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Islamic finance preps rules for charitable funds

[JAKARTA] Islamic finance institutions will present a set of guidelines for Muslim charitable institutions later this month, as the industry looks to develop a more efficient use of their assets, an Indonesian central bank official told Reuters.

Islamic endowments (awqaf) and alms-giving (zakat) have been in existence for centuries and hold billions of dollars in assets around the globe, but they are often criticised for being poorly managed.

A set of guiding core principles for zakat has now been completed and will be unveiled at an upcoming United Nations summit in Istanbul, said Indonesian central bank deputy governor Perry Warjiyo.

Similar rules for awqaf are also in development, Mr Warjiyo said on the sidelines of the annual meeting of the Islamic Development Bank Group being held in Jakarta.

Indonesia's central bank is hosting some of the technical discussions for developing the core principles, as it hopes to strengthen the auditing function and professional management of such entities.

Reliable statistics are scarce, but awqaf are believed to hold large portfolios of real estate, commercial enterprises, cash, equities and other assets, with some estimates as high as US$1 trillion worth of assets held globally.

In Indonesia alone, registered land from awqaf stands at 1,400 square kilometres with an estimated market value of around US$60 billion, according to the country's Ministry of Finance.

REUTERS