Legal Regulation of Productive Zakat for Empowering Entrepreneurs in Malaysia

Abstract

Productive zakat has emerged as a strategic tool in Malaysia for promoting economic independence and poverty alleviation, particularly through the empowerment of entrepreneurs among eligible zakat recipients (asnaf). In addressing persistent socio-economic inequalities, this study examines the design and implementation of Malaysia’s legal regulations on productive zakat to support entrepreneurial growth, with comparisons to regulatory approaches in other Muslim majority countries. Using a critical and comparative legal analysis, the study reviews key principles of Islamic jurisprudence alongside relevant statutory provisions and evaluates the alignment of Malaysia’s regulatory framework with the objectives of maqasid al-shariah in fostering self-reliance and sustainable livelihoods. The findings indicate that Malaysia has introduced progressive legal measures and structured productive zakat programs that provide capital, equipment, and training to asnaf entrepreneurs to enhance their business capacity and reduce long-term dependency. Zakat institutions have incorporated entrepreneurship development strategies into their operational frameworks, reflecting a commitment to socio-economic transformation. Despite these advancements, the study identifies gaps in legal uniformity, enforcement mechanisms, and comprehensive monitoring of entrepreneurial outcomes. To address these issues, the study recommends refining zakat regulations to ensure greater transparency and accountability, strengthening inter-agency collaboration, and embedding mechanisms for active participation of asnaf entrepreneurs in program design and evaluation. This research contributes to the discourse on Islamic economic law by offering a legal analysis of Malaysia’s productive zakat regulations and proposing enforceable and inclusive approaches to empowering entrepreneurs.