Sunday Okobi in Baku, Azerbaijan
The Islamic Development Bank Institute (IsDBI) has signed a Memorandum of Understanding (MoU) with the Labuan Financial Services Authority of Malaysia (Labuan FSA) to explore collaboration on the potential implementation of the Awqaf Free Zones concept within Labuan International Business and Financial Centre (Labuan IBFC).
The acting Director-General of IsDB Institute, Dr. Sami Al-Suwailem, and Mr. Affendi Rashdi, director-general of Labuan FSA, signed the MoU yesterday on the sidelines of the IsDB Group Annual Meetings in Baku, Azerbaijan.
The MoU, according to both parties, marks an important milestone in advancing innovative, Shari’ah-compliant development solutions that leverage the potential of Awqaf (Islamic endowments) to support sustainable economic growth and social development across IsDB Member Countries, including Nigeria.
The IsDB stated that the Awqaf Free Zones are an innovative concept developed by the IsDB Institute to integrate the principles of Waqf with the legal, regulatory, and economic framework of free zones.
According to the MoU, “The concept aims to establish dedicated jurisdictions that facilitate the mobilization of Awqaf assets through modern governance structures, innovative financial mechanisms, and enabling regulatory environments while preserving the perpetual and charitable nature of waqf.
“Through this collaboration, the IsDB Institute and Labuan FSA will explore the feasibility of adapting the AFZ concept to the Labuan IBFC ecosystem.”
They noted the cooperation would include the exchange of knowledge and technical expertise, assessment of legal and regulatory requirements, identification of potential
Implementation models and the exploration of future pilot initiatives.
While speaking on the occasion of the signing of the MoU, the acting Director General of IsDB Institute, Al-Suwailem, disclosed that: “The Awqaf Free Zone represents a new paradigm for unlocking the developmental potential of Waqf by combining centuries-old Islamic philanthropic principles with contemporary financial and regulatory innovation.
“Our collaboration with Labuan FSA reflects our shared commitment to developing practical and scalable solutions that contribute to sustainable development of Member Countries and strengthen Islamic finance globally.”
Also, the Director General of Labuan FSA, Rashdi, said: “Labuan IBFC is uniquely positioned to support the exploration of the Awqaf Free Zones through its existing ecosystem, which brings together international waqf structures, Islamic finance capabilities, digital asset infrastructure, and cross border financial services within a single jurisdiction.
“We look forward to working closely with the IsDB Institute to assess how these strengths can be leveraged to develop innovative and sustainable waqf-based models that unlock
productive assets, enhance socioeconomic impact and support the development priorities of IsDB Member Countries.”
The signing of the MoU will build on the substantial progress achieved by the IsDB. The institute is developing the Awqaf Free Zones concept.
The Institute said it has completed comprehensive studies on the legal and regulatory framework, including a Legal Report, a Model Law, and a Model Regulation, laying the foundation for future implementation in interested jurisdictions. These studies are further supported by governance, operational, and financial feasibility studies that help establish Awqaf Free Zones.
The collaboration with Labuan FSA represents the first institutional step toward assessing the implementation of the Awqaf Free Zones concept within an established international financial centre.
Subject to the outcome of the feasibility assessment and subsequent technical discussions, they said the initiative has the potential to demonstrate how Waqf can be integrated into modern financial ecosystems while supporting the Sustainable Development Goals (SDGs) and enhancing the contribution of Islamic finance to inclusive economic development.
Guided by the principles of Islamic economics and finance, the IsDB Institute leads the development of innovative knowledge-based solutions to support the sustainable economic advancement of IsDB Member Countries and various Muslim communities worldwide.
“The IsDB Institute enables economic development through pioneering research, human capital development, and knowledge creation, dissemination, and management. The Institute leads initiatives to enable Islamic finance ecosystems, ultimately helping Member Countries achieve their development objectives,” Al-Suwailem said.
