Zakat investment in Malaysia: a study of contemporary policy and practice in relation to Shari'a
Wan Ahmad, Wan Marhaini
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Zakat is an obligatory payment that a free and rational Muslim who owns a certain amount of wealth has to observe. The idea of zakat investment was initiated by the belief that providing the poor and needy with a non-substantial amount of fund that is mostly used to pay for their consumption is not enough to tackle poverty. Collection of zakat itself also has been shown insufficient even to provide them with a subsistence level of income. Muslim scholars suggest a long-term measure involving the investment of zakat that not only supplement the poor with a stream of income that is more consistent and continuous, equip them with the opportunity for equity participation or provide them with projects that help improve their livelihood but also provide a source of revenue to fund overall Muslim economic development. However, Muslim scholars found that investment of zakat may make the payment legally vulnerable from the Shari>ca (Islamic law) point of view. Thus, many fatwa>s and views have been expressed by the Muslim scholars as guidelines to ensure that the investment activities conform to Shari>ca. This study examines contemporary policy and practice in the management of zakat investment in Malaysia, particularly at two zakat institutions: Majlis Agama Islam Wilayah Persekutuan and Lembaga Zakat Selangor. These two institutions are selected because they are the most vibrant zakat institutions in the country in terms of zakat revenue and they also are the most active in investing zakat. Given the many background complaints about the institutions’ inefficiencies in managing zakat particularly the large amount of undistributed zakat, it is thus pertinent to analyze the compliancy of these investment activities with the principles and purposes of zakat. The study finds that these institutions accordingly have moulded their investment activities not only to observe the principles of zakat but also according to the modern changes in the administration of zakat in the country as well as to cater for the recipients’ current needs. The study also finds that various policies have been set up to guide the management of these investment activities. Still, there remain numerous possibilities for improving these further.