KUALA LUMPUR: Lembaga Tabung Haji (Tabung Haji), which underwent a restructuring plan recently, is planning to remove the subsidy for first-time pilgrims except those in the bottom 40% income group (B40), likely from next year onwards, sources said.
It is believed that the pilgrims fund had initially planned to announce the move this year, but decided to postpone it pending the green light from the “higher-ups”, according to one of the sources who are familiar with the matter.
“They (Tabung Haji) are making some necessary arrangements to reduce the impact of the subsidy removal on the public. It is uncertain when the announcement will be made, but word is going around that it might happen next year,” the source added.
Tabung Haji has been subsidising first-time pilgrims including those accompanying them for years, having spent over RM1 billion in a decade. In 2019, the cost of the haj pilgrimage subsidy borne by the fund amounted to RM400 million, according to reports.
It is worth noting that in the letters sent out to those who have been chosen to perform their haj this year, pilgrims have the option to accept or forfeit the subsidy.
When contacted, a spokesperson for Tabung Haji said the subsidy remains for those performing their haj this year but he is unable to comment on future pilgrimages.
It is believed that by removing part of the subsidies, the pilgrims fund will be able to improve dividends in the longer run.
Three months ago, Tabung Haji announced that it had restored its financial health after completing its restructuring plan in May 2019 by transferring underperforming assets with a market value of RM9.63 billion to Urusharta Jamaah Sdn Bhd (UJSB) in exchange for RM19.9 billion, comprising sukuk totalling RM19.6 billion and RM300 million in cash.
UJSB is a special-purpose vehicle set up by the finance ministry to manage the pilgrimage fund’s underperforming assets.
The transfer was completed on Dec 28, 2018.
“The difference of RM10.3 billion between the consideration of RM19.9 billion and RM9.63 billion market value of assets is to be borne by the government to ensure that the financial health of LTH (Tabung Haji) is restored,” UJSB had said in statement on this late last year.
Tabung Haji has been put under the supervision of Bank Negara Malaysia since January last year as part of its restructuring plan after the Pakatan Harapan-led government found discrepancies in the fund’s financial records during the previous administration.
This followed reports by the Auditor General and PricewaterhouseCoopers, which revealed that Tabung Haji had failed to recognise impairment losses involving several associate companies and subsidiaries exceeding hundreds of million ringgit.
The fund’s financial distress was further aggravated by the weakening of the stock market in 2018, leading to a bigger deficit of RM10 billion as at Dec 31, 2018 from RM4.1 billion a year earlier, as well as the adoption of a new accounting policy in the same year.
Among companies listed on Bursa Malaysia, Tabung Haji is the biggest shareholder of TH Plantations Bhd and BIMB Holdings Bhd with 73.84% and 53.47% interests respectively.