The Role of Islamic Social Finance Instruments in Reviving the Economy during the Covid-19 Pandemic Crisis in Malaysia

Abstract

The COVID-19 pandemic has triggered one of the worst jobs crises by causing the rise in unemployment, loss of income and businesses. Islamic social finance mechanism should address the massive socio-economic challenges caused by the COVID-19 pandemic. In addition, Islamic social finance instruments also should assist those affected by the pandemic. Among the instruments to achieve this objective are zakat, waqf, and Islamic crowdfunding, which have been adopted and applied in Malaysia. This study aims at examining the role of Islamic social finance instruments, specifically zakat, waqf, and Islamic crowdfunding, in assisting those affected by the COVID-19 pandemic. This study employs library research and interviews to collect data to achieve research objective. The findings reveal that Islamic social finance institutions in Malaysia have used the instruments, especially zakat, waqf, and Islamic crowdfunding to assist those affected to recover from the crisis. The proposed solutions include: save lives, including medical assistance and health care using zakat, waqf, and Islamic crowdfunding. In addition, the Islamic social finance instruments could save households who have lost their jobs and struggle to survive by creating mechanisms to assist them to survive during this crisis by utilizing zakat, waqf, and Islamic crowdfunding. By understanding the role of zakat, waqf, and Islamic crowdfunding, this study could significantly contribute to a broader understanding of the Islamic social finance instruments. This study could shed some lights on how Islamic social finance institutions could plan, strategize and implement suitable measures in the future to assist those affected by the pandemic.