TH Reforms Showing Results As Financial Performance Strengthens - Experts

KUALA LUMPUR, Aug 9 (Bernama) -- Lembaga Tabung Haji’s (TH) 3.5 per cent profit distribution for the 2025 financial year is a positive indication that the institution’s recovery and restructuring efforts are starting to pay off, according to an economist.

The Chairman of the Centre for Economic Studies at Universiti Kebangsaan Malaysia’s Faculty of Economics and Management, Associate Professor Dr Harunnizam Wahid, said better governance and management practices could strengthen TH’s financial and investment performance, potentially enabling it to increase profit distributions to depositors.

“Profit distribution is an important consideration, given that 75 per cent of TH’s deposits are held by just 5 per cent of depositors with large funds and a focus on higher returns,” he told Bernama.

He said the rise in profit distribution for the 2025 financial year pointed to a stronger financial position for TH, while stressing that the effectiveness of reforms following the Royal Commission of Inquiry (RCI) should be assessed comprehensively.

He said the evaluation should consider improvements in governance, internal controls, risk management and investment discipline, as well as TH’s financial position and the benefits received by depositors and pilgrims.

“The 2022 to 2025 TH reports provide consistent evidence that the reforms have contributed to institutional strengthening and performance recovery, although not all HIJRAH24 (TH’s three-year strategic transformation plan) targets were achieved in full,” he said.

On the release of the TH RCI report, Harunnizam said the government’s decision to disclose its findings reflected a commitment to improving governance and transparency at the institution.

He said the implementation of the RCI recommendations, including any amendments to the Tabung Haji Act 1995 (Act 535), should be given due attention to further strengthen TH’s governance and regulation, while serving as an important indicator of the MADANI Government’s effectiveness in addressing the issue.

Meanwhile, senior lecturer and researcher in Production Technology Management at Universiti Tun Hussein Onn Malaysia’s Faculty of Technology Management and Business, Associate Professor Dr Md Fauzi Ahmad, said the 3.5 per cent profit distribution for 2025 was a positive indicator of TH’s recovery, although its success would need to be measured against sustained performance over several years and the full implementation of the RCI recommendations.

He said the rise in profit distribution was an indication that TH’s recovery and restructuring efforts were beginning to deliver results, but cautioned that it was not enough to establish the success of the reforms as a whole.

“The assessment must consider TH’s financial strength, investment performance, governance and risk management, as well as its ability to maintain competitive profit distributions on a sustainable basis.

“Higher profit distributions must be underpinned by strong financial performance and should not rely solely on short-term gains or specific adjustments,” he said.

He said, from the depositors’ perspective, confidence in TH hinged on its ability to deliver stable returns, protect their savings and remain capable of bearing the costs of managing the pilgrimage in the future.

In March, TH announced a 3.5 per cent profit distribution amounting to RM3.22 billion for 2025, benefiting more than 9.7 million depositors, compared with 3.25 per cent the previous year.

According to TH, the higher rate reflected stronger financial performance, as investment income hit a record RM4.64 billion in 2025 and investment assets increased from RM95.06 billion to RM96.37 billion.

TH chairman Tan Sri Abdul Rashid Hussain said the performance marked the best results in eight years and demonstrated the effectiveness of a disciplined investment strategy and stronger governance framework.

-- BERNAMA