Cash Waqf Model for Infrastructure Funding in Indonesia: A Conceptual Paper

Abstract

Infrastructure development has been widely believed to promote economic growth and reduce economic inequality in the country. However, it requires enormous financial resources that governments are not always able to provide. This issue is particularly relevant to Indonesia, where the government’s efforts to develop infrastructure are constrained by a persistent budget deficit that has been encountered since 1998. This paper proposes cash waqf as an alternative funding source for infrastructure development, as it has served as a private provider of infrastructure and other public goods for a long time. The success of cash waqf, however, requires an effective and appropriate model to support infrastructure development. This paper seeks to address the research gap by proposing a cash waqf model that clarifies the roles and responsibilities of all parties involved to leverage cash waqf to fund the infrastructure development in Indonesia. It is a conceptual paper, and the design of the paper used in this study is adopting theory adaptation, as explained by Jaakkola (2020). A Systematic Literature Review (SLR) of articles as well as conference papers is conducted to systematically review the previous studies regarding the cash waqf model. This study’s main contribution is its new way of creating a cash waqf model that not only helps to fund infrastructure but also tackles the existing issues that have caused low cash waqf collection in Indonesia, like the shortage of professional nazhirs, lack of incentives, poor understanding and awareness, and issues with transparency, accountability, and public trust.