Why the “One-Size-Fits-All” Subsidy Structure of Tabung Haji No Longer Works and How to Move Forward

Abstract

The original, novel idea behind Tabung Haji’s establishment is to help Malaysian-Muslims to save for hajj. However, over the years, the subsidy amount for hajj pilgrims is ever-increasing. A case in point, for the 2020 hajj season, a first-time hajj pilgrim needs only to pay RM9980 out of RM22,900 of the original costs. Stated differently, Tabung Haji subsidizes almost half (43.58%) of the total costs. As with any subsidy, the main question is, where do we find the money? Ironically, Tabung Haji is a business entity that needs to generate profit. Consequently, this paper aims to examine the sustainability or lack thereof of the existing subsidy structure and suggest the way forward. Due to its politically sensitive nature, instead of eliminating subsidy, the authors used the Household and Basic Amenities Survey 2019 data to simulate a regressive subsidy structure for first-time hajj pilgrims mathematically.