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Monday, April 15, 2024

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HDC to launch cash Waqf fund to benefit Muslim and non-Muslim Halal micro SMEs

The Halal Development Corporation (HDC) is in the process of finalizing a cash Waqf fund for micro SMEs. HDC is the custodian of the Halal economy in Malaysia under the Ministry of International Trade and Industry. The Ministry of Finance allocated RM4 million (US$910,320) in the 2022 budget to start the Waqf program which is jointly undertaken with Yayasan Wakaf Malaysia. The fund seeks to benefit both Muslim and non-Muslim participants in the Halal industry.

The fund targets micro SMEs as they have been most affected by the COVID-19 pandemic and will offer a maximum funding of RM25,000 (US$5,692.5) at zero interest to be repaid in a maximum of seven years. HDC aims to impact 120 companies in the first year of the launch of the fund. To qualify for funding, companies will need to have been in existence for at least two years and have a Halal certificate or prove that they have applied for a Halal certificate. HDC is working with two government-linked partner banks which will handle the funds in terms of disbursement, repayment and structuring.

HDC highlights the importance of Waqf as a social financing instrument as it allows both Muslims and non-Muslims to participate and benefit from the fund. It chose the cash Waqf model as a blue ocean strategy to allow both Muslims and non-Muslims to benefit from the program and contribute to the Halal industry and seeks to create a snowballing effect of social financing and a culture of social financing.

“If this model is successful, then we would like for other countries to follow our initiative and introduce their own Waqf in their country to help the business community in the Halal economy or be it in other sectors. This is something that we would like to duplicate in other areas,” the spokesperson from HDC further shared with Islamic Sustainable Finance & Investment.

HDC has made consistent efforts in the development of the Halal economy for SMEs. It partnered with Bank Islam Malaysia in June 2021 to introduce the Go Halal Fund with an allocation of RM100 million (US$22.76 million). The fund is available for local SMEs to expand their operations in the Halal industry. In November 2021, the corporation partnered with Standard Chartered Saadiq on the US$100 million Islamic Financial program to support SME corporate multinationals across Asia, Middle East and Africa that operate in the Halal ecosystem.

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