The aim of Islamic social finance is to support socio-economic empowerment, progress, and the development of society. Pooling resources from social finance instruments, like Zakat (alms giving), Waqf (endowments), Qardh al-hasan (interest free benevolent lending), Takaful, and Sadaqah (charity), can establish and lead to growth of lower-income micro-enterprises in the country.
The purpose of this paper is to deliberate on the establishment of Zakat on oil and gas in Malaysia. Similar to gold and silver, oil and gas are valuable minerals, which, upon extraction, should be subject to Zakat payment. In Malaysia, however, this is not the case. The authors argue that Zakat calculation for oil and gas can involve Nisāb adjustment, but not the Hawl (the requirement for one full Islamic year of ownership for the assets), by analogy with Zakat on agricultural produce.
This research study calculates potential Zakat proceeds collectible in Bangladesh by using both classical and contemporary or alternative Zakat calculation methods. The results reveal that the percentage of potential Zakat collectible amount to GDP is significant as the estimates range between 2.3% to as much as 3.8%.
Zakat helps poor to meet their essential needs even in an inflationary environment. Contrarily, higher indirect taxation results in inflation. However, Ushr, which is a form of Zakat would produce results otherwise by helping poor and needy people who are affected the most from inflation.
A key maxim of Islamic jurisprudence suggests that in the matter of commercial transactions, everything is deemed permissible unless explicitly stated otherwise. As long as the transacting parties adhere to the principles of Islamic jurisprudence while applying the benchmark to their transaction, it is acceptable to utilize a consensus methodology. In place of risk free rate or base rate of expected return on investment, some thinkers in Islamic finance suggest the possible use of Zakat rate.
The noted authors explain that the main contribution of this study is to present a model in which juristic and moralist positions are endogenized and augmented to constitute Islamic social welfare function.
The discussions in the forum emphasized on creating synergy between Zakat and Waqf and integrate both the institutions together in institutional design and delivery as well as in public and social policy in member countries.
When a person is helped by a co-worker, neighbour, friend or any other individual in confidentiality, the ego and self-respect of the receiving individual is not hurt or hurt as much as in receiving such benefits publicly from an institution.
This paper presents statistics to illustrate the economic effects of COVID-19 in the global economy. Poverty and unemployment in the informal sector of developing economies is on the rise. On the other hand, developed economies have also seen economic contraction. Capital markets have seen sharp decline in the early part of 2020. However, the author notes that Islamic equity portfolios were less affected. This finding is discovered in other empirical studies as well where Islamic portfolios are found to perform relatively better in economic and market downturns.
Islamic economics principles discourage excessive spending and encourage sharing resources with wider community through Sadqa, Waqf and Riba-free Qard. This can provide more resources at the disposal of poor and needy and for the social causes which are working for the educational and health related needs of poor and needy. Therefore, this can help in tackling poverty, hunger, low levels of schooling and under-provision of health services.
Islamic Economics Project 