An Efficiency and Productivity of Zakat Institution in Malaysia and Indonesia: The Comparative Study

Abstract

The efficiency and productivity of Zakat institution have widely discussed, it is an organization based on social which looks after economic disparities. Most recently, Indonesia made a standardization policy and system of zakat institution, so that the zakat institution in Indonesia can reach the same quality or higher rather than other countries. It called Zakat Core Principles. Therefore, this research will focus on the zakat institution in Indonesia and Malaysia. The purpose of this study is to measure and compare the efficiency and productivity using Data Envelopment Analysis (DEA) and Malmquist Productivity Index (MPI), which is a non-parametric and deterministic methodology for determining the relative efficiency and productivity. The result of this research shows, The first quadrant is the best efficient and productive institutions gained by zakat institution in Indonesia namely Sinergi Foundation and 3 zakat institutions in Malaysia namely Kedah, Melayu Perak, and Selangor. The second quadrant is highly productive but low efficient achieved by zakat institutions in Indonesia namely Baznas, RZ, Dompet Dhuafa and 1 zakat institution in Malaysia namely Jawhar. The third quadrant is high efficient but low productive didn’t achieve by any zakat institution in Indonesia or Malaysia. The fourth quadrant is low efficient and low productive reached by 1 zakat institution in Indonesia namely PKPU and 3 zakat institution in Malaysia namely Kelantan, PPZ and Pahang. The implication in this study is describing the position of zakat institution in Indonesia and Malaysia so that it is known which zakat institution could be a role model or benchmarking for other zakat institution.

Productivity of Zakat Institutions in Indonesia

“…Zakat management institutions in Indonesia are divided into two, namely government institutions called the National Zakat Agency (BAZNAS) and private zakat institutions such as Rumah Zakat (RZ), Dompet Dhuafa, Sinergi Foundation, DT Peduli, PKPU, and other zakat institutions (Nurasyiah et al al., 2019). The implementation of zakat management in Indonesia is contained in Law Number 23 of 2011 governing the planning, collection, distribution and utilization of zakat.…”

“…Given the magnitude of the role and purpose of zakat, it is necessary for zakat institutions to maintain their productivity. According to Gaspersz in Nurasyiah et al (2019) productivity is defined as the ratio of output to input. Productivity is also defined as a combination of effectiveness and efficiency.…”

“…In addition, it is necessary to reduce socialization costs and operational costs by 11.81% and 8.79%. Nurasyiah et al (2019) analyzed the efficiency and productivity of zakat institutions in Indonesia and Malaysia. The results of the study show that the first quadrant is the best efficient and productive institution obtained by zakat institutions in Indonesia, namely the Sinergi Foundation and 3 zakat institutions in Malaysia, namely Kedah, Melayu Perak, and Selangor.…”

“…Zakat management is very important to do considering that zakat has an important role not only in terms of religion but also economically and socially (Widiastuti et al, 2018), among the roles of zakat are to alleviate poverty, equalize income and distribution of wealth, with the aim of preventing concentration of wealth only to a handful of people, contributing to welfare and social justice as well as economic sustainability (Djaghballou et al, 2018;Al-Salih, 2020). Of the several important roles of zakat, the main program of zakat institutions is to reduce poverty and have an impact on empowering people who are not yet prosperous (Nurasyiah et al, 2019).…”

“…There are several studies that have analyzed the productivity of zakat institutions, including Nurasyiah et al (2019) analyzing the efficiency and productivity of zakat institutions in Indonesia and Malaysia, and the results of his research found several zakat institutions that have optimal productivity and efficiency. Rusytiani & Rosyidi (2018) measure the efficiency and productivity of zakat institutions in Indonesia.…”