A Collaboration to Upscale Paddy Fields Project for Asnaf in Kedah – INCEIF
INCEIF UNIVERSITY

A Collaboration to Upscale Paddy Fields Project for Asnaf in Kedah


The partners of Projek Hasan at the official launch of the collaboration held at GFIEF.

 

Kuala Lumpur, 29 May 2024 – INCEIF University, together with its collaborative partners The Kedah State Zakat Board (LZNK), MIFC Leadership Council (MLC) and Association of Islamic Banking and Financial Institutions Malaysia (AIBIM), extends the deepest gratitude to Prime Minister Datuk Seri Anwar Ibrahim for recognising the collaborative initiative between LZNK, MLC, AIBIM and INCEIF, known as ‘Projek Hasan’.

The Prime Minister announced the launch of this initiative in his keynote address at the two-day Global Islamic Economics and Finance Forum (GFIEF) 2024 on 28 May in Kuala Lumpur.

Under Projek Hasan, LZNK will collaborate with the involved agencies including INCEIF to further expand the Smart Large-Scale Paddy Project for Asnaf (Smart SBBA), which has been implemented since 2020. LZNK has implemented the Smart SBBA initiative on 201.7 hectares of land in the districts of Yan, Kuala Muda, Kubang Pasu, and Kota Setar, cultivated by selected participants from among the local asnaf, the poor and needy.

The main goal of this project is to improve the socio-economic conditions and living standards of local communities, particularly the asnaf and B40 groups in Kedah. Additionally, it aims to create diverse economic opportunities for the asnaf community, enabling them to transition from village laborers to agricultural entrepreneurs, and take on other roles such as factory workers and food stall operators.

INCEIF’s role in the collaboration focusses on the research and development of the blended Islamic finance & Islamic social finance tools such as waqf and zakat to upscale the project.

Smart SBBA is executed through the commercial waqf concept, Waqf Blended Finance Programme, which will create a new economic cycle for farmers in Kedah. LZNK also manages its own seedling nurseries to further reduce costs for farmers under Smart SBBA. By growing their own seedlings, Smart SBBA LZNK participants are no longer fully depend on the seedlings sold in the market, thus reducing costs while producing higher quality rice. At present, 82 asnaf participants are involved in managing the planting activities and working as tractor, plough and drone

operators. They managed the project, from the seeding process, planting, and ploughing, to the final stages.

LZNK has established a Food Distribution Centre that aids 585 mosques in Kedah, with an annual budget of RM13.97 million. The agency is exploring the possibility of managing rice distribution through asnaf, which could lead to significant cost savings and strengthen community bonds through the ‘From asnaf to asnaf’ economic model.

To enhance food security and complete the agricultural cycle, LZNK is planning to expand the Smart SBBA by acquiring and subsequently operating a rice mill. Collaborating with Islamic banks under AIBIM, LZNK aims to raise RM10 million through the myWakaf platform to finance this mill. Located close to the Smart SBBA site, this mill will reduce transportation costs and time for farmers, increase their yields, and eliminate middlemen who can reduce their profits. This approach ensures that the benefits of the harvest directly improve the welfare of the farmers and the community, highlighting LZNK’s commitment to creating a fair and beneficial economic environment for all involved parties.

If executed well, MLC envisages for this cooperation model to be replicated in other states around the country.

 

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