Tabung Haji considers placing investment arm under SC oversight

BANGI: Tabung Haji, Malaysia's largest charity organization, is contemplating a significant change in its regulatory approach. The organization's chairman, Tan Sri Abdul Rashid Hussain, revealed that the institution is considering placing its investment operations under the Securities Commission (SC) for formal statutory oversight.

This proposal emerged after a joint task force committee, comprising the SC chairman and Bank Negara Malaysia (BNM) governor, expressed their support for the move following a six-month deliberation process.

After extensive discussions, the committee concluded that placing Tabung Haji's investment arm under SC oversight would be more appropriate. However, Abdul Rashid emphasized that BNM's involvement would remain crucial. The primary reason for choosing the SC as the main regulator is that around 90 to 95% of Tabung Haji's total assets are invested in capital markets, rather than held in pure liquidity.

Despite the shift in regulatory focus, BNM will continue to play a vital role in overseeing overall financial stability and ensuring the country's financial system remains robust. Liquidity, which plays a critical role as a secondary fallback to mitigate potential liquidity crises, will remain under BNM's purview, similar to its historical position as an informal monitor between 2014 and 2017.

To implement this new regulatory framework, Tabung Haji will need to amend the Tabung Haji Act. The organization plans to submit proposed amendments soon, although the process will be time-consuming due to necessary stakeholder engagements. Abdul Rashid assured that the technical details of the amendments would be carefully crafted to maintain Tabung Haji as a religious and savings institution, while clearly identifying its investment arm for formal regulatory oversight. This approach aims to guarantee a higher standard of safety for depositors.