Hofstra Horizons Research

Economics and Ethics in Kelantan, Malaysia

Timothy P. Daniels, Ph.D.,
Associate Professor of Anthropology

Economics and Ethics in Kelantan, Malaysia
Friday morning religious instruction
Photo courtesy of Timothy Daniels

Economics and ethics are often intertwined in cultural schemas in particular social and historical contexts. Max Weber’s classic The Protestant Ethic and the Spirit of Capitalism helps us understand that economic motives often gain their force from religious ethics. My recent work attempts to extend this insight into an examination of the economic policies of the leaders of Kelantan, one of the 13 states of the Federation of Malaysia. The Islamic Party of Malaysia (PAS, Parti Islam SeMalaysia), winning successive state elections since 1990, has controlled the state government of Kelantan for more than 20 years. Focusing on the last two decades, this paper explores these leaders’ attempts to circulate Islamic ethics within the economy of Kelantan. Similar to other contemporary governments, the Kelantan state government collects and redistributes revenues and initiates economic projects. Building upon the insights of cultural and economic anthropologists about the cultural patterning of economic motives, I avoid taking the motives of wealth accumulation, profit maximization, and corporate privilege for granted and instead look toward local cultural ideas and motives (Sapir 1951: 557; Gudeman 1986). In the context of ongoing economic transformation and crises, our understanding of these cultural schemas, varying as they do from our own, can help us reflect upon ourselves and the ethics embedded in our economy.

Developing with religious values

Kelantan state officials
draw upon textually
based Islamic belief in an
absolutely sovereign
God who decides the
ultimate cosmic fate
of all his creatures.

“Development needs to proceed because this world was made by Allah for humans, not for angels or other creatures. However, development which is spiritually empty is like a large tree with hideous and rotten roots. Even the abundant leaves will not cover it for long; they will very easily fall flat” (Nik Aziz, 2010, my translation). These are the words of Tuan Guru Nik Abdul Aziz, chief minister of the state of Kelantan, at an event commemorating the 20 years that the PAS has controlled the state government. He went on to state that economic development should balance material and spiritual concerns, ever mindful that this world is connected to the hereafter. As this statement from the chief executive of Kelantan informs us, PAS Islamic scholars that lead the party and state have tried to implement a pious form of development.

They have created an Islamic ethical schema by combining core religious doctrines with several related notions and populist ideological formulations of an activist Islamic party committed to the establishment of a national Islamic state with extensive implementation of sharia (religious values and norms). Kelantan state officials draw upon textually based Islamic belief in an absolutely sovereign God who decides the ultimate cosmic fate of all his creatures. Individuals do not know whether they will be saved or condemned to punishment in the hereafter. However, this ultimate Judgment depends upon the balance of good and bad deeds over the course of one’s lifetime. God will cast people into different levels of heaven and hell corresponding to different gradations of good deeds and minor and major sins. Psychological tension generated by the uncertainty of a works-based salvation drives pious Muslims to perform meritorious acts and avoid sinful acts. The Kelantan Islamic scholar-administrators connected these core Islamic beliefs with their interpretations of Islamic notionsubudiyyah, mas’uliyyah, and itqan (UMI) — related to proper belief, action, and ethics — framing them as the basis of their state administration. I found these ideas widely promulgated in government newsletters and bulletins. The concept ubudiyyah is connected to aqidah, or religious belief, and reminds the administrators of their position as servants of Allah. Their main goal of administering the state should be to make it a form of ibadah, or worship. The concept mas’uliyya is connected to amal (good works) and sharia, directing them to be cognizant of the responsibility bestowed upon them by Allah and the goals of acting as just and responsible authorities, as khalifah (caliph). Finally, the concept itqan is connected to piety and ethics, reminding civil servants to perform quality work, with skill, concentration, and sincerity (Kerajaan Negeri Kelantan, 2007:23). State government civil servants and employees in state agencies I interviewed expressed strong commitment to UMI. They have attempted to infuse this ethical schema into consumption and distribution practices.

Soon after regaining control of Kelantan in 1990, PAS leaders implemented policies aimed at cleaning up “sinful” activities (maksiat) in the entertainment service sector. Although there were many Islamic schools and institutions, there were also many centers of “sinful” activities. Many of my local interlocutors informed me that before PAS came to power, there was an area in the middle of town with numerous nightclubs, billiard halls, movie theaters, gambling dens and prostitution. They report that PAS immediately, and triumphantly in their opinion, eliminated these venues from the local urban landscape. Nowadays, one can walk through the streets of Kota Bharu under the piercing morning and midday heat, passing rows of commercial enterprises, including McDonald’s, Kentucky Fried Chicken and A&W outlets, the Parkson Mall and Siti Khadijah traditional market, without encountering any of these entertainment venues. State authorities refused to issue licenses for businesses engaging in these sorts of entertainment activities. The sale of alcohol in public places, including hotels and restaurants, was restricted. Some limited circulation of alcoholic beverages is allowed in the Chinese non-Muslim community. Of course, there is a gap between the state-promoted pious ideals and local people’s everyday practices. Although I discovered occasional reports of “sinful” behaviors, most of the local people I observed and interviewed in Kota Bharu expressed and embodied a strong sense of religiosity.

In addition, state government officials promoted the reduction of “wasteful” consumption and tried to embody this in their practices. Government officials accepted lower salaries and avoided extravagant events. In contrast to the forms of “proper” Malay middle class consumption promoted by the United Malays National Organization.

(UMNO)-led federal government, PAS leaders advocated more modest and restrained consumption. These moderate values appear to resonate with many middle class residents in Kuala Lumpur (see Fischer, 2008:90). From this pious Muslim perspective, “wasteful” consumption and use of God-gifted resources is associated with Syaitan and is therefore unethical behavior. My local interlocutors often referred to the widely adored Kelantan Chief Minister Tuan Guru Nik Aziz as an example of “proper” Islamic consumption. Despite having been chief minister for 20 years, he still lives in the same village house he lived in before he took office. His long-term residence in a village house, a popular symbol of continuity with the Malay rural past, casts him as a common man rather than part of the “New Malay” elite. They also proudly note that he still wears baju melayu, traditional Malay Muslim attire, with a turban like he did years ago, in stark contrast to the exquisite business suits and dress shirts of UMNO leaders. The Kelantan state government’s Developing With Islam project, anti-“sinful” activities campaign, and exemplary consumption practices, remind and motivate people to live according to the straight path predicated upon sharia rules and principles. Furthermore, the public absence of maksiat, such as alcohol consumption, prostitution and gambling, and the simple, corruption-free lifestyle of the Kelantan chief minister are signs of the Islamic path to salvation.

Islamic ethical schema in distribution and redistribution

If funds originated from
interest, gambling or
alcohol, for instance, they
were separated from funds
made via “morally clean”
sources (halal), such as
agriculture and trade in
permitted products.

Interest-free banking was a national Muslim concern prior to the PAS electoral victory in 1990. Malaysian Muslim scholars shared a consensus that paying or receiving interest was prohibited according to sharia. The UMNO-led federal government had already embraced interest-free banking as part of its Islamization program, establishing Malaysia’s first Islamic bank, the Bank Islam Malaysia Berhad, in 1983. Nevertheless, PAS, galvanized with the UMI notions, propelled a further Islamization of banking institutions. State leaders refused to store government funds in banks without interest-free counters, eventually spurring most banks to offer such services. They also established programs offering interest-free loans to civil servants and students.

Furthermore, PAS, unlike UMNO, established the principle of separating state funds into halal (permitted) and non-halal accounts based on the sources of the funds. If funds originated from interest, gambling or alcohol, for instance, they were separated from funds made via “morally clean” sources (halal), such as agriculture and trade in permitted products. In 1991 the state government established an innovative fund called Tabung Serambi Mekah (TSM), which included money from halal and non-halal or haram (proscribed) sources, held in separate accounts used for different purposes. PAS ulama explained that this fund provides an opportunity for people with money from haram sources to put it to good use in support of public works. According to the deputy chief minister’s records, only halal funds were distributed to needy segments of the population — the poor and victims of natural disasters — whereas funds from haramsources were used for infrastructural projects or building non-Muslim religious institutions. Through October 2010, more than RM 2.5 million was spent from the TSM fund on fixing houses, medical care, help for fire and flood victims, and other forms of assistance for the fiscal year.

Figure 1

Kota Bharu street Vendors

In a fashion similar to that witnessed with the popular TSM fund, the state government has collected and centralized revenues, sometimes within the Kelantan Chief Minister’s Corporation, and then redistributed them to particular segments of the population. The state government collects funds from land, water and forest concession taxes, leases, permits, service payments, low-cost housing rents, business profits, repayment of loans and so forth. Officials and civil servants also encourage people who can afford to donate money to the state to do so. Cik Wan Azhar, a manager of a state agency, said that one of their main ideas in Kelantan is “to make money to help others.” The idea of ubudiyyah and mas’uliyya comes in, he stated, “when Tuan Guru agreed to pay people higher wages, but these people must pay zakat and must distribute the money, and these people with high pay brackets must remember that not all the money belongs to you. Some of it belongs to others.” The government emphasizes redistributing funds to the needy, including the elderly, disabled, women and the poor, and to religious institutions, such as Islamic schools and colleges. One popular program is the Skim Takaful Kifaalah, which distributes money to the elderly population, aged 60 and above, from all ethnic and religious backgrounds. Another is the Rumah Dhuafat program, which builds homes for those who are poor, infirm and orang kurang upaya (OKU), physically challenged. State funds are also redistributed to agricultural and livestock farmers in the form of subsidies. Notably, funds for industrial development are absent from the budget. There are also several state programs that provide education grants and scholarships to poor students. Thus, the state leaders integrate a pious Islamic ethical schema — mindful of the hereafter and performing good works — motivating responsible acts of justice for the needy and weak into redistribution processes. This serves to make Kelantan into a sort of “Islamic social welfare state.” Moreover, this friendly and helpful style of PAS leaders endears them with the rural poor and strengthens them against the constant attempts by UMNO to regain control of the state government.

The Islamic social welfare character of the Kelantan state is also evident in the framing, discursive presentation, and pattern of redistribution of its 2011 state budget. The budget was labeled the “compassionate” and “friendly” budget, and framed as emerging from the cooperation between the state government, donors and the people. Wan Nik, political secretary of the Kelantan chief minister, explained in an interview that the budget is called “compassionate” and “friendly” because it focuses upon improving the living conditions of the needy, who are the majority of people in Kelantan. He added that their use of the Kelantanese term cakna means “that the government and people as permanent friends work together to develop.” Likewise, Wan Nik writes in the Harakah (22-25, November 2010) that the “compassionate budget implements the act of sharing and giving, which will raise the future effectiveness of distribution efforts.”

The state budget totals just over RM 464 million for 2011. Out of that total, more than RM 80 million – 17.30 percent – is allocated for “services and support.” In addition, approximately RM 57 million or 71 percent of the “services and support” funds are distributed to the poor, orang asli (indigenous), women, youth, elderly, orphans, disabled individuals, and farmers, including RM 12.691 million for the Department of Social Services, RM 5 million for the Skim Kifaalah, RM 4.7 million for Rumah Dhuafaat, and RM 1.5 million in rice to poor families. Around the same amount, RM 61 million, is allocated to the Yayasan Islam Kelantan and to developing Islamic religious education (Kerajaan Negeri Kelantan, 2010; Harakah 22-25, November 2010).

Kelantan government officials present this “compassionate and friendly budget” as an implementation of the amanah, or trust the government holds for the people, and an expression of takwah (piety), ever mindful of blessings from God. Wan Nik (ibid) states that “the values of ubudiah and mas’uliah are based in the command from Allah, The Glorified and Most High,” and quotes a Malay interpretation of Qur’anic verse 58 of Surah An-Nisãa:

Allah doth command you
To render back your Trusts
To those to whom they are due;
And when ye judge
Between people
That ye judge with justice:
Verily how excellent
Is the teaching which He giveth you!
For Allah is He Who heareth
And seeth all things.

Wan Nik, providing a further interpretation, states that it “therefore follows, the emphasis upon material advancement within human development is an important mission of this budget which originates from the deep conviction of obtaining the abundance of blessings from Allah.” Moreover, he offers interpretations of Surah Al-A’rãf verse 96 and Surah Sabã verse 39 and relates them to fulfilling the role of a religious administration and the gratitude of all layers of society for receiving resources from Allah. In conclusion, he notes that this budget “demonstrates that state development involves material and spiritual needs in a comprehensive manner” and strengthens the state principle of “Developing With Islam.” For Kelantan state leaders, this “compassionate” budget manifests their responsibility and accountability to the people in distributing resources in a just and equitable manner. In addition, their support for material needs and religious institutions expresses a pious worldly consciousness, while their conscious obedience to divine directives embodies a pious Islamic ethical schema.

Infusing religious and/or secular humanist ethics in the United States

Thus, the state leaders
integrate a pious Islamic
ethical schema — mindful
of the hereafter and
performing good works —
motivating responsible
acts of justice for the
needy and weak into
redistribution processes.

The PAS-led Kelantan state government has broadly instilled the ethical cultural schema, notions of ubudiyya, masuliyya, and itqan, and the pious worldly consciousness they constitute into consumption and distribution processes. They have contributed to the explosion of interest-free banking and provided people with financial avenues to aid the general welfare while ridding themselves of haram money. Through innovative funds and “compassionate” state budgets, they have managed, with limited revenues, to construct a mode of redistribution of resources to the needy segments of the population. This wide-ranging implantation of their pious Islamic ethical schema indicates that religious humanist ethics is stimulating commercial development and a more equitable distribution of resources.

Finally, the Kelantan state government’s mode of redistribution offers a significant and viable alternative to neoliberal capitalist policies that are dominant in other parts of Malaysia and the world. For instance, in the United States, after the government bailed out banks in 2007-2008 and prolonged tax breaks for the wealthiest Americans in 2010, workers’ collective bargaining rights came under assault and national budgets were proposed that threatened to eliminate many programs for needy segments of the population. The wealthiest echelon of U.S. society, the “super citizens” of neoliberal capitalism, would do well to be reminded of what Tuan Guru Nik Aziz said to the highly paid in Kelantan, that is, that some of the wealth they have accumulated is not for them, it is for others. This example, consonant with some current secular humanist discourses in the United States, holds some potential for correcting the course of economic turmoil in American society. U.S. students, workers and homeowners could really use interestfree loans and “friendly” national budgets that prioritize common people. Given the religious diversity, history of secularism, and deep split between conservative and liberal religious schemas in U.S. society, the ethical values we so sorely need to resuscitate our economy are most likely to be found in secular humanism.


Fischer, Johan. 2008. Proper Islamic Consumption: Shopping among the Malays in Modern Malaysia. Copenhagen: Nordic Institute of Asian Studies Press.

Gudeman, Stephen. 1986. Economics as Culture: Models and Metaphors of Livelihood. London: Routledge and Kegan Paul.

Harakah. 2010. Bajet penyayang harapan baru rakyat Kelantan. 22-25 November.

Kelantan State Economic Planning Unit. 2010. Kelantan Facts and Figures 2008/2009. Kota Bharu: Kelantan State Secretariat.

Kerajaan Negeri Kelantan. 2007. Kelantan Menerajui Perubahan. Kota Bahru: Urusetia Penerangan Kerajaan Negeri Kelantan.

Kerajaan Negeri Kelantan. 2010. Taklimat Bajet Tahun 2011.

Nik Aziz. 2010. Rebah, Bangkit dan Terus Bangkit. Kota Bharu: Unit Komunikasi Menteri Besar (UKMB Resources).

Sapir, Edward. 1951. The Unconscious Patterning of Behavior in Society. In Selected Writings of Edward Sapir, ed. David Mandelbaum, pp. 544-559. Berkeley, CA: University of California Press.

Weber, Max. 1930. The Protestant Ethic and the Spirit of Capitalism. Translated by Talcott Parsons. London: Harper Collins Academic.

Hofstra in the News

More In The News
Hofviews - See More Photos

Hofstra Weather

° F
Heat Index ° F / Wind Chill ° F
Humidity %
Wind mph / Direction °
Rain in
See More from the Project WX Weather Stations

Recent Faculty News