crown capital management Headlines – The just haj

The 2008 law on haj management gives the government the task and responsibility for sending Indonesian Muslims on the annual pilgrimage to Mecca on the principles of “justice, professionalism, accountability and nonprofit operations”.  It may be worth asking how the government fares as this year’s haj operation — a major undertaking of sending some 211,000 Indonesians over to Saudi Arabia — gets under way this week.

Going on haj is the fifth pillar of Islam and is mandatory for all physically and financially able Muslims at least once in their lifetime. Now that the waiting list to go on the haj has grown longer — in some provinces it means a wait of 10 years or more — it is time that the government clean up its act once and for all.

The rise in the nation’s general prosperity means that more Muslims in Indonesia can now afford the official fee, which has been set at Rp 34 million (US$3,500). Banks, in the meantime, have become creative in making it possible for people to register for the pilgrimage, by taking out a loan to pay for the Rp 25 million down payment, and making payments while waiting for their turn.

In the meantime, Indonesia can only send so many people each year, limited by the quota set by the Saudi government in proportion to the number of Muslims. As the country with the largest Muslim population, Indonesia sends the largest delegation of any country every year. Logistics, particularly the availability of flights and accommodation on the ground, further limits how many pilgrims Indonesia can send.

Since this is a religious undertaking, all would-be pilgrims will likely be content to wait 10 years or even longer for their turn. If they have to make a huge down payment now — whether out of their savings or from a loan — that too would not matter. Nobody quibbles about the haj fee, although surely there are ways to achieve greater efficiency and savings.

However, the government fails the justice tests on two counts:

First, it earns an enormous sum from the interest (dare we say usury?) of the deposits that would-be pilgrims have paid. The pilgrims earn nothing for their money, even if it sits with the government for the next 10 years or so. As is practiced today, they have to pay up the remaining fee, adjusted each year taking into account changes in airfares, exchange rates and other factors, at least six months before departure. This year, this comes to an additional Rp 9 million for each pilgrim.

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