A Collaborative Model in The Distribution of Zakat Fund for Gharimin (Debtors) During Post-Pandemic Recovery

The purpose of this paper is to provide a conceptual discussion and analysis of the COVID-19 impact on gharimin (debtors) during the pandemic and the recovery support provided by zakat institutions and Islamic financial institutions. The data were qualitatively analysed to explore the different interpretations of gharimin from the Shariah perspective and the current practices in Malaysian zakat institutions. The pandemic COVID-19 has created a sudden health crisis and the number of gharimin increased and was measured as one of the most vulnerable groups especially when the government announced the lockdown period. Hence, many organizations in Malaysia have distributed the zakat fund among the poor and needy as the major recipients. However, there is no dedicated zakat allocation for gharimin to reduce their risk of defaults and non-performing financing problems. Therefore, the finding of this study formulates a new collaboration model to be adopted by zakat institutions and Islamic financial institutions in supporting the gharimin recipients to pay off the debt and survive their basic needs during the pandemic in Malaysia. It is expected to enhance the distribution of zakat among gharimin and assist zakat institutions to identify them as eligible zakat recipients. Further research will examine the reliability of the proposed model as well as its practical implementation in both institutions.


Introduction
The Covid-19 pandemic (Coronavirus Disease 2019) has created global health crisis that disrupted the daily human life, business and economy.On 11 March 2020, the WHO declared the status of a global pandemic after the virus Covid-19 outbreak emerged in Wuhan and worldwide spread (Sohrabi et al., 2020).It records the deaths about 14.9 million between 1 January 2020 and 31 December 2021 (World Health Organizations, 2022).One-third of the world's population is under lockdown as the World Health Organization (WHO) advised social distancing as the safest measures to prevent the spread of the coronavirus (Batool et al., 2020).In relation to this, Malaysia is among the countries which is severely affected by the pandemic with 2,758,086 confirmed cases with 31,462 deaths from 3 January 2020 to 31 December 2021.
Due to this uncertain circumstance, the former Prime Minister of Malaysia, Tan Sri Muhyiddin Yassin has announced 14 days restricted Movement Control Order (MCO) effective from 18 March until 30 March 2021 nationwide (Prime Minister's Special Message, 2020).The MCO requiring demand closure of all business premises (except those providing essential services), manufacturers supplier and food outlets.(National Security Council, 2020).The MCO order was extended three times, each for another two-week period, until 12 May 2020 (Ng et al., 2020).The MCO is notable affecting all individuals and influence the performance of all sectors in economy.Even after the economy of various sectors were gradually reopened following the reinstatement of the Conditional Movement Control Order (CMCO) to replace MCO, businesses were still negatively impacted for several months as the people's movement and activities were restricted by certain policies (Tajudin et al., 2021).The implication of MCO has triggered thousands of businesses closed down and the increment of unemployment rate in every state and major demographic group (Irda Syahira et al., 2020).The data reported by Department of Statistics Malaysia (2020) mentioned that the unemployment rate for the first quarter of the year 2020 also is recorded to be the highest number in 10 years with a total of 610,500 people in March 2020.This number also is supported by Labour Statistic Data (2021) recorded unpreceded sharp increase from March 2020 until June 2020.The details of each number and states are shown in Table 1.These high unemployment rate therefore impact their commitment to pay off debts, settle outstanding bills as well as survive the basic needs.

Table 1 Statistic of Loss of Employment for State in Malaysia
Source: Employment Information and Analysis Services (EIAS) Employment Insurance System Office Therefore, this paper aims to highlight the impact of MCO on unemployment rate among gharimin during the pandemic.As to date, there is lack of research done to study the group of gharimin that emerged as new numbers who severely affected by the pandemic and made them listed in the category of zakat recipients.Thus, this paper is expected to fill this gap.The main contribution of this paper is to propose the collaboration model between the zakat institutions and Islamic financial institutions by identifying the eligible criteria of gharimin as to ensure the gharimin is not neglected and will not continuously carry with great deal of debt particularly during the emergency.

Definition of Terms Gharimin from Shariah Perspectives
Gharimin is from Arabic word derived from the plural word al-gharim which means debtor.The original word is al-gharm and literally it means al-luzum means obligation, duty or regularity which is based on the Surah al-Furqan verse 65: "And those who say, "Our Lord, avert from us the punishment of Hell.Indeed, its punishment is ever adhering."(Mufti of Federal Territory Malaysia, 2016) According to Muhammad Ruwas, al-gharm means the person who is bound by the agreement (Mahadi et al., 2014).In addition, Mujahid rahimahullah said gharimin is a person who bears debts because his house is on fire, or his property is dragged down by flood, or to meet the needs of his family.(Aminuddin et al., 2020) The gharimin definition is different among schools of thought.The meaning of gharimin based on Hanafi school of thought is refers to those who are in debt and do not have sufficient assets that exceed their debts.While in the Maliki school, gharimin is a person who owes and does not have the wealth to pay it where the debt does not involve any immorality elements (Wahbah az-Zuhaili, 2011).Meanwhile, the Shafie and Hanabilah schools categorise gharimin into two types; first, those who are indebted to themselves, and others owe for virtue or immorality.Second, those who are in debt to reconcile disputes even if they are rich.As for contemporary jurisprudence Al-Qardawi (2009) identify gharim is a person who has a debt, because gharim is fixed, which means it remains to him who has debt.
From the definitions above, it can be concluded that what is meant by gharim is a person who is in debt and does not have sufficient assets to cover his debt, both type of debt is for personal gain and for the benefit of the community.They have the right to receive zakat to cover their debt, with the condition that the debt is not used for immorality or even things that are prohibited by Islamic law.

Gharimin in Malaysian Zakat Institution
Gharimin can be defined in different way in different states.The management and administration of zakat in Malaysia are subject to the authority of state government, provided that Islamic Affairs of each state is under the sultan's advisory council or royal institutions.In Malaysia, there are 14 State Islamic Regional Council (SIRC) of which 13 of it belong to the states and one for Wilayah Persekutuan Kuala Lumpur (Aminuddin et al., 2020).The purpose is to centralize all the Islamic religious activities at state level.In this case, the federal government has limitations in their involvement in state decision including any matters related to zakat (Rusni & Nur I'ffah, 2016).SIRCs are fully responsible in managing zakat affairs including its collection and distribution.
Generally, (Mahadi et al., 2014) discovered that the general definition of gharimin adopted by zakat institution in Malaysia is found to be the same and adhered to the Shafi'e school of thought, however in terms of the characteristics and conditions of eligibility, it differs among zakat institutions in Malaysia.Some states accept cases of indebtedness to loan sharks and some states reject applications and not allowed to receive the zakat assistance (Nabilah et al., 2021).In Shafi'e, the rulings on zakat distribution are based on the Quran and Sunnah and al-qiyas (analogical reasoning) resources for the expansion of rules.Al-qiyas itself is based on al-Quran, Sunnah and al-ijma' (scholarly consensus).However, Mufti of Federal Territory, the Federal Territory Islamic Religious Council (MAIWP) has further outlined three specific conditions for the types of debts that are allowed to receive zakat.Firstly, debt for financing basic needs (food, medicine, education, protection, clothes, transportation).Secondly business debt (by type and priority) and thirdly, the priority of debt settlement assistance is mainly to the poor, needy and converts.
The research by Yusof & Tahir (2015) concludes that the interpretation of gharimin in Malaysia can be divided into two parts.First, interpretation in general which does not include examples and purposes of indebtedness.There are ten states in this first category, namely the Federal Territory, Melaka, Pahang, Terengganu, Johor, Kelantan, Kedah, Perlis, Negeri Sembilan and Sarawak.Second, the specific interpretation which clearly states the conditions of gharimin and purposes of indebtedness.Only four states use this specific interpretation, namely Selangor, Kuala Lumpur, Pulau Pinang, Melaka, and Sabah.However, none of the states exclusively mention the flood victims as a group included in the gharimin category.Muhd.Fisal et al. (2016) explained only that the Mufti of the Federal Territory is of the view that flood victims can be categorized as gharimin.Table 2.0 below provides the specific definition of gharimin has been used by four different states in Malaysia.Muslim who owes to meet the basic needs of himself and his dependents or the interests of society and has no ability to pay them.
Muslims who are indebted to meet the basic needs of their own or their dependents or people who are indebted to solve society's problems and need: The debtor is unable to pay his debt.The debt must be in the matter of obedience required by the Islamic law.Debt has reached a period to be settled.Based on the above Table 2, it can be concluded that the all states apply the general definition of gharimin based on the guideline provided by JAWHAR (2018).The differences are only on the specific interpretation of the zakat distribution given to the gharimin.The interpretation is varying according to locality requirements and priority of needs in each state.In the state of Selangor, the zakat distribution scheme offered by the Lembaga Zakat Selangor (LZS) for gharimin is only five schemes compared to the distribution scheme for gharimin in the Federal Territory whereas MAIWP offers 28 types of assistance which is considered as the biggest number under gharimin scheme.By drawing the different interpretation of gharimin, this study further examines the effect to the total amount of zakat distribution to gharimin in 2019 in each state in Malaysia based on data available in website.Al-Gharimin (2016-2019) Source: Jabatan Wakaf Zakat dan Haji (JAWHAR), ( 2019)

Table 2.3 Zakat Distribution to
The table depicts that the state of Selangor through the Lembaga Zakat Selangor (LZS) recorded the largest amount of zakat distribution to al-gharimin from 2016 until 2020.This is followed by MAIWP, Pulau Pinang and Perak.Kedah is the lowest amount of zakat distribution.Nevertheless, the data and information demonstrated that Malaysian zakat institutions have contributed to the distribution of zakat to gharimin, albeit in a small number.As a result, different definition in each state also contribute to the low zakat distribution to gharimin before the pandemic.With the problem of indebtedness that is quite serious among Muslims during the pandemic, it is strongly argued that the distribution of zakat is needed to give more attention during the post pandemic as they are the group who are in debt for basic needs due to loss of job, drop in revenue, shortage of income and have limited saving to survive their life and families.It is hoped that by giving zakat, gharimin will be able to survive on their own after they manage to pay all the debts.

Recovery Support towards Gharimin During Pandemic Covid-19
To ensure the welfare of vulnerable group through income and liquidity support, the government is focused on immediate strategy that considered the effects of the pandemic on employment, business, and the commercial sector.Malaysia has announced the three series of stimulus Economic Stimulus Package on 27 February, 2020 before the implementation of MCO, PRIHATIN on 27 March 2020 to assist the public during MCO, and another economic stimulus package, PENJANA during the continuance of CMCO on 6 April 2020 (Jamaluddin et al., 2021;Aziz et al., 2020).This stimulus packages mostly targeted the vulnerable household, followed by assistance to small and medium enterprises includes oneoff cash assistance, loan deferments, a wage subsidy program for employees as well as the credit facilities (Melanaie, 2020;Aza, 2020).These measures essentially helped lessen the worries of people, who may experience loss of jobs or income, less saving money to survive the essential needs and ensure the sustainability of business.
In addition, as part of economic recovery process and lessen the financial constraints towards gharimin either individual or small medium business, Bank Negara of Malaysia (BNM) has announced the PRIHATIN Economic Stimulus Package worth MYR250 billion (Shah et al., 2020) which includes an automatic moratorium for six months.During the six months deferment period, the gharimin is not obliged to make monthly debt repayments to the banks and there will be no additional interest charged until the moratorium period ends (Bank Negara Malaysia, 2020).Following the expiration of moratorium period, former Prime Minister Tan Sri Muhyiddin Yassin has announced another relief of three months targeted moratorium extension for individuals who have lost their jobs and are yet to find new employment (Syahira et al., 2020).However, these relief implemented is still not affordable for everyone to survive their life and repay their burden debt.The unemployment rate remains unsolved among the people who are severely affected by the pandemic (UNICEF, 2021).After September 30, 2020, the debtors are required to resume repayment of financing nevertheless, the bank are willing to provide the gharimin who are facing the financial hardship with further repayment assistance options (Haron et al., 2021).
About 16% of the respondents in the survey conducted by RinggitPlus (2020) analysed that they were unready to resume paying their loans after the moratorium period ended.These groups were urged to seek initial assistance by contacting their respective financial institutions or Credit Counselling and Debt Management Agency (AKPK) to discuss these problems and seek financial advice (Hanis, 2020).According to ABM, more than 7.7 million borrowers took advantage of the lending moratorium, indicating that 1.2 million borrowers needed post-moratorium assistance.Unfortunately, other than the extension moratorium on loan payments, the only help which Islamic financial institutions are willing to offer is special relief fund to provide financing aid and take some measures in restructuring the Islamic financing facility (Syahira et al., 2020;Sataloff et al., 2020).While taking into account the consequences of the MCO continuation till 2021, the second moratorium began on July 7, 2021 as part of the government's PEMULIH package to aid debtors who are still unemployed and have yet to recover from job loss or the loss of their own business (Central Bank of Malaysia, 2021).As a precaution, the banking industry has tightened loan approvals and disbursement simultaneously give effect to the debtors to apply the financing.
In a meanwhile, zakat institutions in Malaysia among the agencies of Islamic social finance supports and assist government in preventing the pandemic.From the first day implementation of MCO, zakat institutions have aggressively distributed various kinds of assistance to the local community (Hambari et al., 2020;Ninglasari & Muhammad, 2021).The study reported by Muhamat (2020), distribution of zakat funds as at March 2020 that have been distributed to the government agencies such as hospitals, uniformed bodies as well as the community are RM 119.36 million.The fund is allocated to purchase medical equipment, vaccines, face masks and others to control the outbreak.Later on, as of 30 June 2020, in total RM426 million was distributed by the SIRC and Zakat Management Agency (AMZ) to zakat recipients who are likely the most affected by the pandemic mainly for the poor, needy and fisabilillah (Yusoff, 2020).Nevertheless, the distribution of zakat fund is given to all community, the zakat recipients, small traders, and special allowance to the medical, security and operational staff who are involved in the MCO period regardless of race, religion, state or political affiliation (Amirul, 2020).Chief Executive Officer of the Zakat Collection Center of the Federal Territory Islamic Religious Council (PPZ-MAIWP), Ahmad Shukri Yusoff which clarified that a total of 20,348 people in the Federal Territory were listed as new zakat recipients in August 2020 (Roslan, 2020).The same observation at Lembaga Zakat Selangor which reported that the figures of new zakat recipients increase from 75,000 to 85,000 families throughout the year 2020 (Aiman, 2020).In other states, there has been an increasing new number of zakat recipients as well especially the states that were heavily effected during MCO namely Kelantan, Sabah and Perlis (Department of Statistics Malaysia, 2020).Therefore, based on the scenario above, it is clear that the pandemic COVID-19 has dramatically depressed the debtors financially and pushed them into poverty if no comprehensive social protection support.should be noted that the priority of eight zakat recipients' in giving recovery support is totally changed especially to people who has excessive burden in surviving their life in addition to the poor and needy people.No special allocation of zakat fund is created to assist gharimin in settling debt or financing even though they eligible to receive the zakat as prescribed in Quran.In Quran, Surah at-Taubah verse 60 mentions that gharimin are known as those who are indebted to Islam.As mentioned earlier, the pandemic has contributed to the existence of the gharimin as well as the unexpected rising number of non-performing financing listed in many Islamic financial institutions.However, people often fail to recognise zakat as a potential source of financial assistance and overlook their role in society (Qistina & Sim, 2021).Furthermore, zakat institutions and Islamic financial institutions (IFI) work independently, having separate databases and delivery channels.The lack of coordination between zakat institutions and assistance package programmes from IFI results in fewer benefits being available to those need urgently to settle their outstanding debt.
In this regard, through the experience of the pandemic situation, the role of both IFI dan zakat institution in distributing zakat fund to gharimin is very significant especially in solving the borrower's debt who are trapped in their obligations for their basic needs and daily necessities.If this problem continues, this will further expose the gharimin to the level of low poverty.Therefore, proper recognition of gharimin should be taken into consideration and the zakat fund can be distributed to them in the future.

Future Perspectives on Zakat Distribution (Gharimin)
Based on the paper and past studies discussed earlier, the proposed collaboration model between zakat institution and Islamic financial institution is to enhance the distribution of zakat fund to gharimin during and post pandemic.The proposed model platform could be illustrated by Figure 3.For further explanation on the proposed collaborative model, the following Table 3.0 serves as a guidance which depicts the process of zakat distribution between the zakat institutions and Islamic financial institutions as third-party organization.

Conclusion
Apparently, the COVID-19 pandemic has dealt a huge challenge to zakat institutions in Malaysia.Various sectors of the economy in Malaysia were affected which caused the distribution of zakat assistance to be expedited not only to existing zakat recipients but also the emergence number of zakat recipients.As an Islamic social financial institution, the pandemic has opened a new chapter for zakat institutions in Malaysia to think of innovative strategies to increase the collection and dynamic distribution of zakat in the future.This paper clearly shows that the assistance in the distribution of zakat to gharimin is very small and still limited during the pandemic.The zakat institution is supposed to recognize gharimin as main zakat recipients which their source of income is affected by the pandemic and are facing the difficulties in paying the debt related to their basic family needs.In terms of practical aspects, this paper proposed the collaboration model between zakat institutions and Islamic financial institutions in improving the distribution of zakat fund effectively.This paper is conceptual in nature; therefore, no statistical analysis and empirical evidence are provided.The details statistic on gharimin who have financial difficulties in IFI also yet to analysed by the zakat institutions.Further research to examine the reliability of the proposed model as well as their practical implementation is, therefore, needed.
Step 1 Zakat institutions will appoint Islamic financial institutions as third-party agency in managing the distribution of zakat to gharimin.
Step 2 The collected zakat fund can be put in a gharimin pool.The zakat distribution will be initiated by selecting the process of eligible gharimin in terms of level of debts at the first place.The amount of distributed zakat will depend on that level and should have the limit range of each application.
Step 3 The application for zakat fund will have to go through three stages: First is the investigation on the applicants' debts.The gharimin could provide the details problems for zakat institutions consideration regarding the zakat assistance package or period.Second, the Verification Committee members will verify the application form and finally, the Committee of Zakah Endorsement will endorse the zakat if the applicants are to be entitled as the recipients of gharimin.At this stage, the meeting will be held between the zakat institutions and Islamic financial institutions to verify and approve the applications.
Step 4 The approved gharimin of zakat fund in the first and second stages were mainly for debts which categorized as basic need such as housing, car and personal financing.Furthermore, the gharimin who are entitled to receive zakat fund will not receive the amount of cash to pay the debts but instead the IFI will directly deduct the approved amount of debt.
Figure 2.5 below shows the summary of recovery support towards gharimin during the pandemic.

Figure 2 :
Figure 2: The Recovery Support towards Gharimin During the Pandemic

Table 2 . 0
Interpretation of Gharimin in Zakat Institutions in Malaysia