TH's RM10 Bln Loss Could Have Funded B40 Haj Pilgrims For Over 20 Years
By Nor Baizura Basri
KUALA LUMPUR, July 31 (Bernama) -- The RM10 billion loss incurred by Lembaga Tabung Haji (TH) could have funded haj subsidies for a larger number of muassasah pilgrims -- particularly those from the B40 group -- to perform the pilgrimage over a period of more than 20 years.
Muassasah pilgrims are individuals who perform the haj using the standard, government-regulated pilgrimage system managed directly by TH.
The report by the Royal Commission of Inquiry (RCI) revealed governance weaknesses and imprudent investments that should never have occurred, as it has led to a crisis of confidence regarding the integrity of the 63-year-old institution.
As such, the institution faces a monumental task in restoring public trust in the credibility that TH has built up for so long.
Losses Could Have Covered Haj Expenses
Dr Mohd Faisol Ibrahim, a senior lecturer in Economics and Islamic Banking at the Faculty of Economics and Muamalat, Universiti Sains Islam Malaysia (USIM), said that if TH’s RM10 billion loss incurred between 2014 and 2020 were averaged out, the funds could have funded more Malaysian Muslims, particularly those in the B40 income group, to perform the haj over a period of more than 20 years.
“Assuming the haj cost for the B40 group was RM10,980 per person (at that time), it is projected that 910,747 individuals from the B40 group could have performed the haj over a 25-year period, with an average of 36,430 people annually.
“This figure already represents more than the entire 0.1 per cent yearly quota allocated by the Saudi Arabian government to Malaysia, based on its total population of approximately 34 million. This is a significant figure," he told Bernama today.
Previously, the basic haj fare for muassasah pilgrims was maintained at RM9,980 from 2014 to 2019, despite the actual cost of performing the haj increasing, with TH absorbing the difference through returns from its investments.
Notably, the haj subsidy rose from RM106 million in 2014 to RM300 million in 2019.
For the 1447H/2026M haj season, the government has maintained the haj cost for muassasah pilgrims at RM33,300 per person, while continuing the income-based payment structure.
Under the arrangement, the haj cost for pilgrims in the B40 income group is set at RM15,000, M40 group would pay RM23,500, and T20 pilgrims would pay the full amount of RM33,300, with TH bearing the remaining cost.
Tabung Haji Issue: A Cautionary Tale
The release of the TH RCI report has had far-reaching implications, not only for TH's management but also as a warning to other institutions, including the National Audit Department, Bank Negara Malaysia (BNM), the Ministry of Finance and the government, said Mohd Faisol.
He said the issue is not to be taken lightly; instead, the government must thoroughly examine every finding of the report to ensure such incidents do not recur.
The Muslim community is highly sensitive to any issue that could tarnish the reputation of TH, one of the country's most trusted Islamic institutions, which helps Muslims save for the haj and manages haj pilgrims in a safe and orderly manner, he said.
"The release of the TH RCI report came as a profound shock to depositors, as it revealed numerous governance failures by those entrusted with managing TH.
"These failures had a prolonged knock-on effect on TH's financial position, forcing the sale and restructuring of various assets to safeguard the institution," he said.
Mohd Faisol noted that the report highlighted management weaknesses in terms of governance, legal compliance, leadership, investment, and accounting, as well as instances of waste.
Restoring Confidence, A Lesson Learnt
To regain the confidence of the Malaysian Muslim community, there are several steps that can be taken by TH, including not allowing political appointments in the top management positions in TH and its subsidiaries, said Mohd Faisol.
He also proposed the appointment of a religious affairs minister who has a background not only in Islamic studies but also in economics, finance or Islamic banking.
At the same time, he also proposed that the bonuses improperly awarded be recovered from the management, while those found guilty of misappropriating funds, manipulating data and documents, as well as making decisions that resulted in losses between 2014 and 2018, should be held accountable.
The RCI report has recommended the recovery of bonuses amounting to RM2.19 million paid to members of the TH board of directors and the management of TH Properties, as the payments were made without complying with the stipulated regulations.
"The Muslim community will understand and accept this situation without TH having to jeopardise its position by offering high hibah rates to depositors merely to gain public support, when the reality is that its liabilities are higher than its assets.
"The public must also understand that TH is not like a bank that focuses on generating profits from every product offered to customers. Instead, its role is to help manage savings for the purpose of performing the haj and assist Muslims in performing their pilgrimage in a systematic and safe manner.
“If the people can understand this, then the lower hibah (profit distribution) payout to depositors will not become an issue, as hibah is merely an added benefit to TH savings and not the main priority of depositors," he said.
Mohd Faisol said the government could take several steps to ensure the recommendations proposed by the RCI are enforced at the institution.
“Perhaps the time has come for the current government to make a bold and decisive move to ensure the sustainability of TH -- namely, by strengthening the Tabung Haji Act 1955 through the enforcement of provisions prohibiting the appointment of politicians to the top management structure,” he said.
The 211-page RCI report highlighted various issues, including excessive bonus payments, loss-making investment decisions and inefficient management.
It is deeply regrettable that an Islamic institution that had become a model for many countries due to its efficient haj management nearly collapsed because of management weaknesses.
BNM's warnings to the institution since 2014 should have been given due attention, as the central bank had expressed concerns over TH's financial position and management before the crisis intensified in 2018.
With the release of the TH RCI report, it is hoped that TH can restore the confidence of Muslims in its ability to manage substantial funds effectively for the well-being of the ummah.
Most importantly, TH must return to the original purpose of its establishment, as envisioned by the late Royal Professor Ungku Abdul Aziz in 1959, which was to assist Muslims in fulfilling the fifth pillar of Islam.
-- BERNAMA