Frankly Speaking: Close TH loophole

This article first appeared in The Edge Malaysia Weekly, on January 21, 2019 - January 27, 2019.
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Last month, Bernama reported that Lembaga Tabung Haji (TH) is planning to put a cap on the total deposits of each depositor as a way to reduce government liabilities.

However, last Tuesday, TH downplayed the plan and essentially said it is shelved for now.

“We have to think about the implications of it. I think it’s something we’ll put on the back burner (and) later probably revisit, but certainly not now,” said group managing director and CEO Datuk Seri Zukri Samat.

But TH should treat this matter with more urgency as the fund is, arguably, already being taken advantage of by a small number of depositors.  Note that deposits in TH are guaranteed by the government through the Tabung Haji Act 1995, meaning there is no risk in putting money into the fund.

TH also pays hibah (dividends) consistently and virtually acts as an unpaid investment fund manager for its depositors.

The combination of these attributes has led to a minority dumping their riches into the fund as a way to grow their wealth cheaply at zero risk.

For perspective, in Amanah Saham Bumiputera, the top 9% control 80% of invested funds, while in the Employees Provident Fund, the top 13% of members own 47% of active savings.

There is little reason to believe that such stark displays of inequality is absent among the 9.3 million TH depositors. The management even confirmed that one person had withdrawn RM10 million recently.

Given TH’s raison d’être of helping depositors save for performing the haj, it is inappropriate to allow its continued abuse as an unintended risk-free investment manager.

Amending the Tabung Haji Act to impose a reasonable cap on how much each depositor can put into their TH accounts would achieve this. It is simply a matter of political will.

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