Qualitative validation of a financially affordable Islamic home financing model

Purpose – This study aims to validate a potential synergistic venture between cash waqf (Islamic endowment) institutions (CWIs) and financial cooperatives (FCs) in the provision of affordable Islamic home financing (IHF) in Malaysia. Design/methodology/approach – The study adopted semi-structured interviews with ten experts to validate the cashwaqf-financial-cooperative-mush arakah mutan aqi sah (CWFCMM)model. Thematic analysis technique was used to analyse the verbatim texts. Findings – The findings show that the majority of the informants have positive perceptions of the potential of the CWFCMM model to provide financially affordable IHF products in Malaysia. Nevertheless, this study sheds light on the varying degrees of latent issues and challenges that might arise in the implementation of this model. For example, FCs need to practice the correct business model, implement good governance structures and employ the right people. Meanwhile, CWIs need to work on their accountability issues by publishing their audited accounts in mainstream newspapers, much like what is being done by non-governmental organisations such as the widely recognisedMalaysianMedical Relief Society (MERCYMalaysia). Research limitations/implications – This study interviewed a small, industry-specific number of informants in generating its findings. Time and budget constraints are some of the limiting factors in carrying out the study. Because of these factors, the generalisation of the study’s findings will be limited. Practical implications – First, the CWFCMM model offers an alternative, financially affordable IHF instrument to lowandmiddle-income households inMalaysia. Second, the involvement of third-sector institutions such as FCs and CWIs in the provision of IHF will reduce the burden of the government in its spending on home financing solutions for civil servants. Third, this model will harness the potential of waqf-based financing beyond the contemporary limited applications tomosques, graveyards and ta hfī z (Qurʾanmemorization) schools. Originality/value – This study presents an alternative IHFmodel that transcends the current institutional framework that is heavily dominated by Islamic commercial banks and government-owned home financing institutions. The study does not focus on a single third-sector institution but on an integration of at least two of them, CWIs and FCs, in implementing the IHFmodel.


Introduction
Islamic home financing (IHF) is one of the primary functions of Islamic commercial banks (ICBs). In Malaysia, it is typically based on mur aba Á hah-variants (cost plus mark-up) such as bayʿ bi thaman ajil (BBA) (sale contract based on deferred payment) and tawarruq (commodity mur aba Á hah). It is one of the largest asset classes in the Malaysian Islamic commercial banking industry's portfolios, recording a compounded annual growth of 24.84 per cent per annum vis-à-vis the 9.41 per cent growth of conventional home loans from June 2008 to June 2018. Specifically, from RM14.97bn in June 2008, IHF products reached RM137.67bn in June 2018, a 27.24 per cent share of total home financing (BNM, 2018).
Despite the rapid progress made and the growing maturity of ICBs, several criticisms have been levelled against the pervasiveness of debt-based IHF products such as BBAtawarruq in their portfolios. This has led some scholars to argue that IHF products have strikingly similar features to their conventional home loan counterparts. Mydin Meera and Abdul Razak (2005, p. 4) contend: [. . .]while the BBA is practised as Sharīʿah compliant in some countries, it is, nonetheless, converging to the conventional mode where the computational formulas are similar to the conventional and where the profit rate tracks the market interest rate.
BBA-tawarruq home financing is also sensitive to profit-rate changes. As a result, even a relatively small increase in profit rates will affect the low-and middle-income households' ability to service their monthly instalments. For example, in a Bank of England survey that focuses on the potential impact of higher interest rates, an increase of even 2 per cent is likely to increase the number of financially vulnerable UK households from around 360,000 to 480,000 (Anderson et al., 2016).
In the past couple of years, there have been growing calls from both practitioners and academics for equity-based mush arakah mutan aqi Á sah (MM) (diminishing partnership) home financing that is closer to the normative form of the Islamic gift-economy (Mydin Meera and Abdul Razak, 2005;Haneef et al., 2011). In fact, authors such as Ebrahim (2009, p. 880) even went to the extent of suggesting cooperative (equity) home financing as being "Pareto-superior" to formal home financing.
Observations show that globally, MM is being successfully practised in an FC setting, e.g. by the American Finance House LARIBA and Guidance Residential LLC in the USA and Ansar and Islamic Cooperative Housing Corporation Limited in Canada. In this framework, members provide the funds to benefit themselves Abdul Razak, 2005, 2009;Ebrahim, 2009). This is possible thanks to the "dual bottom line" approach adopted by FCs (Zeuli and Radel, 2005;Ayadi et al., 2010;Birchall, 2013). While FCs provide a cheaper home financing option to their members by offering MM, they may be able to provide returns to the investing members in the form of rentals and sale of properties.
FCs in Malaysia, on the other hand, are contemporaneously associated with Islamic personal financinga hugely lucrative and almost risk-free business modelusually offered amongst civil servants. The current FC withdrawal from the home financing market is rather ironic given the role played by the first Islamic FC -Koperasi Belia Islam Malaysia Berhad (KBIM)in the advancement of Islamic finance in Malaysia. It offered, among others, the first workable IHF model to Malaysian Muslims in 1977(Itam@Ismail et al., 2016. For the current FCs to revert to their original spirit of taʿ awun (cooperation) as formerly practiced by KBIM, they have to contend with a multitude of problems. These include lack of funds to complement their internal source of financing such as member deposits and fees, capital shares and retained earnings (Cornforth and Thomas, 1990;Besley, 1995). These internal sources of funds are usually inadequate to finance IHF programmes of long-term maturity.
This shortcoming could conceivably be overcome by harnessing the potential of one of the most potent financing alternatives for Muslims in the past, that is, through waqf (Islamic endowment). In Malaysia, however, waqf is almost exclusively associated with endowed lands to be used for graveyards and building mosques (Shakrani et al., 2003;Mustaffa and Muda, 2014). Nevertheless, there is a growing call for the more contemporaneous form of cash waqf to increase access to affordable financing by small-and medium-sized enterprises (Mohd Thas Thaker et al., 2016) and to provide low-cost housing solutions to lower-income families (Dusuki, 2008). There is a dearth of studies to address the gap of a financially affordable IHF solution within the FC framework. The main idea of this study is to validate the potential synergy between cash waqf institutions (CWIs) and FCs to offer a financially affordable IHF for ordinary Malaysian households.
The remainder of the paper is structured as follows. The subsequent section will present the cash waqf-financial-cooperative-mush arakah mutan aqi Á sah (CWFCMM) model specifications. The ensuing sections will elucidate the methodology used for data collection, present the findings according to the emergent themes and discuss the findings. The conclusion and potential implications of the study are presented in the last section.

Model specifications
As discussed above, a potential joint venture between CWIs and FCs can be utilised as an alternative in providing a financially affordable IHF solution. Building on the MM arrangement, this research proposes the use of MM under joint CWI-FC initiatives.
An integrated cash waqf-financial cooperative mush arakah mutan aqi Á sah model This model is termed as the CWFCMM model. Its most important components include the w aqif (donors), the CWI, the FC and the joint management committee (JMC). W aqif. Under this model, the w aqif may consist of individuals, institutions, corporations and governments. Waqf benefits from the distribution of essentially two kinds: waqf ʿ amm (general endowment) and waqf kh a Á s (specific endowment). This model will focus on the former.
Cash waqf institution. A professionally established and operating CWI will be incorporated as a subsidiary of the State Islamic Religious Council (SIRC), to be modelled after the Perbadanan Wakaf Selangor (PWS), which was incorporated by Selangor SIRC. PWS issues waqf certificates to raise cash waqf in Selangor. After the cash waqf fund is collected from the donor(s), CWI will first convert the cash waqf pool into real assets through istibd al [1] as currently being practised by PWS. For example, PWS currently holds a couple of shop lots, which cost RM2.75m, in prime locations in the Selangor state capital of Shah Alam. Apart from that, PWS via its special purpose vehicle, Urus Maju Ehsan (M) Sdn. Bhd., [2] has been tasked to develop commercial residential properties in Selangor, which is one of the most developed states in Malaysia.
In the CWFCMM model, the profit[3] from these investment ventures will be equally split into two main portions. The first portion of the profit from this venture will be used by the FC as a complementary source of funds in providing affordable IHF to its membercustomers. Meanwhile, the second portion of the profit will be channelled back to the CWI to ensure its perpetuity and most importantly, its growth, and be used in other philanthropic ventures. As a waqf fund manager, CWI is obliged to handle the funds professionally and productively. It is to ensure that the amount does not fall below the initial or principal amount, in line with the waqf's nature of perpetuity (Mohammad, 2008;Mohsin, 2013).

Islamic home financing model
Financial cooperative. In this model, prior to receiving external financing from CWIs, FCs must strictly comply with Garis Panduan Mengenai Pembiayaan Islam Oleh Koperasi (Guideline on Islamic Financing by Cooperatives) and Garis Panduan Tadbir Urus Syariah (Guideline on Sharīʿah Governance) by the Malaysian Cooperative Commission (SKM). Full compliance with such guidelines will be verified by both SKM and the CWI. Besides that, the CWI is to ensure that the FC that receives its funding is technically sound and financially stable. For a start, CWIs can refer to the "Top 100 Cooperative Profiles" by SKM, which is an annual publication. However, there are other FCs whichdespite their smaller sizeare more technically and financially stable than those listed in the Top 100 Cooperative Profiles. For these smaller FCs, the CWI may perform its own due diligence with the help of Angkatan Koperasi Kebangsaan Malaysia (ANGKASA) (Malaysian National Cooperative Movement), the national umbrella body of the cooperative movement in Malaysia.
Joint management committee. The CWI and the FC, along with the SIRC, will need to form a JMC, to be modelled after the Wakaf Selangor Muamalat. The breakdown of the JMC is as follows: an advisory committee from SIRC; a chairman; a secretary; and a joint secretariat (comprising six members, three from the FC and three from the CWI).
The JMC will be responsible to channel the funds to finance the FC's IHF operation. The involvement of SIRC[4] and the FC will ensure systematic management of the pooled funds.
Mush arakah mutan aqi Á sah home financing arrangement. Figure 1 shows the structure of the proposed financing arrangement under the CWFCMM model. It shows the MM arrangement, which will involve three distinct contracts, namely, the contract of shirkah (partnership), the contract of ij arah (lease) and the bayʿ (sale) contract. The proposed MM arrangement involves the following stages: Member-customer identifies the house, pays a deposit (say an arbitrary 10 per cent), submits his/her proposal and applies for the financing.
Once the application has been approved, the FC will settle the remaining 90 per cent to the vendor. The FC then enters into a mush arakah arrangement with the membercustomer.
Member-customer leases the FC's share in the house. Member-customer will forgo his/her portion of the lease rental amount to buy the FC's share in the house. Apart from that, the member-customer may put an additional amount to increase his/her share redemption. The partnership is terminated when the member-customer owns the total share of the house, after which the title will be transferred to him/her.

Research methodology
The aim of this study is to collect extensive data, first, regarding the issues faced with the current IHF institutional framework, and second, regarding the suitability, applicability and prospects of the CWFCMM model for implementation in Malaysia. The questions presented in the interviews were designed to answer the following questions:

Q1.
To what extent can the CWFCMM model effectively deal with the issues and challenges of offering a financially affordable IHF product?
Q2. To what extent would the perception of the relevant stakeholders be favourable regarding the suitability, applicability and prospects of the CWFCMM model?
This paper followed the recommendations by Guest et al. (2006) and Malterud et al. (2015) that a purposive sample of six to ten informants with diverse experiences may provide sufficient information in an interview-based study. The selection criteria for experts were based on their qualification, area of specialisation and working experience. Meanwhile, in terms of the number of informants that were chosen for the study, the authors adopted the consensus theory developed by Romney et al. (1986). Consensus theory is based on the principle that experts tend to agree more with each other than do novices and uses a mathematical proof to make its case. Romney et al. (1986) also found that small samples are sufficient in providing complete and accurate information within a particular cultural context, as long as the informants are experts in the domain of inquiry. Ten informants, representing multiple potential stakeholders in the CWFCMM model, were interviewed. The list of main topics was sent to the informants beforehand. The interview lasted about one hour on average. The interviews were recorded and transcribed verbatim. Afterwards, some fact checking was performed via email. The interviews were conducted between December Based on the analysis, the authors posited that data saturation (Guest et al., 2006) had, for the most part, occurred by the tenth interview.

Findings
This section presents the study's empirical findings. First, the issues with the current institutional framework of IHF in Malaysia are outlined. Second, this section discusses findings on the viability, prospects and challenges of the CWFCMM model as a viable alternative to the current institutional framework in offering affordable IHF.
Profile of the informants Ten informants representing multiple stakeholders in the proposed CWFCMM model agreed to partake in the interviews. Listed in Table I is the detailed breakdown of informants' respective institutions and positions. After the thematic analysis was performed, 4 categorical themes and 13 sub-categorical themes emerged. Table II provides the detailed breakdown.

Issues with current Islamic banking instruments
The majority of the informants agreed that there are fundamental issues with the current IHF instruments. The interview questions, along with additional probing questions, revealed two emergent sub-categorical themes: the unaffordability of debt-based IHF and limited equity-based IHF instruments offered by the ICBs. The following excerpt from an informant explained the "rationale" for this convergence between IHF and conventional home instruments, as well as its consequential effect upon ICBs: If we look at the current situation, the Islamic bank's profit rate always moves in tandem with conventional bank's interest rates. However, unlike conventional banks, Islamic banks [sic] suffer on the thinning profit margin, as their operating costs are relatively higher (Manager, Bank Negara Malaysia).
An informant, who has been observing the same trend within the tak aful (Islamic insurance) industry, revealed that ICBs will nevertheless, continue their over-reliance on BBA-tawarruq. He further predicted that this trend will not be slowing down, at least not in the immediate future: Although MM is acknowledged by academics, Sharīʿah scholars and practitioners alike (Mydin Meera and Abdul Razak, 2005;Haneef et al., 2011), there is a lack of takers amongst ICBs themselves for MM as it is too complicated to be implemented in the truest sense, considering that it involves at least three parties to a contract. The tripartite nature of MM, for example, will only increase the financing costs such as Sharīʿah-related costs, legal as well as documentation costs for Islamic commercial banking institutions. As they are benchmarking their instrument offerings vis-à-vis conventional ones, any increase in cost, along with its inherent risks, will be transferred to the customers. This is done to maintain their instrument's competitiveness with conventional home loans, or even with BBA-tawarruq home financing for that matter. An informant further elaborated on the tedious nature of MM, as follows: Mush arakah mutan aqi Á sah involves multiple contracts, so [it is] more sophisticated and complicated. It is not too friendly. Sometimes, the banks themselves do not want [to offer MM] because they do not understand it well. It is especially harder as they may incur Sharīʿah risk. From the customer's perspective, using MM incurs at least two costs in the form of fees and margins that arise from the combination of shirkah, ij arah and bayʿ. BBA is a straightforward sale. There is only one margin involved (Sharīʿah Committee Member, Malaysian-owned Islamic bank).
The informant then claimed that the current MM instruments in Malaysia are in actual fact an ij arah thumma bayʿ instrument (lease contract followed by ownership of asset through a sale contract), more popularly known here as AITAB: When people think of mush arakah, they think that the losses will be borne together, whereas, in fact, the mush arakah portion is very small and quite insignificant. Because it only comes at the beginning of the contract. After that, the contract is governed under ij arah which is a fixed income. It is not a pure mush arakah in the ideal sense. Mush arakah is applicable only in terms of ownership acquisition. Then the ij arah comes in. So, the income does not come from mush arakah. It comes from ij arah and sale. The mush arakah does not generate any profit. It is, in fact, an AITAB (al-ij arah thumma al-bayʿ)! In my opinion, AITAB and MM are the same in terms of its economic output and its contextual relationship. There is no substantial difference between MM and AITAB. MM is not a profit-sharing contract. It falls, for me, under sale-based financing as well (Sharīʿah Committee Member, Malaysian-owned Islamic bank).

Issues with current Islamic home financing institutions
The main home financing institutions in Malaysia are ICBs and the government-owned home financing institution, Lembaga Pembiayaan Perumahan Sektor Awam (Public Sector Home Financing Board, LPPSA). As of 2015, the rate of outstanding home financing for both institutions stands at 86 and 10.5 per cent (BNM, 2016).
The newly corporatized LPPSA is a government-funded home financing institution. Ever since its inception in 1970, the interest/profit rate charged on housing loan/IHF to all categories of civil servants has remained fixed at the financially affordable rate of 4 per cent per annum. It is the second lowest financing rate after Sabah Credit Corporation at 3 per cent, which is also a government-owned home financing institution. However, Malaysia employs 1.6 million civil servants or only about 11 per cent of the labour force (Sue-Ann, 2017). An informant noted a dangerous domino effect on the government's fiscal health if civil servants continue to rely on government-owned home financing institutions to provide financially affordable IHF solutions: Although the government still disburses IHF, in my opinion, it is not sustainable. If we look at my own field of research [waqf for higher education financing], at the end of the day, it depends entirely on the government's fiscal health and capability. Now we are seeing that the government is gradually reducing its budget for higher education. And it is not impossible for it to happen to IHF [by LPPSA] (Waqf Researcher, Universiti Sains Islam Malaysia).
The remaining labour force of 13.4 million has to depend mainly on the ICBs to finance their home purchases. The median profit rate charged by ICBs stood at 4.65 per cent. This has created a considerable gap for the rest of the labour force in their search for a financially affordable IHF solution. Evidently, ICBs are unable to even match the 4 per cent profit rate offered by LPPSA. This can be partly explained by Islamic economists such as Dar and Presley (2000) and Sarker (2001) who have identified the relationship between an ICB's shareholders and its investment account holders (IAH) as an "agency problem". Equity shareholders, who assume limited liability, may prefer a higher risk profile for the ICBs than do depositors. Apart from that, equity shareholders' profit potential is unlimited whereas the potential for losses is limited. IAH in ICBs, on the other hand, do not share the profits, but they disproportionately share the risks taken by the ICBs. As a result, ICBs are unable to assume the mantle of an affordable IHF institution akin to government-owned home financing institutions.
Financial cooperatives as a financially affordable Islamic home financing institution: capacity and capability Several authors have highlighted the possibility of FCs as a financially affordable IHF institution (Mydin Meera and Abdul Razak, 2009;Ebrahim and Sheikh, 2016). That being said, for FCs to be a viable alternative to the already-established ICBs and the governmentowned financing institutions, all informants unanimously believe that cooperatives must develop their internal capacity and capability to offer financially affordable IHF. Their responses can be sub-categorically divided into five critical components: business model and strategy, good governance, risk management, regulation and supervision and human resource management. The following sections elaborate on these critical components.
Business model and strategy. SKM, in its National Cooperative Blueprint 2002-2020, has outlined financial services as one of its national key economic areas (NKEA) (Suruhanjaya Koperasi Malaysia, 2010). The same report, however, encourages FCs to branch out into newer financial services instruments such as ar-rahn (Islamic pawn broking), instead of heavily depending on Islamic personal financing instruments as their key economic driver. An informant stressed the danger of over-relying on Islamic personal financing as a mainstay of their business model, as well as the way forward for these FCs: Yes, 90 per cent of [financial] coops give [Islamic] personal financing (IPF). It will weaken/ruin our economy, increasing household debt. [This way] you are not going to contribute to nation building. We want to control this. IPF is a very profitable business as it is a guaranteed payment system by ANGKASA. The concept needs to change. The portfolio needs to be diversified. The composition needs to be gradually reduced. We now have 90 per cent of IPF, then the target would be 70 per cent, and afterwards, 50 per cent. (Executive Vice Chairman, Malaysia Cooperative Societies Commission).
For many years, issues such as lack of capital in most FCs typically characterised the cooperative movement in Malaysia (Banerjee et al., 1994;Birchall, 2013). These problems have resulted in poor financial performance, cash flow mismanagement and non-compliance Islamic home financing model with the Cooperative Societies Act 1993 and its related by-laws and legislation (Bidin, 2007;Othman et al., 2014). As a result, it is even more difficult for FCs to acquire the sheer volume of funds needed to be a viable alternative institution offering financially affordable IHF. However, an informant revealed that there is one potential source of funds that can be tapped by FCs: Currently, we have 13,000 cooperative societies. Their funds are mostly being deposited in commercial banks. However, commercial banks are not disbursing enough financing. Their requirements are also quite stringent. What we have proposed in our discussions is for these deposits to be pulled out and put into cooperative banks or FCs. However, if current FCs are to transform themselves into cooperative banking institutions, the same informant highlighted the importance of not losing track of their original missionthat of helping their fellow cooperative members (Griffiths and Howells, 1991;Birchall, 2012): We have enough of that [referring to commercial banks]. We have enough cooperative banks.
There is no need for direct competition. Because the market is too small. So, the value proposition of a new cooperative bank is to help the underserved market-those who are turned away from commercial banks-but based on Islamic concepts. People who have the potential but are unable to obtain formal financing (Executive Vice Chairman, Malaysia Cooperative Societies Commission).

Nonetheless, it was heartening to note that an informant (who works with an FC) is open to the idea of implementing MM if the FC has a financially affordable source of funds at hand.
We still have home financing instruments, but we cannot disburse them anymore as we have cash flow problems. We can only give out personal financing (PF) as it is in smaller amounts. The fund is just not there. If we do have the fund, for example, a "free fund", we would be delighted to give out IHF to our members. If we have the fund, there will be nothing to stop us from implementing the real cooperative spirit-that of helping out our members (Chief Executive Officer, Koperasi Belia Islam Malaysia Berhad).
Good governance. Unlike investor-owned firms such as ICBs, FCs differ from other enterprises in their concept, organizational structure, governance and equity management (Birchall, 2012;Othman et al., 2014). Most notably, FCs are characterised by their "one member, one vote" feature regardless of one's investment or active participation in policy setting, including selecting board members (International Co-operative Alliance, 2017). In some FCs, and especially in the case of Malaysia, their members tend to appoint politicians and/or influential public figures to be their board members (Jalil et al., 2012). Despite this, to ensure that good governance is practised in FCs, a vice executive chairman of SKM revealed the way forward, albeit a slight departure from the normative, "one member, one vote" cooperative principle: We tell them [FCs] that there is no shortcut. You have to strengthen your corporate governance. That's why we need to ensure that Cooperative Board Members (CBM), at least three of them are our appointees-members who have the experience and qualification in managing a [cooperative] bank. It is because the current cooperative system in choosing their CBM is based on popular vote. You have to be a candidate [for CBM]. If you lobby, then you will be one. We need to modify our current guideline, granting the right for SKM to appoint permanent CBMs. Then we will be able to overcome a major problem in FCs-that of authorised signatories. The current system will result in different CBMs in three years. Asset managers are not willing to deal with a business entity that does not have authorised signatories (Executive Vice Chairman, Malaysia Cooperative Societies Commission).
Risk management. Unlike investor-owned firms such as ICBs, FCs, just like any other notfor-profit financial institutions, emphasise the need to maximise "members' surplus" (Canning et al., 2014;Goglio and Alexopoulos, 2014). Therefore, they usually undertake different risk profiles than that of ICBs. An executive vice chairperson of SKM stressed the importance of the following risk management requirement: If FCs want to secure deposits from non-members, this is when we are going to come in [to supervise]. We need to make sure they have the capability, strong corporate governance, and strong risk management to manage this fund. We do not want people to lose their deposits. You need to have the system, the expertise. We will be doing stress tests. We do not want them to merely finance business ventures. We expect them to help cooperative members as well (Executive Vice Chairman, Malaysia Cooperative Societies Commission).
Regulation and supervision. A number of informants emphasised the importance of SKM playing a more proactive role in the development of FCs in general: Eventually, these cooperative banks will come into our purview. They have moved into shadow banking. They are, in fact, commercial banks. In order to enforce their collective governance structure (cooperative societies), you need to have a strong regulatory body to oversee their operations (Manager, Bank Negara Malaysia).
The same informant cautioned that SKM still has a long way to go in developing its supervisory capabilities: There was one instance when we went into the field with SKM to develop its supervisory capability, as we did the supervisory activities together. The first few days, they were with us [BNM]. Then they disappeared. The big issue here is governance and capacity. And the expertise in manning Islamic financing operations: who are their Sharīʿah committee members? (Manager, Bank Negara Malaysia).
One informant proposed a way for FCs to deal with issues or problems in implementing this model: You get the annual general meeting (AGM) to approve a very loose approval. Do not be specific.
That is the only way to do it. If there is a query from SKM, you will say, "We have already got the resolution". But the resolution is not specific. Let's say if you want to set up this [CWFCMM model]. You go to the AGM and say, "We want to set up housing investment portfolios. We want to raise RM10 million. And these are the flows that we are going to adhere to". Get it approved by the AGM and pass it to SKM (Vice Chairman, Koperasi Ma'ahad Tahfiz Tijarah Gombak Berhad).
An informant revealed one major difference in the governance structure between BNM and SKMperhaps explaining the root cause of the above-highlighted shortcomings: The project is as viable as the persons running it. Viability rests on the people. They can "twist and turn". For me, that is the top priority. Then only you can say about return on investment (ROI), resources, and other aspects. They are not even able to compute ROI, return on equity (ROE), return on assets (ROA)! (Vice Chairman, Koperasi Ma'ahad Tahfiz Tijarah Gombak Berhad).
In the case of FCs, it has been generally argued that lack of good managers makes it difficult for these types of businesses to survive (Basterretxea and Albizu, 2011 Operationalisation of cash waqf-financial-cooperative-mush arakah mutan aqi Á sah model: the way forward This study proposes the mobilisation of CWIs to act as a complementary source of funds to FCs. Most of the informants shared their concerns on the modus operandi of the CWFCMM model and, more importantly, the way forward to operationalise this model. This "CWFCMM operationalization" theme emerged from six questions, as mentioned earlier in Table II. The majority of the informants affirmed the suitability of the CWFCMM model in assisting the average Malaysian household to own a house through a financially affordable IHF product. Below are the respondents' views that were generated from the interviews: I agree wholeheartedly with this model. Because this method can truly mobilise funds from the public. But Malaysians cannot see past this. If we look at Turkey, for example, their waqf is very much "alive" amongst them. Take another example, Oxford University, even though they are non-Muslims, the "spirit of waqf" exists (Chief Executive Officer, Koperasi Belia Islam Berhad).
We need to implement this [model] as the risk is well shared. It is good for the community and is really within cooperative principles (Vice Chairman, Koperasi Ma'ahad Tahfiz Tijarah Gombak Berhad).
As the proposed CWFCMM model can be implemented, the informants were further queried about the finer details of the workings of the model. In response, the informants raised several issues relating to the modus operandi. The subsequent views derived from the interviews were collated into the following sub-categorical themes: mobilisation of cash waqf funds, investment and management of cash waqf funds, the preferred institutional platform, and the urgent need for a paradigm shift for waqf.
Mobilisation of cash waqf funds. One of the fastest ways to mobilise cash waqf funds is via mandated salary deductions by Muslim civil servants. An informant from an SIRC incorporated company that manages waqf cited an example from the state of Sarawak: If we get Muslim civil servants to agree to a mandated, monthly salary deduction even at RM1 or RM5, I do not think that they would mind that at all. Our fund will increase dramatically (Executive, Perbadanan Wakaf Negeri Sembilan).
An informant then cited one local example of waqf fund mobilisation where the SIRC is engaging in initiatives to harness the expertise and heighten the awareness of waqf in universities (Echchabi et al., 2015) by appointing universities to be their waqf collection agents: We have been working together with a university on mutawalli (trustee) appointment. We can simultaneously educate them on matters pertaining to waqf (Executive, Perbadanan Wakaf Negeri Sembilan).
Another informant stressed the need for the government to go an extra mile by encouraging its government-linked companies (GLCs) to facilitate cash waqf mobilisation: Since they [government] are no longer capable of providing affordable IHF directly to the people, they need to play a facilitator's role instead. If they cannot provide yearly contributions [to the fund], they need to encourage their GLCs to do so. It means, instead of normal contribution through their CSR, they can donate to this [cash waqf] fund. The Islamic brotherhood spirit is better embodied here [in waqf] (Waqf Researcher, Universiti Sains Islam Malaysia).
Investment and management of waqf funds. Some SIRCs are keen to convert their cash waqf funds into real assets through the Sharīʿah practice of istibd al. One of them, however, has added an extra element of "waqf multiplication". Here is how it is done: Once we have the waqf lands to be developed, we will first put a "value" on them. Although we have them for free, we will put a value on them anyway. Say ten acres of land valued at RM2 million. Then, we will account them for the gross development costs (GDC). After we have developed them, whatever proceeds we get, we will not merely replace their land, but we will add say, another 2 to 3 acres on top of that 10-acres (Managing Director, Urus Maju Ehsan (M) Sdn. Bhd.).
An informant shared an exciting prospect with the cash waqf investment vehicles, besides the real estate option, which seems to be the default option for many SIRCs: We are moving towards equity and unit trust. Real estates are being implemented right now. But both equity and unit trust are still in the prototyping stage (Sharīʿah officer, Malaysian-owned Islamic bank).
One informant, on the other hand, preferred for the CWI to opt for a safer investment vehicle in the form of Á sukūk (Islamic investment certificates) and Islamic fixed deposits to stay true to the perpetuity nature of waqf: Á Sukūk is more secure due to its fixed-income nature. These [equity and unit trust] vehicles incur higher risks. They [fixed-income investment vehicles] are more suitable to the nature of waqf. Take equity for example. What if the Securities Commission downgrades some of the counters in our portfolio to Sharīʿah non-compliant? Then we will have to withdraw our funds and perform income-purification processes. Another informant advocated a different direction altogether, citing the example of the current joint venture between Selangor SIRC and Bank Muamalat Malaysia Berhad. By doing so, SIRCs will be able to overcome the widely held negative perception amongst waqf donorsnotably, the issue of lack of trust and accountability (Ihsan and Mohamed Ibrahim, 2011): I prefer a combination of corporate and sole trustee [institutions] as we can harness expertise from both parties. This is a very good approach to carrying out this [model]. If we were to put everything into the SIRCs' hands, it will do more harm than good. For example, if we look at the element of trust, I have yet to see an annual waqf report-a good measurement of accountability by these SIRCs. That is why corporate waqf is circumventing this. They tend to do away with SIRC's involvement altogether (Waqf Researcher, Universiti Sains Islam Malaysia).
Waqf: an urgent need for a paradigm shift. A large number of informants agreed on the dire need for a paradigm shift from the old mentality of waqffrom land for mosques and graveyards (see, Shakrani et al., 2003;Mustaffa and Muda, 2014) to a more contemporary form of cash waqf: The mentality of waqf is for mosques and graveyards-for the afterlife. The public is only interested in endowing their lands for graveyards and mosques. When we talk about commercialization, they are somewhat apprehensive (Executive, Perbadanan Wakaf Negeri Sembilan).
However, there is a long way to go in realising this model, considering the concern expressed by one informant regarding a surprisingly basic need, that of full-time staff: Staffing is my biggest concern. I am the only one who has been appointed as full-time, permanent staff. My other staff are what we called "sukarelawan dakwah" (voluntary preacher) appointees by SIRC. They are being paid allowances instead of full salary. We have seven staff. If even half of us went out there [to do promotional activities], then our basic task at hand [of running the office] would not be completed (Executive, Perbadanan Wakaf Negeri Sembilan).

Discussion
The findings from this study are novel in that they are a description of the applicability, suitability and sustainability of the potential venture between CWIs and FCs towards achieving an affordable IHF provision. The narratives in this study also showed that even the ICB practitioners share the same sentiments on the prevailing issues and problems that have been "plaguing" the overall IHF institutional framework. A case in point, most informants have noted the same "mirror effect" of IHF instruments to their conventional home loan counterparts, especially the BBA-tawarruq home financing, which is widely discussed in the literature. At least two other informants have attributed this substantial similarity to the dual-banking structure. Both informants argued that ICBs need to bear costs that are unique to them, namely, the Sharīʿah-related costs. It involves at least an additional layer of the operational structure, including documentation, contract execution, governance and remedial action upon Sharīʿah non-compliant events. As a result, financially unaffordable IHF instruments offered by ICBs are in danger of compromising one of ICBs' novel objectives, namely, to implement "a just and equitable distribution of wealth" (Farook, 2007). As a relatively new IHF instrument available in the Malaysian market that was first introduced in 2006, academics and practitioners alike are seeing MM as a more affordable alternative to BBA-tawarruq (Mydin Meera andAbdul Razak, 2005, 2009;Smolo and Hassan, 2011). Presently, however, only 6 out of 16 ICBs are willing to offer MM. This rather low number of ICBs that offer MM is in tandem with Mydin Meera and Abdul Razak's (2005) argument that MM is less attractive for ICBs since its true implementation would yield lower profits. At least three informants who are actively involved in the industry seemed to be in agreement with Mydin Meera and Abdul Razak's (2009) assessment regarding the complexity of contracts for the genuine implementation of MM. Ultimately, if this trend persists, it will render IHF instruments as financially unaffordable options to potential homebuyers.
Apart from that, MM offered by ICBs in Malaysia revealed a divergence from the original MM framework as practised by FCs in North America. This is because they use the exogenously determined base financing rate or the base rate (Mohd Ali et al., 2012;Isamail et al., 2013;Shuib et al., 2014). MM by these FCs, on the other hand, use endogenously determined rental rate as a benchmark. One informant who is also a Sharīʿah advisor even went as far as alluding that MM, as practised by ICBs in Malaysia, is an "AITAB in disguise". The informant further argued that the mush arakah (partnership) portion in the MM in Malaysia only comes at the beginning of the contract and mimics AITAB for the remainder of its financing duration. Therefore, MM instruments currently offered by ICBs have digressed from the normative form of MM by FCs. As a result, they are exposing Malaysian homeowners to a financially unaffordable IHF arrangement as even a slight profit rate increase will eventually lead to a higher debt-service ratio (Anderson et al., 2016).
Previous work suggests that issues such as the lack of capital, conventional activities, weak structure, and the absence of good corporate governance in some cooperatives typically characterised the FC movement in Malaysia (Bidin, 2007;Othman et al., 2014). As revealed by the then Minister of Domestic Trade, Cooperatives and Consumerism (KPDNKK) Datuk Seri Ismail Sabri Yaakob, most of the internal audit committees appointed by members of FCs in Malaysia have failed to discharge their fiduciary duties, functions and responsibilities (Jalil et al., 2012). An informant who is also a cooperative board member suggested that FCs tend to appoint board members from among politicians and/or public figures who usually lack expertise as compared to their incumbent management team. Therefore, to overcome the above-mentioned issues, one of the National Cooperative Policy's (NCP) strategic cores is to empower FCs through effective monitoring and enforcement activities (Suruhanjaya Koperasi Malaysia, 2010). The Malaysian Cooperative Societies Act (2007) governs IHF, just like other types of Islamic financing instruments. Bank Negara Malaysia supervisory officers are seconded to SKM to help with the overall Islamic home financing model FCs' supervisory activities. However, at least three of the informants agreed that there is a huge gulf in supervisory capabilities and qualities between SKM and BNM.
In the NCP 2010-2020, it was reported that the majority of the cooperatives are small in size and, most importantly, in capital or source of finance (Suruhanjaya Koperasi Malaysia, 2010). As of now, most cooperatives are dependent on internal resources of capital. Although some exceptions are to be made for some FCs, they tend to disburse their external sources of funds (mostly from ICBs) in the form of Islamic personal financing. As a result, for FCs to become financially affordable IHF providers, there is a need for a synergistic joint venture between them and CWIs.
It was demonstrated by the findings that the overwhelming majority of the informants were open to the idea of implementing the CWFCMM model, albeit with some adjustments to its operationalization aspects. However, most of the informants expressed their concern on issues related to accountability (or lack thereof) amongst SIRCs in waqf-asset management. Each SIRC is the sole trustee of waqf-related matters in its state. Although respondents are open to the implementation of this model, they alluded to an urgent need for a paradigm shift amongst Malaysian Muslims regarding waqf from the old mentality of associating waqf with the exclusive application of endowed lands for graveyards, mosques and ta Á hfī Á z schools. They also called for use of cash waqf and the commercialisation of waqf lands.

Conclusion
This study assessed the suitability of a potential venture between CWIs and FCs in the provision of financially affordable IHF in Malaysia. This study contributes theoretically to the FC and Islamic finance literature by demonstrating their unique value proposition in helping the marginally excluded low-and middle-income Malaysians to affordably own a house. Despite its huge potential, this research has managed to shed light on the various potential challenges that might arise out of this model. FCs have a long way to go in proving themselves as a viable alternative to the current institutional IHF framework. FCs need to be operated via the correct business model, implement good governance structures, acquire the right tools and employ the right people for the job at hand. On the other hand, CWIs need to continuously work on their accountability-governance-positive image issue. One of the best ways for them to do so would be to publish their audited accounts in the mainstream newspapers, much like what is being done by one of Malaysia's well-known nongovernmental organisationsthe Malaysian Medical Relief Society (MERCY Malaysia) [5]. Future studies should use more samples (preferably mixed methods) for generalisation purpose because this study used a small sample, and therefore, generalising its findings will be restricted. Notes 1. The literal meaning of istibd al is "changing, exchanging or desiring to change". However, it contemporaneously refers to "the purchase of other lands to be endowed as replacement by the waqf administrator using the proceeds of the sales of the original waqf lands" (Salleh et al., 2015, p. 45).
2. Urus Maju Ehsan (M) Sdn. Bhd. is a waqf property developer in the state of Selangor. It is a wholly owned subsidiary of Perbadanan Wakaf Selangor (PWS).
3. The CWFCMM model will be using the profit rate charged by the Public Sector Home Financing Board (LPPSA) at 4 per cent as a benchmark for an affordable Islamic home financing rate.
4. SIRCs are the sole waqf trustees in Malaysia, as enshrined in the Ninth Schedule (State List-List II) of the Federal Constitution.
5. MERCY Malaysia is a volunteer relief organization that provides mostly medical and humanitarian services both locally and abroad. It is one of the few NGOs that publishes its annual reports in the mainstream media. These include, among others, audited financial statements.
6. SKM or Malaysia Cooperative Societies Commission is the governing agency of all cooperative societies in Malaysia. It is under the purview of the Minister of Domestic Trade, Cooperatives and Consumerism.