Tabung Haji 2018 Bailout Was Necessary to Prevent Insolvency and Financial Market Crisis

KUALA LUMPUR, July 31 — Lembaga Tabung Haji (TH) has defended its 2018 recovery and restructuring plan as a crucial financial bailout that saved the institution from insolvency, warning that the fund would have otherwise faced a catastrophic run on deposits capable of triggering a national financial crisis.

In a statement released today, the pilgrimage fund explained that the government-backed bailout enabled TH to execute its turnaround strategy in 2018, thereby safeguarding depositors’ hard-earned savings and securing the institution’s financial viability.

TH highlighted that an asset-liability deficit exceeding RM10 billion at the end of 2018 posed severe systemic risks to both the fund and the broader economy had profit distributions continued unchecked without financial intervention.

“The profit distribution, in light of the asset-liability gap exceeding RM10 billion as at end-2018, had the potential to trigger a run on deposits and force Tabung Haji to sell its assets at distressed prices to meet large and uncontrollable cash withdrawal requests from depositors,” TH stated.

According to the board, the 2018 recovery plan successfully resolved cumulative investment losses amounting to RM12.6 billion, returning the institution to a stronger and more sustainable financial footing.

Following the implementation of the restructuring framework, TH’s profit distribution rate climbed steadily from 1.25 per cent in 2018 to 3.5 per cent in 2025, while concurrently rebuilding its financial reserves to ensure long-term stability.

-NMT