Islamic Finance

IDB to finance commercialisation of two waqf lands in Jakarta

JAKARTA –The Islamic Development Bank (IDB) is planning to finance the commercialisation of two plots of waqf land in Indonesia, executive director of national waqf agency Badan Wakaf Indonesia (BWI) Achmad Djunaedi told Salaam Gateway.

According to Djunaedi the two plots are in the capital city Jakarta.  

The IDB will put up more than $15.5 million to develop a commercial office building on a 5-hectare waqf land in the business district of Kuningan, said Djunaedi.

The project would likely use the build, operate and transfer (BOT) scheme, he said.

The IDB will finance the construction of the building, rent it for several years and return it to the appointed nazir, or waqf land manager, at the end of the rental period.

“The nazir is the Raudathul Mutallimin Foundation. They have previously built office buildings across over 4,000 square meters of land using the BOT scheme. Investors rent it for 35 years, and this yielded around 1 billion Indonesian rupiah ($75,000) a year,” said Djunaedi.

“The location in Kuningan is strategic considering there are a dozen private companies willing to rent. Income from rent is then channelled into mauquf alaih, such as Islamic schools, orphanages and mosques,” he added.

The IDB will co-finance with other banks the construction of a mall on the site of a 2.5-hectare waqf land in the Tanah Abang district. The land was previously used by street traders around the popular Tanah Abang market. 

“It needs more than 1 trillion Indonesian rupiah ($75 million) to build a modern mall there,” said Djunaedi.

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