February 4, 2023
Jakarta, IO – Something does not sit right with the plan to raise the 2023 Hajj fee. The Ministry of Religious Affairs (MoRA) proposes a 74% increase, from last year’s IDR 39.8 million to IDR 69.1 million this year. This increase makes no sense, particularly when the public is currently facing gruesome challenges, such as skyrocketing living costs, the threat of job loss and the 2023 economic recession.
It is as if the officials in charge of the Hajj pilgrimage are unaware of the people’s suffering, which led us to write: Why make it complicated for an act of worship but expedite foreign investors easily?
Seven confusions can be identified in the narrative of the Hajj cost increase made by MoRA and the Hajj Financial Management (BPKH) in 2023:
First, the Indonesian Hajj Pilgrims have not experienced a significant cost increase since 2014. The average increase in Hajj cost was only 0.83% in the 2014-2019 period. The cost increase during Religious Affairs Minister Yaqut’s tenure caused the average rise to leap to 43.35%. The biggest is in 2023, at more than 73%. This increase raises the question of whether MoRA is on the people’s side, if its only ability is to increase the Hajj cost annually.
Second, the BPKH, as the Hajj financial management, does not seem to work effectively. If the Hajj financial management were effective, the Hajj pilgrims who had paid IDR 25 million for Hajj registration should receive the benefit of their money after 20 years, that is IDR 168.2 million (assuming an investment rate of return of 10% per year).
With IDR 168.2 million, the Hajj pilgrims should not have to pay in more money. In fact, their initial payment can help other pilgrims to go for Hajj. Keep in mind that MoRA calculated the total cost of the 2023 Hajj to be IDR 98.8 million.
Third, the Hajj funds increase every year. At the end of 2022, the Hajj funds were around IDR 167 trillion. The BPKH reported that the value of the benefit from the Hajj funds was only IDR 9 trillion.
It means that the BPKH’s rate of return on investment is meager, only 5.4%. This is why in 2027, the value of the benefit will run out and eventually begin to erode the Hajj funds. BPKH’s low return on investment was the result of alleged mismanagement of Hajj funds.
The BPKH was somewhat negligent by investing 70% of IDR 167 trillion, or around IDR 116.9 trillion, in SBSN, the national sharia securities issued by the Finance Ministry to finance the State Budget, including infrastructure projects with a fixed yield of 5.95% per year.
In addition to SBSN, the BPKH also invests in the Indonesian Hajj Fund Sukuk, a sharia banking product and direct investment placement, whose return is actually quite significant. However, due to the meager amount, 30% of the managed funds, it does not significantly add to the value of the benefit of the Hajj pilgrimage.
The Executive Board and the Supervisory Board of the BPKH receive a stunning salary of around IDR 100- IDR 150 million per month per person but offer minuscule benefits for pilgrims.
The Hajj savings are mostly used to pay for the BPKH Executing Agency (BP) than to serve the pilgrims. The BPKH Executing Agency receives a high salary, but its ability to manage the Hajj funds is limited to investing in SBSN, which has a low return. What a shame.
It is true that the management of the Hajj funds regulated by law must be based on sharia principles, be prudent and be conventional. However, it must also prioritize optimum benefit for pilgrims. The BPKH seems to be held hostage by the Finance Ministry, for most of its investment is only in SBSN – with a rate of 5.5%.
In fact, if the BPKH were to function optimally, the rate of return for Hajj funds management would be 15%. With the pilgrim’s initial deposit of IDR 25 million and an assumption of a 20-year waiting period, the initial deposit could grow to IDR 409.1 million at the end of the 20th year.
Fourth, the Hajj funds always grow. Last time, they were recorded at IDR 167 trillion. However, the value of benefit/managed funds ratio is extremely low, only 5.5% -6% in 2021. This shows that the BPKH does not manage it well and does not understand how to optimize Islamic finance properly.
Fifth, the value of the benefits gained in 2021 was around 8-9 trillion. Although it increased three years ago in 2019 (IDR 7.3 trillion), the amount was too insignificant. How could it be called Hajj financial management if it only invests the Hajj funds in SBSN?
Sixth, the BPKH’s investment is far from being creative. The majority of IDR 167 trillion managed funds went to the Indonesian Hajj Fund Sukuk (SDHI) or SBSN, whose return is minimal. SBSN offers a meager return. It was issued to finance the State Budget and development projects.
Seventh, projects for the benefit of the people also need to be evaluated when Islamic education schools are already mushrooming, such as the construction of embarkations in various regions, manasik (Hajj ritual) buildings, Muslim schools and universities. Meanwhile, the BPKH’s operational costs are considerably significant despite a slight decrease. Operational costs are divided by the value of benefits of 2.02% (2020), although it reached 7.06% in 2016.
MoRA officials repeatedly denied that the Hajj funds were used for infrastructure projects, but they seemed to be mistaken. According to the BPKH’s financial reports in the first half of 2022, it is clearly stated that 70% of the IDR 167 trillion Hajj funds were used to purchase the Government’s SBSN.
The SBSN is used by the Finance Ministry to finance the State Budget. One of the State Budget’s expenditures is to finance infrastructure, such as the provision of state capital in the Chinese consortium’s Jakarta-Bandung high-speed train, the construction of basic infrastructure for the new capital city and others which cannot be separated by component.
If there is a narrative that the Government subsidizes the Hajj pilgrimage, then it is a grave mistake. The managed Hajj funds are indeed subsidizing the State Budget’s expenditures through the use of IDR 167 trillion of Hajj funds, 70% of which went to buy SBSN.
The Government does not provide subsidies to Hajj pilgrims like fuel and electricity subsidies. As a matter of fact, the Government is paying the yield on the Hajj funds at a rate of 5.5%, extremely small compared to investments other than SBSN of 10% -15%.
A number of steps can be taken to avoid the Hajj cost increase in the future:
First, the BPKH must have a makeover. The root of the problem of why the Hajj cost continues to rise is because of the BPKH’s failure to obtain the optimal rate of return on investment for the Hajj funds. The BPKH can only provide a benefit value of 5.5% of managed Hajj funds. Meanwhile, the optimal benefit value of the Hajj funds is 10%. It is unnatural if the BPKH’s failure to provide an optimal rate of return must be suffered by the 5.3 million hajj pilgrims.
The BPKH’s low performance results in the benefit value of the 2023 Hajj, and eventually, it must be reduced from 60% of the Hajj cost in 2022 to 30% in 2023.
Second, there should be changes to Government Regulation (PP) No. 34/2014. In PP 34/2014 article 30 and article 31 concerning Hajj financial management, it is stated that investment of Hajj managed funds is limited to a maximum of 20% for direct investment and 10% for other investments. However, direct investment and other investments can bring the highest value of benefits for the pilgrims.
Investment of the Hajj funds in SBSN or Government Sukuk (sharia-compliant bonds) is too large and does not offer optimal benefit value for the Hajj necessities. The Hajj funds seem like a ‘cash cow’ to finance the State Budget, but its sustainability for the Hajj pilgrims is not taken into consideration. How vicious!
With the increasing public enthusiasm to go for Hajj, the Hajj funds should be managed by the private sector rather than the BPKH or other state institutions.
Private management will be able to professionally offer a higher value of benefit than the BPKH, which has been managing the 2014-2023 Hajj funds for eight years but resulting in Hajj pilgrims’ misery as they have to finance a Hajj cost increase every year.
Source by: observerid.com
