Investment in Equities: Tabung Haji

 This type of investment is equivalent to the uqud al-ishtirak. Most of Th’s investment is in quoted companies as they are easily marketable. In cases where Th’s holding is more than 10% of the company’s equity, Tabung Haji seeks board representation. Th board members and/or senior officials sit on the board of the company to represent it and thus look after the interest of Tabung Haji. Also Th officers make regular visits to the factories and offices to keep in touch with the progress to be informed of the future plans of the company. Furthermore, Th officers make constant reviews on the companies’ performance.

Th has also established wholly owned companies where it also participates actively in the management. Presently, Th has incorporated and own 14 subsidiary companies. These subsidiaries can be grouped into three main sectors, i.e. plantation, project management and services.

Figure 13: Th Subsidiaries

The plantation sector is the most profitable group of companies and they contribute a reasonably high amount of dividends to Th. Th has also invested in palm oil plantation in Indonesia as well as in the Philippines.

The project management sector includes property development. This sector was also effected with the economic crisis of 1997 to 1999 when prices of properties and demand for project management remain very low. Nonetheless, these are picking up mainly due to the government’s efforts of providing numerous incentives to encourage property purchases in Malaysia.

The services sector is a stable sector where the demand is rather predictable. The services provided also complement Th’s operations such as travel management, food catering and its infrastructure. These synergies are mutually beneficial for Th, the subsidiaries and more importantly, the depositors.

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