Indonesia's Cash Waqf Potential Hits IDR180 Trillion

TIMESINDONESIA, JAKARTA – Cash waqf, a form of Islamic charitable giving, holds a vast potential in Indonesia, estimated at IDR 180 trillion ($12.6 billion) annually. However, since its introduction in 2010, this potential has barely been scratched, with only about 2% currently utilized.

Imam Teguh Saptono, the Vice Chairman of the Indonesian Waqf Board (BWI), revealed that the total accumulation of cash waqf to date is approximately RP 2.23 trillion ($156 million), less than 2% of its potential. This was announced during the National Working Meeting and Workshop of the Indonesian Waqf Journalist Forum (Forjukafi) held at the A-One Hotel, Jakarta, on Saturday, February 24, 2024.

Advertisement

Imam pointed out several reasons for this shortfall, primarily the low level of cash waqf literacy among the populace. "Most people's understanding is limited to waqf of land or buildings, such as mosques, while cash waqf literacy is not yet widespread. It's the journalist's job to disseminate information about cash waqf as widely as possible," he stated.

Enhancing literacy on cash waqf requires a distinct strategy, given its association with financial banking instruments. Currently, there are several financial instruments related to waqf, such as Cash Waqf Linked Sukuk Retail (CWLS), Sukuk Linked Waqf (SLW), and Cash Waqf Linked Deposit (CLWD). According to Imam, these instruments are deemed too complex for the general public to understand, contributing to the underutilization of cash waqf's potential in Indonesia.

Imam urges all parties, including journalists, to play a role in increasing cash waqf literacy to achieve the desired potential. Despite these challenges, the overall development of waqf in Indonesia has shown very positive performance.

For instance, the total area of waqf land recorded in Indonesia now reaches 57,263 hectares across 440,512 locations. In 2023, the number of waqf institutions increased to 407, along with 44 Islamic banks. "The Indonesian Waqf Board (BWI) now has a presence across the country, consisting of one central BWI, 24 provincial BWIs, and 271 district/city BWIs," he elaborated.

On the regulatory side, both the central and regional governments have issued numerous regulations supporting the growth of the waqf sector, with 31 waqf-related regulations now in place. "Moreover, each year sees an increase in the number of certified nazhir (waqf managers). Currently, there are 3,887 certified nazhir out of about 400,000," Imam concluded.

This significant untapped potential of cash waqf in Indonesia highlights the need for increased literacy and understanding among the populace. With proper education and simplification of financial instruments, Indonesia could unlock a vast source of charitable giving, benefiting numerous social and religious projects throughout the country. (*)

**) Ikuti berita terbaru TIMES Indonesia di Google News klik link ini dan jangan lupa di follow.