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Why the ‘one-size-fits-all’ subsidy structure of Tabung Haji no longer works and how to move forward

Abd Rahman, Nur Hasnida and Md Zabri, Mohd Zaidi (2021) Why the ‘one-size-fits-all’ subsidy structure of Tabung Haji no longer works and how to move forward. Islam and Civilisational Renewal, 12 (1). pp. 98-113. ISSN 2041-871X E-ISSN 2041-8728

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The original, novel idea behind Tabung Haji’s establishment was to help Malaysian Muslims save for hajj. However, throughout the years, the subsidy amount for hajj pilgrims has proven to be ever-increasing. As a case in point, for the 2020 hajj season, a first-time hajj pilgrim needs only pay RM9980 out of RM22,900 of the original costs. Stated differently, Tabung Haji subsidises more than half (56.42 per cent) of the total cost. As with any subsidy, the main question is, where do we find the money? For instance, the governments of Muslim majority nations such as Pakistan and Indonesia used to directly subsidise their hajj pilgrims but have recently stopped doing so. Moreover, Tabung Haji is a business entity, which understandably needs to generate profit that will then be used to subsidise hajj pilgrims. Consequently, this paper aims to examine the (un)sustainability of the existing subsidy structure and suggest a way forward. Due to its politically sensitive nature, instead of eliminating the subsidy, the authors used data from the Household and Basic Amenities Survey 2019 to mathematically simulate a regressive subsidy structure for firsttime hajj pilgrims.

Item Type: Article (Journal)
Additional Information: 7710/91030
Uncontrolled Keywords: Hajj, Tabung Haji, subsidy, financial literacy.
Subjects: BPH Islamic Economics > BPH72 Economic development. Growth. Sustainable development. Sustainability
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button): Kulliyyah of Economics and Management Sciences
Kulliyyah of Economics and Management Sciences > Department of Finance
Depositing User: Nur Hasnida Abd Rahman
Date Deposited: 26 Jul 2021 13:08
Last Modified: 26 Jul 2021 13:08
URI: http://irep.iium.edu.my/id/eprint/91030

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