Tabung Haji Restructuring Resolves RM12.6b Investment Losses, Rebounds to 3.5% Profit Distribution by 2025

KUALA LUMPUR, July 31 — Lembaga Tabung Haji (TH) has successfully resolved RM12.6 billion in cumulative investment losses through its Recovery and Restructuring Plan, with RM10 billion addressed under its 2018 turnaround framework and the remaining RM2.6 billion progressively recognized through the end of 2025.

In a statement issued today, the pilgrimage fund detailed how the 2018 restructuring salvaged the institution from imminent insolvency as its asset-liability deficit widened from late 2017 to exceed RM10 billion by the end of 2018. Without immediate government intervention, TH would have failed to meet statutory requirements under the Tabung Haji Act to declare annual profit distributions to depositors.

Emphasizing the broader economic risks prevented by the government’s bailout, TH noted that the intervention averted a potential systemic shock across Malaysia’s wider financial system.

“Without the government’s bailout at the time, it could also have triggered a financial market crisis and threatened the country’s financial stability, as TH would have been forced to sell assets at distressed prices to meet a surge in deposit withdrawals (a deposit run) after it was unable to declare a profit distribution to depositors,” TH said.

Out of four restructuring models evaluated at the time, authorities opted to transfer underperforming and distressed assets at premium valuations to a wholly government-owned special-purpose vehicle, Urusharta Jamaah Sdn Bhd (UJSB). UJSB acquired assets carrying a book value of RM9.7 billion for RM19.9 billion, effectively erasing the deficit and enabling TH to declare a profit distribution for the 2018 financial year.

The asset transfer was funded through two series of sukuk issued by UJSB with government letters of support, carrying annual profit rates of 4.05 per cent and 4.10 per cent. While UJSB subsequently offered to resell various assets back to TH, the pilgrimage board maintained strict investment parameters, repurchasing only assets that aligned with its commercial portfolio needs.

This year, after evaluating assets offered by UJSB, TH repurchased a parcel of land in the Tun Razak Exchange (TRX) at its prevailing market price of RM270 million—significantly lower than its original sale price of RM400 million. The fund also repurchased UJ Estates (Holdings) Sdn Bhd’s oil palm plantation for RM695 million, also below its original RM800 million sale price.

“These transactions demonstrate that TH will only reacquire assets that enhance its investment portfolio and safeguard the interests of its depositors,” it said.

Following the execution of the recovery framework, TH’s profit distributions have improved steadily from a low of 1.25 per cent in 2018 to 3.25 per cent for 2024 and 3.50 per cent for 2025. The distributions were declared after progressively recognizing RM2.6 billion in impairments on problematic assets that could not be transferred to UJSB in late 2018.

With its balance sheet restored, TH stated that its financial position is now significantly stronger and that it has begun rebuilding reserves to guarantee long-term operational stability.

“TH remains committed to safeguarding the interests of its depositors, strengthening public confidence, and ensuring the institution continues to operate with integrity and accountability,” it said.

-NMT