Developing a Waqf Crop Micro Takaful Framework Through Crowdfunding- Waqf in Malaysia

Abstract

The agriculture sector contributed 7.1 per cent (RM101.5 billion) to the Gross Domestic Product (GDP) with 10.36% for employment in 2019. Agriculture is considered a high-risk industry due to adverse weather conditions and crop diseases outside the control of farmers that causes serious consequences, such as crop failure, poverty, and food insecurity that could adversely affect the sector's economic development potential. This scenario needs to have a crop insurance scheme to protect the financial loss. However, national crop insurance schemes have not yet been implemented in Malaysia compared to neighbouring countries like Thailand, the Philippines, and Indonesia. This protection is significant for smallholder farmers to provide sustainable economic growth and food security. Questions arise, if this scheme is developed, are small farmers able to contribute to this scheme and what about its sustainability? Therefore, this study aims to develop a sustainable ' Waqf Crop Micro Takaful Framework' (WCMTF) for smallholder farmers' contribution by the takaful industry in developing Crop Micro Takaful Scheme. Next, to recommend ways and policies to enhance the optimisation of crowdfunding in developing WCMTF. In this regard, Waqf is utilised as a way of financing, while crowdfunding is its platform. The crowdfunding platform can also allocate society to agricultural development in terms of moral and financial support. In terms of government policy, this project supports the agriculture sector has enabled farmers to grow economically and bring substantial employment opportunities to the country, especially to the farmers who belong to the B40 group. This program's importance will support the bumiputra economy, which is said to not grow in line with the country's development and, in turn, increase continued prosperity through Islamic financial hub in key economic growth activities (KEGA) 1, to achieve Prosperity Together Vision 2030.