Zakat: Building Trust, Transforming Lives

Behind the rows of skyscrapers, bustling business centres and economic progress that define the Federal Territories as a key engine of national growth, there remains a segment of society struggling to meet basic needs.

Urban poverty has its own harsh realities, as almost every daily necessity -- food, housing, transportation and education -- requires continuous spending. Unlike rural areas, where people may still have access to natural resources, life in the city is heavily dependent on household financial capacity.

 Chief Executive Officer of the Zakat Collection Centre of the Federal Territories Islamic Religious Council (PPZ-MAIWP) Datuk Abdul Hakim Amir Osman said rising living costs in urban areas were making life increasingly challenging for low-income groups, who also face economic uncertainty, job losses, health problems and rising daily expenses.

He said the situation showed that economic growth alone did not guarantee that all segments of society would be free from financial pressures, as some families continued to require support to ensure their basic needs were met.

 “In the Federal Territories, zakat collected by PPZ-MAIWP and subsequently distributed by MAIWP serves as an important instrument of social protection for the Muslim community, not only by providing assistance to those in need today, but also by creating opportunities for them to build more stable lives in the future.

“However, the effectiveness of the zakat system continues to depend on the institution’s ability to uphold the trust placed in it by the community, strengthen the confidence of zakat payers and ensure that every fund collected delivers maximum impact to eligible recipients,” he told Bernama recently.

AID CHANNELS MUST BE NEED-BASED

Abdul Hakim said determining the status of asnaf (those eligible to receive zakat) could not be based on a single measure, as every family has different circumstances and financial responsibilities that needed to be assessed comprehensively.

Currently, MAIWP provides assistance to about 38,000 registered asnaf families classified as the poor and needy, who receive monthly aid across the three Federal Territories of Kuala Lumpur, Putrajaya and Labuan.

However, the figure is not static, as the economic and social circumstances of communities are constantly changing. While some families have successfully moved out of the asnaf category through economic empowerment programmes, new households may become eligible for assistance as their circumstances change.

“Among the factors that may cause a family to require zakat assistance are job loss, health problems, the death of the head of the household or other factors that affect their financial capacity,” he said.

From the perspective of Islamic law, he explained, the fakir category refers to individuals or families with little or no income, leaving them unable to meet basic needs, while the miskin category comprises those who have an income but whose earnings remain insufficient to cover their own basic needs and those of their dependants.

However, determining whether someone qualifies as an asnaf is not based solely on income. Instead, MAIWP uses the Had Kifayah approach, an assessment method that takes into account the overall circumstances of a household, including the number of dependants, age of family members, housing, food, education, healthcare, transportation, utilities and other basic needs.

“This approach is important because two families with the same income may not necessarily be in the same financial situation.

“Had Kifayah is not a fixed figure. It takes into account the actual circumstances of a family so that assistance can be channelled only to those who genuinely need it.

“That is why understanding this concept is important, because eligibility for zakat assistance is not determined simply by looking at income, but by assessing the extent to which a family can meet its basic needs based on its actual financial circumstances,” he explained.

STRENGTHENING ZAKAT COLLECTION, EXPANDING ITS REACH

Ensuring that the needs of asnaf continue to be met requires sustainable planning in the management of zakat funds, as the responsibility for distribution extends beyond immediate assistance to various forms of support for the eight categories of asnaf eligible under Islamic law.

 Abdul Hakim said zakat distribution needs in the Federal Territories now total about RM100 million a month, covering monthly financial assistance, education, medical care, welfare, Islamic institution development and various economic empowerment programmes.

“Every increase in collection does not merely mean more funds. It gives MAIWP greater capacity to assist more asnaf families, increase the value of assistance in line with today’s cost of living and ensure that the zakat distribution system remains sustainable in the future,” he said.

 He said strengthening zakat collection was increasingly important as the number of aid recipients and the cost of providing various forms of assistance continued to fluctuate amid changing economic conditions, rising living costs and global geopolitical conflicts.

As of July, PPZ-MAIWP had collected about RM600 million in zakat, against a total target of RM1.352 billion for the year, with 250,054 individuals having paid zakat through PPZ-MAIWP in 2026.

He said the Federal Territories hold significant potential for zakat collection, given their position as the country’s economic hub. Kuala Lumpur alone has more than two million residents, nearly half of them Muslims, most of whom are of working age. The capital also boasts one of the highest household income levels in Malaysia.

“This shows that there is still considerable room to increase participation among Muslims who are eligible to pay zakat.

“What we are seeing today is not an issue of the community’s inability to pay zakat, but rather that a significant number have yet to calculate their zakat accurately, are unaware that they have exceeded the nisab threshold, or have yet to make zakat payment an annual practice,” he added.

He said when more eligible Muslims fulfilled their  zakat obligations, the impact would go beyond increasing collections. It would also strengthen zakat institutions’ capacity to expand aid coverage and empower more asnaf to become self-reliant and break out of the cycle of poverty.

TECHNOLOGY, INNOVATION STRENGTHEN ZAKAT ECOSYSTEM

Abdul Hakim also stressed that increased zakat collection depended not only on the community’s ability to fulfil the obligation, but also on their level of confidence in zakat institutions.

He said public trust was the most valuable asset that needed to be safeguarded, as zakat collection could only grow when payers remained confident that the funds entrusted to the institution would be managed transparently, with integrity and for the benefit of those entitled to receive them.

Therefore, the principle of trust must be translated into a strong governance system to ensure that every aspect of zakat management was carried out systematically and responsibly.

To strengthen organisational management, PPZ-MAIWP has implemented several international standards, including the Quality Management System (ISO QMS), Information Security Management System (ISO ISMS) and Anti-Bribery Management System (ISO ABMS).

“The implementation of these standards helps ensure that work processes are carried out according to established standards, while strengthening service quality, information security and integrity in the management of zakat funds,” he added.

The organisation also leverages technologies such as data analytics, artificial intelligence (AI) and Power BI dashboards to improve management efficiency and ensure that decisions are based on accurate information.

Power BI is a data analytics platform that presents operational information through interactive dashboards, enabling PPZ-MAIWP to monitor collection trends, identify changing patterns and make faster, more accurate data-driven decisions.

He said technology enabled decisions to be based on data and facts rather than assumptions. The transformation undertaken was not merely aimed at improving organisational efficiency, but also at making zakat-related matters easier, faster and more trusted by the community.

At the same time, PPZ-MAIWP continues to emphasise digital transformation to make it easier for Muslims to fulfil their zakat obligations through more flexible payment channels.

He said digitalisation was not intended to completely replace conventional methods, but to provide more options for payers according to their convenience and needs.

 In addition to counter services, zakat payers can now fulfil their obligations through various channels, including online payments, digital applications, QR codes, partnerships with financial institutions and the Monthly Zakat Salary Deduction Scheme.

 He said collaboration with more than 3,500 public and private sector employers has established the scheme as one of the main zakat payment channels in the Federal Territories.

More significantly, the scheme now contributes about 69 per cent of PPZ-MAIWP’s total zakat collection, highlighting the importance of providing convenient and consistent payment methods for the community.

ZAKAT, ESG AND SOCIAL SUSTAINABILITY

Beyond efforts to strengthen collection, governance and technology adoption, the ultimate goal of the zakat ecosystem is not merely to ensure funds are collected, but to determine how those funds can transform people’s lives.

According to Abdul Hakim, every strategy implemented by zakat institutions must be guided by the principles of maqasid syariah, which seek to protect religion, life, intellect, lineage and wealth for the wellbeing of the Muslim community.

He said this principle was reflected in efforts to facilitate the fulfilment of zakat obligations, ensure assistance reached eligible recipients and expand programmes that helped asnaf build their capabilities.

The approach, he said, also shared similarities with the Environmental, Social and Governance (ESG) agenda, which has emerged as an important benchmark for sustainability among modern organisations, particularly in terms of social responsibility and governance.

“In the context of zakat, the social element is not merely about providing assistance to eligible recipients, but about helping communities build better lives. The governance element is reflected in our transparency, integrity and trustworthiness in managing zakat funds,” he said.

The view was echoed by Islamic economics expert Dr Mohd Faizal P. Rameli, who described the zakat system as having established a governance foundation long before the ESG concept was introduced in the corporate world.

He said the uniqueness of wealth management in Islam lies in the tauhid paradigm, which views human beings as trustees rather than absolute owners of the wealth they possess.

This understanding, he said, meant that integrity in zakat management did not depend solely on procedures, audits or certifications, but also stemmed from an internal awareness among zakat officers that every trust placed in them would ultimately be accountable.

At the same time, the Associate Professor at the Academy of Contemporary Islamic Studies (ACIS), UiTM Melaka Branch, Jasin Campus, said asnaf development needed to go beyond providing basic assistance towards building recipients’ capabilities so that they could improve their standard of living sustainably.

This meant that every form of assistance, whether in the form of business capital or work equipment, should be accompanied by monitoring, training and guidance so that its impact could be measured.

“Sometimes we provide assistance such as sewing machines, but the question is how many of those machines are actually being used and helping recipients escape poverty? We need to look at what happens after the assistance is given,” he said.

For this reason, he proposed expanding collaboration with universities, professional institutions and stakeholders to help zakat institutions assess the effectiveness of asnaf empowerment programmes in a more systematic manner.

He said the true measure of a zakat institution’s success was not an increase in the number of aid recipients, but whether the ecosystem could transform today’s zakat recipients into muzakki (zakat payers) in the future.