TH Welcomes Amendments to Tabung Haji Act, Committed to Strengthening Governance and Depositor Trust

Lembaga Tabung Haji (TH) has welcomed the government's move to amend the Tabung Haji Act 1995, in line with recommendations by the Royal Commission of Inquiry (RCI), to further strengthen governance at the Islamic financial institution.

In a post on its official Facebook page, TH said the proposed amendments would help reinforce governance and ensure the trust entrusted to the institution remains protected.

"As an Islamic financial institution that manages the savings of Muslims for the purpose of performing the hajj, TH is committed to continuously strengthening governance, transparency and integrity to safeguard the interests of depositors and the sustainability of the institution," it said.

TH added that it would continue to support efforts to improve its governance framework, to strengthen depositors' confidence and ensure the institution's mandate is preserved for future generations.

RCI Recommendations and Governance Overhaul

The government's proposed amendments come following the RCI's recommendations on TH, with the changes aimed at reinforcing the institution's governance and accountability framework. The RCI, in its 252-page report, found that the current legislation grants extensive powers to the minister responsible for TH, including the appointment and removal of board members, approval of investments, declaration of hibah and oversight of key operational matters.

The commission concluded that several provisions are no longer suitable and recommended comprehensive amendments to modernise the legal framework governing the pilgrimage fund. Among its key proposals is the introduction of statutory requirements governing the appointment of board members, including clearly defined eligibility criteria, professional qualifications and expertise.

The RCI also recommended prohibiting active politicians from serving as the chairman or members of the TH board and its subsidiaries. Additionally, it proposed that the dismissal of board members should no longer rest solely with the minister, but instead be referred to an independent advisory committee.

Clearer Ministerial Roles and Financial Governance

The commission further recommended restructuring the institution's governance framework, including separating oversight responsibilities between the minister responsible for religious affairs and the finance minister. Under the proposed arrangement, the Religious Affairs Minister would be responsible for matters related to hajj management, while the Finance Minister would oversee financial matters, funds and investments.

The RCI also recommended that the appointment of TH board members and the chief executive officer be made by the Prime Minister based on recommendations from an independent advisory committee. On financial governance, the commission recommended that TH's investment functions remain within the institution through a dedicated department, known as Dana Haji, and be regulated by the Securities Commission Malaysia.

Government Commitment to Reform

On Sunday, Prime Minister Datuk Seri Anwar Ibrahim, in a post on Facebook, said the government would implement amendments to the TH Act 1995 (Act 535) to ensure that the trust of Muslims continues to be preserved. Anwar, who is also the Finance Minister, said the amendment was among the steps taken by the MADANI Government to strengthen governance and ensure that every institutional weakness is firmly corrected.

"Governance must continue to be strengthened, institutions cleaned and every weakness firmly corrected. The Tabung Haji Act will be amended to preserve the trust of Muslims," Anwar said.

The Prime Minister's commitment reflects the government's recognition that robust governance is essential to maintaining public confidence in TH, which manages the savings of millions of Malaysian Muslims. The proposed amendments are seen as a critical step in addressing the governance weaknesses identified by the RCI and ensuring the institution's long-term sustainability.

Stakeholder Engagement and Implementation Progress

Engagement sessions with stakeholders are currently underway to gather feedback on the proposed amendments. Minister in the Prime Minister's Department (Religious Affairs) Datuk Dr Zulkifli Hasan said the move aims to strengthen the legal framework and overall management of TH.

"The government is committed to ensuring that all feedback received through these engagement sessions is fully utilised to elevate the management of the haj institution," he said.

On the overall progress of implementing the RCI's recommendations, Zulkifli said the majority of the proposals had been successfully executed, with their impact reflected in TH's significantly stronger financial position and governance.

"We have seen the effects and the recommendations that were suggested. We have implemented most of them. Today, we see that TH has undergone a very positive transformation, with its reserves and dividend rates rising, and governance improving. In fact, we have received recognition as the best haj management institution in the world," he added.

TH's Transformation Journey

The proposed amendments represent a significant step in TH's transformation journey, addressing governance weaknesses identified by the RCI while preserving the institution's core mandate of serving Malaysian pilgrims and depositors. The institution has made substantial progress in recent years, with improved financial performance, higher dividend payouts, and enhanced governance practices.

TH's reserves have grown significantly, and the institution has been able to declare competitive dividend rates, reflecting its improved financial position and prudent investment management. The recognition as the best haj management institution in the world underscores the positive trajectory of TH's transformation.

Commitment to Depositors' Trust

TH said it remains committed to upholding the trust placed in the institution while ensuring the interests of its depositors remain protected. The institution emphasised that as an Islamic financial institution managing Muslims' savings for hajj purposes, it would continue to strengthen governance, transparency and integrity to safeguard depositors' interests and ensure institutional sustainability.

The institution's commitment to continuous improvement is reflected in its support for the proposed amendments and its willingness to embrace reform. By strengthening governance and accountability, TH aims to maintain and enhance the confidence of its depositors, many of whom have entrusted their life savings to the institution.

Historical Context

Tabung Haji was established in 1963 with the primary objective of helping Muslims save for their hajj pilgrimage. Over the decades, the institution has grown into a significant financial entity, managing billions of ringgit in deposits and investing in a diversified portfolio of assets.

However, the institution has faced challenges over the years, including governance issues and financial irregularities that came to light in the RCI proceedings. The commission's recommendations are designed to address these weaknesses and ensure that TH operates with the highest standards of governance and accountability.

As the government moves forward with the proposed amendments, TH will continue to play a vital role in facilitating the hajj pilgrimage and managing the savings of millions of Malaysian Muslims. The institution's commitment to strengthening governance and transparency will be essential to maintaining public trust and ensuring its long-term sustainability.

The engagement sessions with stakeholders are expected to provide valuable feedback that will help shape the final version of the amendments. Once enacted, the changes will provide a modernised legal framework that supports effective governance and accountability at TH.

TH's support for the proposed amendments to the Tabung Haji Act 1995 reflects its commitment to continuous improvement and its recognition of the importance of strong governance. The amendments, which are based on the RCI's recommendations, will help ensure that the institution operates with transparency, accountability and integrity.

As the government moves forward with the legislative process, TH remains dedicated to upholding the trust placed in it by its depositors and ensuring that the institution's mandate is preserved for future generations. The institution's transformation journey is a testament to its resilience and its commitment to serving the Muslim community in Malaysia.