A fund driven by religious fervour

One of the biggest success stories in mobilising personal savings for the greater common good is Malaysia's effort in setting up the "Tabung Haji" or Haj fund.

It is the story of managing pilgrims and the Fund Board of Malaysia, known in Malay as Tabung Haji (Tabung in Malay means a box where money is saved).

It is said Muslims who wish to perform the Haj – the pilgrimage to Makkah – need to acquire a habit of saving since childhood. Before the fund was set up, Muslims in Malaysia would save money for the Haj through traditional methods such as simply putting it in safes or through the purchase of land and cattle, which could later be sold when the time came to embark on the Haj.

In 1958, Ungku Abdul Aziz, a Malaysian Muslim specialising in rural economy, presented his research to the government making a case for a national savings foundation to enable pilgrims to perform the Haj easily.

Five years later, such an institution was set up; it is today a fixture of the country's economy and a savings foundation with no parallel in the world.

The fund is a tool used by the government to mobilise family savings and finance development and social programmes without resorting to external sources.

Tabung Haji specialises in increasing the savings of Muslim Malaysians and is now open for non-Malaysians, too. Umrah services were added to the foundation recently.

The fund's growth comes from investing its money, which comprises the small savings of its subscribers, in various economic activities, all in accordance with Shariah law. Tabung Haji carries out three main financial operations: 

- Deposit: Opening savings accounts for subscribers and collecting their savings.

- Investment: The investment of the fund's money in Shariah-compliant commercial projects, particularly companies in construction, tourism, agriculture, transport and property.

- Services: Serving Malay-sian pilgrims during Haj by providing transport, accommodation and healthcare.

The fund's success has attracted many investors, but its board is selective about its partners, carefully scrutinising their reputation and dealings for Shariah compliance.

Savings are collected through the fund's branches and post offices around Malaysia, or through direct deductions from salaries of subscribers. A participant can withdraw the money any time he wishes, including while on the Haj.

Economics professor Dr Kamal Hussein says the experiment has been a success because the government provided a proper environment that has largely encouraged savers and created security and reassurance.

Last year, the Tabung Haji transcended its Malaysian borders and became a savings and investment foundation for all Muslims. Its uniqueness had raised a question whether such a fund could be replicated elsewhere, using the pretext of Hajj to drive developmental goals in different fields.

But its success on foreign shores has been immediate, particularly in neighbouring Indonesia.

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