By Mohamed Hadi Abd Hamid, Mohd Zaidi Md Zabri
Malaysia’s demographic trajectory is unmistakable: we are ageing rapidly. By 2048, the proportion of Malaysians aged 65 and above will exceed 15%, officially making us an aged nation. This shift presents profound implications for our economy, society and most importantly, the dignity and wellbeing of our elderly. Against this backdrop, KWAP’s recent launch of a retirement living pilot project in Kepala Batas, Penang is both timely and necessary.
The initiative, announced under Budget 2026, involves the development of an age-friendly township that will provide independent living facilities for retirees. It is designed to support healthy, active ageing by incorporating residential units with access to wellness, medical and recreational amenities, all within a community setting. Situated on baitulmal land managed by the Penang Islamic Religious Council (MAINPP), the project also leverages waqf land for public benefit, showcasing a unique public-private-faith sector collaboration.
This initiative represents a bold step toward building infrastructure tailored to the unique needs of older Malaysians. Nevertheless, its greatest potential may lie not just in physical development, but in how it can catalyze a broader shift in integrating Islamic social finance into eldercare. At the heart of this integration is a simple idea: retiring in dignity.
A faith-driven framework for dignity
Islamic social finance offers a values-based framework to make this a reality. With tools like zakat (alms), waqf (endowment), sadaqah (charitable giving) and qard hasan (benevolent loans), the system is built to serve the vulnerable, including the elderly.
The foundations of Islamic social finance are deeply aligned with the objectives of the Shariah (maqasid al-shariah), which prioritize the protection of life, dignity, intellect, property and faith. In the context of eldercare, these objectives converge. Providing affordable and safe housing, access to healthcare, opportunities for social engagement and financial security speaks directly to these maqasid.
Structural supports for sustainable ageing
Waqf presents a powerful vehicle for funding and sustaining elder-friendly developments. Since the land in Kepala Batas is already under baitulmal management and effectively functions as waqf, it has the potential to generate recurring income through leasing or rental arrangements in a Shariah-compliant manner.
This income could then be channeled into maintaining the facility, providing social programs, and subsidizing services for lower-income residents. Such a structure not only ensures financial sustainability but also preserves the asset in perpetuity for public good.
Zakat could complement this by targeting retirees who fall within the asnaf categories, those without sufficient income or support. Structured properly, zakat distributions can subsidize housing, healthcare, or daily living costs, allowing retirees to age with dignity rather than dependency.
Moreover, with clear guidelines and transparent distribution, zakat institutions can measure impact, identify gaps, and ensure that assistance reaches those most in need, including vulnerable seniors in both urban and rural communities.
Enriching the ecosystem of care
Beyond these formal instruments, voluntary charitable giving (sadaqah) can enrich the ecosystem. Philanthropic contributions can fund libraries, recreational programs, inter-generational initiatives, or digital literacy classes, the kinds of amenities that transform retirement homes into vibrant, purposeful communities.
These initiatives create spaces of connection, not isolation, for the elderly. Community gardens, workshops, and shared prayer areas can foster a sense of belonging and engagement. Similarly, interest-free, qard hasan loans could support small entrepreneurs or cooperatives offering shariah-compliant services within these communities, such as mobile halal meal services, home healthcare, or befriending and social support platforms. These services not only improve quality of life for retirees but also create employment opportunities and stimulate local economies.
The institutional edge
The integration of Islamic social finance into such projects requires deliberate governance structures, robust Shariah compliance, and coordination among public, private, and religious institutions.
Fortunately, Malaysia is uniquely equipped for this. With a professionalized Islamic finance sector, state religious councils (SRICs), and an increasingly sophisticated philanthropic ecosystem, we have the institutional foundation to lead. What is needed is a comprehensive strategy that brings together the various actors, i.e., policymakers, religious authorities, financial institutions, developers, and the community. Each has a role in building and sustaining a model that works.
A moral and strategic imperative
This is not merely a financial opportunity. It is a moral and strategic imperative. The Prophet Muhammad (peace be upon him) taught us to honor the elderly, emphasizing their value within society. As we build for the future, our infrastructure and financing models should reflect this ethic.
The KWAP pilot in Kepala Batas can serve as a prototype, not just for retirement living, but for an entire silver economy powered by faith-based finance. Its success would signal to other SRICs and financial bodies that integrating Islamic social finance into national ageing policy is both feasible and impactful.
Other SRICs can adapt this model to local contexts, aligning with the broader goals of Malaysia Madani and the National Ageing Blueprint. For this to work, capacity building is crucial. We need to train zakat and waqf administrators in eldercare economics. We need regulatory clarity to facilitate hybrid financing structures. And we need public awareness to shift narratives from dependency to empowerment.
Seizing the opportunity
Malaysia has the tools, the talent, and the tradition. What we need now is vision and coordination. The ageing of our population is not a crisis. It is an opportunity to reaffirm our values and reshape our systems.
Retiring in dignity should not be a privilege for the few but a guarantee for all. With Islamic social finance at the centre, we can build a retirement system that honours our elders, strengthens our communities, and reflects the best of who we are.
Dr Mohamed Hadi Abd Hamid is a Certified Shariah Advisor (CSA) and Islamic Financial Planner (IFP). Dr Mohd Zaidi Md Zabri is the Secretary for the International Council of Islamic Finance Educators (ICIFE).
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