Assessing the Contribution of Zakat Fund             on the Malaysian Economy                                             ...
OUTLINEIntroductionLiterature ReviewMethodologyResults and AnalysisConclusion and Policy Recommendation
Introduction      • Zakat is multidimensional in nature.      • It has moral and sosioeconomic aspects.  1      • The admi...
Introduction Therefore, there are three points will be explored : 1. What is the contributionof the zakat fund towards    ...
Literature Review• Economic Impacts of Zakat• The Contribution of Zakat in Malaysian Economy• Financial Sector Development...
Methodology  Basic concept and framework towards the                  problemAnnually time series data from PPZ and IFS fr...
Variables and Operational Definitions  There are three variables used in this paper:  1. LnGDPR  GDP Real  2. LnCOL  Zak...
Results and Analysis
Pre-Conditional Tests• ADF Unit Root Test Analysis  All the data are stationer and have no unit root.• Selection of Optima...
Granger Causality of LnCOL and LnGDPR            LnGDPR               LnCOL• The amount of zakat disbursed to the recipien...
Impulse Response Function of LnCOL and LnGDPR Accumulated Response to Generalized One S.D. Innovations ± 2 S.E. Accumulate...
Variance Decompostition of LnCOL and LnGDPR                         VED of LnCOL and LnGDPR      100%       90%       80% ...
Granger Causality of LnDIS and LnGDPR            LnGDPR              LnDIS• The significant impact of economic growth towa...
Impulse Response Function of LnDIS and LnGDPR  Accumulated Response to Generalized One S.D. Innovations ± 2 S.E.   Accumul...
Variance Decompostition of LnDIS and LnGDPR                         VD of LnDIS and LnGDPR      100%       90%       80%  ...
Conclusion and Recommendation
Conclusion• Zakat implementation in Malaysia is not yet used to advocate  zakat as the major fiscal policy instrument and ...
Recommendation     • Zakat proceeds are sufficient to cover needs. It means that the       implementation of zakat shall b...
Thank You
p. 1PRESENTED ON INTERNATIONAL ZAKATCONFERENCEBiasanya:PRESENTED AT INTERNATIONAL ZAKATCONFERENCE
p. 3The administration of zakat has a long history.The administration of zakat in Malaysia has a long history.It was first...
p. 5Untuk literature review, mungkin bisa diuraikansecara singkat contentnya dengan ditambah 1-2slide lagi (jika memungkin...
p. 16Conclusion and RecommendationConclusion and Policy Recommendation(sesuai outline pada p. 2)
p. 17Zakat implementation in Malaysia is not yetused to advocate zakat as the major fiscal policyinstrument and stabilize ...
p. 17• Empirically, zakat could be significantly effect  to the economy if the government could raise  the economic growth...
p. 17• The contribution of LnCOL and LnDIS towards  economic growth just give 19%, and 11% respectively  as their amount a...
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Slide presentation 2 at International Zakat Conference 2011

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In the Zakat International Conference 2011, I presented two of my papers. This is the second one.

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Slide presentation 2 at International Zakat Conference 2011

  1. 1. Assessing the Contribution of Zakat Fund on the Malaysian Economy By: Mochammad Arif Budiman Dimas Bagus Wiranata Kusuma Qurroh Ayuniyyah PRESENTED ON INTERNATIONAL ZAKAT CONFERENCE IPB INTERNATIONAL CONVENTION CENTRE (IICC) BOGOR, JULY 19-21, 2011
  2. 2. OUTLINEIntroductionLiterature ReviewMethodologyResults and AnalysisConclusion and Policy Recommendation
  3. 3. Introduction • Zakat is multidimensional in nature. • It has moral and sosioeconomic aspects. 1 • The administration of zakat has a long history. • It was firstly managed by the council of Islamic 2 affairs and Malay customs. • Significant changes and improvent started when PPZ was set up in 1991. • Afterwards, the collection and disbursement of zakat 3 have shown positive trend over the years and effect the economy.
  4. 4. Introduction Therefore, there are three points will be explored : 1. What is the contributionof the zakat fund towards promoting economic growth in Malaysia? 2. What is the nature of the relationship between zakat fund and economic growth in Malaysia? 3. What are the short and long run relationships between zakat fund and Malaysian economic growth?
  5. 5. Literature Review• Economic Impacts of Zakat• The Contribution of Zakat in Malaysian Economy• Financial Sector Development and Economic Growth
  6. 6. Methodology Basic concept and framework towards the problemAnnually time series data from PPZ and IFS from 1990 to 2009 Vector Auto Regression (VAR) Analysis Conclusion and Policy Recommendation
  7. 7. Variables and Operational Definitions There are three variables used in this paper: 1. LnGDPR  GDP Real 2. LnCOL  Zakat Collection 3. LnDIS  Zakat Distribution
  8. 8. Results and Analysis
  9. 9. Pre-Conditional Tests• ADF Unit Root Test Analysis All the data are stationer and have no unit root.• Selection of Optimal Lag 1 lag for LnDIS-LnGDPR and 2 lag for LnCOL-LnGDPR.• Cointegration Tests LnCOL-LnGDPR and LnDIS-LnGDPR are cointegrated.• Stability Tests The residuals of LnCOL-LnGDPR and LnDIS-LnGDPR are stable during the period of observation.
  10. 10. Granger Causality of LnCOL and LnGDPR LnGDPR LnCOL• The amount of zakat disbursed to the recipients may be less or more to zakat fund depending on the economic condition.• Zakat implementation in Malaysia is not yet used to advocate zakat as the major fiscal policy instrument and stabilize macroeconomic fluctuations.
  11. 11. Impulse Response Function of LnCOL and LnGDPR Accumulated Response to Generalized One S.D. Innovations ± 2 S.E. Accumulated Response to Generalized One S.D. Innovations ± 2 S.E. Accumulated Response of LNGDPR to LNCOL Accumulated Response of LNCOL to LNGDPR 2.0 5 1.6 4 1.2 3 0.8 2 0.4 1 0 0.0 -1 -0.4 -2 -0.8 5 10 15 20 25 30 5 10 15 20 25 30 • The shocks coming to zakat collection will definitely trigger the spur of Malaysian economy. • The preference or behavior of zakat payers are mainly relied upon the economic fluctuation as perhaps the main source of zakat in Malaysia are coming from zakat income or income deduction for zakat.
  12. 12. Variance Decompostition of LnCOL and LnGDPR VED of LnCOL and LnGDPR 100% 90% 80% 70% 60% 50% LNGDPR 40% LNCOL 30% 20% 10% 0% 2 4 8 12 16 20 24 28 30 • Variation on LnCOL variable is attributable by shock LnGDPR is quite strong even though in period 2 was recorded 17.5%, and finally increases to 19.3% in 30 horizon period. • The accumulated in LnGDPR as the innovation is occurred by LnCOL was high, roughly 75% in 30 horizon period.
  13. 13. Granger Causality of LnDIS and LnGDPR LnGDPR LnDIS• The significant impact of economic growth towards zakat distribution has shown the government does not conduct fiscal policy action through zakat distribution.
  14. 14. Impulse Response Function of LnDIS and LnGDPR Accumulated Response to Generalized One S.D. Innovations ± 2 S.E. Accumulated Response to Generalized One S.D. Innovations ± 2 S.E. Accumulated Response of LNDIS to LNGDPR Accumulated Response of LNGDPR to LNDIS 2.4 1.0 2.0 0.8 1.6 0.6 1.2 0.4 0.8 0.2 0.4 0.0 -0.2 0.0 -0.4 -0.4 5 10 15 20 25 30 5 10 15 20 25 30 • The accumulated response of LnDIS to LnGDPR outlines the positive and significant response of zakat distribution in reacting toward a shock coming in as GDPR is fluctuating. • The accumulated response of LnGDPR was also positive as disbursement zakat was getting shocks even though it is statistically insignificant.
  15. 15. Variance Decompostition of LnDIS and LnGDPR VD of LnDIS and LnGDPR 100% 90% 80% 70% 60% 50% LNDIS 40% LNGDPR 30% 20% 10% 0% 2 4 8 12 16 20 24 28 30• Variance decomposition of LnDIS is attributable in a relatively huge proportion from LnGDPR, increasing from 7% in second period to 44% in 30 horizon period.• The contribution of LnDIS towards economic growth seems to be recorded as a negligible portion, roughly 11% till 30 horizon period due to the small amount of zakat collected over a year compared to tax collection.
  16. 16. Conclusion and Recommendation
  17. 17. Conclusion• Zakat implementation in Malaysia is not yet used to advocate zakat as the major fiscal policy instrument and stabilize macroeconomic fluctuations.• Empirically, zakat could be significantly effect to the economy if the government could raise the economic growth.• The contribution of LnCOL and LnDIS towards economic growth just give 19%, and 11% respectively as their amount are yet relied upon heavily on income of zakat payers which are dependent on the phase of business cycle in the economy.
  18. 18. Recommendation • Zakat proceeds are sufficient to cover needs. It means that the implementation of zakat shall be based upon the Shariah rule, namely it 1 enables to be disbursed and allocated for poverty alleviation scheme. • Government is highly responsible in collecting and distributing zakat, in such a way, by allowing government to directly supervise the mechanism and ratio 2 of zakat distribution. • The cost of zakat management is minimized as the amount collected is 3 relatively small compared to nominal GDP. • Zakat does not create economic distortion in terms of equity accumulated and eventually does not also reduce government budget collection. 4 • Zakat could be incorporated as one of the fiscal policy instrument to analyze 5 the efficacy of fiscal policy.
  19. 19. Thank You
  20. 20. p. 1PRESENTED ON INTERNATIONAL ZAKATCONFERENCEBiasanya:PRESENTED AT INTERNATIONAL ZAKATCONFERENCE
  21. 21. p. 3The administration of zakat has a long history.The administration of zakat in Malaysia has a long history.It was firstly managed by the council of Islamic affairs and Malay customs.It was firstly managed by the Council of Islamic Affairs and Malay Customs.Significant changes and improvent started when PPZ was set up in 1991.Significant changes and improvement started when PPZ was set up in 1991.
  22. 22. p. 5Untuk literature review, mungkin bisa diuraikansecara singkat contentnya dengan ditambah 1-2slide lagi (jika memungkinkan)
  23. 23. p. 16Conclusion and RecommendationConclusion and Policy Recommendation(sesuai outline pada p. 2)
  24. 24. p. 17Zakat implementation in Malaysia is not yetused to advocate zakat as the major fiscal policyinstrument and stabilize macroeconomicfluctuations.Bagaimana klo jd begini:Malaysia so far has not yet advocated zakat asthe major fiscal policy instrument and stabilizemacroeconomic fluctuations.
  25. 25. p. 17• Empirically, zakat could be significantly effect to the economy if the government could raise the economic growth. Bgm klo jd begini:• Based on empirical results, zakat could be significantly affect the economy if the government could raise the economic growth.
  26. 26. p. 17• The contribution of LnCOL and LnDIS towards economic growth just give 19%, and 11% respectively as their amount are yet relied upon heavily on income of zakat payers which are dependent on the phase of business cycle in the economy.Bgm klo jd begini:• The contribution of LnCOL and LnDIS towards economic growth just gives 19% and 11% respectively as their amount are heavily relied upon income of zakat payers which is dependent on the phase of business cycle in the economy.

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