Corporate Waqf: Focusing on the Real Economy

Creative and innovative minds have experimented with the idea before.

The Vehbi Koç Foundation (Vehbi Koç Vakfı) was endowed way back in 1969. It is perhaps the first documented case of corporate waqf. It is also the largest waqf of the country created by the late Vehbi Koç with his personal equity stake in Koc Group, the largest Turkish conglomerate with the consent of his children. From the perspective of Islamic law, this was a hiba, or a gift inter vivos with the Koç Foundation being considered as a judicial person. The dividends of these shares are channelled for the philanthropic purposes designated by the founder. This pattern has been mimicked by many other waqfs in Turkey. The Foundation has since then carried out a great number of activities in the fields of education, healthcare and culture. During its initial years, the Foundation used its resources to set up a multitude of schools, student dormitories, libraries and clinics, only to transfer their ownership and management to the relevant public administration after making them fully operational. Later, it pioneered the setting up of a number of major not-for-profit institutions in each of its focus areas of education, healthcare and culture. Some flagship projects of the waqf include Turkey’s first private museum, the Sadberk anım Museum, the Koç University, the Vehbi Koç and Ankara Research Center (VEKAM), the American Hospital, the Semahat Arsel Nursing Education and Research Center (SANERC) and many more.

When the globally known industrialist and philanthropist from India Mr Azim Premji created an irreversible trust, the Azim Premji Trust, by transferring his 295.5 million equity shares, valued at 3.5 billion USD representing 19.93 per cent of the shares of Wipro Ltd, he perhaps had this concept in mind. The “irrevocability” of the trust in essence, made it equivalent to a waqf. The corporate waqf finances various developmental activities of the Azim Premji Foundation including the Azim Premji University.

However, when Tan Sri Muhammad Ali Hashim, President, Malaysian Islamic Chamber of Commerce (DPIM) and Founder, Waqaf an Nur Corporation Bhd, Malaysia was presenting his model of corporate waqf at the recently concluded 5th SC-OCIS Roundtable on Awqaf at Kuala Lumpur to a galaxy of experts, thinkers and policy makers he perhaps had an entirely different perspective in mind. He sees waqf corporation as a tool of “business jihad” that must be made a key ideological strategy in the struggle for Islamic economic transformation.

In the field of healthcare, the Foundation made a mark with an acquisition of the American Hospital in 1995. While it had been providing financial support to the hospital for many years, it now embarked on a large-scale investment project that lasted twelve years and turned the hospital into a truly cutting-edge, world-class healthcare establishment. The Foundation has also been active in supporting the nursing profession through, set up in 1992, and the School of Nursing under the aegis of Koç University in 1999.

The year 1998 represents another significant milestone for the Foundation when it built thirteen elementary schools across the country. Instead of simply transferring these schools to the Ministry of Education, however, the Foundation decided to continue caring for their needs, based on a new, “build-transfer-look after” operational model. Further four schools were added to this project in the 2006-2008 period, bringing their total number to seventeen.

Johor Corporation (JCorp) was established as a State Investment Corporation in 1968 in the state of Johor, Malaysia[1]. It is one of the country’s largest conglomerates, with core business sectors encompassing palm oils, foods and quick service restaurants, specialist healthcare services, hospitality, property and logistic services. JCorp defines itself as “a state development corporation responsible to develop the state of Johor via the funding generated through profit maximization of its commercial entities which is later returned proportionately to the community as its largest stakeholder.” It sees its milestones of excellence as “not merely corporate and business orientated, but aimed at strategic socioeconomic development through the market-driven approach that is careful, creative, proactive and innovative.” The emphasis on corporate social responsibility (CSR) is reflected in its mission statement that reads as follows:

  • Contributing to state and national economic growth through an efficient and effective business entity while upholding the community interest.
  • Upholding position as a business entity that spearheads and controls market, competitive, profit-motivated and recognized.
  • Catalyst to sustainable business growth which will further create success in fulfilling its obligation as a state investment corporation.
  • Contributing and adding values to the well-being of the community through business success as well as Corporate Social Responsibility undertakings.

JCorp has enjoyed steady growth and expansion in recent years. It is a national market leader in foods and quick service restaurants, specialist healthcare services. Its sound financial position is reflected in the table below:

RM Million 2005 2006 2007 2008 2009 2010 2011
Revenue 432 609 492 427 500 388 474
Profit Before Tax 133 121 126 82 100 118 114
Profit After Tax 124 115 126 77 99 119 137
Total Assets 4233 4680 4796 4934 4896 5173 5808
Total Liabilities 4058 4251 4241 4302 4165 4303 4802
Total Equities 175 429 555 632 731 870 1004

The corporate slogan of JCorp – Membina dan Membela – reflects its belief and philosophy that corporate success and social responsibilities go hand in hand and may be realized through approaches that conform to Islamic Shariah principles and universal values.

As part of its CSR initiatives, JCorp has created non-profit entities under its umbrella, called Amal Business Organizations (ABOs). ABOs function as a medium for JCorp to contribute towards the development of the society through various aspects of charity, well-being and recreation as well as entrepreneurship. In 2011, a total of 27 ABOs were in operation in four segments: social and public welfare development, entrepreneurship development, sports and recreation development and staff welfare. An analysis of major community initiatives undertaken by JCorp since its inception shows its growing commitment to community welfare through activities and programs falling in a range of religious, health, education and economic domains as follows:

The innovative element that stands out in the above initiatives is the operationalization of the concept of corporate waqf in the form of Waqaf An-Nur Corporation Berhad (WANCorp), a limited company established to guarantee proper management of Johor Corporation and its Group of Companies’ stocks and assets under endowment. WANCorp has formalized a Memorandum of Agreement with the Johor Islamic Council, recognizing its role in making a success of JCorp’s corporate waqf. WANCorp has consequently been endowed with powers of trustees and with the duty and obligation to manage JCorp’s corporate waqf.

JCorp’s Corporate Waqf took off in 2006 with the transfer to Waqaf An-Nur Corporation Bhd (WANCorp) RM 200 million worth (on net asset value basis) of public listed shares owned by JCorp. WANCorp’s main income is derived from the annual dividend payout by the PLCs, a part of whose equity is now endowed and transferred to its ownership. These payouts are allocated for re-investment, as well as to fund Islamic CSR programs that are not restricted to Muslims as beneficiaries. For instance, in 2009, RM 4.9 million were received by WANCorp as dividends, and of this, 70% were allocated for re-investment. Another 25% of the dividends received were spent on various Islamic CSR initiatives including the nationwide chain of charity Waqaf An-Nur clinics and hospitals to serve the healthcare needs of the poor of all ethnic groups. Johor Islamic Religious Council is the beneficiary of the remainder 5%. The following are the flagship initiatives of WanCorp:

Management of Mosques

WANCorp currently manages a chain of seven mosques catering to over 15,000 worshippers. The mosques also function as centres of community activities in religious as well as economic domains. For instance, the Imams at the mosques also play a key role in the collection zakāh and execution of contracts between the Waqf and the beneficiaries of its Dana Niaga (seed equity) program. The mosque staff assists in the administration of this program on a voluntary basis. Mosque staff is also given the opportunity to become qualified to provide Umrah services offered by a travel subsidiary whose shares are also endowed.


Another flagship initiative by WANCorp is Waqaf An-Noor Hospital and Waqaf An-Noor Clinics that seek to provide healthcare and dialysis services to the less fortunate segments of the society. It currently owns and manages a chain of 16 clinics and a full-fledged hospital. The clinics provide health services not only in Johor, but also in nearby states, e.g. Negeri Sembilan, Selangor, Perak and Sarawak in co-operation with the respective State Islamic Councils. The number of beneficiaries from these services has steadily increased from 0.56 million in 2009 to 0.67 million in 2010 and to 0.77 million in 2011. About 6 percent of the treatments were provided to non-Muslim patients.

Patients of Waqaf An-Nur clinics have to pay only RM5 for treatment by a qualified doctor, plus the cost of medicine prescribed. Another program with high impact is the provision of treatment for kidney ailments through Dialysis Centers that operate alongside these clinics. These Centers offer subsidized dialysis treatments. For many patients the cost is reduced to almost zero with further financial support from other charities (e.g. Bayt al-māl Funds of state religious councils) that are part of the support network. The number of such beneficiaries increased from 113 patients in 2009 to 115 in 2010 and to 120 in 2011.

Start-Up Capital for Microenterprises

Waqaf Dana Niaga is another innovative program of WANCorp with the objective of developing business opportunities for poor and marginalized groups with low access to capital, such as, young graduates, start-up small businesses operated by housewives and single parents and provision of interest-free loan as seed capital. The program is in a pilot stage in which the group’s foods and quick service restaurants entity plays a lead role.

Disaster Relief

Waqaf Brigade is an initiative that aims to undertake relief and rehabilitation work during national calamities. As an emergency aid organization, Waqaf Brigade has been significantly helping the victims of floods, earthquakes and other natural disasters.

WANCorp as a corporate waqf, has essentially institutionalized the link between a corporate entity such as JCorp and its wealth creation and value adding business function, with a structured mechanism to address the needs of the poor and marginalized sections of the society on a sustainable basis. It has sought to ensure an efficient, transparent and professional management of waqf assets, coupled with the effective disbursement of waqf benefits.

The official status of WANCorp is that of ‘mauquf alaihi’ or beneficiary and not that of nazir/ mutawalli or trustee-manager even while it effectively performs the latter role. This is perhaps warranted by the Malaysia law that permits the Islamic Religious Council of the state or Majlis alone to be the nazir/ mutawalli. WANCorp under an agreement with Majlis is entitles to receive a major part of the benefits for onward transfer of the same to the ultimate beneficiaries.

[1] Information about this institution has been extracted from, accessed on 1st November 2012.

Mohammed Obaidullah | May 09, 2014

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