The Islamic Development Bank Institute (IsDBI) (https://IsDBInstitute.org) and Labuan Financial Services Authority of Malaysia (Labuan FSA) signed a Memorandum of Understanding (MoU) to explore collaboration on the potential implementation of the Awqaf Free Zones concept within the Labuan International Business and Financial Centre (Labuan IBFC).
Dr. Sami Al-Suwailem, Acting Director General of IsDB Institute, and Mr. Affendi Rashdi, Director General of Labuan FSA, signed the MoU on 16 June 2026 on the side lines of the IsDB Group Annual Meetings in Baku, Azerbaijan.
The MoU 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.
The Awqaf Free Zones is an innovative concept developed by the IsDB Institute to integrate the principles of Waqf with the legal, regulatory, and economic framework of free zones. 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, IsDB Institute and Labuan FSA will explore the feasibility of adapting the AFZ concept to the Labuan IBFC ecosystem. The cooperation will 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.
Speaking on the occasion, Dr. Sami Al-Suwailem, Acting Director General of IsDB Institute, stated: “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.”
Mr. Affendi Rashdi, Director General of Labuan FSA, 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 builds on the substantial progress achieved by the IsDB Institute in developing the Awqaf Free Zones concept. The Institute 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 complemented by governance, operational, and financial feasibility studies designed to support the practical establishment of 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, 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.
Distributed by APO Group on behalf of Islamic Development Bank Institute (IsDBI).
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About IsDB Institute:
The Islamic Development Bank Institute (IsDBI) is the knowledge beacon of the Islamic Development Bank Group. 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. More information about the IsDB Institute is available on https://IsDBInstitute.org
About Labuan Financial Services Authority:
Labuan Financial Services Authority is the statutory body responsible for the development and administration of the Labuan International Business and Financial Centre (Labuan IBFC). Labuan FSA regulates and supervises financial services conducted within Labuan IBFC while promoting innovation, international best practices, and sustainable growth in the financial sector.
