Poverty Measurement in Malaysian Zakat Institutions: A Theoretical Survey

Economists agreed that the concept of poverty cannot be defined objectively. However, poverty in Malaysia is commonly conceptualized from the perspective of monetary or income. This is a narrow view since it does not consider other vital aspects of poverty such as vulnerability and social exclusion. It is now recognized that more attention must be paid to other factors and processes which are either constraining or enhancing the poor‘s ability to make a living in an economically, ecologically, and socially sustainable manner. This paper outlines the poverty measurement used by zakat institutions in Malaysia. Besides discussing the present had al- kifayah method, the paper presents the formulation of a multidimensional Islamic Poverty Index (IPI). The proposed multidimensional IPI in nature comprises of monetary and non-monetary indicators and is expected to capture a more realistic poverty group. Furthermore, the IPI is envisaged to reflect on the multidimensional phenomenon of poverty in a more holistic way and is expected to have an impact on zakat organizations as it gives a new perspective in measuring poverty.