Islamic Finance

Indonesia to use zakat, waqf to develop water and sanitation infrastructure

Photo: Villagers stand near their buckets while queuing for clean water at Pandantoyo village, in the outskirts of Bojonegoro, Indonesia's East Java province, October 18, 2013. The government sent 5,000 litres of clean water to every village after 16 districts in Bojonegoro suffered a shortage of clean water after wells and other water sources dried up from a recent drought. REUTERS/Sigit Pamungkas  

JAKARTA - Indonesia is planning to channel zakat, waqf, sadaqat and other Islamic social funds to develop water and sanitation infrastructure projects, the Ministry of National Development Planning (PPN) and National Planning Agency (Bappenas) said today.

PPN/Bappenas will work with the national zakat and waqf organisations Badan Amil Zakat Nasional (Baznas) and Badan Wakaf Indonesia (BWI), the organisations announced at the signing of a memorandum of understanding in Jakarta today.

This comes after the Indonesian Ulema Council (MUI) passed a fatwa (pdf) in August 2015 allowing the use of Islamic social funds for the development of national projects for clean water and proper sanitation.

Bambang Brodjonegoro, the minister of national development planning said that in 2015 access to clean water was only around 70.97 percent and adequate sanitation a lower 62.14 percent, according to data from the national statistics agency. The government is aiming for 100 percent access by 2019 and estimates 275 trillion Indonesia rupiah ($20.5 billion) is needed to achieve this target.

The state is only able to fund around 30 percent of this need. Of the remainder, 40 percent will come from regional budgets, 12 percent from the private sector, 10 percent from government-owned or government-linked enterprises, and 8 percent from other sources including Islamic social funds.

The financing of clean water and sanitation projects is also complemented by non-state budget infrastructure funding (PINA). Most recently, investments were channelled into the Umbulan Drinking Water Supply System (SPAM) project in East Java, through public-private partnership schemes.


Indonesia was a signatory to the United Nations Millennium Development Goals launched in 2000. By 2015, the country had failed to meet four of the eight targets, namely reducing maternal mortality rates, lowering the number of HIV-infected patients, ensuring environment sustainability and providing access to clean water and good sanitation.

"We will focus on areas that still lack clean water and sanitation. In the ASEAN region, our access to sanitation is only better than Timor Leste and Cambodia. There are still about 72 million people in Indonesia that don’t have access to clean water or drinking water and 96 million people don’t have access to adequate sanitation,” said Brodjonegoro.

MDGs were renewed as Sustainable Development Goals with 7 goals by 2030. The availability and sustainable management of water and sanitation is Goal 6.


Baznas chairman Bambang Soedibyo told Salaam Gateway the organisation will coordinate with its provincial and regional zakat institutions to calculate how much it can channel to clean water and sanitation projects as zakat funds must also be disbursed to other needs such as education and health.

"We await Bappenas mapping of their priorities and then we will provide partial funding. We will count our zakat balance and how that can be distributed for the development of water and sanitation projects,” said Soedibyo.

“Last year zakat collection reached 5 trillion rupiah. This year we expect to collect 6 trillion rupiah," he said.

BWI chairman Slamet Riyanto said the mindset of nazir, or waqf land managers, must first change to embrace modern and different uses for waqf.

There are also plans to certify waqf land managers for better optimization of assets, said Riyanto.

"In other countries such as Egypt and Saudi Arabia they even have a minister of awqaf because of the economic benefits from awqaf,” he told Salaam Gateway.

Awqaf assets in Indonesia are estimated at $157.7 billion, equivalent to 5 billion square metres of waqf land spread across 440,000 plots, Rifqi Ismal, Assistant Director at the central bank's Sharia Finance and Economy Department told Salaam Gateway in November. These lands are largely used for mosques, schools, orphanages and cemeteries.

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