Income generation through zakat : the Islamization impact on Malaysian religious institution

Abstract

The aim of this thesis is to examine how the Islamization phenomenon has influenced zakat. The study shows that the distribution of the fund for income generation is a manifestation of the impact of Islamization on the zakat institution. Islamization is an outgrowth of increased religious awareness among Muslims and greater governmental concern with Islamic matters. Such a phenomenon might be initiated either by society or by government. In the case of zakat, a religious duty, the institution has been revived and shaped to become a potentially useful development tool, causing Muslims to look to existing initiatives, in this case income generation, to improve the disbursement system. The greater role of zakat in the economy has also entailed new interpretations of law by means of ijtihad, as the new mechanism to a certain extent is adoption of modern practice originally outside of Islamic realm. Income generation through zakat is a new way of distribution whereby the zakat fund is used for helping the poor to generate their own income. Discussion of the new idea began in the mid-twentieth century and has been implemented in a few Muslim countries. In a country which was clearly moving towards the formation of an Islamic State, namely Pakistan, the effort to introduce the initiative could be seen as part of the effort to achieve a fully religious government. By contrast, where a government, like that of Indonesia, tends to remain neutral in regard to religion, income generation has been mainly part of a societal agenda. In both cases, the zakat rulings will change according to the form taken by Islamization in the country. Malaysia, the country given a special focus in this thesis, is an example of Islamization as initiated by both government and society. The Islamization of society in the 1970s led the secular government to become accommodative towards Islam. Zakat was gradually rejuvenated through better administration and was eventually proposed for active involvement in poverty eradication. The tradition hence has been transformed into a development institution which is not merely religious in nature. In a federation such as Malaysia, policies outlined by the federal government will be followed by the states. Selangor, as the most active state in offering income generation through zakat, has been chosen for further elaboration in this study. Looking at zakat’s financial potential, the state has embraced the institution as part of its development program. Society and the state government have cooperated in supporting the implementation of income generation. Income generation in this context complements the state’s development effort. In addition, ijtihad has been employed to accommodate the changes in the practice of zakat. In sum, the thesis shows how the Islamization phenomenon has influenced religious institutions in general and zakat in particular. It appears that the institution can adapt to contemporary challenges, depending on the societal, economic and political agendas of a modern state.