ASSIGNMENT 1

Baitul Mal in Rasulullah's period and Baitul Mal in Malaysia

Islamic Economy

( FEC10403)

Prepared For:
Madam Nur Shahidatul Akmar Binti Mahyedin

Prepared By:

Amirah Hani Najma Binti Hamnor

012021072311
Table of contents

1.0 What does Islamic Economys Imply?………………………………………………3-4

2.0 Definition of Bayt Al Mal …………………………………………………………….4-5

3.0 Bayt Al MaL History during the Prophet’s time……………………………………5-6

4.0 Source of Bayt Al Mal ………………………………………………………………..6-7

5.0. Expenses of Bayt al-mal …………………………………………………………....7-8

6.0 Bayt Al Mal 's History and Sources in Malaysia…………………………………..8-9

7.0 Baitul Mal's Importance in Malaysia………………………………………………....9

8.0 Comparison of Baitul Mal in the Time of Rasulullah, Khulafa Al-Rasyidin with Baitul
Mal
Today………………………………………………………………………………………9

9. The impact Of Bayt Al Mal on Muslims today……………………………………10

10.0 Conclusion……………………………………………………………………10-11
What does Islamic economics imply?

Islam considers economics to be an important component of human life since it not

only influences how humans manage their physical requirements, but also their
spiritual matters. As a result, economic activity must be based on religious ideals and
morality for the sake of the world and the hereafter.

Human al-falah is defined as the management of the earth's resources based on

collaboration in Islamic economics. On God's planet, resource management is infinite
and will never be exhausted. The usage of these resources is a right that all humans
have. Aside from that, Islamic economics is defined as the study of natural resources
with the goal of bringing human happiness and helping them to fulfil their obligations
to Allah SWT as well as society as a whole. Islamic economics can also be
characterised as a social science that studies economic issues in compliance with
Shariah.

The following are some examples of Islamic figures' descriptions of "Islamic

economics."

1) In the words of Muhammad Al-Mubarak

"Islamic economics is a collection of approaches relating to property, charity, material

and spiritual production, consumption, and distribution, all of which are based on
property rights established from the Qur'an and the Sunnah."

2) In the word of Muhammad Abdullah Ar-Arabi

"Islamic economics is the basis," says Muhammad Abdullah Ar-Arabi, "general

economic principles derived from the Qur'an and Sunnah, and economic development
based on those policies depending on the situation and the time”

To summarise, Islamic economics is a discipline that analyses human actions in

compliance with the Shari'ah's requirements in terms of obtaining, using, or managing
natural resources for personal and mutual material and spiritual benefit in order to
achieve Allah SWT's pleasure.Islamic economic characteristics are classified into two
categories general characteristics and particular qualities. Rabbani, ethical, peaceful,
and balanced are the general qualities of Islamic economics. On the other hand,
economic activities are material in nature but patterned with morality in the Al-Quran
and Sunnah, and the interests of people and society are constantly balanced, which
is an unique characteristic of Islamic economics.In the Islamic economic system, there
are three many components such as Zakat, Wakaf, and Infaq. Furthermore, Baitul
Mal is a division within the Islamic

economy.

Definition of Bayt Al Mal

Bayt al-mal (‫ )بيت المال‬is an Arabic term that is translated as "House of money" or
"House of Wealth."

It is now known as the National Treasury or the Ministry of Finance in modern terms.
Bayt Al Mal is a financial agency that is responsible for the maintenance of all public
property as well as the safekeeping of valuables such as gold and silver coins. In a
word, it also acts as a centre for Muslim property investment. Simultaneously, it serves
to build a functioning Islamic bank and to directly trade the property of Muslims on a
cumulative basis. Bayt Al Mal covers all national development efforts, including
economic growth, infrastructure, education, defence, public services, and culture, as
well as development connected to specific worship, such as providing a place to pray
and caring for the welfare of the poor. Obviously againThe term 'bayt mal al-muslimin'
or 'bayt mal-Allah' was used in the early days of Islam to refer to the building or location
where the Islamic state's moveable public properties were stored until they were
distributed for respective purposes, such as war booties, fifth of war spoils, and the
like, and then simply the term 'bayt al-mal' sufficed to understand this meaning.
However, later in the Islamic era, the term 'bayt al-mal' came to refer to the institution
or group that owns the Muslims' public properties (Mawsu'ah Fiqhiyyah, 1986: 8/242).
The term "public properties" refers to property that all Muslims are entitled to, but no
one is named as the owner and these are the 'bayt al-mal' rights. Despite this, 'bayt
al-mal' is today the name of a body or institution rather than a location (al-Mawardi,
213; Abu Ya'la, 235).As a result, bayt al-mal is the authority in control of all the state's
revenue and expenditures, which all Muslims are entitled to. According to the Shari'ah,
every property, be it land, buildings, minerals, money, or products, is available for
Muslims, but none of them is named as the owner, even though the region on which it
is spent is determined. Regardless of whether it is already in bayt al-custody mal's or
not, this type of property is the rightful property of bayt al-mal.

Bayt Al Mal 's History During the Prophet's Time

Bayt Al Mal has a long and illustrious history. Bayt Al Mal, or Islamic financial
institutions, have existed informally from the time of Rasulullah (s.a.w.) and Saidina
Abu Bakar As-Sidiq. However, the Bayt Al Mal in its true sense did not exist at the time
because the state's wealth was still not expanding significantly. At the time, national
income was derived from two sources zakat and property acquired via war, such as
ghanimah, jizyah, and fai. The national income will not be kept for long it will be
distributed to those in need, such as the desperately poor, orphans, and other
vulnerable populations.

During the time of Saidina Umar bin Al-Khattab, the Bayt Al Mal institution was
officially established. During this time, the Islamic authority made numerous
conquests, resulting in a fast expansion of Islamic territory. The collected property
grew so large as a result of this development that it could not be distributed
immediately. Caliph Umar supported Khalid bin Al-suggestion Walid's to establish a
National Treasury based on the Quran and Hadith, as well as the Companions' ijtihad.
The Diwan was the name given to the Treasury in its early phases. The Bayt Al Mal l
Institution had risen so quickly during the time of the Umayyads (41-132H). Islam has
expanded its sphere of influence to include Africa, Rome, and Constantinople. At the
moment, the most important source of state revenue is Kharaj, as well as Zakat,
Ghanimah, Fai, and Jizyah, were all practised at the period.

During the Abbasiah era (132-655H), the capital of Islamic rule was relocated to
Baghdad, which is a strategically significant location for trade between East and West.
The Bayt Al Mal institution's income has grown many times as a result of this migration.
The battle for political dominance between Al-Ma'mun and Al-Amin was the trigger for
the Bayt Al Mal institution's demise. Under Al-leadership, Ma'mun's the Bayt Al Mal
institution could not function efficiently or in an orderly manner. When the Islamic State
was conquered by the West after the Crusades 1096-1250M, the Bayt Al Mal
Institution ceased to function in the genuine sense of creating the economy and
constructing the Muslims' infrastructure. Its role is becoming more limited, with zakat
fitrah, zakat harta, and wakaf being the only things it collects and distributes.

Sources of Bayt Al Mal

As we all know, Baitul Mal is a property residence. Do we know where the property
in Bayt Al Mal comes from? Community property, state property, and public property
are the three main sources in Bayt Al Mal. Property from zakat fitrah, property zakat,
alms, and waqf are all examples of community property. Property gained from the
wealthy and distributed to the poor is known as community property. Following that,
Ghanimah and Fai', taxes such as Kharaj, jizyah, and usury, riches, or property with
no successors, are all considered state property. Property obtained from mining,
industry, and business, as well as agriculture and other sources, is considered public
property.

Zakat

Zakat is the first source of baitulmal. Zakat is divided into two types zakat fitrah and
zakat harta. All Muslims must pay zakat fitrah, while Muslims must pay zakat harta on
income like as gold, silver, agricultural products, livestock products, and so on. When
there is sufficient revenue and nisab, property zakat is paid. Zakat is normally only
given to those who are qualified for it. The surplus from this land is stored in the
baitulmal for the state's development.

Jizyah

It is a tax imposed on zimmi non-Muslims who live in Islamic countries. This charge
is imposed in return for helping and preserving security, as well as safeguarding them
from the adversary. Jizyah is only imposed on people who are physically and
intellectually fit, have reached puberty, are capable, and are not religious, such as
priests or pastors. Jizyah is further categorised into two types.First jizyah at a rate
determined by mutual agreement and jizyah at a rate determined by the Islamic
government. Those who refuse to pay Jizyah will be severely punished. Prophet
Muhammad s.a.w recommended a fixed rate of payment of one dirham per head.

Ghanimah and Al Fai’

Ghanimah is non-Muslim property that Muslims have taken by force and victory. The
central authority of Medina received a portion of the property, while the rest was
divided among soldiers fighting in the war.Al-Fay, on the other hand, is enemy property
that has been taken without fighting. The adversary, for example, abandoned their
land, and the property were considered al-fay.The majority of scholars believe that the
property of fay is not divided among the war members, but rather that everything is
turned over to fi sabilillah. An example of Ghanimah being used is during the Badr war.
If Muslims are attacked by opponents who want to prevent Islam from spreading, they
must engage in jihad, or religious warfare. In 623 A.D., Prophet Muhammad s.a.w. led
the Muslim army against the Quraysh army. The Battle of Badr was won by the Muslim
army of 313 men, who defeated the Quraysh army of 1000 men. It was the first
triumph, and weapons, 150 camels, ten horses, leather mats, and clothing were
among the loot.

Usyr

Usyr is a commercial tax imposed on Muslim and non-Muslim firms, at differing rates.
The kafir harbi is subject to a ten percent tax. The kafir zimmi, on the other hand, is
5%. Then there's the fact that Muslims are only charged 2.5 percent. Only when the
nisab totals 200 dirhams will this tax be imposed.

Kharaj

Kharaj was first established under the reign of Caliph Umar al-Khattab. Kharaj is a
land tax imposed by Muslims. The land was taken after a war or peacefully, and it is
not shared among warriors, particularly Islamic fighters.

Additional resources

It is a natural property in the belly of the earth that has no heirs, has been left, or whose
owner is unknown.

Expenses of Bayt al-mal

At first the funds should be spent for the defense of the city where it is collect. So
it would be spent to reform its forts at coastal areas; weapons, instruments, etc.
would be bought; salaries of the officials, army and judges of that city would be paid.
If anything remains would be given to the poor, and then if anything remains would
be kept to face the unforeseen circumstances . Ibn Habib also states the same
while says: it has been practicing by the previous Caliphs and Imams that whatever
funds accumulated in bayt al-mal, excluding Zakah, would be spent to safeguard the
Muslim cities and to ensure general wellbeing of the Muslims. So, funds would be
spent on military establishment such as buying weapons and arms, building and
repairing the forts, paying for salaries, ammunitions and supplies of the army, and
the like. Also, it would be spent to ensure public utilities, to construct roads, archways,
bridges, residences, mosques and so on. It would be spent also on the needy, poor
and helpless people

Bayt Al Mal 's History and Sources in Malaysia

The Baitul Mal institution in Malaysia, also known as the Islamic Religious Council
and Malay Customs, is governed by the Malaysian state government. Each state in
Malaysia has a distinct year for the founding of Bayt Al Mal.Kelantan was the first state
to establish Bayt Al Mal. This institution was founded in Kota Bharu in 1915. Several
prominent academics of the time, including Haji Nik Mahmood Bin Nik Ismail and Haji
Muhammad bin Khatib, advised this school. Bayt Al Mal was established in Perlis for
the second time. Initially, this organization's purpose was limited to managing Islamic
religious affairs, but after 15 years, its focus has shifted to improving the state's
economy as well as giving guidance, educating the king's relatives, and overseeing
Muslim welfare. With the passage of time, this function evolves and changes. In
addition, Pahang, which is the fourth state to build this institution, and Negeri
Sembilan, which is the fifth state to do so, are the next two states to do so. These five
states were among the first to reveal the founding of the Bayt Al Mal institution.
Following then, the establishment of this institution has extended throughout Malaysia,
with Perak, Terengganu, Penang, Melaka, Kedah, the Federal Territory, Selangor,
Sabah, and Sarawak leading the way. .Its function is also expanding and improving
for the country's economic gain.

Zakat, fidyah, kaffarah, wakaf, vows, lost property, inherited property, general wills,
and contributions and gifts are all sources of Baitul Mal in Malaysia. Fidyah is a fine
imposed on Muslims with baliqh who break the law, such as the laws of fasting, hajj,
and others. For example, people who fail to observe the required fasting or who miss
alternate fasting shall be subjected to the law of fidyah. The amount of days left
determines the rate of fidyah. Furthermore, wakaf. Waqf is property that has been
withheld or bestowed as a result of the waqf's rights to sales, inheritance, hibah, and
wills. God. Then there's Nazar, which is where Baitul Mal comes from in Malaysia.
Nazar is a person's solemn promise to do or not do something for any reason
sanctioned by syarak. Alms can be contributed to Bayt Al Mal if a person takes an
alms vow. The fourth source is luqatah property, which is property that has been
dropped, collected, or lost by its owner and has been discovered by others.
Furthermore, the property left by the deceased who has no heirs who are qualified to
receive it after it has been split according to sharia is the source of the inheritance that
is not inherited. . Wills and charity are also included. Giving and charity are acts of
kindness performed by individuals for the benefit of others. Next, Zakat is the
mandatory transfer of a portion of a Muslim's wealth from a good source to those who
are entitled to it. Finally, donations or gifts to Bayt Al Mal from the agong, sultan, or
royal family.

Baitul Mal's Importance in Malaysia

Baitul Mal plays an important role in Malaysia's education system. In Malaysia, Baitul
Mal assists the less fortunate, particularly the asnaf, so that all citizens, particularly the
young, can receive the best education possible, as they are the ones who will carry on
future generations' progress. BaitulMal assists this group in terms of education by
channelling education assistance, education spending assistance, rental housing
assistance, and so on. Furthermore, the BaitulMal Institution is extremely beneficial to
the country's development and economic development. Which waqf land has been
bought for the purpose of development.

Comparison of Baitul Mal in the Time of Rasulullah, Khulafa Al-Rasyidin with

Baitul Mal Today.

During the khulafa of Al-Rasyidin, Baitul Mal was a treasury for a country Bayt Al Mal
today is the administration and treasury of the country through the ministry of finance
and Baitul Mal in every state in Malaysia.Furthermore, under Al-reign, Rasyidin's this
institution paid the salaries of government officials and army members who served on
a regular or voluntary basis, but this no longer occurs near Bayt Al Mal .Furthermore,
in the past, this institution provided essential necessities for national development and
welfare, as well as adding value from the standpoint of current learning. Finally, today's
Bayt Al Mal administration is more organised and systematic than in the past.

The impact Of Bayt Al Mal on Muslims today

The institution's first effect is that it can reduce poverty in the community by providing
various sorts of help, such as education and livelihood assistance. It can also assist
the poor in going about their daily lives. Bayt Al Mal can then progress and grow a
country's economic activity. Waqf proceeds, for example, can be used to continue
advanced development. This institution can also help to eliminate social issues in the
neighbourhood, such as stealing. Furthermore, this institution has the ability to create
and grow money circulation in the country.

Conclusion

Based on this article's history and analysis, Bayt Al Mal essentially has the right and
potential capacity to manage and govern Islamic wealth or property. Supporting
Islamic law and legal measures could be employed to achieve this purpose.
Government commitment is also required through law enforcement to support and
actualize Baitul-role Mal's as a guarantor and provider of social services to the
community. As a result, empowering the Baitul-Mal is on the table. In keeping with the
rapid development of Islamic finance, the Baitul-mal should not be overlooked in the
economic sector's development. Although it does not cover the historical role of Baitul-
Mal, it can be strengthened and play a beneficial role in establishing economic
community through proactive activity. The success of Baitul-Mal institutions in
Malaysia is not only a supporter of the existing Islamic financial system, but it may also
be a source of pride for Malaysia as a country that can strengthen the whole
comprehensive Islamic financial system to alleviate poverty in the community.

In addition, The study also demonstrated that, bayt al-mal has a great potential
to play a significant role in economic development. Though at present time the
historical role of bayt al-mal is being carried out by all of the Ministry of Finance,
Central Bank, and Treasury of the State, still there is a big room left for bayt
al-mal to contribute. Currently, with the rapid development of Islamic finance,
the bayt al-mal shall be utilized in parallel with the development of the economic
sector. Bayt al-mal can provide microfinance and qard hasan and so forth, along
with its charitable activities. It also can contribute significantly to mobilize Zakah,
sadaqah, waqf and other charitable funds which would enhance the social
development of the community. Bayt al-mal, indeed, can serve as a financial
intermediary between the surplus and deficit units of the society. It also can contribute
to provide public utilities and to construct the general infrastructures of the state.