More revenue for more generous social protection

  • Focus
  • Sunday, 15 Sep 2019

AS a form of social economy, zakat (tithe) can be turned to as a means of poverty alleviation, says Minister in the Prime Minister’s Department for Religious Affairs Datuk Seri Dr Mujahid Yusof Rawa.

He says one of the ways zakat can help with this is through providing business capital to the needy.

“One of the goals of Islamic administration is to elevate individuals out of poverty through empowerment and the ability to be independent,” he explains.

For example, he elaborates, zakat funds have been used to establish “asnaf-preneurs” or entrepreneurs from the group of asnaf (eligible zakat recipients) who were previously living in poverty.

“We have had success stories about people in difficult circumstances who received capital from zakat funds and are now earning tens of thousands of ringgit by venturing into all sorts of sectors – cosmetics, food and beverage, catering and more.”

Recently, 70 of these “asnaf-preneurs” showcased their products and services

at the Halfest Jakim 2019 in the Mines International Exhibition and Conference Centre.

“Another example is that if we are unable to help a family come out of poverty, we can ensure that their children receive a good education so that the vicious cycle does not repeat itself.

“This means that the child, when given a good education and later a good career, can then help his family,” he says.

Mujahid believes that the philosophy of zakat should be clearly defined so that people do not see zakat merely in terms of collection and distributing of money, but also the outcomes beyond that.

“At the end of the day, we have to consider its impact on social economy,” he notes, adding that zakat can be used to reduce the financial burden of the government in terms of taking on some of its welfare expenses.

Recently, UN Special Rapporteur on extreme poverty and human rights Philip Alston said that Malaysia’s poverty levels are far higher than reported – and that its true poverty rate was about 15%, not 0.4% as believed.

An issue he pointed out was that Malaysia’s social protection system appears to be fragmented, underfunded and poorly targeted.

“According to the government, there are at least 110 social protection programmes in Malaysia spread across more than 20 ministries and agencies. The social protection system also has virtually no redistributive or poverty reduction impact due to inadequate investment.”

He added that, as of 2017, Malaysia’s expenditure on social protection was lower than in all South-East Asian countries for which data was available.

“And unusually, expenditure on social protection has not risen in step with GDP. Moreover, low government revenue limits the resources that the government can spend on social protection,” he said, highlighting that according to the World Bank, Malaysia is projected to record one of the lowest levels of fiscal revenue in proportion to GDP in 2019 (18%), well below the average for middle-income countries (27.5%).

“As of 2017, less than 10% of Malaysians over 15 years old were paying income tax, and the top marginal tax rate for very-high-income earners was just 28%.

“So, there is huge scope for the government, first of all, to start collecting taxes effectively. Secondly, to increase the overall government revenue in order to ensure that funding is available for a much more generous system,” said Alston. — Additional reporting by HARIATI AZIZAN
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