THE 10th ISLAMIC BANKING, ACCOUNTING AND FINANCE INTERNATIONAL CONFERENCE 2022 (iBAF 2022)

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Islamic Banking, Accounting and Finance International Conference - The 10th iBAF 2022

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THE 10th ISLAMIC BANKING, ACCOUNTING AND FINANCE INTERNATIONAL CONFERENCE 2022

(iBAF 2022)

Challenge Factors in Preparing Wasiyyah Services in Malaysia Amalina Mursidi

Faculty of Economics and Muamalat, Universiti Sains Islam Malaysia (USIM), Bandar Baru Nilai, 71800 Nilai, Negeri Sembilan Malaysia

Tel: +606-798 6421 E-mail: [email protected]

Abstract

While there has been an increase of research interest in Islamic estate planning products, few studies have yielded detailed insights into the views of wasiyyah consultants on the factors of why many Malaysian Muslims does not prepare a wasiyyah.

The qualitative study described in this paper aimed to explore the factors that hinders Malaysian Muslims from patronizing wasiyyah services. The study sample for the qualitative study was chosen using purposive sampling and semi-structured, in- depth interviews were conducted. Challenge factors have been identified and categorized into four themes which are a lack of knowledge, a lack of awareness, fees charged, and also no comprehensive marketing. Thus, all of these factors are the primary items that should be focused among marketers in order to develop more effective tactics to increase the number of Muslims choosing to prepare their wasiyyah and to prevent further increase in the amount of frozen assets in Malaysia.

Keywords: Wasiyyah services; frozen assets; Malaysian Muslims

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1. Introduction

Islamic wealth management (IWM) has various products under the Islamic estate planning, including hibah, faraid, waqf, trust account, mutually acquired property document, and wasiyyah, arguably the most debatable product (Mohamad Puad, Jamlus Rafdi, Ahmad Sanusi, & Sarip, 2018). In other countries, wasiyyah is known as a bequest where it plays a main role in the economy since it is related to wealth distribution to the next generation (Barthold & Ito, 1992).

In Malaysia, there are various terms that has been used in defining wasiyyah services, such as Islamic will, wasiyyah, wisoyah, wasitah, and also document of executor appointment. Wasiyyah has also been perceived as a remedy for frozen estate problems (Harun, 2019), especially for Muslims in Malaysia. According to the statistics, the current population of Malaysia until May 2022 is about 33.3 million of which approximately 69.6 percent are Malay Muslims, and the population is estimated to grow to around 37 million in 2030 (Meters, 2022). In line with the positive population growth, it is expected that the Muslims’ patronisation towards wasiyyah will also increase (Bouteraa, 2019).

However, in the year 2020, only 3.12 percent of the population are registered with Amanah Raya Berhad (ARB). Consequently, this has resulted in many unclaimed properties and frozen assets in Malaysia, and this is indirectly impacting the country since the assets cannot be utilised for economic growth (Wajis, Rab, Gunardi, &

Rahman, 2018). Many issues have arisen due to inheritance as seen in newspaper headlines such as ‘Siblings ghosted each other over parents’ will’ (Ibrahim, 2018) and ’70 billion unclaimed properties’ (Haque, 2020).

These incidents occurred partly due to the individual’s and heirs’ ignorance concerning estate planning where they considered their duty to settle the estate a trivial task (Haque, 2020; Ismail, 2016; Rusdi, 2019). Not only that, the number of frozen assets also shows an increasing number from RM70 billion in 2019, has reached to RM90 billion in year 2021 (Haque, 2020; Kamarulbaid, 2021), and this number is growing every year (Haque, 2020).

Initially, the term ‘wasiyyah’ was used to denote the documentation of Islamic estate planning in Malaysia.

However, a few other names were also used such as Islamic will, estate document, wisoyah, and al-wasitah which have caused confusion among Muslims in understanding the wasiyyah service in Malaysia (Mursidi, 2021). This is because wasiyyah providers use different terminology in defining the term wasiyyah itself. Majority of the wasiyyah providers use the term ’wasiyyah’; however, ZAR Perunding Pusaka and Wasiyyah Shoppe were arguing that there are other names to use for wasiyyah services such as wisoyah and al-wasitah (Alma’amun, 2010).

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Many studies in wasiyyah that were done previously had focused on the quantitative method, and only a few studies were found to have utilized the qualitative method. Therefore, the purpose of this study is to examine factors that hinders Malaysian Muslims from patronizing wasiyyah services.

2. Wasiyyah services in Malaysia

The penetration rate of wasiyyah services is still very low in Malaysia. This is proved when only ten per cent out of 28 million Malaysian Muslims and non-Muslims have used the estate planning services in 2009 (Habib, 2010). About six years later, the data has only increased by five per cent where only 15 per cent of Malaysian Muslims have used estate planning in the year 2016 (Karim, 2016).

There are a few reasons to explain why the percentage of Malaysian Muslims who patronize wasiyyah services is smaller compared to bequest for non-Muslims. (Muhamad, 2007) revealed that non-Muslims prefer leaving bequests to ensure that their estates will be sorted quickly, while Malays prefer to follow the traditional way of wealth distribution through faraid where they believe, with faraid, the distribution process will be easier.

However, it is not that easy to manage in Malaysia; if the testator did not prepare a wasiyyah during his lifetime, the process would be complicated (Mohammad, 2015) and sometimes, it might take years to be settled (Kadir, 2020).

Therefore, in line with the preceding discussion, this paper aims to explore the factors that hinder Malaysian Muslims from patronizing wasiyyah services in order to contribute to the practitioners to restructure the marketing strategy to attract more Muslims in preparing their wasiyyah.

3. Methodology

Due to limited past research, the present study is designed to be exploratory in nature. Therefore, to accomplish the objective of the study, the interview method has been applied. A face-to-face interview is particularly useful to conduct in this study as it allows the researcher to understand the actual situation directly related to the study.

Although conducting a face-to-face interview can be very time-consuming, nevertheless, it produces rich and in- depth responses that will be able to meet the purpose of the study.

The qualitative research method was used as the study aims to identify the factors that hinders Malaysian Muslim in patronising wasiyyah services. The interviews had involved five experts from different wasiyyah institutions. Participants were asked about their understanding of the wasiyyah concept and also their opinions on the main reasons of why Malaysian Muslims are reluctant to participate in wasiyyah services. All the interviews were audiotaped and transcribed and then followed by a short discussion with open-ended questions.

4. Findings

The respondents were selected based on their expertise in wasiyyah services in Malaysia. The total number of respondents was five, and the total sample was comprised of three males and two females.

From the five participants’ narratives, a thematic analysis segmentation had produced 39 excerpts that were reflected in the study to be analysed. Findings have revealed that all the elements were represented to varying scopes. Four themes were identified which are: a lack of knowledge, a lack of awareness, fees charged, and no comprehensive marketing.

4.1 Lack of Knowledge

Consumers who have patronised wasiyyah services have clear knowledge of the wasiyyah services (Mursidi, 2021). However, Ghul et al. (2015) and Nyambegera and Gicheru (2016) have delineated knowledge as the main problem in the issue of increasing number of frozen assets. Due to that, the participants described a lack of knowledge on the differences between wasiyyah and faraid as the main reason that hinders people in writing wasiyyah.

“..many people are not aware of wasiyyah. They think that when someone dies, faraid will settle their wealth distribution. Even so, many people misunderstand the difference between wasiyyah and faraid.”

(Respondent 1)

“..they might think that when they died, the heirs will be able to take withdraw their money at the ATM.

However, they don’t know if we died, once the death certificate is out, the bank will block everything and the assets will be frozen. So, the heirs can’t take it out.” (Respondent 2)

The respondents also highlighted that most people lack the understanding of wasiyyah services and they don’t know with whom they should discuss. An example of excerpts from the respondents that relate to this;

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“…that’s what I think. Most people have a misunderstanding in terms of the need for a wasiyyah. He thinks, if they have wealth, they have to make a wasiyyah, but if I don’t have wealth, why I should make a wasiyyah?” (Respondent 3)

“..he knows about wasiyyah, but the details about wasiyyah, the process, who to meet, how to deal with it, how much are the fees, what is the difference between wasiyyah and faraid, that’s the thing that don’t know very much.” (Respondent 5)

4.2 Lack of Awareness

Islamic estate planning is totally neglected by Malaysian Muslims especially in wasiyyah services (Jamalurus, Mokhtar, & Rahim, 2019). This is because their awareness towards wasiyyah remains low. Examples of the

‘aware’ or ‘awareness’ keywords which were frequently mentioned;

“..awareness is very important. But as you can see, awareness is very low. I am the one who studied in wasiyyah, so when it comes to wasiyyah services, the awareness is very low. Why? Because they thought that when they died, everything will be taken care of under faraid law.” (Respondent 1)

“… but it is really hard to make people aware of wasiyyah. because they think they already have faraid, why should they implement wasiyyah? They only think that wasiyyah is distributing one-third from their property.” (Respondent 2)

The participants have also shared that they have never experienced death among close family members, so they were less aware towards the importance of wasiyyah services.

“..some people, they are not aware because they have not gone through the process yet. Maybe they don’t have family members who died, that is why they have no awareness toward wasiyyah.”

(Respondent 4) 4.3 Fees charged

Fees is also another factor that hinders people in preparing wasiyyah. The participants agreed the cost is reasonable and they can get the service from various institutions. The misunderstanding among Malaysian Muslims towards the fees charged for wasiyyah services have lead them not to patronize wasiyyah services.

“..if you want to do that, it’s only RM300. It’s cheap. But to replace the trustee, its expensive. There are a lot of institutions that offering this service, such as Amanah Raya Berhad, Wasiyyah Shoppe, As-salihin Trustee. But majority of them are private organizations.” (Respondent 3)

4.4 No comprehensive marketing

A well-planned strategy is important for every company to stay longer in the industry. Take advertising as an example; it is not only aims to persuade, but also to enlighten. It provides information about the product, including its pricing, packaging, and other aspects, and whoever sees an advertisement proclaiming a discount price on a product, it would attract them to buy the product (Brown, 1950). Due to that, the respondent also explained that the marketing from the institutions is somehow not effective.

“The marketing from agent and institutions are not comprehensive.” (Respondent 1)

To understand the roots of the problem in low wasiyyah participation, the interviews were conducted with respondents that are working in wasiyyah institutions in order to understand challenges factors that hinders Malaysian Muslims from preparing wasiyyah. The interview results showed that a lack of knowledge, a lack of awareness, fees charged, and no comprehensive marketing were identified as the challenge factor in this study.

The factors identified can therefore help the companies to pay more attention to the improvement in the marketing strategy in business especially in diversifying strategies towards marketing the product.

5. Conclusion

The findings of this study serve as a basis in identifying the challenge factors that hinder Malaysian Muslims from preparing wasiyyah services. The study approach can be used not only for the empirical research, but also

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to be utilised by wasiyyah institutions in Malaysia in formulating and implementing new strategies as well as policies to encourage more Malaysian Muslims to patronize the wasiyyah services.

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