Malaysia

Philanthropy Overview
Giving and Volunteering

In Malaysian national language, 'philanthropy' translates to 'sukarela' which combines two words, 'suka' and 'rela' meaning liking/loving and willing/sacrificing. So philanthropy essentially means 'love for sacrifice' or sacrificing with love. In fact, Malaysians do sacrifice cash, kind, and time for others and help each other in happiness and misery. Malaysians' kindness and generosity is reflected in their daily lives.
The spirits of 'gotong-royong' (forming impromptu groups to perform tasks for the maintenance and welfare of the village community), and tolong menolong (mutual help, both in urban and rural areas) are still very much evident in community services eg. patrolling and safeguarding the neighborhood from outside threats, preparing feasts for marriage and other social and religious occasions or celebrations. Gotong-royong, originating from the Malays, has been practised since olden days. Thus, lending a hand has been common and manifested during an appeal for assistance or help. This spirit of voluntarism and empathy have been nurtured in Malaysia.

Majority of people in Malaysia are Muslims and follow the Islamic dicta on philanthropy. Islam provides detailed guides on philanthropy. The main form of giving is zakat, literally meaning to purify or justify through alms-giving. The Muslims are required to give in charity to purify their individual assets. There are many forms of this giving. The first and the most important one is zakat ul mal. Any individual with movable and immovable assets (excluding the dwelling unit and items for personal use) valued to more than 85 grams of gold is supposed to pay 2.5% of his/her annual savings in charity.
Zakat is one of the five pillars of Islam, and distributed to eight categories of people or services. Four of which relate to the poor and needy. In Malaysia, zakat collections cover the following areas: zakat al-fitr; zakat on padi; zakat on wealth; zakat on business; zakat on livestocks; zakat on gold and silver. Zakat is given every year without any delay (Nik Mustapha 1987).
In addition to zakat ul mal, ten million out of around twelve million Malaysian Muslims pay zakat ul fitr every year during the Eid ul Fitr, a sum of money equivalent to the price of 2.75 kilograms of the staple food for each member of the family.

The responsibility for the collection of zakat is delegated to a private organization under the aegis of the Islamic Council, and the distribution is exclusively with a separate government department. This procedure is reaping benefits. In 1997, total zakat ul mal collection in Malaysia was 203 million ringgit, and total collection of zakatul fitr was around RM 32 million (US$8.6 million). Total zakat collection in Malaysia increased from 311 million in 2002 to 408 million in 2003

[see: in Malay language at http://www.yadim.com.my/Ekonomi/EkonomiFull.asp?EkonomiID=102] .

Chinese and Indian communities also have been involved in exclusive ethnicity based giving and volunteering. A wide range of Chinese organisations were formed in colonial Malay to work for the welfare, development, and security of their own communities. These organisations included clan organisations, commercial and industrial organisations, cultural organisations, Chinese schools, and some secret societies. In 1888 there were seven secret societies in Penang with around 93 thousand members. There were Indian religious organisations, youth organisations, and guilds.

The members in these organisations used to offer time for others cause and give generously to achieve the objectives of the organisations.

In recent times these exclusive types of organisations and activities still exist. But people are also involved in giving for the benefit of the wider community. Many corporations positively respond to appeals for donations for specific causes by providing cash and/or in-kind donations, and supports. In responding to the call of assistance, professional organizations often perform social obligations in their own ways and means especially through their service area or professionalism. For instance, Malaysian Bar Council operates legal aid services, Malaysia Medical Health Association operates free clinics in rural areas.

References:
T. Silk, 'A comparative study of Nonprofit Legal Systems in Ten Asia Pacific Societies: Findings and Commentary'. In Philanthropy and Law in Asia, Thomas Silk (Ed.). San Francisco: Jossey-Bass Inc, 1999.

Further information:
Ministry of Women, Family and Community Development, Aras 1-6, Blok E, Kompleks Pejabat Kerajaan Bukit Perdana, Jalan Dato' Onn, 50515 Kuala Lumpur. Tel: +603-2693 0095 Fax: +603-2693 4982, Homepage: http://www.kpwkm.gov.my (in English and Malay); E-mail: info@kpwkm.gov.my
Malaysian Humanitarian Foundation Casa Humanitarian, 3, Jalan Robson, off Jalan Syed Putra, Bukit Robson, 50460, Kuala Lumpur.

Tel: +603 2272 2020 Fax:+603 2272 2002
Islamic Da'wah Foundation Malaysia (YADIM), Jalan Perdana 50480, Kuala Lumpur.

Tel : +603-22746077 Fax : +603-22732330.

Homepage: http://www.yadim.com.my/Ekonomi/EkonomiFull.asp?EkonomiID=102

All Malaysia Info. Homepage: http://allmalaysia.info/msiaknow/community/
M. Weiss, 'Malaysian NGOs: History, Legal Framework, and Characteristics', Paper presented at the First Asian Third Sector Research Conference, Bangkok, 20-22 Nov 1999.
S. Hasan, Principles and Practices of Philanthropy in Islam: Potentials for the Third Sector, CACOM Monograph 53, University of Technology, Sydney, 2001.
Yoshiko Wakayama, Introduction. In Philanthropy and Law in Asia, Thomas Silk (Ed.). San Francisco: Jossey-Bass Inc., 1999.
H.G. Lee, Civil Society in Southeast Asia, Singapore: ISEAS, 2004.

History of Philanthropy
In Malaysian national language, 'philanthropy' translates to 'sukarela' which combines two words, 'suka' and 'rela' meaning liking/loving and willing/sacrificing. So philanthropy essentially means 'love for sacrifice' or sacrificing with love. In fact, Malaysians do sacrifice cash, kind, and time for others and help each other in happiness and misery. Malaysians have built up the culture of 'gotong-royong', and emphasize on the goodness of 'Berat sama dipikul, ringan sama dijinjing', which means to work together in time of difficulties to face the major or minor problems. Practically, it is shown during disasters (fire and flood) or some special events (wedding, funeral etc.). Even in modern days, the villagers still very much in need of mutual help. This goodwill for mutual help is very much related to Malaysian strong religious background regardless of their faiths; Islam, Christianity, or Buddhism or Hinduism.

Islam is the national religion of Malaysia. However, everyone is allowed to have their own religion and practice their religion in their own way as long as it does not contradict with national laws or threaten national security. Historically people have followed Islamic tenets related to philanthropy. The Muslims provide different types of zakat: zakat al-fitr; zakat on padi; zakat on wealth; zakat on business; zakat on livestock; zakat on gold and silver. (Nik Mustapha 1987). Zakat is distributed among eight categories of people or services. Four of which relate to the poor and needy.

Bakr (2001) opines that the advent of Islam in Malaysia was also associated with activities of voluntary organisations with high levels of autonomy in spite of pervasive influence of the Malay sultanate. It was possible exclusively for the existence of moral and material backing of the surrounding Muslim communities and their awqaf. Awqaf, Muslim Law based foundations, thus have been very helpful in the growth of the third sector in Malaysia.

Other religions such as Buddhism, Taoism, Confucianism, and traditional belief is mainly practiced by Chinese community. Buddhism emphasises on the Eight-Fold Path which includes: right understanding, right thought, right speech, right action, right livelihood, right effort, right mindfulness, and right concentration. The Eight-Fold Path is thus made up of three components: wisdom (anna), discipline (samadhi), and conduct (sila). All these religions and the Chinese beliefs concentrate on 'doing-good' for it returns 'good'. The Christian view holds that universal love is the will of God for man and hence the duty of man. This logically excludes intolerance and discrimination.
Christian social activists seek to establish forms of human relationship and of social and economic functioning which values freedom, collective responsibility, equality and universality.
The formal youth organisations began in the 1900s focussing on social and personality building, discipline and morality. St. John Ambulance was the first to be set up in 1908, followed by Scouts and Girl Guide in 1910 and 1917 respectively.

References:
Cheu, H.T. 2000. Buddhism in Chinese Culture. Malaysia: Pelanduk Publications.
Historical and socio-political background to the practice of Zakat in Malaysia. In Zakat and Rural Development in Malaysia.
Knight, F. & Merriam, T. W. 1998. The Economic Order and Religion. London: Routledge.
Nik Mustapha B. Nik Hassan.1987. Zakat in Malaysia - Present and Future Status. Journal of Islamic Economics, Vol 1(1), pg 47-75.
Syed Othman Alhabshi. 'Islamic Values: Its Universal Nature and Applicability', in Islamic Values and Management Syed Othman Alhabshi & Aidit Hj Ghazali. Kuala Lumpur: IKIM, 1994
Azimi Hamzah et al., Persatuan belia di Malaysia: Perkembangan & penyerlahan potensi. Serdang: UPM, 2002.(available in Malay)

Further Information:
Rt. Hon. Dato' Seri Dr. Mohamad Khir Toyo, President of Malaysian Youth Council (since 2002), Wisma MBM, Jalan Tasik Permaisuri 2, Bandar Tun Razak, 56000 Kuala Lumpur. Tel: +603 9173 2761, 2763 Fax: +603 9173 2759 Email: mbm@belia.org.my, presiden@belia.org.my Homepage: http://www.belia.org.my
Hon. Dato' Saifuddin Abdullah, Founder and Chairman of Malaysian Youth Academy (Akademi Belia Malaysia); President of Malaysian Youth Council (till 2002); Member of NITC, National Youth Consultative Council. Email: saifuddin@makmal.com
Hon. Datuk Kim Chan @ Lee Kim Yeok, President, Girl Guides Association Malaysia - Sabah Branch, Voluntary Bodies Complex, Mile 2.5 Tuaran Road, 88100 Kota Kinabalu, Sabah. Tel: +6088 225845 Fax: +6088 223849 Email: tackkim2000@yahoo.com
Hon. Tan Ah Eng MP, National Vice Chairman of Wanita, Malaysian Chinese Association (MCA); Johor State Chairman of Wanita MCA, Pusat Khidmat 8-A Jalan Nakhoda 7, Taman Tun Aminah, 81300 Skudai, Johor. Tel/Fax: +607 5591909.

Philanthropy and the Third Sector: Policy Environment
Interested people are allowed to form any forms of organization subject to approval and monitoring by the government through different agencies. Formal organizations need to be registered. Self sponsored non-government and non-profit organizations addressing the current issues are much encouraged by the government.

The Malaysian government is interested in the progress of the country through education and advancement in science and technology, but cannot do everything. Thus it encourages and financially supports the establishment of nonprofit educational institutions at higher level. There are 17 non-profit public universities throughout Malaysia which receive large grants from the government to subsidize their operating costs. The government, in cooperation with the nonprofit institutions, is thus trying to offer affordable higher education to every citizen.
The government's encouragement and support for the establishment of nonprofit organisations in dealing with social and economic problems of the society, especially for the poor is evident from the funds made available by the government for such organisations. The government's concerns regarding the progress of civil society has increased consistently over the years. In the recent 8th Malaysian Plan (MP8), funds are allocated for the third sector.

RM100 million were allocated under the MP8 for innovations involving youth. In the budget 2002, a total of RM312.4 million is allocated to eradicate drugs (of which RM282,500 are allocated for two organisations- PEMADAM and PENGASIH). Budget 2002 also allocated RM7.7 million to combat social ills through the National Social Services Programs, the Social Action Master Plan, PINTAS besides an allocation of RM81.8 million for Rakan Muda Programme under the Ministry of Youth and Sports.

In budget 2006, RM600 million is allocated for National Service Training Programme. National Service Training Programme was first implemented February 2004 under National Service Act 2003. It is meant to develop patriotism, racial unity, national integration and good character for young Malaysians through its four modules - military training, civics education, character-building and community service. The programme has involved 85,000 youth in 2004, 65,000 in 2005 and expected to train another 95,000 youth from all races in 2006.

The government encourages philanthropy and has undertaken measures, among others through tax laws, to promote it. A person can claim income tax rebates on the amount of money paid as zakat. The Malaysian tax act suggests that, "a rebate shall be granted for a year of assessment for any zakat, zakat ul fitr or any other Islamic religious dues payment of which is obligatory and which are paid in the basis year for that year of assessment to, and evidenced by a receipt issued by, an appropriate religious authority established under any written law" (Government of Malaysia, 1967: Article 6A(3). The zakat has to be paid within the collection year and to the authorised collection agencies to be eligible for tax rebate. The government also has ensured a better collection of zakat funds by providing the responsibility of its collection to a private professional organisation.

In enhancing social welfare, various relevant Acts have been enforced and improvised over time. List of Acts for the relevant areas can be found at http://www.jkm.gov.my/akta.htm and http://www.jkm.gov.my/b_pa.htm
The government wants to ensure strict control over the purpose and activities of the nonprofit organisations.

The Section 5(1) of the Societies Act 1966 empowers the Minister with absolute discretion to declare unlawful any society or branch which in his opinion, is used for purposes prejudicial to or incompatible with the interest of the security, public order or morality of Malaysia. In August 2003, the government launched the National Social Policy to enhance social development, to realise a progressive and stable Malaysian society from the social, economic and technological aspects
Only Malaysian citizens are allowed to become members of a 'society'. Malaysian permanent residents are not eligible for membership except for a limited type of society. Some applications for registration are subject to the approval of the relevant ministry and cannot be approved by the Registrar of Societies.
For example, international organisations, religious organisations, human rights organisations required to have the approval of the Home Ministry. Charitable organisations must have the approval from the Minister of Women, Family and Community Development. With the enactment of the Sports Development Act, sports organisations, however, no longer seek registration under the Societies Act but register under the Sports Development Act.
The Memorandum and Articles of Association (M&A) cannot be amended without the consent of the Minister.

References:
Asian Institute for Development Communication (Aidcom), (1999). Directory of Development-Based Non-Profit Organisations in Malaysia. Kuala Lumpur: Dynamic Business Press (M) Sdn Bhd
Cho, Kah Sin and Ismail Muhd Salleh, ed. (1992). Caring Society: Emerging Issues and Future Directions. Kuala Lumpur: Institute of Strategic and International Studies (ISIS) Malaysia.
Hasan, S. (2001). Principles and Practices of Philanthropy in Islam: Potentials for the Third Sector, CACOM Monograph 53, University of Technology, Sydney.
Malaysia 2000. Malaysia Official Yearbook 2000. Kuala Lumpur: Department of information Malaysia. (English and Malay).
Malaysia 2004. Malaysia Official Yearbook 2004. Kuala Lumpur: Department of Information Services Malaysia. (English and Malay).
Mary George, 'An Overview Of Issues In Charity Litigation In Malaysia', The International Journal Of Not-For-Profit Law (http://www.icnl.org/journal/vol4iss1/george.htm), 4:1, 2001).

Further information:
Economic Planning Unit, Prime Minister's Department, Block B5 & Block B6, Federal Government Administrative Centre, 62502 Putrajaya Tel : +603 88883333 Fax : +603 88883755 Hompage: http://www.epu.jpm.my/
T. Murugiah, National Youth Chief, People's Progressive Party, 12 Silibin Drive, 30100 Ipoh, Perak. Tel: +605 2546904,7916 Fax: +605 2543661. Email: t_murugiah@yahoo.com
Ketua Pengarah Jabatan Latihan Khidmat Negara, Aras 8, Menara TH Selborn, 153, Jalan Tun Razak, 50400 Kuala Lumpur. Tel: +603 26873400 Faks: +603 26873434 Hotline: +603 26813446 Email: knegara@mod.gov.my Homepage:http://www.khidmatnegara.gov.my/
Hon. Dato' Dr. Nordin Kardi, Vice Chancellor, Universiti Utara Malaysia, 06010 UUM Sintok, Kedah. Tel: +604 9283001, 3003, 3004, 3006 Fax No: +604 9283019, 3016 Email: nordinkardi@uum.edu.my Formerly was the Director-General of National Civics Bureau, chairing the Curriculum Gearing Committee; and Curriculum Committee of National Service Programme [Hon. Dato' Saifuddin Abdullah (email: saifuddin@makmal.com), Janice Nga (email: janicenga@yahoo.com) were members to the said committees].

Third Sector Legal Environment: Taxation
As the third sector emerged and played important roles in community, government pledged its commitment to encourage its growth. Government has transformed the notation into action through its tools - the fiscal and monetary policies.
Malaysian government through its Lembaga Hasil Dalam Negeri (LHDN) or Inland Revenue Department (taxation board) lists organizations, clubs, funds and foundations, trusts, and associations etc every year to ensure the donations made to the organizations listed were tax exempted. The list is released and sent to all branches of the taxation department in July every year. The latest list of organizations for tax exemption (effective from 1st January till 31st December 2000) shows a list of 56 organizations in various fields of activity. Donation to these organisations are tax deductible.

However, beside the list that enabled an automatic tax relief, special requests from organizations that wish to have fundraising can request for tax exemption from the authority according to Sub Section 44(6) of the Taxation Act 1967. It is considered and decided on case-by-case basis. It is mentioned that gifts made to the Government, State Government, local authority or a charity are exempt from income tax (http://www.hasilnet.org.my/english/eng_NO2_1_3.asp) However, several requirements or steps have to be followed in order to get the approval as shown in the guideline (Ref. No.: LHDN.01/35/42/51/179) that provide comprehensive procedures in achieving the purpose. http://www.hasilnet.org.my/cP/upload/InfoTax/garis_panduan_eng.pdf

According to the Sub Section 44(6) of the Taxation Act 1967, any institutions, organizations or trust established in Malaysia for non profit making can be considered for such tax exemption. These institutions consist of hospital, public institutions or charity institutions; universities or other educational institutions; public authority or society that carry up research and/or activities to find the causes of diseases, its preventions and healings; institutions involved in socio-economic research; and vocational & technical training institutions.

The following types of organisations and activities can ask for tax exemption: organisations and/or trust inclusive of public or private fund, established specially for constructing, extending or upgrading educational institutions in Malaysia but excluding sports and recreation complex, parking space etc; or scholarship/gift granted for individual for education purposes or research in an institution.

In addition, construction of school and religious buildings (mosques, temples or churches) can also be exempted from taxes with a special request, if applied for.

The formal application made by the president or the secretary of the organizations or the building committee (if constructing a new building) can be forwarded to Assistant Director General of LHDN.