Zakah Distribution for The Purpose of Capital Assistance at Zakah Institutions in Malaysia: An Exploratory Study

_____________________________________________________________________________________________________ As prescribed by shari'ah, zakah is distributed to eight (8) groups of asnaf. There are different mechanisms in Malaysia to distribute zakah, such as financial support for living, education, medical, et cetera. One of the financial supports from zakah is to motivate the beneficiary of zakah by supplying zakah fund for business purposes. This study will explore the practise of capital assistance among zakah institutions in Malaysia. The information for this research was gathered through interviews conducted between July and September 2019. The findings indicate that, out of fourteen (14) states in Malaysia, only one state does not include zakah for business purposes, which is Sarawak or Tabung Baitulmal Sarawak.


Introduction
Zakah refers to the obligatory distribution or rendering of riches from economically stable Muslims within an existing society to benefit certain groups as listed in the Holy Qur'an such as the poor, the needy, etc. (Al-Qardawi, 2000). The maqasid shari'ah prescribes the distribution of zakah accordingly as stated in the Holy Qur'an. i.e. to alleviate poverty and redistribute wealth in order to minimize the gap between the wealthy and the poor. Islam pays great attention to zakah since the word zakah is mentioned fifty-eight (58) times in the Holy Qur'an, i.e thirty-two (32) times in isolation and twentysix (26) times in conjunction with solah (Abdullah & Mahyuddin, 2011).
Zakah is the third pillar of Islam, representing not only religious destinations but also having socioeconomic goals such as the promotion of economic growth and competitiveness, the fulfilment of utilisation needs, and the equal distribution of resources (Azhana & Abd Halim, 2012). It is imposed at 2.5 per cent on a Muslim's wealth that exceeds a certain level (nisab) and is held through a lunar year (haul). In order to administer zakah, the Muslim community is obliged to set up a zakah institution to collect zakah from rich Muslims within the society and to distribute it to the beneficiaries who are the deserving poor and needy.
www.msocialsciences.com Malaysia's economic growth declined from 4.8% in 2018 to 4.5% in 2019 (Focus Malaysia, 2019) even though it was forecasted to grow at 5.3 percent. Whether or not economic growth has achieved its goal, the authorities still need to step up reforms to improve productivity and increase the standard of living for its 32 million people. Malaysia will effectively continue its efforts to improve the living standard of households, especially to 40 percent of the low-income group 1 or B40 group (Budget Tax Articles, 2019). According to the budget figures, some 2.7 million households in Malaysia are in the B40 group (Islamic Voice, 2018). However, there has been an increased of 2.91 millions households in this group in the year 2019 (Department of Statistics Malaysia, 2019).
In order to increase the standard of living for 32 million people in Malaysia, 40% of whom are listed as low per capita incomes, the government is obliged to improve its economic policy, particularly in creating more job opportunities (to reduce unemployment) and by fostering entrepreneurial spirit among citizens in order to increase the number of entrepreneurs.
In the Eleventh Malaysian Plan or Rancangan Malaysia Kesebelas (RMK-11), entrepreneurship is one of the sectors that the government highlighted, especially involving adolescents in the business sector (Rancangan Malaysia Kesebelas, 2015). This responsibility should not be borne by the government alone, but supposedly shared with other entities /agencies /organisations in this country, such as zakah institutions.
In order to achieve all these goals, that is to reduce poverty, increase efficiency and increase the standard of living of people, zakah institutions play their part as a 'small co-driver' for the government to reduce the level of poverty in Malaysia. Effective management of zakah funds and implementation of programmes and activities can produce a greater number of successful asnaf entrepreneurs.

The Establishment of Zakah Institutions in Malaysia
The administration of zakah is under the jurisdiction of the state; under the patronage of HRH Yang Di-Pertuan Agong, for the Federal Territory, while under the Sultan or Raja for other states in Malaysia. This responsibility is held by Majlis Agama Islam Negeri (MAIN) except Kedah on behalf of the Majesty which has a special institution for zakah, namely Jabatan Zakat Kedah 2 which is independent of the MAIN (Azman, Alias & Syed Mohd, 2012).
Due to the demand for zakah collection and distribution activities more efficiently and effectively, there are a number of zakah institutions that have taken the initiative to corporatize their collection and distribution activities (Norazlina & Abdul Rahim, 2011). This is done by regulating a body, which acts as a subsidiary of Majlis Agama Islam Negeri (MAIN) or the State Islamic Religious Council (SIRC) to fulfill the obligations referred to above (Azman, Alias & Syed Mohd, 2012). Survey findings also showed that income threshold for the B40 group in 2019 comprising 2.91 million households was RM4,849. The M40 group's income threshold involving 2.91 million households was between RM4,850 to RM10,959. In addition, there were 1.46 million households in T20 group with income more than RM10,960. In terms o f income distribution, the T20 constituted 46.8 per cent of total household income as compared to 46.

The Zakah Institutions and Disbursement Process
The State Islamic Religious Council (SIRC) or Majlis Agama Islam Negeri (MAIN) directs all zakah institutions in Malaysia to be responsible for the collection and disbursement of zakah funds. E ach of these SIRCs is organized at the national level by a government department called JAWHAR or the Department of Endowment (Awqaf), Alm (Zakah) and Pilgrim (Hajj). The special task of J AWHAR, which was established on 27 th March 2004, is to organize and promote these zakah institutions to increase the efficiency and effectiveness of SIRCs (Sherliza, Raedah & Mazlina, 2017).
The zakah goal is for the eight (8) categories of asnaf that are entitled to receive zakah, as mentioned in the Holy Qur'an: (at-Taubah, verse: 60) "Alms are for the poor and the needy, and those who employed to administer the (funds); for those whose hearts have been (recently) reconciled (to Truth); for those in bondage and in debt; in the cause of Allah, and for the wayfarer; (thus is it) ordained by Allah, and Allah is full of knowledge and wisdom." In accordance with this Holy Qur'an verse, those who are eligible for zakah are poor (fuqara' ) whose income does not reach half the requirements; needy (masakin) whose income slightly exceeds half the need; 'amil, the person who administers the zakah, muallaf the one who is consoled to convert to Islam; ar-Riqab: a freed slave; al-Gharimin: those under debt for the way of Allah; Fisabilillah: those who fight against the hand of God and ibn-Sabil: pilgrims who lose their supplies on the journey of allowed syara' (Makalah Panduan Zakat, Lembaga Zakat Negeri Kedah Darul Aman).
The zakah institution acts as an intermediary between zakah payers and zakah recipients. It plays an important role in the efficient collection and distribution of zakah (Hairunnizam, Sanep & Radiah, 2009). It must ensure that the poor achieves their minimum means of survival, but for the sake of enabling them to get out of the poverty circle, start-up capital assistance should be provided to the asnaf who wants to be an entrepreneur.
Zakah disbursement to an asnaf who wants to be an entrepreneur can solve the problems of poverty. In the sense of the individual, it will enable the asnaf to step away from the status of mustahiq (who receives zakah) and to be muzakki (who pays zakah) with the hope to bring them into economic freedom. In the sense of ummah, setting aside the proportion of those in need purifies their possessions, and it is like pruning plants, this reduces the balance and promotes development (Islamic Voice, 2018).
In terms of distribution, the zakah institutions play an important role in complementing the government's efforts to eliminate poverty, while their reach is for indigent Muslims only (Azman, Mohamad & Syed Najib, 2012). By providing effective distribution to asnaf, in particular to productive zakah recipients (Hashim & Syed Musa, 2019), zakah institutions are able to help the government to build additional numbers of entrepreneurs across the country.
Zakah institution is obliged to manage the method of disbursement of the zakah. One way to ensure asnafs to be autonomous is to provide capital assistance for business purposes. Establishing this capital assistance is intended to enable and benefit asnafs to be self-reliant and self-sufficient, as well as to improve their self-esteem. Hypothetically, asnafs who are effectively immersed in a small enterprise www.msocialsciences.com through this capital assistance are helping themselves and their families to improve their financial condition. This, in fact, is improving and escalating the economy of society. This is a practical attempt to determine the presence and right of zakah according to Islam.

Business Capital Assistance via Zakah Funds
One of the strategies to help asnafs evade from poverty is by offering zakah in terms of capital assistance. By offering zakah assistance, zakah receivers are encouraged to start a small business to generate income that is considered effective financial assistance, while zakah for subsistence purposes is considered non-productive assistance because it does not generate but only stagnates any attempt to generate income.
Zakah for capital assistance refers to the distribution of zakah funds for asnaf who wish to obtain capital support, whether to start a new business or to sustain their current business. The distribution of zakah through zakah capital is another creation in the approach of zakah disbursement, which is left open and not set in a particular form of distribution (Hashim & Syed Musa, 2019).
In economics, capital is one of the functions of production. It contains all aids used in the production of consumer goods and services including various kinds of tools, machinery, equipment, plants, warehouses, transport and storage facilities (Mc Connell, Brue & Flynn, 2018). Capital is used in the ordinary language in the context of money. But when we talk about capital as a factor of production, it would be a mistake to confuse capital with money. The same is true of the zakah contexts, where capital assistance is not provided only in terms of monetary payment; instead zakah institutions provide machinery, tools and production equipment, and much more in order to assist asnaf in the growth of their business.
Zakah capital assistance is a capital aid that is provided to asnaf who meets certain conditions that are used to start or continue their business (Raudha et.al, 2011). It is one of the types of zakah given by the zakah institutions to help asnaf recipients, particularly fuqara' and masakin, stand on their feet and be able to change their economic conditions in order to have a better standard of living.
By using the business capital provided by zakah institutions, asnafs can change their status from the mustahiq to the muzakki, by venturing into a new business. This way, asnafs are able to improve their economic condition; shifting from its current meagre earnings to become an entrepreneur. Muzakki is an individual Muslim or corporate body that is expected to pay zakah while mustahiq is the entity to receive zakah.

Methodology
This study was organized based on the interview method that has been conducted in all zakah institutions throughout Malaysia, including Sabah and Sarawak through face-to-face meetings, telephone calls and e-mail platforms.
The study which started from July to September 2019 took place between researchers and sixteen (16)  Apart from that, this article also uses secondary sources as a reference, namely from books, seminar papers, annual reports, pamphlets, and websites of the Islamic Religious Council in all these states to obtain additional information from the interviews that have been obtained.

Does Zakah Institutions in Malaysia Give Zakah for Capital Assistance?
Out of the fourteen (14) zakah institutions in Malaysia, do all institutions engage in the disbursement of zakah for capital assistance?. By interviewing sixteen (16) zakah officers in fourteen (14)   Source: All inputs came from interview sessions with zakah officers at all zakah institutions in Malaysia

Discussion
The discussion of this paper focuses on the obligation of the zakah institutions across Malaysia and their role in handling zakah for capital assistance. It can be said that almost all the zakah institutions across Malaysia have made efforts to disburse a certain amount of zakah funds to be used as zakah for business purposes, except for Sarawak (or Tabung Baitulmal Sarawak). Based on the results of the study, it was found that the zakah institution under MAIDAM was the first institution to allow zakah distribution applications in the form of business capital assistance, namely in 1957. This is in accordance with the status of MAIDAM which was the first state to establish a religious council in 1367, based on 'Fasal 4 Tambahan kepada Undang-Undang Bagi Diri Kerajaaan' Terengganu, 1367. Then the implementation of zakah capital assistance disbursement were followed by LZS, MAIWP, LZNK and zakah institutions in other states, except TBS.
All zakah distributions are carried out by the respective zakah distribution divisions. The next study proposal will be formulated by the researcher to identify what are the factors cause the TBS for not disbursing zakah in the form of business capital assistance.

Conclusion
This study was done to identify which state provides zakah capital assistance to the asnaf group to do business, along with the year of the start to grant this business capital assistance. This is to obtain the basis for conducting further studies related to zakah capital assistance in the states that provide such facilities either in terms of type of distribution, type of business financing provided, amount of financing including methods of selection of asnaf who are truly eligible to be given capital assistance.