Hajj Fund: sustainable savings with economic development

Presenter(s)/Author(s)

Jaweriya NazFollow

Submission Type

Paper Presentation

Abstract/Description

Purpose

This research aims to analyze the feasibility for developing hajj savings funds in Pakistan with consideration of the developed models of Malaysia’s Tabung Haji and Indonesia’s Badan Pengelola Keuangan Haji (BPKH). This study evaluates the structure, benefits, challenges and financial elements of Hajj savings funds for assessing its applicability in Pakistan’s socio-economic and financial landscape. Moreover, it also suggests optimal savings strategies and financial models for facilitating hajj pilgrimage for Pakistanis Muslim so they can gain access to shariah compliant and sustainable savings funds.

Methodology

Adopted methodology in this research is mixed approach which include qualitative and quantitative analysis. Qualitative analysis under this research includes case study analysis of Tabung Haji and BPKH with the core focus on its operational framework and socio-economic impact. Moreover, quantitative analysis includes historical cost review of Hajj in Pakistan during last decade along with application of financial modelling for calculating essential monthly savings for individuals who plan to save for performing Hajj. This study also makes comparison of existing financial products and its relevance to proposed Hajj saving scheme for Pakistan.

Results

The results from the study suggest that Malaysia Tabun Haji and Indonesia’s BPKH have successfully provided shariah compliant, accessible and secure savings mechanisms for their population. Moreover, its return on savings in these models have been relatively stable as compared to other financial products. However, Tabung Haji’s has the higher risk with diversified portfolio therefore it has better yielded return than the BPKH’s scheme which is more conservative. Historical data of hajj price suggest that Pakistani needs to save between 15,000 to 20,000 per months for at least five years to afford the pilgrimage which is depending on the rate of return. Additionally, the research identified that importance of government backed funding with diversified investment strategy to ensure long term financial sustainability of this saving scheme.

Conclusion

It has been found that hajj saving funds for the Pakistan is feasible and beneficial considering the large Muslim population and growth in demand for Hajj. With the effective adoption of different elements from Tabung Haji and BPKH, Pakistan can successfully developed a model which is suitable for the unique socio-economic conditions. the proposed funds in Pakistan contain low-risk investments, including sukuk and government securities with several opportunities for earning higher returns through portfolio diversification and shariah-compliant mutual funds. Additionally, government also provide support and develop regulatory framework for facilitating success and sustainability for the Hajj saving funds.

Keywords

Hajj savings, Pakistan, Tabung Haji, BPKH, Shariah-compliant investments, sustainable financing

Location

Movenpick Hotel

Session Chair

Dr. Muhammad Ayub, Professor, Riphah University, Islamabad

Session Moderator

Dr. Shafiullah Jan, Head Center for Excellence in Islamic Finance, Institute of Management Sciences (IMSciences)

Start Date

3-12-2024 4:10 PM

End Date

3-12-2024 5:30 PM

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Dec 3rd, 4:10 PM Dec 3rd, 5:30 PM

Hajj Fund: sustainable savings with economic development

Movenpick Hotel

Purpose

This research aims to analyze the feasibility for developing hajj savings funds in Pakistan with consideration of the developed models of Malaysia’s Tabung Haji and Indonesia’s Badan Pengelola Keuangan Haji (BPKH). This study evaluates the structure, benefits, challenges and financial elements of Hajj savings funds for assessing its applicability in Pakistan’s socio-economic and financial landscape. Moreover, it also suggests optimal savings strategies and financial models for facilitating hajj pilgrimage for Pakistanis Muslim so they can gain access to shariah compliant and sustainable savings funds.

Methodology

Adopted methodology in this research is mixed approach which include qualitative and quantitative analysis. Qualitative analysis under this research includes case study analysis of Tabung Haji and BPKH with the core focus on its operational framework and socio-economic impact. Moreover, quantitative analysis includes historical cost review of Hajj in Pakistan during last decade along with application of financial modelling for calculating essential monthly savings for individuals who plan to save for performing Hajj. This study also makes comparison of existing financial products and its relevance to proposed Hajj saving scheme for Pakistan.

Results

The results from the study suggest that Malaysia Tabun Haji and Indonesia’s BPKH have successfully provided shariah compliant, accessible and secure savings mechanisms for their population. Moreover, its return on savings in these models have been relatively stable as compared to other financial products. However, Tabung Haji’s has the higher risk with diversified portfolio therefore it has better yielded return than the BPKH’s scheme which is more conservative. Historical data of hajj price suggest that Pakistani needs to save between 15,000 to 20,000 per months for at least five years to afford the pilgrimage which is depending on the rate of return. Additionally, the research identified that importance of government backed funding with diversified investment strategy to ensure long term financial sustainability of this saving scheme.

Conclusion

It has been found that hajj saving funds for the Pakistan is feasible and beneficial considering the large Muslim population and growth in demand for Hajj. With the effective adoption of different elements from Tabung Haji and BPKH, Pakistan can successfully developed a model which is suitable for the unique socio-economic conditions. the proposed funds in Pakistan contain low-risk investments, including sukuk and government securities with several opportunities for earning higher returns through portfolio diversification and shariah-compliant mutual funds. Additionally, government also provide support and develop regulatory framework for facilitating success and sustainability for the Hajj saving funds.