The Role of Islamic Socio Economic Institutions in Economic Development: Malaysia Case

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Fahd Mohammed Al-shaghdari
Mustika Rahmi
Norsyuhada Zainal


Purpose– The purpose of this paper is to determine the reasons for underdevelopment of community in Malaysia. Furthermore; it explores a new ways to enhance the role of socio economic institutions in order to elevate the Malaysian standard of living. Design/methodology/approach– The paper contends that Islamic micro institutions i.e Zakat, Waqf, and hajj fund have important roles to contribute for furthering socio-economic development of the poor and small (micro) entrepreneurs without charging interest (Riba). The Findings– A centralized zakat payment system is more effective to give significant impact to socio economic development in Malaysia’s underdeveloped community. The other potential alternative is to optimize waqf land which currently based on several studies remain idle/ unutilized.

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