Misconception Of Zakat And Distributive Justice In Islam: Case Study Of Zakat Institutions In Malaysia

The COVID-19 pandemic caused a multidimensional crisis in health, economic, social, and lifestyle due to the pandemic. Many people in various countries endure hardships and struggle to make ends meets. Hence, as an Islamic social fund, zakat plays a role in mitigating this problem by assisting communities directly affected by it. This study investigates the role of zakah and addresses the issues related to zakat misconceptions and management by demonstrating the importance of zakat through a variety of evidence undertaken by zakat institutions during the pandemic. This study adopts a qualitative research method by using secondary data and analytical approaches to achieve its objectives. Zakat distribution programmes conducted by all zakat institutions in Malaysia for zakat beneficiaries affected by Covid-19 have been one of the study’s most important findings. This highlights the viability of zakat principles as one of Islam’s distributive justice mechanisms in assisting and alleviating the burden imposed on society, particularly those in the asnaf categories due to the Covid-19 pandemic’. The study is limited to the focus on the zakat mechanism in the context of distribution justice from the Islamic perspective

The potential development of waqf in India post-Covid-19: a SWOT-TOWS analysis

Waqf is an outstanding socio-economic tool of Islam which has played a great role in the history of Islam. India owns a substantial amount of waqf properties in terms of lands, buildings, and other assets. However, the paper argues that waqf has failed to achieve the expectations of Indian Muslim society due to widespread issues in the management and administration of waqf in the country. Waqf requires huge statutory and administrative reforms in India. Many studies have been conducted about the waqf properties and the issues in its administration in India. However, none of them has examined it in terms of SWOT-TOWS analysis. In this study, the SWOT analysis is conducted to uncover the internal strengths, weaknesses, as well as external opportunities and threats of the waqf in India. The TOWS analysis is carried out to cross-match between strengths, weaknesses, opportunities, and threats. Along with that, the study also put a glance at the potential of Indian waqf institutions in dealing with the economic problems of the country post-COVID-19. The study develops strategies that can help the Indian waqf to achieve its potential development and implies that waqf has sufficient strengths and opportunities in India to deliver its desired objectives and help the Indian economy to revive post-COVID-19

An empirical comparison of sustainable and responsible investment sukuk, social impact bonds and conventional bonds

Purpose – The objectives of this paper are two-fold: first, to empirically compare and contrast the salient features of three financial instruments (FIs), namely sustainable and responsible investment (SRI) sukuk, social impact bonds (SIBs) and conventional bonds (CBs) and second, to examine the differences between the perceptions of the investors and the developers on the features of the three FIs. Design/methodology/approach – Using a questionnaire survey, 251 completed and useable responses were received, representing a 42.54% response rate. In examining the differences and similarities in the characteristics of the three FIs, the inferential statistical of frequency and percentage were used. Wilcoxon test and Mann–Whitney tests were conducted to investigate the differences in the salient features of the three FIs and the differences between the investors and developers’ perceptions on the salient features of SRI, SIBs and CBs, respectively. Findings – The results reveal that stakeholders view SRI Sukuk, SIBs and CBs to be statistically significantly different from each other. This shows that stakeholders do not view SRI sukuk as “old wine in a new Shariah compliant bottle” but instead considered different from SIBs and CBs. Furthermore, stakeholders also differentiate between SIBs and CBs. Originality/value – The paper provides empirical evidence that Islamic finance (IF) instrument, represented by SRI sukuk, is viewed as different instruments to conventional tools, represented by SIBs and CBs. First, it debunks the notion that IF is viewed as similar to its conventional counterpart. Second, SIBs are seen as different from CBs, illustrating the distinct categorisation of impact investing instruments. As such, third, the development of SRI sukuk and SIBs can provide diversification to portfolios as it is a unique instrument in the social finance and financial market

Old wine in a shariah-compliant bottle?: an empirical comparison of SRI sukuk, social impact bonds, and conventional bonds

Purpose – The Islamic finance and Socially Responsible Investing (SRI) Industries have grown significantly in recent times with growth rates exceeding the conventional markets. Both industries arguably share similarities in terms of their objectives. Following this, there are ongoing contentions that Islamic finance instruments simply replicate conventional tools. This paper addresses this issue by empirically comparing three instruments: Sustainable and Responsible Investment (SRI) sukuk, Social Impact Bonds (SIBs), and conventional bonds (CB). Design/methodology/approach – The methodology used is a comparative approach in looking into the similarities and differences of the three financial instruments. This is done qualitatively through a critical review of literature and quantitatively through data obtained from a survey conducted towards stakeholders in Malaysia Findings – The qualitative analysis finds that SRI sukuk, SIB, and conventional bonds shares commonalities but also differences. At the same time, the quantitative analyses of the show that generally, stakeholders view SRI Sukuk, SIB, and CB to be statistically significantly different from each other. This shows that stakeholders do not view SRI sukuk as "old wine in a new Shariah-compliant bottle" but instead is considered to be different from its conventional counterparts. Furthermore, stakeholders also differentiate between SIB and CB. Practical implications – The paper provides empirical evidence that Islamic finance instrument, represented by SRI sukuk, is viewed as different instruments to conventional tools, represented by SIB and CB. As such, firstly, it debunks the notion that Islamic finance are viewed as similar to its conventional counterpart. Secondly, SIBs are seen as different from CBs, illustrating the distinct categorisation of impact investing instruments. As such, thirdly, the development of SRI sukuk and SIB can provide diversification to portfolios as it is a unique instrument in the social finance and financial market. Research limitations/implications – The paper is empirical, but the scope is limited to stakeholders in Malaysia. Further empirical studies can be done to other stakeholders around the world. Furthermore, other factors can be put into consideration to enhance the empirical analysis

Achieving the maqasid of Islamic finance through Social Impact Bonds (SIB) and Sustainable and Responsible Investment (SRI) sukuk

This paper looks into the underlying principles of Social Impact Bond (SIB) and Sustainable and Responsible Investment (SRI) sukuk as compared to the values embodied within maqasid al-Shari‘ah and maslahah. Through a critical review of literature related to SIB, SRI sukuk, maqasid al-Shari'ah and maslahah, the paper attempts to delineate the elements embedded within these financial tools from an Islamic perspective. The paper explicates that SIB and SRI sukuk are financial mechanisms that epitomises the ethical and moral framework of the Shari‘ah as their underlying principles are congruent with the concepts within maqasid al-Shari'ah and maslahah. Thus, the SIB and SRI sukuk models should be given more attention by Islamic banks and Islamic financial institutions whose philosophical foundation is built upon the principles of maqasid al-Shari'ah and maslahah

Consideration on refugees’ financial assistances: why humanitarian Sukuk is important?

As the year 2023 approaches, the contemporary world is witnessing the biggest refugee crisis since World War II. As a result of the vast migration of migrants caused by war and genocide, these refugees face famine and loss of human rights which is beyond comprehension. Malaysia is one of the countries that host the largest number of refugees. It has an honourable reputation for allowing them to access the territory of the country and live with a comfortable condition. Europe also gives refugees several privileges. Lately, however, these privileges have gradually diminished during the recent European financial crisis. Nowadays, there are many researchers discovered and written very deeply regarding humanitarian aid instruments inspiring their principles from the conventional economy. However, there is a wide gap in literature review and a few sources regarding humanitarian Sukuk. The aim of this research is to list a different category of humanitarian instruments that aim to assist refugees and meet their needs in the long term period and provide an overview regarding Sukuk and its strength in mitigating the refugees’ crisis in the short and long-run period and also its critical role to boost the economy of Malaysia through refugees side. this research explores the potentials of humanitarian Sukuk in overcoming the refugee crisis in Malaysia. The researchers found that the Sukuk has high potentials to be used as alternative financing in overcoming refugee crisis. It is also a practical instrument in eliminating the refugee crisis. In this study, the researchers proposed certain structures of Sukuk that can be adopted in financing humanitarian aids to overcome the refugee crisis within the Malaysia borders

Understanding potentials of humanitarian sukuk and its contribution towards financial refugee crisis

Purpose – This paper aims to present an alternative to Financing Refugees. The purpose of the paper is the optimization of the concept of the Sukuk tool and its crucial role to mitigate several financial problems generated by the Refugees crisis. Design/ methodology/ approach – Using the existing literature on a humanitarian initiative in Europe and incorporating these contributions into a Malaysian Humanitarian Aid. Several assumptions concerning the structure and operation of the Sukuk are made, descriptively analyzed. Findings – The concept of Sukuk could be used for the operation of an Islamic social finance instrument dedicated to humanitarian activism. Research limitations/implications – Research that would inform the economic importance of Sukuk would be served with an increased understanding of humanitarian initiatives and Sukuk humanitarian. Social implications – This paper could contribute to the effectiveness of Sukuk humanitarian in their delivery of public good to the refugees. These implications are not restricted to a specific country. Charities and the refugees of any society may benefit from this study if the idea of total Islamic social finance is upheld. Originality/value – This study is the first to address the structure and operation of a Sukuk humanitarian to overcoming the financial refugee crisis

Funding Covid-19 economic stimulus through Islamic social finance: a proposal for impact-waqf SRI sukuk

The COVID-19 pandemic is an unprecedented humanitarian challenge which requires innovative solutions. One apparent challenge among governments is to come up with appropriate funds to finance economic stimulus packages. Such stimulus packages are necessary for the protection and wellbeing of the people and to ensure that the economic operations remain intact. By looking into Islamic economics, various solutions can be explored as offered through Islamic social finance instruments such as Zakat, Waqf, and Sadaqah, as well as its innovative solutions specifically available from the capital market sectors. This paper explores the potential development of an Impact-Waqf SRI sukuk for funding economic stimulus packages, with special focus to Malaysia. This paper proposes a solution in achieving such purpose by referring to the Impact-Waqf SRI sukuk, either based on temporary or permanent cash Waqf structure. Returns of investments to investors ultimately depend on the social impact and key performance indexes (KPIs) as achieved from the economic stimulus packages. It is found that the Impact-Waqf SRI sukuk can be issued either by the government or government-linked company (GLC) and economic stimulus packages can be offered to institutional as well as retail sectors. An option can be given to the investors to waive-off their claims on the capital and returns. Consequently, the government can offer tax rebates or coupons which are equivalent to the value of the waived-off investment

Globalizing zakat assistance for humanitarian crisis: issues and challenges

Zakat is a mandatory alms-giving that formed as a part of Muslims’ obligation. It is made compulsory for those who have the means to carry it out. It promotes the production of human capital and improves economic growth, and is a form of wealth redistribution. Islam has placed, more specifically the Islamic finance, an emphasis on Zakat as an important socio-economic tool. Lately, Zakat receives a growth of attention for its potentials. With the existence of frequent humanitarian crisis such as the refugee crisis, there is a call for a better utilization of Zakat at the global landscape. Looking closely to the latest development, this research looks closely to the issues and challenges in globalizing Zakat for the humanitarian assistance and overcoming the refugee crisis. This research adopts the qualitative research methodology and doctrinal legal analysis. It is found that issues and challenges in globalizing Zakat for humanitarian assistance are inter-related. Such issues and challenges may be differed from one country to another country. A comprehensive structured governance, the regulatory framework, human capital, the effective collection and distribution of Zakat, a strong trust from Muslims to the Zakat institutions or a specific collector, and the efficient collaboration between countries are needed in globalizing Zakat for the humanitarian assistance

Addressing negative spillover effects of overcrowding in Malaysian prisons: can Islamic financial institutions play a role?

Over the years, the number of Malaysian prisoners continues to rise, resulting in overcrowding at prisons and further exposing the prisoners to various health and mental issues. Currently, it is the sole responsibility of the government to absorb the costs of maintaining the prisons, including maintenance and operating costs related to prisoners, currently estimated at around RM511 million. However, from the economic perspective, prison comprises abundant human capital resources, operating in restricted environments with high-level security measures. These resources have remained idle and are not being fully utilized for the generation of economic activities. Harnessing the full potential of the labor resources available in prisons will bring significant impact on the country’s economy in terms of cost reduction and increment in goods and service production. In this regard, the Islamic financial institutions (IFIs) have a potential role to play in addressing these issues, with the possibility that the IFIs provide financial resources and strengthen engagement with the prison department through innovative financing models towards the financial sustainability of the prisons. This study intends to conceptualize the role of IFIs in contributing towards developing the potentiality of prisoners as a productive economic resource and preparing them with financial independence upon their release from prison