This research aims to determine whether current legal structures (secular or religious) are sufficient to enable the proper functioning of waqf in Malaysia; and if not, whether there is need for changes or innovations to be introduced within the existing legal structures to allow waqf to operate in its modern form in Malaysia.

The claim of this thesis is that the waqf is not just a religious institution, but is an economic institution capable of contributing to economic growth. Accordingly, this thesis enquires into three questions: what factors led to this centralization process in Malaysia and its undesirable results, why we should care to change the situation, and what would be the solution to enable the waqf to achieve its full economic potential in this country. The objective of this thesis is to find a modern and efficient governance framework for waqf institution in Malaysia so that it can fulfill its intended purpose. The research methodology used was qualitative in nature. These were literature review, legal reasoning, interviews, case studies and comparative analysis. Findings suggested that although the British policies and the English common law introduced during the colonial period in the Malay States had impacted the local attitude towards waqf, the State controlled situation was also caused by an impulse on the part of the Malay sultans to consolidate what remained of the autonomous space allowed to them: matters relating to Malay culture and Islamic religion. These were reposed in the newly introduced State Islamic Religious Councils, over whom the Sultans presided. Other than centralization, two other major changes from the classical Islamic position on waqf were also inserted even after Malaysia gained independence. These were a removal of express reference to family awqaf in any written laws, and a restriction of endowments of more than 1/3rd of the waqif’s property even whilst he is living. The result of these changes were less than desirable, showing that up to the year 2008, awqaf properties in Malaysia were under utilized and had not been sufficiently managed to be self-sustaining, requiring state funding in order to meet their purposes. Compared to the flourishing foundations in the United States and the post 1967 republican vakiflar of Turkey that have moved in ways that would meet community and society’s needs thus contributing to the economy, it is a finding of this thesis that the Malaysian situation must and can be changed. Amongst the proposals given arising from the research are that an incorporated waqf form should be allowed with independent management by a board of trustees, restoring the legal rights of freedom to endow for family waqf and any amount of property during the life of a waqif (other than by bequest or death-bed endowment), ensuring in the case of current management of awqaf by the State Islamic Religious Councils that an appropriate check and balance mechanism is emplaced by way of separation of judicial and administrative duties between Sharia’ courts and the Mufti’s role in the governance of awqaf, economic incentives such as tax-deduction and tax-recognition introduced, relooking into asset management and funding possibilities and developing the social capital to encourage people to endow more awqaf. Finally and most importantly, a modernized waqf governance framework and an appropriate oversight and regulatory institution are recommended in order to address the agency issues that were the original concern of this thesis.