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Investing haj funds, complying with sharia
The President wants the BPKH to invest the funds in infrastructure projects as the government does not have enough funds to finance these projects.
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According to the Religious Affairs Ministry, almost 40 percent of the haj funds have been invested in sukuk and project-based sukuk since 2010 under an agreement with the Finance Ministry. (Shutterstock/File)
P
resident Joko “Jokowi” Widodo inaugurated recently the supervisory and executive boards of the newly established Haj Fund Management Agency (BPKH), which has taken over the management of the haj fund from the Religious Affairs Ministry.
The President wants the BPKH to invest the funds in infrastructure projects as the government does not have enough funds to finance these projects.
As of the end of 2016, the ministry managed Rp 95.2 trillion (US$7.14 billion) of potential pilgrims’ money. About Rp 54.57 trillion of the funds have been placed in Islamic time deposits, Rp 35.65 trillion in government sukuk and $10 million in conventional government bonds. The new agency estimates the funds will amount to Rp 100 trillion this year.
This article explores the possible practice of Islamic management by the BPKH to make Indonesia a role model in serving the Muslim community in the country in meeting their haj obligation, providing savings and investment services based on sharia principles.
Related to these initiatives are at least three elements that should be considered. First, the role and objectives of the BPKH. Second, the sufficiency of legal structure and regulation, and third, the availability and the clarity of sharia contracts among related parties.
The law on the management of haj funds as stated in Law No. 34/2014 stipulates that the objectives of the BPKH are to improve the quality of services for haj pilgrims, to ensure efficient and rational fund management and provide benefits to Muslims in general through the principles of sharia investment, such as being prudent, beneficial, nonprofit, transparent and accountable.
There are two levels of sharia compliance in the investment strategy of haj fund management. First, sharia compliance based on contract aspects. Second, sharia compliance based on the objectives of sharia.
