Kuala lumpur: The government's guarantee to depositors of Lembaga Tabung Haji (TH), currently valued at RM88 billion, will be activated should TH fail to successfully implement the LTH Recovery and Restructuring Plan 2018, reports the Tabung Haji Royal Commission of Inquiry (RCI).
According to BERNAMA News Agency, the RCI Report, which was released yesterday, scrutinized TH's management and operational issues from 2014 to 2020. The report emphasized that the government should seriously consider implementing TH's recovery plan to help the pilgrimage board achieve its objectives.
The report highlighted that the government's guarantee, as outlined in section 24 of Act 535, would need to be activated if TH fails, which would not only impact TH but also affect the government's fiscal position, potentially risking the country's fiscal systemic stability.
The RCI also suggested improvements to sukuk instruments with a government's guarantee. It found that TH is vulnerable to strategic risks within the nation's financial ecosystem, and that these issues could precipitate a larger national financial crisis, impacting investor confidence and the sustainability of Malaysia's economic growth, as well as TH's ability to fulfill its functions.
The commission stressed the urgency of implementing corrective measures to restore TH's financial health before the close of the 2018 financial year. A special committee has been established to evaluate TH's recovery plan, consisting of representatives from the Prime Minister's Office, Bank Negara Malaysia, the Ministry of Finance, and TH's senior management.
According to the RCI, the committee has devised a plan based on four central pillars to protect the interests of nearly 9.3 million TH depositors and ensure the continuity of TH's primary function, which is hajj management. The plan also aims to restore TH's capability to distribute profits (hibah) to its depositors in full compliance with Act 535, while mitigating potential impacts on the nation's fiscal position and preserving economic stability.