Zakah Collection and Distribution Management: A Case Study of MAIDAM in Terengganu

Zakah is one of the systems to promote wealth-sharing among the Muslims in assuring a minimum standard of living for them. The problems associated with the distribution of zakah and poverty are damaging the performance and achievement of the zakah institution itself. The statistics on the distribution of zakah shows that the poor and extreme poor in Terengganu has been increased over the last few years. In addition, there are people who pay zakah directly to the asnaf while such payments of zakah are not being recorded. Thus, an efficient management for zakah in terms of collection and distribution can contribute to the achievement of the utmost objective of zakah. This qualitative mode of study investigates the activities of zakah collection and distribution that are being practiced by MAIDAM. This study uses the semi-structured interviews to collect the primary data. The study interviews the staff from the Majlis Agama Islam Dan Adat Melayu (Islamic Religious Council and Malay Customs), known as MAIDAM, whereby several issues have been asked and discussed to achieve the objectives. MAIDAM is the only organization that collects and distributes zakah in Terengganu. The study finds that MAIDAM has been using several channels for the zakah payers to make direct payments to MAIDAM. Besides, MAIDAM has collaborations with other organizations to distribute the funds effectively. The study posits that zakah is to be distributed in sustainable modes such as in a form of small financing for needy SMEs to achieve the objective of eradicating poverty line and minimizing income inequality.


INTRODUCTION
Zakah is the fourth pillar in the pillars of Islam, which is obligated towards all Muslims. The Malaysia's government as a medium had appointed Zakah institutions in collecting and distributing zakah efficiently. There are several mechanisms for zakah collection and distribution practiced by Zakah Institution in Malaysia. Based on MAIDAM website, zakah had been distributed in various ways as financial support to the recipient in Terengganu but most of zakah's consumption by recipients in short term only. Zakah is one of the systems that promote the wealth-sharing with Muslims in assuring a comfortable standard of living for the Muslims. The aim of zakah is to discourage the concentration of wealth towards the rich people and to eradicate the poverty among of the poor people . So, the proper and transparent zakah distribution will contribute to the direct impact on the distribution of fair society wealth. It reflects on the meaning of zakah to improve, offering security, to cleanse and grow (Al- Ayni, 1972). Even though, the collection of zakah is increasing but the issue of distribution of zakah still raises many debates and problems. The problems that relate with the distribution of zakah and poverty defame the performance and achievement of the zakat institution itself. It happens because the method of the distribution of zakah is still not proper. This is because the methods of zakah distribution is still ineffective and also the dissemination of information on zakah distribution is insufficient (Hassan et.al, 2012). This study will focus only in the area of Terengganu state. In Terengganu, MAIDAM is the only organization that collects and distributes zakah. There have several methods to distribute zakah in Terengganu which are towards sector of social and humanity, education and Institution of highest education, economy and entrepreneurship, and assistant for muallaf. Most of the methods above are based on financial support. However, the main method is just to give the money as a financial support to the poor people and there is no effort to assist for improving the poor people's standard of living. MAIDAM also had distributed zakah for the asnaf who want to run the business and also for asnaf entrepreneur's course for economy and entrepreneurships. However, the distribution of zakah statistics in JAWHAR shows, the destitute and poorest of poor in Terengganu has been increased over the last few years (jawhar.gov.my,2018). Despite the increment on the collection of zakah, the issue remains unsettled. For example, the noncompliance of some individuals in paying zakah particularly zakah property, and the occurrence of information leakage for individuals who pays zakah, the payment not being channeled through the religious department and being paid directly to asnaf. This action resulted in the payment of zakah not being recorded and excluded from the quote amount in the religious department. (Ahmad & Wahid, 2005). So, this paper aims to know the way or the experience by MAIDAM in collecting and distributing the zakah.

LITERATURE REVIEW Distribution of the Zakah Fund: The Recipient Categories
Individuals who fulfill the nisab are obligated to pay the zakah and there are also particular group of individuals that are eligible to receive it. Hence, to ensure on an equitable and efficient implementation of zakah collection and distribution, it is very important to understand the overall system of zakah, including zakah payers and zakah recipients. So, this section will briefly explain about the eight recipients of zakah which namely faqir, miskin, amil, muallaf, al-riqab, al-gahrimin, fisabilillah, and ibnu sabil. The recipients of zakah are outlined in the Quran on verses 60 of Surah at-Taubah: "Alms are for the poor and the needy, and those 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; a duty ordained by Allah, and Allah is full of knowledge and wisdom" . Based on the verse above, it clearly shows that zakah is only permissible to be distributed among the eight categories of recipients, namely: Faqir, Miskin, Amil, Muallaf, Al-Riqab, Al-Gharimin, Fisabilillah, and Ibnu Sabil. (Khairuldin et al. (2013).

Hardcore Poor (Faqir):
Faqir is a person who has no assets nor profession or a total income less than 50% of the daily needs for both him and his dependents. Under Islamic law, the minimum living standards including food, clothing, and shelter, as well as basic education and medical care. . Poor (Miskin): The poor is defined as a person who has a profession, but his income is only able to satisfy part of his basic needs, without being able to meet other needs for both him and his dependents. . The Zakah Administrator (Amil): An organization that is directly related to business institutions that manage and administer the collection, distribution and finance of zakah. For example, those who are qualified for zakah are collectors, distributors, guards, accountants, clerks, informants, and officials. . Those whose Hearts are reconciled to Islam (Muallaf): A person who has the hope of converting to Islam, or whose faith still needs to be supported and reinforced because they are new to the religion. Thus, they are divided into two parts, those who converted to Islam and non-Muslims who can be persuaded to embrace Islam and do not harm Muslims. Zakah will be given as a way to help and support their new life as a Muslim. .

Slaves and Prisoners (Al-Riqab):
These are Muslims who are in the hands of slaves, physically or mentally dominated and captivated by the enemy. Therefore, zakah may be given as a form of redemption. Most Islamic scholars agree that zakah can be used to liberate a slave whose master is either Muslim or non-Muslim. . The Debtors (Al-Gharimin): They are indebted people but obliged to meet their basic needs for life. In this case, the debt is essentially for legitimate purposes or does not violate Islamic law. According to Imam Shafie's view, someone who is indebted due to helping the community, to make peace or for the purpose of Islam is permitted to accept zakah to pay its debt. But zakah will not be distributed to the debtor for unlawful purposes such as gambling, alcohol consumption, and other immoral activities. But the debtor must try to settle the debts by himself before opting for zakah. ). In the Cause of Allah (Fisabilillah): Fisabilillah refers to a person or group involved in activities to promote, defend or prosecute Islam. Imam Abu Hanifa and Abu Yusuf explain that fisabilillah refers to fighters who defend Islam and the Muslim community, so zakah should be given to them even if they are rich. . The Wayfarer (Ibnu Sabil): Ibn Sabil is the individual who travels from one country and needs aid during his travel even though he is rich. This practice is dedicated to protect the well-being of a musafir. However, the purpose of the travel should not be contrary to Islamic law. Nonetheless, before seeking for zakah aid, traveler should seek for other legal means to meet their needs. Therefore, zakah will only be provided when they cannot meet their needs in order for them to return home. .

Zakah Collection and Distribution in Malaysia
Islam has been proclaimed by The Federal Constitution of Malaysia (1957) as the official religion of the federal. However, all issues pertaining to Islamic law and customs, and the administration of zakah are under the authority of each state, authorized by the Sultan, except for Federal Territory where the law and the Islamic administration are governed or managed by the federal government (Ahmed, 2004;Hudayati & Tohirin, 2010;Mahamud, 2011;MdSaad & Abdullah, 2011). In addition, the Sultan from each state would be advised by each State Islamic Religious Council which is knowns as Majlis Agama Islam Negeri (MAIN). Kelantan is the first state to establish its own State Islamic Religious Council known as "Majlis Ugama Islam dan Istiadat Melayu Kelantan" in 1915, followed by Terengganu, Pahang (1922), Perlis (1934), Kedah (1936 and other states in Malaysia (Mahamod, 2011). These organizations are responsible on all matters or problems related to the religion, and each state has set up its own zakah management institutions.  (2012) said the issue of inefficient distribution of zakah would affect the objective of combating poverty. From the findings, they discovered that there is a bureaucratic problem in the Zakah Institution in Malaysia which causes delays in the application process, such as requiring student to submit application annually to Zakah Institution despite their application being approved in their first year. The incompetency in collecting zakah has also been highlighted in addition to the distribution process. This can be proven by referring to PPZ / MAIWP (2010) reports, only 160,000 out of 2 million Muslims in Selangor (8%) paid zakah. Hence, AbRahman et al (2012) suggested that, to ensure in raising awareness among prospective zakah payers, ZI needs to be more proactive instead of waiting at the zakah counters. Ramli et al. (2011) addressed the issue on asnaf's attitude in receiving capital assistance from Zakah Institutions in Malaysia. From their study, they became aware that some capital aid recipients do not possess behaviors that are fit in becoming entrepreneurs. So, it affects their business performance. Moreover, Wahid et al (2004) says that they studied on the effects of zakah towards the quality of life of the asnaf by inquiring into their level of satisfaction towards the zakah received. Generally, the study found most of respondents wanted to relate the quality of life with matters such as transportation, communication, protection and health. Based on the survey conducted by Ahmad et al. (2006) on the level of satisfaction of paying zakah in Malaysia, 57% of 753 respondents were not satisfied with the current of distribution of zakah in Malaysia which significantly affects their payment of zakah to Zakah Institutions. This was also verified by Ahmed et al. (2006),  emphasizes that the transparency and speculative issues on the distribution method of zakah is the main reason for dissatisfaction with Zakah Institutions in Malaysia.

Zakah Management in Terengganu
The organization that is responsible to collect and distribute zakah is known as MAIDAM. This organization is not exempted from planning an initiative to develop entrepreneurs of poor asnaf, along with their effort to liberate them from the chains of poverty. This initiative aims to increase the ability of the group to be self-reliant in accordance with the philosophy of "give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime". Ghafar et. al (2017) said that, the Council of Islamic Religion and Customs Malay (MAIDAM) Terengganu is the sole institution responsible for handling zakah collection and distribution operations. The aim of MAIDAM in the distribution of zakah is to achieve the following objectives: 1. A more integrated and halal economic development by adopting an approach that is capable of liberating Muslims from the line of depravity, poverty and ignorance.
2. Increase the wellbeing of the orphans, children, women and senior citizens from various aspects, especially among the poverty, poor and muallaf. 3. Implementation of an efficient, fair and effective distribution of zakah and other resources.
At the state level, zakah administration is being placed under the Deputy Chief Executive who is responsible for several sections, including Zakah Distribution Section. Zakah Distribution Section contains several units including the Economic and Entrepreneurship Unit as well as the Training and Monitoring Unit that are directly involved with the development of asnaf entrepreneurs. In every region, zakah collection and distribution is done by MAIDAM regional branch office. Unlike Selangor and Federal Territories, zakah is managed entirely by MAIDAM and is not operated by privatized and special agencies such as the Federal Territories Zakah Collection (PPZ) and the Selangor Zakah Centre (PZS). Like other states of Islamic Religious Council in Malaysia, MAIDAM is liable to come up with an initiative to develop entrepreneurs of poor asnaf, in conjunction with their efforts to liberate them from the chains of poverty. This initiative aims to increase the ability of the group to be self-reliant in accordance with the philosophy of "give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime". This program is a form of providing capital assistance to eligible asnaf and fulfills the requirements to carry out a business activity. These conditions are below the limits of kifayah, business being the backbone, having a business license except for small businesses, and having the basic and related business experience. This aid began with the help of smallscale capital to large-scale capital. (Ghafar et al., 2017).

METHODOLOGY
The research applied qualitative approach, which aims at having a deep investigation into the experience of MAIDAM in managing the zakah in Terengganu through collection and distribution. The research made use of the semi-structured interview because this kind of interview allows the researchers to both control the focus of the interview and have flexibility in gathering information (Cohen et al., 2007).  The interview was about asking several questions related to the experience of MAIDAM in collection and distribution of the zakah in Terengganu. Also, the interview discussion includes the challenges facing by MAIDAM in zakah collection and distribution, highlighting the possible solutions thereof. The interview is recorded and then transcribed accordingly. Apart from the primary data through interview, the study relies also on the secondary data including the related journal articles, books, data from MAIDAM website as well as other library materials. Moreover, the study applies the content analysis method to deal with the findings and results.

RESULTS AND DISCUSSION
Results and discussion have been made based on the qualitative interviews conducted with the respondents of the study, who are basically the personnel of various departments of MAIDAM. In addition, the website of MAIDAM is also have been used as one of key sources of data and information, as advised by the respondents of the study.

Sources of Zakah by MAIDAM
Plantation: Agriculture is among the most important zakah resources in Malaysia because agricultural sector is among the major sectors in which it became the backbone of the economy in Malaysia, along with the services and manufacturing sectors (Mohd Faisol Ibrahim & Suhana Musani, 2010). The rate for zakah on harvest / crop is different based on the methods used which are: 1. The zakah rate for plantation that uses modern technology is 1/20 (5%) 2. The zakah rate for plantation that uses rain water is 1/10 (10%) 3. Nisab for this zakah is 375 bushel = 937.5 Kg in Terengganu.
The techniques that had been used by the payee to pay zakah on plantation are direct payment at MAIDAM counter or via Amil (agent of zakah collection) because there is an akad between the payee and MAIDAM's staff or Amil. (MAIDAM,

2019)
Savings: Zakah on savings is a zakah that is imposed on any money deposited whether they are banknotes or coins that are equivalent to gold and silver. This zakah issued by depositors from savings that have been in full year and has reached the nisab. People who fulfill the requirements of this zakah needs to deal with MAIDAM's staff at the counter for the calculation of zakah on savings and along with paying zakah at the counter that was provided by MAIDAM. (MAIDAM,2019).
For Fixed Deposits, once they have reached 354 days of deposit and / or sufficient nisab (assuming RM11,504.44) they are obligated to pay zakah. While for basic savings, it is based on the lowest balance of one year or several savings accounts within one year. It should also be known for its haul period, which is the initial billing period and the end of haul for the deposit. For example, (The lowest balance for 2014 is RM15,000.00) RM15,000.00 = RM15,000.00 x 2.5% = RM375.00 (Zakah is charged at RM375.00). If the term has been reached, then it is obligatory to pay Zakah.
(http://www.MAIDAM.gov.my,10/5/2019) Employees Provident Fund: Zakah is imposed when the EPF savings is issued and the nisab should be provided along with the issuance. If the withdrawal of the EPF is kept for a year, then it will be charged additionally as zakah on savings using the calculation (Total Output x 2.5% = Zakah). This zakah will be paid directly to MAIDAM at their counter. Besides, some payers will also pay via Amil or known as the agent of zakah collection in MAIDAM. (MAIDAM, 2019). Gold: Zakah on gold and silver are zakah on gold and silver jewellery, and women's jewellery. Zakah issued on gold depends on whether the gold is worn or stored, which has meet the nisab and haul (period). Uruf refers to the customs and practices of a certain society and are commonly different based on states. Gold is of two types, such as unused gold which means possessed gold that is being stored, unused nor worn even once within a year, either in form of jewellery or gold bar. The second type is women's gold jewellery is either being worn occasionally (as a permitted jewellery according to Islam) or continuously within the period of one year is not liable to zakah, unless if it's beyond the urf (excluding gemstones or anything identical). The minimum amount of gold for zakah to be obligated is 85g and the calculation method is gold value x 2.5%.
Silver: Muslim scholars have set a calculation (nisab) for zakah on silver for five auqiyah which is approximately 40 dirhams (5 x 40 = 200 dirhams) and equivalent to 595 grams. The calculation is silver value x 2.5%. Usually, the payer prefers making the payment of this zakah through Amil (agent for zakah collection of MAIDAM) or direct deal with MAIDAM's staff at the counter. (MAIDAM,2019).
Income: Income includes all types of incomes or revenues, in return for services in form of wages, bonuses, salaries, rental income, allowances, pensions and other forms of earnings and any incomes based on an individual's career or as a professional. There are many types of income such as salaries and that is the income of an individual as a reward in return to his service for an employer, or his own company. Employee income consists of Annual Salary, Retirement Salary, Fixed Remuneration and others (including Bonus or anything that can be considered as employment income). Second is free income and that's the income of an individual earned through his job or expertise or service, as a reward in return to his service. This free income includes Legal Services, Advisory Services, Consultant, Medical Treatment, Engineering, Artists and Miscellaneous. Third is the acquisition which means income derived from ownership such as plantation /estate revenues, rental houses, land lease revenues and other revenues. MAIDAM took an initiative to encourage people to pay income zakah via salary auto deduction at which the payer needs to get the form from MAIDAM to apply for it.
MAIDAM has provided the mobile counter for those who want to apply for this channel, and also to pay zakah directly to MAIDAM. Most of the payers are interested to pay via auto deduction of salary. (MAIDAM,2019).

Distribution of Zakah in Terengganu by MAIDAM
Based on zakah collection for last year in 2017, the total collection of zakah that had been accumulated is 140 million, and the distribution of zakah is 183 million. If the collection of zakah is high, the distribution zakah is high as well. The Surplus from past year's zakah collection would be distributed this year. Zakah will be distributed among eight recipients. MAIDAM gave various aids to overcome the problems of poverty and to ensure the poor have the access to a better life.
There are four form of aid for them which are subsistence aid, home rental aid, monthly aid and medical aid. MAIDAM will prepare subsistence aid once a year. While MAIDAM will give RM300 per month to the head of the household and if he has dependents, they will add another RM50 for each dependent. Besides, MAIDAM also provide capital aid to asnaf who has a plan to start a business. But MAIDAM will ensure that the recipient has a place to start the business or else the capital aid won't be approved. Additionally, there is also a recurring aid on capital even when asnaf has started the business. MAIDAM will do a screening on their background as well as investigating the authenticity of the business. For example, one of asnaf in MAIDAM utilizes the capital aid given by MAIDAM with the amount of RM 1000. He runs a small business. After a month, he re-applies for the capital aid. MAIDAM will then check his business's progress. If the business is performing well and the progress is good, MAIDAM will approve it.

Collaboration between MAIDAM and Other Organizations
As the respondents of the study mentioned, there is no collaboration between MAIDAM (Zakah Institution) and Tekun Nasional (Microfinance Institution poverty. It takes a total of six months, with two months of theory lesson and four months of on the job training. After six months, they will start their job as a technician in the factory.
Second, McDonald's company appointed MAIDAM to look for asnaf's children. McDonald's is a fast food restaurant which services are related to serving fast food to their customers.
Asnaf's children that had been selected will have to undergo for a training at McDonald's in Kuala Lumpur for one year, before acquiring the certification level one and two. They receive more benefit during their training with the allowance of RM1200, free accommodation and transportation. Once they are done with the training, they will be hired as a manager at any McDonald's branch.
Third, a collaboration between MAIDAM and Community College during which MAIDAM will hire Community College to teach all asnaf that are involved in sewing and decorating cakes courses. They will give the capital to asnaf after they finish the courses. Community College is a college that focuses more on practical rather than theory. Forth, collaboration between MAIDAM and Entrepreneur College. Entrepreneur College is focuses more on business management where students need to learn on how to manage or handle business both theoretically and practically. This college offered MAIDAM to work together in helping asnaf's children. This college offered RM6 million for 300 asnaf's children which made the amount that needs to be covered by MAIDAM for each of the asnaf's children approximately RM4000 per person. This college offered diploma program. This program is applicable for individuals who are undergoing on the job training to work while studying, in which three days of attending class and three days of working. However, it is still in the process. The success rate of asnaf's children is as follows: The figure above shows the success rate of asnaf's children in ADMA's Company. Based on the chart, the rate increased from 10% in year 2017 to more than 15% in the following year. Asnaf's Children has managed to obtain a job under a crane build academy. The amount of succes rate by asnaf's children is approximately about 13 out of 50 persons. However, it portrayed a positive feedback for asnaf's children.

Challenges Faced by MAIDAM
MAIDAM is the institution that collects and distributes zakah. As the respondents of the study stated, there are few challenges faced by MAIDAM relating to the zakah collection and distribution. This is because MAIDAM needs to ensure that the distribution of zakah is being done among the right people and the recipient must utilize it wisely.

Direct Payment to Asnaf:
There is a challenge in zakah collection when the payer gives the zakah directly to asnaf. It would cause an issue in terms of the transaction records of zakah because the payment will not be documented by MAIDAM (formal institution). Hence, MAIDAM encourages all the payers to pay zakah through several payment channels such as the zakah counters in all nine branches of Zakah Equipment Aid: MAIDAM provides a machine to the asnaf, but he then sells the machine to others. So MAIDAM takes an action in which the said asnaf needs to make a financial compensation for the machine that had been sold. MAIDAM determines that for each aid provided to the asnaf particularly in form of equipment, the guarantee of the item will be in the possession of MAIDAM. Therefore, the recipient cannot use the equipment provided in an unrestrained manner. (MAIDAM, 2019). Collaboration with ADMA's Company: The collaboration between MAIDAM and ADMA's Company also becomes a challenge for them. This is due to that MAIDAM is being subjected to a higher payment of cost for one student for RM14115.10 for six months only. After 6 months, the students will be working for the company but the salary earned is inconsiderable which only RM1000 is. It shows that there is a disparity between the cost of education and the income earned. So, few of the students decided to stop working for the company because of the amount of salary paid. MAIDAM wants to disburse the remaining contracts with ADMA's Company and will discuss further whether they want to continue the contract with ADMA's Company or not.

CONCLUSION
MAIDAM practiced many ways to distribute zakah effectively namely subsistence aid, home rental aid, medical aid, capital aid, recurring aid and education aid. It shows that, MAIDAM ensures that asnaf would receive a sustainable income and to help them to escape the poverty. The prominent part that has been exercised by MAIDAM in the distribution of zakah is through the education aid and capital aid. These would offer a sustainable amount of income to the asnaf. For example, education aid focuses on asnaf's children which they will be guaranteed for employment once they have finished with their studies so that they can help their family to get out of poverty. Besides, the capital aid would also give a sustainable income for the business run by the asnaf. In point of fact, both methods had collaborated with other organizations which help to mitigate the poverty. Collaboration is one of the ways to distribute zakah effectively. Based on the view by Hudson Valley Business Journal (March 28, 2011), collaborations help in fulfilling the standard criteria which are leadership, communication, common mission and precise goals and objectives.
For future study, it is a crucial part for the researcher to look at all the limitations that may affect the study from getting a reliable result. Therefore, some recommendations are suggested in order to improve the future study on Zakah.
Futures studies are recommended to suggest more on the collaboration between Zakah Institution and Microfinance Institution because up until today there no Zakah Institution has collaborated with Microfinance Institution. If zakah is being distributed based on microfinance, it would make revenue through project. Ultimately, this will help in terms of income sustainability for the asnaf. Next subtopic will show on how the process of Zakah Microfinance operates very well based on the experience in Selangor. It is also suggested to make a comparative analysis on the perspective of Zakah performance and distribution efficiency between Terengganu and our neighbourhood states such as Kedah, Perak, and Kelantan.