The COVID-19 pandemic suddenly claimed its existence with thousands of fatalities reported worldwide in just a few months. It has caused great concern and panic resulting to total halt in all activities, particularly the economic sector. The lockdown has caused global economic contraction which has led to forecasted economic recession for the year 2020. Islamic social financing sees this phenomenon as an increase in the numbers of the needy and something has to be done. In Islamic social financing, certain instruments have been identified as tools to mitigate the turmoil facing people who are badly affected by the pandemic. Zakat, sadaqah, qard al-hasan, and infaq can play significant roles especially in providing financial aids to the needy. Zakat in particular has the potential to ease the financial situations for its huge collection recorded. This study employed the document analysis approach to examine the possible role zakat can play during and after the turbulence caused by the pandemic. The findings from the analyses revealed that Islamic social financing via its instruments like zakat, sadaqah, infaq, and qard al-hasan are able to offer and provide financial assistance during and post crisis, in this case the COVID-19 pandemic in various sectors like the education, social, and humanitarian, as well as in the medical sector. The responsible party should continue to provide efficient and hassle free channel for zakat payers to continue paying zakat as it does help in providing sufficient funds and also eradicate poverty in a community that may be caused by any crises alike. The effective and efficient distribution programs are also equally important in ensuring the objective of zakat is achieved in helping the needy.
Top1. Introduction
The year 2020 started its decade by witnessing the sudden outbreak of the Covid-19 and how it has pushed global economy into huge contraction in just within four months after the first case reported in Wuhan, China on November 17, 2019. Covid-19, a newly evolved corona virus was not initially common in human. Where this particular virus comes from is still unknown but previous experience with corona virus leads scientist to suspect it being transferred from animal to human. Belonged to the family of corona disease with common symptoms like normal cold, flu, cough to a more severe disease like ‘Severe Acute Respiratory Syndrome’ (SARS), the impact of this Covid-19 is hugely felt in every passing minute worldwide. The economic contraction impacted from this Covid-19 pandemic is unexpected and affecting almost all aspects of life, be it in health, tourism, socially as well as in the education worldwide. The first case outside China was first reported on January 13, 2020 in Thailand and was declared a public health emergency of international concern by the World Health Organization (WHO) on 30 January 2020 and eventually declared a global pandemic on March 11, 2020, within only two months. At this point, the pandemic has caused 118,000 cases of illness in over 110 countries and territories around the world and the sustained risk of further global spread (The Time, 2020). The pandemic has killed more than 315,000 people by May 18, 2020 with more than 4.7 million confirmed cases globally.
Governments of the world have started to implement a global scale lock down to contain the possible spread from outside and within countries and this has practically put a total halt to all economic activities. This total lockdown implemented throughout the world has consequently caused a severe impact on the global economy resulting to a forecasted global recession in 2020 (The IMF, 2020). The world has been severely affected by the economic halt due to the Covid-19 pandemic that for the first time since the Great Depression in the 1930’s both advanced and emerging markets are in recession. The developed markets are anticipated to record a negative growth of -6.1 percent while the emerging market with normal growth levels well above advanced economies are also projected to have negative growth rates of -1.0 percent in 2020, and -2.2 percent if excluded China for the year 2020. The income per capita for over 170 countries is predicted to shrink and both advanced and emerging markets are expected to only partially recover in 2021 (IMF, 2020). The International Labour Organisation (ILO) predicted that 25 million workers throughout the world may lose their jobs due to the economic halt (Bernama, 2020).
Malaysia is no exception to the impact of the Covid-19 pandemic on its local economy. Bank Negara Malaysia in its Economic and Monetary Review 2019 (BNM, 2019) has projected a negative growth of between -2.0 per cent and 0.5 per cent of the country GDP in 2020 following the global recession caused by the pandemic. The implementation and subsequent extension of the Movement Control Order (MCO) imposed by the government dampen the economic activity following the suspension of operations by non-essential service providers and lower operating capacity of manufacturing firms. The central bank reported further that tourism-related sectors are the most severely affected by broad-based travel restrictions and travel risk aversion, while production disruptions in the global supply chain has impacted the manufacturing sector and exports. Unemployment rate has increased to 3.9% in March 2020 from 3.3% in February 2020 and reaching 5.0% in April, 2020 equivalent to 778,800 unemployed people (DOS, 2020). Having unemployment rate reaching 5% in the job market is among the major concerns to the overall economy of Malaysia. Thus this study is driven to discuss the possible role the Islamic social finance can play during and after the Covid-19 pandemic.