ISLAMIC ENTREPRENEURSHIP
Posted On July 16, 2010
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CORPORATIONS FOR THE COMMUNITY
Building wealth for all with Islamic entrepreneurship
One new strand of thought in Malaysia these days is that of Islamic entrepreneurship. This proposes an alternative to the purely shareholder-centric, business-driven economic model – an alternative that adherents claim is more in line with the teachings of Islam. Community and social justice are at the core of this emerging alternative way of doing business, spearheaded by Islamic entrepreneurship under the banner of a Business Jihad. Its proponents believe in creating a new “halal” financial and economic system in which all Malaysians – Muslim and otherwise – may prosper.
KEY CONCEPTS:   Islamic entrepreneurship gets its footing in the concept of Corporate Waqaf.  Waqaf, in Muslim law, is a permanent endowment or trust, customarily of real estate, in which the proceeds are spent for purposes designated by the benefactor – usually on charitable foundations such as schools, hospitals and mosques. Corporate Waqafs are legally recognised community-owned corporations that continue in perpetuity, and profits from waqafs are used solely for reinvestment or to fund community interests in charitable or social causes.
To be such a Muslim entrepreneur, one must also be worthy of being entrusted with amanah – another key concept meaning a transaction in which one party manages another’s funds or property in trust. The term amanah may also describe other financial activities, such as taking deposits.
With these key concepts at its core, Islamic entrepreneurship uses four strategies to underpin its success: instilling the concepts of halal and amanah into business and corporate life; entrusting amanah to “intrapreneurs” (i.e. top entrepreneurs without equity, MBO or stock options); utilizing the Waqaf Coprporation as an organisational strategy; and bringing communities together as stakeholders through adaptation of the waqf institution. Islamic entrepreneurship and corporate waqafs share the same goal: to engage in the business of building wealth for all Malaysians, while upholding Islamic principles and bridging social divides.
CORPORATE WAQAF: One of the founding members of this movement and the first to establish a corporate – as opposed to conventional – waqaf is the Johor state government’s investment agency, Johor Corporation (JCorp).
“We need to create wealth and jobs,” JCorp CEO Muhammad Ali Hashim, told OBG. “The wealth is only entrusted to us to manage. The motivation is about social justice, about ensuring business bridging divides in community and serving a higher cause.”
In 2006 JCorp transferred RM200m ($58.7m) in shares to its corporate waqaf, Waqaf An Nur Corporation (WANCorp). Endowing such a large amount of shares to a waqaf was a pioneering step in establishing a corporate waqaf, mainly because the management of the assets transferred to waqaf had to be vested back to WANCorp. In comparison, conventional waqafs are managed by the State Islamic Religious Councils (SIRCs).
JCorp has founded, built and now operates mosques and clinics across the state. The first mosque was Masjid An Nur at Plaza Kotaraya, which is staffed, managed and funded by JCorp rather than by the religious authorities – another first.   JCorp established its first clinic at Plaza Kotaraya in 1998 with KPJ Healthcare, JCorp’s healthcare arm. As of mid-2010 WANCorp was operating thirteen clinics throughout Malaysia. The clinics charge only RM5 ($1.50) for all treatments, including medicine, making them a popular place of treatment for the poor, benefiting more than 550,000 poor patients to-date.  In another step, in 2009 JCorp endowed 61% of its shares in TPM Management, which owns the Larkin Sentral shopping centre in Johor Bahru. This makes Larkin Sentral one of the first malls to be controlled and managed by a corporate waqaf.
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WANCorp’s aim is to grow not only as a successful business but also a community-owned Corporate Waqaf. In this manner it hopes to initiate a shift from the conventional to a community-centric business concept.
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