Exploring Islamic Social Finance Practices in Muslim Countries Outside ASEAN

Samsudin Samsudin; Fajrillah Fajrillah; Muhammad Arifin Lubis; Ali Topan Lubis; Saparuddin Siregar; Yenni Samri Juliati Nasution

doi:10.58836/jpma.v15i2.23068

Exploring Islamic Social Finance Practices in Muslim Countries Outside ASEAN

Samsudin Samsudin, Fajrillah Fajrillah, Muhammad Arifin Lubis, Ali Topan Lubis, Saparuddin Siregar, Yenni Samri Juliati Nasution

Abstract

Islamic social finance, such as zakat, waqf, and alms, plays an important role in supporting social welfare and economic development in Muslim countries. The purpose of this paper is to analyze the implementation of sharia social finance in several Muslim countries outside ASEAN, focusing on the implementation mechanisms, challenges, and impacts of such instruments on social and economic development. Digitalization has changed the way Islamic social finance is managed by increasing accessibility, transparency, and efficiency. The application of technology such as sharia fintech, blockchain, and halal crowdfunding strengthens the role of zakat, waqf, and alms in supporting social welfare in Muslim countries outside ASEAN. This research uses a qualitative method based on literature studies with reference to international journals, reports of Islamic financial institutions, and related secondary data. The focus of the research includes how social financial instruments are managed, the role of governments and private institutions in their implementation, and their contribution to poverty alleviation and social welfare. The main results show that the implementation of sharia social finance in countries such as Turkey or Saudi Arabia has succeeded in improving access to education, health services, and community empowerment. However, there are still challenges in the form of low financial literacy, bureaucratic constraints, and the need to increase cooperation between the public and private sectors. The digitalization of Islamic finance has emerged as a potential solution to increase transparency and efficiency in the management of social funds.

Keywords

Islamic social finance; zakat; waqf; sadaqah; economic development; non-ASEAN Muslim countries

Full Text:

PDF

References

Al Faruque, A. A., Habibullah, M., Atiullah, M., Afrose, R., & Abdullah, F. (2023). The Impact of Islamic Social Finance on Sustainable Development Goals to Alleviate Poverty in Muslim Countries: A New Paradigm for Zakat Organizations in Bangladesh. International Journal For Multidisciplinary Research, 5(4), 1–8. https://doi.org/10.36948/ijfmr.2023.v05i04.5707

Abubakar, M. (2020). Social Empowerment Through Islamic Finance. In Handbook of Research on Theory and Practice of Global Islamic Finance (pp. 115-128). IGI Global.

Aderemi, A. M. R., & Ishak, M. S. I. (2023). Qard Hasan as a feasible Islamic financial instrument for crowdfunding: its potential and possible application for financing micro-enterprises in Malaysia. Qualitative Research in Financial Markets, 15(1), 58–76. https://doi.org/10.1108/QRFM-08-2021-0145

Ainol-Basirah, A. W., & Siti-Nabiha, A. K. (2020). the Roles of Islamic Social Finance in the Era of Post-Covid-19: Possible Prospects of Waqf Institutions for Economic Revival. International Journal of Industrial Management, 7(1), 1–8. https://doi.org/10.15282/ijim.7.0.2020.5747

Ascarya, A., & Sakti, A. (2022). Designing micro-fintech models for Islamic micro financial institutions in Indonesia. International Journal of Islamic and Middle Eastern Finance and Management, 15(2), 236–254. https://doi.org/10.1108/IMEFM-05-2020-0233

Babenkova, S. Y. (2021). Islamic Finance Industry in the Middle East and North Africa: Ways out of the Exogenous Crisis. Entrepreneur’s Guide, 14(1), 62–91. https://doi.org/10.24182/2073-9885-2021-14-1-62-31

Citaningati, P. R., & Kamaluddin, K. (2022). Sustainable Development Goals through Productive Fisheries Waqf. Li Falah: Jurnal Studi Ekonomi Dan Bisnis Islam, 7(1), 36. https://doi.org/10.31332/lifalah.v7i1.3952

Dirie, K. A., Alam, M. M., & Maamor, S. (2023). Islamic social finance for achieving sustainable development goals: a systematic literature review and future research agenda. International Journal of Ethics and Systems. https://doi.org/10.1108/IJOES-12-2022-0317

Djafar, Mukhtar Lutfi, Rahmawati Muin, & Sugianto. (2023). Zakat Management in Countries that Require Zakat and Countries That Do Not Require Zakat. Formosa Journal of Sustainable Research, 2(2), 311–324. https://doi.org/10.55927/fjsr.v2i2.3076

Djalaluddin, A., Kolilah, K., Danila, N., & Andriani, S. (2023). Actualization of Islamic Social Finance During Disasters: The Covid-19 Pandemic’`S Lessons In Indonesia. IQTISHODUNA: Jurnal Ekonomi Islam, 12(2), 371–392. https://doi.org/10.54471/iqtishoduna.v12i2.2469

Fadillah, A. Z., Rusadi, P. O., & Karsinih, A. (2022). Digitalization of (Zis) Zakat Infaq and Shadaqah Through the Use of Qris (Case Study: Generation Z). Airlangga International Journal of Islamic Economics and Finance, 5(02), 104–114. https://doi.org/10.20473/aijief.v5i02.42027

Firmansyah, I., & Devi, A. (2017). The Implementation Strategies of Good Corporate Governance for Zakat Institutions in Indonesia. International Journal of Zakat, 2(2), 85–97. https://doi.org/10.37706/ijaz.v2i2.27

Herianingrum, S., Widiastuti, T., Hapsari, M. I., Ratnasari, R. T., Firmansyah, F., Hassan, S. A., Febriyanti, A. R., Amalia, R. C., & Muzakki, L. A. (2024). Muzakki and Mustahik’s collaboration model for strengthening the fundraising capacity of Islamic social finance institutions during COVID-19. International Journal of Ethics and Systems, 40(1), 175–188. https://doi.org/10.1108/IJOES-05-2022-0091

Kabir, M. R., Sobhani, F. A., & Kausar, A. (2017). Management of Sadaqah Through Social Enterprises : A Case Study of Anjuman Mufidul Islam , Bangladesh. IIUC Business Review 6(2017), 6, 63–74.

Kasdi, A., Karim, A., Farida, U., & Huda, M. (2022). Development of Waqf in the Middle East and its Role in Pioneering Contemporary Islamic Civilization: A Historical Approach. Journal of Islamic Thought and Civilization, 12(1), 186–198. https://doi.org/10.32350/jitc.121.10

Latifah, F., & Lubis, R. (2020). Digitalization of ZISWAF Development in Indonesia. https://doi.org/10.4108/eai.21-9-2019.2293962

Maulina, R., Dhewanto, W., & Faturohman, T. (2023). Waqf-Based Entrepreneurship Direct Financing Model: Potential and Challenges. International Journal of Emerging Issues in Islamic Studies, 3(1), 70–91. https://doi.org/10.31098/ijeiis.v3i1.1398

Mohamed, M. I., & Shafiai, M. H. M. (2021). Islamic Agricultural Economic Financing Based On Zakat, Infaq, Alms And Waqf In Empowering The Farming Community. IQTISHADUNA: Jurnal Ilmiah Ekonomi Kita, 10(1), 144–161. https://doi.org/10.46367/iqtishaduna.v10i1.334

Muhammad, T., Al-shaghdari, F., & Ibrahim, S. M. (2023). Islamic Social Finance In Addressing Poverty Reduction And Economic Growth: Using Structural Equation Modeling. The Journal of Muamalat and Islamic Finance Research, 20(2), 179–191. https://doi.org/10.33102/jmifr.529

Najim Nur Fauziah, & Salina Kassim. (2022). Cash Waqf Model for Social Enterprise to Achieve Sustainable Development Goals in Indonesia. Al-Muzara’Ah, 2022, 95–105. https://doi.org/10.29244/jam.specialissue2022.95-105

Notolegowo, H. K., Alamsyah, I. F., Saraswati, N., Jalil, B. A., & Bt Isahak Merican, F. M. (2023). Relationship between Islamic Social Finance and Sustainable Development Goals: A Conceptual Framework. KnE Social Sciences, 2023, 197. https://doi.org/10.18502/kss.v8i18.14245

Nura Abubakar Gwadabe, & Asmak Ab Rahman. (2020). The role of Islamic finance in mitigating the economic impact of COVID-19 towards the attainment of maqasid al shariah: A case study of waqf institutions in Kano State, Nigeria. The Journal of Muamalat and Islamic Finance Research, 17, 59–70. https://doi.org/10.33102/jmifr.v17i3.284

Panday, S., Rushton, S., Karki, J., Balen, J., & Barnes, A. (2021). The role of social capital in disaster resilience in remote communities after the 2015 Nepal earthquake. International Journal of Disaster Risk Reduction, 55(August 2020), 102112. https://doi.org/10.1016/j.ijdrr.2021.102112

Purwanto, P., Sari, F. N., Burasukma, M., & Nursolihah, S. (2021). The Role of Islamic Social Finance Through Ziswaf and BMT During The Covid-19 Pandemic. MALIA: Journal of Islamic Banking and Finance, 5(2), 81. https://doi.org/10.21043/malia.v5i2.11911

Putri Kartini, K., & Muarrifah, S. (2023). Transformation Of The Role Of Technology In The Collection And Distribution Of Social Funds. Jurnal Multidisiplin Indonesia, 2(12), 3561–3570. https://doi.org/10.58344/jmi.v2i12.826

Rahman Ramadhan, A., Rosyalqin Azri, S., & Rasyid Ridha, M. (2023). Strategies and Innovations in the Management of ZISWAF Funds through Digital Platforms for Sustainable Community Development. Proceeding of International Conference on Islamic Philantrophy, 1, 81–91. https://doi.org/10.24090/icip.v1i1.305

Rizal, S., & Pakkanna, M. (2023). Digitalization of Zakat in Stimulating Community Socio-Economic Development in the Middle of the Covid-19 Pandemic (Maqashid Syariah Perspective). European Journal of Humanities and Social Sciences, 3(1), 23–33. https://doi.org/10.24018/ejsocial.2023.3.1.384

Sawmar, A. A., & Mohammed, M. O. (2021). Enhancing zakat compliance through good governance: a conceptual framework. ISRA International Journal of Islamic Finance, 13(1), 136–154. https://doi.org/10.1108/IJIF-10-2018-0116

Suryani, S. (2020). Zakat Management Paradigm: Comparison of Indonesia, Malaysia and Saudi Arabia. INFERENSI: Jurnal Penelitian Sosial Keagamaan, 14(2), 267–282. https://doi.org/10.18326/infsl3.v14i2.267-282

Syed, M. H., Khan, S., Rabbani, M. R., & Thalassinos, Y. E. (2020). An artificial intelligence and NLP based Islamic FinTech model combining zakat and Qardh-Al-Hasan for countering the adverse impact of COVID 19 on SMEs and individuals. International Journal of Economics and Business Administration, 8(2), 351–364. https://doi.org/10.35808/IJEBA/466

Wibowo, A. (2023). Enhancing Economic Growth for the Achievement of Sustainable Development Goals through Digital Era Fundraising Schemes for Sustainable Community Development: A Policy Analysis from the Islamic Economic Perspective. Proceeding of International Conference on Islamic Philantrophy, 1, 26–37. https://doi.org/10.24090/icip.v1i1.301

Wijaya, R. P. (2023). Cash Waqf Linked Dinfra (Cwl-Fra) As Waqf Innovation Model Integrated With Infrastructure Instrument for National Economic Recovery and Sustainability. Malaysian Journal of Syariah and Law, 11(2), 330–343. https://doi.org/10.33102/mjsl.vol11no2.422

Yasni, R., & Erlanda, A. R. R. (2020). Challenges of Zakat Integration as Source of State Revenue. International Journal of Islamic Economics and Finance (IJIEF), 3(3), 175–204. https://doi.org/10.18196/ijief.3238

Zawawi, Yasin, Y., Helmy, M. I., Ma’yuf, A., & Arwani, A. (2023). Waqf and sustainable development law: models of waqf institutions in the Kingdom of Saudi Arabia and Indonesia. Ijtihad: Jurnal Wacana Hukum Islam Dan Kemanusiaan, 23(1), 93–114. https://doi.org/10.18326/IJTIHAD.V23I1.93-114

DOI: http://dx.doi.org/10.58836/jpma.v15i2.23068