THE ROLE OF ISLAMIC ECONOMIC INSTITUTIONS IN THE

ECONOMY

TABUNG HAJI
The Role of Tabung Haji in Malaysian
Economy
Obligatory to perform Hajj for muslim
• Obligatory to perform hajj once in a lifetime of a muslim
Preforming Hajj: Individual Financial
Management to Meet the Intention
 Economics of Hajj and Umrah

The distance from Mecca to Malaysia is 7951 km or 4941 miles.

A typical flight between Mecca to Malaysia would have a flying time of about 9 hours 53
mins
23 December 1949 -- Some
of the 1,171 pilgrims from
Johor and northern Malaya
who arrived at the Singapore
port after a two-week
quarantine on St John Island
Facilities needed
during
performing hajj
• Transportation from
Malaysia to Mecca
• Accommodation during
stay in Mecca
• Healthcare during
travelling and staying in
Mecca
• Food and other needs
during stay in Mecca
• Other services
 Problem among muslims in perfoming hajj prior establishment of TH
Unsystematic Saving
In the early days, Islamic
community in Malaysia resorted
to rather unsystematic and
traditional methods when it
comes to saving their money for
the purpose of performing the
holy pilgrimage.
Dilemma of “RIBA” Lost of Property Freeze of Asset Economics condition after Hajj
Most believed that Another critical focus Such unsafe and Pilgrims returning home suffered
money kept under the relates to the selling imprudent ways economic instability with the loss
pillow at home is a off their land and create a freeze on of their vital assets in life such as
guaranteed way to property for the same asset liquidation and houses, and breeding animals
preserve its integrity purpose. hinders the growth of which have either been sold or
and free of ‘riba’ the nation’s mortgaged in order to enable
practices. economic resiliency. them to go perform their hajj.
12
The Establishment of the Prospective
Hajj Pilgrims Savings Corporation

• The idea to set up the the Perbadanan Wang Simpanan

Bakal-bakal Haji (PWSBH) was born out of a proposal made
by renowned Malay economist Royal Professor Ungku Abdul
Aziz bin Ungku Abdul Hamid in December 1959 to the
Federal Government of then Malaya.
• Following that, muslim intellectuals and the government in
early 60’s were compelled to do something for Malaysian
Muslims’ interest in the world and the hereafter.
Tabung Haji
• To overcome this problem, a working paper on “A Plan to Improve
The Economic Position of Potential Pilgrims” was presented to the
Government by the Royal Professor Ungku Aziz in 1959 with the
objective of setting up a ‘riba free’ financial institution operating on
a profit basis in line with Islamic principles.
• The proposal was fully endorsed and praised by Sheikh Muhammad
al-Shaltout, the Grand Mufti of Egypt who visited Malaysia at that
time.
 The Establishment of the Prospective Hajj
Pilgrims Savings Corporation 1963

1 2 3 4

Their main objective

The first step was taken with then was purely to
the establishment of the Beginning 30 When it started its ensure that their
Perbadanan Wang Simpanan September 1963, operation in 1963, savings were secure and
Bakal-bakal Haji (PWSBH) or Perbadanan Wang a total of 1,281 free of usury to enable
Prospective Hajj Pilgrims Simpanan Bakal- prospective them to fulfill the fifth
Savings Corporation under Law bakal Haji pilgrims opened pillar of Islam and to
No. 34, 1962, in 1963 (PWSBH ) created their accounts attain the hajj accepted
history by with a total by Allah.
The corporation was placed opening counters savings of
under the Ministry of Rural to collect deposits RM46,610. Dividend and bonuses
Development. from prospective were not in the mind at
hajj pilgrims in all at that time.
the country.
EVOLUTION OF ACT AND CORPORATE LOGO
Deposit taking
• Previously using contract of wadiah yad dhamanah
• TH change to Wakalah beginning December 31, 2019
• TH as a wakil to manage depositors money
• Wakalah: mean delegation of one’s affairs to another (penyerahan
kuasa).
Legitimacy of wakalah:The Quran al=Kahf-19)

• So send one of you with this silver coin of yours to the city and let him
look to which is the best of food and bring you provision from it...”
(Surah al-Kahf, verse 19)
Legitimacy of wakalah: Sunnah

• “`Urwah reported that the Prophet (peace be upon him) gave him a dinar to buy
a sheep. He bought two sheep, sold one of them for a dinar, and brought him a
sheep and a dinar. So the Prophet (peace be upon him) invoked a blessing on him
in his business dealing, and he was such that if he bought dust he would make a
profit from it...” (Sahih Bukhari, Hadith no. 3370)
 Components of wakalah contract

Wakil (agent)

Muwakkil (the
principal)

Al-Muwakkal bih
(the subject matter
of the wakalah Sighah (The Offer And
contract). Acceptance Or Ijab And
Qabul)
Scope of the Wakalah
Scope of the
Wakalah

General Wakalah Specific Wakalah

Buy me a bungalow
Buy me a house”
which costs about
without specifying
RM1 million via
any condition
instalment payments
 In an agency contract, the principal can either pay
his agent, or not.

The basis for the permissibility of paid agency is due

to the fact that the agency is useful work for which
Payment to the agent has the right to ask for remuneration.

the agent When the agency is paid, its ruling falls under the
rulings of ijarah.

The non paid agency is also allowed since it is

regarded as a form of charitable act.
 Functions and
Services of Tabung
Haji

Depository, providing
savings services Hajj Services in
Investment
based on Shariah Malaysia and Mecca
compliance

Hajj classes in
Malaysia

Mecca
The Roles and Functions of TH
TH’s Six (6) Main Thrusts
 • TH has introduced the Savings Islamic concept
with a guarantee by the government called Al-
Wadiah Yad-Dhamanah which means the
management is not bound to give any return on the
Depository savings based on this concept.

Services • Depositors do not feel doubtful because TH has

guaranteed pure and clean savings through Shariah
compliance, giving the tax exemption due to the Tithe
(zakat) being paid for and a competitive bonus,
annually.
 • Tabung Haji is a well-known institution
performing excellent, systematic and structured
services for Malaysians in performing their Haj.
Hajj Services • TH’s efficiency and integrity in conducting
Malaysian pilgrims have gained world
recognition, including from the government of
Saudi Arabia.
 • In fact, TH has been ranked first in terms of the
management of the pilgrims by Muassasah
Adilla, an institution under the Ministry of
Hajj in Saudi Arabia.
Hajj Services • The selection was based on several aspects,
such as discipline, regulatory compliance and
understanding of Malaysian pilgrims during their
stay in the Holy Land. TH’s management is
divided into:
 Guidance Division.

Hajj This division is responsible to increase knowledge and

understanding on Hajj, Umrah and Ziarah, increase
awareness of the real situation in the Holy Land and

Services create committed members of a religious conscious

community after returning from performing their Hajj.

It is responsible to coordinate and provide an integrated

guidance module through the following programs:
 Hajj Services
Basic Hajj Course.
The first stage of the hajj
course to be attended by the
pilgrims before departing for
the
Holy Land which covers basic
knowledge related to Hajj
Rituals, Healthcare and Hajj
Management.
The classes are conducted at
the mosque every weekend
for 2 hours for each session
of 17 series starting in the
Rabiulawal month.
Intensive Hajj Course
The second stage of the Hajj
course covers 2 days of the
practical aspects of the Hajj
and Umrah rituals which is
held in the month of Rejab
and Syaaban every year.
The modules include Hajj
Rituals, Health Care and Hajj
Management while in
Malaysia and the Holy Land.
Special Hajj Course.
Offers a one day course
focusing on the
participants scoring below
39% for
understanding the Hajj
rituals during the Intensive
Hajj Course held earlier.
It stresses on the practical
exercise of the Hajj rituals in
a smaller and more focused
group and also invites those
who are selected at
the last minute to perform
the Hajj.
Prime Hajj Course.
The final course held in the
Syawal month is to be
attended by all pilgrims who
have
been selected to perform
Hajj in the current year.
This course provides more
practical hajj and umrah
exercises in a larger
congregation which gathers
all the pilgrims from all
districts of the state. It
involves
simulated Hajj activities
such as ‘staying for a
while’ (Mabit) and ‘casting
of pebbles’ at night. The
pilgrims will spend a night at
the venue of the course.
Investments.
• Depositors’ savings are invested
in Shariah-compliant activities to
generate sustainable and
competitive returns.
• The main objective is to deliver
sustainable and competitive
returns to the depositors within
acceptable risk levels.
 The TH portfolio investment focuses on
equity, fixed income and property.

Investments.
The main focus of the equity
investment is to generate sustainable
and competitive returns from capital
gains and dividends at a reasonable risk
level that commensurate with the
prevailing market conditions.
Investments.

Besides that, the main objective of the Fixed Income Investment is

to generate sustainable and recurring income for the invested
funds and to construct a medium- term fixed income portfolio.

The investment strategy focuses on instruments which are at a

reasonable risk level and return in accordance with the policies
and procedures.
 • TH has introduced the Al-Ansar Bumiputera Fund
launched under the Restricted Investment
Account “RIA”. This is the first in Malaysia
approved by Bank Negara Malaysia under the
Islamic Financing Scheme Act 2013 (IFSA) and
supported by the YAB Prime Minister.
Investments. • This fund provides financing and credit facilities
amounting from RM50, 000 to RM1 million in 5
years, with a shariah-based concept of Tawarruq
which is managed by Bank Islam Malaysia Berhad
and is disbursed to the Muslim Bumiputera
Entrepreneurs and Small Medium Enterprises
(SMEs).
 • This fund aims to strengthen Muslim Bumiputera
Investments. Entrepreneurs and SMEs by providing financing
for the purpose of working capital and/or capital
expenditure, in order to expand their businesses.
 • TH has given the priority in 11 sectors to
expand their businesses which is Halal Food,
Oil and Gas, Education, Health, Agriculture
and Agro-based, Construction, Transport,
Telecommunications support and Utilities,
Investments. Wholesale, Retail and Hospitality.
• This is aligned with the Government’s hope to
empower the Bumiputera’s economy by
supporting them via financing contracts or
working capital.
ASSET ALLOCATION
Number of Depositors and Savings Amount
Year Number of Depositors’ Savings
Depositors (RM Billion)
2010 5,627,000 27.1
2011 6,956,000 31.7
2012 8,171,000 38.3
2013 8,304,00 45.7
2014 8,600,000 16.0
2015 8,850,000 18.3
2016 9,100,00 67.704
2017 9,300,000 70,780
 Number of Depositors (in Million)
9.4
9.27
9.21
9.2 9.1

9 8.97

8.8
8.8 8.75

8.6
8.6

8.4 8.3
8.2
8.2

7.8

7.6
2012 2013 2014 2015 2016 2017 2018 2019 2020
 Zakat Tabung Haji (RM Million)
120

106 107

100

86 86

80
68
59 60
60
53
47
44
40

20

0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
TH BUSINESS SPECTRUM
Subsidaries of Tabung Haji
Investment of Tabung Haji
• The involvement of TH in the Islamic Finance Sector is through wholly-
owned subsidiary, BIMB Holdings Berhad. BIMB Holdings Berhad (BHB).
• BHB status as the only listed Islamic financial institution in the country has
enable it to offer end-to-end Shariah-compliant financial services to the
market, from banking to takaful to stockbroking.
• BHB focused on key areas including asset quality, financing cost, proactive
capital management and strengthening risk management.
• With strong support from its subsidiaries comprising of Bank Islam
Malaysia Berhad (Bank Islam), Syarikat Takaful Malaysia Berhad (Takaful
Malaysia) and BIMB Securities Sdn. Bhd. (BIMB Securities), BHB is enable to
improve its performances.
Tabung Haji Investment in Real Estate
• TH has invested in few real estates in Malaysia and outside Malaysia
including office building, hospital, factory, hotel, commercial property
and shopping mall.
• In total 146

67
68
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Kompleks Pentadbiran Islam Putrajaya

70
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TH and Charity
TH has mobilising food and financial assistance during the Movement Control Order
(MCO) period. A total of RM19.2 million was channelled under various initiatives.
 Employm
Halal ent Fund
Food Mobilizat
Industry ion

Riba
free Human well
being
Basis

The
Economic
and social
Malaysia impact of
Tabung Haji
Training
Scheme
zakat
(SL1M)

Perform
the 5 th Corporate
Social
Pillar in Responsibility:
Islam: Fund
Muslim Aids for
Brotherh Muslim
ood Entrepre
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