World’s First Zakat Index Launched by Bursa and Pribumi in Malaysia

KUALA LUMPUR: In a pioneering initiative, Bursa Malaysia and Persatuan Remisier Bumiputera Malaysia (Pribumi) have launched the Pribumi Bursa Malaysia Zakat Index (PBMZI). This innovative Zakat Index is designed to recognize and promote public-listed companies (PLCs) that incorporate corporate zakat practices, thereby boosting their economic contributions. By highlighting these companies, the PBMZI aims to encourage more PLCs to adopt zakat contributions, fostering a more socially responsible corporate environment and enhancing the overall economic impact of zakat payments in Malaysia.
Tan Sri Abdul Wahid Omar, Chairman of Bursa Malaysia, emphasized the significance of this launch. The Zakat Index, the first of its kind globally, acknowledges zakat-paying listed companies and encourages more PLCs to follow suit. Currently, the index includes 27 constituents from diverse sectors such as financial services, utilities, telecommunications, property, plantations, technology, healthcare, transportation, consumer products, and energy.

Comprehensive Screening and Criteria of Zakat Index

The PBMZI tracks the performance of the top 200 companies listed on the Main Market of Bursa Malaysia that meet specific eligibility criteria. These criteria include profitability and the payment of corporate zakat contributions. Companies undergo rigorous screening to ensure they have no significant controversies before being included in the index. The selected PLCs are then weighted within the index based on market capitalization.

Abdul Wahid expressed optimism about the future growth of the index’s constituents, anticipating an increase during the semi-annual reviews in June and December. He noted that the collaboration between Pribumi and Bursa Malaysia on the Zakat Index was driven by their mutual recognition of its potential impact on increasing zakat contributions from companies within the economy.

Enhancing Investment Strategies

The Zakat Index is Bursa Malaysia’s first venture into customized indices, leveraging in-house capabilities to analyze and calculate indices. This initiative expands their ability to provide investors with tools to track specific investment strategies and mandates. The Zakat Index aligns closely with the social pillar of environment, social, and governance (ESG) criteria, resonating with the broader objectives of Maqasid al-Shariah, which promote social justice and economic equity.

Abdul Wahid highlighted that by recognizing profitable companies that fulfill their zakat obligations, the Zakat Index aims to attract socially conscious investors. This could increase market participation and reinforce Malaysia’s status as a global Islamic financial hub.

Significant Economic Contributions

The Zakat Index has already shown significant economic contributions. Zakat contributions from the 27 PLCs currently included in the index totaled RM233 million last year, up from RM197 million in 2022 and RM142 million in 2021. This trend illustrates the growing commitment of companies to their social responsibilities and the positive economic impact of such contributions.

With the introduction of the Pribumi Bursa Malaysia Zakat Index (PBMZI), the integration of zakat into corporate practices is set to become a standard for socially responsible investment. This benchmark not only drives economic growth but also enhances social equity in Malaysia and beyond. By recognizing and promoting public-listed companies that adopt corporate zakat practices, the PBMZI encourages more businesses to contribute to social welfare, thereby strengthening Malaysia’s position as a leader in Islamic finance and socially responsible investing.