Recently, there have been many problems regarding zakat management and these problems had been addressed several times by several parties. The Muslim society is still not satisfied with zakat management especially in term of the zakat distribution. A possible solution to counter the problem of the zakat management is by localization of the zakat management. Generally, zakat disbursement function lies under the responsibility of the State Islamic Religious Council (SIRC) in most of the states in Malaysia included Singapore.
Zakat is recognized as a self-help measure adopted with full religious backing to support those poor and destitute who are unable to help themselves so as to alleviate misery and poverty from Muslim society (Chapra, 1992). In addition, the state could also exercise zakat as a vital instrument to fulfill the basic needs in an Islamic economy as well as an instrument of fiscal policy (Chapra, 2000). The distribution of zakat historically began at the era of the prophet (pbuh).
During that time, the collection and distribution of zakat was, in principle localized which means that what was collected in an area was also distributed in the same area and none of it was carried to the central government. There are no reports that any surplus funds existed in any area nor that any zakat funds were transferred from one area to another during the life of the Prophet (Khaf, 1999; p. 17). This situation proved that it is an undisputed fact that zakat was collected and distributed by the Islamic state especially in its early period.
The localization of zakat has been applied successfully and distributed efficiently during the prophet’s life. The good governance of zakat institution will enhance the effectiveness of zakat collection and zakat distribution. Could it be possible to implement localization of zakat management in this modern era where ICT and technology is fully operated in all activities? If we agree that zakat management should be localized, which institution should take the responsibility?
The process of localization should be done by local committees according to the hierarchy of existing administration such as district office, penghulu, chief of village, Jawatankuasa Kemajuan dan Keselamatan Kampung (JKKK), the mosque committees and others. Furthermore, the positive side of localization is that the members of the community could have positive voice and will participate and actively involved in the village activities (Alatas et al, 2003) Is the concept of privatization similar with localization?
According to Tanzi (2002), the privatization should be considered as a possible alternative to decentralization for at least some government activities but the big difference between these concepts is that privatization removes the element of subsidy for part of the decision and activity because users must bear the full costs for their private activities. On the other hand, localization is using the element of subsidy because the local institution is lack of funding compare to private institutions.
Zakat management should be localized in terms of collection and distribution of zakat. Proper implementation management in zakat in a particular state will ultimately improve the socio-economic condition of the Muslim society in that state. By localization of zakat management, the gap between zakat institution and zakat recipients will decrease. Localization means decentralization of decision making to the local level and can be pursued through political administrative and fiscal decentralization.
Localization has many advantages in management, social, politic and economic. The advantages of localization are improving transparency, allocative efficiency, improve inequality, disbursement without delay, trusted amil, disbursement locally, and etc. Zakat institution must put into practice the concept of localization to resolve the problems that arise regarding inefficiency distribution of zakat and etc because it has been practiced since the prophet (pbuh) age.