Tabung Haji evaluates proposed shift for investment arm to come under SC oversight

Lembaga Tabung Haji is evaluating a proposed shift in its regulatory framework to place its investment operations under formal statutory oversight.

Tabung Haji chairperson Abdul Rashid Hussain said a joint task force committee, which includes the Securities Commission (SC) chairperson and Bank Negara Malaysia governor, has leaned toward placing Tabung Haji’s investment arm under SC’s oversight following extensive internal deliberations.

“After deliberating in detail for almost six months, we concluded that it is more relevant for Tabung Haji to be regulated by the SC.

“However, that does not mean Bank Negara will not be involved.

“We are fine-tuning the framework to ensure all key regulators are involved in Tabung Haji’s future regulatory structure,” Rashid said during a panel session “Dialog Ummah: Realiti dan Masa Depan Tabung Haji” organised by Himpunan Gerakan Islam Malaysia today.

He said the primary reason for choosing the SC as the main regulator is that 90 to 95 percent of Tabung Haji’s total assets are invested in capital markets rather than held in pure liquidity.

Because the majority of Tabung Haji’s operations pertain directly to capital market investments, he said SC's regulatory jurisdiction aligns naturally with the core structure of Tabung Haji’s portfolio.

Bank Negara to retain essential role

While SC is being eyed as the primary regulator for its investment operations, Bank Negara will retain an essential role in overseeing overall financial stability, Rashid said.

“Bank Negara will maintain overarching responsibility over the country's financial institutions and total financial system stability.

“Liquidity matters will always remain under Bank Negara’s purview,” he said.

He added that liquidity plays a critical role as a secondary fallback to mitigate potential liquidity crises or runs, in the event of a sudden loss of depositor confidence, referencing Bank Negara’s historical role as an informal monitor between 2014 and 2017.

Addressing the legislative changes required to enact the new regulatory framework, Rashid said the proposed amendments to the Tabung Haji Act will be submitted soon. The process will take time due to the necessary stakeholder engagements.

The technical details must ensure that Tabung Haji remains completely intact as a religious and savings institution, he said. At the same time, its investment arm will be clearly identified and carved out for formal regulatory oversight to guarantee a higher standard of safety for depositors.

“The process of amending an Act involves several formal stages.

“The proposal must first be presented to the minister, who will then take it to the cabinet for approval. Once agreed, it will go through the Attorney-General’s Chambers for final drafting before being tabled,” Rashid added.

- Bernama

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