Analysis of Economic Potential in Stock Zakat in the Indonesian Financial Sector

The aim of this study is to examine the economic potential of zakat shares within Indonesia's expanding financial sector, as it has the capacity to enhance the well-being of individuals and promote economic growth. This type of zakat is analyzed through analytical and descriptive methods, utilizing secondary data from financial reports and related institutions. Despite low levels of community participation, this research indicates that the potential for zakat shares within Indonesia's financial sector is substantial. Through data analysis, it is evident that zakat shares can contribute to the enhancement of the financial sector by increasing liquidity and investor confidence, as well as promoting more inclusive economic growth and equitable distribution of wealth. Consequently, to provide significant economic benefits for the financial sector as a whole, it is necessary to augment public participation in zakat shares and improve zakat infrastructure.


INTRODUCTION
Zakat is a form of Islamic social finance or philanthropy, along with infaq and alms. With the passage of time, research on zakat has been growing (De Luna dkk., 2019;Fegert dkk., 2020;Younossi dkk., 2019). One recent development is the concept of zakat on shares, which did not exist during the time of the Prophet. This type of zakat is based on the zakat on trade, which was traditionally collected at a rate of 2.5% annually (Fauziyah, 2010). According to the regulations on zakat management outlined in Law Number 23 of 2011, corporate zakat is required. (Undang Undang Nomor 23 Tahun 2011 Tentang Pengelolaan Zakat, t.t.) In fiqh, a company is considered as a single entity, and its zakat is calculated as a single asset (Brown dkk., 2020;Kuckertz dkk., 2020). The zakat is then distributed to all shareholders based on their respective shareholdings in the company's capital (Hartono & Ak, 2021). Based on Muhammad Riduwan et.al.'s research, Zakat shares are considered obligatory according to Imam Shafi'i's view on zakat maal (Riduwan dkk., 2022). This means that investors who have shares exceeding the nisab and haul are obligated to pay zakat based on the actual value of their shares, as it is considered zakat from trading profits (Adz-zuhailiy, 2010).
As a nation with the world's largest Muslim population, consisting of 229 million individuals or 87.2% of Indonesia's 263 million population (Annur, 2023), zakat a form of social fundraising, has tremendous potential (Anik & Prastiwi, 2019). In 2022, the potential zakat on shares is estimated to be the highest, with a value of Rp. 111 trillion. The potential zakat for company shares listed on the Indonesia Stock Exchange (IDX) in 2020 and 2021 was Rp. 69 trillion and Rp. 81.94 trillion, respectively. The average value of zakat per share in 2022 is Rp. 15.98 per share. Therefore, data on the growth of zakat shares as a component of companies can be a potential source of zakat in Indonesia (Badan Amil Zakat Nasional, 2022).

Source: Processed data (2023)
Despite the enormous potential of zakat on shares in Indonesia, there is still a lack of optimal understanding and application of it among stock investors. This reluctance is mainly due to the perception that zakat on shares is prohibited (Sri Rahayu Dj. Puhi, Tineke Wolok, 2021). However, this perception has been addressed by numerous studies on the legal aspects of zakat on shares. Ridho's research, for instance, reveals that both Yusuf Al-Qardhawi and Wahbah Az-Zuhaili required zakat on shares. Qardhawi, however, distinguished between industrial and trading companies, setting the zakat at 10% and 2.5%, respectively, while Az-Zuhaili considered the zakat rate to be the same for both types of companies at 2.5% (Ridho, 2018).
Throughout 2022, the capital market in Indonesia demonstrated steady and positive growth, as evidenced by various indicators such as market stability, trading activity, fundraising, and record-breaking numbers of retail investors. Notably, the Composite Stock Price Index (IHSG) reached its highest level in history on September 13, 2022, at 7,318.01 points. As of December 29, 2022, the JCI had grown by 4.23% year-to-date, reaching 6,860.08 points. The stock market capitalization also experienced a significant increase of 15.18% with a value of Rp. 9.509 trillion year-to-date (Otoritas Jasa Keuangan, 2022). These data indicate that the Islamic capital market in Indonesia is attractive to global investors. With the increasing development of the capital market, Indonesia has the potential to become a strong country with its social funds (Basuki, 2021).
Despite the challenges posed by the Covid-19 pandemic (Rasheed dkk., 2019;Vollmer dkk., 2020;Vollset dkk., 2020), the Indonesian Sharia Capital Market has shown consistent growth in both value and transaction volume, according to Abdalloh (Abdalloh, 2020). The Indonesia Stock Exchange (IDX) has been recognized by the Global Islamic Finance Award (GIFA) as the Best Islamic Market Capital for 2019 and 2020. Moreover, IDX has also received awards as The Best Supporting Institution for Islamic Finance of the Year 2016, 2017, and 2018, as well as The Best Emerging Islamic Capital Market of the Year 2018. These accolades are a testament to the stability of Islamic finance, which has been able to weather the high fluctuations of the economy during this pandemic (Abdalloh, 2020).
It is intriguing to explore the vast potential of the Islamic capital market in Indonesia's financial sector as a source for social fundraising through stock zakat (Aragaw, 2020;Martin dkk., 2019;Yue dkk., 2021). The authors of this study aim to delve into the potential of zakat shares and analyze the methods for calculating and collecting zakat in Indonesia.

RESEARCH METHODOLOGY Share Zakat
To calculate zakat on shares, the first step is to determine the value of the shares owned by a person. This can be done by multiplying the number of shares owned by their current market price. Once the value of the shares has been determined, it is then multiplied by 2.5%, which is the zakat rate for shares according to the majority of Islamic scholars.
For example, if a person owns shares worth Rp. 100 million, then their zakat obligation for those shares would be Rp. 2.5 million (Rp. 100 million x 2.5%). However, if the value of a person's shares, together with their other assets, does not meet the nisab of 85 grams of gold, then zakat is not obligatory for that year (Barkah dkk., 2020).
In Indonesia, there are several methods of collecting zakat on shares, including through a third-party zakat institution or directly to the recipients of zakat. In recent years, there has been an increasing number of zakat institutions that have been established to facilitate the collection and distribution of zakat (Hartini dkk., 2022;Ilham dkk., 2022;Safitri dkk., 2022), including zakat on shares. These institutions collect zakat on behalf of the shareholders and distribute the funds to the rightful recipients, such as the poor and needy, or for other charitable purposes.

Zakat Stock Law
I apologize for the confusion in my previous response (Dwi, 2019). I understand now that you were referring to the distinction made by Yusuf Qardhawi regarding the obligation of zakat on shares of different types of companies (Hardi, 2020). According to Qardhawi, for industrial companies, the zakat obligation is based on their income, which is 10% or 5% of their net profit, analogous to agricultural zakat (Riduwan dkk., 2022). However, if the profits are invested in the assets of the shareholders, then zakat is issued along with other assets. On the other hand, for trading companies that buy and sell goods without carrying out processing activities (Ahmad & Rusdianto, 2018), such as international trading companies or import-export companies, zakat is obligatory on the shares of the company. The zakat rate in this case is 2.5% of the value of the shares owned (Riduwan dkk., 2022). The zakat obligation on shares of industrial companies is based on their income, while for trading companies it is based on the value of the shares owned (Francine dkk., 2018). It is important to note that the classification of a company as either industrial or trading can be complex, as some companies may have both aspects to their business (Qardhawi, 2022). In such cases, it is recommended to consult with a qualified Islamic scholar to determine the zakat obligation (Ahmad & Rusdianto, 2018). Additionally, it is important to note that zakat on shares is only applicable if the shares have been held for a full lunar year and are intended for investment purposes, rather than for personal or business use.
Wahbah Zuhaili's (Adz-zuhailiy, 2010), opinion aligns with Sheikh Abdurahman Isa's view that the zakat obligation on shares depends on the type of company the shares belong to (Prastyo, 2019). For industrial companies that do not carry out trading activities, there is no zakat obligation on the shares unless the profits are combined with the assets of the shareholder (Oktaviani, 2020). On the other hand, for trading companies that produce or trade raw materials, the zakat obligation is 2.5% of the principal and growth or profit at the end of each year (Az-Zuhaili dkk., 2011). It is important to note that there may be variations in opinion among Islamic scholars regarding the obligation of zakat on shares, and it is recommended to seek guidance from qualified scholars in the matter (Az-Zuhaili dkk., 2011).

Principles of Calculation of Zakat on Company Shares
In 2019, the National Amil Zakat Agency's Center for Strategic Studies (PUSKAS BAZNAS) released a publication called the Corporate Stock Zakat Indicator (IZS) to simplify the process of issuing zakat from shares for shareholders. This method of calculation is based on the Corporate Zakat Fiqh book that was published by BAZNAS in 2018, and it involves a number of steps for determining the zakat amount owed on company shares (Dianovi dkk., 2022;Najeed dkk., 2022;Nopiana dkk., 2022). These steps include determining the haul date, analyzing the assets and liabilities, measuring the zakat amount, and calculating the amount of zakat owed (Pusat Kajian Strategis Badan Amil Zakat Nasional, 2019).
Choose a haul date that spans 12 months and keep a record of closing transactions and the financial balance sheet at the end of this period. Identify which assets are eligible for zakat by analyzing current assets on the general balance sheet. Determine and measure the liabilities that the company must pay at the end of the haul and subtract them from the zakat assets. Calculate the zakat amount by measuring the zakat-eligible assets after subtracting liabilities.
Determine the nishab, which is equivalent to 85 grams of pure gold, based on the ijma' of contemporary and classical jurists. Choose the appropriate percentage of zakat: 2.5% for trading companies and 5% for agriculture. Multiply the zakat-eligible assets by the percentage of zakat to calculate the zakat amount that needs to be paid (Asep & Mulyana, 2021).
To calculate zakat on shares, the asset approach is employed. This involves multiplying the value of company assets that meet the zakat criteria by the applicable zakat rate, and then dividing this figure by the number of outstanding shares (Silalahi dkk., 2022). The zakat rate for companies is typically 2.5%, although in the agricultural sector it is 5%. The following formula can be used to calculate the corporate stock zakat indicator:(Pusat Kajian Strategis Badan Amil Zakat Nasional, 2019) The process of calculating zakat objects can be categorized into two types, namely corporate zakat objects and non-DES corporate zakat objects (Amado-Alonso dkk., 2019; Rahmah dkk., 2022; Rohmalimna dkk., 2022). The formula for calculating corporate zakat objects is by subtracting current liabilities from the difference between current assets and fixed assets. Meanwhile, to calculate non-DES corporate zakat objects, profits are also subtracted from the same formula used for corporate zakat objects (Badan Amil Zakat Nasional, 2023). The formula is as follows: Corporate Zakat Object = (Current Assets -Fixed Assets) -Current Liabilities, Non-DES Corporate Zakat Object = (Current Assets -Fixed Assets) -Current Liabilities -Profits In case the company zakat object, as calculated in point (a), results in a negative value, the IZS can be calculated using the profit before tax. The zakat amount is multiplied by the profit before tax, and then the resulting value is divided by the number of outstanding shares. The calculation can be represented as follows:

Sharia Shares
Stocks represent a form of investment in a company, which can provide returns that are subject to fluctuations based on the investor's skill in managing them (Tandelilin, 2010). Typically, stocks represent a form of musyarakah/syirkah activity, whereby investors provide equity participation to companies, and are consequently entitled to a share of profits in the form of dividends. Islamic stocks are those that adhere to specific criteria based on sharia principles (Ibrahim, 2013).
The micro prudential regulator in Indonesia, the Financial Services Authority, has established rules for companies listed on the Indonesia Stock Exchange that are classified as sharia-compliant shares or the Sharia Securities List. Usually, sharia-compliant shares are subject to zakat (Otoritas Jasa Keuangan, t.t.). Nevertheless, Pusat Kajian Strategis Badan Amil Zakat Nasional has made an analogy with zakat bonds, where the principal value is still eligible for zakat. Therefore, conventional stocks that do not comply with sharia principles can also be subject to zakat (Hartati, 2021). However, the zakat collected from these conventional shares is based on their value, rather than the company's profits since profits earned from non-Sharia-compliant shares are deemed illegitimate (Pusat Kajian Strategis Badan Amil Zakat Nasional, 2019).

Method
The study utilizes a descriptive qualitative approach to gain a comprehensive understanding of the economic potential of zakat shares within the Indonesian financial sector. The research methodology employed in this study is library research or literature review, which is intended to gather relevant secondary data on the research topic. Secondary data, such as literature, documents, and sources that pertain to zakat stocks and the Indonesian financial sector, are used in this research (Sholeh, 2005).
The collection of data for this study will involve a literature review encompassing previous research conducted by other scholars, financial reports of companies operating within the financial sector, regulatory documents pertaining to zakat on stocks, and other pertinent sources of data.

RESULT AND DISCUSSION
The purpose of the Results and Discussion is to state your findings and make Source: Data secondary processed (2023)

Corporate Zakat Financial Institutions
Islamic financial institutions like Islamic banks and Islamic investment companies are currently seen as crucial investment areas (Ciez & Whitacre, 2019;Hart & Halden, 2020). These institutions are usually organized as joint stock or limited companies. There are several factors to take into account when calculating zakat for such corporations (Fitri & Rahmi, 2021), such as: The calculation of zakat is done once a year, at the end of haul (based on the Islamic lunar calendar). Fixed assets, such as property, furniture, cars, machinery, and tools, are not subject to zakat.
Zakatable assets include cash and cash equivalents held in banks, as well as investments whose value is determined by market prices, receivables, and current accounts with other parties. Afterwards, the zakat assets are decreased by any liabilities owed to other parties, such as outstanding debts to depositors, investments made for customers, receivables from the central bank, and other current debts (Anoum dkk., 2022;Demina dkk., 2022;Firman dkk., 2022). The net zakat assets can be calculated using the following formula: The calculation of zakat is determined by subtracting the total liabilities and obligations from the zakat assets. The zakat nisab for Islamic financial institutions is equivalent to 85 grams of pure gold. The zakat rate for Islamic financial institutions is 2.5% according to the Hijri calendar. To determine the zakat amount, the zakat measure is multiplied by the zakat percentage. The distribution of zakat is based on the ownership of the number of shares (Badan Amil Zakat Nasional, 2023).

Economic Potential in Zakat Shares in the Financial Sector in Indonesia
In 2022 To calculate zakat on financial sector shares, the process involves multiplying the necessary zakat assets by the zakat rate and dividing it by the total number of outstanding shares (Brelje & Martins, 2019;El-Emam & Özcan, 2019;Zuo dkk., 2020). Profits earned from non-DES financial institutions are excluded from the zakat assets since interest-based earnings are categorized as riba (Dewi S dkk., 2022;Hikmah dkk., 2022). The 2.5% zakat rate in the financial sector aligns with the zakat rates for gold and silver.
The computation of zakat on shares has resulted in an average zakat value of IDR 21.66 per share in the financial sector for the year 2022. With the total number of outstanding shares amounting to 1,560,803,046,557, the potential zakat on shares in the financial sector amounts to IDR 64.18 trillion. This figure surpasses the potential zakat for the years 2018, 2019, 2020, and 2021, which were IDR 50.3 trillion, IDR 48.5 trillion, IDR 28.73 trillion, and IDR 41.20 trillion, respectively.
Among stocks in the financial sector, PT. Adira Dinamika Multi Finance Tbk. (ADMF) has the highest zakat value per share, which is IDR 182.44. The company's total number of shares is 1,000,000,000. Meanwhile, Indomobil Multi Jasa Tbk. (IMJS) has the lowest zakat value per share, which is only IDR 0.45.
The The significant Muslim population in Indonesia presents great potential for the growth of the Islamic capital market in the country, resulting in increased zakat collection from stocks (Gabriela dkk., 2022;Popkova, 2019;Qureshi dkk., 2022). This development can provide a substantial source of income for the government that can be utilized for the welfare of the people. This viewpoint aligns with Shulhan's (Afkar, 2020) research study entitled "Economic Potential in Zakat and Equity Waqf in Indonesia". Indonesia's Islamic Capital Market has a promising outlook (Kartel dkk., 2022;Keshav dkk., 2022), as demonstrated by the recognition bestowed upon the Indonesia Stock Exchange (IDX) by the Global Islamic Finance Award (GIFA). The IDX was awarded The Best Islamic Market Capital in 2019-2020, in addition to The Best Supporting Institution for Islamic Finance in 2016-2018, and The Best Emerging Islamic Capital Market in 2018.

CONCLUSION
Based on the study, it can be inferred that shares' zakat has enormous potential to provide economic benefits to the financial sector of Indonesia. These benefits include enhanced liquidity, investor confidence, and a more equitable distribution of wealth. However, public participation in zakat shares remains low, indicating the need for increased awareness and better zakat infrastructure. Therefore, future researchers are advised to investigate the factors that affect public participation in zakat shares and determine strategies to improve zakat management's effectiveness to promote more inclusive economic growth in Indonesia.