ESTABLISIHNG AN EFFECTIVE AND EFFICIENT ZAKAT INSTITUTION...

“Enhancing Efficiency in Tax Administration”

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ESTABLISIHNG AN EFFECTIVE AND EFFICIENT

ZAKAT INSTITUTION: A MALAYSIAN EXPERIENCE

IN THE FEDERAL TERRITORIES

Hj. Mohd Rais Hj. Alias

Chief Executive Officer

Zakat Collection Centre Federal Territories Religious Council

Abstract

Zakat is one of the pillars of Islam. It is not an act of worship and ranks in importance

immediately after the prescribed solah. Zakat or alms tax can be defined as that

portion of a man’s wealth which is designated for the eight asnafs. The term is derived

from the Arabic verbal roots meaning “to increase” “to purify” and ”to bless”.

Further, zakat enhances the feeling of responsibility towards the wealthy and riches

bestowed by Allah upon oneself. The discharge of such duty under this third pillar of

Islam therefore not only cleanses the wealth or assets of the giver as it is mandatory

for Muslims to part a certain portion, but zakat also in a way, teachs and moulds the

personality and traits of Muslims to be charitable and sensitive towards the plights of

others who are less fortunate.

In Surah Al-Baqarah: 110 Allah said, “ And be steadfast in your prayers and pay

the zakat. Whatever good you send ahead for your own selves you shall find

rewards with Allah. Truly Allah sees well all that you do.”

The nature of zakat is to pay a certain amount of wealth from a certain kinds of wealth

to specific recipients when the wealth reaches the designated minimal amount of

wealth (nisab) for a full cycle of a lunar year (haul). In general when zakat is due, it is

an obligation to a Muslim to pay zakat on time to satisfy his religious duty as Islam

always encourages any immediate action in doing good things. Allah says in the

Quran in Surah Ali Imran (3), verse 133, “And hasten to forgiveness from your

Lord and a garden as wide as heavens and earth, prepared for the righteous”. In

line with the verse, Yusuf al-Qaradawi asserts that, the immediacy of zakat payment is

highly commended.

According to the majority of Muslim scholars, the details of zakat were first stipulated

in the second year of hijrah. It was during the month of Ramadhan that zakat fitr was

imposed and in the month of Syawal of the same year on zakat mal or assets.

Conversely, the institution of zakat decreases the tendency of the recipient to be bitter

or angry towards the fortunate groups in the society. It also inculcate the realisation

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that other sectors of the community care for their (the recipient) well-being. Therefore,

this realisation will be the catalyst of a brotherhood in Islam.

1. INTRODUCTION

The Malaysian Constitution has listed zakat under the state authority. This

provision is in line with the basic concept accepted by the Malaysian

Constitution in which all religious affairs should be put under the various state

authorities. In Malaysia, though Islam is the religion for the Federation, it doesn't

mean that the Federal Government has the fullest authority in religious affairs.

The Malay rulers (Sultan) or Yang Dipertuan Agong as Head of Religion

have religious authority in their respective states. Each state in Malaysia has

formed its own lslamic Administrative law that is in line with the constitutional

provision to execute its authority over religious matters. Normally provision

related to zakat is part of the law.

To implement zakat management tasks, State Enactment and Act for

Federal Territories for lslamic Administration all over the country normally would

determine the particular institutions to be responsible for zakat affairs. Zakat

management and administration in Malaysia is the responsibility of the

respective Islamic Religious Council (“Majlis Agama Islam”) of each of the 13

states in Malaysia, with the Federal Territory (FT) of Kuala Lumpur, Putrajaya

and Labuan having its own Council, giving a total of 14 Islamic Religious

Councils for the country. In fact, zakat collection and distribution are arranged

by the Islamic Councils because it is not under the Federal or State Government

because all matters concerning religion is the responsibility of the States Islamic

Council.

Zakat management offices under the respective Islamic Religious Council

of each state are normally known as Zakat and Baitulmal Office, Zakat

Committee, Zakat Unit or Zakat Department. Apart from zakat collection office,

there are zakat officers (amil) who are appointed during the month of Ramadan

to collect zakat on Fitrah (Self).

Naturally zakat collection and distribution is only one of the many functions

of the Islamic Religious Council. Some of the other functions are matters

concerning personal and societal adherence and observance of the Muslim

faith, mosques, prayers, fasting, marriages, divorces, Islamic education,

enforcement of the syariah law, propagation of the Islamic faith, conversion,

Muslim welfare, Muslim festivals and wakaf. Therefore, it can be concluded that

all religious matters and ceremonial custom of muslim in Malaysia are put under


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the administration of respective states where rulers or Sultan are also the head

of the religion.

2. HISTORY OF ZAKAT ADMINISTRATION IN MALAYSIA

Though zakat institutions in Malaysia particularly has been established for

the past 70 years, zakat management has yet to present its actual true potential

until early 90's when steps were taken to improve and modernize zakat

management and system. There are several reasons that contribute to this

situation. Among them:

All this while, Islamic Religious Councils has been concentrating on

zakat fitr and zakat on agriculture (paddy). Thus, serious consideration on

the true potential of zakat of property is not given proper emphasis. The

notable cause for this is because the economy of Muslim / Malay

community has yet to reach the level that could enable them to pay zakat.

However, today, majority of Muslim community in Malaysia is qualified to

pay various types of zakat.

The lack of efforts to give wide spread focus and detailed information

on the concept of zakat on property to the community as zakat officers or

'amils' do not have clear understanding of the concept of zakat themselves.

As a result, there are Muslims who know their zakat obligation on paying

zakat but do not know how to pay or make calculation on the amount of

zakat that should be paid.

There was also the perception of the public on the effectiveness level

of zakat management office especially the distribution aspect in truly

helping the poor and needy.

Understanding of zakat among Muslims in Malaysia were still in low

level, which can be divided into two categories: i) Those who are totally

unaware / ignorant of their obligation and do not make any effort to know

about their duties on zakat, this category of people would only pay when

legal action is taken against them; ii) Those who know about their obligation

but reluctant to pay zakat until they are informed and clarified.

Zakat institution in Malaysia previously was left behind in terms of its

management and implementation. Collection and distribution system

implemented by the authority concerned was still at the backward state that

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caused its true potential to be hidden for a long time. This is a big loss as the

collection/return could have been invested in socio-economic development of

Muslim community in Malaysia.

3. MODERNZATION IN MANAGEMENT OF ZAKAT IN

MALAYSIA

Zakat management and administration in Malaysia took a giant innovative

step when the Federal Territories Islamic Religious Council agreed to a

proposal forwarded in 1990 by an ex-Menteri Besar of Pahang state, namely

Dato’ Haji Abdul Rahim Bakar, that the zakat collection in Federal Territories be

made a model using corporate management principles.

After a study was done by a consulting firm, the Religious Council agreed

to the recommendation of a task force for the setting up of a new office to collect

zakat on behalf of the Islamic Religious Council. The new approach includes

the incorporation of a new management and administration of zakat collection

system by setting up a company under the Islamic Religious Council to

separate it from the rest of the administration of Islamic affairs which is very

diverse. A new office was set up called “Pusat Pungutan Zakat” (PPZ) or Zakat

Collection Centre. The company called “Hartasuci Sdn. Bhd.” manages PPZ

and handles all matters pertaining to the collection of zakat on behalf of the

Religious Council.

PPZ is the zakat office of Federal Territories Islamic Religious Council which

started operation on 1st January 1991. PPZ has been receiving payments from

Muslims and corporations throughout the country because it is the most

systematic and the pioneer of using corporate methods and style of

management of zakat collection. All costs of collecting zakat were borne by the

company and the Council pays the company management fees monthly as an

amil. Zakat collection and the administration of PPZ was computerized which is

believed to be the first in the world. On-line zakat counters were specifically

opened to serve the zakat payers.

All the zakat money collected is banked-in daily into the Islamic Religious

Council’s account namely the Baitulmal account. PPZ has responsibility only

for collection. The disbursement is the responsibility of the Islamic Department.

Generally, the Baitulmal division of the Council being the specific administrator

working under a Baitulmal Committee which is one the Committees under the

Islamic Council.


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The existence of PPZ in the Federal Territories marks a new era in zakat

institution as this is the first time a computerized zakat management system is

implemented. PPZ operates by giving clear explanation on zakat and its

assessment. In addition, new payment counters were introduce for zakat

payers. PPZ collects all types of zakat - zakat on income, zakat on businesses,

zakat on savings, zakat on shares, zakat on gold and zakat on self (fitrah). For

zakat on crops and livestock in the Federal Territories, any business or

company doing such activities is deemed to be zakat on business.

Apart from the improvement on the counters, payers can also enjoy new

services through the multi payment channels such as salary deduction,

payment through post/mail, payment at bank counters, payment through phone

banking and the internet. Hence, due to the introduction of these various modes

of zakat payment since early 1991, the total zakat collection has continued to

increase steadily every year.

4. CHANGES & IMPROVEMENT AFTER

CORPORATIZATION OF ZAKAT MANAGEMENT IN

MALAYSIA

The increase on the awareness to pay zakat among Muslims in Malaysia

today is due to the increasing dakwah efforts and marketing which became

more effective in the last 26 years. Thus, efforts by the Islamic Religious Council

of Federal Territories by establishing PPZ centre and other State Islamic

Religious Councils through zakat Centre could be seen through information

campaigns and dakwah which are carried out regularly to increase zakat

collection of their respective states.

When corporatization becomes widespread in states throughout Malaysia,

some positive changes could be seen especially in the administration of state's

zakat management. Thus, resulting in committed efforts in developing zakat

institutions in the respective states. Among the changes adapted:

Enhance capabilities of state's zakat centres to define their actual

goals, functions and duties. Corporate work style that is goal-oriented,

professional, flexible, less bureaucracy and customer oriented has been

adopted.

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The new amil concept (at least at the time it’s been intoduced) or

corporate amil which incorporated a more aggressive, professional and

teamwork outlook has brought positive feedback among zakat payers

and has changed the mindset of the people towards the job. It is also a

stark contrast to its conventional style where an amil used to conduct his

activities in a mosque.

More committed efforts to develop systems which could enable work

to be conducted excellently through better Work System, Internal

Auditing System, Finance System, Zakat Collection System, Report

System and etc.

More comfortable and attractive office environment with various

facilities provided. Plus more convenient for payers to perform their zakat

payment through multiple channels. Thus easier to facilitate Muslims to

perform their obligations on zakat through multiple channels. The

establishment of comfortable service counters has helped to increase

the presence of zakat payers. To add, the user-friendly and corporate

looking staff who are ever willing to assist zakat payers has also boosted

the image of the center.

The improvement help the government and community to realize that

zakat institution has the potential to play an important role in managing

the community and country if the collection level reaches the size that

could give an impact. Thus, enable more distribution program to be

introduced by the Islamic Religious Council for the sake of those who

deserve to get assistance from zakat fund.

While employment of graduates from various academic backgrounds/fields

such as Accountancy, Finance, Business Administration, ICT, Company

Administration & Secretarialship, Communication, Public Relations and Islamic

Studies. They are recruited to work as a team in contrast to the old concept of

'amil'. In its continuous effort to ensure the highest standard of services to its

customers by systematically organized and plan training for its staff. These

training and workshops, either held by internal trainers or outsiders, concentrate

on staff development in management, operational and administration aspects.

Hence, the corporatization efforts have proven successful with the

encouraging increase of zakat collection through the years. The actual

achievement of is shown in the figures below:

Year Zakat Collection (RM)


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Federal Territory (PPZ)

2010 282,676,073

2011 348,882,925

2012 410,411,327

2013 492,402,029

2014 538,580,526

2015 565,830,627

Source: Zakat Report 2006 – 2015 1 USD = RM4.135

All of the above achievement have been pioneered and achieved by the

subsidiary of Islamic Religious Council of Federal Territory known as PPZ since

its establishment in 1991 as the forerunner of the modernization of zakat

institution in Malaysia.

5. FEDERAL TERRITORIES RELIGIOUS COUNCIL

SUCCESS FACTORS IN ZAKAT COLLECTION

As a subsidiary for the Religious Council of Federal Territories responsible

for the collection of zakat of property for the Federal Territories of Kuala Lumpur,

Putrajaya and Labuan, PPZ constantly notices and improves its marketing

efforts for dakwah on zakat to the Muslim ummah.

In Kuala Lumpur, zakat marketing strategy began as early as in 1952 when

Kuala Lumpur was still under the administration of the Selangor government. It

then later formed the Federal Government Kuala Lumpur in 1974. The

marketing strategy used was considered too conservative and lacked funding,

which resulted in the overall zakat collection being at a minimum. It did not

reach the true potential of zakat.

What is meant by the conservative method was that zakat employees had

to wait for clients to come to the zakat counters to make payments. In the

meantime, the only marketing strategy used was by way of spreading the word

which did not help much in the publicity. There were also not enough employees

who were skilled in communication and who fully comprehended the concept

of zakat. The factors mentioned are weaknesses that influenced the method

and marketing strategy before establishment of PPZ.

Evidently, after the establishment of PPZ, the zakat institution in Malaysia

has been successful in promoting zakat to the Muslim community, and the

results are proven in the amount of zakat collected and the increased amount

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of zakat payers. This has resulted in the changes of zakat institutions in

Malaysia, placing it among the same rank as other management institutions.

Apart from that, the ability to fully comprehend the concept of zakat, hiring new

and trained employees, the introduction of new methods of payment, and the

experience of working professionally and corporately, are other contributing

factors to the achievements of the zakat institution in Malaysia that one can be

proud of.

By adopting two corporate strategies such as "Customer Comes First" or

"Customer is Number One" and "Pro Active Marketing", PPZ continues to carry

out their method of approach which has resulted in the increase in the number

of collection and zakat payers for the past 26 years. Among the marketing

objectives of PPZ are:

lncrease of zakat collection.

lncrease in number of zakat payers.

Improvement in the professional management practice based on

current technology.

Maximise the level of customer satisfaction through services rendered.

Create a working environment based on Islamic values.

As an agent responsible for promoting zakat to the Muslim community

within its 26 years of operation in Kuala Lumpur, Putrajaya and Labuan,

PPZ has practiced two methods or marketing strategy; which is 'direct and

indirect' marketing. Both these methods are clearly very effective and have

greatly increased the total collection as well as the number of payers from

year to year.

The success story in increasing its collection today is a reflection of its

achievement and its capabilities. The contributing factors of this success

are as follows :

5.1 Organizational Characteristic

Corporatisation

The establishment of PPZ-MAIWP in the beginning of 1991 by the Islamic

Religious Council was felt to be the vital turning point for zakat administration

in the Federal Territories and in Malaysia. Since its inception, the corporate

culture such as professionalism among its staff has contributed to tremendous

improvement and development to the organisation.


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Concept of Amil

The new amil concept or corporate amil which incorporates a more aggressive,

professional and teamwork outlook has brought positive feedback among zakat

payers and has changed the mindset of the people towards the job. It is also a

stark contrast to its conventional style where an amil used to conduct his

activities in a mosque.

Computerisation System

The use of computerisation system in all PPZ-MAIWP activities such as the

collection of data, counter zakat payment, report activities and dissemination of

information among the staff has contributed to the efficiency, effectiveness and

added competency of PPZ-MAIWP in the planning and orchestrating of its

various operations and administration.

Establishment of Service Counters

The establishment of comfortable service counters has helped to increase the

presence of zakat payers. To add, the user-friendly and corporate looking staff

who are ever willing to assist zakat payers have also boosted the image of the

centre.

Call Centre

In light of giving and disseminating information on zakat matters, PPZ have

established a Call Center in order to answer any question regarding affairs on

zakat . This in turn facilitate answering the muslims on any enquires be in the

form of calculating and getting various information regarding zakat and its

fulfilllement.

5.2 Work Culture

Customer-oriented Services

Upholding excellent and outstanding customer-oriented services is PPZ-

MAIWP’s promise to its customers. Phrases such as 'Customer is always

right', 'Customer comes first' and 'Customer is no. 1' is the daily work

culture practiced by all staff. Hence, this leads to customers’ satisfaction.

Professionalism

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Staff of PPZ-MAIWP are encouraged to observe the culture of professionalism

in carrying out their duties. This is vital as PPZ-MAIWP is an organisation that

offers services to the public.

Management and Training

In its continuous effort to ensure the highest standard of services to its

customers, PPZ-MAIWP has systematically organised and planned trainings

for its staff. These trainings and workshops, either held by internal trainers or

experts, concentrate on staff development in management, operational and

administration aspects. This is also in fulfillment of an aspect of a requirement

set by the MS ISO 9001:2015 and ISMS ISO/IEC 27001:2015.

Teamwork

The aspect of teamwork among PPZ-MAIWP staff has always been identified

as one of the crucial success factors of PPZ-MAIWP. Thus, continuous

discussion and dialogue sessions are held to provide ample platform for staff

to voice out their opinions and perceptions on various work related matters,

hence, ensuring the best decision is made at the end of the day.

Work as Ibadah

Staff are also constantly reminded to realise that their work is an act of ibadah.

Hence, they should observe positive Islamic work attitudes and strive to be a

good Muslim worker at all times.

Employees Incentives

Realising the importance of the present staff to the organisation, PPZ-MAIWP

offers various incentives and benefits to its employees. The effort has led to a

productive and creative team as well as solved the problem of losing staff to

other companies.

Employees as Organisational Assets

PPZ-MAIWP too, realises the fact that its employees are its organisational

assets. Each employee has sacrificed countless time, thoughts and energy for

the success of PPZ-MAIWP. Hence, it is only befitting for PPZ-MAIWP to play

its role and look into the needs of its staff so that both parties are in a 'win-win'

situation.

5.3 Economy


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Increment of Gross Domestic Product (GDP) Percentage

One of the factors of the increase in zakat payment is the increase in GDP percentage each year. Malaysia is truly blessed with charismatic and dedicated leaders who are highly knowledgeable to lead her economy. With the continuous increase of GDP percentage since the economic crisis in

1998, unemployment rate has been lowered, thus increasing work

opportunities for Malaysians. This results in an increase in overall payers as

well as payment.

Political Stability

Another important contributing factor is Malaysia's political stability.

Malaysians are generally peace loving people who live in a peaceful and

harmonious environment. This has been achieved since its independence in

1957 even though it consists of several races such as the Malays, Chinese,

Indians, Kadazan and Iban. This stability is definitely a priceless asset to PPZ-

MAIWP in carrying its activities.

5.4 Socio Cultural

The Existence of Middle Class Malays

Since the introduction of the New Economic Plan (NEP) by the Malaysian

Government from 1970 to 1990, scores of Malays have benefited in the aspects

of economic prosperity. The NEP targeted that the natives 'bumiputera' will gain

30% of the nation’s wealth as a prerequisite to compete with other races in

Malaysia.

As a result, in the 90s, a new generation of middle class Malays came into being

and these Malays held various important positions in the private and

governmental sectors. There were also scores of Malays who became

successful professionals in various lines of work.

5.5 Law Factor

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Rebate

One exclusive advantage given by the government of Malaysia is the rebate on individual tax from zakat payment. Act 1967 6A (3) of The Income Tax Act states that an individual who has paid zakat via the State Islamic Religious Council will be given a rebate on his / her individual tax provided that a receipt of the zakat payment is produced. Hence, this advantage has helped to ease the burden of a zakat payer.

6. MARKETING STRATEGIES FOR COLLECTION

6.1 Direct Marketing

As an agent responsible for promoting zakat to the Muslim community within its 26 years of operation in Kuala Lumpur, Putrajaya and Labuan Island, PPZ-MAIWP has practiced two methods or marketing strategy; which is 'direct and indirect' marketing. Both these methods are clearly very effective and have greatly increased the total collection as well as the number of payers from year to year. Among the direct marketing activity used are: Zakat Talks/Briefing

Dissemination of zakat related information is continuously carried out all

year round through talks / briefings. This method has proven to be important

especially as it reaches the mass, either in offices or in mosques all around

the country.

Services on Zakat Estimation & Assessment to Individuals and Companies

Since its establishment, PPZ-MAIWP has introduced numerous services

with the objective of encouraging the public to make queries pertaining to

zakat related matters. PPZ-MAIWP too welcomes initiatives by the public

to organize consultation sessions such as on methods of zakat estimation

and assessment especially for those who have problems coming to PPZ-

MAIWP service counters.

Zakat Operation & Zakat Campaign

Two marketing methods are used to ensure that the public is aware of PPZ-

MAIWP activities. The two methods are ZAKAT OPERATION and ZAKAT


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CAMPAIGN. In this two methods, zakat officers will move as a team and

station themselves at strategic places such as lobbies of commercial

buildings and government offices, housing areas and business premises to

distribute pamphlets and zakat forms to the public.

Mosque Operation

A method conducted on a rotational basis known as “MOSQUE OPERATION” is an approach carried out specifically during events such as exhibitions, consultations, and tazkirah followed by Friday sermons. This allows those in attendance access to information and queries regarding zakat and its methods of payment.

Follow-ups

Another strategy implemented by PPZ-MAIWP is to do a follow-up on

companies and individuals who have failed to pay their zakat. This follow-

up will help PPZ-MAIWP to identify reasons for the failures of the zakat

payment, hence, allowing PPZ-MAIWP to construct strategies to overcome

these factors. It will also help PPZ-MAIWP to ensure that the targeted zakat

payment can be achieved during the said year.

Summarize Zakat Report

To meet the terms drawn up in the Client Charter, PPZ-MAIWP annually publishes and gives a report to all the muzakki regarding the status of the collection and the number of zakat payers. Furthermore, the report also includes information regarding distribution via programs, projects, and schemes implemented by the Federal Territories Baitulmal throughout the year.

Reminder

One method of reminding zakat payers concerning their zakat obligation is through implementing a reminder system. Zakat is an obligation that occurs only once a year, added to that the busy demands of work, the need for a system to remind Muslims of the obligation becomes a necessity.

Greetings Cards

Another one of PPZ-MAIWP’s approach through direct marketing is the annual delivering of Eid Mubarak cards and calendars to the zakat payers. Through this practice, each customer will feel special and PPZ-MAIWP would constantly be in their thoughts.

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Individual / Group Consultant

Another method used by PPZ-MAIWP to disseminate knowledge pertaining

to zakat is through consultation method. Consultation methods are held for

individuals as well as for a group. This method will help to further clarify

and explain zakat matters in a clear 'direct marketing' manner.

Group Zakat Collection

The group zakat collection is a method whereby PPZ-MAIWP will open

counters via invitation from offices either from the public or private sectors.

This effort is introduced with the objective of helping those who are unable

to go to PPZ-MAIWP service counters due to the constraints of time and

occupation.

Salary Deduction Campaign

To help ease the burden of zakat payment among the public, PPZ-MAIWP

has introduced the salary deduction scheme since 1991. This scheme is

seen as an effort by PPZ-MAIWP to help ease the burden of the zakat

payers so that it would match the payers’ financial capabilities.

Appointments

All year round, attention is given to individuals and groups that require

further clarification regarding the practice of zakat.

6.2 Indirect Marketing

Although the effectiveness of dakwah through direct marketing has already been proven, PPZ-MAIWP nevertheless is also applying indirect marketing methods to propagate zakat to the Muslims as part of PPZ-MAIWP’s obligation towards the Religious Council of Federal Territories. These include: TV

The appearance of PPZ-MAIWP staff on public and privatised TV from time to time is the best method of reaching potential payers from all over the country. This approach not only directly benefits PPZ-MAIWP but also assists other zakat institutions nationwide in the dakwah effort and they indirectly become recipients of zakat collection from the rest of the Muslim community in Malaysia. Radio

Likewise, occasional appearances on public and privatised radio stations by the PPZ-MAIWP staff also help the dakwah effort. Exposures from these two


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medium; TV and radio are very effective in the creation of a good image. It becomes a constant reminder to the community that PPZ-MAIWP is always there for them. Sermon

The opportunity offered by the Religious Council of Federal Territories which allows PPZ-MAIWP to inform and educate the Muslim communities in the Federal Territories of Kuala Lumpur, Putrajaya and Labuan PPZ-MAIWP is another indirect means of approach utilized by PPZ-MAIWP. The chance to give lectures during Friday prayers in the month of Ramadan and December is used fully by PPZ-MAIWP to disseminate information on zakat.

Presentation

In comparison, briefings are given to smaller groups of people while lectures are targeted to much larger groups. Briefings allow PPZ-MAIWP staff to focus exclusively on explaining and answering all enquiries thoroughly. This approach is normally employed specifically to address smaller groups within companies, societies, NGO’s, and other groups that require this method. Group Assessment & Collection

Another method of indirect marketing is through organizing group collections. This activity is carried out intermittently and at times set up as a permanent feature depending on the time and place as a convenience for the busy citizens of Federal Territories. This method helps those who have no time to spare for a visit to the PPZ-MAIWP office and contend with lack of parking spaces. These problems can be solved by calling the PPZ-MAIWP staff to their work place to set up temporary payment counters without having to leave their office to fulfill their zakat obligations. Flyers/Posters Distribution

Recognizing that efforts to raise awareness among the Muslim community concerning the zakat obligation are not easy, PPZ-MAIWP also practices the collective method of distributing printed matters such as pamphlets and flyers. This method clearly has added benefits whereby the payers or potential payers would receive the printed materials in their mailboxes without having to visit the PPZ-MAIWP office. If they are interested in making payments, they only have to post the form together with their cheque, money order or bank draft using the envelope addressed to PPZ-MAIWP which has been provided. Exhibitions

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To ensure the expansion of dakwah efforts, promotions through the setting up of booths during exhibitions are also adopted by PPZ-MAIWP. Events such as Convocation Fairs, selected weeks, Government Ministry Open Days and Muslim festivals such as Maulidur Rasul and so forth become an excellent and efficient gathering place. Zakat Seminar

Zakat seminars on various issues such as zakat for business, co-operative societies and paymasters are continuously held to fulfill different needs such as financial management, human resource management and businessman to raise awareness on the responsibility towards zakat. Info day

Efforts to promote and propagate zakat products to the general public are often in collaboration with Government Ministries as well as governing bodies and private sectors. Activities are held in conjunction with Ministry’s Open Day, Convocation Fairs, Launches, Expo and so forth.

Zakat Talks / Briefing

Dissemination of zakat related information is continuously carried out all year

round through talks / briefings. This method has proven to be important

especially as it reaches the mass, either in offices or in mosques all around the

country.

7. FEDERAL TERRITORIES RELIGIOUS COUNCIL – ZAKAT

DISTRIBUTION PROGRAMMES

Zakat distribution aims to change the lives of the poverty-stricken by

enabling them to afford to live a comfortable life. Al-Qardawi mentioned that the

distribution of zakat serves to cater for the needs of its recipient. For this

purpose, zakat is not necessarily given to all recipients if there are those that

are in need of more zakat. According to him, the government has the authority

to identify ways to distribute zakat.

With regard to this, the obligatory nature of zakat should become a catalyst

to assist Muslims in four aspects through the goal of zakat distribution: to

resolve poverty issue, to establish social justice, to develop a society based on

love, mutual solidarity, brotherhood and to eliminate from the poor the feelings

of hatred that they may harbour towards the rich. Further, zakat has its own

strength as it unites the Muslims, build better relations among them and

encourage Muslims to work together. Zakat also should be for the purpose of


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being a welfare instrument to overcome economic issues or as a means to

stabilize the economy of the Muslims.

In most of the states in Malaysia, zakat fund distributions have increase

from year to year. Projects and assistance aid has been enhanced due to the

increase in the zakat collection annually.

Year Zakat Distribution (RM)

Federal Territory (MAIWP)

2006 101,548,407

2007 121,224,318

2008 167,507,847

2009 174,986,013

2010 200,541,409

2011 217,246,481

2012 271,967,597

2013 328,394,455

2014 419,225,908

2015 612,747,408

Source: Zakat Report 2006 – 2015 1 USD = RM4.135

It is compulsory in Islam, as far as Zakat collection and gathering are

concerned, to be distributed to those who really in need and who belong only

to these eight categories mentioned in the Holly Koran in the following Ayat:

“The alms are only for the poor and the needy, and those who collect them,

and those whose hearts are to be reconciled, and to free the captives and

the debtors, and for the cause of Allah, and (for) the wayfarer; a duty

imposed by Allah. Allah is Knower, Wise.” Surah At-Taubah ayat 60.

Taking the Federal Territories as an example, disbursement of zakat is

under the responsibility of the Federal Territories Islamic Council. The

administration specifically is done by the Baitulmal division in MAWIP. There is

also a Baitulmal Committee reporting to the Council and this Committee

approves the applications for Baitulmal funds from applicants after the normal

processing is done by offices of the division.

When applications for zakat funds or programs and projects are being

considered, the Committee and the Council is always mindful that it should fall

under one of the eight categories (asnaf) for spending of zakat fund and that it

fits in with the overall objective of zakat.

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Relevant Institutions were established by the MAIWP as methods of

distributing the zakat fund to the respective asnaf. Among the institutions

established for helping the asnaf are:

Baitulmal Vocational Institute. Established as a platform to reduce

poverty among muslim family by providing skill / vocational training to

the family members. Training on development of skills given to the

children of the poor from all over the country like sewing, creative

drawing, cooking, food catering, electrical wiring, batik printing and

building & construction courses. It also provide free training courses,

monthly allowance and accommodation to trainees.

Baitulmal Profesional Institute. Operating as a private institute of

Higher Learning which offers Diploma and Certified courses like Charted

Secretaries and Administrators, accounting, computer, business

administration etc.

Pusat Rawatan Islam - PUSRAWI [Islamic Medical Centre]. The first

medical centre in the country that provides medical services using

Islamic approach not only catering for the Muslim but open to all.

Darul Kifayah. Operating as an orphanage house for children who

come from a very poor family. Occupants in this centre are provided with

daily expenses and their education cost are fully born by the Religious

Council of the Federal Territories.

Darul As Sa'adah. Operating as a centre for problematic Muslim

individuals who has no where to stay and no one to rely on. It is also a

rehabilitation centre for immoral Muslim girls. Occupants will be given

guidance of Islamic Principles.

Islamic Kindergartens. Offer pre-school education to children age 5-

6 years old as preparation for primary education.

MAIWP Islamic Secondary School (SMA-MAIWP). Established in

2007 to provide Islamic secondary education in Federal Territory

Science Tahfiz Integrated Secondary School (SMISTA). Established

in 2011 as platform to train young generation to become Al-Quran

memorizer and will widely spread in various job markets in the future.

This system combines two education curriculums which is National

Curriculum & Memorizing Al-Quran.


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Apart from the above establishments, Baitulmal of Federal Territory is

also engaged in giving out short term/monthly aid under the various asnafs

in helping them to get better living conditions and also to continue their

livelihood. Such programmes and expenditure are :

Poor and Needy (Fuqara' Wal Masakin). Which included aid of food,

finance, medical, Ramadan aid, rent and marriage aid. This segment

also included scholarships, educational aid, uniforms, bags, shoes,

emergency, disaster aid, skills training, business aid, house repairs or

construction, aid for disability and shelter for women and children.

New Converts / Those Whose Hearts Are To Be Reconciled

(Muallaf). Religious instruction, aid for temporary shelter, aid to

organizations undertaking dakwah and marriage aid.

Zakat Collectors and Administration (Amil). To pay expenses for

zakat collection, administration and development so that all the

programmes and aid can be carried out efficiently and effectively

especially in helping the destitute and poor.

To Free Slaves / Captives (Al-Riqab). To suit modern needs, aid is

given: To free Muslim from ignorance, to free a Muslim community from

very oppressive conditions and to free those trapped in prostitutions.

Those in Debts (AIGharimin). Which help such as food debts,

educational debts, medical treatment debts, rental debts, funeral

expenses debts, petty trader's debts.

The Cause of Allah (Fisabilillah). Dakwah activities (individuals and

organizations), seminar, workshops and activities carried by universities,

schools and associations that help to develop Muslims, especially

students and youths. Also included publications of dakwah materials

/books.

Travellers (Ibnu Sabil). Aid to stranded travellers.

Zakat distribution using the conventional method is mainly dividing the

zakat fund to every asnaf (categories of people entitled for zakat). However,

this method has been revised. Zakat distribution using the conventional method

is mainly dividing the zakat fund equalld to a more efficient and practical way

approved by the Syaria' Consulting Committee Meeting. The fiqh scholars has

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unanimously agreed that zakat fund will be distributed accordingly based on

priority which are faqir, miskin, amil followed by the other asnaf.

To ensure transparency in zakat allocation, Internal Audit Unit carry out the

auditing prior to audit carried out by the General Audit Department. The Federal

Territories Islamic Council believes in giving effective and excellent services to

recipients from the schemes offered to them. The council also opens its door to

any constructive criticism and suggestions for the development and benefit of

the Ummah especially in the Federal Territories.

8. FACTORS IN ESTABLISIHNG AN EFFECTIVE AND EFFICIENT

ZAKAT INSTITUTION

Although we could say that the administration of zakat institutions has

undergone many improvements thus far, there are still vital issues pertaining in

establishing an effective and efficient zakat institution. Previous studies in

various fields shows that the challenges in the management of zakat institution

is divided in two, namely internal and external factors. Internal factors refers to

aspects of administration and management. While external factors also include

the technical aspects and the perception of outsiders.

Some of the underlining issues includes:

The need to upgrade efficiency – Internal

There is a need to enhance/strengthen zakat management system to

address the inefficiency issue especially in the distribution aspect.

Generally, zakat is normally given based on application and sometimes

based on public report or initiatives carried out by zakat institution itself.

Apart from that, bureaucracy plays another role where in the process of

distributing zakat. Therefore, the principle that should be practise is that

zakat collected should be disburse as soon as possible. This was the

practise of the Prophet (pbuh).

The need to actively scout for prospective payers - Internal

The transformation in zakat institution could be done by improving the

ability of zakat collection centers to identify not only those who should

pay zakat, but also to trace down the prospective zakat payers. For this

purpose, the authority needs to change the method of collecting zakat

from waiting at the counters to proactively organizing briefing and talks


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session on the importance of zakat to all walks of life. This initiative may

raise awareness among prospective zakat payers to fulfil their religious

obligation.

The need to enhance Capital Building for asnaf - Internal

Although eradicating poverty is an inspiration of all people, it is not an

easy task. Helping the asnafs by directly giving them a sum of money to

buy necessities is indeed only a short term solution. Zakat institutions

could change the way financial assistance is given including in the form

of financing children’s education or sending then to training centres to

gain certain skills and knowledge thus getting employment to elaviate

asnaf from poverty.

The need to upgrade Management of Human Resourse

Development – Internal

Human resources is one of the biggest challenge for a zakat institution.

Those who wish to be employed must be an amil as outlined by the

ulama’, namely, a muslim, which capable of performing the job,

understands the work and having a sense of honesty in their work.

Therefore, Human Resource Management must also ensure that each

post is in accordance with the qualification. This is to ensure that the

work as amil can be carried out accurately and precisely.

The need to update to the best and latest Information Technology

System - Internal

Zakat institutions must follow the latest developments in information

technology. This is to ensure that the payment of zakat can be carried

out quickly and accurately. With the attitude of zakat payers who are

exposed to the latest technology and fast service, Zakat Institution

must be prepared to ensure all amils are equipped with such latest

and up todate technologies.

The need to strengthen Internal Control – Internal

Zakat Institution should take appropriate action to establish the Internal

Audit Committee to ensure that action is taken accordance with

established procedures. At the same time external auditor plays a role in

monitoring the activities undertaken by Zakat Institution. Certification of

MS ISO 9001:2015 also ensures that procedures involving acceptance

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and distribution of zakat funds. Zakat Institutions should also manage to

obtain certification for Information Security Management System (ISMS)

ISO/IEC 27001:2015. ISMS is a method to control information system

and networks in order to minimize risk.

The need to correct the wrong perception on zakat fund surplus –

External

Basically the community sees that zakat institutions did not make proper

distribution of surplus zakat fund each year. This phenomenon is caused

by factors whereby payment of zakat received towards the end of each

year. Therefore, Zakat Institution must be able to plan and distribute

zakat fund in such a way to accommodate asnaf diligently.

The need to change the beliefs on zakat obligation - External

Different beliefs arise due to earlier generation of scholars who adapted

ibadah of zakat according to their times. Thus this generation who holds

on to old practices and makes it difficult for any new approach to the

payment of zakat. Therefore there is a need to educate the Muslim in

adapting to new understanding of zakat obligation.

The need to eliminate confusion between Zakat Obligation versus

CSR - External

In some countries, like Malaysia Zakat payment especially by

businesses institution faces difficulties in paying zakat on business

compared to paying corporate tax. In order to lessen the burden of

paying double taxation on zakat and corporate tax, Companies is likely

to pay corporate tax since zakat is considered not compulsory whereas

corporate tax is punishable by law.

The need to eliminate Improper Channel for Zakat Distribution by

Payers - External

There are zakat payers who distribute zakat payments directly to asnafs.

The reasons used by the zakat payers is that they do not trust in the

zakat institution in delivering zakat funds. The impact of such actions will

lead to eligible recipients deprived of their rights. Therefore, there is need

for Zakat Institution to really educate zakat payers their obligations to

pay zakat to the the respective authorities.

9. CONCLUSION

Zakat institutions has offered numerous advantages to Muslims. Being a

religious duty, it offers the payers the inner satisfaction of a duty accomplished.

It induces a feeling of pleasure in awareness among prospective payers to fulfil


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their religious obligations and by teaching that only those funds on which the

due zakat has been paid are halal (legitimate) for appropriation or consumption.

The institution of zakat should not be understood only as an act of ritual but

its significance is also intended at achieving social justice. Social justice implies

that each and every individual in a community is assured of a minimum means

of livelihood. Islam insists that every individual member of the society must be

able to participate and contribute to nation building. This can be achieved when

individuals have fulfilled their basic needs.

The Zakat Institution clarifies clearly that the Islamic approach to ritual

exercise is not only to purify oneself and to uplift individual morality but also to

organise society in all aspects of its requirement. Therefore, the collection and

disbursement of zakat have some economic implications.

It is impossible to find or single out a particular zakat institution that has

reached a standard of effective and efficient in its administration of zakat fund.

Nevertheless, this paper was able to present an example of an institution which

has been in operation for almost forty three years in Malaysia. i.e. Federal

Territories Religious Islamic Council. Although this institution tried to implement

zakat administration to its outmost best, however it would not escape from

being the target of criticisms from the Muslim Community over the years.

Looking at the positive angle, this shows that Zakat Institutions is still relevant

and well-loved and given sincere attention by the Muslim community. It is the

hope of all Muslim to see excellence in zakat administration can really be

achieved as occurred during Caliph Umar Abdul Aziz, where no Muslim is

eligible to zakat fund due to its excellence in term of zakat administration

coupled by effective and efficient rules of an Islamic Nation during that glorious

time.

Wassalam,

HAJI MOHD RAIS HAJI ALIAS

Zakat Collection Centre

Federal Territories Religious

Council, Malaysia

Website :www.zakat.com.my

E-mail : [email protected]

Tel : 1300-88-5757

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