Fund Mobilization: Tabung Haji

As an institution established and managed to conform to Islam, Th ensures that management of depositors’ saving is in accordance with tenets of Islam. In implementing its functions as a savings institution, Th adheres to the Islamic principle i.e. aqad izin, the depositors give consent to Th to manage their deposits for the purpose of investment.

One of the main strengths of Th is in its almost monopolistic position in pilgrims’ management. The monopoly is derived from provisions within the Th Act which precludes any other individual or entity to operate Hajj services in Malaysia unless with the consent from the minister in charge of Th. From the commercial point of view this monopolistic position assures Th regular inflows of pilgrims’ deposits each year.

Over the years, Th is being accepted as a financial institution that carries out its financial activities according to Shari‘ah principles that continue to be a key area of strength in attracting potential Muslim depositors. The increasing number of depositors annually proves this. Th encourages savings not only for the purpose of pilgrimage but also for other beneficial needs of depositors. For each Ringgit saved by a depositor the government of Malaysia undertakes to guarantee the deposit Ringgit per Ringgit. This guarantee adds confidence to depositors that their savings are not only wisely managed but also guaranteed by the government.

The profits derived from the investment then are to be distributed among the depositors in the form of bonus. This is done after Tabung Haji has determined the net distributable profit for the year after the payment of zakat.

Source: Towards Islamic Banking: Experience and Challenges, Institute of Policy Studies. Republished with permission.