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1. KULLIYYAH OF ECONOMICS AND MANAGEMENT
SCIENCES
SEMESTER 2, 2019/2020
ECON 7311: Islamic Capital Market
Research title:
Motivating Wakaf and Zakat in making affordable housing
accessible by joint procurement
lecturer:
Dr Mohd Nizam Barom
PREPARED BY:
Abdirahman Musa Eldodo Saeed (G1729805)

2. I. Introduction
The urbanization processes in most developing countries have prompted huge lodging deficiencies
and subjective insufficiencies and an immediate result of this is most of the urban populace cannot
manage the cost of the expenses of traditional lodginglum. Dwellers make up 37% of the urban
populace in developing nations at present, with the rate being as high as 62% in sub – Saharan
Africa and 43% in Southern Asia. Somewhere, in the range of 2000 and 2030, the urban regions
of the creating nations will ingest 95% of the total populace development (UN-HABITAT). In
reaction to many factors, especially urbanisation and demographic growth, demand for housing is
growing. In 2009, the urban population of 3.42 billion inhabitants for the first period in history
reached the local people of 3.41 billion. The urban population hit 4.12bn in 2016. This pattern will
intensify with a predicted growth in the urban population of 1.7 billion people across 40 Years to
come. Asia will significantly contribute to that rise due to its strong profitability in growth in the
economy. Urban housing differs from residential buildings; the former has a higher concentration
of earth, more multi-unit structural element, and more rental properties. The urban population of
Asia will grow from 45 per cent in 2015 to 65 per cent in 2050 (UN 201). There is also a shift to
megacities—agglomerations of 10 million people or more. In 1950, there were only two such cities
in the world and by 2025, there will be 29 megacities, with half of them (15) in Asia (UN 2010).
The density of slums remains high, marked by non - durable materials, precarious tenure,
overpopulation and lack of clean water and sanitation. In the developed world, more than one-third
of the urban citizens live in slum dwellers. The occurrence in Asia ranges from 42 per cent of
South Asia's urban population to 37 per cent in East Asia, and 24 per cent in West Asia.
2. Literature review
Affordable housing problem confronting in the needy and poor Muslims the affordable housing
problematic, Ismail in 2015 said Malaysia is facing major housing affordability difficult and that
the problem is acuter in the urban areas (Ismail, 2015). The sustainable housing supply would be
3.0 times the real annual income of the family, but in 2014, the medium house expenses for people
of Malaysia as a whole and Kuala Lumpur stood at 4.4 times and 5.4 times the median annual
household income respectively. The figures indicate that Malaysia is facing 'seriously
unaffordable' and 'severely unaffordable' housing markets (Ismail, 2015). They observed that the

3. current housing affordability problem stems out not from the lack of housing stocks but due to
supply-demand imbalances and that, the imbalances have increased since 2015. They argued that
the prices of most new launches do not match the households' affordability.
In the context of affordable housing for the poor and needy Muslims, the problem appears to
continue unabated. For instance, in 2014 the estimated shortfall of affordable housing for Malaysia
as a whole stood at 960,000 units (Cheah & Almeida, 2016); and within that, the shortfall for the
Muslims stood at about 480,960 units.
In contrast to the works of Cheah and Almeida (2016) in which they recommended The Affordable
Housing Costs range between RM248 thousand and RM261 thousand, most low and middle-
income Malaysians are more comfortable to associate the term affordable housing with those
styled under the “low cost/PPR” housing schemes. A low cost/PPR housing is defined by its selling
price of between RM35, 000 and RM42, 000 per unit by the Ministry of Urban Wellbeing,
Housing, and Local Government Malaysia, n.d. However, Khairuddin et al. (2017) claimed that
even at this price range the problem of affordability among most low and middle-income
Malaysians and especially the poor and needy Muslims persist(Cheah & Almeida, 2016).
2.1 Definition and Preliminary factors
In its 1948 declaration of human rights, the United Nations viewed housing as basic human rights
for individual security, privacy, health, care and security. In addition, food and garments, the
sanctuary is an important and essential part of fundamental human rights, as confirmed in the
Qur'an: "It is Allah Who has made your dwelling places of rest and quietness for you" (Qur'an
16:80). The housing also, leads to economic growth, as demand for numerous essential building
material products, such as timber, steel, cement and other building materials, provides many
building workers.
There are three styles of housing planning programs in the developed countries; formal, informal
and organic (Mitlin, 2000). The Planning Authority is the legislative framework for systematic
projects. They established within the context of the laws, controls and regulations of government.
Whilst the advancement of Informal housing is sometimes unlawful and includes of unpermitted
colonies and squatter settlements. Such types of projects are being prevalent due to issues of
poverty, insufficient infrastructure and poor governance. Significant aspects of informal growth

4. are tenure instability and poor service and facilities quality. A UNCHS study (1995) found weak
management as the main factor that promotes informal settlement Instead of inequality more
people opt for the casual rather than formal transaction than the lower-income community does.
In illegal communities, a large part of the urban population lives. Nearly two-thirds of the urban
population in advanced countries live in informal housing and are rentals as one of the most in
need (Nafar & Bank, 2018). Infrastructure by its clear and aggregate impact is an important aspect
of the modern economy. Organisation design demand for labour and construction materials and
housing is linked to the land market and a range of business services to evaluators and advertisers
from real estate agents, attorneys, and technicians.
2.2 The Roles of Wakaf and Zakat in the Provision of Affordable a House
Zakat monies are only payable to the eight categories of recipients or snaps. The two most
vulnerable categories of asnafs are the fakir and Miskin. The former relates to one that has neither
material possession nor means of livelihood while the latter is one with insufficient means of
livelihood to meet basic needs. These categories of the asnaf are eligible to be assisted as provided
under the haddul kifayah (poverty line under the zakat system).
Generally, the zakat managers in Malaysia offer 32 types of help to the asnafs including the
provision of shelter, daily sustenance, clothes, medical and health, education and transportation
(dan Haji, 2008). In terms of shelter, zakat assistance covers repairs, the building of houses and
cash down for purchasing new low-expense homes, the monthly rental and utility assistance and
assistance for the building of new houses in collaboration with other agencies.
Published statistics on the detailed distribution of zakat funds for shelter across Malaysia is not
available. However, an examination of the Selangor Zakat Board's Lapuran Pengurusan Zakat
Selangor 2015 shows that the provisions of shelter, lumped together under social development
programmer, for asnaf fakir and Miskin stood at repair and building new houses in 2015: RM27.8
million (2014: RM20.3 million); and house rental assistance in 2015: RM17.9 million (2014: RM
11.3 million). The said amount represents some 6.75% of the total zakat monies distributed to all
asnaf for 2015 (2014: 5.30%). The total amount of zakat monies distributed in 2015 was
RM676.047 million (2014: RM595.745 million) (Selangor, 2016).

5. In contrast to zakat, waqf authorities' initiatives in the provision of housing as a whole appear to
be more active. However, their initiatives seem to be focusing on unlocking the values of waqf
land and properties. Initiatives on the development of low expenses housing including those
chosen for asnafs are still at their infancy (Rashid, Fauzi, & Hasan, 2018).
2.3 CRITICAL EXAMINATION OF THE ROLES OF WAKAF AND THE ZAKAT
POWERS THAT BE IN THE SUPPLYING OF ADEQUATE AND HOUSE
AFFORDABLE FOR THE NEEDY AND POOR MUSLIMS.
Based on the available literature, it appears that the focus of zakat powers, in the supply of cheap
housing, are on the asnafs fakir and Miskin. In addition, the assistance appears to favour the asnaf
fakir and Miskin who are landowners or with permission to erect houses thereon, owners of houses
needing repairs, tenants and those intending to purchase low-cost houses whereby the down
payments are paid by the zakat authorities on their behalf. In addition, most
Zakat housing being developed thus far appear to be comprehensive in style comprising
residential, religious and common facilities. While such an idea is commendable as the
development exhibits, an ideal "Islamic village" but it would require a considerable sum of money
to develop along with the appropriate land size. Small-scale developments or buying units direct
from developers or the secondary market were given less attention.
In the case of waqf, data from published sources suggests that the initiative to utilize waqf lands
and assets for building affordable housing focusing on the low cost/PPR styles of residential units
are still as its infancy. However, waqf authorities seem to pay more attention towards property
development initiatives aimed at unlocking the values of waqf land such as in the commercial,
medical and health and hospitality sectors (Rashid & et al 2017).
In carrying out their roles in the provision of affordable housing zakat and waqf, managers were
faced with a variety of constraints Financing inadequacy; land problems (unregistered waqf land,
uneconomical waqf land due to scale, location, etc.) and the availability of skills are the top of the
list of constraints(Ahmad Dahlan, Juhari, & Ahmad Shafiee, 2015).
Some zakat and waqf authorities have experimented with the knowledge of having waqf and zakat
working in collaboration in the offer of affordable housing to address the constraints they face. For
example in Melaka, the RM2.27 million Al-Ehsan Flats at Tengkera was built using waqf funds,

6. Baitulmal funds, and surplus zakat funds. The residential units were rented out to the poor and
single mothers at below-market rates (Ab Rahman, 2009). In this context, Khairuddin et al. (2014)
have proposed a model for the zakat and waqf authorities and private property developers to work
based on a joint venture. However, they pointed out several issues that must be resolved before the
model can be adapted for use.
2.4 CHALLENGES AND ISSUES IN MALAYSIA IMPLEMENT HIGH MEDIUM COST
HOUSE
To classify the problems and challenges related to the implementation of low-cost housing in the
capital of Malaysia Kuala Lumpur, meetings were conducted with City Hall managers Kuala
Lumpur and housing developers to implement low-cost housing. The study findings are as
follows:-
1. Based on Syafiee Shuid, the supply and demand of low medium-cost housing were lacking.
2. Because of poor productivity, individual developers are not willing to build low-cost housing,
despite the fact that no pressure has been established, not like low-cost housing. In comparison,
private developers are not granted special opportunities to allow them to establish low-cost
medium-sized housing.
3. The Draft Kuala Lumpur Structure Plan 2020 exclude low medium-cost lodging class in the
projection of houses unit to be worked constantly in 2020. Despite the fact that the accentuation
of Structure Plan is to give more houses in the medium-cost run, explicit strategies and projection
for low medium-cost lodging class were not expressed (Shuid, n.d.).
4. There are no particular arranging and structure rules for low medium-cost lodging contrasted
with minimal cost lodging. The requirements that municipal authorities implement vary from one
scheme to the next. This irregularity makes disarray among private builders.
5. Housing distribution mechanism for low medium-cost homes has to be stricter, as buyers are
not regulated. This house type also is the land financial specialist's option.
6. Without appropriate local government legislation, Kuala Lumpur's low-cost housing prices are
often pegged among RM70, 000 and RM85, 000 for every unit. None of the private developers is
selling houses at the cost about RM42, 000 and RM69, 999 per year, from the data collected.
7. Lack of local government oversight and supervision over the development and execution of high
and medium-cost housing relative to low-cost housing.

7. 8. Because of the economic crisis, the development of low-cost buildings in Kuala Lumpur through
and several other towns only began since 1998.

8. References
Ab Rahman, A. (2009). Peranan wakaf dalam pembangunan ekonomi
umat Islam dan aplikasinya di Malaysia. Jurnal Syariah, 17(1), 113–
152.
Ahmad Dahlan, A. R., Juhari, S. S., & Ahmad Shafiee, A. S. (2015).
MOOCs at International Islamic University Malaysia. International
Journal of Computer Science and Information Technology Research,
3(2), 140–149.
Cheah, S. L., & Almeida, S. J. (2016). Demysfifying the affordable
housing issue in Malaysia (Box Article). Retrieved from Kuala
Lumpur, Malaysia: Http://Www. Bnm. Gov.
My/Files/Publication/Ar/En/2016/Cp04_002_box.Pdf Http://Www.
Theedgemarkets. Com/My/Article/Likely-Higher-Epf-Withdrawals-
First-Timehomebuyers.
dan Haji, Z. (2008). Laporan Tahunan Jabatan Wakaf, Zakat dan Haji
2008.
Ismail, S. (2015). Khazanah Research Institute.
Mitlin, D. (2000). Addressing urban poverty: increasing incomes,
reducing costs, and securing representation. Development in
Practice, 10(2), 204–215.

9. Nafar, N., & Bank, I. D. (2018). Affordable Housing Development and
SDGs : The Role of Islamic Finance Affordable Housing
Development and SDGs The Role of Islamic Finance Nosratollah
Nafar, (June).
Rashid, K. A., Fauzi, P. N. F. N. M., & Hasan, S. F. (2018). Meeting
housing needs of the poor and needy Muslims through Zakat and
Wakaf. Planning Malaysia, 16(7).
Rashid, K. A., Hasan, S. F., Sarkawi, A. A., & Aripin, S. (n.d.).
ZAKAT-WAQAF COLLABORATION IN THE, 164.
Selangor, L. Z. (2016). Laporan pengurusan zakat Selangor 2015. Shah
Alam: Author.
Shuid, S. (n.d.). LOW MEDIUM COST HOUSING IN MALAYSIA :
ISSUES AND CHALLENGES by :, 1–13.