity to acknowledge and appreciate the role of my siblings,

my eldest sister, Nur Mahani, her husband. Dr Al Amin and her children, my first

brother, Ahmad Tajudin, his wife, Zarijan and his children, and my second brother,

Ghazali his wife, Ruzilawati and his children. My siblings have has been the main

driving force in my life, which helped me to steer through the toughest challenges.

Their guidance, based on high ethical and moral values, has been the beacon light that

directed me to the right path. All credit goes to them for my achievement of this

academic milestone. Above all, I have no words to express my gratefulness and

indebtedness to my beloved mother, Fatimah and my beloved father, Allah Pitchay for

their love, care, upbringing, and persistent prayers that undoubtedly have been my

greatest strengths. A special unknown words and loving expression to my beloved

wife, Mahfuzatun Nisa, who is my living shadow through my life and PhD journey

and, a special unknown feeling expression to my children, Muhammad Sayf Yasser

and Zara Annur, who are my special gift from Allah SWT and they become the

medicine to cure my stressed during my PhD jouney. I very thankful to Allah SWT to

have my beloved parents in law, Ahamadul Kaber, and Aminah, who have giving me

priceless and unlimited support since the beginning of my married life. A special

thanks to my sisters in law, Radziatun Nisa, Mardziatun Nisa and Rafeatun Nisa for

their support and love.

ix

I convey my thankfulness to my colleagues and friends at the International

Islamic University Malaysia and University Sains Malaysia. A special note of thanks

is due to my non-biological brothers, especially to Dr. Shabir Ahmad Hakeem, Dr.

Mohamed Asmy, Dr. Omar Khalid Bhatti, Dr. Nafiu Oladukun, Dr. Abdullah and Dr.

Hidayatul Ihsan who have been trustworthy companions all the way through my PhD

journey. I could bank on them for their consultation on academic as well as non-

academic related matters. In addition, I thank my friends, Dr. Abduh, Dr. Nail, Dr.

Abideen, Br. Ma Yue, Nabil Al-Faheem, Anwar Al-Abbasy, Dr. Abdul Momin, Dr.

Amandu, Br. Fanny Al Farisi, Br. Ahmed, Br. Ahmed Ali, Dr Ali Bahari, Br. Faizal,

Br. Sakeeb, Br. Ahamd Kamil, Br. Zaidi Zabidi, Br. Ahmad Khaliq, Br. Hassan and

Br. Yufraj.

Last but not least, I express thanks to Universiti Sains Malaysia and

Kementerian Pengajian Tinggi for sponsoring my postgraduate education.

x

TABLE OF CONTENTS

Abstract .................................................................................................................... ii Abstract in Arabic .................................................................................................... iii Approval Page .......................................................................................................... iv Declaration ............................................................................................................... v Copyright Page ......................................................................................................... vi

DedicationDedication .............................................................................................. vii Acknowledgements .................................................................................................. viii

List of Tables ........................................................................................................... xiv List of Figures .......................................................................................................... xvi

CHAPTER ONE: INTRODUCTION ................................................................. 1 1.1 Background of the Study ........................................................................ 1

1.2 Problem Statement .................................................................................. 4 1.3 Research Objectives ............................................................................... 5 1.4 Research Questions ................................................................................ 6 1.5 Scope of the Study .................................................................................. 6

1.6 Overview of Research Methodology ...................................................... 7 1.7 Contributions of the Study ...................................................................... 8

1.7.1 Contributions to the Body of Knowledge ..................................... 8 1.7.2 Contribution to the Industry and Policy Makers .......................... 8

1.8 Organisation of the Study ....................................................................... 9

CHAPTER TWO: WAQF IN MALAYSIA ........................................................ 11 2.1 Introduction ........................................................................................... 11 2.2 Overview of Waqf in Malaysia ............................................................... 11

2.1.1 Pre-Colonial Period of Malaysia .................................................. 12 2.1.2 Colonial Period of Malaysia ......................................................... 13 2.1.3 Post Independence of Malaysia .................................................... 17

CHAPTER THREE: EXISTING MODELS AND THE PROPOSED

CASH WAQF MODEL .......................................................................................... 21 3.0 Introduction ............................................................................................ 21

3.1 Existing Cash Waqf Models in Muslim and Minority Muslim

Countries ................................................................................................. 21 3.1.1 Waqf Share Scheme (WSS)........................................................... 21

3.1.2 Deposit Cash Waqf Scheme (DCWS) ........................................... 23 3.1.3 Compulsory Cash Waqf Scheme (CCWS) .................................... 24

3.1.4 Corporate Waqf Scheme (CWS) ................................................... 25 3.1.5 Deposit Waqf Product Scheme (DWPS) ....................................... 26 3.1.6 Co-Operative Waqf Scheme (CWS)............................................. 28

3.2 Modes of Financing the Waqf ................................................................ 29 3.3 Muslim Employees and Islamic Business and Institutions (MEIBI)

Cash Waqf Model ................................................................................... 32 3.3.1 Founder ......................................................................................... 32 3.3.2 Medium ......................................................................................... 33

xi

3.3.3 Trustee .......................................................................................... 33 3.3.4 Objectives ..................................................................................... 33

3.4 Expected Implication of MEIBI Model .................................................. 34 3.4.1 Muslim Employees ....................................................................... 34

3.4.2 Islamic Businesses and Institutions .............................................. 34 3.4.3 Government .................................................................................. 34 3.4.4 Economy ....................................................................................... 35 3.4.5 Social ............................................................................................ 35

CHAPTER FOUR: THE FACTORS INFLUENCING THE

BEHAVIOURAL INTENTION OF MUSLIM EMPLOYEES TO

CONTRIBUTE CASH WAQF THROUGH EMPLOYMENT SALARY

DEDUCTION ......................................................................................................... 36 4.1 Introduction ............................................................................................ 36 4.2 Literature Review ................................................................................... 36

4.2.1 TRA Application in Consumer Behaviour and Decision

Making Studies ............................................................................. 38 4.2.2 TRA Application In Islamic Economic and Finance Studies ....... 39

4.3 Theoretical Framework And Proposition Development ......................... 41 4.3.1 Theoretical Framework ................................................................. 41

4.3.2 Proposition Development ............................................................. 42 4.3.2.1 Attitude and Behavioural Intention .................................. 42

4.3.2.2 Subjective Norms and Behavioural Intention ................... 43 4.4 Methodology ........................................................................................... 44

4.4.1 The Important of Intention in Islam .............................................. 44 4.4.2 Research Design ............................................................................ 45 4.4.3 Study Area..................................................................................... 45

4.4.4 Population and Sample.................................................................. 45 4.4.5 Sample Size ................................................................................... 46

4.4.6 Questionnaire Development .......................................................... 48 4.4.6.1 Behavioural Intention ....................................................... 48 4.4.6.2 Attitude ............................................................................. 48

4.4.6.3 Subjective Norms ............................................................. 49

4.4.7 Data Analysis Techniques ............................................................. 49

4.4.7.1 Reliability and Validity Test............................................. 49 4.4.7.2 Structural Equation Modelling (SEM) ............................. 50

4.4.7.3 Measurement Model ......................................................... 50 4.4.7.4 Structural Model ............................................................... 52

4.5 Findings .................................................................................................. 53 4.5.1 Demography Result ...................................................................... 53 4.5.2 Confirmatory Factor Analysis (CFA) ........................................... 54

4.5.2.1 Construct Validity............................................................. 62 4.5.3 Structural Model ........................................................................... 65

4.5.5.1 Path Analysis .................................................................... 67

4.6 Discussion ............................................................................................... 69 4.7 Conclusion .............................................................................................. 71

xii

CHAPTER FIVE: THE FACTORS INFLUENCING THE

BEHAVIOURAL INTENTION OF ISLAMIC BUSINESSES AND

INSTITUTIONS TO CONTRIBUTE CASH WAQF ......................................... 73 5.1 Introduction ............................................................................................ 73

5.2 Literature Review ................................................................................... 73 5.2.1 Business Ethic and Management Theories ................................... 73 5.2.2 Philanthropy- Strategic and Altruistic Perspective ....................... 76

5.2.2.1 Strategic Philanthropy ...................................................... 76 5.2.2.2 Altruistic Philanthropy ..................................................... 77

5.2.3 Theory of Planned Behavior (TPB) .............................................. 78 5.2.3.1Attitude and Strategic Philanthropy- Economic

Perspective .................................................................................... 81 5.2.3.2 Subjective Norms and Strategic- Political Perspective .... 83 5.2.3.3 Perceived Behaviour Control............................................ 84 5.2.3.4 Perceived Moral Obligation and Altruistic Perspective ... 86

5.3 Conceptual Framework and Proposition ................................................ 88

5.3.1 Conceptual Framework ................................................................. 88 5.3.2 Proposition .................................................................................... 88

5.3.2.1 Economic Attitude and Behavioural Intention ................. 88 5.3.2.2 Political Pressure and Behavioural Intention .................... 90

5.3.2.3 Perceived Behavioural Control and Behavioural

Intention ........................................................................................ 91

5.3.2.4 Moral Obligation and Behavioural Intention .................... 92 5.4 Methodology ........................................................................................... 93

5.4.1 Research Design ........................................................................... 93 5.4.2 Data Analysis Techniques ............................................................. 94

5.4.2.1 Structural Equation Modelling ......................................... 94

5.4.2.2 Measurement Model ......................................................... 95 5.4.2.3 Structural Model ............................................................... 97

5.4.2.4 Reliability Test ................................................................. 97 5.4.3 Study Area and Population ........................................................... 97 5.4.4 Sample Size ................................................................................... 98

5.4.5 Questionnaire Development .......................................................... 99

5.4.5.1 Behavioural Intention ....................................................... 100

5.4.5.2 Economic Attitude ............................................................ 100 5.4.5.3 Political Pressures ............................................................. 101

5.4.5.4 Perceived Behavioral Control ........................................... 101 5.4.5.5 Moral Obligation .............................................................. 101

5.5 Findings .................................................................................................. 102 5.5.1 Demography Result ...................................................................... 102 5.5.2 Confirmatory Factor Analysis ....................................................... 105

5.5.2.1 Construct Validity............................................................. 115 5.5.3 Structural Model ........................................................................... 119 5.5.4 Path Analysis ................................................................................ 120

5.6 Discussion ............................................................................................... 122 5.7 Conclusion .............................................................................................. 124

CHAPTER SIX: RECAPITULATION OF THE STUDY ................................ 126 6.0 Introduction ............................................................................................ 126

xiii

6.1 Summary of the Thesis ........................................................................... 126 6.2 Implications of the Study ........................................................................ 131

6.2.1 Implications for Practice ............................................................... 131 6.2.2 Implication for the Waqf Institution .............................................. 132

6.2.3 Implication for the Government and Policy Maker ...................... 132 6.3 Limitations of the Study ......................................................................... 133 6.4 Suggestions for Future Study ................................................................. 133

BIBLIOGRAPHY .................................................................................................. 135

APPENDIX A .......................................................................................................... 157

APPENDIX B QUESTIONNAIRE ......................................................................... 168

xiv

LIST OF TABLES

Table No. Page No.

4.1 Demographic Information of the Muslim Employees 54

4.2 Index Category and Level of Acceptance 55

4.3 MM1 OUTPUT 56

4.4 Factor Loading 57

4.5 MM2 OUTPUT 57

4.6 MM2 Factor Loading 58

4.7 MM3 OUPUT 58

4.8 MM3 Factor Loading 59

4.9 MM4 OUTPUT 59

4.10 MM5 OUTPUT 60

4.11 Factor Loading for Final Measurement Model 63

4.12 Average Variance Extracted 63

4.13 Reliability 64

4.14 KMO and Bartlett's Test 64

4.15 AVE and R2 65

4.16 Structural Model 67

4.17 Relationship Model among Variables 67

4.18 Coefficientsa 68

5.1 Demographic Information 103

5.2 Cash Waqf and Corporate Philanthropic 103

5.3 Index Category and Level of Acceptance 106

5.4 1st Measurement Model (MM1) Output 108

5.5 2nd Measurement Model (MM2) Output 108

xv

5.6 MM2 Factor Loading 109

5.7 3rd Measurement Model (MM3) Output 109

5.8 4th Measurement Model (MM4) Output 110

5.9 MO Factor Loading 110

5.10 5th Measurement Model (MM5) Output 111

5.11 MO Factor Loading 111

5.12 6th Measurement Model (MM6) 112

5.13 7th Measurement Model (MM7) 112

5.14 8th Measurement Model (MM8) 115

5.15 Factor Loading for Measurement Model 116

5.16 Average Variance Extracted 117

5.17 Reliability 118

5.18 KMO and Bartlett's Test 118

5.19 Average Variance and R2 118

5.20 GOF of SM 120

5.21 Path Analysis 120

5.22 Coefficientsa 121

xvi

LIST OF FIGURES

Figure No. Page No.

3.1 Waqf Share Scheme 23

3.2 Deposit Cash Waqf Scheme 23

3.3 Compulsory Cash Waqf Scheme 25

3.4 Corporate Waqf Scheme 26

3.5 Deposit Waqf Product Scheme 27

3.6 Co-operative Waqf Scheme 28

3.7 Muslim Employees and Islamic Businesses and Institutions (MEIBI)

Model 32

4.1 Theoretical Framework of TRA 37

4.2 Conceptual Framework of TRA 42

4.3 Sample Size Formula by Cochran (1963) 47

4.4 1st Measurement Model (MM1) 56

4.5 5th Measurement Model (MM5) 61

4.6 Structural Model (SM) 66

5.1 Theory of Planned Behaviour, Ajzen (1988) 79

5.2 Conceptual Framework 88

5.3 Known Population Formula (Yamane,1967) 99

5.4 MM1 Output 107

5.5 8th Measurement Model (MM8) - Final Measurement Model 114

5.6 Structural Model (SM) 119

1

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Waqf is a voluntary act recommended by Prophet Muhammad (peace be upon him-

hereinafter pbuh) 1 and was widely practiced in the early age of Islam. Sait and Lim

(2005) noted that Waqf involves a dedication of assets for charitable purposes or

generates income for specific beneficiaries such as donor’s family or other people in a

perpetual basis. Nonetheless, Waqf is considered a voluntary act and it is not directly

stated in the Qur’an2 (Kuran T. , 2001), it has significantly contributed to the

socioeconomic development of the Muslims in term of establishment of Muslim

civilization and has gone beyond normal charity (Hoexter M. , 1998). Notably, Waqf

played a key role in strengthening the spirit of brotherhood in the Muslim society,

facilitated education as well as spreading the true spirit of Islam among the Muslims

(Siraj, 2012).

Abdel Mohsin (2013) noted that the creation of Waqf later has been developed

into an institution with its own legal framework. Waqf institution has contributed to

fulfil many crucial needs in various sectors, which in contemporary era are being

financed by the government (Abdel Mohsin, 2013). The various sectors are such as

education, health care, commercial and business activities, national security, military,

transportation facilities, (i.e., highways ,bridges, etc.), shelter, and food for the needy

and poor people, creating jobs for the people and also covering agriculture and

industry sectors without engaging any external cost such as fund from the

1 It is highly encouraged in Islam to say “peace be upon him” after mentioning any of the prophets’

name. 2 Quran Kareem is the primary source of reference for Muslims.

2

government. The uniqueness of the Waqf institution is the objective, which it is not

established with the aims of profit, but to support the general goods and welfare of the

general society while seeking compound rewards in the hereafter. However, Waqf

institution and the contributions of Waqf assets are not sustained as indicated by

Cizakca (2002). The Waqf system went through various trends that include significant

growth, stagnant and even downturn periods. One of the main reasons for the

despicable condition of Waqf institutions in Muslims countries as argued by Aun

(1975) is due to western colonisation.

Just like most Muslim countries, the practise of Waqf in Malaysia was

negatively affected during the period of colonisation. Waqf practice in Malaysian can

be traced to the 14th century after the embracement of Islam by the Malacca Sultanate

(Aun, 1975). During this period, some of the Waqf properties, as stated by Aun

(1975), were in the form of mosques and Islamic schools. The development in the

Waqf practice, one century after the Sultanate started, was truncated by the

commencement of colonization in Malaysia. The colonisation period beginning with

the Portugese from 1511 to 1641, followed by the Dutch from 1641 to 1824, and then

by the British from 1826 to 1946, had a devastating effect on the development of Waqf

in Malaysia. British occupation was interrupted from 1941 to 1945 due to Second

World War (WWII), which paved the way for the Japanese occupation of Malaysia.

Thereafter, the British regained the control of Malaysia from the Japanese in 1946.

Malaysia became an independent country following the end of British colonisation in

1957. According to Salleh (2009), Waqf practice went through tremendous changes

during the post-colonisation period in terms of trustee3(Mutawalli), restructure of

3 Trustee is a person or a committee appointed by the donor and is responsible to manage the donor’s

property. In it’s the early practiced in Malaysia, the trustee is an individual. Usually trustee is the

mosque leader (Imam), village leader, etc. However, at the end of the colonization period, the role of

3

Waqf properties in the country due to loss of Waqf deeds and even some of the Waqf

properties were no longer considered as Waqf due to the loss of documents that could

serve as evidence.

The report of the Portal i-Wakaf currently estimated the total size of Waqf

lands as recorded by the State Islamic Religious Councils (SIRCs)4 to be around

8,861.13 hectares that is worth about RM 63,729,855.50 (JAWHAR, Portal i-Wakaf,

2012)5. Though, SIRCs have a huge number of potential Waqf land, most of the lands

are however still lying idle. According to the former director of Jabatan Wakaf, Zakah

dan Haji6 (JAWHAR), Datuk Dr. Sohaimi Mohd Salleh, 99.28 per cent of the Waqf

land currently remained undeveloped, mainly due to shortage of financial resources

(Sabit, 2009). So far, the Malaysian government is the only source of funding to the

SIRCs for financing Waqf projects and developments. In the 9th Malaysian Plan

(RMK-9), the Malaysian government allocated RM 256.89 million, which comprises

RM244 million for developing 19 physical projects (Table 1- See Appendix) and

RM12.5 million for non-physical (Table 2- See Appendix) projects. However, under

the 10th Malaysian Plan (RMK-10), the government’s allocation has been cut to RM

72.76 million due to economic reasons which is meant for only 10 selected projects

(Bernama, 2012). Based on the total budget of RMK-9 and RMK-10, SIRCs managed

to develop only 0.16 per cent of the total land and as suggested by YB Mejar Jeneral

Dato’ Seri Jamil Khir bin Hj. Baharom7, SIRCs needed at least RM80 billion to

develop the entire Waqf lands in Malaysia (Ngah, 2012). It can, therefore, be rightly

the trustee was transferred under the responsibility of an organization called the State Islamic Religious

Council (SIRC). 4State Islamic Religious Council is appointed as sole trustee of Waqf assets in Malaysia 5 http://www.jawhar.gov.my/iwakaf/ 6 JAWHAR is a government institution that monitors the effectiveness and efficiency of Waqf, Zakat

and Hajj administration in every state in Malaysia. 7 Minister in the Prime Minister's Department in charge of Islamic Affairs

4

asserted that the development of Waqf properties requires other innovative sources of

funding in addition to the government funding. As such, a new mechanism that will

allow for a sustainable contribution in the form of cash could go a long way in

developing the idle Waqf land. Besides identifying a new cash Waqf model, the

present situation also needs to understand the behavioural intention of the potential

donor to use the new propose cash Waqf model and this will ensure the sustainability

of the cash Waqf model to the potential donors.

1.2 PROBLEM STATEMENT

Currently, Waqf institutions in Malaysia face liquidity constraints. The government

funding is not sufficient to support the development of Waqf assets in Malaysia.

Hence, to rejuvenate the Waqf assets in Malaysia, Waqf institutions have to generate

new Waqf assets in form of cash, which can transform the idle Waqf land for

buildings, agriculture, industry sectors and other productive sectors. Previous scholars

also noted that in overcoming the issue of funding as argued by Abdel Mohsin (2008),

contemporary scholars believe that contribution to Waqf in the form of cash becomes

imperative. The practise of cash Waqf is not new. Indeed, it was well practiced during

the Ottoman era. Ajfan (1985) indicated that toward the end of the 16th century, the

concept of cash Waqf was fully accepted by the entire Antonia and the European

provinces of the Ottoman Empire, which equally controlled some places of South

Eastern Europe, the Middle East and North Africa.

So far, Selangor is the only state that is quite active in collecting cash Waqf

from the Muslim society. Selangor SIRC has established a subsidiary called

Perbadanan Wakaf Selangor (PWS) in year 2011, which specifically focuses on

collecting cash Waqf from Muslims as well as Shari’ah compliant institutions.

5

Currently, the total amount of cash Waqf collected in the year 2012 is estimated at

RM4, 106,956.15 (Perbadanan Wakaf Selangor). The ability of PWS to sustainably

collect cash Waqf could greatly facilitate the development of cash Waqf. Based on the

statistics (Graph 1- See Appendix), it is indicated that the monthly collection of cash

Waqf for the 2012 was inconsistent. The CEO8 of Perbandanan Waqf Selangor says

that this is due to lack of Waqf awareness or promotion by PWS, which failed in

establishing Waqf culture giving among the Muslim society (Yang, 2013).

Furthermore, there is less participation from Islamic businesses and institutions (IBIs)9

to contribute cash Waqf even though the government offers a tax deduction of 10%

towards the organisations that contributed cash Waqf. Furthermore, even though a

large literature on different aspects of Waqf and cash Waqf exists, studies on

examining the behavioural intention of creating cash Waqf are still rare.

Therefore, proposing a new mechanism of cash Waqf collection that

specifically focuses on Muslim employees and IBIs in Malaysia and analysing the

behavioural intention of the respected donor are warranted that could help in boosting

the collection of cash Waqf.

1.3 RESEARCH OBJECTIVES

The main objectives of this study are firstly to propose new cash Waqf model that

involve Muslim employees and IBIs in Malaysia to contribute cash Waqf to Waqf

institutions in developing idle Waqf lands. The second objective is to analyse the

behavioural intention of Muslim employees to contribute cash Waqf through

employment salary deduction. The third objective is to investigate the behavioural

8 Currently is En. Abu Bakar Yang 9 Table 3 in Appendix Shows the statistic of Islamic Business and Institutions contributed cash Waqf

6

intention of top managements of IBIs to contribute cash Waqf as their companies’

philanthropy contribution.

1.4 RESEARCH QUESTIONS

The following are the research questions addressed in this study:

i. Does the behavioural intention of Muslim employees influence their

contribution to cash Waqf through employment salary deduction?

ii. Does behavioural intention of top management of IBIs influence their

contribution to cash Waqf as their companies’ corporate philanthropy

contribution?

1.5 SCOPE OF THE STUDY

The scope of this study focuses on two (2) kind of contribution, i.e. (1) Muslim

employees in Selangor state and (2) IBIs listed in Bursa Malaysia. Selangor state has

been chosen due to its already existing cash Waqf institution that can collect

contribution from Muslims community especially Muslim employees. The IBI’s listed

in Bursa Malaysia are capable of contributing more than the individuals and also can

claim the contribution as a part of their corporate social responsibility (CSR) activity.

Furthermore, the Malaysian government has offered tax deduction incentives of 7%

tax deduction for Muslim employees and 10% of organisations that contribute cash

Waqf to the Waqf institutions.

In order to address these research questions efficiently, this study adopts a

quantitative method approach. Data collection for primary data was collected through

field survey using questionnaire for Muslim employees in Selangor, while, for IBIs,

primary data was collected via email by using online questionnaire which were sent to

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top managers of IBIs. In additions, the present study also conducted several interviews

such as with the CEO of Perbadanan Waqf Selangor (PWS) and Waqf officers at

Jabatan Wakaf Zakat and Hajj (JAWHAR). This is done in the early of the study to

gauge the overall situations and challenges of Waqf in Malaysia. The secondary data

were collected from PWS reports and website and, JAWHAR reports and website.

1.6 OVERVIEW OF RESEARCH METHODOLOGY

To address the research questions and objectives, this study is divided into two

separate but related essays; one is focusing the behavioural intention of Muslim

employees on contributing cash Waqf through employment salary deduction, while

second focus on the Islamic business and institutions (IBIs) to contribute cash Waqf as

their company's corporate philanthropic contribution.

Research methodology of this study is starts with collecting secondary data

from relevant sources such as Waqf reports and websites owned by PWS and

JAWHAR. Next, the study also incorporates qualitative data analysis the data are

collected by conducting semi-structured interviews with chief executive officer (CEO)

of PWS10, director of Waqf in JAWHAR11, and with the chief executive officer (CEO)

of Koperasi Pembiayaan Syriah Angkasa Berhad (KOPSYA)12. These qualitative data

were used for the understanding of the present situation and the prospects of Waqf

development in the future. For quantitative data, the study developed two different

sets of questionnaires; the first questionnaire was developed specifically for Muslim

employees. While the second questionnaire was developed specifically for top

managers of IBIs. The data collected from both questionnaires were analysed by using

10 Mr. Abu Bakar Bin Yang 11 Mr. Azlan Bin Abd. Majid 12 Dato Syed Mohd Ghazali Wafa Bin Syed Adwam Wafa

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structural equation modelling (SEM) analysis. The software AMOS 21.0 was used to

conduct the analysis.

1.7 CONTRIBUTIONS OF THE STUDY

The contributions of the present study can be categorised into two: 1) To the body of

knowledge; 2) industry and policy makers. Each of the contributions is discussed

below:

1.7.1 Contributions to the Body of Knowledge

Even though a large literature on different aspects of Waqf and cash Waqf exists,

studies on examining the behavioural intention of creating cash Waqf are still rare.

Therefore, this study, as the first thorough study focusing on the behavioural intention

of cash Waqf focusing on Muslim employees and top managers of IBIs, it can

contribute to the development of knowledge on Waqf specifically to understand the

behavioural intention of cash Waqf donors. Moreover, a new cash Waqf model will be

proposed which focus on how to generate more and sustainable source of cash from

Muslim employees and Islamic businesses and institutions.

1.7.2 Contribution to the Industry and Policy Makers

The present study employs appropriate number of Malaysian Muslim employees and

top managers of IBIs in its study survey methodology. The finding of the study can

contribute to the industry, especially in terms of development of the Waqf assets and

its institutions, practitioners and stakeholders by adding the literature in investigating

the behavioural intention of cash Waqf donors comprised of Muslim employees and

top managers of IBIs. For the policy makers, the study employed establishes theories