Hana Musfirah Mohd Sofie; Turaley Kenc (INCEIF, 2023)
In Malaysia, waqf is a matter under Islamic law and is included in the State List in the Federal Constitution 1957. The administration of waqf falls under the jurisdiction of the State Islamic Religious Councils ("SIRCs") as these entities are named as the sole trustee of waqf under the respective state enactments. This legal structure provides a gap in the form of absence of check-and-balance on the SIRCs as the Federal Territories Islamic Religious Council or Majlis Agama Islam Wilayah Persekutuan ("MAIWP") has no authority to infringe on the purview of the SIRCs nor does MAIWP have any monitoring, oversight or enforcement powers over the SIRCs. This creates opportunity for abuse or mismanagement of the waqf assets. Hence, there is a pressing need to enhance accountability and transparency of the SIRCs in managing the waqf assets entrusted upon them. In the context of capital market products which involve waqf, the importance of accountability of the entity in charge of the administration of the waqf assets are even more amplified as it involves investor protection and capital market integrity. Transparency and accountability are crucial elements of good corporate governance which is the cornerstone of investor protection. Good corporate governance promotes transparency in how the management carries out the investors' mandate and fulfils its responsibilities to the stakeholders. The main focus of this project paper is to the study the accountability of the mutawalli or the waqf administrator, by examining their obligations under the state enactments and understanding the industry practice based on literature review and interviews with subject matter experts. Through this study, the findings reveal that there is a need for enhanced accountability structure in the administration and management of waqf in Malaysia through better reporting and accounting practices. The findings also highlight the various initiatives that are in the midst of being formulated and developed to provide solutions to this problem.
