Lembaga Tabung Haji (TH) has been urged to focus on reasonable and sustainable investment returns that align with the level of risk it can accept, while prioritising the protection of prospective pilgrims' savings. According to economist Associate Professor Dr Muhammad Irwan Ariffin, TH does not need to be the most aggressive fund or pursue the highest returns, but rather should prioritise capital protection and liquidity while generating returns in a disciplined manner. Dr Muhammad Irwan Ariffin, a lecturer at the Department of Economics, Kulliyyah of Economics and Management Sciences, International Islamic University Malaysia (IIUM), stated that TH still needs to take investment risks to generate returns that can overcome inflation and support hajj operations.
However, he emphasized that the risk needs to be controlled through portfolio diversification, exposure limits, independent valuations, and continuous monitoring. The economist warned that TH should avoid large investments approved without independent due diligence, overly optimistic asset valuations, and over-reliance on management recommendations. He also cautioned against concentrating funds in a single company or sector, investments that are not in line with the institutional mandate, and investments without a clear exit strategy.
Regarding asset allocation, Dr Muhammad Irwan Ariffin advised that TH's strategy needs to be assessed periodically due to changing market conditions, interest rates, inflation, and financial needs. He emphasized the importance of balancing stable and liquid assets with growth assets that offer higher returns but have greater risk. Dr Muhammad Irwan Ariffin also stressed the need for TH to pay attention to asset-liability management, ensuring that the maturity, liquidity, and cash flow of investments are matched with depositor withdrawals, profit distribution, and hajj operational needs.
Every major investment should undergo due diligence, including financial, legal, operational, governance, and reputational assessments. In summary, TH has been advised to adopt a balanced approach to investment, prioritising sustainable returns while protecting the savings of prospective pilgrims. This approach involves controlling risk, avoiding excessive concentration, and ensuring that investments align with the institutional mandate.
The advice comes as TH continues to play a crucial role in managing the savings of prospective pilgrims and supporting hajj operations. By adopting a disciplined and sustainable investment approach, TH can ensure the long-term stability and resilience of its operations. As the Malaysian economy continues to evolve, the importance of sustainable investment returns cannot be overstated.
TH's ability to balance risk and returns will be critical in maintaining the trust of its depositors and ensuring the continued success of its operations. In conclusion, the economist's advice serves as a reminder of the importance of responsible investment practices and the need for TH to prioritize the protection of prospective pilgrims' savings. By doing so, TH can ensure that it remains a trusted and reliable institution for generations to come.
