ISLAMIC SOCIAL FINANCE AND COMMUNITY-BASED TOURISM: A ZAKAT-WAQF MODEL FOR RURAL TOURISM DEVELOPMENT IN TERENGGANU

Abstract

Rural tourism in Terengganu represents one of Malaysia’s most culturally significant and ecologically rich tourism corridors, yet the communities that inhabit its landscapes remain structurally marginalised from the economic benefits of tourism development. Conventional financing mechanisms, reliant on private capital and government grants, have proven insufficient to bridge the gap between tourism potential and community economic participation. This article proposes an integrated Zakat-Waqf model for financing and governing community-based tourism (CBT) development in rural Terengganu, drawing on the complementary functions of zakat as a short-term redistributive instrument and waqf as a long-term asset endowment. Through a systematic review of the literature, institutional analysis, and comparative case examination, the article critically evaluates the theoretical coherence and practical viability of integrating Islamic social finance instruments into CBT planning frameworks. The analysis demonstrates that while the Zakat-Waqf model offers genuine potential for financing eco-tourism infrastructure, cultural heritage tourism, and homestay programme development, its implementation confronts substantive obstacles rooted in jurisdictional fragmentation between the Majlis Agama Islam dan Adat Melayu Terengganu (MAIDAM) and state tourism authorities, the governance limitations of current zakat distribution systems, and the cultural dependencies of local communities on government patronage. This article argues that the transformative potential of Islamic social finance in rural tourism development can only be realised through a restructured governance architecture that integrates religious financial institutions into the formal tourism planning system.