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Cover, Katalog, Foreword, Preface, Table Of Contents and About The Authors

ZAKAT LAWS IN INDONESIABy :

Heru Susetyo, SH. LL.M. M.Si. Ph.D

2018

iZakat Laws In Indonesia


Heru SusetyoZakat Laws In Indonesia / Heru Susetyo, - Cet. 1. Depok: Publisher

Faculty of Law University of Indonesia, 2018viii, 269 page ; 17 cm x 25 cm 297.54

Zakat Law

ISBN 978-602-5871-02-3

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First editionFirst Printing, May 2018Zakat Laws In IndonesiaBy: Heru Susetyo

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No part of this book may be reproduced in any form of stencils, photocopies, microfilms or any other means without the written permission of the author and publisher

Published by: Publisher Agency Faculty of Law University of IndonesiaJl. Prof. Mr. Djokosoetono, Kampus U.I. Depok 16424Fakultas Hukum Gedung D Lantai 4 Ruang D.402Telepon. +61.21.727.0003, Pesawat 173, Faxsimile. +62.21.727.0052E-mail. [email protected]

For my mother

iiZakat Laws In Indonesia

mailto:[email protected]

Cover, Katalog,Foreword, Preface, Table Of Contents and About The Authors

My mother

My mother

And my father…

Who have shown me their unconditional love and support all my life

For my lovely wife, Widi Utami … who have shown me her unconditional love and support in times of trouble and pleasure

For my lovely boys, Radhi, Faris and Adian and lovely girl, Amira…to make my life more cheerful and meaningful…

To all of them this book is dedicated….

iiiZakat Laws In Indonesia


ForewordFromProf. Dr. Topo Santoso, SH, MH.

Dean Faculty of Law Universitas Indonesia (2013 – 2017)

Assalamualaikum warrahmatullahi wabarakatuh

The book written by Dr. Heru Susetyo is part of textbook grant program of 2017 which was managed by Badan Penerbit (Publishing Agency) Faculty of Law Universitas Indonesia. Thank you so much for Dr. Heru Susetyo, Prof Uswatun Hasanah, and other researchers at Center for Islam and Islamic Law Faculty of Law Universitas Indonesia that have strongly supported the publication of this book.

This book is very important for students, faculties, as well as researchers who are interested to study zakat and zakat management in Indonesia, since it describes about the socio political dynamic of zakat secularization in Indonesia.

Furthermore, let me express my utmost gratitude for Dr. Arie Afriansyah, Ms. Qurrata Ayuni, Ms. Ryan Muthiara Wasthi, and Mr. Dede Wawan from Badan Penerbit (Publishing Agency) Faculty of Law Universitas Indonesia for selecting, editing and finally publishing this book.

I do hope that this book will enrich the discourse of Islamic Law in Indonesia. Happy reading !

Wassalamu’alaikum Warrahmatullahi wabarakatuh

ivZakat Laws In Indonesia


Foreword byProf. Dr. Dra. Uswatun Hasanah, MA.

Professor of Islamic Law Faculty of Law Universitas Indonesia


This book is derived from PhD dissertation made by Dr. Heru Susetyo at PhD program in Human Rights and Peace Studies, Mahidol University, Thailand where I also co-supervise and co-examined it. Congratulations for Dr. Heru Susetyo !

This book is not about the fiqh of zakat but about the socio political dynamic of zakat secularization in Indonesia. Therefore this book is distinctive and peculiar. Very few books talks about zakat practices in Indonesia, and even less that is written in English.

I take this opportunity to express my utmost gratitude for Prof. Topo Santoso, Dean of FHUI 2013 -2017, Prof Melda Kamil, the Current Dean of FHUI, and all researchers of Center for Islam and Islamic Law Faculty of Law Universitas Indonesia (LKIHI FHUI), not to mention Badan Penerbit (Publishing Agency) Faculty of Law Universitas Indonesia for selecting, editing and finally publishing this book.

I do expect this this textbook of zakat will enrich the discourse of zakat management and Islamic Law in Indonesia.

Wassalamu’alaikum Warrahmatullahi wabarakatuh

vZakat Laws In Indonesia


Preface from the Author


All praise is due to Allah, the Lord of the Worlds. The Beneficent, the Merciful. Master of the Day of Judgment. Thee do we serve and Thee do we beseech for help. May prayers and peace be always upon the Prophet Muhammad (PBUH).

This book is derived from PhD dissertation made at PhD program in Human Rights and Peace Studies, Mahidol University, Thailand, under supervision of Dr. Sriprapha Petcharamesree, Dr. Yukiko Nishikawa (IHRP Mahidol University and Nagoya University), Prof Dr. Uswatun Hasanah (from Universitas Indonesia) and under generous support and assistance from Dr. Yanuar Sumarlan (IHRP Mahidol University). Thank you so much for Dr. Sriprapha, Dr. Yukiko, Prof Uswatun and Dr. Yanuar for the opportunity given to me to study with you and exhaust your valuable scholarship.

The author also indebted to Dean Prof. Hikmahanto Juwana, Dean (almarhum) Prof Safri Nugraha, Acting Dean Dr. Siti Hajati Hossein, Dean Prof. Topo Santoso and current Dean Prof Melda Kamil. Without their generous support and attention this dissertation and book won’t be finished.

This book talks about the socio political dynamic of zakat secularization in Indonesia. Zakat management in Indonesia, the most predominantly Muslim country in the world, is very unique. The fiqh is almost similar with other Muslim countries but the practices and zakat management is different. It is greatly influenced by national and local socio-political dynamic.

Last but not least, the author also expresses utmost gratitude for Dr. Arie Afriansyah, Ms. Qurrata Ayuni, Ms. Ryan Muthiara Wasti, and Mr. Dede Wawan from Badan Penerbit (Publishing Agency) Faculty of Law Universitas Indonesia for selecting, editing and finally publishing this book.

Hopefully this book will enrich the discourse of zakat practices and Islamic Law in Indonesia.

Wassalamu’alaikum Warrahmatullahi wabarakatuhvi

Zakat Laws In Indonesia


viiZakat Laws In Indonesia


TABLE OF CONTENTS

FOREWORD PROF. DR. TOPO SANTOSO, SH., MH........................i

FOREWORD PROF. DR. DRA.USWATUNHASANAH, MA................ii

PREFACE FROM THE AUTHOR........................................................ iii

TABLE OF CONTENTS.......................................................................iv

ABOUT THE AUTHORS .....................................................................vi

CHAPTER IINTRODUCTION...............................................................1I.I. Background

CHAPTER II WHAT IS ZAKATII.1. Introduction13II.2. Zakat: Conceptual BasisII.3. Zakat as Islamic Social FundII.4. Zakat and The Role of The StateII.5. Zakat Attraction to the State25II.6. Conclusion ..................................................................................31

CHAPTER III ZAKAT IN MUSLIM WORLDIII.1. IntroductionIII.2. Zakat, Poverty and Muslim World III.3. Zakat Practices in Selected CountriesIII.4. Zakat Practice in Indonesia III.5. The Distinction of Zakat Management in Indonesia III.6. Conclusion

CHAPTER IV INSTITUTIONALIZATION OF ZAKATBY THE STATE IN INDONESIAIV.1. Introduction56IV.2. Development of Institutionalization of Zakat in Indonesia............56IV.3. State-Based Zakat Management in Different AdministrationIV.4. Zakat Management by Non-State Zakat AgenciesIV.5. Politicization of ZakatIV.6. Socio Political Dynamic of Zakat In IndonesiaIV.7. Conclusion

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CHAPTER V SOCIO-POLITICAL DYNAMIC OF INSTITUTIONALIZATION OFV.1. IntroductionV.2. Legal Struggle for Securing People’s Rights on Zakat

AdministrationV.3. Implications on Zakat AdministrationV.4. Impact on Zakat Collection and Distribution :

People ResistanceIV.5. Institutionalization of Zakat and Justice143IV.6. Conclusion9

CHAPTER VI INSTITUTIONALIZATION OF ZAKAT ANDSOCIAL JUSTICEVI.1. IntroductionVI.2. Right to Social Security in International and

Regional InstrumentsVI.3. State and Non State Social SecurityVI.4. Social Security Rights in Country Report and UPRVI.5. Zakat as Social SecurityVI.6. Zakat : Compulsory of Philanthropy? Rights or Welfare? ...........186VI.7. Conclusion ..................................................................................193

CHAPTER VII CONCLUSION

GLOSSARY ........................................................................................206

BIBLIOGRAPHY208

LIST OF INTERVIEWEES ...................................................................213

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ABOUT THE AUTHORS

Short Bio data

Heru Susetyo, SH. LL.M. M.Si. Ph.D.

Heru Susetyo in an assistant professor at Faculty of Law Universitas Indonesia Department of Law, Society and Development and also Chairman of Center for Islam and Islamic Law at Faculty of Law Universitas Indonesia (since 2015). He is currently teaching human rights, victimology, law and social welfare, children protection law, law and society for undergraduate and Legal Research Method and Zakat Wakaf for Master of Law students. Besides, he also teaches at Faculty of Social Sciences and Faculty of Public Health, Universitas Indonesia. Graduated from Universitas Indonesia in 1996 (bachelor or law) and 2003 (master of social work) and also obtained master of International human rights law (LL.M) from Northwestern Law School, Chicago (2003) and a PhD in Human Rights and Peace studies from Mahidol University, Thailand (in 2014). Currently, he is conducting research to obtain PhD in victimology at INTERVICT, Tilburg University, and The Netherlands. Instead of teaching, Heru Susetyo has written numerous articles in various newspapers, magazines and online media and also published several journals and books related to human rights, victimology, terrorism, social work and international criminal law. He has also been responsible to handle research and publication affairs at faculty of University as Manager of Research and Publication (since 2018), Editor in Chief of Jurnal Hukum dan Pembangunan FHUI (since 2018) and Editor in Chief of Journal of Islam and Islamic Law Studies (since 2007). He is reachable by email at [email protected] and his own blog : http://herususetyo.com

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mailto:[email protected]

Chapter I Introduction

CHAPTER IINTRODUCTION

I.1. BACKGROUNDZakat is a form of religious contribution (alms) in Islamic teaching.

Islam is the religion embraced by majority of Indonesian people. In 2010, Muslim population in Indonesia amounted to 207.8 million people out of 237.6 million (or 87.3 percent)127. With this large number, Indonesia is considered as the most populous Muslim country in the world to surpass Pakistan, India, Turkey and Egypt. The large number of Muslim population does not reflect that Indonesia is Islamic country. Nevertheless, the influence of Islam still significance both in the government as well as in society. Yazid, et.al. (2010) clarified that the relevance of religion has been an important issue both in the context of policy and social sciences. In terms of policy, there are a number of institutions which are related to religion. The welfare institutions, educational institutions and even banking institutions are connected to religion. Therefore, religion used to have an extensive role in almost every aspect of society. In terms of policy, religion has a close relationship with the state and religious leaders who are very actively involved in the government.

However, in the case of Indonesia, the relation between Islam and the state is unique and the way Indonesian people practicing Islam are actually

more in Indonesian way, rather than the Arabian way128. Some Indonesian Muslim scholars are irritated by the Western inclination to identify Islam per se with the Middle East and Arabism. Former President Wahid, for example, repeatedly pointed out that ‘Islam and Arab culture are not the same’ (Woodward 1996: 136 in Kolig, 2009). Wahid is said to have demanded that Islam be ‘indigenized’ in Indonesia; i.e., it should be ‘deeply

127 Based on survey conducted by Badan Pusat Statistik (Central Agency for Statistics) in 2010. Other religious groups are Christians (16,528,513), Catholics (6,907,873) Hindu (4,012,116), Buddhists (1,703,254) Confucianists (117,091) and others (around 1.3 million).

128The Islamic teaching was born and developed in Arabian Peninsula in 6 th -7th

centuries by Prophet Muhammad PBUH and his companions and disciples.1


planted in modern Indonesian soil’ by adapting it to Indonesian conditions and shedding the Arabic precedence (Abdullah, 1996: 69 in Kolig, 2009).

For a religion in a state with Muslim majority, Islam is not just a religionbut it is the way of life. In the case of Indonesia, some Muslims still practice Islam and follow the five pillars of Islam while other Indonesian Muslims are not.129

Zakat or Alms is one of the most important Muslim’s ways of life. It is in fact the third pillar of Islam which makes it an obligation for Muslim to fulfill the requirement of paying zakat in money or in kinds. However, since some Indonesian Muslims are not really practicing Islam and with no penalties imposed by the government, the fulfillment of zakat payment obligation is dependent on the individual Muslim’s belief or ‘taqwa’ (piety).

Due to the low number of zakat revenues received by zakat collecting institutions and small number of Muslim people disbursing their zakat money, the government of Indonesia then intervened in zakat affairs by creating state-based zakat collecting institutions and announced new laws related to zakat affairs since the 1990s. From this point of view, the practice of zakat in Indonesia is good measure of institutionalization. Nevertheless, texts of institutionalization of zakat policy is very scarce in the literature. Among of them are Yazid (2010) who discussed institutionalization of zakat in Malaysia, and Mohamad (2010) who studied bureaucratization and institutionalization of the Sharia in Malaysia.

The concept of secularism is an ideology or doctrine. It is the separation of religion from other affairs and not necessarily exclusion of religion from having authority over political and social affairs. Institutionalization hypotheses actually consists of three different interpretations: institutionalization as a decline of religious belief and practices, institutionalization as marginalization of religion to a privatized sphere, and institutionalization as the segregation of secular spheres from religious standards and institutions (Cassanova, 1994 in Yazid, 2010).

Institutionalization in Indonesia in religious affairs started when the state established Ministry of Religion in 3 January 1946, only four months after Indonesian Independence on 17 August 1945. This ministry managed to regulate religious affairs of all acknowledged religions in Indonesia (Islam, Christian, Catholic, Hinduism, Buddhism and later on Confucianism). In Islamic affairs, the ministry managed to regulate hajj

129There is a famous people’s terminology to address Indonesian Muslim swho are not really practicing Islam as ‘Islam KTP”. KTP or Kartu Tanda Penduduk (National Identity Card) contains religious affiliation and some people put ‘Islam’ as their religious affiliation on KTP but they are not actually practicing Islam.

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(pilgrimage), Islamic education, Islamic propagation, and subsequently the zakat and waqf (under special directorate).

Related to zakat affairs in Indonesia, zakat was initially managed and administrated solely by Indonesian Muslims, even long before Indonesian independence in 1945. Yet, after establishing the Ministry of Religious Affairs (Kementerian Agama), the state managed to secularize zakat affairs by announcing Law on Zakat Administration No. 38/1999 and installing state-based zakat agencies called BAZNAS (Badan Amil Zakat Nasional or National Zakat Agency).

Geertz (in Kolig, 2001) saw institutionalization mainly in terms of ‘institutionalization of thought’, brought about by the growth of science and resultant loss of religious certainties. Modernization cannot occur without institutionalization. Islamic societies, in his view, show little sign of institutionalization and hence cannot truly be modernized. On the contrary, they show a tendency to resist modernization by engaging in anti-secular movements, thus manifesting their inability to keep up with the western society. Clifford Geertz, who studied Javanese and local muslim in Java Island in the 1900s, might be right when he said that Islamic societies showed a little sign of institutionalization and hence could not truly be modernized. In the case of Indonesia, even though, the state has exhausted all efforts to secularize muslim affairs, particularly in zakat affairs, yet the people do have their own needs and wants on zakat which are different from those of the state.

Dinc (2006) holds that institutionalization is defined as the decline of the social significance of traditional religions as an unmistakable very important part of the modernization process. Institutionalization is strongly connected to the decline of the community in the modern societies, which also meant the decline of the communitarian spirit and the rise of materialist, individualist culture and promotion of the individual vis-à-vis social group. Turner (in Isin & Nielsen, 2008) argued that within Islam there are a parallel set of acts that constitute a religious community. Just as acts of citizenship are necessary to construct a commonwealth, acts of piety are necessary to create a community. The worth of citizens within the civil city is measured by their contributions to the community through activity in three arenas or ‘pillars’ such as work, war, and reproduction. These are very obvious in the case of Islam where the worth of an individual is measured formally in terms of the Five Pillars of orthodoxy, namely the hajj (pilgrimage), shalat (the prayer ritual), shaum (fasting during Ramadhan Month), syahadah (the profession of faith) and zakat (almsgiving). Zakat appears as tax, and hence a Muslim who pays their taxes are active members of the umma, which is a global political community.

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The problem emerges when zakat, as a divine and also a religious instrument, must be accommodated in secular (or semi-secular) muslim country, like Indonesia. Not just secular, Indonesia also has various social security mechanisms originated from traditional values, beliefs, religions, as well as state laws, in other words, the legal pluralism of social security mechanism is applicable in Indonesia.

For the zakat itself, since there is a notion that zakat money is not belonging to zakat payers (the money which are temporarily under zakat payers’ ownership are actually belonged to zakat recipients), zakat money are claimable. Zakat can be classified as the poor’s right and not simply the rich’s. However, to classify zakat as a right and not simply a charity, it must be contextualized and related to human rights, particularly social security rights.

The right to social security is recognized since the end of the Second World War, as a basic human right. For its fundamental importance, social security is one of the greatest achievements of modern society, even if it is certainly not fully available to everybody. For those who have access to it, social security means freedom – to a certain extent – from the perennial anxiety about present and future means of existence. This is a form of real freedom, to which people are very strongly attached (Langendonck and Put, 2006).

Among the significant legal and moral basis concerning social security rights is Article 22 of the Universal Declaration of Human Rights (UDHR) 1948 which simply states that "Everyone, as a member of society, has the right to social security". This is further elaborated upon in Article 25 which says in its first section: "Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.”

International Covenant on Economic, Social and Cultural Rights concluded in the United Nations on 19 December 1966. Article 9 of the Covenant repeats the wording of the Declaration concerning "the right of everyone to social security", with the addition of "including social insurance". This seems to indicate that assistance-type benefits are not sufficient for the right to social security, but that some hard entitlements without individual assessment of need are required. But apart from this, the text does not add anything to the vague general statement in the Universal Declaration. Therefore, this important right lacks a clear definition. In the international instruments, that define this right, it is stated in general terms, without further specification. It is far from clear what are the precise

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obligations of states that ratify the international instruments concerning this right and/or who incorporates this right in their national Constitution (Langendonck and Put, 2006).

This unclear definition then leads to unclear concepts. Social security right might be one of unpopular and less discussed rights in this planet. While many people talk a lot about civil and political rights, economic rights, development rights, etc., few people pay attention to social security rights. This notion is in line with the general comments of ESCR Committee to Right of Social Security which express this issue as follows :

The Committee on Economic, Social and Cultural Rights (the Committee) is concerned over the very low levels of access to social security with a large majority (about 80 percent) of the global population currently lacking access to formal social security. Among these 80 percent, 20 percent live in extreme poverty. During its monitoring of the implementation of the Covenant, the Committee has consistently expressed its concern over the denial of or lack of access to adequate social security, which has undermined the realization of many Covenant rights. The Committee has also consistently addressed the right to social security, not only during its consideration of the reports of States parties but also in its general comments and various statements.130

Meanwhile, social security systems do not just belong to international laws. The practices and concepts of social securities have been found in many nations, ethnicities, values, religions, and beliefs, both in modern and traditional life, either in the current and the past, in a modest and even in complex forms.

General Comment No. 19 of ESCR to the rights of social security distinctly mentions that (point no. 5) :

“Other forms of social security are also acceptable, including (a) privately run schemes, and (b) self-help or other measures, such as community-based or mutual schemes. Whichever system is chosen, it must conform to the essential elements of the right to social security and to that extent should be viewed as contributing to the right to social security and be protected by States parties in accordance with this general comment.”131

Given the case of Islamic law, Islam is a world’s religion worshipped by around a quarter of world population. Yet, Islam is not just a religion, but

130General Comments No. 10 point (7) and (8) of ESCR Committe at 39th Session on 3 – 27 November 2007,, available at http://www.refworld.org/docid/47b17b5b39c.html.

131General Comments No. 10 point (5) of ESCR Committe at 39th Session on 3 – 27 November 2007, available at http://www.refworld.org/docid/47b17b5b39c.html.

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also a teaching containing with comprehensive laws and orders. The teaching and practices of Islam have shown us some forms of social security. Nevertheless, some scholars have doubted that Islam is compatible to human rights and whether the Islamic Social Security System can coexist with other systems in harmony.

To understand more about this issue, the social security system in Indonesia might be given as a good example. Indonesia is the most populated Muslim country in the world with about 207 millions Muslim inhabitants (out of 237 million in 2010). However, the country is not an Islamic country132, but rather a country which accommodates all religions and beliefs under the state philosophy of Bhinneka Tunggal Ika (Unity in Diversity).133 Islamic laws are existing in Indonesia along with secular laws and customary laws. In other words, Islamic laws are existing in legal pluralism situation. Islamic laws have coexisted with other laws in Indonesia for many years.

Indonesia is also a country that ratified major human rights conventions, including International Covenant on Civil and Political Rights (ICCPR) (through the Law No. 12/2005) and International Covenant on Economic Social and Cultural Rights (ICESCR) (through the Law No. 11/ 2005). The country has also enacted some laws related to human rights such as Human Rights Act No. 39 year 1999, Human Rights Court Act No. 26 year 2000, the Law on Ratification of Convention against Torture in 1998, The Law on Ratification of Children Rights Convention in 1990, The Law on Ratification of CEDAW in 1984, and so on.

Islamic Laws in Indonesia had been developed long before the Indonesian Independence in 1945, precisely during the Dutch Colonialization. Before the 1945 independence, Islamic courts and some Islamic laws had also been introduced in very modest manner. Yet, the real development and formal recognition of Islamic Laws in national legal

132Simon Butt (2010: 1) mentioned that Indonesia is home to more Muslims than any other country. Yet it is not an Islamic state and is unlikely to become one, despite the strong and sustained urgings of some Muslim groups. Indonesian Islam is, like Indonesian society itself, dynamic and diverse, accommodating a wide variety of practices and beliefs. Butt also quoted Gertz (1960) and Ricklefs (2008) that many scholars agree that a large majority of Indonesian Muslims are moderate and tolerant. Although holding a strong sense of Islamic identity and ritually oberving the five pillars of Islam, these Muslims also accept the multitude of local spiritual observances not necessarily inspired by Islam.

133There are a lot of debates whether Indonesia is really a secular country, because, Indonesia is still greatly influenced with religious values, particularly Islamic values. Imtiyaz Yusuf, an expert of Islamic Politic from Mahidol University, (interview in Bangkok, 29 April 2013) prefers to address Indonesia as ‘semi-secular country.’

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system were actually beginning after the Indonesian Independence in 1945 up to present.

The first milestone and significant national law heavily influenced by Islamic law was Indonesian Marriage Law No. 1 year 1974. The law is actually a national law but many of its provisions are clearly derived and greatly influenced by Islamic Marriage Law.134 Following marriage Law, the country also enacted Indonesian Law on Islamic Court No. 7/1989, Islamic Family Law Compilation year 1991, the Law on Zakat No. 38/1999 (later amended by Law No. 23/2011), the Law on Wakaf (endowment) No. 41/2004, the Law on Islamic Banking System No. 21/2008 and Law No. 19/2008 on State Sharia Obligation (or Sukuk in Arabic Language), the Law No. 3/2006 (amended by Law No. 50/2009) on extensification of jurisdiction of Islamic court.

While the aforementioned laws deal mostly with family and economic affairs, the Islamic laws in Aceh have gone further by introducing local ordinances/local bylaws in Islamic Criminal Laws (or Qanun) which have specific jurisdictions on certain areas, namely : adultery (zina), gambling (maisir), alcohol (khamr), and khalwat (man and women out of wedlock intimately conjoined together in a remote place), and also (in 2009) introducing a qanun on jinayah (or local ordinance in Islamic Criminal Law) which also covers stoning to death punishment (rajam) for adulterers and amputation for thief (but so far, until beginning of 2014, this law has not been implemented because of heavy criticism from public).

Among several prevailing Islamic laws in Indonesia, there are at least three laws containing the provision of ‘social security’ in various types, namely The Law on Zakat No. 38/ 1999, the Law on Wakaf No. 41/2004, and the Law on Islamic Banking No. 21/2008. The Law on Zakat No. 38/1999 clearly mentions, on its consideration part, that zakat is one of potential financial resources for community welfare. Zakat is an Islamic instrument made to establish social justice, and that zakat pays special attention to the needy people. Article 16 of Zakat law mentions that money originated from zakat collection will be disbursed for those who are eligible to be the beneficiaries according to holy Al Qur’an and Islamic teaching. Furthermore, the same article rules that the utilization of zakat collection must be strictly based on priorities of the needy people (mustahiq) and is utilized for productive efforts. In addition, the infaq, shadaqah, wasiat,

134The nationalist and democratic party of Indonesia ( PDI or Partai Demokrasi Indonesia) disapproved this Marriage Bill of 1974. Their MP’s walked out from the forum for following reasons: the bill was regarded as heavily influenced by Islamic values or Islamic interest and it was incompatible to nationalism spirit embraced by the party.

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waris and kafarat (all are type of giving provided by Muslim) must be utilized, preferably for productive efforts.

The Law on Zakat No. 38/1999 had been subsequently amended by Law No. 23/2011 on Zakat Administration. This new law was enacted on 27 October 2011 and suddenly became as hot issue that raised public criticism. Many people, particularly private or non-state zakat agencies, held back to the law since it has introduced the new relation and new situation between state and the people in zakat management where the provisions were more in favor of the state (state-heavy). The State tried to centralize the zakat management in Indonesia through independent agency created by state namely BAZNAS, while the private zakat agencies treated only as supporting agents. Moreover, the collection and disbursement of zakat money without state’s written approval are considered as a crime (Articles 38 to 41 of the said law).

Meanwhile, The Law on Wakaf135 No. 41/2004 states that wakaf as an Islamic institution has economic potential and benefit that need to be effectively and efficiently administered solely for the sake of worship and religious interest as well as to promote people welfare in Indonesia. Article 5 mentions of the said law stated that wakaf is established for economic benefit and general welfare. Regarding the utilization of wakaf, Article 22 of the same law further elaborates that the utilization of wakaf treasure can only be done for: (i). Infrastructures and activities of worship, (ii) infrastructures and activities of education and health, (iii) Assistance to the poor, unaccompanied children, orphans, scholarship, (iv) promoting and enhancing Muslim’s economy, and (v) other general welfare compatible with Sharia and national laws.

Furthermore, The Law No. 21 year 2008 on Islamic Banking System also clearly mentions in Article 4 that Islamic/Sharia Bank’s obligation is to collect and disburse people’s funds. Islamic/Sharia Bank can also function as a Baitul Maal136 institution by receiving funds originated from zakat, infaq, shadaqah, hibah or other social funds and disburse them to the organizations responsible to administer social funds. Also, the Islamic Banks are authorized to collect social funds originated from cash wakaf and transfer them to wakaf organizer (nazhir) according to the intention of the givers.

135Wakaf or waqf is a donation given by muslim people in the form of land, building, house and other immovable things to the God (Allah SWT) merely for the sake of worship, to benefit the community. Mostly wakaf donation are in the form of land or building which are subsequently transformed into Mosque (mosque), Islamic Schools, hospital and other public facilities.

136Literally means House of Wealth or House of Treasury.8


Regarding zakat management and the relation between state and the people, Salim (2008: 12) mentions that the Qur’an does not elaborate the provisions on zakat management and enforcement. In fact, there is no clear directive as to whether to centralize or decentralize, institutionalize or personalize the application of zakat. Although the Qur’an mentions eight recipients of zakat including zakat agency or zakat collectors (al amilin alayha), there is no further instruction and elaboration on zakat collection, obligation to pay their zakat to certain agency, or possibility to give their zakat directly to the poor and needy. The application of zakat in the modern period has never been the same from one Muslim country to another. Practices range from complete incorporation of zakat as a regular tax of the Islamic states (such as in Pakisan, Sudan, Libya, Yemen, and Saudi Arabia) to the establishment of intermediary financial institutions that receive voluntary payments of zakat (like in Jordan, Egypt, Bahrain, Kuwait and Indonesia), to the disbursement of zakat according to the individual’s private conscience (like in Morocco and Oman).

There are many cases in Indonesia related to zakat mismanagement (zakat disbursement) and zakat policies like in Pasuruan (East Java Province) in 2008, in Jakarta 2009, in Makassar (South Sulawesi Province) 2012 and 2013 respectively, also the Massive protests related to Regent Decree on Zakat Payment of Civil Servants took place in Lombok Timur Regency (2005), in Malang (East Java Province 2011) and in Pekanbaru Riau Province (2013)137. All the cases show that zakat management and zakat policies in Indonesia are not properly managed and regulated. Hence, they are subject to criticism by some parties.

For example, at the first case, a wealthy and pious man in Pasuruan Regency, East Java, disbursed his zakat money directly to poor people around his residence. This action lead to 40 human casualties since people fought, pushed, and hit each other in order to get the zakat money at first chance.

The second case occurred right after the Islamic Holy Day (Idul Fitri) in September 2009. Jakarta Provincial Governor at that time, Fauzi Bowo, disbursed zakat money directly to the people who massively gathered in front of Jakarta Government Provincial Office at Jalan Medan Merdeka Selatan. People pushed, kicked and stampeded due the irresponsible rumors that the amount of zakat money was insufficient. Nobody was killed, but many people were taken to hospital due to severe injuries.

137INFOZ magazine (20th Edition December 2013), a magazine owned by Forum Zakat revealed that in Pekanbaru, Riau Province and Malang City, East Java province, people strongly protested the regulations that oblige civil servants to deduct 2.5 percent of their monthly salary as zakat money and disburse them to state-based zakat agencies.

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Another case took place during Ramadan month (August 2012 and July 2013) in Makassar, South Sulawesi, when a rich man directly distribute his zakat to the poor people for the amount of IDR10000/each, which also caused stampede and injuries to many people.

Last case related to zakat disbursement took place in Lombok Timur Regency, West Nusa Tenggara Province. The teachers, who were also civil servant within the region, launched a mass protest against the enforcement of Lombok Timur Regent Decree No. 17/2003 as an implementing regulation to Lombok Timur Local Ordinances No. 9/ 2002 on Zakat. The Regent Decree obliged all Muslim civil servants (including teachers) to pay the zakat money to designated state-based zakat agency. The payment of zakat carried out by automatically deduct the amount of 2.5 percent of their monthly salary. The decree soon triggered a massive protest. The civil servant teachers conducted a strike for several days and pushed the Regent to revoke the decree. The cause of this resistance was due to the fact that not of all them are muzakki or zakat payers. Half of the teachers earned low salary and had a lot of debt, therefore, they are not qualified to be zakat payers (Salim, 2008: 19). Salim (2008) later claims that the Regent Decree violates Muslim individual’s right on freedom to choose the method of payment of zakat, they cannot freely disburse their own zakat money due to uniform method of payment imposed by the Regent Decree.

Thus, it is clear that even in predominated Muslim country like Indonesia, the implementation of an Islamic economy instrument, like zakat, is not that easy. Hooker (2008) mentioned that when it comes to relation between zakat and tax, it is revealed that the characteristics of zakat present problems for the contemporary nation-states The individual Muslim is no longer just a Muslim, he or she is also a citizen, and therefore subject to the secular laws of the state. Zakat is a tax, and taxes are a state matter with their own laws (Hooker, 2008: 32).

Other problems related to zakat management are the methods of payment and disbursement. The fatwa138 from the 1970s through to the present have always insisted that payment should be personal, and hence that individuals should be able to choose the amount and method of payment (Hooker, 2003: 11). Zakat has two components: fitrah, a small sum paid as part of one’s religious obligations at Ramadan, and maal, a larger sum based on one’s disposable income. Fitrah is always paid by

138 Fatawa or fatwa is a judgment made by Muslim Scholar (ulama) on certain issues upon request by muslim people or initiative made by board of ulama to resolve a problem or provide an Islamic legal views on certain issues.

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Muslims. However, the state did not intervene seriously in the collection of zakat maal until 1999, the year when the first national Law of Zakat was enacted (Hooker, 2008: 33).

A national system of zakat was introduced in 1999 under the Zakat Management Law (No. 38 year 1999). It attempted to do two things: first, to institute an effective nation-wide system for the collection and distribution of zakat, and second, to reconcile the state and private systems through the provision of a common administrative framework. The law permits the collection of zakat by two sort of agencies: a national Zakat Agency Board (Badan Amil Zakat/BAZ) and private Zakat Agencies (Lembaga Amil Zakat/LAZ). The latter includes organizations of varying sizes and capacities. There is no machinery to compel payment, although some districts and city authorities have been trying to do so in the case of civil servants. In theory, the amounts paid in zakat are deductible from income tax (Hooker, 2008: 33).

Unfortunately, the new law on zakat management No. 23/2011 and its implementing regulation, Government Regulation (Peraturan Pemerintah) No. 14/ 2014139 have reduced public participation in zakat management. The said laws stipulate that Badan Amil Zakat Nasional (National Zakat Agency) is set as the primary zakat administrator in Indonesia. It may have branches in provinces and cities/ regencies. This unequal position left the private zakat agencies as only the supporting agents in zakat management. They may collect zakat only if they were officially acknowledged by the National Zakat Agency (BAZNAS). The previous law of 1999 did not establish such unequal position. Instead the 1999 law acknowledged the more flexible room for public participation. Therefore, the coalition of non-state zakat agencies which felt that they were discriminated by the law later challenged this new zakat law by filing a judicial review of Law No. 23/2011 to Indonesian Constitutional Court on 16 August 2012 followed by a judicial review of Peraturan Pemerintah (Government Regulation) No. 14/2014 to Indonesian Supreme Court on 17 July 2014.

The aforementioned discourses regarding Islamic social security laws (particularly zakat) and its implementation in Indonesia have shown the complex and complicated manner of the institutionalization of Islamic-based social security instrument into a non-Islamic country. The state, people, and other stakeholders in this discourse must deal with these

139 The new law on Zakat Management No. 23 year 2011 is an amendment to the old zakat law No. 38 year 1999. It was passed by Indonesian parliament on 27 October 2011 and the Government Regulation No. 14/2014 was enacted by President of Indonesia on 14 February 2014.

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circumstances and harmonize various laws in multicultural situation including to human rights, which seemed to be a relatively new issue for many Indonesians. Moreover, the institutionalization also bring forth contestation. Contestation between state and civil society as well as contestation within state apparatus in administering zakat affairs. Hence, institutionalization of zakat in Indonesia has presented not just religious issues but also a socio-political dynamic within it.

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Chapter II What Is Zakat

CHAPTER IIWHAT IS ZAKAT

II.1. IntroductionThis chapter is intended to discuss zakat as Islamic economy instrument

by exploring the Islamic social security instruments, the origin and background of zakat in Islamic teaching and Islamic history, and the basic concepts of zakat among other Islamic economy instruments.

The next part will describe about how zakat was managed and distributed by religious institutions both in Islamic history as well as in Indonesia. The last part deals with the analysis about why the state of Indonesia interested in administering zakat affairs.

Administration of zakat by secular (or semi secular state) like Indonesia is an interesting thing to be studied since zakat is a divine religious instrument intended to uphold social justice. Interestingly, Indonesia is not a state based on religion, although considered as the most predominantly muslim country in the world.

II.2. Zakat: Conceptual BasisIslam is among the world major religion with around 1.5 billions of

disciples all over the world. Not just a religion, Islam is a way of life, a guidance, a set of laws and complex system to govern Muslim’s entire life. The main sources of Islamic laws are the Holy Qur’an (Koran) and the Prophet Muhammad’s speech and behaviors (usually called as Sunnah or Hadits). Other important sources are muslim scholars’ thought and opinions (qiyas and ijtihad) which can be classified into several main school of thoughts. As a religion and a complex system of life, Islam is both a relationship between human beings and the God (Allah), between human themselves (muamalah) and between human beings to other living creatures, the entire planets.

The relationship between human and the God (habluminallah) is represented at the terminology of ‘ibadah’. Ibadah consists of series of activities such as taking a pledge (syahadah) that Allah is the one and only God and that Prophet Muhammad is Allah’s messenger, observing prayer (shalat), fasting, paying zakat, and doing pilgrimage (hajj) to Makkah if a Muslim is able and adequatet.

The relationship between human (habluminannaas) is another atmosphere of a muslim’s life. This kind of relationship must be observed in line (integrally) with the relationship between human and the God (ibadah).

13Zakat Laws In Indonesia


Islamic social and economic systems are both ibadah and muamalah. They reflect the relation between Muslim and the God (Allah) namely ibadah (or worship) and reflect the relation among Muslims (muamalah). Ibadah and muamalah integrates two dimensions of muslims’life. Therefore, discussion about Islamic social security should also consider its dimension as both profane and divine.

Rehman and Askari (2010: 7) mentioned thatIslam unites ethical principles with institutional measures (laws and rules) to create a framework for how an Islamic inspired economy and society should function. Institutions proposed by Islam relating to governance, social solidarity, cooperation and justice are designed to achieve economic development and growth. The essence of an Islamic society is that it is a rule-based system, centering on the concept of justice (Al’Adl’). Broad measures to address perceived resource scarcity and to achieve an equitable distribution of wealth and resource under the rubric of justice are three-fold : a) the fostering of ethical and moral values such as justice, equality, honesty, etc, b) economic tools and instruments such as zakah, sadaqah, and inheritance and property laws, and c) the development of the institutional capacity and political will to insure that these principle and norms are adequately upheld. At the core of the model is the principle of justice while the principle equity, fiscal prudence, respect of property rights and hard work branch out from this central theme (Rehman and Askari, 2010: 7).

In Islam, Zakat is known as a tax-like mechanism to distribute wealth to the poor. Zakat accounts for 2.5 percent of the wealth and savings which have remained constant for one full year. In Arabic, the term Zakat is derived from the phrase Zaka which means growth, pure and blessed. The meaning of growth in this context is to grow up and develop human dignity (Djamil,2004 in Mintarti,2011 : 83). The goal of zakat in Islam is not just to help the poor people, but to lift the people up higher than their wealth. So the people can freely manage but not driven by wealth. Zakat aims to liberate the soul of the people from their wealth. The worst of the man are those who are driven by wealth and render the wealth as their God (Qaradhawi, 1988 in Mintarti,2011 : 83). Qaradhawi further stated that zakat is empowerment. Zakat empowers the weak people. Hence, zakat must be apprehended as driving force, restorating force and promoting the wellbeing of its recipients (Djamil,2004 in Mintarti, 2011 : 83).

Therefore, the concept of Zakat in Islam means the purification of wealth and a good deed which helps the needy in the society and strengthens social bonds in the community. Zakat is one of the earliest systems used to reach social justice and satisfy the needs of the poor and needy, based on taking a portion of the wealth of the wealthy and giving it to the poor and those in need. Zakat can also be viewed as a purification for the Muslims of greed



and other worldly desires as it builds a sense of responsibility towards those who are in need. Zakat is also a mechanism to eradicate poverty and sustain good quality lives for people (Yementimes Staff, 2008).

The concept and principle of justice are among the underlying idea of Islamic social security instrument. And so is zakat that is intended to uphold social justice and income distribution. Zakat is therefore, an obligation of Muslims to give a specific amount of their wealth with certain condition and requirements to beneficiaries called mustahiq (Al Qardhawi in Salleh and Rahman, 2011: 7). The concept of zakat exemplifies Islam’s strong concern with social and economic justice. According to Arif (in Saleh, 2011: 7) zakat serves as an ‘equitable distribution of wealth and income, which is enforced through moral obligation and fiscal measures.” Zakat is monetary devotion based on the idea that all things belong to Allah (God), and that wealth is therefore positioned at the disposal of mankind as a trust. The passion of human beings is sanctified through earmarking a proportion of the wealth for the distressed and needy as mandated in the Qur’an. Zakat does not only purify property, but also purifies one from selfishness and greed. The recipients of Zakat also purify themselves from envy, jealousy, hatred and uneasiness as it will foster goodwill, gratefulness and warm wishes for the contributors (Dhar, 2013).

In Islam, wealth is a means and not an end. And the management thereof should be for the benefit of the community, directed to please God, and aimed to the afterlife. As wealth is considered as belongings of God, with mankind nothing other than its temporary guardian, social responsibility and accountability are essential to this concept (Wouters in Ahmed, 2013: 150).

The idea of zakat is, therefore, derived from the idea, That your wealth is actually not yours. They belong to the God. And indeed, in your wealth, there is some parts belonged to the community.140

In wider perspective, zakat is intended as a means to achieve social justice. Social justice implies that every individual in a community is assured of minimum means of livelihood. Al-Shafi’I, Malik and Ibn Hanbal141 stressed that the fulfillment of one’s basic needs is the main criterion for the distribution of zakat. Failure to satisfy the basic needs of the masses can lead to the occurrence of poverty and wide disparity between the rich and the poor

140Paul Wouters (in Ahmed, 2013) later mentioned that Islamic wealth management

acknowledges responsibility toward the community and redistribution as key concepts at the very start of the chain and not as end result.

141Al-Shafi’I, Malik and Ibn Hanbal are three great Imams (leader) and scholar in Islamic

School of Thought (Mazhab) acknowledged by Muslims all over the world for their legacies in juridical matters and Islamic jurisprudence. They all lived around 8th to 9th century, Al-Shafi’I was born in presently Gaza (Palestine), Malik was born in presently Makkah (Saudi Arabia), and Ibn Hanbal was born in presently Baghdad (Iraq).



(Hassan in Sadeq, 1991: 213). Related to this discourse, Mintarti (2011:78) believes that zakat in Islam has two meanings: theological-individual and social meanings. Theological-individual meaning means that zakat is intended to purify wealth and soul. In this array, the zakat affects only to individuals and their relation to the God (Allah). However, the social meaning of zakat means that zakat is also has social dimension, namely to eradicate poverty and social injustice. Zakat money will be circulated to other people, not just enjoyed by the rich. And here is the essence of zakat: the distribution of income and wealth. The prophet Muhammad PBUH said: "Any owner of gold and silver who does not deliver from them their right, on the Day of Qiyamah (Day of Judgment), (the gold and silver) will be shaped as foils of fire. Then it will be heated in the fire of Hell, (and) then with it he will be ironed on his side, his forehead, and his back" (narrated by Muslim). Qardhawi, a well-known Muslim scholar, states (1993:62) that zakat is obligatory after the holy Qur’an verses which were delivered to Prophet Muhammad during the Medina period. The verse on the obligation of zakat is quite clear and the order and instruction to pay zakat money is firm. The order to pay zakat is in line with the order to perform shalat (prayer).

Zakat is obligatory when a certain amount of money or nisab is reached or exceeded. Zakat is not obligatory if the amount owned is less than this nisab. The nisab (or minimum amount) of gold and golden currency is 20 mithqal (One mithqal is approximately 4.25 grams), or approximately 85 grams of pure gold. The nisab of silver and silver currency is 200 dirhams, which is approximately 595 grams of pure silver. The nisab of other kinds of money and currency is to be scaled to that of gold, or 85 grams of pure gold. This means that the nisab of money is the price of 85 grams of pure gold, on the day in which Zakat is paid.

Nonetheless, the word ‘Zakat’ which means purification is becoming obligatory according to Qur’anic verse and it is the main form of alm which is obligatory. For this reason zakat remains obligatory even if there are no needy persons in a community. The system of zakat is designed to help the poor and the needy, and it is a highly desirable characteristic of the believers that in addition to prayers and other acts of worships they are always conscious of this duty, and this is the best strategy to remove social-economical injustice and disparities (Wahidi, 2012 : 63).

Zakat is obligatory after a time span of one lunar year passes with the money in the control of its owner. Then the owner needs to pay 2.5 percent (or 1/40) of the money as Zakat (a lunar year is approximately 355 days). The owners of zakat money should deduct any amount of money they borrowed from others, then they check if the rest reaches the necessary nisab, before they pay zakat. If the owner had enough money to satisfy the nisab at the beginning of the year, then the money increased (in profits,



salaries, inheritance, grants,etc.), the owner needs to add the increase to the nisab amount owned at the beginning of the year, then pay Zakat, 2.5 percent of the total at the end of the lunar year. (There are small differences in the fiqh schools here).142

In Indonesian situation, Indonesian compilation on Syariah Economic (Kompilasi Hukum Ekonomi Syariah, 2009) mentioned in Article 668 (2) that zakat is part of wealth obliged to be disbursed by a Muslim or Muslim’s institution to those who deserve to receive it. Furthermore, Article 679 (1) of the compilation stated that zakat is counted from the whole income excluded the living costs. The group of persons deserve to receive zakat money are called as mustahiq (from Arabic word, means ‘those who deserve’). The mustahiq of zakat has already been stipulated in the holy Qur’an.

Another important thing in wealth distribution in Islam is Baitul Maal (House of Wealth). Baitul Maal is the manifestation of an Islamic philosophical concept built upon three main principles relating to the concepts of wealth, trust, and socio-economic justice. Being a manifestation rather than a fixed institution in Islam. Baitul Maal can involve either one or more institutions developed to achieve the ends provided in the concepts of wealth, trust, and socio-economic justice (Ghazali, 1990: 46).

The attainment of socio-economic justice is an immediate objective of Baitul Maal. This is clear since Baitul Maal bears the responsibility of undertaking the workings of the society’s fiscal system, development planning and welfare provisions. The structure of Baitul Maal can be in the form of one or more institutions, it can be said that the Baitul Maal will act as a treasury complemented by a full-fledged administrative machinery entrusted with the task of planning and distribution of society’s wealth in the whole socio-economic and political set up of the nation (Ghazali,1990: 46 – 47).

Bait in Arabic means a house and maal is property. Baitul maal, therefore, means the treasury of the public. The very concept of the Baitul Maal is the concept of trust, the wealth of Baitul Maal is to be treated as Allah’s wealth or Muslim’s wealth, as against the imperial treasury as used to be known during the medieval period. This concept implied that monies paid into the treasury were Allah’s trust and the common property of all the Muslims and that the Caliph or a ruler was in the position of a trustee, whose duty was to spend the treasury on the common concerns of all Muslims while allowing for himself nothing more than a fixed stipend (Doi, 2002: 388).

The concept of Islamic state and the establishment of Baitul Maal are inseparable. The word Baitul Maal does not occur in the Qur’an as such, but the sources from which the funds flow into Baitul Maal are all mentioned in one way or the other in the Holy Qur’an. The institution, however, is

142(http://www.islamawareness.net/Zakat/whatzakat.htmlaccessed on 13 January 2012


http://www.islamawareness.net/Zakat/whatzakat.html


mentioned frequently in the al-hadits of the prophet. Baitul Maal came into being in the life term of the Prophet immediately after the coming into existence of the Islamic State of Medina. It developed fully in the time of the Rashidun Caliphs, particularly the second Caliph Umar bin Al Khattab (Doi, 2002).

The sources from which funds are collected in the Baitul Maal are as follows (Doi, 2002 and Ghazali, 1990):a. Zakat, One of the pillars of Islam which demands that 2.5 percent of

1/40 part of our savings should be given the poor and needy. These funds were collected and managed in the Baitul Maal of Muslims for the welfare of the ummah. The zakat is only payable by Muslim subjects from their cash property, trade merchandise and herds of cattle. The non-Muslims are exempted from the payment of zakat.

b. Sadaqah or infaq, It is a voluntary charity given by individuals over and above the payment of the compulsory zakat to relieve the problem and sufferings of fellow-human beings. According to the hadits, sadaqah must be given in such a way that even the left hand or the donor does not know what the right hand gives.

c. Jizzyah, the jizzyah is an annual tax levied on non-Muslim citizens living in the Islamic state. Just as the Muslims pay the compulsory zakat, the non-Muslims pay the jizzyah. In return, it will be the duty of the Muslim state to protect their lives and property, like any Muslim citizen. The jizyah collected will go to the Baitul Maal.143

d. Kharaj, a tax levied on the producer of the landed property owned by the non-Muslim in the Islamic state. Just as the Muslim pay ushr, the non-Muslim are supposed to pay kharaj to the baitul maal.

e. Ushr,, the taxation to be paid on the produce of the landed property of the Muslims at the rate of ten percent if it through natural rainfall in an Islamic state. But if the water has been supplied through irrigation, it will be at the rate of 20 percent. This amount is to be paid in the Baitul Maal which will cater for the welfare and needs of the individuals as well as the ummah as a whole.

143Jizyah in reality means a reasonable tax that a Non Muslim is required to pay. If a

Muslimruler fails to protect the life and property of Non Muslim citizens, he has to return the jizyah. They will pay jizyah just as the Muslims will give an obligatory zakat,the poor due. The payment of jizyah will absolve a Non Muslim from the payment of zakat although he will still enjoy the right to share the zakat money if he happens to be poor and needy like any other Muslim. The amount of jizyah must be reasonable. So that it can easily be paid by Non Muslims. It will be interesting to note that Caliph Uthman fixed equivalent to one shilling per month for the rich, 6p for the middle class and 3p for the ordinary people. The destitutes were exempted from payment. Also, as a Muslim is bound by Shariah and and cannot behave as he likes, a Non Muslim citizen must also share in all the activities for the welfare of the state and should not jeopardize the activities launched for the betterment and well being of the state. Just as a Muslim shares rights and obligations with every other Muslim everywhere, regardless of nationality, so does the Non Muslim citizens (Doi, 1994 : 55 – 56).



f. Chums, a certain percentage of whatever a Muslim army gets as a booty (ghanimah) after fighting war with enemies and gaining victory over them. Likewise, a certain percentage of the income from the natural resources, mines, petroleum, and other natural hidden treasures owned by individuals is also called khumus. Such proceeds go to the Baitul Maal and is used for the welfare of the nation.

g. Fay, a property captured from the enemy forces without fighting any battles with them. Such property, if acquired, will go to the central funds of the Baitul Maal.

h. Dara’ib, are the general taxes which the Islamic state deems fit to impose on its citizens to carry out some public welfare works or when the state needs funds in the event of any emergency. The proceeds go to the Baitul Maal.

i. Waqf, these are the religious trust and the proceeds from these religious trust properties go to the Baitul Maal.

j. Ushur, constitutes the revenue collected from the proceeds out of trade and business carried out by all the citizens of the Islamic state irrespective of their religious beliefs. This revenue also goes to the Baitul Maal.

k. Kiraal Ard, the income generated from the government and it goes to the central funds of the Baitul Maal.

l. Amwal al fadillah, any income from the government owned natural resources is called amwal al fadhilah and goes to the Baitul Maal.

This research focuses only on zakat for the following reasons: zakat is considered as special wealth and its disbursement must meet some restrictions and limitations. This is partly because zakat money is mandatory, while wealth (like in infaq,shadaqah or other social funds which are not mandatory) has no restrictions or specific categories in disbursement. People have their own freedom to dispense their own money either by themselves or through social institutions, and there are no specific categories of recipients (like in zakat recipients). For zakat disbursement, the Qur’an and history of Islam tell us that zakat should be managed by power. Power in this meaning could be state or state-based institutions. The role of the state in zakat affairs and its management to secularize zakat among other social security instruments in a multicultural society like Indonesia are the reasons why studying zakat in Indonesian context is always interesting.

Muslim jurist are unanimous in their opinion that Muslims as well as non Muslims are to be treated equally in their rights to be looked after from the funds of Baitul Maal in any Muslim State.144 However, whether non muslim

144The source of funds in Baitul Maal are not only zakat money.



deserves to be zakat recipients, muslim scholars have different opinions. Zakat is only given by Muslims and Non Muslims are exempted from it. Imam Zufar (in Do’i, 1994) thinks that it is lawful to give zakat to the poor and destitute dhimmis145 in order to draw them closer to Muslims. He claims that although Non Muslims have not contributed anything to zakat, they still can be the recipients from the zakat funds. Another group of jurists only allows the payment of zakat to the poor dhimmis when one can not find any poor Muslim recipients, while there are still some jurists belonging to different schools who insist that zakat should not be given to Non-Muslims (Do’i, 1994 : 110).

II.3. Zakat as Islamic Social FundThe original teaching of Islam about zakat clearly classifies zakat as

obligatory for Muslim people. Zakat is obligatory for Muslims who meet certain requirements where they must set aside their money in certain amount and for certain period as stipulated by Islamic teaching, to be disbursed to needy people (zakat recipients). Saidi in Kurniawati et.al. (2004:1) mentioned that public fund in Islam can be differentiated to three categories i.e. for social, professional, and commercial purposes. Social fund is fund intended as social assistance, either directly provided to the needy people or through social organization channel which will subsequently be delivered to the needy people without personal or political interests. Professional fund is a fund that needs special authority and skills since the fund is intended as rolling fund. The best example for professional fund is wakaf fund. Meanwhile, commercial funds are funds intended for investment or business purposes. Fahmi (2010) asserts that zakat is the most important social security in Islam, while Sudewo (2007) indicates that zakat is the most important political decision in Islam.

The main sources for social fund in Islam are Zakat, Infaq and Shadaqah. Zakat is the particular form of money which have considerable symbolic importance because it is one of the five pillars of Islam and thus an individual obligation to God. It is also one of only two of the pillars directly involving money (the other is hajj). The Five Pillars of Islam (or ‘Arkanal Islam’ in Arabic, ‘Rukun Islam’ in Indonesian) are five expressions as follows : As-shahadah (witnessing) that Allah is one and Prophet Muhammad is the last prophet of Allah SWT, prayers (shalat) regularly, Zakat, Fasting in the month of Ramadhan (shaum) and pilgrimage or hajj at Baitullah (kaba) in Makkah.

Nafik (in IMZ, 2011 : 175) interpolates that zakat can be utilized as a welfare indicator, a means to narrow economic gap. An instrument for growth

145Dhimmis or zhimmis are Non muslims living in Islamic states.



and economic empowerment, and a tool to control the economy. Zakat will have long- term impact should it is employed for empowering the mustahiq (zakat recipients), not just a charity. The charity approach of zakat will render the zakat recipients unproductive and will affect only to short term economic impact.

Nafik (in IMZ, 2011 : 181) further claims that zakat works as welfare indicator universaly, everytime, everywhere and at all economic systems. Somebody will become as zakat payer (muzakki) when his/ her wealth has reached the certain limit (nisab). Somebody who are categorized as muzakkican be categorized as wealthy man. Why? In counting the nisab, the zakatable wealth are those which are already deducted for regular cost or regular consumption. If the amount of remaining money still higher than nisab limit after being deducted for regular cost, then he or she can be considered as muzakki or ‘wealth person’.

Research conducted by Laila & Amalia (in IMZ, 2011 : 229 – 251) and Mintarti (in IMZ, 2011 : 43) shown that empowerment programs by utilizing zakat money conducted by non-state zakat agency in Indonesia has successfully empower poor people. The indicator is the income of zakat recipients is increasing. The zakat recipients’ increment of salary, in turn, will also affect their ability to meet the basic needs such as food, clothes, house, education, health and recreation. Furthermore, the facilitation program conducted by non-state zakat agency has successfully increased the skills, knowledge and attitude of the mustahiq. Further, zakat can be employed to transform and empower a community.146

Beik (2009: 47) who studied the role of Dompet Dhuafa Republika in alleviating poverty through zakat also inferred that zakat can reduce the number of poor families from 84 percent to 74 percent (in a research area). Research conducted by Hartoyo and Purnamasari (2010) in Garut Regency, West Java Province in 2010 also concluded that zakat (in this case is zakat recipients of Lembaga Amil Zakat (non-state zakat agency) Persis) can diminish the poverty gap to 7.52 percent and elevate the income of its zakat recipients up to 3.70 percent. Another study conducted by Anriani (2010) in Bogor City, West Java Province (to the zakat recipients of Badan Amil Zakat Kota Bogor or Bogor City Zakat Agency) concluded that the zakat recipients (mustahiq) of BAZ Kota Bogor has diminished around 8.77 percent in 2010 after a few years became as zakat recipients. Tsani (2010) asserted that the zakat recipients (mustahiq) of BAZDA Lampung Selatan Regency, Lampung Province , In Malaysia, Ibrahim (2006 in Fahmi, 2010) found that zakat had

146The researcher has personally interviewed Nana Mintarti in Ciputat, Banten Province on 19

July 2013. She mentioned that she had conducted research with her groups in ten different areas in Indonesia. The research report shown that zakat money can really lift up poor people out of poverty line.



reduced the number of mustahiq (zakat recipients) in Selangor State from 62 percent to 47 percent.

Concerning the utilization of zakat, Mintarti (2011 : 77) mentions that among the goals of zakat is to combat the poverty by taking out the poor people from their poverty, to improve their quality of life and to transform the mustahiq (zakat recipients) into zakat payers (muzakki). Mintarti believes that zakat can empower people. Zakat-based community empowerment is done through developing economic and social improvement of poor people by instigating active participation of poor people, facilitated by amil who are also acting as facilitator of the program. Hence, the goals of zakat are no just to combat the poverty by providing temporary assistance but to extend the ownership and transforming mustahiq (zakat recipients) into muzakki (zakat payer).

II.4. Zakat and The Role of The StateRegarding the role of the state in wealth management, in this case is the

practices of Baitul Maal (house of wealth), are different from time to time. During the life of Prophet Muhammad SAW period state expenditures were mostly for state defense, disbursement of zakat and ushr for those who were eligible, payment of civil servants, payment of state’s debts, and allowances for traveler (musafir), also for secondary needs such as supporting those who studied Islam in Medina, support for the guests and delegations, gifts for other governments, or to cover the debts of deceased men or women who were in poor condition and unable to pay their debts. To manage the incomes as well as the expenditures, Prophet Muhammad SAW assigned the Baitul Maal (Hidayat, 2009 : 116).

Meanwhile, Gamal Al Banna (2006 : 18) mentions that during the Medina period, source of state income was mainly from the zakat which was taken from the rich people and disbursed to poor people. However, zakat funds were not utilized for running the government. Also, the government did not collect the tax in Medina (Madinah). Zakat was not collected through force, but more on one’s sincerity.

Umar bin Khattab, the second Caliph, had expanded and founded numerous Baitul Maal in the capital city, as well as in the provinces. He perceived Baitul Maal treasure as Muslim treasure, while the Caliphs and amils (zakat organizer) play the role only as the duty holder. Therefore, state was responsible to provide for widows, orphans, unaccompanied children, financing or funerals of the poor, supporting the bankrupt men or women, paying the diyat (blood money in Islamic criminal justice system), and also to lend certain amount of no interest loan for those in need to run their businesses. These mechanisms are actually resembled with the present social security mechanisms practiced in many modern countries. As



mentioned in previous chapter, social security mechanism usually work to secure the health problem, accident, retirement, bereavement as well as to support the family who lost their loved ones (Al Banna, 2006 : 18).

Thereafter, to disburse the Baitul Maal’s treasure, The Caliph Umar ibn Khattab set up some departments , namely : (a) department of military services, (b) department of justice and execution, (c) department of education and Islamic development, (d) department of social security. Department of social security managed to distribute financial assistance to all poor and needy people as well as those who live in suffering. This department began to work as early as year 20 hijriah Islamic Year (or 630 AD) by assessing the needs of some people who had defended Islam, those who have family relationship to the Prophet Muhammad SAW147, women, children and slaves, they were all eligible to obtain social security from Baitul Maal (Al Banna, 2006 : 18).

Wahidi (2012) convinces that government of an Islamic State can collect zakat even by force for well being of society. This assumption is based on the historical holy war (jihad) announced by the first caliph Abubakar Asshidiq against the first aroused munafiq (hypocrite) Musailamah Al Kazab after very short time from the departure of Holy Prophet towards eternity. When this hypocrite heard about the sad departure he claimed that only the Prophet was authorized to collect zakat when he was not present anymore in this world nobody was obliged to pay zakat. The Caliph announced ‘jihad’ against Al Kazab as he refused to pay zakat.

However, in this contemporary world where some Muslims are not living in Muslim countries and some Muslim countries are not enacting Islamic Constitution, it is difficult to see the practice of Caliph Abubakr Asshidiq to collect zakat money by force shown by present Muslim rulers in Muslim countries. In some jurisdictions, collecting zakat by force even can be considered as violation to human rights and a threat to democracy. Regarding the role of the state in Islamic economy, Chapra (1992: 223) stated that the role of the state in an Islamic economy is not an ‘intervention’ which smacks of an underlying commitment to laissez-faire capitalism. It is also not in the nature of collectivization and regimentation which suppress freedom and sap individual initiative and enterprise. It is also not in the nature of the secularist welfare state which, for its aversion to value judgments and claims on resources, leads to macroeconomic imbalances. It is rather, a positive role, a moral obligation to help realize the well-being of all by ensuring a balance between private and social interest, maintaining the economic train

147According to Prophet Muhammad’s policy, his member of family and descendants are not

eligible to receive zakat. They may receive other social fund but not zakat, (http://www.muslimpovertyrelief.org.uk/8-180-153--zakat-and-sadaqah.aspx accessed on 17th October 2014).


http://www.muslimpovertyrelief.org.uk/8-180-153--zakat-and-sadaqah.aspx


on the agreed track, and preventing its diversion by powerful vested interests. The values and the more effective socio-economic institutions are in creating a just equilibrium between resources and claims and in realizing the maqasid148, the smaller will be the role the state will have to play in the economy. But whatever the role of the state, it should not be played arbitrarily, it should be within the constraints of the Sharia and through the democratic channels of consultation (shura).

Chapra (1992:224) subsequently affirms that while Islam recognizes individual freedom and the role of the price mechanism in promoting efficiency, it does not regard market forces as sacred. The blind operation of market forces does not automatically reward socially-productive effort, curb exploitation, or help the weak and the needy. It is, therefore, the responsibility of the state to ensure the realization of the maqasid (the objectives of Islamic Sharia).

Judging from previous reading, there are various approaches in managing zakat in different regimes. Islamic economy as well as zakat management are always evolving. The main principles are always similar but the details, at the practice level, are always evolving.

II.5. Zakat Attraction to the StateThere is a contesting idea whether zakat should be managed by the

state or left it to Muslim’s to manage. The history of Islam from the practice of Islam by Prophet Muhammad in 6 – 7 AD, followed by several Caliphs, shows different practices.

During the Prophet Muhammad and the first two Caliphs zakat was controlled by the state absolutely. Zakat was obligatory and the ruler will impose sanctions for those who refuse to disburse their zakat money. However, during the third Caliph Utsman bin Affan the room for the people to manage zakat was opened by letting non-state actors to be as intermediary agent in collecting zakat money (amil).

Regarding the relation between religion and the state, Javaid Rehman (in Smits, 2012:31) asserts that the place of religion in society remains contested and controversial. State practices have been varied and largely indicate a failure to adopt appropriate and accommodating constitutional mechanisms. Religions are not limited to moral or ethical values but also interact with economic and financial market forces. This is particularly the case with a religion such as Islam, which continues to engage all aspects of public and private conduct and has established norms as regards financial practice. Islamic financial model faces considerable challenges. The extent to which the prohibitions on Riba, Gharar and Qimar are practicable in modern

148Maqasid means the objectives of Islamic Sharia



financial world remains uncertain. The other key features of the Islamic financial model, zakat and awqaf have not been effectively implemented by any of the Sharia-complaint states.

Islamic finance is an egalitarian model promising resource and wealth reallocation to all segments of the society. One of the primary means to achieve such re-allocation is through the medium of zakat. Zakat is a phenomenon similar to that of alms in Christianity and charity. However, in fact, zakat goes much further than alms, and can more accurately be described as a wealth tax – which prescribes that 2.5 percent of funds idle for one year must be paid. At the same time, the zakat is a contribution over and above state taxation and includes the specific purposes of reallocation of wealth and supporting the needy (Rehman in Smits, 2012 : 28).

Substantial impediments are also faced in the implementation of the Islamic financial concepts of zakat and waqf (wakaf). Although an integral part of the Muslim faith, during the modern times, it has proven difficult to collect and administer the zakat tax. Zakat tax is operational in only a handful of Islamic states, with serious difficulties in its implementation. Pakistan provides a rare example, where legislation was drafted to administer zakat. However, notwithstanding the adoption of a considerably comprehensive legislation, the zakat and ushr ordinance (1980) under the regime of the late General Zia-ul-Haq was a failure. Amongst the major hurdles were the controversy over collection of this tax (over and above the state-legislated income tax), the identification of the recipients of zakat, and the proper mode of distribution of zakat. In an overall governance structures, saturated with mismanagement and corruption, it is hardly surprising to find challenges for charitable ideas in the form of zakat and waqf in effective operation (Rehman in Smits, 2012 : 30).

There are some notions why the state of Indonesia was interested to administer zakat. Zakat is a divine instrument instructed by the God (Allah) and becoming part of Islamic faith. Paying zakat (for those who meet the requirements) is mandatory. Yet, involvement of the state is actually not mandatory. The history of Islam has shown that there is no strict requirement that zakat must be controlled by the state. Even more in Indonesia, a semi secular country, the interest of the state to administer zakat is really something to be questioned.

One possible reason why zakat draws attention from the state is a political action taken by the state as part of state responsibility to promote social welfare for the people, particularly Muslim’s. In Constitutional Court Verdict on 31 October 2013 upon judicial review of Indonesian Law No. 23/ 2011 on Zakat Management, the Justices hold that Indonesia is a religious welfare state. Therefore, to take part in zakat affairs is part of state “opened legal policy” in promoting social welfare.



The second reason related to zakat potentiality, according to BAZNAS ( Badan Amil Zakat Nasional – National Zakat Agency), zakat potentiality in Indonesia is around IDR 217 trillion (or around USD 20 billion) a year (Ramadhan in Republika Newspaper, 29 April 2013). However, both state and non-state zakat agencies can collect only around IDR 2.7 trillion a year (or only one percent). Therefore, there is very large room for zakat collectors to collect zakat from zakat payers. The state-based zakat agencies have more chances to collect more zakat money than the non-state ones since they may employ state apparatus through state bureaucracy all over Indonesia. In 2014, Indonesian National Revenue is predicted at IDR 1667 Trillion (Indonesian Ministry of Finance, 2014) compared to total national revenue in 2014, zakat is potentially projected as 13 percent of total revenue, which is a huge amount of money.

The third reason is religious reason. The state, through BAZNAS, believes that the state is principal authority in zakat administration. Non-state zakat agencies are just supporting agents. The state holds this viewpoint based on its interpretation on some verses in Qur’an that zakat must be collected by power and the history of Islamic governance during Prophet Muhammad and the Caliphs, when the authority to collect zakat was the state.

Historically, state attention to zakat affairs started when the Nederland Indies Government issued a decree in 1893 containing the appointment of certain religious officers like naib or penghulu who responsible to administer the zakat. Furthermore, in 1905, the Nederland Indies Management issued a regulation (Bijblaad 6200) which forbid the local-Indonesian officers intervening zakat management. During the Japanese colonialization, in 1942 – 1945, an organization called Majelis Islam A’la Indonesia (Indonesian Islamic Assembly) managed to build a Baitul Maal (house of treasury) in Java Island in 1943. Yet, the Japanese colonialist government dissolved it (Salim, 2003: 182).

Prior to the country’s independence on August 17, 1945, the efforts to collect zakat were conducted by various Islamic organizations that were already established. However, there were no government regulations about this since the Netherlands, which occupied Indonesia at that time, paid no attention to the issue of zakat. No government involvement was made during this period. After the independence, the encouragement to enhance zakat management increased noticeably. In the 1950s, some attempts related to the issuance of legal rules of zakat were made, although they were not successful (Mintarti & Beik in Purwakananta & Aflah, ed., 2011: 159 – 160).

In 1950s Minister of Finance Yusuf Wibisono stated his thoughts in an article that “zakat should be included in the state finance system.” Wibisono’s and state interest in zakat were motivated by the growing discourse about



zakat by Muslim scholars. There was no information, however the Ministry of Finance worked seriously on the idea, which was probably alien to Old Order policy. During the Old Order Regime, the challenge was to maintain the nation-state that united various religious and political factions. The Minister of Religious Affairs K.H. Wahid Hasyim, for example, stated that his ministry tried to facilitate all religious practices equally (Fauzia, 2008).

Later on, in a circular issued in 1951, the Ministry stated that it would not interfere zakat and fitrah matters, but it just encouraged Muslims to fulfill them. Although in 1954 the Old Order government began to show an interest in dealing with religious practices, namely recording the data on zakat and fitrah, this policy remained under the non-interventionist policy inherited from the Dutch. Thus the government somehow followed the legacy of the Dutch administration in having a religiously neutral state which theoretically only facilitated the religious life of the population without intending to be involved in or manage religious practices (Fauzia, 2008).

It was in the 1960s the discussion about collection and distribution of zakat wass conducted by formal institutions. On September 26, 1968, eleven well-known Islamic scholars or ulama came to the country’s second President, Soeharto, underscoring the importance of implementing zakat. The President gave positive response to this call. As the result, the needs of having zakat management institution emerged. To intensify it, the President issued Presidential Decree No. 07/ 1968 to certain persons to assist him in administering national zakat collection ((Mintarti & Beik in Purwakananta & Aflah, ed., 2011: 159 – 160).

In continuation with the President’s order, Minister of Religious Affairsrs issued Minister Regulation in 1968 about establishment of government board of zakat from central government as low as to the level of sub district and village. The President strengthened this regulation by issuing Letter No. B. 133/ 1968 to all related government officials. Governor of provinces were then responded to this letter by issuing decree in their respective provinces (Mintarti & Beik in Purwakananta & Aflah, ed., 2011: 159 – 160).

Thus, it was clear that the New Order Regime‘s involvement in zakat started from 1968 with the establishment of the state-based zakat agency (Badan Amil Zakat or BAZ). Among the significant initiatives were the proposal and endorsement of 11 leading ‘ulama’ on 24 September 1968 to the President Soeharto to actively promote zakat and endorse the establishment of zakat bodies under the provincial governments (Fauzia, 2008). The Ministry of Religious Affairs worked to gradually institutionalize state zakat management through the ministerial regulations for the



establishment of zakat agencies and a proposal of zakat law, both of which failed to be passed into law.149

This failure has a lot to do with former President Soeharto who supported no formalization of Islam under the state for fear of political Islam. Rather than openly rejecting the idea, Soeharto himself acted as a national zakat collector. He also issued a Government Decree which appointed a staff of threeamong whom was Maj. Gen. A. Ratuprawiranegarato help with the president‘s task as zakat collector. His rejection of national regulation but assumption of the task of collecting zakat, suggested that Soeharto was trying to diminish the efforts toward Islamic state formalization in a way that did not offend the Muslim population (Fauzia, 2008).

Nevertheless, in subsequent decades, especially in 1970s and 1980s, zakat development was stagnant. No significant improvement was made. Collection of zakat was conducted only during the month of Ramadan in the mosques throughout the country. On the other hand, utilization of zakat failed to reduce poverty in the country. Zakat management of some already established zakat institutions was very traditional, marginal and unprofessional (Mintarti & Beik in Purwakananta & Aflah, ed., 2011: 159 – 160).

In 1999, during President B.J. Habibie administration, the zakat management has attained clearer and firmer legal status through the Law of Zakat Management No. 38 year 1999. Furthermore, this law had been endorsed and implemented by the Minister of Religious Affairs’ Decree No. 581/ 1999 and followed by the adjustment of national taxation regime. This law brought the governmental zakat agencies as Badan Amil Zakat (National Zakat Agency) and non-governmental zakat agencies namely Lembaga Amil Zakat (LAZ). Anyhow it was a good achievement but still zakat was not declared as obligatory.

It was interesting finding tough that from 1968 to 1985 provincial zakat agencies were successfully established in many provinces. They even preceded the establishment of National Zakat Agency (BAZNAS) in 2001. Gen. Ali Sadikin, the governor of Jakarta, established a state-based zakat agency on 5 December 1968. He was the first New Order Governor to set up a zakat agency in his province, shortly after Soeharto had announced his own willingness to be a national zakat collector. This suggested that Soeharto did not really have a problem with Ministry of Religious Affairs‘proposal for the establishment of state-based zakat agencies. Presumably, Soeharto wanted to act as a national zakat collector in order to reap benefits from the zakat funds. Soeharto thought that zakat, sedekah and other kinds of charitable

149Regulation of Minister of Religious Affairs (PMA) No 4/Juli/1968 on the establishment of

BAZIS and Regulation of Minister of Religious Affairs (PMA) No 5/Oktober/68 on Baitul Maal were annulled in 1969. The proposal forzakat law was also rejected by the other ministries.



giving had economic potential. This can be seen in his autobiography and in a 1968 speech as follows (Soeharto, 1989 in Fauzia, 2008):

A 90 percent majority of the Indonesian population is Muslim, and from that number let us says there are about 10 million Muslims entitled to pay zakat. Take on average that they are entitled zakat due on Rp. 10,000. If the rate of zakat is 2.5 per cent from this amount, then Indonesian Muslims will gather capital of 1/40 x 10 million x Rp. 10,000, which means 2.5 billion rupiah each year! This is a good amount ofcapital. Let us use this capital effectively and efficiently. We shall develop it by varied means for more appropriate targets. We can use this resource to establish mosques, hospitals, orphanages, help the aged, and provide jobs for the destitute and poor, and for other social, spiritual and religious development in more productive ways. This is only an example of a challenge that should be answered by the Muslim community. For the first step, I will announce to all Indonesian Muslims that I myself am ready to organize.

Later, the legislating process of Law No. 23 year 2011 on Zakat Management followed by legislation of Government Regulation No. 14/ 2014 were clearly showing the state’s growing interest in managing zakat. At both regulations, there are some provisions that confirm the position of the state (through BAZNAS) as primary zakat administrator in Indonesia, while non-state zakat agencies are only the supporting agents. This development will be discussed in the next chapter.

II.6 ConclusionZakat is a divine instrument created by the God and is a part of Islamic

faith. Zakat is intended to purify ones’s wealth for the sake of promoting social justice and income distribution. Zakat management and distribution were varied in Islamic history. There was a period where zakat had been managed by the Islamic governance, but there was also some period that common people/ non-state zakat agencies had their own role in administering zakat. Muslim countries have different practices in zakat administration, and so is in Indonesia.

In Indonesia, zakat practices are varied in different administration. During the Dutch and Japanese colonialization, the rulers seemed to stay away from zakat administration and left it to Muslims. At the beginning of Indonesian Independence, the state played a minimum role in administering zakat. However, by the end of 1960’s at the beginning of President Soeharto’s administration, the state started to play a bigger role.

The policy of the state to involve in zakat affairs provoked a question on state interests to involve in zakat administration after several decades of silence. The state’s involvement in zakat affairs really changed the relation between state and Muslims in zakat affairs. Zakat is no longer people affairs



but also state affairs. Moreover, the new law on zakat management (No. 23/2011) and government regulation No. 14/ 2014 clearly confirmed the position of the state as primary zakat agency (through BAZNAS) while the non-state zakat agencies are acting only asthe supporting agents.


Chapter III Zakat In Muslim World

CHAPTER IIIZAKAT IN MUSLIM WORLD

III.1. Introduction

As mentioned at previous chapter, zakat is a divine Islamic instrument originated from the God, one out of five pillars of Islam, and have been practiced since the birth of Islam in the 6th century. However, the practices of zakat in the 21st century and outside of Arabic countries (Arabian Peninsula, West Asian and Northern Africa) are different. The original teaching is stillexisted but the practices might be different due to the variety in social and political systems in different administrations. Moreover, Muslims currently live in various countries, from an Islamic state to semi-secular up to liberal and secular ones.

The differences in social, political and cultural context lead to different practices of zakat, particularly in collection and disbursement method and the role of the state in zakat management. This chapter will discuss the current practices of zakat in selected countries of Muslim World and show the distinction of zakat management in Indonesia compared to those of othe countries.

III.2. Zakat, Poverty and Muslim World

Ashraf and Hassan (in Ahmed, 2013: 224–226) mentioned that Islamic principles of poverty alleviation are based on the Islamic view of social justice and the belief in Allah the Almighty. An Islamic approach to poverty alleviation would ideally involve a holistic approach including a set of anti poverty measures such as: (a) increasing income level with pro-poor programs, (b) achieving an equitable distribution of income and (c) providing equal opportunities to all citizens.

Ashraf and Hassan (in Ahmed, 2013: 224 – 226) also claim that poverty eradication strategies in Islam involves three distinct sets of measures: (1) positive measures, (2) preventive measure, and (3) corrective measures. Positive measures include: (a) income growth, (2) functional distribution of income, and (3) equal opportunity. Preventive measures cover (a) control of ownership and (b) prevention of malpractice, while



corrective measures include (a) compulsory transfer of wealth, (b) recommended transfer of wealth, and (c) state responsibility. The best example of compulsory transfer is zakat.

Just 17 years since the end of the Cold War, over 300 millions human beings have died prematurely from poverty-related causes, with some 18 million more added each year. Larger numbers of human beings must live in condition of life-threatening poverty that makes it very difficult for them to articulate their interest and to fend for themselves and their families (Pogge, 2007: 51 – 53). Poverty does not take place solely because of too little aid being dispensed to the poor. Because the poor are systematically impoverished by present institutional arrangements for a long time, their disadvantages have been compounded. Of course, substantial funds are needed to eradicate severe poverty at a morally acceptable speed. But such funds are not generous charity. All that is needed is compensation for the harm produced by unjust global institutional arrangements whose parst and present imposition by the affluent countries. Given that the present global institutional order is foreseeably associated with such massive incidence of avoidable severe poverty, its (uncompensated) imposition manifests an ongoing human rights violation –arguablythe largest of such violation ever committed in human history. The continuing imposition of this global order, essentially unmodified, constitutes a massive violation of the human rights to basic necessities – a violation for which the governments and electorates of the more powerful countries bear primary responsibility (Pogge, 2007 : 51 – 53).

Therefore, we might say that poverty can be regarded as a violation of human rights. Sane (in Campbell in Pogge, 2007 : 55) mentioned that :

If.poverty were declared to be abolished, as it should with regard to its status as as massive, systematic and continuous violation of human rights, its persistence would no longer be regrettable feature of the nature of things. It would become a denial of justice. The burden of proof would shift. The poor, once recognized as the injured party would acquire a right to reparation for which governments, the international community and, ultimately, each citizen would be jointly liable. A strong interest would thus be established in eliminating as a matter of urgency, the grounds of liability, which might be expected to unleash much stronger forces than compassion, charity or even concern fo one’s own security, are likely to mobilize fo the benefit of others.



Related to zakat and muslim countries150, data of Human Development Index (HDI)151 of UNDP in 2011 shown that around twelve predominantly muslim countries are classified as Low Human Development Index152 (out of 187 countries), as follows :153

Table 1 : Human Development Index of Muslim Countries 2011

NO COUNTRY HDI INDEX RANK1 Pakistan 0.504 1452 Bangladesh 0.500 1463 Yemen 0.462 1544 Senegal 0.459 1555 Nigeria 0.459 1566 Mauritania 0.453 1587 Comoros Island 0.433 1638 Djibouti 0.430 1659 Sudan 0.408 16910 Afghanistan 0.389 17211 Mali 0.395 17512 Burkina Faso 0.331 18113 Niger 0.295 186

Source: Human Development Report 2011 (http://hdr undp..org)

The table above shows that predominantly muslim countries generally occupied low rankings of HDI. Predominantly muslim countries which

150The term of muslim countries refers to muslim predominantly countries or country which

adopt Islam as its constitution or countries belonging to Organization of Islamic Conference (OIC). Currently OIC has 57 member states and 5 countries with the status of observer (http://www.oic-oci.org/member_states.asp).

151Human Development Report introduced a new way of measuring development by

combining indicators of life expectancy, educational attainment and income into a composite human development index, the HDI. The breakthrough for the HDI was the creation of a single statistic which was to serve as a frame of reference for both social and economic development. The HDI sets a minimum and a maximum for each dimension, called goalposts, and then shows where each country stands in relation to these goalposts, expressed as a value between 0 and 1 (http://hdr.undp.org/en/statistics/hdi/)

152The HDI is classified to four different groups of countries namely Very High Human

Developpment, High Human Development, Medium Human Development and Low Human Development.

153See HDI Report 2011 at http://hdr.undp.org/en/media/HDR_2011_EN_Table1.pdf.


http://www.oic-oci.org/member_states.asp

http://www.oic-oci.org/member_states.asp


qualify to be Very High Human Development are only four countries, as follows:

Table 2: Muslim Countries with Very High Human Development in 2011

NO

COUNTRY HDI RANK

1 UAE 0.846 302 Brunei 0.838 333 Qatar 0.831 374 Bahrain 0.806 42

Source: HDI Report 2011 at http://hdr.undp.org/en/media/HDR_2011_EN_Table1.pdf

Indonesia in 2011 was classified as Medium Human Development with the rank of 124 and in 2012 took a step higher at rank of 121 (http://hdr.undp.org/en/statistics/). Based on the data displayed above, discussing on zakat and poverty in muslim countries, particularly Indonesia is quite relevant. Furthermore, zakat must be perceived as mandatory expenditure for alleviating poverty in Islamic Economy. The impact of zakat for alleviating poverty must be conducted as built in program in Islamic economy. The reasons are given as followings (IMZ, 2011: 11):

The disbursement of zakat money has been stipulated in Sharia (Islamic Law), namely for eight kind of persons, poor people, amil (zakat administrator), newly converted Muslim, former slaves, persons in severe debt, ones who fight in Allah’s way and ones in travelling. The Muslim scholars did agree that those outside of these eight groups of zakat recipients are not eligible to receive zakat money. Also, the poor people (fuqara and masakin) are the top priority to receive zakat money.

Zakat is imposed to wide area and covering many activities ranging from agriculture, gold and silver, commercial business, mining, etc. Therefore, zakat potential is enormous and it is important to finance programs to alleviating poverty.



Zakat is ‘spiritual tax’ with the status of obligatory to be paid by Muslims at all circumstances. Hence, zakat revenue should be stable and will assure the sustainability of poverty alleviation programs which usually take long period.

Zakat has many important economic implication leading to ideal economic and poverty alleviation. Yet, to solve economic problems by zakat is exaggerated. Islamic economy system is an integral and comprehensive, inseparable and interrelated. In this context, zakat should be put as a sub system within the whole Islamic economy system (IMZ, 2011: 11). Therefore, zakat must be administered comprehensively and simultaneously in line with other features of Islamic economy such as the prohibition of riba (interest) and gharar154, money as an instrument of exchange not as a commodity, the just regulation on land ownership, implementation of equity financing widely, and so on. When zakat system is implemented but at the same time the other features of Islamic economy are not simultaneously implemented, the zakat’s goal to alleviate poverty will not be realized (IMZ, 2011 : 12). Generally, poverty is one of the biggest problems faced by most of the developing countries including Indonesia. This problem of poverty still exists until today, especially since the Southeast Asian economic crisis which took place in 1997 – 1998. According to Poverty Mapping, the number of mustahiq (zakat recipients) existing all over Indonesia reach 33.9 million. Most of them are living in East Java Province (7.4. million) Central Java Province (7.0 million), West Java Province (5.7 million) Lampung Province (1.5 million), South Sumatera Province (1.2 million), Banten Province (1.1. million), North Sumatera Province (1.0 million), and West Nusa Tenggara Province (1.0 million). Number of mustahiq in other provinces ranges between 60.000 and 500.000. Seen from gender balance, they are almost equal, namely 49.9 percent of them are male and the remaining 50.1 percent are female. Their educational level is very low, 77 percent are the elementary school dropout and most of them work at agriculture (63.1 percent), industry 8.9 percent commercial 8.8 percent and service 7.2 percent (Said and Purwakananta in Purwakananta & Noor Aflah, 2011 : 49 – 50).

154 Gharar is variously defined in English as 'uncertainty' or 'deceptive uncertainty'. The Qur'an

uses the word "al-gharūr" to mean "deceptive". (http://www.islamic-finance.com/item160_f.htm accessed on 13 January 2012.


http://www.islamic-finance.com/item160_f.htm


According to the 2010 census on population conducted by Central Bureau of Statistic, the number of poor are 31.02 million, but if World Bank’s standard is employed, then the number is higher.

On the contrary, the muzakkis (zakat payers) number in Indonesia are around 23.6 million with the biggest number in West Java Province (4.2 million), East Java Province (2.9 million), Jakarta Province (2.4 million), Central Java Province (2.1 million), Banten Province (1.3 million) and North Sumatera Province (1.0 million). Most of the muzakki are male (60.6 percent). It is worth to note that most of these muzakkis are at the age of 25 to 59 years old (26.1 percent are between 25 and 34 years old, 25 percent between 45 and 59 years old). The occupational background of these muzakkis are as follows: 27.3 percent at agricultural sector, 20.9 percent at industrial sector, and 18.4 percent at service sector (Said and Purwakananta in Purwakananta & Noor Aflah, 2011 : 50).

III.3. Zakat Practices in Selected Countries

Zakat institutions play an important role in the economic development of nations. It serves not only to collect wealth but also to distributes other resources obtained from the public. It can be said of all of Muslim countries have their own zakat institution.

Generally, there are two systems of zakat management in Muslim countries. First, obligatory system, where the zakat is centrally managed by the state with punishment for those who do not pay the zakat money. This system is applied in a country with Islamic Constitution such as Pakistan, Sudan, Libya, Yaman, Malaysia and Saudi Arabia. Second, the voluntary system where zakat is managed both by the state and civil society and without punishment for those who do not pay zakat money. This system is applied in Kuwait, Bangladesh, Jordan, Indonesia, Egypt, South Africa and other countries where Muslim are minorities (IMZ, 2011:62).

Powell (2010) asserts that predominantly Muslim nations take a wide variety of approaches to zakat. The most common approach is to ignore it altogether. Another approach is for the government to establish entities to collect and distribute voluntary zakat contribution. Powell (2010 : 59) also mentions that of 40 predominantly Muslim countries, twenty four do not institutionalize zakat. While six Muslim countries are recognized as having obligatory system, i.e. Sudan, Pakistan, Libya,



Saudi Arabia, Malaysia and Yaman. Yet, in term of zakat-able assets those countries applied different policies. In Yaman, for example, zakat is applied for zakatfitrah and zakat maal. In Saudi Arabia, Libya, Pakistan and Sudan, zakat is mandatory only for zakat maal. Meanwhile, in Malaysia, zakat is mandatory only for zakat fitrah.

Table 3Zakat Administration System in Predominantly Muslim Countries

No Country Zakat Management System1 Afghanistan None2 Algeria None3 Azerbaijan None4 Bahrain Voluntary5 Bangladesh Voluntary6 Burkina Faso None7 Chad None8 Egypt Voluntary9 Guinea None10 Indonesia Voluntary11 Iran Voluntary12 Iraq None13 Jordan Voluntary14 Kazakhstan None15 Kuwait Voluntary16 Lebanon Voluntary17 Libya Mandatory18 Malaysia Mandatory19 Mali None20 Mauritania None21 Morocco None22 Niger None23 Nigeria None24 Oman None25 Pakistan Mandatory26 Qatar None27 Saudi Arabia Mandatory28 Senegal None29 Sierra Leone None



30 Somalia None31 Sudan Mandatory32 Syria None33 The Gambia None34 Tajikistan None35 Tunisia None36 Turkey None37 Turkmenistan None38 UAE Voluntary39 Uzbekistan None40 Yemen Mandatory

Source: Powell, 2010

The distinction is also applicable in the methods of collection and disbursement of zakat money. In Saudi Arabia and Sudan, the zakat agency relies on self-assessment made by the muzakkis. In Pakistan, zakat on financial assets will be collected directly by institution which manage the assets. In collecting zakat of agriculture, the government of Saudi Arabia will assign an officer to reckon the zakat of a muzakki, then subsequently forward the zakat money to the beneficiaries. While in Sudan, zakat of agriculture is collected by tax agency. On the contrary, zakat management in other Muslim countries, particularly in secular Muslim countries and countries where Muslims are minority, the zakat payment system is voluntary. Governments usually pay less attention to centralize zakat management. Hence, the room for civil society to manage the zakat is widely open (as shown and practiced by Indonesian civil society for the last 25 years).

In this voluntary system, there are various forms of zakat agencies: (1) as a non-governmental organization, (2) as a semi-governmental body which voluntarily collects the zakat money and disburses them to the needy people (the only example for this scheme is Nasser Social Bank in Egypt), (3) as a government agency founded deliberately to manage the zakat money. Some Muslim countries founded a zakat agency which is legally and financially independent, such as Kuwait Zakat House in Kuwait and Zakat Fund in Jordan, Tunisia and Bangladesh (IMZ, 2011:65).

In India, Indian government established zakat foundation in order to replace current individualistic, socio-religious, organizational pattern and



bring all of them under a single baitul maal system. According to census of India in 2001 the total Muslim population is around 139 millions or almost 14 percent of Indian population. Assuming the average size of family as five, presumably there are around 28 millions of muslim families in India. This huge number of Muslim community compels the Prime Minister of India to think about their economical empowerment. Therefore, the Government of India decided to think of zakat as a potential opportunity for Indian Muslims (Wahidi, 2012 : 31).

Below is the zakat practices in six countries. Three countries applied mandatory system (Pakistan, Saudi Arabia, and Malaysia) and the other three countries applied voluntary system (Jordan, Singapore and Indonesia).

3.1. Zakat Administration in Saudi Arabia

Saudi Arabia has the oldest statutory system of zakat collection. It is even listed as sort of constitutional requirement in the Saudi Basic Law No. A/90 1 March 1992 as follows:

Article 20:No taxes or fees shall be imposed, except in need and on a just basis. Imposition, amendment, cancellation or exemption shall take place according to the provisions of the Law.

Article 21:Zakat shall be collected and spent for legitimate expenses.

Furthermore, Royal Decree on August 8th 1956 stated that :

Article 1:Zakat duty shall be collected in full in accordance with the provisions of Islamic law (Shariah) from all Saudi persons, shareholders of Saudi companies whose all shareholders are Saudi, and Saudi shareholders of joint companies whose shareholders are Saudi and non-Saudi.

The most recent version of the law provides that all Saudi and Gulf Cooperation Council Nation citizens and companies who conduct business in the Kingdom of Saudi Arabia in commercial goods pay zakat at the rate of 2.5 percent (Powell, 2010: 67).



3.2. Zakat Administration in Pakistan

The zakat collection in Pakistan is based on a completely centralized system and all the contribution goes to zakat fund in state bank of Pakistan. The disbursement of zakat is decentralized and its distribution takess place through local zakat committee in the provinces, districts, and villages. Currently there area 250.000 zakat workers in 39.000 zakat committees, the system adopted in 1980 through decree issued by President Zia ul Haq. Pakistan is one out of three muslim countries that has made a clear reference in their constitutions to the responsibility of the state to implement zakat (Article 31 of Pakistan Constitution). Thus, the implementation of zakat in Pakistan has become an exemplary part of the greater agenda of Islamizing the nation-state (Salim, 2008: 117).

Russell Powell (2010) mentioned that data suggest that prior to passage of the Ordinance, only 5 percent of Pakistanis actually pay zakat. State enforced income taxes were also evaded on a wide scale, so one aim of Islamization in this area was to increase buy-in for redistributive tools by rooting them in Islam. In Pakistan (Powell, 2010) zakat funds area managed at the federal, provincial and local levels. The schedule of zakat is received at the federal level and is then distributed to provincial committees. Some of the collected money is used for provincial level projects, but most is directed to local communities that distribute the scheduled zakat funds in addition to collecting and distributing second round of zakat funds. Federal zakat administration expenses are paid by the government. Local zakat committees costs are borne locally and are limited to 10 percent of collected zakat. Many responsibilities of the local level are shared by volunteers in order to limit costs.

The implementation of zakat in Pakistan suggests how zakat collection and disbursement is characterized by a centralized structure that serves as a pillar for the economic and political interests of the Islamic state. Since it was introduced through Zakat and Ushr Ordinance No. 17/ 1980, the centralization of zakat management in Pakistan has not come close to achieving any complete socioeconomic or political transformation. The centralization of zakat management has proven detrimental: (1) the incorporation of zakat into the Pakistani legal system has fixed



the nature of zakat from a voluntary act to a compulsory religious duty, (2) the institutionalization of zakat formally levied only on Muslims has enhanced the growing sense among a minority of Pakistani Non-Muslims, (3) the integration of zakat rules into the Pakistani taxation system has transformed zakat payment from being simply and easily fulfilled into something with all the accessories of modern system of taxation, which are of course difficult to understand for many Pakistanis, (4) As a consequence of the depersonalization of zakat that religiously delegitimized, many Pakistani Muslims sought to evade all or parts of the zakat payment, (5) the official implementation of zakat by the Pakistani government has created a competition between political parties for control over the zakat funds (Salim, 2008 : 118 – 119).

3.2. Zakat Administration in Jordan

The Zakat Act in Jordan was passed in 1978 to establish a Zakat Fund under the Ministry of Awqaf. Jordan officially encourages contributions to the Zakat Fund and such contributions are deductible from income for tax purposes. No more than 10 percent of zakat funds can be used for administrative purposes. In 2007, the zakat fund received more than JOD 2.5 billion Jordanian Dinars (around USD 3.5 billion) (Powell, 2010).

In Jordan, the zakat collection is administered by the state through the department of religious affairs.155 However, the non-state private zakat agencies such as local mosques are free to collect the zakat and other donations as well. This position is understandable since Jordan is a secular state rather than an Islamic state. Around 90 percent of the population are Arab Muslim (Jordanian, Palestinian, and Iraqi), but Jordan is clearly much different from Saudi Arabia in term of the state’s adherence to Islamic Sharia.

In Jordan, there is no punishment for non-state zakat agencies which collect the money, but the state strictly controls the distribution of money since they are worried that the money will go to hardline Muslim groups. Surrounded by Palestine, Israel, Syria, Iraq and Saudi Arabia, Jordan is held to this position.

155 Interview with Khaldun Salamah, Jordan Muslim Scholar in Zarqa, Jordan, 23 September

2012.42



Any individual in Jordan can ask or claim for zakat money should they need it. One Indonesian student, for example old that as a foreign Muslim student, he occasionally asked for zakat money to support his study through local zakat agency. He got the money for certain amount regularly without any difficulties, only by telling that he is a foreign student and has limited amount of money to study in Jordan.156

Even though potential zakat collections in Islamic countries have generally increased but it is still lower than it should be and has not reached its potential. The laws and religious decisions concerning zakat where there are still peppered with inconsistencies. There are still room from uniformity in term of amount, term and kind of assets that can be levy as zakat. There are also evidence that total zakat collected in Islamic countries was less than 1 percent of their Gross Domestic Products (GDP) (Kahf, 1999 in Arifin, 2011: 10).

3.3. Zakat Administration in Singapore

The management of zakat in Malaysia and Singapore are quite interesting. In Singapore, a country where Muslim are less than 20 percent of total population, the collective zakat collection started in 1986 by common people under MUIS (Majelis Ulama Islam Singapore or Islamic Assembly of Singapore). Zakat and wakaf (or waqf) in Singapore are administered by corporation. There are 170.000 regular zakat payers out of around 500.000 Muslims in present Singapore. Instead of zakat, other funds like shadaqah and wakaf are also administered to build the Islamic schools, mosques, and so on. Since the beginning, the government of Singapore plays no role and show no intention to intervene in zakat management. Zakat funds are the contribution made by Muslim citizens who can overcome poverty and problem with education.

A brochure made by zakat authority of Singapore, namely Majelis Ugama Islam Singapore (MUIS) or Islamic Religious Council of Singapore, called people to pay the zakat money by saying :

In fact, your wealth become blessed because you use it to alleviate the plight of the less fortunate, to help families finance the high

156 Interview with Abdan Lillahil Ahad, Indonesian Master Student in Amman, Jordan on 23

September 2012.43



cost of their children’s education and to improve the quality of life for our community in general. Your zakat on business will help safeguard and improve the well-being of the Muslim Community in Singapore.

The common types of wealth that are subjected to zakat in Singapore are savings, CPF157, business, investment, shares, insurance and gold (http://www.mom.gov.sg). The zakat can be paid through : MUIS office, authorized MUIS Zakat Collection Centers, through MUIS website (www.muis.gov.sg) and AXS machine158 or giro (http://www.axs.com.sg)

Other methods in collecting zakat money in Singapore are done through (1) cash transfer, (2) internet banking e-Nets, (3) special payable cheque, (4) particular debit card, (5) auto deduction from particular bank saving, (6) zakat outlets (EZ.ZAKAD) at many mosques in Singapore (IMZ, 2011 : 74). Requirements for obligatory business zakat in Singapore are as follows: (1) Only the Muslims’ shares of the business is subjected to zakat, (2) halal assets only, non-halal assets and activities are not subjected to zakat, (3) haul-periodical term, (4) full ownership, (5) compulsory for productive assets, and (6) intention to do business. The zakat collected by MUIS will be disbursed through MAGRASS (MUIS Annual Grant for Social Services), ETSS (Education and Training

157The CPF of Singapore was set up in 1 July 1955 as an old-age and compulsory

comprehensive savings scheme for working Singaporeas and permanent residents It is administered by Central Provident Fund Board, a statutory board under Ministry of Manpower. The scheme has since evolved into a comprehensive social security savings system addressing not just retirement adequacy, but also healthcare, home-ownership, family protection and asset enhancement. The principle of self-reliance is an essential tenet underpinning the CPF system, which continues to meet the three key needs of retirement expenditure, healthcare and home ownership. These constitute the basis of financial security in retirement. As Singapore moves towards an aging population, gradual enhancements to the system will be made to ensure that Singaporeans have ample provisions to last through their golden years. The CPF Scheme performs four main functions: Retirement, Healthcare, Home Ownership, Family Protection and Asset Enhancement. (http://www.mom.gov.sg/employment-practices/employment-rights-conditions/cpf/Pages/default.aspx accessed on 3 March 2013)

158AXS Station is a one-stop multi-application and interactive high performance terminal that

provides customers with the latest on-line information, e-commerce, payment services and many more. With over over 830 AXS Stations island-wide operating 24 hours daily, the AXS Station network has grown to be the largest public broadband transactional terminal network in Singapore. The strategic placements of AXS Station ensure better accessibility and convenience for the various demographic groups of customers (http://www.axs.com.sg/phpweb/consumer/network_axs_station.php accessed on 3 March 2013).


http://www.axs.com.sg/

http://www.axs.com.sg/phpweb/consumer/network_axs_station.php

http://www.muis.gov.sg/

http://www.mom.gov.sg/

http://www.mom.gov.sg/employment-practices/employment-rights-conditions/cpf/Pages/default.aspx

http://www.mom.gov.sg/employment-practices/employment-rights-conditions/cpf/Pages/default.aspx


Support Scheme), EPS (Empowerment Partnership Scheme), MFAS (MUIS Financial Assistance Scheme).

3.4. Zakat Administration in Malaysia

Malaysia, on the other hand, is among the best model for zakat regulations in term of clarity and detail of methods and procedures in zakat management. The authority to collect and disburse zakat in Malaysia lies at state level, not at federal level. There are 14 states in Malaysia and each state has its own law on zakat management. Wahab (in Ahmad, 2013) mentioned that zakat management in Malaysia, both the collection and the disbursement, is managed by traditional Muslim leaders, before the Malaysian independence. Yet, after the independence, zakat management is under the state government (not federal government). There is no common standard concerning zakat management in all states (Shawal in Ahmad, 2013). The states have their own authority to implement different rules and procedures regarding zakat affairs. However, since the 1990s there was a need to privatize and decentralize zakat management. Zakat management system in Malaysia can be categorized into three different systems : (1) as a corporation system, where the collection and disbursement of zakat are managed by a corporation (this system applies in Selangor, Sarawak and Penang State), (2) as a semi corporation system, where the corporation is responsible only to collecting zakat money while the disbursement process is managed by the central government. This mechanism applies in Malaka, Negeri Sembilan, Pahang and Federal Territory, and (3) state government fully controls and administers the zakat payment through a body called Islamic Assembly (Majelis Agama Islam), at the remaining states in Malaysia (IMZ, 2011:71).

Data from Lembaga Zakat Selangor shows that since the corporatization of zakat in 1994, the zakat collection has increased around 22 percent annually from 1994 to 2010. Zakat disbursement also increased around 21.84 percent from MYR 14 million in 1994 to MYR 330 million in 2010. Zakat recipients also increased from 4,593 families in 2001 to 15,816 families in 2011 (Ahmad in Haryono, 2013:119). The interesting thing about Malaysian zakat management is the government espouses the management of zakat done by private agencies. The government stands firmly as a facilitator. Zakat is administered under the



Malaysian Islamic Assembly (Majelis Agama Islam Malaysia). The Assembly further builds Pusat Pungutan Zakat (Center for Zakat Collection) and Tabung Haji (Hajj Savings). The Tabung Haji in Malaysia has been recognized as part of social security scheme in Malaysia. Asher (1994:12) writes that : ”...in addition to the above schemes, there is also a Pilgrimage Fund (Tabung Haji) which has been set up to enable accumulation of savings to enable Muslim Malaysians to go on Haj (pilgrimage), and a unit trust (ASD) for the Bumiputera community, which provides social security services for the members.”

Pusat Pungutan Zakat or Center for Zakat Collection ws founded in 1991 and began its job on 1 January in Kuala Lumpur. This zakat collection model has been satisfying the zakat payers by introducing corporation way, modern marketing and IT-based zakat collection. This model further inspires other states in Malaysia to build the same zakat collection centers. At present, five out of 14 states in Malaysia own their own Pusat Pungutan Zakat, and the other eight states still rely on Baitul Maal system (Sudewo, 2008: 172).

In coping with zakat affairs, there are four significant policies of the Malaysian government (Sudewo, 2008: 178) :

The Malaysian government recognizes the legal status and authority of PPZ as a corporation founded for collecting zakat;

The government endorses the PPZ to set apart 12.5 percent of zakat funds for overhead costs (for amil or persons who responsible to administer the zakat);

The government stipulates that zakat payment can deduct the amount of taxes; and

The government set apart the budget to finance the Baitul Maal in overcoming poverty.

According to Ahmad Hidayat Buang159, professor of Islamic Law at University of Malaya, every state in Malaysia has one office of

159 Interview with Prof. Ahmad Hidayat Buang from University of Malaya Kuala Lumpur, in

Jakarta, 11 September 2012.



Islamic Affairs under the name of Jawatan Agama Islam Malaysia (JAIM or Office for Islamic Affairs in Malaysia). At the federal level, under the Prime Minister Office, there is a coordinating Islamic Affairs Agency namely Jabatan Kemajuan Agama Islam Malaysia (JAKIM) or Malaysian Department of Islamic Development. At the Prime Minister Office, there are some offices related to Islamic Affairs such as Department of Awqaf, Zakat and Hajj, Federal Territory Islamic Affairs Department (Jawatan Agama Islam Wilayah), Institute of Islamic Understanding Malaysia, Muslim Religious Division, and Malaysia Department of Syariah Court. The Pusat Pungutan Zakat (Zakat Collecting Center) is founded by the state as an independent body to support the work of JAIM in each state, particularly related to zakat affairs.

Zakat is mandatory for all of Muslims in Malaysia. However, there is no punishment for those who do not want to pay the zakat. There is no mechanism to force the zakat payers to pay the zakat money either. The PPZ offers the benefit for zakat payers who pay to PPZ to receive official receipts that can be used for income tax deduction. Payers of zakat is subject to income tax deduction in Malaysia. The only punishment recognized in zakat management in Malaysia is that nobody and no other institutions in Malaysia can collect zakat money or acting as amil (zakat collector) except the Pusat Pungutan Zakat (PPZ). The zakat collection is, therefore, managed by and under the PPZ.160

III.4. Zakat Practice in Indonesia

Powell (2010 : 65-66) mentioned that Indonesia is unique in a number of ways. First, along with Malaysia, it is far removed from the core of the Arab Middle East. Second, Islam came to the region somewhat later and as a part of a religious phenomenon with relatively less political entanglement. Third, according to surveys, Indonesia has the highest rate of zakat giving among surveyed nations at 94 percent, of Muslim Population with the rate even higher for those with higher education, even though zakat is not mandatory. Different from other countries In Indonesia, the government is not stand alone in administering zakat. There are big number of non-state zakat agencies and traditional zakat administrators nationwide.

160 Interview with Prof. Ahmad Hidayat Buang from University of Malaya, Kuala Lumpur in

Jakarta, Indonesia, 11 September 2012.47



4.1. State-Administered Zakat Agencies

The state-administered zakat agency in this regard is a zakat agency which is created by the state either by the central government or local government (provinces, cities and regencies). The zakat agency created by central government is called BAZNAS (Badan Amil Zakat Nasional or National Zakat Administrator Agency). This agency is founded by Presidential Decree and recommended by Ministry of Religious Affairs. The BAZNAS is a non-structural agency directly under the authority of President of Indonesia. Some people call BAZNAS as semi-governmental agency. At the provincial and city/ regency level, governors, mayors or regents can issue a decree on the establishment of Local Zakat Agency or BAZDA (Badan Amil Zakat Daerah).161

During the New Order period, BAZs were developed at provincial level, such as the BAZIS DKI Jakarta and BAZ Jawa Barat (West Java). In response to the Zakat Management Law No. 38/ 1999, BAZs were established in provinces, regencies and districts, without requiring approval from Ministry of Religious Affairs (MORA) (Fauzia, 2008). There are no clear figures regarding BAZs and LAZs (Lembaga Amil Zakat or Non-state Zakat Agencies), or other zakat committees in Indonesia. If each mosque formed a committee to collect zakat maal and zakat fitrah, there would be at least 643,000 zakat committees which are based in mosques all over Indonesia. The Directorate of Zakat in the Ministry of Religious Affairs expected a total of about 5,649 BAZs, but there were only 1,001 (of which 18 percent had been formed by 2007). The Ministry of Religious Affairs report may reflect only the number of BAZs that have been formally created, without a clear information whether they are operational or not (Fauzia, 2008).

BAZNAS

Badan Amil Zakat Nasional or BAZNAS was founded by Presidential Decree No. 8 year 2001 on 17 January 2001. This national zakat agency is located in Central Jakarta. It has

161The Law No. 23 year 2011 on Zakat Management and Government Regulation No. 14/2014

subsequently change the name of BAZDA Daerah (or local BAZDA) into BAZNAS Daerah ( or BAZNAS in provincial and district level).



branches all over Indonesia. From provincial level to kecamatan (sub-district level). They even have networks in schools, universities, companies, etc. with the name of UPZ (Unit Pengumpul Zakat) or Special Unit for Zakat Collector. The managerial system of BAZNAS has already been based to international standard by gaining the ISO 9001: 2008 certificate from WQA on 9 December 2009. The benefit of paying zakat through BAZNAS are: (1) getting the NPWZ (Nomor Pokok Wajib Zakat) or Registration Number of Zakat Payers), and (2) getting the receipt of payment which can be used as deductible income at annual income tax statement.

Currently, the BAZNAS’ services are not limited only to distributing zakat money to the needy people but also in other areas such as : (1) Indonesia Cerdas (Smart Indonesia), for the zakat recipients who need educational support, (2) Indonesia Sehat (Healthy Indonesia), for the zakat recipients who need free health services and free medicines, (3) Indonesia Makmur (Prosperous Indonesia), for zakat recipients who need initial fund to start their own business, (4) Indonesia Taqwa (Pious Indonesia), for developing the Islamic teachers and supporting the Muslim preachers who are assigned to remotes area, as well as to support the mosques, (5) Indonesia Peduli (Care Indonesia), consist of humanitarian support for natural disaster victims, famine victims.162

Didin Hafidhudin, Chairman of Badan Amil Zakat Nasional (BAZNAS) or National Zakat Agencies, a state-founded zakat agency163, stated that zakat is part of Islamic Sharia. Viewed from Islamic Sharia perspective, zakat is not a philanthropy. The holy Qur’an mentioned that zakat is stipulated by Allah SWT (The one and only God for Muslim People) with the status: obligatory (QS: At-Taubah: 60). In Surah At-Taubah 103 Allah SWT ordered Muslims to collect zakat from the Muslims in order to clean up their wealth. In Islamic history, the Muslim rulers had the right to fight those who reject to pay zakat money and to observe prayer (shalat). Zakat does not belong to private agencies but zakat is managed by power. “Power’ in this case is related to state. Originally, zakat fund must be disbursed to the needy that live

162Data gained from visit to BAZNAS office in Central Jakarta on August 30th, 2012.

163 Interview made in BAZNAS office with Prof Didin Hafidhudin, the Chairman of BAZNAS at

Jalan Kebon Sirih Jakarta Pusat on August 30th 2012.49



around vicinity of the payers. It should not be forwarded to other places. The BAZNAS does not want to centralize the zakat management, instead it manages its regulations. Hafidhuddin also mentioned that there is a sign that private zakat agencies try to centralize the zakat management, instead.164 The reason why the state need to govern the zakat management is to ensure the accountability of zakat management that all zakat agencies must strictly comply.

Didin Hafidhuddin (in Multifiah, 2011 : 53) presumes that the benefit of paying zakat to an institution which has legal body are assurance for the certainty and discipline in paying zakat, zakat recipients’ good feeling for receving money indirectly from zakat payers, efficiency and effectiveness in delivering the zakat money to the right beneficiaries, and revelation of Islamic values in the government operation (Multifiah,2011: 53).

The BAZNAS in its statement concerning the revision of the old law on zakat (No. 38 year 1999) admitted that there is good development for zakat awareness in Indonesia. For many private zakat agencies in Indonesia, BAZNAS is worried that they cannot monitor, control and coordinate the private zakat agencies since they have no legal power to coordinate all zakat affairs in Indonesia (Hardianto and Handoko in Sabili Magazine,2010 ).

Hafidhuddin later mentioned that BAZNAS is just a state-founded zakat agency. However, it remains an independent agency not really a governmental agency. The notion that a zakat agency is trusted and said to be successful when it can collect a lot of zakat fund is not true. On the contrary, the real indicator of success is how far the zakat money are well-received by the poor for true benefit? Success of zakat is measured by the development of the wealth of its recipients through developing the program to transfer ‘mustahiq’ (zakat recipients) to be ‘muzakki’ (zakat payers). The improved level of the recipients (mustahiq) is among the ultimate goals and the approaches in managing zakat. The right of zakat collectors (amil) is maximum 12.5 percent of all collected zakat fund. Therefore, zakat collectors would be better misallocate zakat money than fail to allocate it at all.165

164Ibid.

165Interview with Prof Didin Hafidhuddin, Chairman of BAZNAS in BAZNAS Office, Central



According to Hafidhuddin, there are two things which are not included in Zakat Law No. 23/ 2011, that zakat payers can be punished if they fail to pay zakat and that zakat can deduct state income tax imposed to zakat payers. These two missing provisions actually create the situation where the zakat payers will assume that zakat payment has no value to solve financial duties and has no impact on their tax obligation. The researcher took notice that the BAZNAS under Didin Hafidhuddin’s leadership got more recognition from the state. The Law No. 23/2011 on Zakat Management was really strengthening the position of BAZNAS in Indonesian zakat affairs. Moreover, the approach made by Hafidhuddin to the government, particularly during President Susilo Bambang Yudhoyono period, was excellent. On August 5 th 2013 (coincided with 27 Ramadan 1434 Islamic Lunar Year), President Yudhoyono stipulated every 27 Ramadan as National Zakat Day. Yudhoyono came to BAZNAS office and disburse his own zakat money. Not only that, shortly after the Indonesian Election Commission stipulated the elected new president of Indonesia 2014-2019, Didin Hafidhuddin stated that the elected president must strongly support zakat movement in Indonesia (Republika Daily Newspaper, 24 July 2014). Those events have shown not only the recognition of BAZNAS from the state, but also the supremacy of state-based zakat agency over non-state zakat agencies.

4.2. Non-State Zakat Agencies

Beside the state-based zakat agencies, zakat collection in Indonesia has been performed by two other types of organization: through traditional zakat committees (or panitia zakat) and Lembaga Amil Zakat (LAZs). These types of organization have been implemented since the New Order period (1966–1998), but the term of ‘LAZ’ was legally used in the Reformasi (reform) period by the Zakat Management Law No. 38 year 1999 (Fauzia, 2008). The LAZs are an organized and modern form of zakat committee. The Zakat Management Law No. 38/1999 necessitates that LAZs have a legal document (akte pendirian) as a foundation (yayasan) or be under a legal body.

Jakarta on August 30th, 2012.51



Community-based zakat committees operate usually during fasting Ramadan month, mainly for the collection and distribution of zakat fitrah and zakat maal. The committees are created by mosque boards, neighborhood organizations, and social organizations. The establishment of LAZs was mostly supported by Reformist Muslims, especially Revivalist groups, either in Islamic organizations or in secular institutions. Based on the membership of Zakat Forum (Forum Zakat) and national LAZs, there are three types of modern institutions which became strong bases for the establishment of LAZs: Islamic institutions, (secular) corporations, and financial institutions (Fauzia, 2008).

More than half of the LAZs belong to socio-religious institutions. Many LAZs developed from a mosque-based social division, an old function of the mosque. Large mosques usually built their own boards for zakat and non-zakat donations which were active throughout the year, not only during the end of Ramadan. Examples of this type of LAZ are the House of Zakat Indonesia (Rumah Zakat Indonesia) and Al-Falah Social Funds (Yayasan Dana Sosial Al-Falah or YDSF).

The LAZs created in secular multi-national banks and corporations were initially only informal bodies working for the collection of zakat from Muslim employees who wanted to fulfill the religious duty. As the New Order policies during the 1990s were accommodating Islam, these bodies obtained support from their company management. Later, they were encouraged to get legal status as a formal LAZ, as this would provide a positive image for their corporation. Some of these LAZs were created after 1999, stimulated by the spirit of the Zakat Management Law 1999. Large Islamic Reformist organizations such as Muhammadiyah, Persis, and Dewan Dakwah Islamiyah Indonesia (DDII) created their own LAZs. Even Nahdlatul Ulama, a Traditionalist Muslim organization, followed the trend of having an organized LAZ called Lazis NU. This establishment was probably launched by a few elite members of Nahdlatul Ulama and had little impact on grassroots practices among Traditionalist Muslims. Lazis NU is the only Traditionalist organization that is recognized as a national LAZ. Lazis Muhammadiyah is the only LAZ that formally represents the Muhammadiyah organization. The performance of Lazis Muhammadiyah is a bit better than that of Lazis NU (Fauzia, 2008).



Leading LAZs are mostly those which have been developed into professional organizations and established as independent foundations (Yayasan). Two examples of them are the Dompet Dhuafa and PKPU (Pos Keadilan Peduli Ummat). The LAZs which are part of large Islamic institutions, corporations, and financial institutions, have not been able to compete with those independent LAZs because they work as a section supporting a big organization. Leading LAZs are mostly supported by Revivalist Muslims who have a strong da‘wah (propagation) mission. Therefore, talking about zakat administration or zakat management in Indonesia is incomplete without taking the non-state zakat agencies into account. The existence of these non-state actors are real and they have contributed significantly to Indonesian zakat development. The non-state zakat agencies can be a traditional one, like those managed by local mosques, Islamic boarding schools, companies or community, or they can be a modern one, like those managed by a foundation with modern management and corporation culture. The non-state zakat agencies can be a national one with nationwide coverage or local one limited to cover provinces or cities-regencies. Currently, there are around 300 non-state zakat agencies throughout Indonesia either national or local-based.

The Non-state zakat agencies have been existing in Indonesia far before the Indonesian Independence in 1945. Most of the modern ones, which introduce modern management along with its professionalism values, transparency and accountabilities, were founded in the 1990s, or before the enactment of Zakat Management Law No. 38 year 1999. Among of the pioneers of Modern Non-state Zakat Agency are Dompet Dhuafa, Rumah Zakat Indonesia and PKPU. However, the enactment of Law No. 23/2011 on Zakat Management really alters the bargaining position of non-state zakat agencies toward state-based zakat agencies and to the entire zakat management in Indonesia.

III.5. The Distinction of Zakat Management in Indonesia

Zakat management in Indonesia is different from other countries. While the other Muslim countries applied the obligatory system, Indonesia applied the voluntary one. While some other countries restrict the role of non-state actor in zakat management, Indonesia still opens the room for civil society.



Even though zakat payment is mandatory for all Muslims who meet the requirements according to the Islamic teaching, the state of Indonesia has never imposed zakat as obligatory. This policy is also applied in the latest Law on Zakat Management No. 23/2011 and Government Regulation No. 14/2014. Zakat is perceived as religious obligation which is based in personal awareness to disburse it or not. Moreover, there is no legal punishment from the state for those who refuse to pay their zakat obligations.

Furthermore, the law on zakat still open the choices of zakat payment methods, whether to disburse it through state-based zakat agencies (BAZNAS) or through unofficial channels (non-state zakat agencies). There is no obligation to disburse the zakat to state-based agencies. In reality, Indonesian Muslims disburse their zakat money much more through non-state zakat agencies, rather than through the state-based ones. The low revenue of state-based zakat agencies is believed as one reason to legislate new law on zakat in 2011, as the law clearly stated that BAZNAS is the primary zakat agencies, while non-state-based zakat agencies are only the supporting agents.

This unfair position leads to discrimination and provokes the non-state zakat agencies to challenge the Law on Zakat Management No. 23/2011 to Constitutional Court through a judicial review. Not just through judicial review, in some areas people had shown their resistance to institutionalization of zakat. And this is another distinction of Indonesian zakat management, civil society movements are quite strong and they may challenge the state anytime once they found that their rights related to zakat management are violated by the state. This strong civil society in, let say, Saudi Arabia and Malaysia is unknown.Regardless the domination of the state over non-state- based zakat agencies, the total revenue of zakat in Indonesia in a year is still low. Data shows that in 2012 total zakat collection nationwide was only IDR 1.7 trillion and IDR 2.3 trillion in 2013, the potential zakat nationwide is calculated around IDR 271 trillion (Rukmana, Saptono and Beik in Republika Daily Newspaper, 24 July 2014). One possible reason why zakat collection in Indonesia is poor, is related to the level of religious piety of Indonesian Muslims. Also there is no incentive to pay zakat through official channels. Paying zakat is not automatically deducted income tax as in Malaysia or other countries.

III.6. Conclusion



Zakat is part of the teaching of Islam enshrined in Five Pillar of Islam. Zakat is a religious instrument stipulated by God (Allah SWT) and exemplified by His Messenger Prophet Muhammad PBUH. Nevertheless, zakat has not just theological dimension but also a profane and social dimension. As a religion and set of fundamental laws of values, Islamic teaching also offers social security scheme. There are many kinds of social security schemes in Islam, but the most important one is zakat.

The social dimension of zakat comes from its original teaching that zakat is taken from the rich people or those whose wealth have extended the limitation (nisab) in certain period (haul), to be disbursed to the poor or certain groups stipulated as zakat recipients (asnaf). Zakat is meant as income distribution so the poor people might be empowered and strengthened with the expectation that someday they will transform themselves as zakat payers (mustahiq to muzakki).

Zakat is meant to be a social security. It has almost similar concept with social security provided by the state in the form of social insurance, health insurance, insurance for accident, retirement, unemployment etc. The different things are, that zakat regulations have been stipulated by religious (Islamic) Law while state social securities are stipulated by state trough legislative bodies and executed by the governments. The problem emerged when a secular muslim state like Indonesia manage to secularize religious instrument like zakat.

Things will be more interesting when zakat as Islamic social security instrument is also applied in a country along with state social security instruments. In many countries, such as Saudi Arabia, Malaysia, Pakistan, Sudan, Libya, Bangladesh and Indonesia, zakat have also been legislated into national laws.The main challenge related to zakat is when zakat is put under modern state arrangement. Nobody is argued that zakat is compulsory as stipulated by the God and exemplified by the Prophet Muhammad PBUH. However, when it comes to relation between zakat, Muslim people and modern state, the practices may vary.

The practice of zakat administration in Saudi Arabia, Libya, Yemen, Sudan and Pakistan are strictly regulated and imposed by the state. However in Turkey, Jordan, Egypt, and other Muslim countries, the



practices are varied. The role and the level of involvement of the state are also varied.

Indonesian zakat practice is also different with other countries. Indonesia applies voluntary system while the state manage to centralize zakat administration through a state-based agency namely BAZNAS. Yet, there is no punishment for those who refuse to pay zakat. Also, there is no punishment for those who pay their zakat through unofficial channels. Zakat is mandatory before Islamic law but not mandatory before Indonesian law. However, study shows that the role of the state in administering zakat has been expanded from totally ignoring the zakat affairs to centralize zakat administration through the Law No. 23/2011 on Zakat Administration.

The complexity of zakat implementation in different countries represents the complexities of imposing religious laws in secular (or semi-secular countries). Moreover, not just secular, people has some options of social security schemes where they have their own freedom to choose which one fit for them (like a shopping forum). The schemes can be originated from the state, community-based, or other sources.


Chapter IV Institutionalization Of Zakat By The State In Indonesia

CHAPTER IVINSTITUTIONALIZATION OF ZAKAT

BY THE STATE IN INDONESIA

IV.1. Introduction

This chapter will discuss the political as well as the social dynamic of zakat in Indonesia, particularly about how this divine system (zakat) has been institutionalized in national laws and, formalized in local bylaws. The chapter includes the socio-political dynamic which might arise and the attitudes of various actors about zakat in different social settings.

The tool to understand the discourse of zakat in Indonesian settings is by criticizing the judicial review to the Law of Zakat Management No. 23/ 2011 and Government Regulation No. 14/2014 petitioned by Non-state Zakat Agencies to Indonesian Constitutional Court166 and Indonesian Supreme Court.

IV.2. Development of Institutionalization of Zakat in Indonesia

2.1. Institutionalization of Zakat Through Law

Individual Muslims may directly disburse their own zakat money by themselves to the determined beneficiaries, without involvement of any parties or institutions. However, disbursing zakat money through official channels or institutions is preferable. Beik (2014) mentioned that disbursement of zakat through amil (or official channel) is preferable, since zakat money could be delivered to targeted recipients effectively. Zakat payers should not deliver the zakat money directly to the beneficiaries, as what they do in infaq or shadaqah.

Suharsono (2014 : 19) mentions the eminency of disbursing zakat through any zakat institutions is as follows : (1) fulfilling the God’s will at the holy Qur’an, (2) practiced by Prophet Muhammad and his companions, (3) getting the prayer from zakat collector (amil),

166According to Indonesian legal system, judicial review for an Act (Undang-Undang) must be

petitioned to Constitutional Court and judicial review for non Act must be submitted to Supreme Court.56



(4) zakat money can be optimally utilized, (5) the distribution will be more proportional and equal, and (6) the muzakki or zakat payers will be more sincere since he or she does not directly meet the beneficiaries. Meanwhile, Syamsudin (2013: 32) added that among of the benefits to disburse zakat money through official channel are the zakat funds can be utilized for economic empowerment and the zakat payers (muzakki) will be more committed and discipline.

Hence, by disbursing through any channels or institutions, zakat is not simply a private matter. It is a social and also a public matter. Nevertheless, the institutionalization of zakat into Indonesian national law has just been done only recently.

A national system was introduced in 1999 under the Zakat Management Law (No. 38/ 1999). The law attempted to do two things: to institute an effective nation-wide system for the collection and distribution of zakat, and to reconcile the state and private systems through the provision of a common administrative framework. The law permits the collection of zakat by two agencies: National Zakat Collection Board (Badan Amil Zakat/ BAZ) and private Zakat Collection Agencies (Lembaga Amil Zakat/ LAZ). The latter include organizations of varying sizes and capacities (Hooker, 2008: 33). The Zakat Administration Law should be seen as a success of Reformist Muslims167 in enforcing their demand for islamizing the society because their demand for the law has been voiced since the 1950s. The law deals not only with zakat but also with many other philanthropic forms, such as religious sedekah168, non-religious donations, and waqf. The enactment of the Zakat Management Law 1999 was prepared in a rush during President Habibie Administration, not only because of the reform spirit but also out of fears that the political climate after Habibie would not be in favor of its enactment (Fauzia, 2008).

The Zakat Management Law 1999 provides three significant legacies. First, the law became the basis for the legalization and

167 The term ‘reformist Muslim’ refer to Muslim leaders or scholars who engage in socio-

political movements to change the apprehension as well as policies regarding Islam in Indonesia. Among the main target is to Islamizing the national laws.

168 Sedekah or shadaqah is a giving or allotment by anobody sincerely to people in need. The

sedekah must not in the form of money. Even giving a smile is also considered as sedekah.57



establishment of many LAZs. Second, it endorsed the Reformist modern interpretation of zakat management.169 Third, the law also became a basis for wider state involvement (or bureaucratization) in Islamic philanthropic activities (Fauzia, 2008). The Ministry of Religious Affairs (MORA) played an important role in the institutionalization of zakat activities. MORA issued Ministerial Decree No 581 (1999) and later Ministerial Decree no 373 (2003) on the implementation of the Zakat Management Law to replace the Decree no 581. The replacement was also forced by Islamic philanthropy activists, especially the Zakat Forum (Forum Zakat), an umbrella organization consisting of both state and non-state zakat agencies. Following these regulations, the Ministry established the Directorate of Zakat inside the Directorate of Islamic Affairs. The Ministry also promoted zakat management and activities through its offices throughout the country. However, the bureaucratization has not been effective and the Ministry itself has a reputation for inefficiency and corruption (Fauzia, 2008).

The 1999 law on zakat has been subsequently amended by Law No. 23 year 2011 on Zakat Administration. This new law was enacted on 26 November 2011 and suddenly became as hot issue and raised public criticism as well.

Following the enactment of Law No. 23 year 2011, the state has produced numerous laws on zakat, i.e.:1. Government Regulation No. 14 year 2014 on Implementing

Regulationary of The Law No. 23 year 2011.2. Presidential Instruction No. 3 year 2014 on Optimalization of

Zakat Collection at Ministries, Governmental Agencies, Secretariat General of State Agencies, Secretariat General of State Auxiliaries Agencies, Local Governments, State Owned Enterprises and Local Government Owned Enterpises Through National Zakat Administrator Agency (BAZNAS).

3. Minister of Religious Affairs Decree No. 118 year 2014 on Establishment of Provincial BAZNAS

4. Director General of Development of Muslim Society Decree No. DJ.II/568 year 2014 on Establishment of City and Regency Branch of BAZNAS

169The reformist modern inteIDRretation of zakat management hold that zakat managemet

should not centrally controlled by the state. There must be a room for public participation in zakat management.



5. Regulation of National Zakat Administrator Agency (BAZNAS) No. 01 year 2014 on the Submission of Consideration of Management of BAZNAS

6. Regulation of National Zakat Administrator Agency (BAZNAS) No. 02 year 2014 on Recommendation of Establishment of Non State Zakat Administrator Agency (Lembaga Amil Zakat - LAZ)

Prior to the enactment of Law No. 23 year 2011, the government issued Government Regulation No. 60 year 2010 on Zakat or Other Mandatory Religious Alms Which Are Reducable from Gross Income and Director General of Taxation Affairs Regulation No. PER-33/PJ/2011 on Agencies or Organizations Founded or Legalized by the State Which are Stipulated as Zakat or Other Mandatory Religious Alms Recipients that are Reducable from Gross Income.

Government Regulation No. 14 year 2014 regulates mainly on elaboration in details about Law No. 23 year 2011. However, it has not adjusted the provision with the latest ruling of Constitutional Court concerning Judicial Review of Law No. 23 year 2011, particularly at article 57 on Requirements of Establishement of Non State Zakat Agencies.

The Presidential Instruction No. 3 year 2014 is a provision that command all governmental-related agencies to optimalize the zakat collection through BAZNAS. A regulation which was strongly criticized by Non State Zakat Agencies since it hinder them to collect zakat originated from state-officials or governmental-related agencies. The decree also affect the LAZ which are previously founded by or originated from State-Owned Enterprise such as national banks, national airlined, national mining corporations, etc. The decree manages that the LAZ which is founded by state-owned enterprise will work only as zakat collectors and not as zakat distributor. All the money collected from zakat dispensers must be forward to BAZNAS.

Minister of Religious Affairs Decree No. 118 year 2014 on Establishment of Provincial BAZNAS, Director General of Development of Muslim Society Decree No. DJ.II/ 568 year 2014 on Establishment of City and Regency Branch of BAZNAS, and series of BAZNAS Regulations from 2016 to 2016 generally



regulated more about administrative and institutional matters concerning Central BAZNAS, Provincial BAZNAS and City/ Regency BAZNAS. Yet, for Non State Zakat Agencies (LAZ) the most important regulation is Regulation of BAZNAS No. 2 Concerning Recommendation of Establishment of Non State Zakat Administrator Agency (Lembaga Amil Zakat - LAZ).

2.2. Overview of Law No. 23 year 2011 on Zakat Management

The Zakat Law of 2011 as an amendment of previous zakat law of 1999 has strengthened the role of the state in administering zakat in Indonesia. If the previous law set the same position between state and non state actors in zakat administration, the latter law puts state higher than the non state actors. The law clearly authorizes and mentions that zakat administration in Indonesia is administered by BAZNAS (article 6) while non state zakat agencies/ private zakat collectors are only the supporters of this new zakat regime (article 17).

For the state, this law creates more legal certainty and provides more authority in administering zakat. While for most of private zakat collectors (LAZ), the law is a disaster. Many of LAZ have rejected this law since it actually marginalized public role in zakat management. The government tried to centralize the zakat management in Indonesia while the private zakat collectors are only the supporting agents. The collection and disbursement of zakat money by anyone or any institutions without state’s written approval are considered as a crime (as explicitly mentioned by Article 38 and Article 41 Zakat Law No. 23 year 2011).

The new law on zakat management No. 23 year 2011 seemed to marginalize public participation in zakat management. Badan Amil Zakat Nasional (National Amil Zakat Agency) is the primary zakat administrator in Indonesia along with its branches at provincial, regency/city levels, sub districts as well as at villages. . The private agencies may work to collect zakat funds only after getting written recommendation from the BAZNAS Agency and approval from Ministry of Religious Affairs. In contrast, the previous zakat law of 1999 did not establish such an unequal position. Instead, it acknowledged more flexible room for public participation.Back to legislating process when this new zakat law still in parliamentary debates, Gambiro (in Haryono and Erlangga,ed.,



2012: 4) the chair of zakat bill committee in Indonesian House of Representatives, indicates that the previous law of zakat (1999) showed a good development in zakat management. However, Gambiro still found many weaknesses which should be repaired. Among the flaws of the law are no clear provisions on the direction, integration and coordination among zakat agencies in Indonesia, either state-based or non-state-based. He promised that the new law on zakat will provide clearer and more professional of zakat management system. This new law on zakat management was subsequently challenged by non-state zakat agencies to Indonesian Constitutional Court on 16 August 2012.170 The applicants request to Constitutional Court to annul some Articles at this law namely Article 5, 6, 7, 17, 18, 19 and 38, 41.

Article 6 of the said law mentions that the BAZNAS is the main operator of zakat management nationwide. Article 7 explicitly mentions that BAZNAS is both regulator and operator of zakat management in Indonesia. Article 17 explicitly mentions that people (non-state actors) may form private zakat agencies to assist BAZNAS. Article 18 contains some prerequites for non-state actors to form private zakat agencies: among others are they must obtain recommendation from BAZNAS, must have specific legal body, etc. Articles 38 and 41 contain the provision of criminalization for non-authorized individuals and institutions who administer the zakat.

The legal grounds to annul these Articles were the violation of constitutional rights of the applicants. The applicants regard that the zakat law of 2011 potentially damaging their rights embodied at Article 28 1945 Constitution by criminalizing, marginalizing, subordinating and discriminating their rights.

On 31 October 2013, Indonesian Constitutional Court finally pronounced their decision upon the judicial review of Law No. 23 year 2011 on Zakat Management. The court ruled that the petitions of petitioner were partly granted. The Article 18 (2) a, b , d and Article 38 and 41 of Law No. 23/ 2011 were in violation to Indonesian Constitution and therefore, have no legal power. The

170 The Judicial Review of Zakat Management Law No. 23 year 2011 was petitioned by

KOMAZ (Koalisi Masyarakat Zakator Coalition of Zakat Society) which is an informal body consisting of coallition of numerous Lembaga Amil Zakat (Non-state Zakat Agencies).



court rejected other petitions to annul Article 5, 6, 7, 17 and 19 of the said law.

The legal impact of Constitutional Court’ decisions are as follows :1. Indonesian goverment, through National Amil Zakat Agency

(BAZNAS) is still the primary administrator of zakat nationwide, the agency is both regulator and operator of zakat administraton. The non-state zakat agencies are still treated as supporting agents (vide Article 17 Law No. 23 year 2011). This awkward position is enormously criticized by non-state zakat agency since it can lead to unfair competition among zakat agencies.

2. The non-state agency are free to operate as private zakat agency as long as they get permission from Ministry of Religious Affairs. The ministry will consider the application after having recommendation from BAZNAS. However, the Court annuled the prerequisites that private zakat agency must meet the form of ‘organisasi kemasyarakatan’ (special body designated for people organization in Indonesian law), also annuled that the private agency must have legal body (according to Indonesian law on legal body) and must not have Sharia-compliance board.

3. The Court annuls and lifts up the provision of criminalization and penal sanction to non-state zakat agencies as well as traditional zakat collectors in villages, Islamic traditional schools, mosques and Islamic traditional organizations which do not have permission or authorization from the state (Ministry of Religious Affairs through BAZNAS). The state is expected to develop them but not to penalize them. This decision actually maintains the situation that private and traditional zakat agencies can still operate without fear of being criminalized. However, the court suggests that they must, gradually, do some efforts to be registered and recognized by the state by having Ministry of Religious Affairs’ approval.

Another disaster for non-state zakat agencies is not only the enactment of Law No. 23/ 2011 on Zakat Management but also the enactment of Peraturan Pemerintah (Government Regulation) No. 14/2014 as the implementing regulation of Law No. 23/2011 on Zakat Management, enacted on 14 February 2014. Such government regulation contains some provisions which are



potentially damaging the existence of non-state zakat agencies. Those provisions tend to marginalize and discriminate non-state zakat agencies for example, Article 57 & 58 of Government Regulation No. 14/2014 stipulated that to found a zakat agency, the applicant must meet some requirements, i.e., registered as a legal body before Indonesian Law and have the form of Islamic Mass Organization (registered at Ministry of Internal Affairs). These requirements are too excessive and exaggerated for most non-state zakat agencies. Not all of zakat agencies have legal body and fulfill the requirement as Islamic Mass Organization (Organisasi Massa Islam).

The next discriminative provisions are Article 62 and 63 of Government Regulation No. 14/ 2014. Article 62 of the said regulation restricts the establishment of provincial chapter of national zakat agency as only one chapter for each province. Also, for provincial-based zakat agency the Article 63 restricts the establishment of cities/regencies chapter of provincial zakat agency as only one chapter for each city/regency. These provisions really damage Indonesian civil society and restrict the role and involvement of the people in administering zakat. Adressing this situation, the Zakat Forum petitioned this Government Regulation to be judicially reviewed by Indonesian Supreme Court on 17 July 2014.

2.3. Local Ordinances on Zakat Management

In addition to national-level legislation, the Zakat Administration Law of 1999 has been endorsed by local governments through regional regulation (peraturan daerah) or local ordinances/ bylaws. There are regional regulations that have a strong Islamic sharia tendency, prescribing for instance the wearing of Islamic clothing, punishments against adultery, and caning. These regulations are controversial because the issue of religion is not part of the decentralization policy decided by local government, with the exception of Aceh province. However, no strict measurements have been taken by the central government because religion is a sensitive issue for certain jurisdictions and these regulations were supported by the regional legislative assemblies (Dewan Perwakilan Rakyat Daerah or DPRD).



Among of those sharia local ordinances are some ordinances which regulate zakat management, usually called as Perda Zakat (peraturan daerah tentang zakat or Local Ordinance on Zakat Administration). By October 2012, there were approximately 30 local governments (provincial, cities and regencies) which had enacted the regulation. South Sulawesi, West Java, and West Sumatra were among the provinces where zakat regulations were enacted most often in their districts.

The Perda Zakat is a form of regional implementation of the Zakat Management Law which aims to support the law in a province or district. Most of the Perdas only follow the spirit and substance of the Zakat Management Law, therefore, it is generally regarded as not against the national law and not the same as other regulations that have a strong sharia nuances (Fauzia, 2008).

The endorsement of the Perda zakat was primarily related to Islamic and political motives. One Perda zakat which is strongly motivated by Islamization is the Qanun Zakat (or Local Ordinance on Zakat Administration) in Aceh province. Here, the enactment is in the same spirit as other qanuns reviving a more conservative form of Islam. These qanuns idealize the formal implementation of the sharia (Fauzia, 2008).

In most other districts, the Perda zakat is only a repetition of the Zakat Management Law 1999 affected by local circumstances. There are indications that the Perda zakat is being used to gain votes due to the system of regional elections, zakat is a selling issue to get support from local Islamic leaders. This can be seen in Bulukumba district in South Sulawesi. Supporters of the Perda zakat were the secular ruling party in that district, namely the Golongan Karya (Fauzia, 2008).

Therefore, there are various reasons and circumstances for each local government and local parliament to create such local ordinances/bylaws. Some of the bylaws on zakat management are as follows: 171

171 xa.yimg.com/.../Perda+Syariah+diurutkan+Tahun+ber... accessed on 13 January 2013



1. Local Ordinance No. 7 year 2004 of Nanggroe Aceh Darussalam (Aceh Province) on Zakat Administration.172

2. Local Ordinance No. 13 year 2003 of Solok Regency (West Sumatra Province) on Zakat, Infaq and Shadaqoh Administration.

3. Local Ordinance No. 2 year 2006 of Kampar Regency (Riau Province) on Zakat, infaq and Shadaqoh Administration.

4. Local Ordinance No. 4 year 2006 of Bangka Regency (Bangka Belitung Province) on Zakat, Infaq and Shadaqoh Administration.

5. Local Ordinance No. 4 year 2004 of Banten Province on Zakat Administration.

6. Local Ordinance No. 9 year 2005 of Bandung Regency (West Java Province) on Zakat, Infaq and Shadaqoh.

7. Local Ordinance No. 12 year 2005 of Sukabumi Regency (West Java Province) on Zakat Administration.

8. Local Ordinance No. 4 year 2005 of Sidoarjo Regency (East Java Province) on Zakat, Infaq and Shadaqoh Administration.

9. Local Ordinance No. 9 year 2003 of Banjarmasin Regency (South Kalimantan) on Zakat Administration.

10. Local Ordinance No. 31 year 2004 of Banjarmasin City (South Kalimantan) on Zakat Administration.

11. Local Ordinance No. 19 year 2005 of Hulu Sungai Utara Regency (South Kalimantan) on Zakat, Infaq and Shadaqoh Administration.

12. Local Ordinance No. 07 year 2008 of Padang Panjang Regency (West Sumatra Province) on Zakat.

13. Local Ordinance No. 29 year 2004 of Bukit Tinggi Regency (West Sumatra Province) on Zakat, Infaq and Shadaqah.

14. Local Ordinance No. 02 year 2010 of Padang City (West Sumatra Province) on Zakat Administration.

15. Local Ordinance No. 04 year 2004 of of Banten Province on Zakat.

16. Local Ordinance No. 06 year 2002 of Serang Regency (Banten Province) No. 06/ 2002.

17. Local Ordinance No. 35 year 2005 of Ogan Ilir Regency (South Sumatra Province) No. 35/ 2005 on Zakat Administration.

172The Qanun or Peraturan Daerah or Local Ordinance on Zakat in Aceh Province is different

with other Local Ordinances on the same issues. It stipulated that the name and form of state-owned zakat agencies in Aceh is Baitul Maal (or house of wealth) not Badan Amil Zakat (Amil Zakat Agency) like in other provinces.



18. Local Ordinance No. 05 year 2005 of Makassar City (South Sulawesi Province) on Zakat.

19. Local Ordinance No. 02 year 2003 of Bulukumba Regency (South Sulawesi Province) on Zakat, Infaq and Sadaqah.

20. Local Ordinance No. 02 year 2003 of Makasar City (South Sulawesi Province) on Zakat Profesi, Infaq, and Shadaqoh.

21. Local Ordinance No. 17 year 2005 of Maros Regency (South Sulawesi Province) on Zakat Administration.

22. Local Ordinance No. 02 year 2002 of Lombok Timur Regency (West Nusa Tenggara) on Zakat.

23. Local Ordinance No. 09 year 2002 of Bima Regency (West Nusa Tenggara) on Zakat.

24. Lombok Timur Regent Instruction No. 04 year 2003 on Reduction for the amount of 2.5percent each month of civil servants and school teachers’ salary.

25. Dompu Regent Instruction No. 04 year 2003 on Reduction of Civil Servants and school teachers Salary for the amount of 2.5 percent each month.

26. Appeal Letter of Dompu Regent No. 451.12/016/SOS/2003 on Infaq and Zakat for all civil servants in Dompu Regency.

2.4. Overview of Local Ordinance on Zakat in Three Provinces

The local ordinances on zakat in Indonesia does have similar characteristics, namely to administer zakat in local context. It does not regulate a lot about the Islamic perspective of zakat, but more on regulating the zakat in provinces, cities or regencies. Yet, they also have differences. Based on the researcher’s study to six local ordinances in three research areas (West Sumatra, Banten and South Sulawesi Provinces) the differences are as follows:

The local ordinances in Padang Panjang Regency, West Sumatra (No. 7/ 2008) stipulated that zakat is obligatory for Muslim residents, the regency government has very authoritative power in forming the BAZ (Badan Amil Zakat or state-based zakat agencies) and permitting LAZ (Lembaga Amil Zakat or Non-state-based zakat agencies) to operate at its region. Furthermore, it obliges all Muslim civil servants, state-owned enteIDRrise employees and regency-owned employees to pay zakat to BAZ by automatically deducting their monthly salary for 2.5percent as zakat.



In Bukittinggi Regency, also part of West Sumatra Province, the Local Ordinance No. 29/ 2004 strictly regulate both the BAZ and the LAZ in an authoritative manner. The working period for BAZ officers is stipulated for only three years (extendable). Also the ordinance stipulates that 87.5percent of zakat money collected by special unit formed by BAZ must be distributed by the units themselves and leave another 12.5 percent to be administrated by BAZ. The BAZ is supported by government’s budget as well.

Meanwhile, in Makassar City, South Sulawesi Province, the local ordinance (No.5/ 2006) on zakat applies almost similar policy between tax and zakat, namely the zakat payers (muzakki) is able to get special registration number of zakat (like a special registration number of tax payer), and if a zakat payer disburse the amount of zakat exceeded the required amount, he or she may ask for the returning of the exceeding amount. The Muslim entrepreneurs are obliged to report their businesses to BAZ. The distribution of zakat money is prioritized for productive measures and for local (Makassar City) beneficiaries only. In Maros Regency, also in South Sulawesi, the BAZ, according to Local Ordinance No. 17/2005 may receive other philanthropy funds namely (kifarat, waris, infaq, shadaqah). Interestingly, the Local Government will deduct 2.5percent from pilgrimage (hajj) funds as zakat. Therefore, every Muslim who conducts hajj from Maros Regency must disburse 2.5percent of hajj cost as zakat. The distribution of zakat must also meet certain requiements, namely for beneficiaries who live inside Maros Regency and for productive measures.

In Banten Province, the provincial ordinance on zakat (No.4/2004) is even more progressive. The civil society may involve in the establishment of BAZ Banten officers’ selection process by giving opinions, suggestions or even objections. Non-state zakat agencies (LAZ) could be established if meet certain requiements e.g.: operational area covers at least 40percent of Banten Province, able to collect at least IDR 500.000.000/ month,and financial report is auditable regularly. The collection of zakat focused to zakat maal, but they may collect other social funds, and The distribution of zakat is for Banten residents who meet the criterium. Interestingly, this provincial ordinance recognizes zakat as an instrument to deduct taxable income as long as the zakat payers disburse their zakat through official channels.



In Tangerang Regency, also part of Banten Province, the local ordinance (No.24/2005) stipulates that the BAZ is supported by local government budget, and the ordinance provide criminal punishment (in form of incarceration and paying the fine) for those amil (zakat administrator) who violates the local ordinance.

IV.3. State-Based Zakat Management in Different Administration

This section will describe the different practices of zakat management in different administration and various institutions in Indonesia, both state-based and non-state-based zakat agencies, as follows :

3.1. The BAZDA of West Sumatra173

Badan Amil Zakat Daerah (BAZDA) Sumbar or West Sumatra Provincial Zakat Agency is an independent body in West Sumatra Province which is founded by West Sumatra Government (by Governor Decree No. 451 9 October 1993 and subsequently by Governor Decree No. 455/ 2001). Previously, in 1973, West Sumatra Government founded Yayasan Dana Sosial Islam (Islamic Social Fund Foundation) (Institut Manajemen Zakat,2006: 58). Therefore, this local initiative is much older than national initiative concerning zakat agency. National Zakat Agency (BAZNAS) was founded in 2001.

The executive committee of BAZDA Sumbar are also appointed by Governor Decree, but it has independent character. Therefore, the agency is not under Provincial government or ministry of religious affairs in Jakarta. The BAZDA Sumbar is not superior over another BAZ founded by city and regency government. Particularly after the law on local autonomy (No. 22/ 1999 and No. 32/ 2004) was enacted , which provides bigger role for local government in governing local matters.

173 Interview with Prof. Syamsul Bahri, Chairman of BAZDA Sumbar in Padang City on 17

September 2012.68



The BAZDA Sumber conduct the coordination job with other zakat agencies. It also conduct campaign or dissemination program to raise people awareness over zakat. The BAZDA main program are as follows : (1) Supporting the muallaf (newly convert Muslim) with the program of IMTAQ (Iman Taqwa or faith and piety) for muallaf in Nias, Mentawai and Chinese descent, (2) Supporting the education (CERDAS) and providing scholarship for children coming from poor family, (3) West Sumatra Healthy, providing support for health, (4) Sumbar MAKMUR, providing support for farmers’ empowerment by providing fund and goods, farming and fisheries supplies, etc. , (5) Sumbar PEDULI or Care, by providing emergency support for natural disaster victims such as flood and landslide victims. The BAZDA Sumbar is among the most successful provincial zakat agencies in Indonesiaaccording to Forum Zakat (Indonesian Zakat Agencies Forum). This is because the zakat agency got full support from the government as well as from the people. Also, West Sumatra people have generally been recognized as kind of Muslim people who have great Islamic culture and apprehension.

The main source of zakat income for BAZDA Sumbar come from civil servants of West Sumatra Province. It can collect IDR 250 million/ month. However the BAZ Padang can collect IDR 900 million/ month. The government can directly cut the amount of 2.5percent from civil servants monthly salary as zakat. The second potential zakat payers are the traders/ merchants. The BAZDA Sumbar can collect many zakat money especially during Ramadan month. However they receive no zakat fitrah due to lack of personnel who can distribute the zakat fitrah money to the needy people. The BAZDA Sumbar acknowledges that they know that other private zakat agencies such as PKPU, Rumah Zakat and Dompet Dhuafa Singgalang are also existed in West Sumatra, however they seldom coordinate among themselves.

Total employees of BAZDA Sumbar are currently 15 people. Most of them are non-civil servants and retired persons. This number is, of course, very limited since they must handle many jobs, especially during the natural disasters. However, the personnel in BAZDA cities and regencies are bigger than in BAZDA Sumbar. The real problem experienced by BAZDA Sumbar are with its bureaucracy. Too many phases must be passed before they can conduct the program or distribute the zakat money. At this point



they cannot compete with Private Zakat Agencies which have bigger staff and clearer programs.

3.2. Zakat Management in Padang City

Kota Padang or Padang City is a capital city of West Sumatra province in Sumatra Island, the third largest island in Indonesia after Papua Island and Kalimantan Island. West Sumatra province has been recognized for many decades as the ‘Muslim province’. Not just because 95 percent of its inhabitants are Muslim, but they are also, generally speaking, practicing Islam in daily life. Therefore, the city of Padang is really a good place for conducting research on zakat.

The government of Padang City has enacted local ordinance No. 02/2010 on Zakat Management. The Local Regulation or Bylaws on zakat is designated to all Muslims who live in Padang City.174 However, the main sources of zakat money are from civil servants or government officials who live in Padang City. There are around 12,000 civil servants in Padang City. The Local Ordinance on Zakat has been running well and uncontested by the people. The reason is because the Padang City Muslim are mostly pious Muslimswho practice Islam daily.175

3.3. Zakat Management in Bukittinggi

Bukittinggi is the second largest city in West Sumatra and believed to be as tourism capital city of West Sumatra. Bukittinggi does have local ordinance on Zakat since 2004 (No. 29).

Before the involvement of local goverment in zakat administration, zakat in Bukittinggi city is fully administered by the people and private agencies. The BAZIS, government-initiated zakat agency, also administered by private party (the legal document was issued by local government but the operational was done by private party. The BAZIS of Bukittinggi was founded in 1993 and among the

174 Based on Interview to Pun Ardi in November 2011, a Padang City Member or Parliament

who drafted this law.175

Interview with Azwar, Chairman of Padang City Parliament Commision who draw up Zakat Ordinance in 2010.



pioneer of BAZIS in Indonesia after BAZIS Jakarta. 176 Currently, the BAZ of Bukittinggi is supported by government budget. The local budget supports daily operational and staff’s salary (the staff are mostly retired civil servants and contractual staff) . However its achievement is not as good as expected. The BAZ has sent no report to local parliament, whereas, they need to report to local parliament within three months after the end of fiscal year. The MP of Bukittinggi City mentioned that the BAZ is somewhat can not be fully trusted since the zakat money can be borrowed by other government institutions for something unrelated to zakat affairs.Initially, the private party administered the zakat in Bukittinggi City region, but gradually the local government interested to involve. When the government took part, the income slightly decrease. Then the government introduced new policy to deduct the salary of all civil servants (all levels) for the amount of 2.5 percent as zakat. This policy did not warmly welcome by the civil servants, especially the lower level, but they had no choice.

The Local Ordinance of Zakat Administration in 2004 was an initiative of member of parliament and aimed to support the religious life of Bukittinggi people. However, in practice, there were some politics involved. The disbursement of zakat money not always go to the eight zakat recipients, but to the people or constitutuent of the ruling party in Bukittinggi.177

Zakat potential in Bukittinggi City is IDR2.8 billion, however, the realization is lower than 50 percent of its potential. At the same time, local private zakat agency, like Pos Keadilan Peduli Umat can collect IDR700 million and utilize the zakat money progressively through economic empowerment programs. Darwin, a member of parliament of Bukittinggi City mentioned that, “The current local ordinance, is effective only to civil servants and not to common people, it has no legal sanctions and has not followed by promotion and dissemination program, how can people will comply?”178

3.4. Zakat Management in Makassar City and Bulukumba Regency,

176Interview with Darwin, member of Bukittinggi Parliament in Bukittinggi on 13 April 2013.

177Interview with Darwin, member of Bukittinggi Parliament in Bukittinggi on 13 April 2013

178 Interview with Darwin, member of Bukittinggi Parliament in Bukittinggi on 13 April 2013



South Sulawesi179

The local ordinance on zakat for Makassar City was enacted in 2006 (No.05/ 2006). This ordinance is applied for 14 district in Makassar for all inhabitants. The ordinance applies not only to civil servants/ government employee but also to common people. It was enacted without any serious contestation. The legislatures as well as the governmental executives fully support to this law. This ordinance is actually similar with other zakat ordinances in other provinces that the law apply particularly for civil servants or government officials. The civil servants is obliged to set aside 2.5percent of their monthly salary as zakat. However, in Makassar city, the obligation is also applied for common people (Muslim only), not just for government officials.

In September 2011, there are 14,000 government officials in Makassar city. If they are Muslim and earn more than IDR1,000,000/ month then the 2.5 percent zakat apply for them. However, in December 2010 the BAZ Kota Makassar earn only IDR 100.000.000. The zakat potential in Makassar is around IDR7 billion/year amounted from 80 percent of Muslim inhabitants in Makassar City. Total zakat income, both from government officials and common people, are less than IDR 2 billion (Tempo Magazine, 4 September 2011).

3.5. The BAZNAS of Makassar City180

The zakat agency of Makassar City is founded by Makassar Mayor Decree. Its objective is to serve the people of Makassar City who want to donate their zakat through this agency. The agency also works in line with Makassar City By Laws (or Peraturan Daerah) on Zakat Administration which was then followed by Makassar City Mayor Circular as an implementing regulation needed to implement that bylaws.

Generally, the Local Ordinance is designated to all Muslims in Makassar. However, the regulation is not strict. The government

179 Research and visit to Makassar city, South Sulawesi was conducted in November 2011 and

February 2013 respectively. 180

Interview with Katjong Tahir, Treasurer of BAZDA Kota Makassar, 1 February 2013 in Makassar City.



cannot force the Muslim people to donate their zakat only through the government zakat agencies (BAZ Kota Makassar). Therefore, initially this ordinance applies only for civil servants who work for and within Makassar City.181

“The regulation is difficult to be applied to anybody in Makassar, therefore, the civil servants were treated as first example. The mayor issued a circular which instructed all civil servants to donate certain amount of their salary as zakat or infaq money. Regularly, around ninety percent of the civil servants in this city have donated their zakat money every month”

The zakat in Kota Makassar is levied through UPZ (Unit Pengumpul Zakat or Zakat Collection Unit) which was founded in any governmental units within Makassar City. The Unit can only collect then transfer the money to BAZ Makassar. They cannot distribute the zakat money by themselves. According to Makassar City Circular, the Mayor instructed the civil servants to donate their money as infaq proportionally in accordance with their income levels. The fourth level officer should donate IDR 20.000, the third level officers should donates IDR 10,000, the second level officers pay IDR5000 and the lowest level (first level) donates only IDR3000 per month. However, not all of the civil servants paid the money as instructed. The number of civil servant in Makassar City is around 6000 people. However the number of civil servants working in zakat agency are only two. The rest of the staff are contracted employee or retired civil servants who were re-employed by the agency. The employees of the agency got no salary from the City Government. They got their wages only from their percentage (shares) within zakat money (one eighth) which is

181 The same condition apply in other cities and regencies where Local Ordinance of Zakat is

applied, the implementation of the ordinance works only for civil servant. The case in Bekasi Regency (Adhika, 2013 : 100) shows that the local ordinance on zakat applied only to civil servants by assuming that civil servant are part of government officials who should comply to government regulation. Also the dissemination of the ordinance to civil servants is much easier since they work regularly in the same governmental offices. Meanwhile, the local government can not expect common people to show the same level of compliance. There are varieties of apprehension and awareness toward zakat inside Bekasi City people. However, research conducted by Adhika (2013) indicated that even the civil servants in legal division within Bekasi City Government did not know much about this ordinance. This is an evidence that so far the ordinance has been poorly disseminated to civil servants. In Bekasi City there are around 10,000 civil servants. According to Mayor of Bekasi Instruction, every civil servants who earn more than IDR1,600,000/ month should pay the zakat of 2.5percent. The money should be paid to BAZDA Bekasi. Hence, the method of payment is varied. In one governmental unit the civil servants pay cash directy or through the treasurer of the unit, in other offices prefer to transfer to BAZDA account, while in other offices the treasurer will deduct 2.5percent of the salary as zakat money.



not enough, because they need to share the zakat funds with other zakat recipients and zakat collectors at UPZ.

The income of BAZ Makassar each month is only IDR50 million to IDR70 million. In a year they can collect around IDR 1 billion. In 2011 they collect IDR49 million zakat money and IDR 1 billion infaq money. The zakat money is mostly originated in form of zakat maal, not zakat fitrah. This is because most of the people donate their zakat fithrah money directly to the mosques in their neighborhood, not to BAZ. Instead from the civil servants, other significant zakat income for BAZ Makassar is from the pilgrims who will go for pilgrimage to Mecca. The Government instructed each pilgrim from Makassar City to set aside IDR 350.000 as their donation for BAZ.182

Regarding the distribution, BAZ usually distribute the zakat money through the chain of governmental offices. They will initially ask about information of poor people in the areas to the lower level of city government, namely Kelurahan. The information that they need are the availability of six poor people and four village religious teachers to be classified as zakat recipients. Also, they will determine the incoming proposal from poor people or social foundations, should the proposal meet their requirements or not. Therefore, the distribution of zakat money in BAZ Makassar are mostly in four areas: (1) Religious development by supporting the religious teachers, newly converted Muslims (muallaf) and development of mosques, (2) economic and human resources development, supporting small and medium enterprises, conducting vocational courses, (3) Education (by providing financial support/ scholarship for the needy students), (4) Health Services, (by supporting cataract operation or eye operation). The Agency supported five eyes operation per month in cooperation with a clinic and a public radio. Also, the agency frequently supported mass circumcision operation for around 300 children each year, (5) Humanitarian Aid, by supporting the victims of natural disaster (flood, landslides, etc.) or sending aid to Gaza Strip/Palestine, etc. 183

182 Interview with Katjong Tahir, Treasurer of BAZDA Kota Makassar, 1 February 2013 in

Makassar City.183

Interview with Katjong Tahir, Treasurer of BAZDA Kota Makassar, 1 February 2013 in Makassar City.



Concerning the collaboration with other zakat agencies, particularly to non-state zakat agencies, the informant mentioned that so far there is no regular collaboration with non-state zakat agencies within Makassar City. Katjong Tahir also criticized the non-state zakat agencies by stating that the private agencies has never reported their zakat income to city government.184

The agency does not market itself through regular marketing channel but they market itself through cooperation with Council of Ulama (Muslim scholar) and through their current and former zakat recipients (beneficiaries).

3.6. The BAZDA of South Sulawesi Province185

Contrary the Zakat Agency of Makassar City (BAZDA Makassar), the Zakat Agency of South Sulawesi Province is relatively better. Located in a two story building right before the Great Mosque of Makassar (Al Markaz Al Islami Mosque), the agency seemed to be very vibrant. There is maternity hospital right beside the office, designated for poor people.186 The patients deserve to get free services if they meet the requirements. Also at the right side of the office there is an elementary school which is also designated for poor students. The students deserve to get free education as long as they meet the requirements. There are currently 143 students divided into six different grades and ten teachers (four males and six females teachers).

The Agency works under the mandate of South Sulawesi Local Ordinance No. 7/2007 on Zakat Administration and South Sulawesi Governor Regulation on Zakat Administration. The

184 Interview with Katjong Tahir, Treasurer of BAZDA Kota Makassar, 1 February 2013 in

Makassar City.185

Interview with Rasmuddin, Head of Secretary BAZDA Propinsi Sulawesi Selatan, 1 February 2013.

186Information provided by Arifin Purwakananta, Director of Dompet Dhuafa on 4 February

2013. He explained that the maternity hospital in Makassar is initially founded and funded by Dompet Dhuafa, afterwards, the management was transferred to BAZDA South Sulawesi. Not only in Makassar City, Dompet Dhuafa also initiated a hospital for poor people with the name of Rumah Sehat (House of Healthy) in Mosque Sunda Kelapa, Central Jakarta (currently under BAZNAS control) and proposing a non profit hospital in any other places.



governor strongly supports the zakat collection by BAZNAS Sulsel by issuing a circular a month before Ramadhan month in 2007 designated to every government bodies within Provincial Government, regarding instruction to donate their zakat money within Ramadhan Month through BAZNAS.

The Agency took only zakat maal, not a zakat fitrah, for following reasons: (1) the BAZNAS is adjacent to two big mosques, which also collect zakat money, (2) the BAZNAS does have program to distribute basic needs regularly, (3) Lack of personnel who can manage the distribution of zakat fitrah money.

Currently the BAZNAS is equipped with 40 secretarial staff and 50 members of executive board and without specialization as professional amil (zakat collector). The board consist of civil servants and retired civil servants who actually do not stay by day at the office. Therefore, they do not send people to pick up the zakat money, but they wait for the muzakki (zakat payer) sending the zakat money to them. The salaries of staff are taken from provincial government budget. They do not want to set aside amil rights within zakat money (one eighth of total zakat fund collected).

The agency treated the donation received from zakat payers as zakat. “There is no difference, all money received are treated as zakat.”187 In 2012 they can collect around IDR 600 million (which exceeded their target of IDR 500 million). Further, in a month the BAZNAS can collect around IDR 10 to15 million. Mostly the money received are through Unit Pengumpul Zakat (Zakat Collector Unit) in every provincial government bodies. The UPZ further transfer the money to BAZNAS Account.

Regarding the distribution, the BAZNAS designates zakat money to poor people (fakir miskin), educational fund, health services, and supporting vocational training. Currently, in cooperation with Dompet Dhuafa, they founded a maternity hospital for poor people. So far they have served 2000 patients and around 300 babies have been born at the hospital.

187 Interview with Rasmudin from BAZNAS of South Sulawesi in Makassar City, 2 February

2013.76



In answering the question about How to assess the patients’ wellbeing the informant replied :

“We conduct a survey to their neighbors. We do not visit their house but their neighbors. If we convince that they are really in need, therefore we will assist them at our hospital. Should the patient’s condition turn into more complexity where our hospital cannot treat, then we will refer them to other hospital where we have cooperation with. We will donate the amount of maximum IDR 1.500.000 for their healthcare.”188

The elementary school serves the children who come from poor family where they do not have to pay anything. Instead, the agency will support their educational supplies as needed. Also their parents will be prioritized to be participants of vocational training arranged by the agency. Currently the agency provides sewing training for free for the parents.Regarding the cooperation with non-state zakat agencies or LAZ, Rasmudin mentioned that BAZNAS of South Sulawesi also belongs to Forum Zakat Sulawesi Selatan (Zakat Forum of South Sulawesi) where all zakat agencies both state and non-state gathered under one umbrella. However, the coordination among zakat agencies is somewhat unclear. There is no territorial division between one and other zakat agencies. So, it is likely that in one area there are many zakat agencies conduct their program, however in other areas are none. Rasmudin clarified this issue by saying :

“This is also the problem caused by the new law of zakat year 2011. The non-state zakat agencies perceived themselves are discriminated by the law. They are actually get more zakat money than us. The provincial government do not know how much they earn because there are no report provided by them…”189

Furthermore, when it comes to marketing, Rasmuddin mentioned that BAZNAS os South Sulawesi marketing program are through

188 Interview with Rasmudin from BAZNAS of South Sulawesi in Makassar City, 2 February

2013.189

Interview with Rasmudin from BAZNAS of South Sulawesi in Makassar City, 2 February 2013



discussion and talks with stakeholders, visiting the governmental bodies and through Islamic Propagation within the Mosques. They do not set up the banners (as non-state zakat agencies do) since there is no budget for such kind of promotion.

3.7. Zakat Administration in Bulukumba

Another interesting case study is in Bulukumba Regency, also located in South Sulawesi.190 This regency is regarded as a ‘model’ for the implementation of Islamic Law (Sharia) into local laws (as local ordinances). The islamization is not only in civil affairs but also in criminal affairs. A village in Bulukumba regency, namely Padang Village in Gantarang Sub District, introduced Islamic Criminal Punishment (jinayah) through its village ordinance.

The local ordinances of Bulukumba Regency that were influenced by Islamic Laws are as follows (Andis,2011: 87) : 1. Local Ordinance No. 03/ 2002 on Prohibition, Monitoring, Enforcement and Selling of Alcoholic Beverages, 2. Local Ordinance No. 02/2003 on Zakat, Infaq and Shadaqah Administration, 3. Local Ordinance No. 05/2003 on Muslim and Muslimah Dress Code, 4. Local Ordinance No. 06/2003 on Standardization of Al Qur’an Recitation for Students and Brides/ Grooms.

Those Islamic Local Ordinances subsequently followed by special ‘crash program’ of Bulukumba Regency related to religious affairs, as follows (Andis,2011: 86): 1. The development of youth-mosque activists, 2. Development of Qur’anic Kindergarten Education, 3. Development of Islamic Education Circle (Majelis Taklim),4. Development library of the mosques,5. Development the Qur’anic memorization Program, 6. Development the Islamic Arts and Performances, 7. Empowerment the zakat, infaq and shadaqah, 8. Eternalizing the prosperous and happiness Muslim families

(sakinah).191

190 Bulukumba regency is a regency (or Kabupaten) which is situated in Southeasternmost tip

of South Sulawesi Province, Indonesia. The distance to Makassar, South Sulawesi Capital to Bulukumba is around 150 km (or four hours trip by car).



In relation with zakat affairs, the Bulukumba Regency believes that the awareness of Muslims must be developed to set aside their wealth as zakat, infaq or shadaqah through the prevailing mechanism within the regency. The Badan Amil Zakat Kabupaten (BAZKAB or Bulukumba Regency Zakat Agency) will administer zakat affairs within the regency along with Sub District Zakat Agency (BAZCAM or Badan Amil Zakat Kecamatan). The Regent of Bulukumba Regency believes that zakat potential in Bulukumba regency are really significant due to the fact that 99.9 percent of its inhabitant are Muslim and two third out of them are classified as zakat payers. However, the Regent admitted that to raise people’s awareness to zakat was not an easy task. Therefore, he always requests to Muslim preachers within Bulukumba Regency to convey his zakat message through Islamic Propagation Program in mosques and other places (Andis,2011: 66–68).

Data obtained from resource persons in Bulukumba Regency show that the implementation of Bulukumba Regency Ordinance on Zakat in 2003 was that strong as it was previously introduced in 2003.192

Baharuddin Salam193, former Member of Parlliament of Bulukumba Regency (2004 – 2009) mentioned that the local ordinance of zakat in Bulukumba is no longer work well. This ordinance does not work since people prefer to pay their zakat directly to their neighborhood or to the mosques (mosques) in their areas rather than to state-based zakat agencies. Bulukumba people has a long history of Islamic tradition, supported by the fact that almost 100 percent of its inhabitants are Muslim. Including Kajang

191 The enactment of Islamic-based local ordinances in Bulukumba regency since 2003 is

subject to be strongly criticized by human rights activists. Syamsurijal Ad’han (2008: 70-71) claims that most of Islamic-based local ordinances tend to be discriminative, especially for women. He later mentioned that the ordinances wrongly put the priority. A state must assure the primary rights of the people, then secondary rights and tertiary rights. Among the basic principles are justice and non discriminative to other religions/ beliefs, ethnicities, races and gender. Therefore, there will be no betterment should the local ordinances tend to discriminative and creating to other groups Ad’han in Jurnal Perempuan, 2008 : 70 – 71).

192Field research to Bulukumba Regency was conducted on 3 – 4 February 2013

193 Interview with Baharuddin Salam was made in Bulukumba on 4 February 2013.



indigenous people who are officially Muslim but do not practice Islam. Other minorities are Christian, Hinduism and Buddhist.

Baharuddin also mentioned that the implementation of this ordinance need to be strongly imposed by the government. So far, the ordinance has been regarded only as a suggestion or recommendation about how to pay zakat in Bulukumba, not really in the form of an order or instruction. Only the civil servants or local government officials can be forced to pay their zakat money in accordance to local ordinance.194

Haji Kamaluddin, the advisor of BAZKAB (Badan Amil Zakat Kabupaten or Regency-Based Zakat Agency) Bulukumba interpolated that in Bulukumba there is a village called as ‘Zakat Village” namely Padang Village in Gantarang Sub District. Because, around 90 percent of its inhabitants are obedient to zakat regulations. Setyarini (2008: 160-161) mentioned that Padang village195 also recognizes agricultural zakat. The BAZKAB regularly visit the village to socialize the agricultural zakat. At first harvest they can collect IDR 18 million or three times bigger than PBB (Pajak Bumi dan Bangunan or building and land tax). The next harvest earned IDR 36 million and the farmers directly distributes their agricultural zakat by themselves. Other zakat villages are Balong Village in Ujungloe sub district and Ballasaraja Village in Bulukumpa sub district.196

However in other Bulukumba regency areas, generally, people are a bit passive to this regulation. They always need the government to remind and push them. The government must take initiative then people will follow. The period of Pattabai Pabokori Regent

194 Interview with Baharuddin Salam was made in Bulukumba on 4 February 2013.

195 Padang village is an example of Muslim village, stipulated as a model of Muslim village and

as model for Islamic-based local ordinances implementation. In front of Village Head Office there used to be a board reads :”Muslim women without wearing scarf will not be served.” Also, this village introduced Village Local Ordinance on Islamic-based criminal punishment where the caning punishment for certain offenses were enforced (Dewi Setyarini in Jurnal Perempuam, 2008 : 160 – 161).

196 According to Dewi Setyarini (in Jurnal Perempuan, 2008 : 167), some Muslim villages which

have been treated as model for Islamic-based Local Ordinances, the life of their residents are not always good. In Ballasaraja village, Bulukumpa Subdistrict, as an example the main road of the village is damaged.



(1995 – 2005) is the best one. However, after his period was over, the local ordinance seemed to have no strong power.

“If the leader regularly goes to mosque, then people will follow him. Zakat potential of Bulukumba people is enormous. For instance, a tobacco farmer may earn around IDR5 billion a year. They always change their fancy cars every year! In Bulukumba many people become rich by cultivating tobacco, cocoa and pepper!”197

On the other hand, Kamaluddin believed that the zakat collection, if initiated and supported by the government, will be much bigger than Bulukumba Annual Budget. Yet, the next problem is accountability. Kamaluddin suspected that the financial report of the BAZKAB is not transparent.

Actually I am an advisor to BAZKAB but I even do not know the number of money going in and going out. There must be an institution which supervise BAZKAB. Right now the supervision is unclear. The head of Bulukumba Religious Affairs Office is also the head of BAZKAB. It is conflict of interest. Whereas, he is the one who can supervise BAZKAB.”

Haji Tjamiruddin, former head of BAZKAB Bulukumba added the information that in Bulukumba Regency the local government officials usually pay the infaq money (not a zakat) as follows: the 4th level officials pay IDR 7000/month, the 3rd level officials pay IDR 5000/ month, the 2nd level officials pay IDR 2500/ month and the 1st

level officials have no obligation to pay their zakat money.198

For government officials who agreed to pay their zakat money through BAZKAB, their salary is automatically deducted to 2.5 percent. The BAZKAB does not receive cash money. It opens the bank account and waits until zakat payers transfer their zakat money. There are two kind of accounts, zakat or infaq. Only for those who agreed and signed the letter, their salaries will be deducted. Every local governmental unit is acting as UPZ (Unit Pengumpul Zakat or Zakat Collector Unit).199 The utilization of

197 Interview with Haji Kamaluddin, the advisor of BAZKAB Bulukumba, was made in

Bulukumba on 4 February 2013.198

Interview with Haji Tjamiruddin was conducted in Bulukumba, 5 February 2013.



zakat money in Bulukumba is as follows: distributing the rolling funds to around 200 merchants/sellers at IDR250.000/ each, providing limited scholarship (living cost for one semester) for those who pursue their studies in Arabic countries, conducting program to produce Muslim scholars (pengkaderan ulama) and providing zakat money to muallaf (newly converted Muslims). So far the muallaf come from Japan, Czech Republic and Tana Toraja Region).

The BAZKAB of Bulukumba Regency also provides money for high school students who come from poor family. They received IDR50,000/ month. Other zakat utilization is for natural disaster countermeasures like flood or landslide disaster. Also for health services by providing ambulance and setting up emergency clinic. Other zakat income comes from pilgrimage (jama’ah haji).

The infaq money received from civil servants may reach IDR 150million/ month. The amount of infaq money received by BAZKAB is bigger than zakat. Meanwhile, zakat money in zakat village is administered by the village people. The BAZKAB receives only the report. Other zakat money utilization is for celebration of Muslim Holy Days, where the BAZKAB also disburses the money for orphanage house.

Similar with Kamaluddin, Tjamiruddin also said that local ordinance of zakat in Bulukumba at present situation does not have strong influence : 200

The implementation of local ordinance of zakat here is la yamutu wa la yahya, or not live but also not die. It is quite different with the period of Pattabai Pabokori Regent. During his term even the Imam of Mosque got stipend. Originally, the local government planned to zakat collector unit in each villages. But the plan is just a plan. After the turnover of the regent, the plan was over too.

In every sub district there are some non-state zakat agencies, mostly mosque-based. The mosques have their own zakat administrator. The BAZKAB receive only the report while the zakat money received by mosques were distributed by themselves. Haji Tjamiruddin mentioned :

199Interview with Haji Tjamiruddin was conducted in Bulukumba, 5 February 2013

200Interview with Haji Tjamiruddin, conducted in Bulukumba, 5 February 2013.



“That is fine. We do not want to monopolize zakat collection in Bulukumba. Please go ahead. We need only the report in order to coordinate the distribution between one and other zakat agencies, and also to prevent the overlapping in zakat distribution. In our case, we do not receive the zakat money directly. Most of the money were transferred to our account by zakat payers.”201

IV.4. Zakat Management by Non-State Zakat Agencies

4.1. Dompet Dhuafa

Dompet Dhuafa Republika (DDR), which subsequently transformed to Dompet Dhuafa (DD), is a non-profit organization in Indonesia and among the pioneer of non-state zakat agency in Indonesia. The goal of DD is to enhance social level of the low-lived people by managing ZISWAF (Zakat, Infaq, Shadaqah, Wakaf and other halal and legal funds) from individuals, groups, corporations/organizations. It was initiated by four journalists who encountered close interaction with low-lived people. From there, they created a management of low-lived people for those who concerned about them. Parni Hadi, Haidar Bagir, S. Sinansari Ecip, and Eri Sudewo were the four journalists who founded Dompet Dhuafa Republika.

Since the beginning of Republika Daily Newspaper in 1993, the journalists have been actively collecting 2.5 percent of zakat (alms) from their income. It was distributed directly to low-lived people. They funded the activity with their own money. Somehow it helped encouraging social activities within the REPUBLIKA community. Based on Indonesian Law no. 38/1999 regarding Zakat Management, Dompet Dhuafa is a society-based zakat management institution. Later, Ministry of Religious Affairs Republic Indonesia issued a Certified letter no. 439/2001 that certified Dompet Dhuafa Republika as a national level amil zakat Organization on 8 October 2001.

The vision of Dompet Dhuafa are to self-develop a functional organization as a community reinforcement locomotive, to

201 Interview with Haji Kamaluddin, the advisor of BAZKAB Bulukumba, was made in

Bulukumba, South Sulawesi Province on 4 February 2013.83



develop community reinforcement organization network, to expand self-potential and reinforce community asset, to advocate a justified economic paradigm. Its goal are to enhance the effectiveness of organization’s performance, to improve the function of organization’s network through devolution (decentralization and role), to intensify the comprehension, acceptance and accomplishment of justified economy, to increase community asset reinforcement through Zakat and other social funds and charity management and to reach community’s self-supporting.202

According to Sabeth Abilawa, the Corporate Secretary of Dompet Dhuafa, this organization is actually a pioneer and a model for similar agencies. Many zakat practitioners both in state-administered agency (BAZNAS) or a private ones (LAZ) are graduate from “Dompet Dhuafa School.’203 The Dompet Dhuafa has so far fourteen branches in 10 provinces namely Jakarta, Banten, West Java, Aceh, West Sumatra, Jogjakarta, East Java, South Sulawesi, East Kalimantan, and four branches overseas in Hong Kong, Japan, Australia and USA respectively. The branches in Indonesia have worked both for collecting and distributing zakat money, also to serve the needy people through various empowerment program. On the other hand, the overseas branches, which are also legally registered at local laws, focusing their program in different areas. In Hong Kong, they serve Indonesian migrant workers who work in Hong Kong (there are around 140.000 Indonesian migrant workers in Hong Kong in 2013, mostly are female and working as domestic workers). In Australia, they serve the Islamic Propagation program conducted by Indonesian people who live in Australia. Dompet Dhuafa Australia Ltd is a non-profit organization. The goal is to enhance social level of the low-lived people by managing ZISWAF (Zakat, Infaq, Shadaqah, Wakaf and other halal & legal funds) from individuals, groups or corporations. Dompet Dhuafa Australia, Ltd. was registered as A Company Limited by Guarantee under the Australian Corporations Act 2001.

202Interview with Sabeth Abilawa and Nana Mintarti at Dompet Dhuafa Office in Ciputat on 19

July 2013.203

Interview with Sabeth Abilawa, Corporate Secretary of Dompet Dhuafa, in Padang City, West Sumatra 16 September 2012.



In Japan, the Dompet Dhuafa Chapter was founded on 1 January 2011 in Hamamatsu City. Hamamatsu is a city located 350 km to the south of Tokyo. The chapter was founded by Indonesian migrant workers and students who live in Japan. The main idea to found Dompet Dhuafa Chapter in Japan is to support the Islamic propagation in Japan and since Japan does have significant potential of zakat. In 2013, around 30.000 Indonesian Migrant Workers and 3000 Indonesian students in Japan. Hence, other objective of the foundation of Dompet Dhuafa in Japan is to support the advocacy program and providing assistance to Indonesian migrant workers and Indonesian people who live in Japan.

Dompet Dhuafa in Hong Kong204 is special branch founded to serve Indonesian migrants workers who live and work in Hong Kong. There are almost 140.000 Indonesian migrant workers in Hong Kong, mostly female and working as domestic workers. The Dompet Dhuafa responds this situation by establishing a branch to serve the workers by providing empowerment program, life skill training, and collecting donation (including zakat) which will be disbursed the needy people in Hong Kong area. None of money collected by DD Hong Kong were transferred to Jakarta. The money were utilized to meet the need of the needy people in Hong Kong, particularly the Indonesian Migrant Workers.

Dompet Dhuafa Singgalang (DDS) in Padang205 is a branch of Dompet Dhuafa. It was founded in Padang in 2007 as a joint cooperation with Singgalang, Padang-based newspaper. The establishment of DDS was part of the response to an earthquake occurred in Tanah Datar Regency in 2007. Currently, it has 13 staffs and around 1500 contributors (among 50 percent of them are zakat payers). Dompet Dhuafa Singgalang is among the fastest growing of DD Networks. The growing number of donations are very significant. This is due to continuing publication supported by Singgalang Newspaper and ongoing support from the people, also it manages to keep the impartiality. Currently, Dompet Dhuafa Singgalang has chapters in Pariaman Regency, Padang Pariaman

204 Interview with Abdul Ghofur, former Head of Dompet Dhuafa in Hong Kong in Tangerang on

25 September 2012.205

Interview with Musfi Yendra, Head of Dompet Dhuafa Singgalang in Padang City on 17 September 2012.



Regency, Bukittinggi City, Payakumbuh Regency and Dharmasraya Regency.

Current program of DDS are collecting donation and conducting similar program as stipulated by Dompet Dhuafa in Jakarta, particularly in education, economy, health affairs, emergency support for natural disaster victims and providing clean water. They do have a standard operation procedure where they must come to disaster-affected areas maximum within eight hours. They provided basic foods and money to rebuild the mosques. The donation consists of bounded donation and free donation.

The DDS also focusses on empowerment. They support poor women by providing fund to start small business. They created six groups and dropped the funds. The assistance will be provided for around six months. They also provide free ambulance and support the development of people in Mentawai Island. In 2012, DDS assisted 8250 households all around West Sumatra or around 33.000 inviduals.

In West Sumatra, people pay their zakat directly to mosques. However, DDS has good network with Dharmasraya Regency Zakat Agenct. Instead of Dompet Dhuafa Singgalang, Lembaga Amil Zakat Semen Padang or Semen Padang Zakat Agency is also among the important non-state zakat agency in West Sumatra. It can collect around IDR10 billion a year.Arifin Purwakananta, Director of Dompet Dhuafa,206 mentioned that zakat management concept within Dompet Dhuafa is based on “Empowerment Triangle” namely : basic access, economic growth and social justice. Basic access consist of housing, food, education and health affairs. Economic growth is fulfilled through providing fund to start business, production and support the marketing process. Social justice program is met by conducting advocacy program.

Arifin also mentioned that the empowerment program of DD are based on maqashid shariah (or the objectives of Islamic Sharia) which subsequently conducted by stipulating zakat as main instrument in creating sharia economy. Furthermore, among of the main duty of DD is to disseminate the concept and the law of zakat

206Interview with Arifin Purwakananta, Director of Dompet Dhuafa, Jakarta 2 March 2013.



to the people. Dompet Dhuafa, based on Arifin’s explanation, has introduced new perspective of community development namely : “Islamic Integrated Community Development.” This approach is done by firstly mapping the poverty and the villages, followed by selecting and implementing pilot project to selected villages (in 2013 DD has pilot project on community development program in Parung, Tuban, Bali, Lampung and Yogyakarta).

When it comes to relation betwen zakat and human rights, Arifin Purwakananta interestingly express that :207

Zakat is the least unsuspected Islamic propagation. Zakat is different with Corporate Social Responsibility (CSR). The CSR is taken from the corporate profit and intended, inter alia, for social marketing. While zakat is taken from the wealth. Zakat is an instrument for the needy people (zakat recipients) to obtain their human rights. Zakat can lessen the gap between the rich and the poor. Finally, I am sure that if a region administer its zakat affairs properly and justly, the human rights situation in that area will aso be good.

The main business of Dompet Dhuafa is empowerment. The empowerment program of Dompet Dhuafa is later developed by several sub program as follows : water resource development, Dompet Dhuafa Corporation, Construction Corporation and dissemination of sacrificial animals.208

The dissemination of sacrificial animals is conducted by building village cattle in several areas. Around 25.000 sacrificial animals have been disseminated a year. This program really empower local people who breed the cattle. Abilawa stated : “Our program is different with others. We facilitate local people to breed the cattle. In return, they deserve to have their shares of sacrificial animals’ price. This is really empowerment, since other zakat

207Interview with Arifin Purwakananta, Director of Dompet Dhuafa in Jakarta, 2 March 2013.

208Information provided by Sabeth Abilawa, Deputy Director of Dompet Dhuafa in Ciputat 19

July 2013.87



private agencies simply give the sacrificial animals in the form of canned beef.”209

Around 65 percent of Dompet Dhuafa’s revenue comes from Ramadhan program. Yet, the large amount of money cannot be absorbed only in a year. Therefore, the money is placed in various program such as in Islamic Bank, travel, business program, and so on.

Dompet Dhuafa also develops waqf money. It received a land and school building (formerly was named As-Sukra Foundation) amounted to IDR90 billion. Also it received Holcim School (formerly belong to Holcim Cement Corpooration). Both schools later turned into Islamic School with modern curriculum developed by Dompet Dhuafa under the new name : Smart Ekselensia. Other waqf land received by Dompet Dhuafa situated in Ciputat area, South Tangerang Regency, was then turned into a futsal (mini soccer) field to raise fund. This creative development has rendered many NGOs to learn and replicate DD, particularly about how to do fundraising.

Dompet Dhuafa’ biggests revenue is from zakat money, especially during Ramadhan month. On the other hand, other zakat agencies such as Rumah Zakat (House of Zakat), seventy percents of its revenue come from infaq money. Meanwhile, the PKPU’s (Pos Keadilan Peduli Umat – a non state zakat agency) revenue is 80 percent come from infaq money. Therefore, Dompet Dhuafa can be considered as the biggest zakat money collector in Indonesia. The revenue of DD in 2012 was IDR172 billion and previously in 2011 was IDR217 billion.

Every year DD spends around IDR50 billion for health affairs by supporting community hospital in Parung and a health unit designated for poor people, namely Lembaga Kesehatan Cuma-Cuma (Free Health Services Agency). At present, main businesses of DD are in health and educational affairs. The employees of DD are around 800 persons (in July 2013), scattered in five countries (Indonesia, Australia, Japan, Hong Kong and USA) and the next chapter will be South Korea.

209Information provided by Sabeth Abilawa, Deputy Director of Dompet Dhuafa in Ciputat 19

July 2013. 88



Abilawa mentioned that DD will expand its business by creating legal aid agency specified to assist the legal problem of poor people and working in environmental advocacy, and so forth. This framework clearly explains that DD is not simply a zakat agency.210

One important thing about Dompet Dhuafa, the program of DD is intended to empower the poor peoople. Not just relieving their sufferings but also releasing. Mintarti, Deputy Director of Dompet Dhuafa stated: “.... Zakat program in DD is intended not just for relief but release. We want to liberate people from poverty, not just relieve them temporarily. Therefore, the mustahiq will transform to be muzakki someday. This is what we called as empowerment.”211

Dompet Dhuafa has declared itself as empowerment organization by creating empowerment program, economic support, etc. The work of zakat agency is to collect, manage and distribute, empowerment is the other thing. The main program of DD is zakat, followed by relief then empowerment (community-based program) such as the program of ‘Masyarakat Mandiri’ (Self Sufficient Society). Mintarti also mentioned that DD program is well integrated. It covers micro, mezo and macro level. For instance, in macro level, DD intends to take part in policy advocacy as well. Mintarti claimed that : “Dompet Dhuafa is a pioneer. First agency which build modern zakat agency, first agency which build free health services , first agency which build amil (zakat administrator) school (a six month education, mixed between classical and practices approached, and at the time of the interview has reached seven batches. Therefore, no wonder that many agencies has clonned Dompet Dhuafa.”212

Regarding method of zakat distribution in DD is done by directly come and submit a proposal to DD or through a program. Dompet Dhuafa does the mapping and having a map of muzakki and mustahiq all over Indonesia . It may freely select the beneficiaries,

210Interview with Sabeth Abilawa in DD Office, Ciputat Tangerang 19 July 2013.

211Interview with Nana Mintarti in DD office, Ciputat Tangerang 19 July 2013.

212Interview with Nana Mintarti was conducted at DD office in Ciputat,South Tangerang 19 July

201389



only those who meet the criterion and related with the program, which is empowerment program. However, DD also welcomes cooperation and initiative by individual or group in utilizing zakat fund.

Fauzia (2008) claimed that Dompet Dhuafa and other LAZs have sought to reform the practice of Islamic philanthropy in three aspects: (1) modernizing management, (2) program diversification and (3) fiqh reformulation. Each of these aspects will be elaborated below :

1. Modern Management

Amelia Fauzia (2008) mentioned that Dompet Dhuafa and some LAZs have campaigned for professional or at least modern management. This became an important aspect because zakat collection had been heavily overshadowed by traditional practices and ambiguities.

The LAZs and Dompet Dhuafa also campaigned for LAZs to have good administration and to be accountable and transparent. Accountability and transparency have become significant icons for LAZs, which compete with one another to publish and distribute their financial reports. In this way, LAZs have broken through a taboo that asking for donated money is not favorable. Reports of zakat collection and distribution have become a significant marketing device to gain trust from the community. LAZs (and also some BAZs) competed to have their reports audited and published.

Following the LAZ model, BAZs are encouraged to be modern charity organizations. However, the work standards (ethos) of BAZs and LAZs are somewhat different. The LAZs tend to be flexible, bottom-up, and supported by industrious (if not militant) activists, who are driven by idealism, whereas BAZs are mostly top-down and bureaucratic, and they are maintained by civil servants who work only to fulfill their duties. LAZs usually have good human resources compared to BAZs. Another reform is the professionalization of the job of zakat managers (amil). In Indonesia, amil is a traditional job that has been done voluntarily by a kyai or modin, or by someone dealing with religious matters in a village. Due to



the demand to expand the zakat sector, Dompet Dhuafa urged that an amil should be a qualified person who can work full-time to manage the zakat organization. Therefore, amils, who used to work voluntarily were to be transformed into professional managers who work full-time and receive good salaries.

2. Program Diversification

Fauzia (2008) asserts that Dompet Dhuafa and LAZs campaigned for philanthropic organizations to move from their traditional amil job as zakat collectors into providing more advanced programs. The majority of LAZs have extended their program sectors into education, health, and social and economic areas. During Ramadan Month, the outlets of Dompet Dhuafa are easily found scattered all over malls and shopping center in Indonesia. They manage to approach the potential zakat payers and pick up the potential zakat money proactively.

3. Reinterpretation Related to Zakat

Fauzia (2008) mentioned that the program diversification at Dompet Dhuafa is closely related to the last aspect of philanthropic reform, namely fiqh (Islamic jurisprudence) reformulation. This reformulation applies to Islamic regulations (mostly found in fiqh books) that are specifically related to philanthropic activities requiring a progressive adaptation to a modern society. It can be called fiqh of philanthropy (fikih filantropi). Most of LAZs seek an Islamic basis from the Qur‘an, hadits and jurist opinions to support their modern adaptations. They use this to justify economic empowerment and humanitarian assistance, including the use of banks and other modern devices. Two reforms of the fiqh of zakat have been in progress: the reinterpretation of zakat recipients and a reformulation of and payment of due zakat. Dompet Dhuafa has reintepretated the eight types of zakat recipients as well as methods of zakat payment.

4.2. Rumah Zakat Indonesia



The history of Rumah Zakat Indonesia (or House of Zakat Indonesia) started when Abu Syauqi, one young da'i (Muslim preacher) in Bandung, along with several colleagues in the Majelis Ummul Quro Qur'an recital group agreed to set up social institutions associated with humanitarian aid. On 2 July 1998 they formed an organization called Dompet Sosial Ummul Quro (or Social Wallet of Ummul Quro). 213

In 2003, DSUQ changed its name to Rumah Zakat Indonesia DSUQ along with the enactment of the Minister of Religious Affairs Decree No. 157 on March 18, 2003, that certified this organization as non-sate national zakat agency. In 2005, Branch offices grew rapidly. Earthquake and tsunami disaster in Aceh Province on 26 December 2004 had forced Rumah Zakat Indonesia to expand its role in Sumatera Island. Rumah Zakat Indonesia has established several new branch offices in Aceh, Medan, Padang, Palembang and Batam. It also developed IT-based management by online network, online transaction, online attendance, and developed some financial softwares. Therefore, donations had increased rapidly, especially public donation for post-tsunami rehabilitation of Aceh. At that time, Rumah Zakat Indonesia recorded around IDR 45.26 billion donations had been collected. The transformation in Rumah Zakat Indonesia continued by introducing corporate value : "Transformation From Traditional to Professional Corporate" starts. Zakat awareness is encouraged by the release of campaign called "When Zakah Become Lifestyle".

The idea of establishment of Rumah Zakat, according to Nur Efendi214, current CEO of Rumah Zakat is replicating Prophet Muhammad way of life. When the Prophet moved from Makkah City to Madinah City, upon arriving at Madinah he firstly built Mosque (mosque) then market. Mosque is a center of excellence, center of change. The market may facilitate the change. Nur Effendi says :

213Data obtained from a visit to Rumah Zakat headquarter in Bandung and interview with the

CEO, Nur Effendi on 23 July 2013.

214Interview with Nur Effendi, CEO of Rumah Zakat at Rumah Zakat Headquarter, Bandung, 23

July 2013. 92



“Rumah Zakat is eager to be a model of empowerment by adopting the concept of ‘hijrah’ (exodus) of Prophet Muhammad from Makkah to Madinah by firstly setting up the aqidah (Islamic basic valuesy), then building a mosque, which is interpreted by Rumah Zakat as building center for transformation, since mosque in Islam is regarded as center for transformation and center for training. Afterwards, the Prophet Muhammad built a market and we designate our zakat money to transform the people by creating Kampung Perubahan (Village of Change) and Agropolitan.”

In regard to current challenges, Rumah Zakat differentiates the poor people as ‘city poor people’ and ‘village poor people’ (agropolitan). It builds ‘kampung perubahan’ (village of change) as a model for empowerment in fourteen areas. To date, Rumah Zakat has developed fourteen ‘agropolitan’ areas where Rumah Zakat is acting as facilitator and other fourteen areas are the members. The members breed the cattle (usually goats and cows), where the cattle are housed by Rumah Zakat in Rumah Zakat cattle-shed. Rumah Zakat freely provided the cattle-shed. In a ‘village of change’, an officer of RZ may responsible to handle around 250 households. Yet, the stockbreeding is not the only business of ‘Village of Change’,other program are also possible as long as they meet with the village potentials.

Regarding budget allocation in Rumah Zakat, Effendi mentioned that budget for empowerment program 35 percent, health program 25 percent, education program 20 percent and the rest are for various activities. Furthermore, like any other non-state zakat agencies, Rumah Zakat focuses its activities to empowerment program, more specifically, economic empowerment. Nur Effendi says : “ Rumah Zakat is eager to transform mustahiq to muzakki, to transform poor people to zakat payer, someday.” For instance, if a mustahiq ask for money to return to his/ her hometown then Rumah Zakat will buy the ticket, not giving the money directly.215

215Interview with Nur Effendi, CEO of Rumah Zakat Indonesia in Bandung on 23 July 2014.



In administering zakat money, Rumah Zakat applies centralization principle. The revenues from all over Indonesia must be forwarded to central account for the sake of bookeeping. However, the money will then returned to the branches according to their program. In 2013, Rumah Zakat has 56 branches all over Indonesia and six representatives called as ‘trustee’ abroad, i.e. in Malaysia, Australia, Germany, Japan, Hong Kong and USA.Rumah Zakat was born to administer the zakat. Currently 65 percent of its income come from zakat money. The empowerment program, humanitarian relief, etc are coming after zakat program. Of all revenue, humanitarian relief took around ten percent of zakat money. On the other hand, some muzakkis intended their zakat money to be disbursed as humanitarian relief, such as for helping tsunami victims in Aceh, earthquake victims inYogya, flood victims in Jakarta, etc.

Rumah Zakat accommodated both individual and groups in zakat disbursement. Nur Effendi said :216

“Since this is people funds, we are very cautious in disburse them. We put more money in program, rather than to meet individual needs. “For instance, if an individual asked for money to return home after admitted that his or her money were being stolen, we will then pay for the ticket, take him to bus terminal or train station. We will not give them money directly. We assess the zakat recipients carefully. Some people say that they were poor but instead they have luxurious goods in their houses.”

To enable zakat recipients easily access zakat funds, Rumah Zakat installs a zakat recipients liaison officer with the duty to facilitate the access of recipients to their program in economic, health and education fields. In 2013, the core program of Rumah Zakat are Educare, HealthCare, YouthCare, and EcoCare. All the program run within the concept of integrated and sustainable community-based.

216Interview with Nur Effendi, CEO of Rumah Zakat Indonesia in Bandung on 23 July 2014.



Integrated Community Development is a program and a place that focuses on integrated distribution of education, health, youth training, and integrated community-based economic empowerment. Along with Zakat Recipients Relation Officer as Human Resource assistant, the ICD became the center of distribution of the program that makes it properly measured and controlled. In 2013, Rumah Zakat Indonesia expanded its services with educational programs by organizing ‘free champion’ of elementary school. Also its select best teachers to provide education for future leaders.

Rumah Zakat Indonesia is also interested in developing empowerment programs. The support and public trust really strengthen the institutions to give more focus on engineering major civilizations that had been Rumah Zakat Indonesia dream from the beginning, namely "Transforming a Mustahiq to a Muzakki" (transforming a zakat recipient to a zakat payer). To support this dream, Rumah Zakat has expanded the development of small and micro enterprises in 18 cities throughout Indonesia.

Rumah Zakat Indonesia has also conducted motivation and skill training under the name of Youth Development Center. Motivation training plays an important role because of the mindset, character, and counterproductive attitudes had contributed to poverty. And more important is the community assistance that carried out by 28 MustahiqRelation Officer (MRO) with the real support from the volunteers. Rumah Zakat also launched EAZI (Executive Amil Zakat Indonesia), ADP (Amil Development Programme), ACTPRO (Acceleration Program) and other programs.

In 2009, In order to strengthen the organization, Rumah Zakat founded new program namely : Indonesia Health House – Rumah Sehat Indonesia (managing the health programs), Indonesia Champion House – Indonesia Juara (managing the education programs), Indonesia Self Sufficient House – Indonesia Berdaya (managing the economics of self-sufficiency program). Until the end of 2009, Rumah Zakat



Indonesia had established eight Champion Schools, and seven Free maternity hospitals.217

The year of 2009 was also a year of expansion since Rumah Zakat Indonesia had opened 14 new branches in the first semester, thus increasing the total of 45 office network. The improvement of Rumah Zakat Indonesia has been appreciated by the people. The RZI received an award from Karim Business Consulting which placed Rumah Zakat Indonesia as the Second Best LAZNAS (Lembaga Amil Zakat Nasional or National Private Zakat Agency) in ISR (Islamic Social Responsibility) Award. The award also comes from the IMZ (Indonesia Magnificence of Zakat) that confer Rumah Zakat Indonesia as the Best Organization in Zakat Development (Rumah Zakat Indonesia Brochure,2011).

In 2010, the Rumah Zakat Indonesia officially launched a new brand replaces the previous RUMAH ZAKAT INDONESIA. With the launched of three new brand values: Reliable, Progressive and Humanities, which sharpen the character of this organization as : "World Class Governance Socio-Religious Non-Government Organizations (NGO)".

In 2011, Rumah Zakatgained the trust of IDR146 billionfrom donors and partnerswho make up 99.246people. It then tried to channeling aid tothe poorthrough some program namely : education(Smilesof the Champion), health(HealthySmiles),and economy(Smiles of Self Sufficient) in thetargetareaofIntegratedCommunityDevelopment(ICD).218 In education field, Rumah Zakat has the Champion School program which provides education services whichprovidesfree education with great quality.In 2013, Rumah Zakat has set up12schoolsin 11 cities. In addition, the RZI has offered ascholarshipprogramfor students from elementarylevel tocollege students. Until 2011it had helped629,626children nationwide.

217Rumah Zakat Annual Report, Bandung, 2008.

218 The meeting with RZI Officers namely Acep Lu’luddin was made on 14 September 2012 in

Jakarta and with Dr Pamungkas Hendra Kusuma in Ciputat on 11 October 2012. 96



In the health sector, along with its partners, the RZIhas set upsevenmaternity hospitalsandaFamilyHealth Clinic. Meanwhile,in economics sector, the RZIhad have 33Halls ofBinaMandiri (Small and Medium Enterprises) which were establishedinthe targetareaand accompanied byaMemberRelationshipOfficer(MRO)whohave a task as a companion, facilitator, social worker, surveyor and community advocates.219

Currently Rumah Zakat and its partners have set up 10 primary schools and one junior champion which provide free educational facilities for 945 students (as of April 2011). Similarly, other programs such as Cheers Scholarship, Student Scholarship, Car Champion, Champion Lab, Nutrition Champion and the tent. The Self Sufficient Smiles program were implemented by the Independent Small Business Group (KUKMI), Empowering Centre, Water Well, Means Independent Business, Training, Skill and Potential Local Empowerment and Agro Cultivation. Independent Smiles program was rolled out to explore the potential of citizens to be able to independently target. Healthy Smiles program has also been felt by Beneficiaries with the Free Maternity Home, Free Maternity Services, Standby Toddler Nutrition, circumcision program, Health Alert, Fleet Healthy Families and Ambulance Lighten Grief.

In 2011, Rumah Zakat had a network of 44 offices from Aceh Province to Papua Province, and had been supported by 468 professional amil (zakat administrator) and has highly utilized the information technology for management of Zakat Infaq and shodaqoh as well as other humanitarian funds. Until June 2011, the number of beneficiaries who from the Zakat House were 1,748,943 persons.220

4.3. Harapan Dhuafa

219Rumah Zakat Indonesia Annual Report, Bandung, 2008.

220Rumah Zakat Indonesia Annual Report, Bandung, 2008



Harapan Dhuafa (or Poor People Hope) was a Banten Province-based non-state zakat agency which was founded in Serang, Banten Province in 2004. Harapan Dhuafa (Harfa) concentrates in empowering poor people through administering the zakat, infaq and shadaqah, wakaf, hibah and other social funds. In 2013, Harapan Dhuafa is the one and only provincial-based (Banten) zakat agency in Banten Province. Other zakat agencies are branch of their Jakarta-based agencies or come up only during Ramadhan (seasonal). 221Harapan Dhuafa has branches in Pandeglang, Lebak, and Cilegon with main office in Serang.

The main program of Harapan Dhuafa are education, advocacy and rehabilitation/ recovery. Its main program is subsequently elaborated into Education Program, consist of Aku Peduli Cerdas (I Care to Education), scholarship for poor children who have great academic record, care to kindergarten, SMP Terbuka (or open junior high school) TKB Mandiri (or Self Sufficient Kindergarten), Care to Holy Qur’an, teachers and village preachers, and Harfa Skill Center. The Social program consist of social welfare insurance, distribution of sacrificial animals, support for poor orphans, providing emergency response and environmental service program. In Health program, consists of care for health, social emergency assistance, advocacy for public health and mobile health clinic. In Economic empowerment consists of moving stimulation funds, facilitating micro enterprise and muzakki (zakat payers) investment.

In 2013, Harapan Dhuafa concentrated its program to poor women economic empowerment, life skill (sewing and english course), health and emergency response (consist of health advocacy, free medical treatment, and circumcission service), supporting the poor orphans (scholarship, health, life skill) and environmental services program in Pandeglang. Fadhullah, CEO of Harapan Dhuafa,222 mentioned that local ordinances on zakat are available all over Banten Province. The pioneer is Serang Regency. In Serang, instead of civil

221Information given by Fadhullah, CEO of Harapan Dhuafa in Serang, Banten Province, on 26

July 2013. 222

Interview with Fadhullah in Harapan Dhuafa Office, Serang – Banten, 26 July 2013.



servants/ government employees, the businessman also pay their zakats to BAZ (Badan Amil Zakat – Local Zakat Administrator Agency). In Serang, the monthly salary of civil servants are deducted 2.5 percent regularly. This policy was executed by zakat agencies owned by local govenment. Fadhullah said that the BAZ in Banten Province apply the same policies as others in other provinces, not to mentioned the BAZ in Jakarta Province and Aceh Province which are slightly different.223

In Banten, there are unwritten agreements and unwritten job divisions among zakat agencies, as follows: BAZNAS Propinsi Banten (Banten Province Baznas) collects zakat from state enterprises and universities, BAZ Kota (city) and Kabupaten (regency) collect zakat from junior and senior high school, while elementary schoolteachers’ zakat are collected by BAZ Kecamatan (sub-district level).

Meanwhile, the non-state zakat agencies (LAZ) collect zakat money from private employees, civil servants (who are still eager to pay their zakat money even though their monthly salary have been deducted for zakat every month). This is actually, a unique situation in Banten Province. Civil servants prefer to pay their zakat to their hometowns and their mosques. Fadhullah claimed that this is because zakat tradition is old tradition in Banten, where people usually dispense their zakat money to mosques and to Muslim traditional leaders they trusted, instead of dispensing them to licensed amil zakat agencies.

Harapan Dhuafa opens its branch inside the mosques. In 2013, there are five Harapan Dhuafa branches in five different mosques. Harfa concentrates to collect zakat money only in Banten Province. They have no intention to join the nationwide competition. The best Harfa branches, in term of productivity and program are in Cilegon, Pandeglang and Lebak consecutively. Most of zakat recipient of Harapan Dhuafa are in Serang and Cilegon City. Their muzakkis are not limited only to employees but also the blue collar labors

223 Jakarta and Aceh government have their own regulation on zakat. In Jakarta under the

name of BAZIS and in Aceh under the name of Baitul Maal. All the BAZIS DKI employees are civil servants.



who are also so enthusiastic to pay their zakat money. People is so enthusiastic to pay zakat money due to Islamic and mosques revivalism in Banten.224

To date, Harfa is the one and only provincial non-state zakat agency in Banten. The others work only during Ramadhan month. On the other hand, the state-owned zakat agency, like BAZ are highly depend on the commitment of the mayor/ regent. The BAZ Lebak is so progressive when it was directly controlled by the Regent. And so is BAZ Cilegon, which was so progressive when it was seriously handled by the Mayor. ‘Progressive’ in this term means that the Mayor/ Regent may instruct BAZ to deduct the zakat money of private enterprises which get the development projects from local government. However, there is also political dimension in zakat disbursement. When it comes to zakat disbursement, the local BAZIS was sometimes ordered by the executive to disburse the money to the constituents of ruling party for the sake of maintaining the power. Also, sometimes the mayor/ regent tried to attract the constituents politically by opening the formal ceremony of zakat disbursement to let the people thought that the resources of zakat fund come from the executives.

Harapan Dhuafa applies a unique attitude toward classification of recipients (asnaf). The categorization is not limited only to economic categorization but also social categorization, such as the recipients could be a widower, qur’anic teacher,traditional midwife and so on. Harfa also focusses on community- based empowerment program. In Serang they focusses on economic empowerment, where zakat money is utilized as rolling fund to support small enterprises. Also to support health services and vocational education (sewing course). While in Pandeglang Regency it focusses to support the people in dealing with environmental problem such as sanitation, building toilet, educating people to use toilet instead of going to river of paddyrice field, etc. In Pandeglang, environment and health affairs are among the very serious problem. Pandeglang is among the highest region with high number of infants and mother mortality rates.

224Interview with Fadhullah in Harapan Dhuafa Office, Serang – Banten, 26 July 2013



On the other hand, in Cilegon City, it focusses on supporting traditional handicraft home industries and providing scholarship for students who come from poor family. In Lebak Regency, Harfa focusses more on collecting zakat from civil servants.

In empowerment program, Harfa focusses on vocational and economic empowerment. Harfa facilitates a sewing course as well as entrepreneurship tutorial on sewing business for about six months, with twenty participants each batch. Upon completing the course, the participants are given two options, whether to start the business by themselves or applying a job to other companies. If they are willing to start the businesses, then Harfa will provide rolling fund (qardhul hasan) without bank interest. Instead of sewing course, Harapan Dhuafa also conducts empowerment program for fisherman families (mostly the wives) consist of majelis taklim-based (local Islamic weekly gathering) as well as mosque-based empowerment. It provides rolling fund (qardhul hasan) for the amount of IDR 700,000 up to IDR 2,000,000 for each applicant. This fund must be returned within sixty weeks.

Fadhullah claimed that Harfa in Serang Regency could collect IDR 600 million a year. This amount is bigger than the zakat revenue collected by BAZ Serang. However, there is no rivalry between Harfa and BAZ, they both ocassionally work together in a joined program such as supporting the orphans. Hence, there is no competition between them since they both have different sources of zakat fund. The BAZ concentrates more on civil servants’ zakat, local governmental projects and corporate zakat while Harfa works for the rest.225

4.4. Pos Keadilan Peduli Umat (PKPU)226

The PKPU (Pos Keadilan Peduli Umat or Justice Center for Caring of People) is a national humanitarian agency that involves and helps alleviating the suffering of people with the

225Interview with Fadhullah in Harapan Dhuafa Office, Serang – Banten, 26 July 2013.

226 The information about PKPU gathered through several visit and meeting with PKPU

Officers namely Sri Adi Bramasetia and Suryama in March 2012 and subsequently in September – October 2012 in PKPU Head Office Jakarta and other places).



participation of community and also as a mediator between the benefactor (aghniya) and poor people (Dhuafa). The PKPU has established partnerships with government or similar bodies through community empowerment in the economic, education and health through zakat donations, infaq and charity, humanitarian funds and corporarate funds (CSR). This agency was firstly founded as a Humanitarian Foundation in Jakarta on 10 December 1999, in response to massive socio-religious conflicts all over Indonesia, particularly what had happened in Ambon, Maluku Province. Before and after its inception, the PKPU devoted to work for humanity by providing humanitarian relief to any natural disasters as well as to social conflicts all over Indonesia.

Furthermore, on 8 October 2001 PKPU obtained the status of National Private Zakat Agency pursuant to Minister of Religious Affairs Decree No. 441/2001. Afterwards, in 2004, the PKPU has extended its program and scope of activities by transforming itself from merely National Private Zakat Agency into National Humanitarian Agency (Lembaga Kemanusiaan Nasional).

By bearing the status of National Humanitarian Agency, the PKPU has actively participated and assisted people in various calamities. Their activities in responding the disaster are by providing emergency responses, conducting reconstructions and rehabilitation programs, as what had they done in Aceh earthquake and tsunami 2004, Yogyakarta earthquake 2006 and so on.

The vision of PKPU is to expand its service globally, not only in Indonesia. This vision has forced them to develop the key performance indicators and working standards. They also strive to emphasis the improvement of service quality to contribute more for the people. On 21 July 2008 PKPU was awarded NGO in Special Consultative Status with the Economic and Social Council of the United Nations.227 This

227 Special consultative status is onsultative status is granted by UN ECOSOC upon

recommendation of the ECOSOC Committee on NGOs, which is comprised of 19 Member States. Consultative relationships may be established with international, regional, sub regional and national non-governmental, non-profit public or voluntary organizations. NGOs affiliated to an international organization already in status may be admitted provided that they can demonstrate that their



status forces PKPU to improve their public accountability periodically. Furthermore, in 2010 the PKPU has also been officially registered as National Social Organization pursuant to Minister of Social Affairs Decree No. 08/Huk/2010.

Currently, the main program of PKPU are as follows :228

1. Collecting donation and fund from the communitya) Zakat, Infaq, Sedekah, Wakaf and CSR (Corporate

Social Responsibilities) of the Companiesb) Special donations for humanitarian disasterc) Clothes, basic foods and medicined) Fund for Sacrificial Animal 229

2. Humanitarian Missiona) Natural disaster and humanitarian disaster b) Critical and poor areas

3. Humanitarian Rehabilitationa) Rehabilitation of Health Facilities and Clean Waterb) Rehabilitation of Educational Facilitiesc) Rehabilitation of Worship Facilitiesd) Rehabilitation of Economic and Small Business

Facilities4. Community Development

a) Empowering community's economicb) Conducting alternative education c) Constructing independent health services centerd) Distributing sacrificial animals

programme of work is of direct relevance to the aims and puIDRoses of the United Nations.In the case of national organizations consultation with the Member State concerned is required. To be eligible for consultative status, an NGO must have been in existence (officially registered with the appropriate government authorities as an NGO/non-profit) for at least two years, must have an established headquarters, a democratically adopted constitution, authority to speak for its members, a representative structure, appropriate mechanisms of accountability and democratic and transparent decision-making processes. The basic resources of the organization must be derived in the main part from contributions of the national affiliates or other components or from individual members (esango.un.org/paperless/Web?page=static&content=intro).

228Based on interview with PKPU Deputy Director, Sri Adi Bramasetia at PKPU Headquarter in

East Jakarta, 22 July 2003.229

Sacrificial Animal or hewan kurban is an Islamic tradition conducted every year right on Hajj-day (every 10 Zulhijjah, Islamic lunar calendar) where Muslim people surrender their animals (usually goat, cow or buffalo) as a sacrifice to the God. The meats and all parts of animal are then delivered to the needy people.


http://esango.un.org/paperless/Web?page=static&content=intro


According to Bramasetia, the PKPU has focussed its activities on : (1) emergency rescue, (2) rehabilitation, and (3) empowerment. The agency is not a money-targetted agency but a program-targetted one that emphasizes the quality of the program. The PKPU is a humanitarian agency, not simply a zakat collector. It is first wellknown as humanitarian agency which frequently sending people, money and aids to conflict or disaster areas. Gradually, PKPU has developed its mission from purely humanitarian organization into community development agency as well as amil zakat (zakat administrator) in 2001-2006. 230

Apart from Dompet Dhuafa which created many legal entity within its holding group and focus on economic empowerment, PKPU has only one legal entity. The utilization of zakat money in PKPU is bound to two values i.e.: money value and benefit value. Therefore, PKPU differentiated its business into zakat center and CSR (Corporate Social Responsibility) management.231 The main zakat program in PKPU is divided to two sections : collecting and empowering. The zakat center and CSR management are belonged to collecting section, while the programs belong to empowering section.232The PKPU dedicates all efforts for all of Indonesian people without any discrimination. Their motto is " Menggugah Nurani Menebar Peduli " or “Arousing the Conscience and Spreading the Care.”233

Instead of maximizing funds collection from the people, PKPU also work with many companies to utilizes their CSR funds. Every company, particularly those which operate in environment and natural resources field are requested by Indonesian Law on Limited Corporation 2007, to shares certain amount of its profit as CSR funds. The fund can be

230Interview with Sri Adi Bramasetia, Deputy Director of PKPU in Jakarta, July 2013.

231Ibid.

232Ibid.

233Based on PKPU Annual Report 2009.



distributed directly by the company or through social and humanitarian organization like PKPU.

Since 2010, PKPU has shifted its paradigm and key performance indicator (KPI), from the amount of zakat money collected to how far the program could reach the beneficiaries. Sri Adi Bramasetia said :

“We have shifted our ‘driver’ from the amount of money we collected from zakat payers into how many beneficiaries we may reach in our programs. Last year we targetted our beneficiaries might reach two millions people all over Indonesia. Therefore, for PKPU, the quality of life of its beneficiaries is much more important than the amount of zakat money we collected."

Apart from Dompet Dhuafa which focusseson economic empowerment, Rumah Zakat which sticks out as national private zakat agency while conducting empowerment program, health and education, PKPU insists to be humanitarian agency by providing humanitarian relief to any disasters in the world, particularly in Indonesia, while, concurrently, working as national private zakat agency.

IV.5. Politicization of Zakat

Zakat practices in Indonesia are not simply religious events, there are also political dimensions. The Law on Zakat No. 23/ 2011 and Government Regulation No. 14/2014 clearly show the legal policy of the state to control the zakat affairs. That the state, through BAZNAS is the primary administrator of zakat in Indonesia and non-state zakat administrator are supporting agents. This position is further affirmed by Indonesian Constitutional Courts by not annuling the Articles which stated the position of non-state zakat administrator as supporting agents. Whereas, statistic shows that for the last ten years, the non-state zakat administrators have been more productive than the state ones in term of zakat revenue.

Another political dimension in zakat affairs is in disbursement on zakat. Based on the researcher’s observation from three provinces in Indonesia, the practice of zakat in such areas are largely depend on the commitment and level of seriousness of the executives (governor,



mayor, regent) in dealing with local ordinances on zakat administration. If the executives shown their commitment and initiative then zakat affairs and BAZ people will work well. If not, the other way around occured.Yet, this executive-heavy situation is potential for another abuse of power. In some cases, the executives ordered the zakat agencies to disburse zakat funds to the beneficiaries considered as their constituents. Moreover, if the national or local election will be due soon, then the zakat disbursement will also tend to be somewhat political.

Not just political, in some areas, zakat money are embezzled by their amil (officer). For instance, in Kampar regency, Riau Province, around IDR 1 billion of zakat income of 2007-2009 was embezzled by the amil. The case was then brought to criminal justice system in 2011.234 Another case took place in Bali, an officer embezzled zakat money of IDR 9.5 million for his own interest. The zakat money which should be disbursed to the recipients through Mosque Panglima Sudirman in Bali, had never reached the recipients. The officer then faced the trial in 2011.235

5.1. Parliamentary Debates

During parliamentary debates, prior to the enactment of Law No. 23/2011 on Zakat Administration, the primary endorser of this bill was the member of parliament belonged to 8th Commission of Indonesian Parliament (responsible inter alia for religious affairs). At first, the 8th Commission proposed the name of this bill as Law on Zakat, Infaq and Shadaqah. However, the government, through Minister of Religious Affairs Suryadarma Ali, rejected this idea and insisted that the name of the bill should be the Law on Zakat since the latter (infaq and shadaqah) are voluntary mechanism and need minimum role of the government in their implementation.

The government also proposed that the state, through BAZNAS, should control and centralize the zakat management in Indonesia. Non-state actors might be still existed but they will work as supporting agents for BAZNAS. Ministry of Religious Affairs will work as regulator, while BAZNAS and LAZ will be as operators.

234http://www.halloriau.com/read-korupsi-9820-2011-04-26-penggelapan-uang-zakat-

diserahkan-ke-kejati.html accessed on 25 May 2014.235

http://news.okezone.com/read/2012/10/16/340/704428/terdakwa-penggelapan-zakat-mengaku-lupa


http://www.halloriau.com/read-korupsi-9820-2011-04-26-penggelapan-uang-zakat-diserahkan-ke-kejati.html

http://www.halloriau.com/read-korupsi-9820-2011-04-26-penggelapan-uang-zakat-diserahkan-ke-kejati.html


Government also proposed that the zakat management must be conducted in accordance with Islamic Sharia.

The parliament responded government’s response differently. Member from Golongan Karya party proposed that zakat management must be treated as tax, that zakat must be directly reduced income tax and there will be punishment for those who are unwilling to disburse their zakat money. The role of the state should be limited only as regulator and let the zakat agencies (both state-based and non-state based) govern their zakat administration. Golongan Karya party also proposed that Indonesia should learn from Malaysia’s experience in administering zakat.

On the other hand, Member of Parliament from PDI Perjuangan, nationalist party, proposed that zakat must be and always be as voluntary mechanism. That the state should not force the people to disburse their zakat money. Let people choose themselves the zakat agencies they prefer the most. All zakat agencies have similar position in administering the zakat. Let the people govern themselves and state just facilitates their efforts. The member of this party does not support the notion that zakat must directly reduce income tax, but zakat could reduce taxable income.

Member of Parliament from PKS (Partai Keadilan Sejahtera – Prosperous Justice Party), Islamic Party, strongly espouses this bill with certain prerequisites: that the state should provide the space for non-state zakat agencies to take part in zakat administration, that zakat must reduce income tax, and there must be a separation of power in zakat management, between regulator, executor and supervisory board. The MP form PKS also proposed that the government should provide incentives for zakat payers, let say by easing them to go for hajj (pilgrimage), and zakat must be managed in line with community empowerment. On the other hand, Member of Parliament from PAN (Partai Amanat Nasional – National Mandate Party) proposed that zakat money are levied from Muslim community, therefore they should be disbursed to Muslim community too. Regarding zakat management, this political party proposed that zakat could be administrated under governmental body like Otoritas Jasa Keuangan (or Financial Services Authority). Islamic Political party of PPP (Partai Persatuan Pembangunan or United Development Party) proposed



that state should leave the operational and management of zakat to zakat agencies. The role of the state in zakat administration should be limited to planning, regulating and supervising only. Muslim-based political party PKB (Partai Kebangkitan Bangsa or National Awakening Party) contended that zakat should reduce income tax and the role of government is only as regulator. The zakat agencies, both state-based and non-state based do have same position. The party also considered that the bill should contain punishment for zakat payers (muzakki) who refuse to pay zakat. Member of DPD (Dewan Perwakilan Daerah or People’s Representative Council) or Senator, also in the opinion that zakat must directly reduce income tax.

If we take a look at parliamentary debates above, every political party holds the opinions and positions that related to their political choices. Nationalist political party, like PDIP, not in favor that state should control all issues related to zakat affairs. They prefer that zakat management should be in voluntary system. Let the people choose their zakat agencies without state’s interference. The PDIP also in the opinion that zakat and tax are different. Tax is a national fiscal system while zakat is a religious instrument. Therefore, zakat cannot replace tax and disbursing zakat does not automatically deduct income tax.

Muslim-based political party regards this issue also in accordance with their political preferences. The PKB, Nahdatul Ulama-based political party, PAN, Muhammadiyah-based political party, and PKS (Prosperous Justice Party) prefer the zakat law still provide the room for people to manage their zakat. This is understandable since many of their constituents are traditional zakat operators as well as non-state zakat agencies. The Muslim/ Islamic-based political party also in the opinion that state should play bigger role without eliminating role of civil society and that zakat must directly reduce income tax. Incorporation of zakat into national law is part of ‘ummah agenda’ or ‘the agenda of Muslim community.

Unfortunately, when the bill finally enacted on 27 October 2011, the idea that zakat must directly reduce income tax did not appear. Furthermore, the new law still treated zakat as not mandatory. There is no provisions that obliged Muslim citizen to pay their zakat



before state law. Zakat is mandatory in religious law, not in state law.

IV.6. Socio Political Dynamic of Zakat In Indonesia

As described at previous chapter, Indonesia isa predominantly Muslim country with 244 million236 inhabitans (87 percent or around 212 millions are Muslim in 2012). With this high number of Muslim population, Indonesia is considered as the largest Muslim country in the world in 2012, surpassed Pakistan (178 millions Muslim), India (177 millons Muslim), Bangladesh (145 millions Muslim), Egypt (80 millions Muslim), Nigeria (76 millions Muslim), Iran (75 millions Muslim) and Turkey (74 millions Muslim).

However, Indonesia is neither a Muslim country nor a secular one. Indonesian constitution of 1945 clearly mentioned that Indonesia is a country based on law and established the idea of unity in diversity (Bhinneka Tunggal Ika). It believes on One Supreme God (Ketuhanan Yang Maha Esa). It acknowledges all religions and beliefs equally. Nevertheless, the idea of Islamic State and Islamic Shariah have been existing since many decades. Even before the Independence of Republic of Indonesia on 17 August 1945.

The institutionalization of zakat in Indonesia took place in the context of institutionalization of Islamic Law in Indonesia which started by Jakarta Charter in 1945 up to date. The Jakarta Charter (Piagam Jakarta) was a constitution draft, which was drawed up by Muslim scholars and politicians in 1945, right before Indonesian independence from Dutch. The charter was an important part of the founding of the Republic of Indonesia. It was initially written in the Charter that “the state is based upon (Belief in) the One God Almighty, with the obligation for Muslim to exercise Islamic Shariah” (on themselves). During the announcement of the Indonesian Constitution on August 18, 1945, this latter phrase was removed, and the altered text read : “The State is based upon (Belief in) the One God Almighty. This deletion has resulted in a lengthy constitutional debate-one which has lasted until present (Ka’bah,2006 : 6).

236http://www.depkes.go.id/downloads/REpercent20Kalselpercent20-

percent2021percent20Febpercent2013.pdf accessed on September 16th, 2013. 109


http://en.wikipedia.org/wiki/Islam_in_Nigeria

http://en.wikipedia.org/wiki/Islam_in_Egypt

http://www.depkes.go.id/downloads/RE%20Kalsel%20-%2021%20Feb%2013.pdf

http://www.depkes.go.id/downloads/RE%20Kalsel%20-%2021%20Feb%2013.pdf


The phrase ‘with the obligation for Muslims to exercise Islamic Shariah (on themselves) refers to obligations which are imposed by the state, by means of laws and regulations, upon Muslim citizens. This is because Shariah (Islamic Law), in its implementation, can be divided into two parts. The first part is shariah which does not require state power for its implementation, and which is left to the individual obedience of individual Muslims. Actually, all of Islamic law relies heavily upon individual Muslim obedience, but there is another particular part of it which is the duty of the state to implement. This second part consist of obligations which are imposed by the state upon individuals as a part of enforcing the laws of a sovereign nation. In Presidential Decree 1959 on the return to Indonesian Constitution 1945 (UUD 1945), former President Soekarno stated : “That we are of the belief that the Jakarta Charter, dated 22 June 1945, is the inspiration behind the UUD 1945, and is an integral part of this constitution.” (Ka’bah,2006 : 7).

It can be inferred from the statement above, the legal stipulations regarding the obligation to observe Islamic Shariah for Muslim Citizens is still in effect, even though due to political consideration the text of that phrases (seven words in original Indonesian text) was removed. As this legal stipulation is still in effect, Ka’bah believes that this is precisely what has led to the sporadic appearance of a number of laws, regulations and institutions which exhibit nuances of Islamic shariah (Ka’bah,2006 : 7). If we take a look at the laws connected with Islam which have been produced during the existence of the Indonesian Republic, it turns out that the terms “Islamic Law” and “Islamic Shariah”237 (or just “shariah”) have been used interchangeably. After the Jakarta Charter, the precedent for using shariah terms within Indonesian Law appeared in Law No. 10 of 1998 which replaced Law

237 The literal meaning of Sharia is path towards the watering place. The Sharia unlike Canon

Law or Kirchenrechtm is not confined to religious law. In addition to laws relating to religious practice, moral and ethical behavior, the Shariah also covers a wide range of issues usually regulated by secular laws and ordinances. Islam (in the embodiment of Sharia) proclaims itself not merely as a religion but a complete code of life, defining and refining, ethics, morality and all aspects of public and private life. In regulating the life pattern, human actions in Islam are considered to be either objectively good or inherently bad. This concept visualizes Islam as both a religion and civilization. In this context, Sharia also governs the economic behavior of the society for which it has laid down general principles and also introduces specific guidelines regulating commercial life and all forms of economic activity. Given the presence of of a value laden and all encompassing system, the increasing interest in Sharia, in particular, Islamic finance appears remarkable. The sharia is based upon the Qur’an (the Muslim Holy Book) and Sunnah (representing model behavior derived from the traditionand practices of Prophet Muhammad) as primary sources. Amongst the sharia’s secondary sources are ijma (consensus amongst Muslim scholars and jurists), qiyas (application by deduction and analogy) and ijtihad (independent legal reasoning in search of an opinion). The primary as well as as secondary sources have a significant involvement in the context of Islamic finance (Rehman in Smits,ed., 2012 : 20 – 21).



No. 7 of 1982 regarding banking, which mentioned ( in Article (1) clause (12) :

“Financing as based on the Principles of Islamic Shari’ah is the provision of money or equivalent redeemable notes which are based on an agreement or authorization between banks and other parties which obligate the party which is provided the financing to pay back the monies or redeemable notes within a predetermined period of time accompanied by compensation or a share of the profits.

Article 1 clause (10) of this law states that :“Shariah principles are contractual regulations which are based on Islamic Law, between banks and other parties, for the depositing of funds and/ or the financing of business activities or other activities which are stated to be in accordance with the shariah, among them, financing based ont he principles of profit-sharing (mudarabah), participating capital (musharakah), sale of goods of profit (murabahah), or the financing of capital goods based on the principles of renting ( ijarah), or by existence of an option of transfer of ownership of the property rented from the bank by another (third) party (ijarah wa iqtima).”

The Articles mentioned above clearly explains that what is meant by “Shariah Priciples” are contractual regulations that are based on Islamic Law. So the term shariah here is equated with Islamic Law. Long before that law, right on 10 June 1991, the Compilation of Islamic Law in Indonesia (or Kompilasi Hukum Islam) was enacted pursuant to Presidential Instruction (Instruksi Presiden/ Inpres) No. 1/1991. This law consists of three books on Marriage Regulation, Inheritance Regulation and endowment (waqf) regulation. In particular, the Book III has been revised and developed into the Law No. 41 year 2004 regarding Endowments (wakaf).

The term Shariah also appears in Article 25 clauses (1), (2), and (3) of Law No. 18 year 2001 regarding Special Autonomy of the Special Province of Aceh, which was enacted on 9 August 2001 :

1. The Islamic Shariah Judiciary in the province of NAD is a part of the national court system, as conducted by the Shariah Court, which is free from any and all outside influences.

2. The authority of Shariah Court, as meant in clause (1) is based on Islamic shariah in the national legal system, which is further



regulated by the qanun (laws) of the Province of NAD.”

The shariah court or the Islamic Judiciary in Province of NAD (Nanggroe Aceh Darussalam) consists of Religious Courts (or Mahkamah Syar’iyah – Pengadilan Agama) which have more authority than religious court in other provinces. It is based on the Qanun of NAD as regional ordinance authorized under special autonomy status.

Legislation based on Islamic shariah in the first-tier regions and the second-tier regions (districts) was not only enacted through Qanun of the NAD Province of NAD but also through various Regional Regulations (or Regional Ordinance/ ByLaws), Government Circulars and other laws made in a number ofZregions.

For instance, in Bulukumba Regency (South Sulawesi Province), the local government enacted Regional Ordinance No. 03/2002 regarding The Banning of issuance and Sale of Strong Alcoholic Drink, Regional Ordinance No 02/2003 regarding the Zakat Administration, Alms and Ccharity, Regional Ordinance No. 05/2003 regarding Dress Code for Muslim Men and Women and Regional Ordinance No. 06/2005 concerning Proficiency in reading and writing of the Qur’an for students and bride/ groom.

In Maros regency (also in South Sulawesi) the local government enacted Regional Ordinance No. 15, 16, 17 of December 2005 respectively concerning Qur’anic Alphabet Literacy, Muslim Dress Code and the Zakat, Alms and Charity Management. In East Lombok (Nusa Tenggara Barat Province) there is Regional Ordinance No. 09/2005 regarding payment of zakat profession. In Pamekasan Regency (Madura Island - East Java Province) the government enacted Regional Ordinance No. 18/ 2001 regarding the Restriction of the Distribution of Alcoholic Drinks. In Cianjur Regency (West Java) the government issued a circular No. 061/2896 concerning the Recommended Work Dress Code (for Muslim Men and Women) in Work Days. In Riau Province, The Governor Issue a Governor Circular No. 003.1/UM/08.1 regarding the Making of Arab-Malay signs (alphabet).

Ka’bah (2006: 13) marks that the enactment of many Regional Ordinances which closely linked to Islamic tradition is an indication that people, in certain regions, support for Islamic Shariah. Considering this present state of development, it is quite possible that the number of Regional Ordinance based on Islamic Shariah will increase in the future.



However, this is not always the case. In some regions, Islamic-based regulation were enacted merely because of political motive, rather than to meet the needs of the local Muslim people.

Article 49 of Indonesian Law No. 3 year 2006 concerning the amendment of Law No. 7/ 1989 on Religious Courts states that the Religious Courts has the authority to settle the dispute in the field of shariah-based economy. The law indicated eleven types of shariah-based economic institutions/ products, namely : Shariah-based banks, Shariah-based macro-finance institutions, Shariah-based insurance, Shariah- based reinsurance, Shariah-based mutual funds,Shariah-based bonds and mid-term notes,Shariah-based securities, Shariah-based financing,Shariah-based pawnshops, Pension funds run by Shariah-based financial institutions, and Shariah- based businesses. The entry of these eleven types of law for the shariah- based economy means that almost all types of business transa.ctions under Islamic shariah have become positive law in Indonesia (the prevailing laws).

Ka’bah (2006: 20) indicates that the introduction of various laws based on Islamic Shariah, whether from central or regional governments since 22 June 22 1945, is the indication that Islamic Shariah is a living law and an inseparable part of Indonesian society. Such indications can also be seen from the recent use of Dewan Syariah Nasional’s fatwa (National Shariah Board Decision) to fill the void of laws and regulations in the field of the shariah- based economy. Ka’bah (2006: 21) further believes that the enforcement of Islamic Shariah which takes the form of state law is a very supportive development regarding positive legal reforms. Islamic Shariah, as law which originate from divine injunctions, will provide substance to a national legal system which can be well-respected, especially by those citizens who consider it to be religiously valid.

Based on Ka’bah’s (2006) stance which claim that Islamic Sharia is a living law and inseparable part of Indonesian society, the researcher may argue that Islamic Sharia is actually a living law and inseparable part of Indonesian society. However, Indonesian Muslim people have their own perspectives and practices of Islamic Sharia which somewhat distinct to the practices of Islamic Sharia in other countries. And so in zakat practice. The practice of zakat in Indonesia is actually the Indonesian people interpretation over zakat.



Ka’bah (2006) further claimed that the enforcement of Islamic Sharia which takes the form of state law is very supportive development, the researcher argues that the islamization (or institutionalization ) of Islamic law into national law are not always very supportive development. In case of The Law of Marriage No. 1/ 1974 and The Law on Zakat Management No. 23/ 2011, the laws have raised public criticism due to some controversial provisions contained at the laws. Not to mention various sharia-based local ordinances throughout Indonesia which are somewhat incompatible and created disharmony with other local and national laws.

IV.7. Conclusion

This chapter displays both secondary data gained from library research and from field research on institutionalization of zakat in Indonesia. The library research found that the zakat administration in Indonesia is a unique one. It has passed many kind of administrations and various political situation, from colonial era up to date.

However, zakat administration had never been as state affairs until 1999 when the first zakat law was passed by the parliament. Previously, during Soeharto administration (1967 – 1998) neither the president nor the parliament enacted the law on zakat, even though the President had issued an administrative decree on zakat management, not a hard law ones.

The year 1999 marked as the first year when the state really paid attention to zakat administration. This is also the year when state managed to secularize zakat affairs. Previously, the year of 1993 was marked as the birth of a modern non-state private zakat agency which introduce new approach in zakat management, namely Dompet Dhuafa.

The birth of Dompet Dhuafa subsquently inspired many Muslim people and organizations to also establish zakat agency with professional approach, which distinguish them to traditional zakat agencies which based in mosques, islamic boarding schools as well as in Islamic foundations.

However, the modern development of non-state zakat agencies were not followed by state-zakat agencies. Research conducted in three locations shown that the non-state actors are more progressive, more creative and more serious in administering the zakat. Whereas, the existence of state-zakat agencies are supported by the state (and local



governments), and in some regions, are supported by local ordinances as well. The research also show that they have developed the professional approach in zakat administration with clear goals, clear focus, variety of program (from philanthropy to empowement) and also more accountable and transparent. Through the research conducted to selected state and non-state actors in zakat management aforementioned above, the researcher may infer that the non-state actors apply the rights-based approach in zakat management (although the term ‘RBA’ are not familiar to them). The explanation of this assumption will be discussed at the next chapter.

However, the enactment of new Law on Zakat Management (No 23/ 2011) and Government Regulation No. 14/ 2014 were regarded as serious threat for civil society since the laws tend to marginalize participation in zakat administration. Judging from parliamentary debates prior to the enactment of Indonesian Law No. 23/ 2011 on Zakat Management, it was inferred that there was a clear intention from the state to control and centralize zakat affairs under BAZNAS. On the other hand, Members of Parliament addressed this issue differently. Their positions reflected their political choices. Nationalist political party prefer the state to stay away from zakat business and let the people govern zakat affairs by themselves. While Muslim-based political parties prefer the state to govern zakat affairs but still provide the room for Muslim civil society to co-administer zakat affairs through non-state zakat agencies and traditional zakat collectors.

Therefore, the judicial review to zakat laws petitioned to Indonesian Constitutional Court in 2012 and to Indonesian Supreme Court in 2014 by non-state zakat agencies are understandable since they regard that the state tried to monopolize and centralize zakat management in Indonesia by using state law and religious justification. These zakat laws are, in turn, potentially damaged civil society and narrowed down public participation in zakat management through discriminative and unfair provisions embodied in their provisions. Unfortunately, the verdict of Indonesian Constitutional Court seemed to strengthen the position of the state in zakat management. The court recognized the position of BAZNAS as both regulator and operator of zakat management in Indonesia and the position of non-state zakat agencies are solely ‘to assist’ the BAZNAS.


Chapter V Socio-Political Dynamic Of Institutionalization Of Zakat In Indonesia

CHAPTER VSOCIO-POLITICAL DYNAMIC OF

INSTITUTIONALIZATION OFZAKATIN INDONESIA

V.1. Introduction

The next challenging question regarding zakat affairs in Indonesia is the impacts of its institutionalization. To measure and evaluate its impacts, the rights-based approach will be employed.

As we may have been aware of, rights-based approach promotes justice, equality, and freedom and tackles the power issues that lie at the roof of poverty and exploitation. To achieve this, a rights-based approach makes use the standards, principles and methods of human rights social activism, and of development. Rights-based programming, holds people and institutions that are in power accountable to fulfill their responsibilities towards those with less power. It also supports rights holders to demand their rights and to be involved in political, economic, and social decisions in society. It aims to increase impact and strengthen sustainability by addressing root causes, bringing about policy and practice changes, working together with others towards common goals and by changing power relations.

A rights-based approach to programming requires (Theis, 2004 : 4 – 5): Long-term goals with a clear focus on people and their rights; Working together; Equity and non-discrimination; Accountability; and Participation.

A rights-based approach to development promotes justice, equality, and freedom and tackles the power issues that lie at the roof of poverty and exploitation. To achieve this, a rights-based approach makes use the standards, principles and methods of human rights social activism, and of development.

Theis (2004 : 4 – 5) further denotes that rights - based programming, holds people and institutions that are in power accountable to fulfill their responsibilities towards those with less power. It also supports rights



holders to demand their rights and to be involved in political, economic, and social decisions in society. It aims to increase impact and strengthen sustainability by addressing root causes, bringing about policy and practice changes, working together with others towards common goals and by changing power relations. A rights-based approach to programming requires:

Long-term goals with a clear focus on people and their rights. This requires analyzing problems, causes, and responsibilities at local, national, and international levels.

Working together with other government and non-government agencies towards common rights-based goals.

Equity and non-discrimination –concentrating on the worst rights violation and paying particular attention to the most marginalized people.

Accountability –strengthening the accountability of duty bearers for human rights at all levels. This should be achieved through a combination of direct action, changes in law, policies and resource allocations, changes in institutional rules and practices and changing attitudes and behaviors.

Participation – supporting rights holders (children, adults, and civil society institutions) to demand their rights.

V.2. Legal Struggle for Securing People’s Rights on Zakat Administration

In a state governance, people does have three rights : (1) rights to access information; (2) right to participate; and (3) right to justice. These people’s rights may also apply in zakat affairs.

Regarding public participation, the state considers that people may involve in : (1) monitoring the collection, disbursement and empowement of zakat by zakat agencies; (2) collecting zakat; (3) enhancing the awareness of Indonesian muslim to pay zakat through official channels.

During the legislating process of Zakat Law Bill (subsequently became as Law No. 23/ 2011 on Zakat Management, the state through Ministry of Religious Affairs hold the opinion that the Indonesian muslim people historically have been heavily involved in zakat affairs through traditional zakat channels (mosques, islamic foundation, Islamic boarding school) or modern ones (proffesional zakat foundation). This active participation must be guaranteed and the room for participation must be provided.



People participation must be regulated through the involvement of non-state zakat agencies which are actually in line and becoming inseparable part of unified zakat management system.238

Furthermore, the state strongly believed that zakat affairs must be administered in a unitary system by a nation-wide agency which have the authority to coordinate, to collect, to distribute and to empower zakat nation-wide.239

When the bill eventually passed to be the Law on Zakat Management on 27 October 2011, many of the provisions, indeed, were in favor of the state and narrowed down the room for participation of civil society, as follows :

Article 5(1) To administer zakat affairs, the government forms BAZNAS. .(2) BAZNAS, as mentioned at article 5 (1) is situated in capital city of

Indonesia. (3) BAZNAS, as mentioned at article 5 (1) is a non-structural

government agency which is independent and responsible to the President through the Minister of Religious Affairs.

Article 6Baznas is an agency authorized to administer zakat nationwide

Article 17To assist BAZNAS in collecting distributing and empowering zakat, people may form LAZ.

Article 38Everyone is prohibited to deliberately collect, distribute and empower zakat money without approval from state apparatus

Article 41 Everyone who deliberately and unlawfully violate article 38 of this Act will be sentenced for one year detainment of be imposed with fine of IDR 50.000.000,

238Indonesian House of Representatives, Records and Documents of Legislating Process of

Law No. 23/ 2011 on Zakat Management.239

Ibid.



The implementing regulation of Law No. 23/ 2011, namely Government Regulation (Peraturan Pemerintah) No. 14/ 2014 is also containing some unfair provisions for civil society; for instance :

Article 62 (2) National Zakat Agency (LAZ) may open the chapter for maximum one chapter at each province.

Article 63 (1) Provincial-based Zakat Agency may have only one chapter at each city/ regency.

In this array, the state regards that the role of public in zakat administration is just complimentary and suplementary to state zakat agency (which is BAZNAS). The state, through BAZNAS, manage to strengthen the power to control the activities of non-state zakat agencies from the collection, distribution, even in empowerment of zakat funds.

This unequal position, between BAZNAS and LAZ, was strongly criticized by civil society which subsequently lead to judicial review of Indonesian Law No. 23/ 2011 on Zakat Administration petitioned to Constitutional Court in August 2012 and subsequently followed by another judicial review of Government Regulation No. 14/ 2014 petitioned to Supreme Court in July 2014.

As already been discussed at previous chapters, there are many kind of zakat management in muslim countries. There is obligatory system applied in Saudi Arabia, Libya, Sudan, Pakistan, and Malaysia, and voluntary system applied in Egypt, Jordan, Turkey, Singapore, including Indonesia.

By choosing voluntary system, the state has actually surrendered its authority to centralize the zakat management. Therefore, the room for public or civil society participation is widely open.

This notion might be naïve. Since there are various reasons for the states not to directly involve in zakat management. In a country where muslim is a minority, it is understandable that state does not involve in this matter. Also, in secular countries, where religious affairs are apprehended as private matters and not a state matter, the reasons also clear. However if a country like Indonesia, a house to the most populated muslim nations in the world, does not involve in zakat management, then it will be quite interesting.



Indonesia is not an Islamic country but also not a real secular country. It is secular in term of not choosing any religion/ belief as state basic foundation. However, it is not really secular since Indonesia recognizes all religions and beliefs equally and relatively give no objection should the religious affairs interfere to state affairs.

This ‘Indonesian secularism’ is actually derived from the Pancasila (five pillars) as state basic foundation. The first pillar states : “believe in one supreme God’. Therefore religion and belief are still important and take into account by the state.

The position of the state of Indonesia toward zakat management has been varied. There is a period when the state really stay away to manage the zakat. However, started at the end of 1960s, the state began to show its interest to manage the zakat.

History told that the year of 1999 was the first year Republic of Indonesia first formalized zakat affairs into national law (Law No. 38/ 1999). This law was actually warm-welcomed by Indonesian civil society, particularly those who also work in zakat management. The law showed the intention of the state to manage the zakat, but it still opens the room for participation of civil society equally.

Different with the first national law on zakat, the zakat law of 2011, an amendment to the previous law, possesses the different spirit and intention. It is clearly stated that the state, through BAZNAS is eager to centralize zakat management in Indonesia. The article mentions that the zakat management in Indonesia is managed and controlled by BAZNAS as independent agency founded by the state, while the non-state agency can participate in zakat management only as supporting agents.

This unequal position showed by new law on zakat of 2011 meant that room for public participation in zakat management has been narrowed by the law. In other words, non-state zakat agencies have been subject to be marginalized, discriminated, subordinated, restricted and criminalized as well.

This drastic change in zakat policy hold by state raises suspicion that at the past the state did not seriously involve in zakat management since they did not really know the zakat potentiality, economically. Yet, after



they know that non state zakat agencies can collect zakat money much higher than state-based zakat agencies, then a strategic policy must be initiated. The brand new development regarding national zakat policy is the Verdict of Indonesian Constitutional Court upon Judicial Review of Zakat Law No. 23/ 2011 which was publicly pronounced on October 31st. 2013. This verdict, again, shown the state is still highly interested in administering zakat in Indonesia.

As a matter of fact, the state is not just interest but also affirm (through Constitutional Court Decision) the superior position of the state over non-state zakat administrator. While the non-state zakat administrator petition the court to annul the articles which clearly mention that the non-state zakat administrator are only the supporting agents of zakat affairs (article 17 Law No. 23/ 2011), the court insisted to vindicate the law.

Nevertheless, the room for public participation in zakat administration is still open. The Law on Zakat 2011 and Constitutional Court Decision still allowing the provisions that non-state zakat administrator may involve in administering zakat affairs, as long as they meet the requirements stated on article 18 Law on Zakat 2011 (authorization from Ministry of Religious Affairs, recommendation from BAZNAS, professionalism, accountability, et cetera).

Also, the provision of criminalization were partly annulled by Indonesian Constitutional Court, where individuals and non state actors (including traditional zakat operator) could not be criminalized solely because they do not have authorization from the state to administer the zakat.

After the Constitutional Court verdict upon judicial review of Law No. 23/ 2011 on Zakat Management, the Government enacted Government Regulation No. 14/ 2014 as an implementing regulation of Law No. 23/ 2011 on Zakat Management.

However, similar to its upper law, the Government Regulation No. 14/ 2014 also narrowed down and discriminated non state zakat agencies. Among of the discriminative provisions are article 62 and 63 of the said regulation which clearly mentioned that National Non State Zakat Agency ( Lembaga Amil Zakat - LAZ) can only have one chapter at each province and Provincial-based Non State Zakat Agency can only have one chapter at every cities/ regencies within the province.



Facing this blatant discrimination, some non state zakat agencies, lead by Forum Zakat, were willing to petition (judicial review) the said regulation before Supreme Court in 2014.240

V.3. Implications on Zakat Administration

3.1. Long-term Goals with a Clear Focus on People and Their Rights

Does the zakat administration has long-term goals with a clear focus on people and their rights? Regardless the goals, the practice of zakat in Indonesia has shown the dynamic spirit and the high level of involvement of civil society which might be different with other muslim countries.

Talking about goals and clear focus on people and their rights on zakat cannot be done without discussing some issues attached to it as follows :a. Whether zakat is a form of charity/ philanthropyb. Whether zakat is a right or welfarec. Whether zakat can substitute or complement national income

taxd. Whether zakat is having empowerment design, let say to

transform one from zakat beneficiaries to zakat payers.e.To answer such questions, firstly we must talk about Indonesian zakat potentiality. As a most populous muslim country in the world, zakat potentiality in Indonesia is extraordinary. It can reach IDR 217 Trillion or equal to 20% of Indonesian Income and Expenses Budget.241 However, so far both the national zakat agencies and private zakat agencies could collect only 1% out of IDR 217 Trillion or equal to IDR 1.7 Trillion with total zakat recipients reached 1.7 million people in 2011. The prediction of total zakat income in 2012 will be around IDR 2.3 trillion or slightly more than 1% of total zakat income (KONTAN Magazine, 2012 : 3).

240Information gathered from Focus Group Discussions with Forum Zakat (Organization of

Zakat Agencies) in Depok City, 14 February 2014.241

According to research conducted by Faculty of Economic and Management Bogor Agricultural Institute in 2012.



Sri Adi Bramasetia, Khoirul Muttaqin and Nur Effendi (KONTAN Magazine, 2012 : 3) explained that the reasons why total zakat income in Indonesia is still far from its potentiality are : 1) lack of awareness of muslim people concerning zakat

knowledge;2) zakat payers tend to distribute zakat money by themselves to

their closest relatives; 3) Zakat payers distrust the state zakat agencies and 4) Zakat payers also distrust to the accountability of Private

Zakat Agencies.

Furthermore, Bramasetia stated that the benefit of paying zakat money to zakat agencies are as follows : a. the agency can collect more zakat money in big amount,

which is important to benefit more people and create more program;

b. Zakat payers do not know the recipients and vice versa, this is important to keep the sincereness of the zakat payers;

c. the zakat money will not distribute solely to the zakat recipients till drop but the zakat agencies can create sustainable distribution. For instance, creating moving fund for starting the business.


0200400600800

100012001400160018002000

200720082009201020112012


3.2. Accountability

Accountability is an important part of rights-based approach. A development program must be accountable. Implementation of certain kind of human rights must also accountable. Zakat is social security instrument. Zakat is rights not simply a philanthropy or welfare. Zakat affairs involve a lot of zakat payers (muzakki) and zakat recipients (mustahiq) and large number of zakat agencies both state-based and Indonesian case, zakat potentiality is around IDR 217 trillion.

Zakat affairs must be accountable since it involves people’s money and the money is belonged to the people who deserve to claim it. Zakat is right and zakat is strictly claimable by its beneficiaries.

The accountability of zakat practice applies to both state and non-state actors. The practice of zakat in Indonesia, based on the data displayed previously, shown that the level of accountability is varied. In some state-based zakat agencies are very much accountable while in others are not that accountable. People do not know the financial statement of zakat agencies. Interestingly, in South Sulawesi even the board of advisor of zakat agencies did not know about the amount of zakat money administered by his agency.

Other problem related to accountability is the disbursement of zakat itself. In Bulukumba zakat agency the utilization of zakat money is not really designated for eight groups of beneficiaries. The celebration of Islamic Holy Days by local government also utilizes this zakat money.

The accountability of state-based zakat agencies in administering zakat money is among the consideration of some of zakat payers not to surrender their money to the agencies. Statistic shown that non-state zakat agencies was able to collect zakat money much higher than ones collected by state-based agencies. Zakat payers prefer to pay zakat money not to the state for various reasons : (1) the physical distance, it is easier to pay zakat money to their surrounding masjid, foundation or institution; (2) tradition; long before the state-based zakat agencies founded by governments, people usually pay their zakat money to their neighborhood or



ones they trust; (3) accountability of non-state zakat agencies; zakat payers pay more trust to non-state zakat agencies since they are relatively more accountable and professional; (4) Disbelief to the state; zakat is a matter of trust. Zakat payers will pay their zakat to the agencies they trust much. To some extent, people are distrust to the state since many corruption cases committed within state institutions, including in Ministry of Religious Affairs which administer the zakat affairs in Indonesia.

3.3. Zakat and Income Tax: Double Burden?

Zakat can be considered as tax on the wealthy to provide social justice. Zakat effects purification in three directions. Its work covers the moral, the economic and the social spheres. In the moral sphere, it washes away greed and acquisitiveness of the wealthy, makes them alive to and responsible for solving the problem of poverty. It frees the spirit of man from the hold of wealth which grows tighter in direct proportion to the greed of man. The wealthy are made responsible individually and collectively through the state to see to it that the elementary necessities of life are provided to all the members of the nation. The stakes are made considerably greater than social security of the Musalmans (Mahmud Ahmad, 2007: 100).

Apart from the realization of social justice, zakat makes special contribution which has absolutely no parallel in any other economic system, past or present. Zakat is the uncompromising enemy of hoarding. Hoarded wealth is the first item on which zakat is assessed. Mahmud Ahmad (2007: 112) claims that indeed no secular system can possibly tackle the problem of hoarding with the effectiveness with which Islam can do, because hoarded wealth can only be taxed with the cooperation of the hoarders. And there is no reason why the hoarders should cooperate with the taxing authority against their own dear wealth. In Islam, on the other hand, the fear of God and the fear of the Day of Judgment are enough to force cooperation upon the hoarders against their wealth.

Another problem in zakat management is whether zakat payment can reduce state tax or not. The debate on the status of zakat in states fiscal policy has always been a hot issue for years. In case of Indonesia, the individual muslim is no longer just a Muslim; he or



she is also a citizen, and therefore subject to the secular laws of the state. Zakat is a tax, and taxes are a state matter with their own laws (Hooker, 2008: 32).

It may be mentioned here that poor-due in Islam is an obligatory tax and not a personal generosity left to the choice of the members of the society. It is the responsibility of the state to manage the collection of zakat and its fair distribution among the deserving people. There runs a spirit of worship in it. So it must be well guarded. If there is no Islamic state then consciousness must prevail and all hopes of fair dealing may be pinned in the Highest Authority (Qardhawi, 2006: 98).

Differences Between Zakat and Tax242

DIFFERENCES ZAKAT PAJAK DESCRIPTIONName/ Meaning

Clean, Grow and Evolving

Debt, levy, tribute

Anyone who disburse his/her zakat, their wealth will be clean and blessed, different with the tax

Legal Ground The Holy Qur’an and Prophet’s expressions and behaviors

The Law of the States

Disbursing zakat is a worship and having religious value, while paying tax is just carrying out an obligation as citizen

Nishab & Tariff Stipulated by the God and absolute

Stipulated by the states and not absolute, always shifting due to state


Law on Zakat Management 2011.124



budgetting plan

Character Obligation, permanent and continuing

Mandatory, based on needs and could be abolished

Subject Muslim All CitizensObject Permanent,

eight zakat beneficiaries (ashnaf)

For development and regular funds

Type of Assets Productive assets

All assets

Reward Reward from the God and blessed assets

Availability of public goods and public services

Ijab qabul (asking & accepting ceremony)

required Not required

Sanction From the God and Islamic Governance

From the State

Motivation to pay

Faith to the God, obedient/ fear to the state’s sanction

Obedient/ fear to the state

Calculation Method

The zakat payers or zakat agencies may calculate

State has stipulated the calculation, executed by tax agencies

Yusuf Qardhawi (1993 : 999) later mentioned that the similarities between tax and zakat are : (a) both tax and zakat could be collected by force. During the Prophet Muhammad SAW and the Caliph, the Islamic government will force any muslim who meet certain threshold to pay zakat. If they refuse to pay zakat the the



government may wage a war; (b) Both tax and zakat must be handed over to the state; (c) there are no direct rewards from the state for those who pay tax and zakat; the rewards will be enjoyed later either in the world (state facilities, etc.) or in the hereafter; (d) both tax and zakat have social functions, instead of fiscal and financial functions.

Qardhawi (1993 : 1006) further claimed that zakat is both worship and tax, for following reasons : zakat is initially and originally collected by the state, even by force if ones refuse to pay it. Furthermore, zakat money can be utilized to finance social projects (as happened in Bangladesh), almost similar with tax. Initially zakat is a kind of worship and religious obligation but it also functions as tax. We may say zakat is a religious taxation.

Therefore, zakat is both human rights and God’s right, a right of poor people, and also a right of God.

In Indonesian situation, Salim (2008: 35) observes that many Indonesian Muslim are greatly concerned over the double fiscal burden between tax and zakat. Responding to the problem, the Indonesian Council of Ulama (MUI) held a seminar on zakat in 1988 and affirmed that zakat and tax are different duties, and that Indonesian Muslims are obliged to pay both. The reason underlying this view is that zakat is a religious obligation mandated by God through the Qur’an and Sunnah to all Muslims, while tax is a duty required by the nation-state but religiously justified based on the principle of public interest (al maslahat al amah).

Dawam Rahardjo, a Muhammadiyah intellectual in 1992 first put forward the idea that zakat payment could be tax deductible. The idea was supported by the seminar in Jakarta (1997) that Muslims who paid zakat should be able to claim a tax deduction of at least 2.5 percent. Malaysia has been cited for its exemplary management of zakat in this way. However, the practice in certain Western countries, like the United States and Australia, where an individual or public company that makes donation to registered charity foundations is entitled to a tax deduction is surely to have inspired this notion in Indonesia (Salim, 2008: 38 – 39).

Muslim scholars treated this issue differently. Yusuf Al Qaradhawi in his book (Fiqhuz Zakat) explained that zakat is an obligation



toward religion and tax is an obligation toward state. Masdar Farid Mas’udi held that zakat is a spirit and tax is a body. Therefore, tax is zakat, itself. Meanwhile, Hasan Turobi, former Sudanese leader and scholar, convinced that tax is not obligatory while zakat is obligatory (Republika Islamic Newspaper, 19 July 2009).

Current situation concerning relation of zakat and state tax in Indonesian Fiscal Policy is zakat payment cannot directly deduct personal income tax, yet it can deduct ones taxable income. Through Law No. 38 year 1999 on Zakat, zakat is introduced as part of fiscal incentive. Later, through Law No. 17 year 2000, zakat money received by zakat agencies is not subject to be taxed. Special regulation made by Director General of Tax Affairs No. 6 year 2011 on Zakat and Other Mandatory Religious Alms clearly state that zakat money paid by taxpayers can deduct the taxable income. To get benefit from taxable income deduction, the taxpayers must present the receipt of zakat payment along with their Annual Income Tax Letter.

Actually, the zakat agencies are not really happy with this situation. They are now striving to influence the tax policy. That zakat payment can directly deduct income tax. The reason is, some people are unhappy to pay both zakat and tax annually. Zakat is paid as religious obligation as Muslim and tax is paid as Indonesian citizen obligation. There is a fact that people are more honest when paying zakat then when they pay the taxes. Therefore, there is reasonable need to recognize zakat payment as a factor which can directly deduct the income tax (KONTAN Magazine, 2012: 4).

One interpretation regarding zakat beneficiaries was proposed by Masdar Mas‘udi, a leader of Nahdhatul Ulama, the biggest mass Muslim organization in Indonesia. According to him, zakat benefits should be disbursed to three sectors, the poor/destitute, amil, and fi sabilillah (Mas’udi, 1993).Since he believes that zakat is the same as tax, amil refers to state expenditure and fi sabilillah refers to any public good. Therefore the use of zakat or tax funds is extensive and far reaching such as for eradication of poverty and to support those underprivileged communities. Indeed, this category could optimize the use of zakat funds to benefit all the people without discrimination, the idea that is based on the thought that Islam promotes justice.



However, this idea implies that zakat or tax is managed by the state and the existence of LAZs is not important. Although some of the above LAZ‘s interpretations and programs are in line with that of Mas‘udi‘s interpretation, most LAZs reject the notion that zakat is the same as tax. The majority of LAZs (if not all) also disagree with the idea that beneficiaries of zakat should not be limited to Muslims (Fauzia, 2008).

Tax deduction for zakat payers has been informally proposed since the 1960s. The tax deduction system is that the amount of zakat one pays is deductible from the amount of income that is assessable for income tax purposes. This regulation was stipulated in both the Zakat Management Law (1999) and the Tax Law (2004). In general, the system is implemented in many western countries, where charitable contributions can be deducted from the amount of tax payable. For most Muslim leaders, this policy is an accommodative solution for Muslims living in secular state, where they have the obligation to pay tax as well as zakat.

However, this policy is a kind of lip service because it is not fully supported by the Tax Office and the Ministry of Finance. Both agencies are concerned about the decline in tax payment, and fear that the policy would add another problem to cause a decrease in the tax payment. Until 2007, there was no improvement in the realization of this tax deduction, and almost no Islamic philanthropic organizations clearly assisted their zakat payers to benefit from this policy. Muslims also seem reluctant to obtain thisbenefit‖ because it does not give them a significant tax deduction and could cause extra trouble for them in dealing with the notorious Tax Office. It has become general knowledge that the Tax Office is a corrupt state agency and that the tax system is not well run in the country. There was speculation that this policy was intended to trap zakat payers who had not fulfilled their tax obligations. In addition, the majority of Muslims may not have tax numbers. Yet, the managers of Islamic philanthropic organizations think that this taxation issue is not important (67%).

Rather than pushing this tax deduction, it seems that the advocates of zakat reform are reviving the proposal of state-enforced zakat, through the Tax Office. This is because zakat is regarded as tax.



3.4. From a Recipient to Zakat Payer (Transforming Mustahiq to Muzakki)

Next problem is how to change a zakat recipient (Mustahiq) to be a zakat payer (muzakki). This is among the main objective of every zakat agencies. They expect that their zakat recipients can someday transform themselves to be zakat payers. Therefore, many zakat agencies introduce the sustainable zakat distribution program or introducing empowerment program to strengthen their zakat recipients.

Based on the observation and interviews, all zakat agencies both state-based or non-state based, i.e. BAZNAS, Dompet Dhuafa, Rumah Zakat, PKPU and Harapan Dhuafa have focused their program on people empowerment through various ways. Dompet Dhuafa and Rumah Zakat focus on economic empowerment by developing self-sufficient societies through supporting livestock and agricultural initiatives.. PKPU devoted as an agency which provide humanitarian relief while acting as non-state zakat agency concurrently. Harapan Dhuafa devoted to empower the fisherman, peasant and poor women by providing rolling fund to start business and conducted life-skill training to be tailor.

The zakat notion to transform a recipient into zakat payer, actually are not belonged to civil society as such. Inasmuch, in academic draft of Law No. 23 year 2011 on Zakat Administration, both the government and legislators concurred that among the goals of zakat is to transform the poor people (or zakat recipients) to be zakat payer, or from mustahiq into muzakki.

Regarding empowerment program, Rumah Zakat , a private zakat agency has introduced three empowerment program since 2003 which have reached around 2.25 million zakat recipients namely Senyum Juara (The Winners’ Smile), Senyum Sehat (The Healthy Smile) and Senyum Mandiri (the Self Sufficient Smile). The three program cover the area of education, health, social and economic.

The LAZIS MU, a private zakat agency owned by Muhammadiyah, Indonesian second largest muslim organization, in 2011 can collect



around IDR 28 billion zakat money. They further transfer the zakat money to around 250.000 zakat recipients in the form of micro finance for small and medium enterprise, women empowerment and supporting the funds for 14 groups of young entrepreneurs.

Another organization, namely LAZISNU, a private zakat agency owned by Nahdhatul Ulama, the largest muslim organization in Indonesia, introduced some interesting program such as (1) NUCare (immediate cash transfer) for natural disaster victims; (2) NUPreneur; micro finance program for street hawkers and home industry; (3) NUSkill; introducing vocational education for the drop out children or those who are not able to study to higher degree; (4)NUSmart; a special zakat money distribution for Holy Qur’an Teachers and also for Social Entrepreneurs. The LAZISNU received IDR 5.64 billion in 2011 and around IDR 3.68 billion has been delivered to the said program.

NO

ZAKAT AGENCIES(State-Owned and Private Ones)

AMOUNT(In IDR Million)

1BAZNAS 40.404

2 BAZNAS Provinces 111.5363 BAZNAS Regencies/ Cities 171.4424 Dompet Dhuafa Republika 75.0555 Amanah Takaful 3.5006 Pos Keadilan Peduli Ummat 77.353

7 Baitul Maal Muamalat 28.6548 Yayasan Dana Sosial Al Falah 29.9979 Pusat Zakat Ummat 5.66310 Baitul Maal Ummat Islam BNI 22.14411 Bina Sejahtera Mitra Ummat 7.74312 LAZ Dewan Dakwah Islam

Indonesia7.798

13 Yayasan Baitul Maal Bank BRI 47.40214 Rumah Zakat Indonesia 144.02915 Baituzzakah Pertamina 13.38416 Dompet Peduli Ummat –Daarut

Tauhid13.920



Source: BAZNAS 2012

Other notion of zakat adopted by Non-State Zakat Administrator, in this case is Dompet Dhuafa, is empowerment. Zakat fund is not merely utilized for the sake of philanthropy but also for empowering the beneficiaries. Not just relief but release is the empowerment idiom of Dompet Dhuafa where all of their program are intended not just to provide assistance to the beneficiaries but also to release them from poverty and empower them. So someday, the zakat beneficiaries will shift to be zakat payers.

3.5. Utilization of Zakat Funds in Indonesia

How far zakat funds can be utilized? How flexible the room for utilization of zakat funds provided? These kind of questions are really big issues. Originally, the holy qur’an clearly stipulated that the zakat fund beneficiaries are only eight different kind of people (asnaf). Further, there are notions that zakat funds can also be utilized for healthcare, community development, financing the state development, building construction, financing the cost of education, and so on and so forth.

The holy qur’an, indeed, has stipulated the eight groups as beneficiaries of zakat fund. However, the room for interpretation are still provided. At this point, the zakat agencies in Indonesia, either state-owned or private ones, really have the challenge. To maximize and utilize the zakat funds, so they can really benefit the recepients without violating Islamic Shariah and national zakat law.

The Indonesian Council of Ulama (Majelis Ulama Indonesia) has issued several fatwas on zakat. The Fatwas are actually the response to Indonesian muslim problem related to zakat in daily life. Among of the fatwa issued by the MUI are quite advanced and fit with the recent situation. On February 2th 1982 the Ulama stipulated that Zakat money can have a productive character and the zakat money can be used for public interests (maslahah amah). On February 19th, 1996 the Ulama issued a fatwa that zakat money can be utilized for supporting the education, providing fellowships or scholarships for the students who are in need (BAZNAS, 2011).



In the case of Indonesia, zakat funds are utilized in various ways. Not just in traditional ways (directly disburse zakat money to poor people) but also in modern ways along with modern interpretation. Therefore, zakat money can be utilized to economically empower people through series of empowerment program.

Also, zakat money can be utilized as humanitarian assistance for victims of natural disasters and social conflicts as long as the zakat payers intentionally bind themselves for such purposes.

Other notions on utilization of zakat funds mentioned by Ashraf and Hassan (in Ahmed, 2013 : 226) that zakat can be used as part of long-term strategy for poverty alleviation. The views expressed by the founder of three scholars of jurisprudence namely Shafii, Maliki and Ahmed bin Hanbal are noteworthy. According to Malik and Ahmed bin Hanbal, the amount paid in Zakat must be enough for one year’s requirement. Imam Shafii treats this in a life-term perspective and maintains that the poor should be given zakat enough for their lifelong requirements of a normal life span. Also, a fatwa issued by the international Shari’ah Board on Zakat (ISBOZ) explains that zakat funds might be used in undertaking development projects, educational services, and healthcare services as long as the beneficiaries of such projects fulfill the criteria to be recipients of zakat (Kahf, 2006 : 10 in Ahmed, 2013).

Moreover, zakat can be treated as an alternative source of funding (Hassan and Khan, 2007 in Ahmed, 2013 : 226). Zakat funds, if collected and managed properly, could be used to create a pool of funds that can be used in financing development activities and can replace government expenditures. In Bangladesh, zakat funds could have contributed up to 21 percent of the Annual Development Plan (ADP) in 1983/ 1984 and up to 43 percent of ADP in 2004/ 2005.

3.6. The Role of The State in Zakat Management

What is the role of the state in zakat management? Actually, there are various opinions about the role of the state in this matter since concept of ‘state’ itself is also problematic. Some muslim scholars argued that Islam has never introduced the concept of state like present modern state. The Prophet Muhammad, indeed, created



an Islamic governance, however the form his governance is greatly different with present modern state.

Indonesia experiences the same problem. As the most populous muslim country in the world, Indonesia, itself, is a modern state. Not an Islamic state, nor a state resemble to Prophet Muhammad’s governance.

There is a contesting idea whether zakat should be managed by the state or leave it to muslim people to manage. The history of Islam, began by the practice of Islam by Prophet Muhammad in 6 – 7 AD, followed by several Caliphs, shown different practices.

During the Prophet Muhammad and the two first Caliphs, zakat was controlled by the state243 absolutely. Zakat was obligatory and the ruler will impose sanctions for those who refuse to disburse their zakat money. However, during the third Caliph, Utsman bin Affan, the room for the people to manage zakat was opened by letting non state actors to be as intermediary agent in collecting zakat money (amil).

Regarding the relation between religion and the state, Javaid Rehman (in Smits, ed., 2012 : 31) asserts that the place of religion in society remains contested and controversial. State practices have been varied and largely indicate a failure to adopt appropriate and accommodating constitutional mechanisms. Religions are not limited to moral or ethical values but also interact with economic and financial market forces. This is particularly the case with a religion such as Islam, which continues to engage all aspects of public and private conduct and has established norms as regards financial practice. Islamic financial model faces considerable challenges. The extent to which the prohibitions on Riba, Gharar and Qimar are practicable in modern financial world remains uncertain. The other key features of the Islamic financial model, zakat and awqaf have not been effectively implemented by any of the Sharia-complaint states.

243The word ‘state’ in this regard is different with state in modern time. The state in early

Islamic era was actually an Islamic (theocratic) reign which governed parts the world which had been conquered by Islam.



Islamic finance is an egalitarian model promising resource and wealth reallocation to all segments of the society. One of the primary means to achieve such re-allocation is through the medium of zakat. Zakat is a phenomenon similar to that of alms in Christianity and charity. However, in fact, zakat goes much further than alms, and can more accurately be described as a wealth tax – which prescribes that 2.5% of funds idle for one year must be paid. At the same time, the zakat is a contribution over and above state taxation and includes the specific purposes of reallocation of wealth and supporting the needy (Rehman in Smits, ed, 2012 : 28).

Substantial impediments are also faced in the implementation of the Islamic financial concepts of zakat and aqwaf244 (wakaf). Although an integral part of the Muslim faith, during the modern times, it has proven difficult to collect and administer the zakat tax. Zakat tax is operational in only a handful of Islamic states, with serious difficulties in its implementation. Pakistan provides a rare example, where legislation was drafted to administer zakat. However, notwithstanding the adoption of a considerably comprehensive legislation, the zakat and ushr ordinance (1980) by the regime of the late General Zia-ul-Haq, this system of tax collection and its redistribution has failed. Amongst the major hurdles has been the controversy over collection of this tax (over and above the state-legislated income tax), the identification of the recipient of zakat and the proper mode of distribution of zakat. In an overall governance structures, saturated with mismanagement and corruption, it is hardly surprising to find challenges for charitable ideas in the form of zakat and aqwaf in effective operation (Rehman in Smits,ed., 2012 : 30).

If the governance during Prophet Muhammad had a powerful mandate to collect the tithe (zakat) even by force, the government of Indonesia, certainly could not apply the same practice. Therefore, what is the role of Indonesian government in zakat management?

Famous muslim scholar Yusuf Qardhawi (2006 : 89) indicates that the collection of the poor-due and its distribution cannot be left to the sweet will of the wealthy. It is, no doubt, obligatory for the

244This terminology is used interchangebly in different muslim countries : aqwaf, waqaf, waqf

and wakaf. Indonesia use the word ‘wakaf’as stated in the Law of Wakaf No. 38 year 2004.. 134



faithful. But it is not individual generosity. It must be administered collectively which is possible only for the state to accomplish. The state should make arrangement for its collection from the rich and distribute it to those who deserve it. If the right of the poor and needy are left to the sweet will of such type of people there is no guarantee that the poor will get their right definitely. Also, a person who receives his share of poor-due direct from the state instead of taking it from the wealthy keeps up his prestige and self-respect which may be injured otherwise. His sentiments are not injured by following this procedure. If the distribution of zakat is left to the individuals, it may mismanage the distribution system to the disadvantage of the poor. The rich people may give it to the persons whom they like and ignore the genuine one. It is possible that the poor who is not paid is more genuine than those who have been paid to the sweet will of the giver.

Hafiz Ibn Hajr (in Qardhawi, 2006: 90 – 91) stated that: “the man at the helm of affairs of a state is responsible for the collection and distributions of the Poor-Due. He may do it either himself or get it done by his deputy. It must be collected forcibly from a person who refuses to pay the Poor-Due.”

Qardhawi (2006: 91) later proclaims that this system was practised by the Holy Prophet and after him by the rightly-guided Caliphs. It cannot be left to the rich men who sometimes are unable to know whom they must pay and they are miser as well. So it must be administered by the Authority of the state. But it is essential that the rich must cooperate with the servants of the state. It becomes obligatory on the rich that he should cooperate with those persons who are appointed of the collection of poor-due. The rich should pay them poor-due and may not keep secret anything on which poor-due is levied. This is the directive of the Holy Prophet and his companions.

On the other hand, regarding zakat management and the role of the state, Indonesian Muslim scholar Arskal Salim (2008: 12) mentions that the Qur’an does not elaborate on zakat management and enforcement. In fact, there is no clear directive as to whether to centralize or decentralize, institutionalize or personalize the application of zakat. Although the Qur’an mentions eight recipients (beneficiaries) of zakat (usually called as asnaf) including a zakat agency (al amilin alayha), there is no further instruction on how



zakat should be collected or whether Muslims are obliged to pay their zakat to this agency, or whether they can voluntarily give their zakat directly to the poor and needy. The application of zakat in the modern period has never been the same from one Muslim country to another. Practices range from complete incorporation of zakat as a regular tax of the Islamic state (Pakistan, Sudan, Saudi Arabia) to the establishment of intermediary financial institutions that receive voluntary payments of zakat (Jordan, Egypt, Bahrain, Kuwait, Indonesia), to the marginalization of zakat according to the individual’s private conscience (Morocco, Oman).

Four cases in Indonesia, first in Pasuruan East Java in 2008 and the others in Jakarta, 2009, Makassar 2012 and East Lombok Regency in 2005 shown zakat management in Indonesia still face many challenges.245

The Qardhawi’s position, that zakat must be administered by the authority of a state, actually is the position hold by Indonesian government when they drafted the bill of Zakat Law which finally had been enacted on 27 October 2011. The state, through ministry of religious affairs, hold that in Islamic history the state has been playing a very significant role in zakat administration. Moreover, under Caliph Abu Bakar Ash Shiddiq, the zakat payment was mandatory. He will wage a war to those who refuse to pay the zakat. During his administration, zakat was treated as a tax, therefore everyone must pay zakat both as citizen and muslim obligatory. Caliph Umar ibn Khattab, the substitute of Caliph Abu Bakar, treated zakat affairs the same way. He will wage a war to those who refuse to pay their zakat to to government.246

The state, further claims that zakat is a faridhah sulthaniyah, means an obligation which strongly related to power. Therefore, only the state which meet the condition, since it has the power and authority to administer zakat affairs from central power (Capital City) to villages in remote areas. At this point, the state claim that

245 See the four cases related to zakat disbursement and zakat policies at Chapter 1.


the Law of Zakat Management 2011.



the zakat collector must be a state or an agency created by the state.247

Nevertheless, next Caliphs/ Ruler after Umar ibn Khattab, treated zakat affairs differently. During the third Caliph, Utsman ibn Affan, the zakat payers had their own rights to distribute their zakat money by themselves. The Caliph Ali ibn Abi Thalib, treated zakat affairs the same way as Utsman’s. Furthermore, during Caliph Umar ibn Abdul Aziz, the zakat affairs were administered by the government again, with a more modern management. However, under the Caliph Muawiyah ibn Abi Sufyan, the government let the people to administer the zakat affairs (Kuntarno, Aflah & Tajang in Hasanah, 2011 : 160).

The state also claimed that the significant role of the state in administering zakat is derived from article 34 Indonesian Constitution 1945 which says : “poor people and abandoned children are handled by the state and the state develops social security system for all the people and empowering weak and poor people to enhance their human dignities. The state claims that zakat is part of empowerment program and state’s social security system.248

Other reasons why zakat management should be properly administered are public accountability and the certainty that zakat funds are really well received and benefitted specific zakat recipient groups. And this is the real problem for zakat management in Indonesia. Many zakat agencies are not accountable enough in their financial report. Some agencies commited embezzlement and fraud. Also,whether the zakat funds they got really benefit the zakat recipients are still in big question mark (?).

These kind of problems subsequently led to the idea that the state must centralize the zakat management and narrowing down the room of participation of non-state actors. At least, these are the underlying asumptions when the government and lawmaker

247Ibid.

248Ibid.



amended the Law on Zakat Management No. 38 year 1999 to the new law No. 23 year 2011.

The Law No. 38 year 1999 does not expicitly distinguish the different role of national zakat agency and the private ones. Their positions seemed to be equal. Meanwhile the new law of 2011 clearly mention that national zakat agency along with its branches all the primary zakat administrator,while the private/ non state agencies are only the supporting agents. The non-state agencies can operate only after obtaining written approval from national zakat agency (BAZNAS).

There are several considerations that may limit the degree of state involvement in the collection and distribution of zakat. It seems that since the time of the third successor of the Prophet Muhammad SAW (Peace be Upon Him), Khalifa Utsman bin Affan, there were good reasons for leaving part of the obligatory zakat for individual payers to distribute at their own discretion to deserving relatives and neighbors. Today, in consideration to this, there are the considerations of economy and managerial cost; leaving certain margin for casual deserving causes; economic incentives, choice of degree of government interference in the private affairs of individual, availability of other resources for supporting the poor, local, political, social and religious considerations, etc. (Monzer Kahf in Abulhasan M. Sadeq.et.al, 1991 : 188).

Nik Mustapha Hj. Nik Hassan (in Abulhasan M.Sadeq, et.al. 1991: 213) firmly states that zakat is not just an individual responsibility. The state has the responsibility of collecting and disbursing zakat in a well-organized system as prescribed by Islam. Failure to carry out this responsibility is a grievous sin, as the basic thrust of mutual sharing of community’s income between the affluent and the have not as prescribed by Islam will not be realized. The Islamic fiscal policy based on zakat would provide the state with a reasonable amount of resources intended for social welfare.

Current pictures of zakat management presented by Ashraf and Hassan (in Ahmed, 2013 : 230) mentioned that in most Muslim countries, the contribution of zakat from zakat donors to such managed Zakat funds has been less significant for a variety of reasons : (a) individual zakat donors prefer to choose to whom they should pay zakat, which in some cases may be their close



relatives and neighbors; (b) the low level of trust in the management of zakat because of government involvement ; and (c) more important, lack of trust in the National Zakat management fund, which has little knowledge regarding the eligibility of the recipients.

What about Indonesia? Article 683(1) of Indonesian Compilation of Shariah Economic (2009) clearly mentions that: (1) Those whose entitle to administrate the zakat are the state,

which then disburse the zakat money to eight zakat mustahik (those who deserve).

(2) The priority of zakat disbursement is to the zakat mustahik who live around the area of zakat collection.

(3) Indonesian compilation of Shariah Economic also mentions that zakat is obligatory by stipulating article 684 as follows:

(4) Anyone who violates the zakat regulation will be imposed by sanctions as follows:a. Those who are unwilling to pay the zakat money will be

charged with a fine. The amount of the fine will not surpass the amount of zakat obliged to be set aside.

b. The fine mentioned in article 684(a) must be decided by court’s verdict.

c. Those who ignore to pay the zakat money, will be charged with a fine not exceed 20% out of total amount of zakat.

d. The zakat money and the fine, which should be paid, could be taken forcefully by court’s clerk to be forwarded to local Badan Amil Zakat (Zakat Collector Agency) in the city/ regency.

Muslim scholar Yusuf Qardhawi, interpreted the holy Qur’an (at-taubah chapter) that the zakat must be collected and disbursed with facilitation of ‘the amil’. This is explained that zakat must be administered by the state, not by individuals. Those who collect zakat are the head of the state or the representatives on behalf of the state (Qardawi, 1993 : 65).

Abdul Wahab Khallaf and Abdul-Rahman Hasan (in Qardawi, 1993 : 761-762) hold that the disbursement of zakat could not be centralized by the state. They hold that zakat disbursement should leave certain amount of zakat (one third or a quarter) to be disbursed by the owner of zakat money. They have their own rights



to disburse the zakat money by themselves. In relation with Islamic governance, a government who stipulate Islam as the basic foundation of the state and applying Islamic sharia in all sectors of the state, should have the right to collect and disburse zakat. Meanwhile, the government who does not stipulate Islam as state foundation, does not employ Allah’s law in state activities and simply adhere state ideology to the West and the East, this government does not entitle to collect zakat money.

Furthermore, Qardawi encourages all governments who stipulate Islamic system at this contemporary world, to really taking care of zakat affairs, by founding offices, agencies, or foundations related to zakat management. Also, to collect the zakat money ordered by Allah SWT and disburses them according to Islamic law (Qardawi, 1993 : 1108).

In line with Abdul Wahab Khallaf, Ahmad Mohamed Ibrahim (2000 : 372) mentions that where there is no muslim government to arrange for the collection of zakat and zakat al fitr then the views of the Hanbali school can be followed, which state that is preferable for the person to distribute the zakat himself. However this view may not be productive as many people do not fulfill their obligation to pay the zakat and if they pay it at all it will only be left to themselves to determine. Moreover, the distribution of the zakat itself will not be properly organized and the objectives of the payment of zakat to remove poverty and want in the community will not be achieved.

Furthermore, Ibrahim (2000 : 372) confirm that clearly there need to be an organization for the collection and distribution of zakat. This organization need not necessarily be the government or a government agency. It will be possible for the Muslim organizations or associations to set up a Baitul Maal and to appoint amils to collect and distribute zakat. Whatever organization is set up it will be necessary to ensure that the management of the zakat is carried out efficiently, smoothly, and with full dedication and trust (amanah). The amils may have to be trained in management of finance and poverty, so that the zakat can be collected, administered and distributed so as to achieve the aim of removing poverty and hardship.



The Indonesian Council of Ulama issued a fatwa on March 3rd

2011 regarding Amil Zakat or the persons/ institutions that have the authority in collecting zakat money. The fatwa stated that : (a) Amil zakat is person or group of persons who are assigned by the government to administer the implementation of zakat or (b) person or group of persons who are formed by the people/ society and legalized by the state to administer the zakat management.

To be as an amil zakat he or she must meet certain requirements : (1) muslim or muslimah (2) mukallaf (adult/ mature) (3) amanah or trusted; (4) capable and having qualified knowledge on zakat laws and the role of duties of Amil Zakat. The duties of amil zakat are as follows : (1) collecting zakat money; survey, counting and deciding, determining (2) maintaining the zakat money; consist of wealth inventarization, maintenance and securing zakat wealth; (3) Distributing zakat; consist of transferring zakat and reporting (BAZNAS, 2011).

According to Indonesian Council of Ulama’s Fatwa, the operational costs of zakat administration are covered by the state. In case of the state does not support the cost or the fund is insufficient then it can be taken from zakat money itself, by deducting amil section or fisabilillah section (BAZNAS, 2011).

V.4. Impact on Zakat Collection and Distribution : People Resistance

During the New Order, the development of community zakat agencies was small due to the authoritarian character of the regime over Islam, with the exception of the last ten years when the regime tended to use Islam as its power. The establishment of zakat and charitable organizations was mostly in the circle of provincial government offices, or was carried out by foundations of government officials. The state-based zakat agencies were in reality only supported by Muslim government officials, who had no other choice than to agree to zakat being deducted from their salaries. In addition to BAZ, Ministry of Religious Affairs instructed around 1970 that village zakat committees be formed to endorse the zakat and fitrah payment of Muslims. Again, due to the top-down nature of the system, some Muslim communities, in particular Nahdlatul Ulama, refused to pay their zakat to these committees.



There was opposition or, more specifically, hidden resistance to state-based zakat agencies and the village zakat and fitrah committees. The resistance was mainly a refusal to contribute to both institutions, including the charitable foundations established by government officials, and was observable among Nahdlatul Ulama followers in rural communities, for example, in central Java. Nahdlatul Ulama followers stubbornly kept paying their zakat to local kyai, abandoning the payment of zakat to neighborhood association zakat committees. Some kyai openly criticized the state-based zakat committees in their speeches at religious gatherings (pengajian). Dirdjosanjoto has shown that the changes in zakat payment to state committees had weakened the social and political power of kyai as well as reducing their income.

Charitable foundations established by government officials also suffered from this kind of rejection. A chief district (bupati) of Banyumas established the Basmalah foundation in the 1980s. Supported by the Banyumas MUI, it collected and managed philanthropic contributions from all people in Banyumas. It asked for a contribution of Rp. 100 from each household, which was administered through the government apparatus using neighborhood associations. It gained about Rp. 38 million a month. However, people criticized the foundation because they did not see the benefit of what they were contributing to and accordingly stopped their contributions. Due to its lower income, the foundation stopped functioning.

Another type of resistance took the form of community-based zakat organizations. This was a kind of ―soft resistance practiced mainly by Modernist Muslims. Rather than giving their zakat to the state apparatus, they created their own organizations. As a result, non-state zakat bodies grew in opposition—or at least as alternatives—to state-based zakat agencies.

In the years following the establishment of the state zakat agency, enthusiasm for managing zakat continued to grow. This was partially due to the accommodative Islamic policy of the New Order in the late 1980s, and particularly after 1991, when its alliance with the military weakened. This was exploited by religious figures as an opportunity to see their demands met, namely, that the government agree on a more extensive implementation of Islamic law in the country. Their demands resulted in a number of regulations, including the establishment of an Islamic bank, the Religious Court and the Presidential Decree on the Compilation of Islamic law in 1991.



Zakat agencies established either by the state or by Muslim communities worked for the collection of zakat and sedekah (and later also waqf). State-based zakat agencies were actually not totally dominated by the state officials. The state did not have authority to deal with religious matters. It asked for the involvement of religious leaders in their performance.

Another resistance action against zakat policy shown by government officials in East Lombok Regency, West Nusa Tenggara Province and by civil society in Malang City (2011) and Pekanbaru City (2011). In East Lombok (2005) around 4000 teachers at that regency performing demonstration and teaching strike. The protest was made since the teachers strongly disagree with the policy embodied at Local Ordinance on Zakat Administration. The ordinance said that every government official’s salary (muslim only) will be deducted 2.5% as zakat profession. The teacher hold that they did not reject the compulsory to pay zakat as muslim but they could not accept the local government mechanism in administering the zakat and the capability of local government in administering zakat affairs. There were no clear consideration and guidance about whom and at which level the government officials must surrender their salary to be deducted 2.5% as zakat (Latief, 2008 : 7).

Another resistance to institutionalization of zakat was shown by state and quasi-state agency, namely BAZIS DKI and State-Owned Enterprise Zakat Agencies. The BAZIS DKI was founded in 1968 by Jakarta Governor Decree under the name of BAZ (Badan Amil Zakat). It was then transformed to BAZIS DKI (Badan Amil Zakat Infaq Shadaqah) in 1973. Therefore, BAZIS DKI is also much older than National Zakat Agency (BAZNAS) which was founded in 2001. It was also founded long before the enactment of two National Zakat Laws (No. 38/ 1999 and No. 23/ 2001). In term of zakat collection and distribution, BAZIS DKI is among the most successful local government-based zakat agency. The enactment of Zakat Law 2011, which manage to centralize zakat administration under the umbrella of BAZNAS, really perturb BAZIS DKI.249

The same condition applied to state-owned enterprise zakat agencies. Some state enterprises, namely Bank Mandiri, Bank BNI, Bank BRI, PT 249

Information given by representative of BAZIS DKI at the FGD on Corporate Zakat Situation in the Aftermath of Zakat Law 2011, Jakarta 28 August 2014.



Pupuk Kujang, PT Garuda Indonesia, etc. Had founded zakat agencies within their companies. They have also successfully collected and distributed zakat money. However, the enactment of Zakat Law 2011 which centralize zakat affairs under BAZNAS really harassed them. The BAZNAS managed to render them only as zakat collector under umbrella of BAZNAS (or as Unit Pengumpul Zakat – Zakat Collector Agencies) since they have the status as state-owned enterprise.250

IV.5. Institutionalization of Zakat and Justice

There are various ideas of justice. Justice from the perspective of utilitarianism, libertarianism, justice according to markets and morals, justice as constructed by Immanuel Kant, Aristotle, John Rawls, etc. What is justice in Islam? What kind of justice offered by zakat?

Zaki Fuad Chalil (2009: 394) states that zakat, infaq, and shadaqah are part of income distribution system. Islam obliges and encourages people to create equilibrium of income. Since not all the people are able to involve in economic process properly, let say the differently-able persons, widows, orphans, then Islam provide the solution for those unfortunate people to have part of zakat, infak, and shadaqah.

Monzer Kahf (in Abulhasan M. Sadeq, 1991: 174) firmly holds that zakat is a transfer payment from the wealthy to the poor for the purpose of redistribution of wealth and income in the society. Furthermore, it is also established that the Qur’an and the Sunnah do have overwhelming evidence indicating that the Islamic system does not like any form of concentration of wealth or income in a few hands and considers their redistribution, by means acceptable in sharia, one of the major objectives of the Islamic economic system.

Zakat is intended to as a means to achieve social justice. Social justice implies that each and every individual in a community is assured of minimum means of livelihood. Al-Shafi’I, Malik and Ibn Hanbal stressed that the fulfillment of one’s basic needs is the main criterion for the distribution of zakat. Failure to satisfy the basic needs of the masses can lead to the occurrence of poverty and wide disparity between the rich and the poor (Nik Mustapha Hj. Nik Hassan in Abulhasan M. Sadeq, 1991: 213).

250 Information given by representativesfrom various state-owned enterprise zakat agencies at

the FGD on Corporate Zakat Situation in the Aftermath of Zakat Law 2011, Jakarta 28 August 2014.144



According to John Rawls (Shestack in Symonides, 2002 : 46 - 47) justice is the first virtue of social institutions. Human rights, of course, are an end of justice; consequently, the role of justice is crucial to understanding human rights. Principles of justice, according to Rawls, provide a way of assigning rights and duties in the basic institutions of society. These principles define the appropriate distribution of the benefits and burdens of social cooperation. Rawls’ thesis is that each person posseses an inviolability founded on justice’ which even the welfare of society as whole cannot override. In just society, the liberties of equal citizenship are settled; the rights secured by justice are not subject to political bargaining of to the calculus of social interest.

John Rawls developed a conception of justice as fairness in his now classic work A Theory of Justice .251 Using elements of both Kantian and utilitarian philosophy, he has described a method for the moral evaluation of social and political institutions as follows:

Imagine that you have set for yourself the task of developing a totally new social contract for today's society. How could you do so fairly? Although you could never actually eliminate all of your personal biases and prejudices, you would need to take steps at least to minimize them. Rawls suggests that you imagine yourself in an original position behind a veil of ignorance . Behind this veil, you know nothing of yourself and your natural abilities, or your position in society. You know nothing of your sex, race, nationality, or individual tastes. Behind such a veil of ignorance all individuals are simply specified as rational, free, and morally equal beings. You do know that in the "real world", however, there will be a wide variety in the natural distribution of natural assets and abilities, and that there will be differences of sex, race, and culture that will distinguish groups of people from each other.

In this original position , behind the veil of ignorance, what will the rational choice be for fundamental principles of society? The only safe principles will be fair principles, for you do not know whether you would suffer or benefit from the structure of any biased institutions. Indeed the safest principles will provide for the highest minimum standards of justice in the projected society.

251 http://sites.wofford.edu/kaycd/rawls/



Amartya Sen (2009 : 54) asserts that original position is an imagined situation of primordial equality, when the parties involved have no knowledge of their personal identities, or their respective vested interests within the group as a whole. The principle of justice, in a Rawlsian formulation, determine the basic social institution that should govern the society they are, we imagine, about to create.

Furthermore, Amartya Sen ( 2009 : 54 – 55) mentions that what is essential for an adequate understanding of justice is Rawl’s foundational idea that justice has to be seen in terms of the demands of fairness. Central to fairness must be a demand to avoid bias in our evaluations, taking note of the interests and concerns of others as well, and in particular the need to avoid being influenced by our respective vested interests, or by our personal priorities or eccentricities or prejudices. It can broadly be seen as a demand for impartiality. This is how people can cooperate with each other in a society despite subscribing to ‘deeply opposed though reasonable comprehensive doctrines.’ People may differ in their religious beliefs and general view of what constitutes a good and worthwhile life, but they are led by the deliberations to agree in Rawl’s account, on how to take note of those diversities among the members and to arrive at one set of principles of justice fair to the entire group.252

In regard to zakat affairs, in line with Rawl’s principles of justice, in zakat itself there is a way of assigning rights and duties in the basic institutions of society. These principles define the appropriate distribution of the benefits and burdens of social cooperation where the rich people (zakat payer) does have some duties to assist poor people or zakat

252John Rawls in Political Liberalism (1993 : 291) as quoted by Sen (2009 : 59) claims that

‘principles of justice’ will emerge in the original position with unanimous agreement : a. Each person has an equal right to a fully adequate scheme of equal basic liberties which is compatible with a similar scheme of liberties for all. b. Social and economic inequalities are to satisfiy two conditions. First, they must be attached to offices and positions open to all under conditions of fair equality of opportunity; and second, they must be to the greatest benefit of the least advantaged members of society. Equal personal liberty is given priority over the demands of the second principle which relates to the equality of certain general opportunities and to equity in the distribution of general purpose resources. The first part of the second principle is concerned with the institutional requirement of making sure that public opportunities are open to all, without anyone being excluded or handicapped on grounds of, say, race or ethnicity or caste or religion. The second part of second principle is concerned with distributive equity as well as overall efficiency, and it takes the form of making the worst-off members of the society as well off as possible. Therefore, according to Rawls (in Sen, 2009 : 64) after giving liberty its due and after recognizing the need to have openness in allowing people to compete equitably for offices and positions, the difference principle indicates the importance of equity in social arrangements so that attention is drawn particularly to the predicament of the worst-off people.



beneficiaries by disbursing part of his/ her wealth (which are actually not his or hers but belonged to God and poor people).

Zakat money, certainly, can not be accessed by all people. There is no equal right for everyone to be zakat beneficiaries, only those who belonged to eight types of zakat beneficiaries (or asnaf as stipulated in holy qur’an) are able to obtain zakat beneficiaries. At this stage, zakat does not meet with first Rawls’s principle of justice. Since public opportunities are open to all without anyone being excluded or handicapped on ground of race, ethnicity, caste or religion.

Yet, zakat meet with Rawls’ second principle of justice. The beneficiaries of zakat money are those who suffered from social and economic inequalities. The second part of Rawls’ second principle is concerned with distributive equity as well as overall efficiency, and it takes the form of making the worst-off members of the society as well off as possible. The difference principle indicates the importance of equity in social arrangements so that attention is drawn particularly to the predicament of the worst-off people. And, the beneficiaries of zakat are among those who have the worst social and economic conditions.

Moreover, the poor people do have their own rights to claim their parts in zakat money in the possession of zakat payer. Although, these rights in practice are difficult to be claimed in Indonesia since the state law does not oblige Indonesian Muslim to pay zakat, but the poor people’s rights over zakat money are still existed.

In regard to the idea of justice in Islam, it is possible to be seen in the Quran and the Prophet’s Muhammad own actions and implicit theory of justice that informs both the reading of those texts and their later applications. The Quran has frequent recourse to a vocabulary of justice which is grounded on the proposition that humankind is responsible for all those actions that lie within the exterior bounds set down by God. To pay one’s moral and fiscal debts and to temper retribution with mercy are qualities to which mankind is enjoined. A person who is just therefore engages in acts that are framed by awareness, born of the pursuit of reason over passion, of the harm that may be done to the community of believers by acting otherwise. The Qur’an (Sura VI : 152) actually enjoins the believers to be just even if it should be to a near kinsman, and demonstrates practical application when, for example, it recommends that contracts be written down in order to avoid subsequent doubt (Lawrence Rosen, 2000 : 154 – 155).



Rehman and Askari (2010 : 7) claim that the essence of an Islamic society is that it is rules-based system, centering on the concept of justice (Al’adl’). Broad measures to address perceived resource scarcity and achieve an equitable distribution of wealth and resource under the rubric of justice are three-fold, and include: a) the fostering of ethical and moral values such as justice, equality, honesty, etc.; b) economic tools and instruments such as zakah, sadaqah, and inheritance and property laws; and lastly c) the development of the institutional capacity and political will to insure that these principle and norms are adequately upheld. At the core of the model is the principle of justice while the principle equity, fiscal prudence, respect of property rights and hard work branch out from this central theme.

The Qur’anic conception of justice suggest that ultimately justice is connected with the interior life (batin) of the believer rather than with external appearance (zahir), and hence that true justice must be accompanied by the proper intentions. Repeatedly the Quran assures mankind that God is incapable of acting unjustly and that those whose well-intended acts accord with divine prescription will indeed receive divine reward. Since Islam is, to a very great extent, a religion and attendant set of cultures that, while acknowledging the distinction between the interior and the external, nevertheless presume in everyday discourse that overt acts give evidence of internal states. It is not surprising to find that those features of justice to which people refer link act and concept in a host of ways. Further, the concept of justice in Islam consists of three aspects : justice as regulated reciprocity, justice as equivalence, and justice as relational/ contextual are clearly represented in holy scripture and in received cultural orientations (Lawrence Rosen, 2000 : 155).

Amin Azis (in Uswatun Hasanah, 2011 : 109 – 110) claims that in Islamic perspective, justice is an absolute character of the God to his creatures, including human and the nature.

Social justice in Islam a humanitarian justice which covers all sectors of human life. Not only economic justice. Social justice in Islam is, therefore, a mixture between economy value, material, moral and spiritual values altogether (Uswatun Hasanah, 2011 : 110 – 111).

Islam is a complete teaching of both worship and human relation (muamalah), between basic ideology (aqidah) and practices, material



and spiritual, economic values, morality, world as well as hereafter affairs. In accordance with zakat, zakat is related with economic justice. Social justice can not be reached without economic justice (Uswatun Hasanah, 2011 : 114).

Is zakat provide justice for the people? The answer is yes. Zakat is a social instrument intended to provide social justice. Zakat money is taken from ones who meet the prerequisite to the poor people or those who belong to zakat beneficiaries. Zakat also provide justice for the zakat payers since only those who meet the prerequisite i.e his/ her wealth are larger than the nishab (minimum amount of zakatable assets/ income). There is a belief in Islamic teaching, the more you disburse your wealth as zakat, your wealth will not be reduced, in contrary, your wealth will be accrued.

In relation to Rawls’principles of justice, justice provide a way of assigning rights and duties in the basic institutions of society. These principles define the appropriate distribution of the benefits and burdens of social cooperation. The beneficiaries of zakat (mustahiq or eight types of ashnaf) clearly have their own rights to claim their zakat. Even though, such claims must not always been granted by duty bearers.

The state of Indonesia through Zakat Law No. 23/ 2011 and the Verdict of Constitutional Court Decision on judicial review to zakat law No. 23/ 2011 asserts its position as the primary duty bearer in zakat affairs. The court affirmed that Indonesia is a religious welfare state where the state must protect the citizen’s rights to access zakat fund. According to court’s decision, any efforts to criminalize unlicensed zakat administrator (amil zakat) will be considered as violation to Indonesian Constitution 1945.

Instead of the state as duty bearer, the non-state zakat agencies are also affirmed by the Zakat Law and Constitutional Court’s Decision as the duty bearer, as long as they meet the prerequisites stipulated by the Law. Another duty bearer, is of course the muzakki (zakat payers) or those who posses wealth exceeding the zakatable limit (nishab). However, even Indonesian Law on Zakat and Court’s Decision do not have provision to enforce such duty of the muzakki to dispense their zakat money to the beneficiaries. It remains largely depends on the initiative and sincerity of the muzakki.

IV.6. Conclusion



The impact of zakat institutionalization from rights-based approach contains some spirits and elements as follows: Long-term goals with a clear focus on people and their rights, Working together, Equity and non-discrimination, Accountability and Participation.

Rights-based approach is really a good tool in assessing development program and any program designated for people empowerment. All development program are certainly related or containing some elements of human rights.

And so is zakat. Zakat management strongly needs participation from the public. Zakat is not only private matter. Zakat is both private and public. Zakat is not a philanthropy or welfare. Zakat is right. Right of the beneficiaries to claim it and obligation of certain people to dispense it.

Zakat is private in term that zakat is part of worship which strongly stress on human faith and human sincerity. Nobody knows whether a person has zakatable assets rather than the him/ her. Even in a country which apply obligatory system where zakat administration is strictly controlled by the state (as in Saudi Arabia, Sudan, Iran and Malaysia), only the zakat payers know his/ her zakatable assets.

Zakat is public matters since the money will goes to certain group of people (eight of asnaf) which actually have their own rights to claim it. Zakat is also public matter since zakat is fully or partly managed by the state, or by some element of the states, in some muslim countries. The collection and disbursement of zakat is also intended to uphold social justice by distributing the wealth to needy people.

The management of zakat by private agencies is also need accountability. Zakat money is belong to people. Zakat is dispensed by trust from zakat payers directly to zakat recipients or through private zakat agencies. Trust is very important in managing the zakat. Zakat payers will dispense their share of wealth to any agencies only if they trust to the agencies. And trust is built by accountability and transparency also by the clarity of to where and whom the money were disbursed and utilized.

When it comes to long term goals with a clear focus on people and their rights, in case of Indonesia, the goals are there. If we take a look at the



Law on Zakat year 1999 and subsequently amended in 2011, the goals of zakat management in Indonesia are very interesting and idealistic.

However, the implementation is different. The collection of zakat money is very low compared to its potentiality. Also, there is a disharmony between state-based and non-state zakat agencies in administering zakat. Ones suspect others and vice versa. Hard to see them working together to administer the zakat, particularly after the enactment of Law No. 23/ 011 on Zakat Management and Government Regulation No. 14/ 2014 which haves been unfriendly welcomed by non-state zakat agencies.

In regard to zakat and justice, by employing John Rawl’s principles of justice, in zakat itself there is a way of assigning rights and duties in the basic institutions of society, where the rich people (zakat payer) does have some duties to assist poor people or zakat beneficiaries by disbursing part of his/ her wealth (which are actually not his or hers but belonged to God and poor people).

On the other hand, the poor people do have their rights to claim their parts in zakat money in the possession of zakat payer. Although, these rights in practice are difficult to be claimed in Indonesia since the state law does not oblige Indonesian Muslim to pay zakat, but the poor people’s rights over zakat money are still existed and still there. In other word, the poor people’s rights over zakat money are still rights and they have their own rights to claim them either to the state or non state actors, even though, in practice they will find it difficult to claim it.


Chapter VI Institutionalization Of Zakat And Social Justice

CHAPTER VIINSTITUTIONALIZATION OF ZAKAT AND

SOCIAL JUSTICE

VI.1. Introduction

Human rights is like a huge ship containing many smaller ships which are loaded with certain rights. Among of the small ship is social security rights. The social security right is also a less popular right compared with civil and political rights. When it comes to human rights, what people recall mostly are civil and political rights. Economic, social and cultural rights is usually perceived as secondary rights, and even social security rights.

Social security rights, theoretically, belongs to economic, social and cultural rights. The provision of this right is clearly embodied in Universal Declaration of Human Rights (UDHR) 1948 and subsequently in International Covenant on Economic Social and Cultural Rights (ICESCR) 1966. It also appears on many regional human rights instruments and national laws in many countries, including Indonesia.

This chapter will elaborate the relationship between social security, human rights and rights-based approach as a theoretical background for discussing the zakat affairs. The objectives of this study, among other things, are to find out whether institutionalization of zakat contribute to social security, and to scrutinize whether social security is simply a philanthropy given and secured by the state, or it can be claimed and enforced in the name of ‘rights’by the people or by its beneficiaries.

VI.2. Right to Social Security in International and Regional Instruments

2.1. Economic Social and Cultural Rights

Economic, social, and cultural rights constitute three interrelated components of a more comprehensive package, with obvious links to civil and political rights. As human rights and fundamental freedoms are indivisible and interdependent, equal attention should be paid to the implementation, promotion, and protection of civil



and political, and economic, social, and cultural rights (Symonides, ed., 2002: 119 – 120)

At the core of social rights is the right to an adequate standard of living. The enjoyment of these rights requires, at a minimum, that everyone shall enjoy the necessary subsistence rights; adequate food and nutrition, clothing, housing and the necessary conditions of care. Closely related to this right is the right of families to assistance.

In order to enjoy these social rights, there is also a need to enjoy certain economic rights. These are the right to property, the right to work, and the right to social security. Economic rights have a dual function. Most clearly demonstrated in regard to the right to property. On the one hand, this right serves as a basis for entitlements which can ensure an adequate standard of living while, on the other hand, it is a basis of independence and therefore of freedom.

The right to social security is essential, particularly when a person does not have the necessary property available, or is not able to secure an adequate standard of living through work, owing to unemployment, old age or disability.

Apparently, right to social security tends to be ‘more universal’ than those rights in civil and political rights. It is easier for any states to recognize right to work, right to have affordable housing, right to have health insurance. Yet, people might be different in addressing the freedom of belief, conscience, right to abortion, rights of LGBT and so forth. Take an example of Indonesia. Presently some Indonesian people, especially those who belongs to Sunni Muslim, have expressed their disagreement to live together, coexistent, with people from other sects such as. Ahmadiyah People and Shia People in some places. In many cases, these disagreements frequently lead to violences, i.e. arson, killing, destroying the houses and persecution.

However, the same disagreements have not been rarely took place when it comes to right to social security. Less people argue or challenge to this right. Inasmuch, whoever we are, wherever we live, whatever our religions/ beliefs, we do need some form of social security to secure and guarantee our life, especially in time



of sorrowness. This kind of rights is really have universal character that render it to be universally accepted.

2.2. Social Security

Social security is a form of social protection administered by the state to provide its citizens a guarantee of security of life as established in the 1948 UN Declaration of Human Rights and ILO (International Labor Organization) Convention No 102 year 1952.253

The ILO definition of social security (1998) is as follows:“…Social security is the protection a society provides individuals through a set of public policies against social economic pressures that would otherwise cause loss of income as a result of sickness, maternity, work accident, temporary invalidity, disability, old age, and premature death, and medical treatment, including the provision of subsidies for family members as needed.”

The ILO definition of social security is universal, and a variety of approaches are taken to its implementation, depending on the country concerned. Later on, the ILO conference in 2001 the International Labour Conference, composed of representatives of States, employers, and workers, affirmed that social security “is a basic human right and a fundamental means for creating social cohesion”.254

Bambang Purwoko (1999) mentioned that there are many definitions of social security. From the social insurance perspective, social security is a technique or method for addressing the risk of industrial relations based on the law of large numbers. From a social assistance point of view, social security means income support for the less well-off for their daily needs. Therefore, social security is:

253Available at http://www.ilo.org/dyn/normlex/en/f?

p=1000:12100:0::NO::P12100_INSTRUMENT_ID:312247254

At 89th session, report of the Committee on Social Security,resolutions and conclusions concerning social security, available at ESCR Commission general

comment to Rights to Social Security http://daccess-dds-ny.un.org/doc/UNDOC/GEN/G08/403/97/PDF/G0840397.pdf?OpenElement


http://daccess-dds-ny.un.org/doc/UNDOC/GEN/G08/403/97/PDF/G0840397.pdf?OpenElement

http://www.ilo.org/dyn/normlex/en/f?p=1000:12100:0::NO::P12100_INSTRUMENT_ID:312247

http://www.ilo.org/dyn/normlex/en/f?p=1000:12100:0::NO::P12100_INSTRUMENT_ID:312247


b) an economic factor such as consumption, savings, and subsidies or concessions for the redistribution of income;

c) a state instrument for means-tested redistribution of social-economic risks;

d) a poverty reduction program, followed up by community empowerment;

e) A system of basic protection against the partial loss of income as a consequence of the risks of industrial relations.

What is the function of social security? Social security has three pillars:1. Social assistance/ service; this system is funded from taxes

by the state or from contributions from those who are better off;

2. Compulsory savings; everyone is required to pay into a provident fund;

3. Social Insurance; everyone makes contributions or pays premiums, which are compulsory. Premiums may be paid by another party or by the government, in the case of poor people. This system of social insurance is the best, sufficient funds are collected, and it is the most commonly used system in the world.

As a system of basic protection for workers, including members of the general public hit by disaster or misfortune such as poverty as a result of industrial relations or otherwise, social security benefits include:(a) cash compensation to support the income of the main

breadwinner;(b) financial compensation in the event of work accident or

premature death;(c) Health services and aids.

Initially, social security functions to minimize economic insecurity, before moving towards achieving economic insecurity. Economic insecurity is the employment condition marked by uncertainty about job opportunities coupled with low wages, and eventually to the loss of incomes resulting from misfortune that is not offset by a comprehensive social security system and to costly health services, which frequently force people to outlay additional expenditure that cuts their spending money.



What should social security offer? Most people will agree on the following: it has to provide an income to those who are deprived of it; it has to guarantee a replacement income to those who are temporarily out of employment; it has to provide suitable employment or a replacement income for those who have permanently lost their employment; it has to offer possibilities of social integration to those who are handicapped; and it should provide the necessary care for those who cannot lead an independent life. These must be the benefits to be provided by social security in present-day society. Social security has to offer every person sufficient resources for a living according to human dignity, including health care; offer workers (employed and self-employed) replacement incomes at the end of their working life, or when their earnings are interrupted because of sickness, accident, maternity, invalidity or unemployment; contribute to social integration of all residents and to integration of all potential workers into the labor market (Langendonck & Put).

Danny Pieters (2006) defines social security as the compilation of benefits in cash and in kind, including services, granted to some persons. The arrangement as granting protection against the insecurity resulting from the risks related to the ascent of the industrial society and its development or, in short, against social risk. In other words, Sinfield (2006) defines social security as a situation of complete protection against the loss of resources while Berghman (2006) perceives it as a situation of complete protection against human damage.

Social security systems in many developed countries consist of a combination of two major programs: social insurance and social assistance. Characteristics of social insurance programs arethey are financed by contributions, they generate "earned" benefits for workers and their families, and they provide for various contingencies that interrupt or stop earnings (such as illness, old age, maternity and unemployment). On the other hand, characteristics of social assistance programs arethey are non-contributory and met from general revenues; they are designed to supplement the incomes of particularly vulnerable groups (elderly and disabled). In some countries they provide a "safety net" for those who are not able to access social insurance benefits. The benefits and eligibility conditions vary from country to country. The benefits may be either in cash or in-kind in the form of food aid.



The schemes include "income replacement schemes" or "cost compensation schemes" that provide complete or partial com-pensation for family care, health care, funeral costs, etc. (University of Minnesota, 2008).

Widodo Suryandono (2006) distinguishes social security implementation in a state as having two branches, employing social insurance method or social assistance method. Social insurance method is employed if in undertaking this scheme, the participation of employees and employers are needed. So that the fund collected to finance the scheme are coming premium given by employer and employees. Social assistance method, on the other hand, is employed when the said social security schemes are mandated by the constitution for those who entitle for such rights. The social assistance fund, therefore, is coming from the government.

Mukul G. Asher (1994 : 1 – 2) mentioned that social security involves financing individuals in their old age so as to alleviate poverty, prevent a significant and abrupt fall in the standard of living upon retirement, death or disability, and to make adequate health care accessible and affordable. Governments get involved in the provision of social security for one or more of the following reasons (Rosen, 1988 in Asher, 1994): First concerns market failure in certain insurance markets due

to adverse selection and asymmetric information. The second reason concerns paternalism. The usual

argument is that in the absence of compulsion, a significant proportion of the population will not save enough for old age due to an excessively high rate of discount applied to future as compared to present consumption.

The third reason concerns economies in decision making and administrative costs which arise from government sponsored as compared to individual decisions concerning social security.

Fourth, the governments get involved in social security to redistribute income to ensure a socially adequate level of consumption by the elderly. In addition to the economic and technical reasons noted above, social security arrangements in a given country are also closely related to the compulsion and desires of the ruling coalition, and in pluralistic democracies, to interest-group politics. Thus, political factors



have also historically played a part in the government’s role in social security.

James (in Asher, 1994: 2 -3) affirms that there are four pillars which may be identified for providing social security. The first pillar mandates savings by individual for their retirement. The second is redistributive pillar to insure against low incomes earned during the working years. A third pillar provides fiscal incentives for non-mandatory savings. A fourth pillar consists of purely voluntary personal savings and voluntary family and other arrangements. The fourth pillar, which is informal and traditional arrangements, has two major advantages. First it does not impact on the government budget. Second, it is decentralized, personalized and flexible. In economies with fairly small organized sectors and low per capita income, this method usually predominates (Asher, 1994: 3).

In Indonesian situation, the challenges of formal social security (those which are conducted by formal agencies) are a strong reliance on the extended family and communities to provide an informal social protection net against loss of income, ill health or other misfortunes; also, limited reliance on employers through labor legislation, reinforced by collective agreements, to directly provide benefits such as wages during sickness and maternity and on termination of employment (Lindenthal, 2004 : 17)255

The levels of awareness of Indonesian people to formal social security are relatively low. From Lindenthal (2004: 17) we may understand that part of the reason is because Indonesian people still rely on their extended family and communities to provide an informal social protection. At this point, we may categorize zakat as one of informal social protection belonged to Indonesian Muslim people, which, to certain degree, render some people not to strongly rely on state social security mechanisms.

2.3. Social Security and Human Rights

The right to social security is recognized, since the end of the Second World War, as a basic human right. Nobody doubts its

255available at http://www.uni-koeln.de/wiso-fak/soposem/roesner/pdf/Sose2007_SopoII/Social

%20Protection%20Policy%20Options%20for%20INO%20-%20UNSFIR%202005.pdf157



fundamental importance. Social security is one of the greatest achievements of modern society, even if it is certainly not fully available to every human being on this planet. For those who have access to it, social security means freedom. To a certain extent. Of the perennial anxiety about present and future means of existence. This is a form of real freedom, to which people are very strongly attached. But this important right singularly lacks a clear definition. In the international instruments, which define this right, it is stated in general terms, without further specification. It is far from clear what could be the precise obligations of States who ratify the international instruments concerning this right, and/or who incorporate this right in their national Constitution (Langendonck & Put, 2006).

The notion of Langendonck and Put is interesting, that ssocial security is one of the greatest achievements of modern society, even if it is certainly not fully available to every human being on this planet. This notion reflects the real situation. The states respect this right differently. Some countries come up with universal social security system and other with institutional and residual systems. Some countries fully manage the social security affairs while others are partly manage or even let them administered by civil society (as in residual system).

Article 22 of the Universal Declaration of Human Rights (UDHR) simply states that "Everyone, as a member of society, has the right to social security". This is further elaborated upon in article 25, which says in its first section: "Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control." Article 9 of International Covenant on Economic Social and Cultural Rights (ICESCR), concluded in the United Nations on 19 December 1966 repeats the wording of UDHR concerning "the right of everyone to social security", with the addition: "including social insurance" (Langendonck & Put, 2006).

Apart from the general statement that social security includes social insurance, the scope and nature of social security is not defined under the ICESCR covenant. Article 9 of the ICESCR



however refers to the ILO Social Security (minimum standards) Convention No. 102 of 1952 and also request each State Party to indicate which of the following branches of social security exist in their country: medical care, cash sickness benefits; employment injury benefits, unemployment benefits; and family benefits. This list clearly indicates that the social security system is meant to be an alleviate arrangement for ensuring a guaranteed income and basic sustenance from the State to labor inactive members of society who may for obvious reasons not be able to earn income or sustenance through work. This in essence is aimed at protecting the dignity of the individual in such situation and preventing him from having to engage in the undignified act of begging or resorting to other degrading and unacceptable means of sustenance (Baderin, 2005: 188 – 183).

The brief text of article 9 of the International Covenant on Economic, Social, and Cultural Rights must be seen against the background of the much more developed ILO standards. The principal ILO instrument in the field of social security is the Social Security (Minimum Standards) Convention of 1952 (No. 102). This menu-type Convention is structured around nine specific branches of social security : (1) medical care; (2) sickness benefit; (3) unemployment benefit; (4) old age benefit; (5) employment injury benefit; (6) family benefit; (7) maternity benefit; (8) invalidity benefit; (9) survivors ‘benefit (Symonides, 2006).

In its interpretation of the vague and brief Article 9 of the International Covenant on Economic, Social, and Cultural Rights relies on the branches of social security listed in the ILO convention in the guidelines drawn up for state reporting. Under article 5(e) (IV) of the International Convention on The Elimination of All Forms of Racial Discrimination, the right to social security and social assistance shall be guaranteed without discrimination on the ground of race. The Convention on the Elimination of All Forms of Discrimination against Women lists several forms of social security which must be provided for women, taking gender specific needs and obstacles into consideration.



In the European Social Charter256, the general provision is found in article 12, which uses the term ‘social security’ in the same meaning as the ILO and article 12 (2) refers to ILO Convention No. 102 as a minimum standard to be used under this Charter. Under article 12 93) states undertake ‘to rise progressively’ the system of social security to a higher level. Social and medical assistance for those in need is provided for by article 13. The European Social Charter guarantees family benefits (article 16) and services for mothers and children (article 17). Article 14 protects the rights to social welfare services. The 1988 Additional Protocol to the European Social Charter has, in its Article 4, a provision on the right of elderly persons to social protection.

The American Declaration of the Rights and Duties of Man257 provides in article 16 for the right to social security, specifying unemployment, old age and mental or physical disability as situations in which the right is actualized. The American Convention on Human Rights has a general clause on economic, social, and cultural rights, calling for their progressive realization (article 26). But the Additional Protocol in the Area of Economic, Social, and Cultural Rights of 1988 contains more detailed provisions on the right to social security on the basis of Article 16 of the American Declaration, adding death of beneficiary, work accidents, occupational diseases and childbirth, to unemployment, old age and mental or physical disabilities –situations in which the right applies.

Basically, international human rights recognize three bases to ensure an adequate standard of living: property, work, and social security. The organizations of social security can take different forms and scope. The minimum approach has evolved from the poor relief of previous centuries and extends therefore only to those who do not manage to obtain a living through the operation of the market.

256 European Social Charter is a Council of Europe treaty which guarantees social and

economic human rights. It was adopted in 1961 and revised in 1996 (www.coe.int/T/DGHL/Monitoring/SocialCharter/)257

Adopted by the Ninth International Conference of American States, Bogotá, Colombia, 1948, available at www.cidh.oas.org/Basicos/English/Basic2.american%20Declaration.htm


http://www.cidh.oas.org/Basicos/English/Basic2.american%20Declaration.htm

http://www.coe.int/T/DGHL/Monitoring/SocialCharter/


The second approach is to organize social security by way of insurance to be paid by workers and employers, but with more or less extensive in scope, concerning insurance against accidents in work and insurance against disability, or periods of unemployment. For the jobless, and the more or less self-employed, and, particularly those employed in the so-called ‘informal sector’, such insurance cannot provide security. Consequently, it may have to be combined with the first type of ‘poor relief’, the so-called ‘safety net’. To cater for those who fall outside.

The more advanced systems of social security extend to everyone, based partly on contributions made obligatory by workers and employers, but supplemented by state funding derived from taxation and other source of income. Such comprehensive social security may sometimes extend to coverage of disability, unemployment, old age, child allowances and leave with pay during periods of pregnancy and childbirth.

2.4. State Obligation

The Universal Declaration of Human Rights (UDHR) envisaged that the rights contained therein shall be enjoyed by everyone throughout the world. The rights must be absorbed into the legal, administrative, and political culture of nations, first by a recognition that they are achievable, ideals, and then by implementation in national law and management through relevant political and social reforms. Global institutions had to be set up to monitor the implementation of human rights worldwide and to bring about cooperation in the fields of economic, social, and cultural matters to establish conditions for their full enjoyment throughout the world (Symonides, 2002 : 124).

The UDHR was initially an expression of ideals to be achieved. The process of transforming these ideals into ‘hard law’ (positivization in legal language) at the international level started with the adoption of the two international covenants adopted in 1966. While this created obligations for states under international law, the main task was to ensure that the rights were incorporated into national law and administrative practice. This transformation, whether into constitutions or into statutory law, can be fully



achieved only when it goes hand in hand with the evolution of human right culture where individuals as well as politicians, administrators and security forces know and accept, not only their own rights, but also their duties flowing from the rights of the other members of the community on a basis of equality (Symonides, ed.,: 2002: 124).

Under international law, obligations for human rights are primarily held by states. When states seek to implement these obligations in national law, they are also required to impose duties on persons subject to their jurisdiction. Such duties include the requirement to respect the rights of other persons, such as the duty to respect the property of others which is imposed through criminal law provisions on theft, and other measures. Duties have also to be imposed on all individuals to contribute to the common welfare, including taxation. The compliance with such duties makes it possible for the state to assist and to fulfill (provide) in ways which enable everyone to enjoy his or her economic, social, and cultural rights.

When we talk about Indonesia, Indonesia despite having the largest muslim population of any country has played only a minor role in the international debate regarding human rights, moreover on relation of Islam and human rights. None of the Indonesian governments from the early 1950s through to the late 1990s were driven by an Islam-oriented diplomatic or human rights agenda.258

Therefore, In Indonesian situation, the process of transforming UDHR as soft law into hard law in Indonesia has just begun in 1999 when the country firstly enacted Human Rights Act No. 39// 1999 and followed by the second amendment of 1945 Constitution in 2000 which inserted another new ten provisions in article 28 concerning human rights. However, the legalization of social security into national laws took place far before the human rights act of 1999. The law on social security for employee was firstly enacted in 1992 with the name of Law of Social Security for Employment (Jaminan Sosial Tenaga Kerja), followed by 2004 law on National Social Security System and 2011 law on National Agency for Social Security. Meanwhile, The first national law on

258Greg Fealy, Indonesian Islamists Perspectives on Human Rights in Shahram Akbarzadeh

and Benjamin MacQueen, Islam and Human Rights in Practice Perspective Across the Ummah (Oxon : Routledge, 2008) page. 144.



zakat, itself, was enacted in 1999 and subsequently amended in 2011.

2.5. The Roles and Levels of State Involvement

Human rights are not belonged to the state. Human rights are for everyone. However, to some extent, states do have responsibility to promote, protect, respect and fulfill human rights of their people. States obligations can be seen at various levels (Symonides, ed., 2002: 127 – 128): At primary level, respect the resources owned by the

individual, his or her freedom to find a job and the freedom to take the necessary actions and use the necessary resources –alone or in association with others- to satisfy his or her own needs.

At secondary level, state obligations mean to protect the freedom of action and the use of resources against other, more assertive or aggressive subjects –more powerful economic interests, such as protection against, again unethical behavior in trade and contractual relations, against the marketing and dumping of hazardous or dangerous products. This protective function of the state is the most important aspect of state obligations, also with regard to economic, social, and cultural rights, and it is similar to the role of the state as protector of civil and political rights.

At the tertiary level, the state has the obligation to facilitate opportunities by which the rights listed can be enjoyed. At the fourth and final level, the state has the obligation to fulfill the rights of everyone under economic, social, and cultural rights. The obligation to fulfill could thus consist of the direct provisions of basic needs, such as food or resources which can be used for food (direct food aid, or social security) when no other possibility exists.

In regard to zakat affairs, A.M Saefuddin mentioned that there are five instrumental values of Islamic economy, as follows : (1) zakat; (2) prohibition of riba/ interest; (3) economic cooperation; (4) social security; and (5) the role of the state. The role of the state is very significant in implementing Islamic economy values, especially in legal aspect, planning and monitoring of resources and funds allocation and distribution; the distribution of income and wealth as well economic growth and stability (Hasanah, 2011 : 158 – 159).



At this stage, zakat is related to social security, since both zakat and social security are aimed to combat the poverty. Also, social security is perceived as both state and people’s obligation. Social security is belonged to Allah which then transferred to human. By conducting social security (including zakat), the human is expected to be more generous and closer to their Creator (Allah) , their wealth become clean and growing, and their greediness expected to dissapear (Hasanah, 2011 : 158).

However, according to Saefuddin (in Hasanah, 2011), both zakat and social security are best if implemented mainly by the state, since the state does have legal and political power to execute such big business.

The next question is whether the Republic of Indonesia is eligible and entitled to handle these ‘big business’ since Indonesia itself is not an Islamic country and also not having an Islamic governance. Therefore, the legal and political decision of the state to secularize Whereas, to some extent, to execute those five instrumental Islamic economy values, do need the support and facilitation from Islamic governance, equipped by the enabling legal grounds.

2.6. Levels of Obligation on the Rights to Social Security

The level of state obligation to the rights of social security can be apprehended as follows: The obligation to respect. This level is not applicable with

regard to the social security obligation. The obligation to protect. This is a significant part of the

obligation arising from social security. The obligation to ensure that in contractual labor relationships, provisions are made for social insurance. It is also part of the protective function to ensure that these insurance arrangement are effective, and that guarantees are established so that, even in cases of bankruptcy, the necessary payment are available to beneficiaries.

The obligation to facilitate. To the extent that ‘social security’ is based on social insurance, a state may undertake certain tasks in order to complement the contributions made by the worker and the employer by way of establishing the



institutions administering the insurance and also by adding. Through state funding, to the contributions made by the worker and the employer.

The obligation to fulfill. The minimum obligation could consist of providing assistance to those who are not covered by social insurance arrangements. This is also follows from article 11 of the International Covenant on Economic Social and Cultural Rights on the right to an adequate standard of living for everyone, to which we shall return.

More specifically, on ESCR general comments No. 19 to rights of social security, the obligations of state party to this rights is clearly stated as follows :259

States parties have immediate obligations in relation to the right to social security, such as the guarantee that the right will be exercised without discrimination of any kind (article 2, paragraph 2), ensuring the equal rights of men and women (article 3), and the obligation to take steps (article 2, paragraph 1) towards the full realization ofarticles 11, paragraph 1, and 12. Such steps must be deliberate, concrete and targeted towards the full realization of the right to social security. The right should be given appropriate priority in law and policy. States parties should develop a national strategy for the full implementation of the right to social security, and should allocate adequate fiscal and other resources at the national level. If necessary, they should avail themselves of international cooperation and technical assistance in line with article 2, paragraph 1, of the Covenant.

In relation with social security rights, the states to some extent do have their responsibility to promote and to fulfill the social security rights of their people if the right are still undeveloped. States have responsibility to respect and to protect if people do have their own social security mechanisms. Just respect and protect them, do not interfere too much.

Zakat, on the other hand is an unique social security mechanism. In one hand it is religious mechanism intended to uphold social

259ESCR Committee General Comments to Right of Social Security, At 89th session, report of

the Committee on Social Security, resolutions and conclusions concerning social security, available at http://daccess-dds-ny.un.org/doc/UNDOC/GEN/G08/403/97/PDF/G0840397.pdf?OpenElement




justice. On the other hand zakat is also regulated by the state, such as in Indonesia, The institutionalization of zakat by the state has raised questions whether the same condition (state obligation toward social security rights) also apply to zakat practice.

The optimal fulfillment of obligations would be achieved by organizing a comprehensive social security system which combines social insurance and social assistance into a comprehensive whole. This model, which corresponds to the “welfare state”260 model, was first introduced in the Beveridge Commission261 in the UK in 1941 and has become the paramount system, particularly in the Nordic countries.

The rights to social security covers three different options: social assistance which is provided only to the needy and which often tends to be of a very minimal scope; social insurance which is based primarily on the more or less obligatory contributions made in working relationships under national laws; and social security in its full sense, which combines social assistance and social insurance into a comprehensive and universalistic approach.

VI.3. State and Non State Social Security

260 Welfare State is concept of government in which the state plays a key role in the protection

and promotion of the economic and social well-being of its citizens. It is based on the principles of equality of opportunity, equitable distribution of wealth, and public responsibility for those unable to avail themselves of the minimal provisions for a good life. The general term may cover a variety of forms of economic and social organization ( www.britannica.com/EBchecked/topic/639266/welfare-state)

261Most social work in western European countries is currently delivered within the context of

the welfare state, whose origins can be traced back to the work of Sir William Henry Beveridge at the time of the Second World War. Early on during the Second World War, the Minister of Health commissioned a committee to investigate the state of social services and welfare benefits in the UK and invited Beveridge to be chair. In 1942, the report Social Insurance and Allied Services was published, which quickly simply became known as ‘the Beveridge report’. It was followed in 1944 by a report entitled Full Employment in a Free Society. Both reports were to have far reaching consequences, way beyond the government’s initial intentions. Beveridge’s work labeled the main challenges for social policy as ‘the five giants’: squalor, ignorance, want, idleness and disease. Social insurance was but one element introduced to address these challenges. Equally important were education, health care, and housing and employment services. Social workers are currently active in all of these sectors. Beveridge argued for the state to have a central role in guaranteeing the necessary resources for people`s welfare, as well as being the main provider of services (www.historyofsocialwork.org/eng/details.php?canon_id=134)


http://www.historyofsocialwork.org/eng/details.php?canon_id=134

http://www.historyofsocialwork.org/eng/details.php?canon_id=134

http://www.britannica.com/EBchecked/topic/639266/welfare-state

http://www.britannica.com/EBchecked/topic/563762/state


Social security as an instrument of social welfare is not established solely by state legislation. There is various social security instruments existed in this world in various forms. From a traditional one to a complex and modern one. From a state-based, community-based or religious-based social security instrument.

The United Nations, in this regards is ESCR Commission, acknowledged other mechanisms instead of ones introduced by UN, by stating : “Other forms of social security are also acceptable, including (a) privately run schemes, and (b) self-help or other measures, such as community-based or mutual schemes. Whichever system is chosen, it must conform to the essential elements of the right to social security and to that extent should be viewed as contributing to the right to social security and be protected by States parties in accordance with this general comment.262

Hence, the prerequisites for other social security mechanisms to meet UN standard are they must conform to the essential elements of the right to social security and to that extent should be viewed as contributing to the right to social security and be protected by states parties. Fortunately, Republic of Indonesia has ratified the International Covenant of Economic, Social and Cultural Rights since 2005 (through Law No. 11 year 2005). Therefore, Indonesia is a state party to ICESCR.

It is always important to take a look at social security system existed in Indonesia for the following reason : Indonesia is third largest democracy (after India and USA) and fourth largest country in the world (by population after China, India and USA) and at the same time bear the title as the most populated Muslim country in the world.

Yet, even though almost 90% of Indonesian population is Muslim, the country itself is not an Islamic state263. Indonesian Constitution of 1945 clearly states that Indonesia is a Unitarian state (not a federal one), a

262General Comment No. 19 to Rights of Social Security (Art. 9) UN Commission of ESCR on

39th Session, 3 – 27 November 2007, available at http://daccess-dds-ny.un.org/doc/UNDOC/GEN/G08/403/97/PDF/G0840397.pdf?OpenElement accessed on 23 July 2013.

263Islamic state in this term is a country which has a constitution or legal system strongly

influenced by Islamic principles.167




republic and underlying the Pancasila (five pillars) as state basic foundation.

The ideology of Pancasila, actually, tries to accommodate all beliefs, religions, cultural and local values in the ‘big ship’ called Indonesia. Actually, Pancasila is an Indonesian attempt towards national identity (Wang, 2001). As clearly mentioned in the constitution (although in practice it might be different) Indonesian people are free to exercise their own beliefs, religions and their cultural values as long as they do not undermine and violate the Pancasila’s values and Indonesian Laws. Pancasila is a doctrine laid down by former President Sukarno in his speech on June 1st, 1945. Pancasila contains five principles, e.g. (Wang, 2001): Kebangsaan (nationalism); Kemanusiaan (international humanism) Kerakyatan (representative government or democracy); Keadilan Social (social justice), and Ketuhanan(belief in One Supreme God).

Indonesia is not just plural in term of socio, cultural, or political contexts. The legal system is also plural, alias, there is more than one legal system apply in this country instead of the national law produced by the state. The source of laws in Indonesia are from western law (particularly Western European Law), customary laws (local laws or ethnic laws or usually called as adat law) and religious laws (from various religions and beliefs but Islam is the strongest religions which has greatly influenced Indonesian legal system).

Arskal Salim (2007) mentions that in the post-independence Indonesia, the colonial legacy of legal pluralism continued some modifications. While adat legal institutions (peradilan desa) were largely eliminated in the 1950s for the sake of Indonesian unity and integrity, adat norms are retained and applied by the general state courts (pengadilan negeri). On the other hand, limited areas of Islamic Sharia are upheld by the religious state court (pengadilan agama or mahkamah syar’iyah in Aceh Province). With this legal policy, Indonesia has embarked on the path towards legal pluralism, allowing a variety of legal sub-systems to be operative in the realm of the single sovereign power of the state (Salim 2006, Lubis 2003). These plural legal orders, paradoxically, have been founded on the Indonesian legal policy that promotes the modernization of law, in which legal centralism and legal positivism are the key themes. This paradox is not only existing in the formal legal institutions, but also



observable in Indonesian national legislations. The Basic Agrarian Law264 (Law No. 5 year 1960) and the Marriage Law (Law No. 1 year 1974)265 are clear examples of how the policy of legal centralism results in the practice of legal pluralism.

In fact, since early 1990s, Indonesian legal policy has dramatically shifted to include the principle of so-called 'legal distinction', where particular groups of citizens would have certain specific laws applicable for them exclusively (Salim and Azra, 2003). This situation has led Indonesia to further develop a national legal system that segregates citizens based on their respective religious backgrounds (Salim, 2006), thus paving the way for legal pluralism to deepen in which religious identity turns to be an important legal basis in some areas.

This ‘legal distinction’, where particular group of citizens can have their own laws can be a positive or negative development of law. It is positive since it accommodates certain groups’ needs and wants for certain issues. For instance, Indonesian Law No. 1 year 1974 on Marriage, Law No. 7 year 1989 on Islamic Court, Law No. 38 year 1999 on Zakat Management and Law No. 17 year 2008 on Islamic Banking are actually special laws originated from Sharia or Islamic Principles, specifically made for Indonesian Muslim people to accommodate the Muslim citizens’ needs and wants.

Not only the central government in Jakarta, many local government in Indonesia (either provincial, regency or cities governments) welcomed this ‘politic of accommodation’ by enacting some local ordinances related to religious issues, mostly to Islamic Issues (usually called as Perda Sharia or Peraturan Daerah Shariah or Local Ordinances Influenced by Sharia Laws). For example, local ordinance on zakat management, Muslim attires, reciting and writing of holy Qur’an in some regencies and cities. The Aceh province has the largest number of sharia-based local ordinances which cover not only civil matters but also public and criminal matters. Instead of “sharia-based local ordinances’,

264The Basic Agrarian Law or Undang-Undang Pokok Agraria is an attempt to unify Indonesian

land laws. It accommodated the adat or customary land tenure as source of land law.265

The marriage law of 1974 is also an attempt to unify Indonesian marriage laws. The main sources of Indonesian marriage laws are Islamic law, customary law and western civil law. Islamic laws heavily influenced this law rendered some MPs from secular political parties walked out during the enactment of this law in 1973.



in Manokwari City, West Papua province, the local parliament used to propose the local ordinance bill in 2005 : ‘Manokwari as City of Holy Bible’, however the bill has never been passed due to strong rejection from other member of local parliaments coming from other religious groups instead of Christianity.

Aceh province is a unique story. In order to annihilate the separatist movement in Aceh (in the name of Gerakan Aceh Merdeka or Free Aceh Movement) and to ease the integration of Acehnese people into the Republic of Indonesia, Indonesian government granted Islamic Law for certain jurisdictions which apply only to Aceh province. The special law for Aceh started by 1999 when the government enacted The Law on Distinction of Aceh, followed by Law on Special Autonomy of Aceh in 2001 and Law on Governance of Aceh in 2006. The first two laws are umbrella laws which enabled some local ordinances (qanun) related to Sharia Law applied in Aceh. The last law was enacted in 2006 as a mandate of MoU between Indonesian Government and Free Aceh Movement, to establish peace in Aceh province.

Apart from its positive development as a politic of accommodation, the certain laws designated for certain groups also bring negative impact. Negative in the sense that not all groups will certainly be accommodated. There will be some groups, especially the minority ones, which will be excluded. Why? Because the minority groups are usually have less pressure and few representatives both in government or parliament. Therefore, their voices are frequently unheard.

3.1. Social Security in Indonesian Law

In Indonesian situation, the definition of social security has legal, political, and economic aspects.

Legal Aspect: In Indonesia, social security is mandated by article 5 clause (1), article 20, article 28H clause (1), clause (2), and clause (30, and article 34 clause (10 and clause (2) of the 1945 Constitution and its 2002 amendment. Therefore, social security has to do with the state’s responsibility to implement the mandate of the said articles and laws; namely to provide a basic system of protection against social economic risk.



Political aspect: social security is an effort towards the formation of a welfare state, which is the political will of government as enshrined at 1945 Constitution.

Economic aspect: social security is concerned with the redistribution of income through a means-tested mechanism of compulsory participation. A national security system is required for state security and to increase people’s purchasing power, thus creating long-term economic security.

Rights of Social Security is guaranteed in Indonesian Law on Human Rights No. 39 year 1999:Article 41(1) All citizens are entitled to social security needed for a decent

life.(2) All differently-able persons, elderly people, pregnant woman,

and children are entitled to have some kinds of priorities and special treatment.

Article 42All citizens who are elderly people and differently-able are entitled for nursery, education, training, and special assistance provided by the state, solely to guarantee their decent life and human dignity, to enhance self-confident, and ability to participate in society, national, and state’s life.

Regarding rights to exercise Islamic social security, or whether people can exercise their own social security based on their own beliefs/ values, the explicit provisions are not readily available rather than these provisions at Law on Human Rights 1999, as follows:

Article 22(3) Everyone are free to observe their own beliefs or religions

and to conduct the worship according to their beliefs and religions.

(4) The state guarantee the freedom of everyone to observe their won belief or religions ant to conduct the worship according to their beliefs and religions.

The umbrella of Indonesian laws on social security are Indonesian Law No. 11 year 2009 on Social Welfare (Kesejahteraan Social)



and Indonesian Law No. 40 year 2004 on National Social Security System (System Jaminan Sosial Nasional). However, article 5 clauses (2), (3) and (4) of Law No. 40 year 2004 had been challenged to Indonesian Constitutional Court by some local social security providers by arguing that the said article was in contrary with their constitutional rights. The article mentioned that social security providers are limited only to four state-based and Jakarta-based social security providers namely: PT Jamsostek, PT Askes, PT Taspen and PT ASABRI.266

Partly as a result of the ruling of judicial review of Law No. 40 year 2004 and driven by the need to simplify and meet the needs of the Indonesian people to social security, the state further enact the Law No. 24 year 2011 on Badan Penyelenggara Jaminan Sosial (Social Security Administrator Agency). The law clearly states that there will be only two kinds of social security administrator namely: Social Security Administrator for Health (or BPJS Kesehatan) and Social Security Administrator for Employment (or BPJS Ketenagakerjaan). The four existing state-based social security bodies must be transformed into the new bodies by January, 1st

2014.

In addition to national laws on social security, the country has also adopted numerous international human rights instruments related directly and indirectly to social security rights, such as International Covenant on Economic Social and Cultural Rights, which was ratified by Indonesia in 2005 and subsequently became Indonesian Law No. 11 year 2005.

The Law No. 11 year 2009 has just replaced the outdated Law No. 6 year 1974 on Basic Regulations of Social Welfare. This new law has clearly come with new approaches and definition of social security. While the previous law defines `jaminan social` (social security or social assurance) as the whole protection and

266 Within four months of being passed, on February 21st, 2005, the National Social Security

System Law had been presented for judicial review , the ruling on which was read by the Constitutional Court on August, 31st 2005. This judicial review was proposed by representatives of local parliaments (Jawa Timur Provincial Parliament, the management of the Jawa Timur Province Public Health Insurance Administering Body, the management of the Rembang District Public Health Insurance Administering Body and the management of the Jakarta Public Health Insurance Administering Body) who were of the opinion that thrir constitutional rights and responsibilities were undermined by the coming into force of the National Social Security Law (Indonesian Cooordinating Ministry of Social Welfare, 2006 : 5).



maintenance of social welfare for citizens which are managed by the government and/ or the people to maintain adequate standard of social welfare, the newer law maintains that social welfare is a fulfillment condition of the material, spiritual, and social needs of the citizen which enable them to live adequately and develop themselves, so they can perform their social functions.

Indonesian Law No. 11 year 2009 on Social Welfare further mentions that social welfare efforts (on article 1 (1) are an integrated, planned and sustainable effort done by the government, local government, and the people in the form of social services in order to meet the basic needs of the citizen which consist of social rehabilitation, social security, social empowerment, and social protection.

Social security in this law aimed to secure the poor people, orphans, unaccompanied children, unfortunate elder people, differently able person, and those who are suffered from severe illness which render them unable to meet their own basic needs. Social security also provided to Indonesian heroes and their families. To support the said groups, the government set a social welfare insurance, sustainable direct assistance, and sustainable allowances.

According to the law, the primary duty holder of social welfare is the state, while the target of social welfare efforts are individual, family, groups, or society. The specific requirements to render them eligible for such relief are poverty, unaccompanied, disability, remoteness, social disorder and disorder behavior, victims of calamities, victim of crime, exploitation and discrimination.

Instead of state, the law also recognizes the role of the people in social welfare efforts. Article 38 of the said law further elaborates that people are able to maximize their role in social welfare efforts. This role can be played by individual, family, religious organization, social organization, non-government organization, professional organization, corporation, social welfare institutions and foreign social welfare institutions.

The Law on national social security system, Law No. 40 year 2004 mentions that social security is a kind of social protection to assure all citizens to meet their basic needs adequately (pursuant to



article 1-1), while social insurance is a mechanism where the members of such scheme are mandated to deposit certain amount of their monthly income to be utilized as a protection for economic and social risk which may occur to the members and their families (pursuant to article 1-3).

The national social security system is a system for the management of social security program by several administering bodies. The National security system is in essence of a state program that aims to provide a guarantee of social protection and welfare for all the people of Indonesia. Through this program, it is hoped that each citizen will be able to fulfill his or her minimum basic life needs in the event of circumstances that cause a loss or reduction in income, as a result of illness, accident, loss of employment, or reaching old age or pension age (Coordinating Ministry of Social Welfare, 2006).

Social security is a form of social protection to ensure that all citizens are able to provide for their minimum basic life needs. The meaning of basic life needs as defined by the National Social Security System Law 2004 is a person’s essential needs to achieve an adequate standard of living, for the creation of social welfare for all Indonesian People. Social security is administered through a mechanism of social insurance, that is, a mechanism for collecting funds from compulsory contributions to be used to provide protection against social economic risks that befall participants and/ or their family members.

The national security system is administered on the basis of the principles of humanitarianism, benefit, and social justice for all citizens of Indonesia. The principle of humanitarianism relates to respect for human dignity. The principle of benefit is in an operational principle that relates to efficient and effective management. The principle of social justice is an ideal. These three principles are intended to guarantee the continuity of the program and the rights of participants (Coordinating Ministry of Social Welfare, 2006).

The national security system aims to implement the mandate of article 28H clause 3 and article 34 clause 2 of the 1945 Constitution as amended in 2000, expressed in the national social security system law, which governs participation, contributions and



benefits, the mechanism for administering social security, and social security institutions at the national level, towards creating optimal, fair, and beneficial protection for participants and/ or their family members.

Social security system is designed to be able to synchronize implementation of the various forms of social security implemented by various implementing bodies to ensure providing greater benefits for each participant. Social security program area administered through mechanisms of social insurance, social assistance, and/ or compulsory contributions with the aim of providing social security for all citizens, thus fulfilling their basic life needs (Coordinating Ministry of Social Welfare, 2006).

3.2. Social Security in Customary Laws/ Non State Laws in Indonesia

Social security mechanism is not solely administered by the state. There are a number of non state social security mechanisms introduced within a country. Similar situation are also founded in many countries. James Midgley (2006) mentioned that some non state social security mechanisms usually have similar form as follows : a. Cooperation or Co-Op; in many countries, this mechanism

work at community level. Some of them are created by the state but many are created by the people. Coop has social security function. It helps the member to survive during the bad period and also to develop their own businesses;

b. Funeral Support; in some communities, people collect regular contribution from their members. The money will be consumpted primarily for funeral support should one of the member is in need, or to support the wedding costs, in time of sickness, or other special needs;

c. The association of community credit circle, particularly for those who come from low income groups, since the low income groups usually get the problem to access credit to the banks;

d. Special insurance scheme administered by the people, such as harvest insurance, health care insurance, etc.

Other mechanism studied by James Midgley (2006) is zakat. Zakat is islamic social security mechanism which can be governed by the



state or by the people. Saudi Arabia is among the first Islamic state to integrate the customary practice of zakat with the state laws. Franz von Benda-Beckmann’s (1988) in Midgley (2006) stated that the zakat practice in Indonesia is a good example to scrutinize the relation model between traditional (religious) social security mechanism and the state.

Midgley (2006) further states that the culture in western states are different with those in developing countries, therefore, the applied social security system are also different. In developing countries, people employ all available resources inside them. Although, it does not accomodate into the state law but people work with them in their daily life.

Franz Von Benda-Beckmann (in Midgley, 2006) mentions that traditional social security developed in developing countries is a genuine one. Meanwhile, the current state practice on social security are influenced by colonialism at the World War II. The traditional social security mechanism have been living in developing countries since many centuries ago. They came up due to specific circumstances and special needs. The traditional and contemporary ones are different in term of role and management. Traditional social security mechanism oblige individual, groups and community to provide assistance right at the time they need it. These systems are based on cooperation and participation of all members of community. Their main objective is to promote the wellbeing of the members of community.

In Indonesian situation, far before the inception of Republic of Indonesia in 1945, people did have their own mechanisms derived from customary laws or religious values. As the fourth largest country in the world (in term of population) and third largest democracy (in term of politic), certainly Indonesia is blessed with hundreds of different ethnicities, cultures, tribes, beliefs and many kind of non state social security mechanisms. Presently, there are around 500 different tribes and languages all over Indonesia.

Currently, many form of traditional social security mechanisms are existed in Indonesia. For instances, are those which have been practiced in Mamuju Regency, Sulawesi Barat (West Sulawesi) Province. The research conducted by Indonesian Ministry of Social Affairs (2008) shown that there is a mechanism for protecting the



street vendors in traditional market either legally, socially or economically in that area. The street vendors may join the Co-Op and apply the credit scheme easily to finance their business.

Also in Mamuju regency, there is a mechanism to protect the farmers with the name of ‘Kelompok Tani’ (Farmer Group) and the fisherman group led by a leader called ‘Penggawa’. The objectives of those two traditional groups are to support their members so they are able to get the tools of production and to market their products.

Sugiyanto, et.al. (2006) describe that in East Java Province, particularly in City of Madiun, Surabaya, and Jember there are traditional social security mechanism among women street vendors in traditional market. The mechanism is conducted through weekly social gathering called ‘pengajian’ (Islamic Study Group) and ‘arisan’ (monthly social gathering) or paguyuban (informal association) among the street vendors. Some people take benefit from the street vendors’ problem in getting the money by establishing some mechanism acting as ‘informal and walking banks’267 where they can easily get the credit with very easy prerequisites but the interests are usually quite high.

Arisan is another uniqueness of traditional social security mechanism. We will find this mechanism ubiquitously all over Indonesia. The scheme is not strictly adhered to any beliefs or social groups but rather on friendship or brotherhood or even territorial-based (originated from the same hometown). So people from different social groups, beliefs and ethnicities may participate as long as they feel ‘in group’ with other members. Arisan is characterized as a regular social gathering, usually conducted once a month in different host member. In every arisan the member must pay the regular money contribution (usually in exact amount every month or every agreed gathering), then after members gave the money which is considered as sweepstake, the leader will raffle and those who win the sweepstake will get all the money. The winner will also responsible to be the next host for arisan and must bear the cost by him/herself. The idea of arisan therefore, are to strengthen social bound among the members as

267 Walking Banks or ‘bank berjalan’ is individual or group who act as a bank. They may lend

money for certain amounts in certain period and in return they get the money back plus the interest.



well as to support those who are in need. The member of Arisan can come from various background, not limited only to Javanese (as the biggest ethnic in Indonesia) or Muslim People.

Another mechanism is “Sedekah Rombongan.” (or group alms). This philanthropy movement is actually an informal community founded in Yogyakarta Province, Central Java, by Saptuari Sugiharto in June 2011. This movement has around 157 voluntary members who initially did not know each other. They are bounded by similar affection and attention to ailing people. They run this movement by employing social media such as Facebook and blog. They post the pictures of ailing patients to the blog or Facebook and collecting donation for them. They keep the accountability and transparency by keep posting the financial report through internet.268

The philosophy of “sedekah rombongan’ actually adopt the philosophy of ant. Ant is a weak and small creature (animal). However, when they are gathered together, they can work things out, lifting up the bread or biscuit and remove it to other place. This movement put the focus of their action only to emergency relief for ailing people. They left the empowerment program to other institutions. Up to August 2012, they are able to collect donation approximately IDR 4.5 Billion and the entire amount have been distributed to the needy people.269

Other examples, the research conducted by Ministry of Social Affairs in 2003 – 2004 on Community-Based Social Security in four different provinces : South Sumatera, South Kalimantan, Banten and South Sulawesi, respectively, also shown that traditional mechanism of social security in Indonesian society is still existed.

For instances, in Banjarmasin City, South Kalimantan Province, there are an initiative called Lembaga Solidaritas Pedagang Kaki Lima (or Street Hawkers Solidarity Institution), Perkumpulan Ojek Cendana dan Simpang Cemara (or Motorcycle Taxi Cendana and Simpang Cemara Association), Persatuan Angkutan Alalak (Alakak

268See Tarbawi Islamic Magazine, 280th Ed. 6 September 2012; main reading resource for

Sedekah Rombongan is available at http://sedekahrombongan.com/

269Ibid.



Transportation United) and Syairus Sahab.

Lembaga Solidaritas Pedagang Kaki Lima is an institution founded in 1998 and formally registered to Banjarmasin City Government. The objectives of this institution is to combat the unemployment, protecting the street hawkers from any threats such as eviction from governmental police, maintaining the environment, providing social, economic and legal protection from Banjarmasin City Government’s policies The members will be provided with financial assistance as they needed, in accordance with the ability of the organization. Protection from any mal-administrative committed by governmental police (such as bribery) will also be given. There is no obligation for members rather than paying monthly donation of IDR 2500 (or equal to USD 0.30).

Perkumpulan Ojek Cendana dan Simpang Cemara in Banjarmasin City is an organization of motorcycle taxi drivers which consists of only ten members. The members must pay the daily donation of IDR 1000/ day. Therefore, in a month they will have IDR 300.000 (multiply to ten members). The money will be given (fully or partially) to the members who need it. Money can be used for motorcycle repair or for paying children’s tuition fees, and so on.

Other social organization in Banjarmasin City is Syairus Shabab. Syairus Shabab is a youth-Muslim organization founded in 1999. Its activities are Islamic Propagation, Islamic Education, Serving the Family of Deceased Person, and assisting their members who were in unfortunate situation (sickness, accident, etc.). This organization has 45 members and all members must donate IDR 1500/ week and IDR 1000/ month. The members occasionally will be requested to donate money if there are sudden needs within their community.

In Banten Province, there are some institutions namely Majelis Pemuka Agama dan Adat or Board of Religious and Customary Law Leaders which was founded in Tunjung Teja Village, Banten Province on December 25th, 2003. The objective of this organization is to lighten the burden of the mourner’s family upon the departure of their loved ones inside the village. Even though the target of this organization is specifically for assisting the bereaved family, they are also assisting elderly people and poor family. Financial source for this activities come from monthly



donation (IDR 2000 or rice donation equal to 1 liter). Also, shortly after the event of departure, the organization will make an announcement and distribute the donation letter to every household. The bereaved family deserves to get IDR 300.000 and 100 kilogram of rice (if the deceased is adult) or IDR 300.000 and 100 kilogram of rice (if the deceased are children).

In South Sulawesi Province, right in Makassar City, there is some community-based social security. In Bukit Baruga complex, Antang – Makassar City, since 1999 the local community has organized some activities such as employing poor people to work inside the housing complex as gardener, domestic worker, motorcycle taxi driver, etc. Another program is distributing staple foods and rice every Friday, religious holidays and during circumcision ceremony. Every month each community must donate IDR 5000 to IDR 10000. The target of this activity is 100 people.

Other community-based social security in Makassar City, South Sulawesi are Kerukunan Keluarga Masyarakat Batua Baru (Batua Baru Family Association), Kerukunan Keluarga Tikunna Malenong (Tikunna Malenong Family Association), Perkumpulan Arisan Masyarakat Jawa “Wiji Raos” (Javanese Community in Makassar City Association).

Batua Baru Family Association is a locality- based organization. The members live in the same locality namely BBD Housing Complex, Aspol Batua, and Tello Baru area. Main activities of this organization are bereavement support, sickness support, and victim of fire.

Tikunna Malenong Family Association is both and ethnic and territorial-based organization. It is founded on 11 November 1979 in Makassar (Ujung Pandang). The members come from the same region in Tana Toraja Regency, regency situated 500km to the north or Makassar City. Similar with other organization, their activities mainly in bereavement support and wildfire victims’ support.

Javanese Community in Makassar Association is an ethnic-based organization. All the members come from Javanese people (from Java Island) who live in Makassar area. It has 75 members. Main activities of this organization are arisan (regular social gathering),



Islamic education gathering, orphanage support (once a year) and acting as informal bank by saving and lending money for the members who are in need.

In Paku Village, Kayu Agung Sub District Kayu Agung City South Sumatra Province there is a unique social security mechanism. Different from previous ones, the villagers introduce the mechanism called ninkuk. Ninkuk is local language for family gathering. Ninkuk mechanism works in marriage ceremony preparation. In a Ninkuk, the close families and informal leader are invited to collectively talk about the proposed marriage preparation. In a marriage preparation, the role of informal leader is so important. The immediatee families and invitees are invited to bring goods needed for the bride to be brought to the groom.

VI.4. Social Security Rights in Country Report and UPR

The Indonesian government on its report to Human Rights Council in 2012 (Universal Periodical Review)270mentioned about social insurance and social assistance. Social assistance was provided in the form of School Operating Fund (Bantuan Operasional Sekolah) and Operational Assistance for School Books and Scholarship for Poor Children. These pro-poor education financing mechanisms provide financial incentives given directly to elementary and junior schools to assist students with financial problems in order to be able to finish the nine year compulsory education.

In regard to social insurance in health services, a number of local governments initiate free health services for the less privileged. The government of Bali, Gorontalo and Solo, for example, provide affordable and/ or free health services for their citizens. In Bali, Health Security of Bali Mandara (Jaminan Kesehatan Bali Mandara/ JKBM) program provides health insurance for Balinese who are not insured by other health insurance. The program, which has started on 1 January 2010, is expected to serve 2.5 million uninsured citizens out of 3.9 million Bali citizens.271

270 Second cycle of Indonesian Report to UPR, Available at


271Ibid




Furthermore, in achieving the Millenium Development Goals (MDGs) mainly goals 5 and 6, the Government had established Delivery Insurance Program (Jaminan Persalinan/ Jampersal) which gives financial guarantee for all uninsured pregnant women and women in need of having basic health services facilities. Jampersal includes antenatal services, delivery assistances by health personnel, and postpartum services, including family planning, newborn care and exclusive breastfeeding counseling.272

Meanwhile, in its report to UN Committee on Economic Social and Cultural Rights in October 2012273 , the government of Indonesia stated that to implement the guarantee of such right, the Government has stipulated Law No. 40 of 2004 on National Social Security System and further strengthened by Law No. 11 of 2009 on Social Welfare. Law No. 40 of 2004 sets up National Social Security System as a social protection to ensure the fulfillment of basic needs for a decent life for every participant and/ or family member. The system is expected to fulfill the basic public services, including health insurance, work accident insurance, pension and life insurance. For worker who canno afford the premium social insurance, Law No. 11/ 2009 has guaranteed that the Government provides social welfare insurance premium, which are paid by the Government as well as sustainable direct assistance.

Health insurance is conducted nationally on the basis of social insurance and equity principles. Health insurance is aimed at ensuring that participants obtain health care benefits and protection in fulfilling basic health needs. The participant of health insurance is any person who has paid insurance premium or whose premium are covered by the Government. Families of participants are also eligible to receive health insurance benefits. Each participant can also include other dependent family member with the additional premium.274

Since 2005, the Government of Indonesia has developed health insurance programme for society through Health Insurance for the Poor (Asuransi Kesehatan Masyarakat Miskin/ ASKESKIN). In 2008 until

272Ibid

273 Initial Country Report submitted by Indonesia under article 16 and 17 of ICESCR :

Available at http://tbinternet.ohchr.org/_layouts/treatybodyexternal/TBSearch.aspx?Lang=en&TreatyID=9&DocTypeID=29

274Ibid



recently, the programme has been changed to National health security programme (Jaminan Kesehatan Masyarakat/ JAMKESMAS). The aim of JAMKESMAS program is to increase the access and quality of health services for all communities that are very poor, and incapable to achieve optimal health standard, effectively and efficiently (quality and cost controllable). Budget resources of JAMKESMAS is allocated through State Budget (APBN) in the form of social assistance through social insurance mechanism. The government targets universal coverage on health insurance in 2014 with the main programme for 76.4 million population.275

The Law establishing the BPJS was passed by the Parliament on 28 October 2011. The endorsement of the BPJS Law makes it the country’s first social security programme representing universal health insurance coverage. The law will create a single State entity in 2014 that will cover health care. Those with a regular income will have to pay monthly premiums, while the Government will pay premiums for people who are poor or unemployed. In 2015 a second BPJS will cover life insurance, work accident insurance, civil service pensions and old-age pensions. Under the law, workers and the poor will be provided full protection and coverage even for severe or complicated illnesses.

On the other hand, Indonesian Civil Society responses to the said report is very much different. The civil society reported as follows t: 276

Law No. 40 of 2004 on SJSN and Law No. 24 of 2011 on BPJS do not cover all of the diseases that should be covered by the program. On September 2012, the Government decreed the premium for Health BPJS of 22,000 rupiah per person per month. Every BPJS participant has to pay the premium, except the poor people. However, on March 2013, the Finance Ministry reduced the premium to 15,500 rupiah due to the country’s fiscal condition. The Indonesian Doctors Association has performed studies to determine the ideal premium based on PT Askes’ experience and found that the premium for the first category should be 38,000 rupiah. This has resulted in the very small cost the State must pay, which consequently resulted in the poor quality of BPJS’ service.

275Ibid

276Indonesian Civil Society Responses on List of Issues of the Committee of Economic, Social

and Cultural Righs (ESCR) Available at http://tbinternet.ohchr.org/Treaties/CESCR/Shared%20Documents/IDN/INT_CESCR_CSS_IDN_16819_E.pdf



The lengthy service procedure, both when processing the PBJS card or in the hospital. In fact, many patients were rejected by the hospitals because they have not exchanged their old social security card into BPJS card. In addition, many hospitals rejected the BPJS program and refused to serve patients using this facility, especially those who were poor and less fortunate. This kind of practice was similar to the previous health security services for the poor (through the national health insurance scheme for the poor (Jamkesmas), the local government-funded health insurance scheme for the poor (Jamkesda), the welfare card (Gakin), and health care card (SKTM program), because 70% of users complained about the hospital service, such as administration,nurses, doctors, facilities, down payment, medicine, cost, and other hospital services.

The services have not covered certain groups, because the socialization of BPJS has not touched marginal groups like bums, sex workers, and transvestites. Even if they knew about the social security, they faced problems with their data. Many transvestites, sex workers, and street urchins did not have identification cards and permanent address.

The lack of formal data will also threaten the followers of traditional religions in Indonesia, as most of them do not have formal ID Card. Domestic workers and other informal workers should pay for their own social security premium, because they were put into the first category. In reality, most of the domestic workers and informal workers do not have sufficient income to pay the premium.

So far, there have been no transparency and clarity for the public from the government of Indonesia in regard to the categorization of poor and disadvantaged people to receive health insurance, including the criteria and the designation. This was caused, among others, by the different data in various government institutions (ministries and other institutions) related to the amount of the PBI.

Data from the National Team for Alleviating Poverty (TNP2K) showed that the poor and disadvantaged people in Indonesia reached 96.7 million people, while the Statistics Bureau (BPS) data showed there are 100.8 million poor and disadvantagedpeople. This caused uncertainties whether beggars, street urchins, part-time teachers, workers with salaries below the minimum wage, etc are deserved to receive PBI.



The community does not only face the risk of natural disasters but also disasters due to climate change and conflicts (because of social vulnerabilities). It may not take up headlines in the news but the intensities of such calamities tend to increase and cause significant loss for the people. Frequent flood and droughts take place in some areas in Indonesia affect the local food supply and it makes people poorer especially those living from the agriculture, fishery, livestock including small traders (vegetables vendors, street vendor).

Such appropriate social protection providing livelihood assurance for people living in disaster prone areas vulnerable does not exist yet because they are assumed as less affecting, small impact or loss, and it turns that loss are only counted on or limited to numbers of casualties. This is a false picture because the impact on people livelihood is significant. Such things can be understood and correspond to relevant policies such as exempting or easing credit loan and administrative requirements for people with disability, elderly and socially exluced people and people work in informal sectors living in disaster prone areas.

Indonesian government country reports on Social Security Rights, both to ESCR Committee and to Human Rights Council (Universal Periodical Review) as well as Indonesian Civil Society report to ESCR Committee did not mention social security religious mechanism like zakat at their reports. The zakat as a mean of social security tend to be excluded of national social security mechanism, thus, no need to be reported before the United Nations mechanism.

VI.5. Zakat as Social Security

5.1. Social Security in Religious Values

Apart from social security forms enshrined in local cultures and community, some form of social security is also existed in religious values or in Tamanaha’s terminology (Tamanaha, 2007) are religious normative systems.

Jerome Shestack (in Symonides, 2000 : 35) claims religion is one source of human rights. The term ‘human rights’ as such is not found in traditional religions. Nonetheless, theology presents the basis for a human rights theory stemming from a law higher than the state and whose source is the Supreme Being.



In Christianity, a tithe mechanism does exist. The Law of Moses mandated the tithe, at least in part to support the ministry of the Levites. Like many other laws, however, it was frequently observed in the breach, although the prophets insisted that failure to pay the tithe was nothing less than robbing God (D.A Carson in Christianity Today, November 15, 1999).

Hilman Latief (2012) mentioned that in case of Indonesia, some mass Muslim organizations (Muhammadiyah since 1912, Al Irsyad Al Islamiyah since 1914, Persatuan Islam since 1923 and Nahdhatul Ulama since 1926) have introduced some forms of social services and community empowerment program since the beginning of 20th century. They founded social institution in education, health and social services field. The social services program introduced by those mass Muslim organization are really a blessing for the society. For the society, these social roles are good alternative to meet the people needs, which are greater than the government’s capacity (Latief, 2012: 4).

In 21st century, the Muslim philanthropy in Indonesia either conducted by mass Muslim organizations or small and traditional institution, have expanded their playing fields to also build many schools, clinic and hospitals, installing small and medium enterprises, including institutionalize the Islamic-based social security namely Zakat, Infaq and shadaqah (usually called as ZIS).

And not only Muslim people, some form of social security mechanisms also existed in Christianity, Catholic, and Buddhism, Hinduism and other religions and beliefs in Indonesia. Research conducted by students or Faculty of Law University of Indonesia (2012 and 2013) to six Catholic Churches in Jakarta shown that the church indeed have introduced some form of social security for their members. The churches got the money regularly as a weekly or monthly contribution (alms) from the members. The money collected, therefore, will be forwarded to other members of the church who need it. The donation program is usually intended to support health and education problem of their members. Another mechanism also apply in Bali, a famous tourism island inhabited by Hinduism people. In Bali, local people usually support the family who carry out a traditional ritual called ‘cutting teeth ceremony.’ when a member of family had came to certain age of maturity. The



ceremony usually spends a lot of money, therefore, family and community support, indeed, are needed.

Back to zakat, zakat is intended, in accordance with Islamic teaching, to be social security for its beneficiaries. Zakat is an instrument of social justice and wealth/ income distribution. Zakat funds can not be disbursed for all people, only for eight type of beneficiaries (ashnaf).

Yet, the institutionalization of zakat through Law No. 23/ 2011, Government Regulation No. 14/ 2014 and other local ordinances on zakat in many provinces/ cities/ regencies in Indonesia do not support the position of zakat as instrument of social security, even for certain type of its beneficiaries. The state has never imposed the obligation of zakat for muslim people who meet requirement as zakat payers, except for civil servants in some jurisdictions (but even if the civil servants refuse to disburse their own zakat through official channels, there will be no punishment too). Therefore, the existence of zakat as social security are largely depend on the level of awareness of the zakat payers, rather than the compliance of the citizen to state’s laws.

VI.6. Zakat : Compulsory of Philanthropy? Rights or Welfare?

6.1. On Rights

One of the strengths of human rights is that it focuses on those who are excluded. It requires policymakers to ask : who has not benefited? Who has been forgotten? Who has been excluded? It offers valuable corrective tools to development planners, who are predisposed to add up overall progress and overlook the often invisible minorities who do not benefit (Robert Archer in Hickey & Mitlin, 2009 : 29 – 30).

Every person is entitled to claim his or her rights. They empower everyone. This is a much broader message than one which focuses only on the very poor, only on political prisoners, only those who suffer systematic discrimination. In this respect, the universality of human rights is central to its credibility. If a human rights approach is to work politically, it must appeal to the prosperous as well as the poor – and it must remain relevant to



both. In fact this is where the true power lies : we all benefit if everyone is treated justly; if we all feel safe, if people are protected against extreme poverty, if all are healthy and educated. The obligation to include the excluded is clearly there; it is the acid of justice (Robert Archer in Hickey & Mitlin, 2009 : 29 – 30).

A right is a justified claim or entitlement. It is justified claim on someone, or on some institutions, for something which one is owed. The Oxford English Dictionary suggest a threefold definition of a ‘right’ (Cheria, et.al, 2004: 9) namely: (1) That which is morally or socially correct or just; (2) fair treatment; (3) A justification or fair claim’ (4) A thing one may legally or morally claim; the state of being entitled to a privilege or immunity or authority to act.

Jack Donnely (in Bauer & Bell, 1999 : 61) claims that ‘rights’ in english has two principal (moral and political) senses : ‘rectitude’ and ‘entitlement’. In the most general sense of rectitude, we speak of something being the right thing to do, indicating conformity with a standard of action. Entitlement is a narrower sense of ‘right.’ When someone has a right, she is entitled to something and therefore armed with claims that have special force. The focus is on the relationship between rights-holder and duty-bearer, rather than duty-bearer and standard of rectitude.

Donnely (in Bauer & Bell, 1999 : 61) later asserts that to claim that there are human rights is to claim that all human being,simply because they are human, have rights in this sense. Such rights are universal held by all human beings. They are equal. One is or is not human , and thus has or does not have (the same) human rights equally. And they are inalienable. One can no more lose these rights than one can stop being a human being, no matter how inhuman the treatment one may be forced to endure.

The core content of a human right refers to the entitlement or the set of guarantees that constitute the rights. The core contents of a Social Economic and Cultural rights have both universal and unique characteristics. The universal characteristics are those which apply to all rights. Certain characteristics of the core content of each right are unique to that specific right. The minimum core content is the non-negotiable foundation of a right to which all individuals, in all contexts, and under all circumstances all entitled. It is the intangible baseline level that must be guaranteed for all



persons. It indicates a minimum below which no government should perform, even in unfavorable conditions (Cheria, et.al. 2004: 22).

Meanwhile, Elizabeth Ashford (in Pogge, 2007) claims that human rights are a set of urgent and rock bottom moral claims against others that every human being has simply in virtue of their humanity. Most important rights are at their core claim rights, which conceptually entail corresponding duties, they are justified claims to something , and they are justified claims against some duty-bearers to perform or refrain from some action.

Human rights claims are claims of basic justice. Each person is entitled to the objects of their human rights and can be justifiably insisty on them as their due. These claims ought to be institutionally guaranteed, but since human rights are grounded in fundamental moral principles they are independent of established institutional standards. For this reason, a central function of human rights is to evaluate existing social institutios : a test of whether any institution is minimally just is whether it acknowledges human rights (Ashford in Pogge, 2007 : 185).

The ideas of human rights proposed by Ashford is somewhat vague. What is basic justice? Is there any agreement concerning basic justice? Other vague thing is her statement that “a test of whether any institution is minimally just is whether it acknowledges human rights.”

In association with zakat and human rights in muslim countries, in some muslim countries, the underlying ideas of human rights is having different philosophy with those applied in the west. Also, some muslim countries introduce the idea of human obligation as a pair to human rights.277 The articles mentioned in Cairo Declaration 1991 on human rights in Islam below may explain how muslim countries perceive human rights :278

277Rehman and Askari (2010) presented an interesting research about Islamic Countries. They

mentioned thatIslamic countries are not as Islamic in their practice as one might expect; instead it appears that the most developed countries (which are mostly secular countries) tend to place higher on their preliminary Islamicity Index.

278Cairo Declaration 1991 is available at http://www.oic-oci.org/english/article/human.htm



Article 1 (a) All human beings form one family whose members are united

by submission to God and descent from Adam. All men are equal in terms of basic human dignity and basic obligations and responsibilities, without any discrimination on the grounds of race, color, language, sex, religious belief, political affiliation, social status or other considerations. True faith is the guarantee for enhancing such dignity along the path to human perfection.

(b) All human beings are God's subjects, and the most loved by Him are those who are most useful to the rest of His subjects, and no one has superiority over another except on the basis of piety and good deeds.

Article 2 (a) Life is a God-given gift and the right to life is guaranteed to

every human being. It is the duty of individuals, societies and states to protect this right from any violation, and it is prohibited to take away life except for a Shari'ah prescribed reason.

(b) It is forbidden to resort to such means as may result in the genocidal annihilation of mankind.

(c) The preservation of human life throughout the term of time willed by God is a duty prescribed by Shari'ah

(d) Safety from bodily harm is a guaranteed right. It is the duty of the state to safeguard it, and it is prohibited to breach it without a Sharia-prescribed reason.

If we take a look at the text above, the Cairo declaration clearly presented the idea of basic obligations and responsibilities. Therefore, the rights are not there alone. Rights are existed in coexistence manner with obligations and responsibilities. Secondly, the Cairo Declaration emphasize the existence of ‘God.’ That life as well as human rights are given by the God. Also, it pays special attention to Sharia. That the implementation of human rights, to some extent, must compatible to Islamic Sharia.

Human rights, like all other rights, are based on a relation between two parties – the claimant or the beneficiary of a right and the entity that is obliged to ensure that the claim is met. While individuals and groups are beneficiaries of rights set forth in the international



instruments, state parties to international treaties have responsibilities under international law. A state is responsible for act or omission which can be attributed to it as its own (Cheria, et.al. 2004). The responsibilities of the state are to protect, promote, respect, and fulfill the entitlements under the rights.

Related to zakat, in zakat affairs, there is, at one side, an obligation for any Muslim who meet certain requirements, to disburse their zakat funds. However, in Indonesian situation, this obligation is not enforceable. There is no legal punishment for those who refuse to disburse their zakat funds. On the other hand, the right of eight type of zakat beneficiaries is there. They have their own right, since the rights are stipulated at the Holy Qur’an and at Prophet Muhammad’s message, but they could not claim them. There are no guarantee that the eight type beneficiaries of zakat could claim their share in zakat funds.

6.2. Zakat as Right or Welfare

Rights of welfare is part of human rights. Even though not all of welfare services can be claimed by the people, it is still a right. What about the (religious) tithe could be considered as rights ? or welfare ?

James Griffin (2009 : 176) mentioned that the right of welfare was used to articulate the attractive view of property prevalent in the medieval Church. God has given all things to us in common, but as goods will not be cared for and usefully developed unless assigned to particular individuals, we creatures have instituted systems of property. In these systems, however, an owner is no more than a custodian. We all thus have a right, if we should fall into great need, to receive necessary goods or, failing that, to take them from those in surplus. This idea resembles zakat in Islamic tradition. That the wealth owner is no more than a custodian.

In Christianity, the Law of Moses mandated the tithe (see Lev. 27:30-33) at least in part to support the ministry of the Levites (Num. 18 : 21-24). Like many other laws, however, it was frequently observed in the breach, although the prophet insisted that failure to pay the tithe was nothing less than robbing God (D.A. Carson in Christianity Today, November 15, 1999).



When it comes to zakat in Islam, the question is whether zakat is considered as compulsory or philanthropy279, rights or welfare? Since the same condition as mentioned by Griffin above are also apply to zakat in Islamic Law. That the owner of property are actually no more than a custodian and all of people thus have right to welfare. However, in zakat affairs, not all people may have the same rights over zakat funds. Only those who meet certain requirements, usually recognized as eight type of zakat beneficiaries (ashnaf).

Michael Freeman (2011 : 67) asserts that the discourse of rights draws our attention to persons who have the rightful entitilements. The distinctive value of a right is that if gives the right holder a special entitilement to press the relevant claims if enjoyment of the rights is threatened or denied. This distinguishes having a right from simply enjoying a benefit or being the beneficiary of someone’s else obligation (Donnely, 1985 Freeman, 2011: 67). Some theorist claim that unenforceable rights are not rights at all. One can, however, have a moral right to something even if that right is unenforceable. The Jews in Nazi Germany had many moral rights that were not enforceable. The recognition of moral rights that are unenforceable now may help to get them enforced in the future.

In regard to zakat affairs, there are, of course, rights holders and duty bearers in zakat affairs. The rights holders are eight zakat beneficiaries (ashnaf) and the duty bearers are the zakat payers (person whose wealth exceed the certain limit of zakatable wealth) as well as the state. Zakat is a right of eight beneficiaries. They are entitled to zakat funds. However, in Indonesian situation, this right seemed to be unenforceable and difficult to be claimed. Even though the Holy Qur’an obliges Muslim to pay zakat, however Indonesian law on Zakat 2011 and its implementing regulation (Government Regulation No. 14/ 2014) do not force Muslim to pay zakat. There are no sanction nor punishment before Indonesian laws for Muslims who do not pay zakat money. Therefore, the disbursement of zakat by zakat payers (muzakki) largely depend on the level of awareness of zakat payers, rather than their compliance to prevailing zakat laws.

279‘Philanthrophy” means ‘loving peole’ or according to Payton, Professor in Philanthropy

Studies, philanthrophy means “voluntary action for the public good.” (Giving Insight, PKPU Zakat Magazine, 5th Edition December-January 2014, page 19).



On the other hand, Yusuf Al Qardhawi (2006 : 85) asserts that Islam declares zakat as a right and not contract of the poor. It is not hypothesis. Islam has declared zakat as one of the Rights of Allah and at the same time right of a man on another man. It is a right of Allah in the sense that He is the creator of human being and his Sustainer and Bestower of wealth. It is, therefore, obligatory for him to express his gratitude to the Almighty Allah. The way is that the prosperous one should help the needy. All human beings are brethren, though some of them are rich and the other poor. The poor and the needy have a right over the wealth of a rich and prosperous brother which he should pay to him.

Imam Razi (in Qardhawi, 2006: 85 – 86) reveals the idea of rights of the poor containing in zakat as follows: Firstly, a man availing of some wealth to his bare need and necessity he must keep it to himself. That is his right. If he receives more than what he actually requires for his maintenance, the surplus must be distributed among the poor and the needy. Whose earns his living by hard labour has every right to keep his wealth with him. But the poor person is also desirous of some wealth to lead an honourable life as a human being. Now these two extremes come on the platform. To one God enjoins to part with a portion of his wealth to help his poor brethren to lead his life with dignity. Thus we shall prefer the right of an owner to the extent that he will remain in possession of major portion of his wealth while a needy are given a part thereof so that both of them may be satisfied as far as possible. Secondly, if a rich man hoards his wealth beyond his needs and does not fulfil the needs of his brethren who is poor, it shall be considered an attempt against the intelligence of the material existence and not lawful in any manner. So God orders that a portion of the wealth be given to the poor that His plan may work well and satisfactory. Thirdly, the poor and destitute are the creatures of God. The rich and wealthy are custodians or trustees of His riches. So, he orders the cashiers to pay a portion out of the wealth which has been given to them.

Nik Mustapha Hj. Nik Hassan (in Abulhasan M. Sadeq, 1991: 227) implicitly states that zakat is a right, not simply welfare. Islam specifies clearly the eights head of zakat recipients. It also provides the principles as to how zakat collections should be disbursed. Among other principles are the following:



1. Zakat collection must be disbursed as immediately as possible. There should not be any delay because the funds are the rights of the zakat recipients, and they are badly in need of the assistance.

2. Zakat collected in a particular area must preferably be spent for the recipients residing in that area. This will strengthen further the bond of brotherhood and create a healthy atmosphere of mutual cooperation in the community.

3. The zakat fund must be disbursed in such a way as to maximize the benefits of the recipients spiritually and economically. The zakat recipients must have their basic needs satisfied and participate in economic activities. They should not be zakat recipients forever. They should ultimately be zakat payers.

4. Zakat expenditure must be aimed towards achieving economic equity, growth and stability. Appropriate zakat disbursement must be able to influence the allocation of resources towards achieving the above objective. Being the most important fiscal instrument in the Islamic system, the role can be played by zakat.

Ahmad Mohamed Ibrahim (2000: 367) mentions that zakat is not mere alms giving which may take the form of private charity. Although in certain circumstances it is permissible to pay zakat individually, it however loses much of its significance thereby and has been tolerated only in very exceptional cases. It is preferable that zakat should collect by the state or on a national basis and spent by the state or community.

From the data and discussions presented above, we may say that many Indonesian Muslim perceives that zakat is philanthropy and that zakat is part of voluntarism activities. Whereas, according to Holy Qur’an and Prophet Muhammad’s messages, zakat is compulsory for Muslim people who meet certain requirements.

However, Indonesian Muslim’s attitude toward zakat is understandable since the prevailing Indonesian Law on zakat does not mention that zakat is compulsory for Indonesian Muslim, and also does not mention that those who refuse to pay zakat money will be punished. The old zakat law 1999 and new zakat law 2011 do not have provisions on the obligation of Indonesian Muslim to pay zakat as well as no punishment for those who reject to pay



zakat. This phenomenon lead to the assumption that zakat is philanthropy.

In conclusion, the researcher may say that zakat is a right before Islam and Islamic tradition. However, when it comes to zakat institutionalization in a modern state like Indonesia, zakat resembles welfare. Since zakat disbursement is not mandatory and there is no mechanism for zakat beneficiaries to claim their share on zakat funds

VI.7. Conclusion

Social security rights is a right, part of human rights and have been inserted in many international human rights instrument. Moreover, social security rights is also embodied in many regional and national instruments. Yet, to legislate and drafting a bill on social security is one thing. To enforce it and fulfill it to the communities is another thing.

As explained above, social security right is not an attractive right compared to civil and political rights or even to other ECOSOC rights like right to health, right to education, right for employment or right to food.

If social security right is considered not as an atrractive right by some developed countries, we may guess what will developing countries do toward this ‘poor’ right? To implement social security rights, the role of the state is apparent. State is the primary social security provider or the main duty bearer. While the civil society acting as supporting agents as well as the rights holder.

The role of the state toward social security rights are similar to other rights, namely to promote, to fulfill, to protect and to respect. State need to promote and fulfill all people’s rights of social security. Thereafter, if the people does have their own social security instruments, originated from social, cultural and religious values, then duties of the state are to respect and to protect them.

Notwithstanding, the right of the people to exercise their own social security rights do not deprive their rights to enjoy social security instruments provided by the state. And vice versa. The state can



enforce the law or regulation concerning social security to all citizens, even though the citizens do have their own social security instruments.

For instance, a Muslim people who live in Indonesia must adhere Indonesian law as well as Islamic Law. They have to pay the taxes and at the same time also pay the zakat as religious obligation. They cannot refuse to pay the tax after paying zakat money otherwise the state law said so.

Therefore, to some extent, state law is superior or higher than local laws or traditional law. The problem comes up when the state also ratify international law related to this subject. International law or international human rights law could be in the form or soft law or hard law.280 International Law becomes as hard law when a state joins to an international convention as a party by ratifying such law into national law.

In case of social security right, the Republic of Indonesia has ratified International Covenant on Economic Social and Cultural Rights (ICESCR) through Indonesian Law No. 11 year 2005. Therefore, Indonesia has an international obligation to comply with such convention and implement the said law as mandated along with national instruments in social security.

However, in Indonesian Country Reports on Social Security Rights, both to ESCR Committee and to Human Rights Council (Universal Periodical Review) as well as Indonesian Civil Society report to ESCR Committee did not mention any social security religious mechanism like zakat at their reports. The zakat as a means of social security tend to be excluded from national social security mechanism, thus, no need to be reported before the United Nations mechanism as part of state obligation under ICESCR.

280Scholars Kenneth W. Abbott and Duncan Snidal distinguish harder from softer international

law based on three dimensions: Obligations. Harder law will have a higher degree of legal obligation, while softer law will have weaker or no legal obligation. Precision. International law may be written in more or less detailed and precise language. Harder law will have a higher degree of precision, while softer law will use more vague, general or abstract wording. Delegation. Harder law is more likely to delegate interpretation or enforcement to an independent third party (like an international court or tribunal). Softer law is more likely to keep interpretation or enforcement within the parties, allowing more room for political maneuvering (http://clg.portalxm.com/library/keytext.cfm?keytext_id=66)


http://clg.portalxm.com/library/keytext.cfm?keytext_id=66


As a tool to assess the state’s attitude and compliance toward implementation of social security rights the rights-based approach can be employed, inasmuch, this approach is a conceptual framework for the process of human development that is normatively based on international human rights standards and operationally directed to promoting and protecting human rights.

Social security rights is also secured in Indonesian legal system. The 1945 Constitution embodied social security rights in specific article. These rights also appear in some Indonesian laws such as employment law, social welfare law, and so on.

However, present attitude toward social security shown by governments and common people are generally still poor. They regard this right as simply a normative right. Less efforts have been shown to claim or fight for it. Especially in Indonesia where many informal social security mechanisms still apply which, in turn, rendering the people not to rely on formal social security mechanism provided by formal agencies.

Therefore, social security rights situation in certain place can be measured by overseeing its implementation by using these parameters: public participation, accountability, equity and non-discrimination, clear focus on people and rights and working together.When it comes to Indonesia, Indonesia is indeed a diverse and pluralism country. No doubt about it. The pluralism of Indonesia formed by its unique geographical landscape as an archipelago, situated between two big continents (mainland Asia and Australia), by the number of its population and its long history of cross cultural experience, visited or colonized by other nations.

The pluralism of Indonesia also affect to its social, cultural, legal and religious values. There are no single traditional or modern values in Indonesia. Even in one community or ethnicity that live in the same area and even in Muslim community who actually share the same religion and adherence to the God, the differences are existed.

The legal pluralism of Indonesia constructed by various sources of law in Indonesia, namely state law, religious (Islamic) law, adat (customary) law and western-law (derived from Dutch-law heritage). Social security, as a living instrument in the society is having similar characteristic as legal pluralism.



Further, In Indonesia (and also in other countries) social security is not produced and provided solely by the state. We may say that state is the primary social security provider. However, long before the modern state was established (in each society), people does have their own social security mechanism. The source of non-state social security mechanism can be from religious values, adat (customary) values or local community and group values. Hence, the state cannot claim that social security in this country provided only by the state. We may say that state is the primary provider and duty bearer of social security but we may not say that social security in Indonesia is provided solely by the state.

The state of Indonesia or Republic of Indonesia was incepted only in 1945. Before that year, we may not say that the society or communities with their own semi-autonomous social field were not existed. Also, we may not say that before the independence of Indonesia in 1945 there was no social security instruments existed in the society.

Social values, including social security instruments can survive with or without state involvement. The benefit of state involvement is to put more legal and political pressure to the people.

Social security instruments in Indonesia can come from social values, cultural values, religious values, specific group values or interest group values. The aforementioned examples shown that social security is existed almost at all groups and societies in various places throughout the country. At this point, legal pluralism took place. For instance, an Indonesian Javanese Muslim who lives in Bali is an Indonesian citizen and at the same time he/she is a Muslim, he/she is coming from Javanese descendant and also resident of Bali Island. As an Indonesian he/she must abide to Indonesian laws and regulations on social security. Let say, to pay income tax annually or to surrender his/her salary to be deducted monthly as a contribution for social security scheme.

As a Muslim he/she must strictly obey Islamic laws on zakat, wakaf and other Islamic social security instruments. He or she must give up 2.5% of his/ her earning as zakat and so for his/ her other wealth and assets. As a Javanese people, he/ she are surrounded with cultural values and adat law on social security. For instance, there is unwritten social values that parents should take care the children forever (not strictly until 17 years old as applied in some countries), that children should



look after the parents if they grow old, that older siblings must take care their younger brothers/ sisters.

Also, if he or she comes from any specific area in Java (village, sub district, city, and regency) in Java, then he/ she must also comply with their ‘area values.’ It is not uncommon that Javanese people does have blood-bound and territorial-bound group wherever they live in Indonesia. They will meet occasionally or regularly and establish specific rule, including group rule on social security.

Lastly, if an Indonesian Javanese Muslim lives in Bali Island, then he/ she must also obey to local values in Bali. Sometimes, there is no limitation whether you are local people or newcomer, you should strictly comply with territorial regulation. For instance, if the neighborhood in Bali impose regular (monthly) money contribution/ dues for all residents living within the neighborhood as part of neighborhood social fund, then ones can not refrain to its neighborhood rule, otherwise they will not be fully accepted to the neighborhood.

The similarities of all kinds of social security are that they are established to secure ones (or their members) financially in time of loss and mourning. When the member of community having problem either in economy, health, education and other misfortunes, then the mechanism come up to support the loss.

The benefit of social security which is managed by the state are: (1) formalized and legalized by the state; (2) it has legal certainty through state legislation and enactments; and (3) enforceable; there are some reward and punishment mechanism to put these social security mechanism into effect. However, the level of compliance of the people may vary. They may comply to such mechanism because they aware or because they are afraid of the sanctions should they deliberately against the laws.The non-state social security mechanism may be more flexible and well apprehended by the member of religious/ social groups. However, to some extent they are less enforceable and presenting no legal certainty since they are not formalized by state laws. Therefore, the adherence to such mechanisms are greatly depend on the level of awareness of each community member.

In regard to zakat affairs, the pluralism of Indonesia, indeed, affected the practice of zakat affairs. Indonesian muslim people have other choices



of social funds to be disbursed in addition to zakat. Also, the level of awareness to zakat are different to every muslim. Moreover, the state and national laws on zakat have never forced Indonesian Muslim to pay zakat. Zakat is obligatory before the Islamic teaching but not before state laws. As a conclusion, whether zakat is a right or welfare, zakat is absolutely a right before Islam and Islamic tradition. However, when zakat has been secularized in a modern state like Indonesia, then zakat resembles welfare. Zakat resembles welfare in Indonesia since zakat disbursement is not mandatory before Indonesian law and so far there is no mechanism for zakat beneficiaries to claim their share on zakat funds.

Last but not least, Islam in Indonesia in Indonesian Islam and zakat in Indonesia is Indonesian zakat. We should not equalize and generalize the practices of zakat in Indonesia to other practices in different jurisdictions.


Chapter VII Conclusion

CHAPTER VIICONCLUSION

In summing up the socio political dynamic of zakat institutionalization in Indonesia, initially we must put zakat as part of Islamic teaching then as a religious instrument which has been secularized into state laws in Indonesian context.

Zakat is part of the teaching of Islam enshrined in Five Pillar of Islam and a religious instrument stipulated by God (Allah SWT) and exemplified by Prophet Muhammad PBUH. Nevertheless, zakat not just has religious and theological dimension but it also has social and political dimension. Moreover, if zakat has been secularized into national laws in a secular state.

Furthermore, zakat is not just a worship but also a tax. Zakat is a spiritual tax or religious taxation (in other word : mandatory philanthropy), for the reasons that zakat has almost similar characteristics to tax : (a) zakat is obligatory; (b), zakat must be collected by state even by force (even though the room for civil society must also be provided in zakat management) and (c) zakat fund could be utilized to finance social and development projects.

The social dimension of zakat comes from its original teaching. That zakat is taken from the rich people or those whose wealth have extended the limitation (nisab) in certain period (haul), to be disbursed to poor people or certain groups stipulated as zakat recipients/ beneficiaries (asnaf). Zakat is meant as income distribution so the poor people might be empowered and strengthened with the expectation that someday they will transform themselves as zakat payers (mustahiq to muzakki).

Thus, no doubt that zakat is meant to be a social security. It has almost similar concept with social security provided by the state in the form of social insurance, health insurance, insurance for accident, retirement, unemployment etc. The different things are, the zakat regulations have been stipulated by religious (Islamic) Law while state social securities are stipulated by state trough legislative bodies and executed by the governments.

Things will be more interesting when zakat as Islamic social security instrument is also applied (secularized) in a country along with state social security instruments. Not just applied, but in many countries, such as Saudi



Arabia, Malaysia, Pakistan, Sudan, Libya, Bangladesh and Indonesia, zakat have also been legislated into national laws.

As a country which recognizes pluralism, the institutionalization of zakat is not a big deal for Indonesia. However the challenges are still there. Which one must be prioritized by Indonesian muslim? paying income tax or paying zakat? Can they disburse the zakat money by themselves or must strictly follow the channels stipulated by zakat management laws? How accountable is the government is managing the zakat? How effective zakat money utilized to alleviate poverty?

The main challenge related to zakat is when it is put under modern state arrangement, particularly in semi-secular country like Indonesia. Nobody is argued that zakat is compulsory as stipulated by the God and the Prophet. However, when it comes to relation between zakat, muslim people and modern state, the practices may vary.

The practice of zakat administration in Saudi Arabia and Pakistan, as an example, are strictly regulated and imposed by the state. However in Malaysia, Jordan, Egypt, and other muslim countries, the practices are varied. The role and the level of involvement of the state are also varied. The complexity of zakat implementation in different countries represents the complexities of imposing religious laws in secular countries. Moreover, not just secular, people have some options of social security schemes where they have their own freedom to choose which one fit for them (like a shopping forum). The schemes can be originated from the state, community-based, or other sources.

In this regard, the zakat in Indonesia is actually ‘Indonesian Zakat’ (or Indonesian version to zakat) since the practices are different with other Muslim countries. Perhaps, only in Indonesia the civil society challenges the zakat laws to Constitutional Court and Supreme Court simply because such laws tend to discriminate and narrowing down the room of civil society in zakat management. Also, in some areas, people protested the local bylaws and strongly show their resistance to zakat management since the law did not meet their wants.

These situations take place because the Islam in Indonesia is also ‘Indonesian Islam’ (or Indonesian version of Islamic teaching) where disagreement could be expressed publicly facilitated by the democratic political atmosphere.



Therefore, one should not equalize the practice or Islam and the practice of zakat as similar to all Muslim countries. There are always the differences which partly caused by Indonesian pluralism.

Why the state of Indonesia secularize the zakat? Zakat administration in Indonesia had never been as state affairs until 1999 when the zakat law first passed by the parliament. Hence, this year was marked as the year when zakat nationally secularized and the year when the state really paid attention to zakat administration.

The potentiality of zakat funds nationwide might be among the reason the state of Indonesia involve in zakat management. This is understandable. Indonesia is the most predominantly Muslim country in the world with constantly rising economic development. There will be huge amount of zakat funds in Indonesia if all Indonesian Muslim people disburse their zakat money.

Institutionalization then took place by legislating some national laws on zakat management, followed by the enactment of numerous local ordinances in various provinces, cities and regencies throughout Indonesia.

Not just through legislation, the institutionalization took place by installing state-based zakat agency, namely BAZNAS in 2001. The Law on Zakat Management No. 23/ 2011, followed by Government Regulation No. 14 year 2014, Presidential Instruction No. 3 year 2014 and series of BAZNAS Regulations started from 2014, have strengthened BAZNAS position as the main administrator as well as regulator of zakat management all over Indonesia. Those policies were regarded as discriminative and unfair by civil society who have also been involved in zakat managemet which then lead to judicial review of the said zakat laws to Constitutional Court and Supreme Court.

The Verdict of Indonesian Constitutional Court upon judicial review of Law No. 23/ 2011 on Zakat shown that the state still insists that the primary zakat administrator in Indonesia is the state, through BAZNAS. Meanwhile, the non-state zakat administrators infest the position as supporting agents. All non-state zakat administrators must have authorization from Ministry of Religious Affairs after having BAZNAS recommendation in due course.

Among of the underlying argument of Constitutional Court to provide stronger position to the state in zakat management is the court hold that Indonesia is a religious welfare state, where the state has primary responsibility to secure



people’s rights over social security including in zakat affairs as Islamic social security instrument. The court also hold that when the state choose to centralize zakat management is also justified as a part of state’s legal policy (opened legal policy).

The researcher found that the court’s opinion on ‘religious welfare state’ is somewhat problematic. Indonesia is normatively a welfare state but in practical is not a welfare state. In other word, Indonesia is a minimalist welfare state where state’s budget and attention to social welfare issues are low. Therefore, why the could should use religious justification to acknowledge the state’s intention to centralize zakat management? There is a political motive behind this religious justification.

On the other hand, the Constitutional Court still guarantee the rights of the people to be as zakat administrator as long as they meet the requirements stipulated by the zakat laws. The Court hold that the criminalization and penal sanction for non-state zakat administrator, should they operate without state’s authorization is considered as violation to Indonesian Constitution 1945. The attitude of the court to take side with the state and at the same time still preserve the rights of the people to administer zakat is an opened legal policy which is, assumed fit and proper for Indonesian situation as religious welfare state (the term ‘religious welfare state’ is coined by Indonesian Constitutional Court in its decision over judicial review to Law on Zakat 23/ 2011).\

Instead of the resistance shown by legal action to National Court, other socio-political dynamic of Indonesian civil society toward zakat institutionalization have been shown by strong protest and disagreement in several areas.

Civil society and non-state zakat agencies in Indonesia are quite strong and well organized. The year of 1993 was marked as the birth of a modern non state private agency which introduces new approach in zakat management, namely Dompet Dhuafa Foundation. The birth of Dompet Dhuafa Foundation subsequently inspired many muslim people and organizations to also establish non-state zakat agency with professional approach, which differ them with the traditional agencies based in masjids, Islamic boarding schools as well as in Islamic foundations.

However, the modern development of non-state zakat agencies was not followed by state-based zakat agencies. Research conducted in three locations shown that the non-state actors are more progressive, creative and



more serious in administrating the zakat. Whereas, the existence of state-zakat agencies have already supported by local executives, local parliaments and local ordinances.

Research conducted at four different non-state zakat agencies shown that they have developed the professional approach in zakat administration, with clear goals, clear focus, variety of program (from philanthropy to empowerment) and also more accountable and transparent. In general, the researcher may conclude that the practices of zakat management shown by selected non state actors are in line with the ‘Rights-Based Approach” concepts which ontains some spirits and elements as follows : Long-term goals with a clear focus on people and their rights, Working together, Equity and non-discrimination, Accountability and Participation.

Rights-based approach is really a good tool in assessing development program and any program designated for people empowerment. All development program are certainly related or containing some elements of human rights.

The management of zakat, either by the state or non state actor also need accountability. Zakat money is belong to people. Zakat is dispensed by trust from zakat payers directly to zakat recipients or through private zakat agencies. Trust is very important in managing the zakat. Zakat payers will dispense their share of wealth to any agencies only if they trust to the agencies. And trust is built by accountability and transparency also by the clarity of to where and whom the money were disbursed and utilized.

When it comes to long term goals with a clear focus on people and their rights, in case of Indonesia, the goals are there. If we take a look at the Law on Zakat year 1999 and subsequently amended in 2011, the goals of zakat management in Indonesia are very interesting and idealistic. However, the implementation is different. The collection of zakat money is very low compared to its potentiality.

Even though some non-state zakat administrators are really well-performed, well-organized, modern, professional and having a very good iniatiative on zakat administration, such as empowerment, transforming mustahiq to muzakki, not just relief but release, et cetera, but also, there is an existing disharmony between state-based and non-state zakat agencies in administering zakat. Hard to see them working together to administer the zakat, particularly after the enactment of Law No. 23/ 2011 on Zakat



Management which has been unfriendly welcomed by non-state zakat agencies.

Zakat is also an instrument to reach justice for the poor. Zakat money, certainly, can not be accessed by all people. There is no equal right for everyone to be zakat beneficiaries, only those who belonged to eight types of zakat beneficiaries are able to obtain zakat beneficiaries. At this stage, zakat does not meet with first Rawls’s principle of justice. Yet, zakat meet with Rawls’ second principle of justice. The beneficiaries of zakat money are those who suffered from social and economic inequalities. The second part of Rawls’ second principle is concerned with distributive equity as well as overall efficiency, and it takes the form of making the worst-off members of the society as well off as possible. And, the beneficiaries of zakat are among those who have the worst social and economic conditions.

Does the institutionalization of zakat contribute to the enjoyment of right of social security in Indonesia?

In Indonesia (like in any other country in the world) social security is not produced and provided solely by the state. We may say that state is the primary social security provider. However, long before the modern state was established (in each society), people does have their own social security mechanism. The source of non-state social security mechanism can be from religious values, adat (customary) values or local community and group values. Hence, the state cannot claim that social security in this country provided only by the state. We may say that state is the primary provider and duty bearer of social security but we may not say that social security in Indonesia is provided solely by the state.

The benefit of social security which is managed by the state are: (1) formalized and legalized by the state; (2) it has legal certainty through state legislation and enactments; and (3) enforceable; there are some reward and punishment mechanism to put these social security mechanism into effect. However, the level of compliance of the people may vary. They may comply to such mechanism because they aware or because they are afraid of the sanctions should they deliberately against the laws.

The non-state social security mechanism may be more flexible and well apprehended by the member of religious/ social groups. However, to some extent they are less enforceable and presenting no legal certainty since they are not formalized by state laws. Therefore, the adherence to such



mechanisms are greatly depend on the level of awareness of each community member.

Social security rights are also secured in Indonesian legal system. The 1945 Constitution embodied social security rights in specific article. This rights also appear in some Indonesian laws such as employment law, social welfare law, and so on.

However, present attitude toward social security shown by governments and common people are generally still poor. They regard this right as simply a normative right. Less efforts have been shown to claim or fight for it. Especially in Indonesia.

In Indonesian present situation, social security right is not an attractive right compared to civil and political rights or even to other ECOSOC rights like right to health, right to education, right for employment or right to food.

In regard to zakat and social security right, zakat is not a philanthropy or welfare. Zakat is right, right before Islamic teaching. The Holy Qur’an provide the right of the beneficiaries to claim it and imposing obligation of certain people who meet the requirement (as zakat payers) to dispense it. However, when it comes to institutionalization of zakat in Indonesia, it is pretty difficult to categorize zakat as a right before Indonesian Law. Zakat is not treated as obligatory in all state laws. There is no legal obligation to disburse zakat and no legal punishment for those who refuse to disburse their zakat funds. The disbursement entirely depend on the state of awareness of zakat payers.

The next reason why zakat is not a right before Indonesian law is there is no mechanism for zakat beneficiaries to claim their share over zakat funds. The rights and obligation is there (before Islamic teaching) but still the fulfillment of this right is unforceable and unclaimable before Indonesian laws. Even the institutionalization of zakat by the state can not guarantee the rights of beneficiaries over zakat funds. At this point, zakat resembles welfare, rather than ‘right’.

Zakat meet the requirements to be categorized as rights. Yet, in Indonesian situation, zakat is unenforceable. Likewise, the institutionalization of zakat in Indonesia can not force the collection of zakat. On the other hand, half of Muslim people treat zakat as philanthropy, not a mandatory one. Whereas, the law enforcement of zakat law is strongly related to the level of awareness of zakat payers, not depend on legal compliance to national zakat laws.


Glossary

GLOSSARY

Amil : Zakat Administrator

Ashnaf : Eight types of zakat recipients

Baitul Maal : House of Wealth/ Treasure

BAZ : Badan Amil Zakat (Zakat Agency)

BAZCAM : Badan Amil Zakat Kecamatan (Sub-District-

basedZakat Agency)

BAZNAS : Badan Amil Zakat Nasional/ National Zakat

` Agency

BAZKAB : Badan Amil Zakat Kabupaten/ Regency-

based Zakat Agency

DPD : Dewan Perwakilan Daerah (Council of

Provincial Representatives/Senate)

DPR : Dewan Perwakilan Rakyat (House of

Representatives/ Parliament)

DPRD : Dewan Perwakilan Rakyat Daerah (Local

Parliament)

Haul : Certain minimum period applied to disburse

zakat


Glossary

ICESCR : International Covenant on Economic Social

and Cultural Rights

IDR : Indonesian Rupiah

Infaq : Dole/ Alms (usually in the form of money)

Inpres : Instruksi Presiden/ Instruction of President

JOD : Jordanian Dinar

Kifarat : Kind of fine which is paid as a consequence

of violating a worship

LAZ : Lembaga Amil Zakat/ Non-state ZakatAgency

Mahkamah Agung : Supreme Court

Mahkamah Konstitusi: Constitutional Court

MORA : Ministry of Religious Affairs

Mustahiq : Zakat recipients

Muzakki : Zakat payers

MYR : Malaysian Ringgit

NAD : Nanggroe Aceh Darussalam (old name of

Aceh Province)

Nishab : The minimum amount of zakatable money/

assets


Glossary

PBB : Pajak Bumi dan Bangunan (Land and

Building Tax)

PBUH : Peace Be upon Him (addressed to Prophet

Muhammad)

Perda : Peraturan Daerah/ Local Ordinance/

ByLaws

PP : Peraturan Pemerintah/ Government

Regulation

RI : Republik Indonesia/ Republic of Indonesia

Sedekah/ Shodaqoh : Alms/ Dole (but not only in the form of

money)

UU : Undang-Undang/ Laws

USD : US Dollar

Qanun : Local Ordinance in Aceh Province

Wakaf/ Waqf : Endow the land to the God as a part of

worship

Waris : Inheritance

Zhimmis/ Dhimmis : Non Muslims who live in Islamic Countries


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List Of Interviewees

LIST OF INTERVIEWEES

NO NAMEPOSITION/ OCCUPATION/

ORGANIZATIONPLACE OF INTERVIEW

TIME OF INTERVIEW

1 RasmudinHead of Office BAZNAS Propinsi Sulawesi Selatan

Makassar City, South Sulawesi

1 February 2013.

2 Katjong TahirTreasurer of BAZNAS Kota Makassar

Makassar City, South Sulawesi

1 February 2013.

3 Andi SabriFormer Member of Bulukumba Regency Parliament 1999 – 2004

Bulukumba Regency, South Sulawesi

3 February 2013

4 Burhanuddin SalamFormer Member of Bulukumba Regency Parliament 2004 - 2009


4 February 2013

5. KamaluddinAdvisor of BAZNAS Kab. Bulukumba


4 February 2013

6 TjamiruddinFormer Chairman of BAZNAS Kab. Bulukumba


4 February 2013

7 Prof. Didin HafidhuddinChairman of BAZNAS (National Zakat Agency)

Jakarta (BAZNAS Office)

29 August 2012

8 Abdan Lillahil AhadIndonesian Master Student in Amman, Jordan

Amman, Jordan22 September 2012

9 Khaldun SalamahLecturer, Islamic School of Zarqa, Jordan

Zarqa, Jordan22 September 2012

10 Pun Ardi Member of Padang City Parliament

Padang City, West Sumatra

11 AzwarMember of Padang City Parliament


12 Syamsul Bahri Head of BAZNAS of West Sumatra


17 September



2012

13 Suryama Advisor of PKPU Jakarta

14 Musfi YendraHead of Dompet Dhuafa West Sumatra Branch


17 September 2012

15 Sabeth AbilawaCorporate Secretary of Dompet Dhuafa


16 September 2012

16 Sri Adi Bramasetia Deputy Director of PKPU Jakarta 22 July 2013

17 Abdul GhofurHead of Fundraising Program, Dompet Dhuafa

Tangerang25 September 2012

18 Prof. Ahmad BuangProfessor of Islamic Studies University of Malaya

Central Jakara10 September 2012

19 Prof Raihanah AbdullahProfessor of Islamic Studies University of Malaya

Central Jakarta10 September 2012

20Dr. Pamungkas Hendra Kusuma

Head of Division at Rumah Zakat Indonesia

Tangerang

21 Acep Lu’luddinHead of Division at Rumah Zakat Indonesia

South Jakarta

22 Arifin PurwakanantaDirector of Dompet Dhuafa Foundation

South Jakarta2 March 2013

23 Sabeth AbilawaDeputy Director for Advocacy Program Dompet Dhuafa Foundation

Ciputat, Tangerang

19 July 2013

24 Nana MintartiDirector of Communication and Public Relation of Dompet Dhuafa

Ciputat, Tangerang

19 July 2013

25 Nur EffendiExecutive Director of Rumah Zakat

Bandung, West Java

23 July 2013

26 FadhullahDirector of Operational of Harapan Dhuafa Zakat Agency

Serang, Banten Province

26 July 2013



27 Masrul AidiBoard of Advisors Baitul Maal Banda Aceh City

Banda Aceh, Aceh Province

30 October 2013

28 Hilman Rosyad Shihab

Former Member of Indonesian Parliament 2004 – 2009 (the legislator of Law No. 23/ 2011 on Zakat Management)

Depok, West Java

4 June 2013

29 Darwin Member of Bukittinggi Regency Parliament, West Sumatra

Bukittinggi, West Sumatra

13 April 2013

30

KOMAZ

Koalisi Masyarakat Zakat)

Alliance of Zakat Community from various non-state zakat organizations

Depok, West Java

FGD in Depok 15 November 2013

31ETOSERs University of Indonesia

The recipients of Dompet Dhuafa scholarship for education

Depok, West Java

FGD in Depok

October 2013
