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29 March 2024

Endowments are ‘sleeping giant’ in Islamic economy

WIEF panelists during the discussion in Dubai on Wednesday (SUPPLIED)

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By Staff

The role of Islamic endowments need to be further streamlined and redefined to unlock their true potential, experts said during a panel discussion on ‘Mobilising Capital from Waqf, Pension Funds and Unit Trusts’ at the the 10th World Islamic Economic Forum (WIEF) in Dubai.

Abdullah M Al Fouzan, Founder and Chairman of the Investor for Securities Company in Saudi Arabia, said: “Endowments are a sleeping giant, and they are suffering from a state of negligence with annual returns at less than 3 per cent.”

He called for tapping the true potential of endowments through a structured and concerted effort.

Presenting the importance of pension funds and how they can contribute to the GDP, the moderator of the session, Prof. Talal Yassine, Managing Director of Crescent Wealth, Australia, said that while Muslims form 23 per cent of the world population, and global pension funds have assets at over $27 trillion (Dh99 trillion), Islamic pension funds account for only 1 per cent of the value.

“There are only three pension funds from the Organisation of Islamic Cooperation countries in the top 300 pension funds in the world. Islamic pension funds have a long way to go, but developing them is critical to ensuring that Muslims can live a life of dignity in their old age,” he said.

Prof. Yassine said that the success achieved by Australia with pension funds, which contribute over two per cent to the country’s annual GDP by fees alone, can be replicated in other countries.

Highlighting the role that pension funds can play in driving socio-economic growth, Datuk Shahril Ridza Ridzuan, Chief Executive Officer of the Employees Provident Fund (EPF), Malaysia, said that EPF is today the world’s seventh largest pension fund, growing at about 11 per cent annually. He said that the fund is investing in Shariah compliant businesses globally, and is today has “the world’s largest pool of Shariah-compliant assets.”

Dr. Shamsiah Abdul Karim, Deputy Director of Asset Development, Islamic Religious Council of Singapore, explained about the Waqf assets led by the Council, and the social role they play in building mosques and promoting social solidarity.

The panelists were unanimous on the role of Islamic endowments in driving social growth and urged to explore innovative, Shariah complaint ways to further build asset base and value.