The Role of Islamic Banks Managing Waqf Institutions to Promote the Indonesian Agriculture Sector

Abstract

The agriculture sector has absorbed numerous labourers to work in this area as a farmer. However, it still has many issues such as a low level of educational background and financial constraints experienced by the farmers. This study delineates the role of Islamic banks in managing waqf institution to promote the Indonesian agriculture sector. By adopting an extensive review on this particular issue, this study finds that firstly, an Islamic bank is needed to manage waqf funds professionally in Indonesia. Secondly, Islamic banks can act as a social intermediary to enhance human resource quality by empowering the farmers’ education in the field of agriculture. Thirdly, the Islamic bank can be a financial intermediary, which will provide subsidies to the farmers to buy fertilizer, seed, and other inputs. Furthemore, the Islamic bank can also be a third party guarantor to the farmers when they are borrowing money or give direct financing to the farmers by adopting an Islamic financial scheme. This study provides suggestions to overcome several issues in the agriculture sector by managing waqf funds and it accordingly adds to the literature thereby deepening the knowledge in related fields.