Waqf (Islamic Endowment) Bonds
Cash waqf linked sukuk (CWLS)
Indonesia's Cash Waqf Linked Sukuk (CWLS) programme structures Islamic bonds where proceeds fund waqf assets (social infrastructure). Returns go to endowed social programmes. DSN-MUI ruled this permissible as it combines the irrevocable waqf endowment with sukuk investment returns.
Full Ruling
The CWLS structure works as follows: (1) Investors purchase retail sukuk from the government. (2) Proceeds are used to fund waqf (endowment) assets — e.g., schools, hospitals, mosques. (3) Coupon (periodic payments from sukuk) is allocated to fund operational programmes of the waqf institution. (4) Principal is returned to investors at maturity. DSN-MUI approved this structure as the sukuk component (sovereign ijarah sukuk) is separately permissible, and the allocation of returns to waqf purposes adds social benefit.
Rationale & Reasoning
Sovereign sukuk backed by state assets are permissible ijarah structures. Allocating the profit distribution to waqf purposes is a laudable social act (tabarru') that does not affect the permissibility of the underlying sukuk. The waqf endowment itself is one of the most recommended acts in Islamic law.
Rule Basis (Daleel)
- 01Sovereign ijarah sukuk permissibility
- 02Waqf (endowment) as encouraged act
- 03DSN-MUI approval of structure
Citations & Sources
DSN-MUI Fatwa No. 40 – Capital Market Transactions (2003)
Dewan Syariah Nasional – MUI Indonesia · 2003
Ref: 40/DSN-MUI/X/2003