Zakat in the context of the Malaysian Economy

Zakat in the Context of the Malaysian Economy Zakat Institution has not played a significant role so far, the main reason is the small amount of zakat collected in the country. It is very small (about RM 408 Million in 2003) compared to the revenue of the government (which is about RM 89.2 billion from tax and other revenues) Therefore, development of the Muslim community in this country does not and cannot depend on zakat money. Zakat is such a small portion. The economic, educational and social needs of the community are financed almost wholly from government revenue.

If a national zakat organisation is set up and the collection in Malaysia is about RM 700 million a year. The projected collection include zakat on business if they are given rebate from corporate tax. Even though it is still a small amount compared to government revenue and the general economy, the zakat institution may then be able to play some significance role in meeting some of the needs of the community, provided effective distribution programs are carried out in all the states to complement government programs. The challenge is to be able to make an impact on the community using zakat money of about RM 430 million a year collected by the various Islamic councils in the country.

Overall the malaysian economy is many times larger, namely about 230 billion ringgit for a population of about 25 million people of whom about 61 are Muslims. Zakat Organization In Malaysia In Malaysia, though Islam is the official religion, The Federal Government does not have the fullest authority in religious affairs.Zakat is the responsibility of the Islamic Council of each state in the country There are 14 Islamic Councils, one for each of the 13 states and one for the Federal Territory Wilayah Persekutuan of Kuala Lumpur. Each state has its own religious Administration Enactment while the Federal Territory has its own Act to manage zakat. The Islamic Councils have a unique status in that they are not a part of the Federal or State Government However, they have been established either through Federal or State legislation. They also depend on the Islamic Religious Department which is a government department existing in each state to provide the administrative services and to implement the decisions of the Council.

The Council is mainly a policy-making and supervisory body. Each Council is report to the Sultan or Ruler of each State The National Council for Islamic Affairs acts as a coordinator between the various state Islamic Councils especially when it concerns Islamic matters that effect the whole country.

Since its inception the PPZ has experienced many changes and improvements in its administration by passing bureaucratic procedures and a customer oriented approach as well as a pro-active approach in tackling customers complaints. PPZ was officially open by the Honourable Prime Minister of Malaysia, Tun Dr. Mahathir Muhamed On 8th March 1991 by being the first zakat office to operate in a new corporate style. Zakat Organization in the Federal Territory of Kuala Lumpur The Islamic Council of the Federal Territory of Kuala Lumpur has set up a Zakat Collection Centre (PPZ) having a corporate style management combined with computerised collection system, proactive marketing and customer-oriented approaches.

In early of 1991, the Federal Territory Islamic Religious Council had established a subsidiary company known as Hartasuci Sdn. Bhd., also known as Zakat Collection Centre. While the responsibility of the Zakat Collection Centre is to collect zakat on mal & self for the Federal Territory Religious Council, while the distribution of zakat is still being done by the Federal Territory Baitulmal. Therefore in 1990, a proposal made by Y. Bhg. Dato’ Haji Abdul Rahim bin Abu Bakar to Y. B. Tan Sri Dato’ Dr. Mohd Yusof Noor was well received to try out a new system and structure of establishing a new Zakat Collection Centre. A study done by a consultant (PricewaterhouseCoopers) had summarised the following findings to be implemented by the Federal Territory Religious Council. - The first was to adopt a corporate method and structure as a way to collect zakat. - The Second was to set up an office specifically for zakat i.e. Zakat Collection Centre that is separated from other activities of the Federal Territory Islamic Religious Department. - And the third to fully utilise computer technology in all zakat collection transactions. Since its inception the Zakat Collection Centre has experienced many changes and improvements in its administration by passing bureaucratic procedures and a customer oriented approach as well as a pro-active approach in tackling customers complaints. Zakat Collection Centre was officially open by the Honourable Prime Minister of Malaysia, Tun Dr. Mahathir Mohamed on 8th March 1991 by being the first zakat office to operate in a new corporate style. Zakat is the compulsory giving of a set proportion of one\'s wealth to charity.

It is regarded as a type of worship and of self-purification. Zakat does not refer to charitable gifts given out of kindness or generosity, but to the systematic giving of 2.5% of one\'s wealth each year to benefit the poor. The benefits of Zakat, apart from helping the poor, are as follows: 1. Obeying God 2. Helping a person acknowledge that everything comes from God on loan and that we do not really own anything ourselves 3. And since we cannot take anything with us when we die we need not cling to it 4. Acknowledging that whether we are rich or poor is God\'s choice, so we should help those he has chosen to make poor 5. Learning self-discipline 6. Freeing oneself from the love of possessions and greed 7.

Freeing oneself from the love of money 8. Freeing oneself from love of oneself 9. Behaving honestly The 2.5% rate only applies to cash, gold and silver, and commercial items. There are other rates for farm and mining produce, and for animals.