BPKH Strategy to Manage Hajj Funds Remains Secure and Beneficial for Pilgrims
The Hajj Financial Management Agency (BPKH) has demonstrated its commitment to managing funds to ensure the smooth implementation of the Hajj pilgrimage, specifically through strategic placement in various investment instruments.
Fadllul Imansyah, Head of the BPKH Executive Body, stated that given current market conditions, fixed-income instruments with relatively low risk are the preferred choice for managing Hajj funds. For instruments that adhere to Sharia principles, one primary focus is State Sharia Securities (SBSN).
“Looking at the current economy, the safest options are risk-free investments, such as Government Securities. Since we must adhere to Sharia principles, we utilise SBSN alongside standard Government Securities,” Fadlul said during a conversation with CNBC Indonesia.
He noted that the available yields in the market are becoming increasingly attractive for Hajj fund managers. Fadlul explained that BPKH’s investment strategy during market volatility can be viewed from a contrarian perspective, leveraging the agency’s significant bargaining power.
When market participants tend to become cautious due to volatility, such conditions can actually create opportunities to acquire instruments with more attractive yields. “Speaking as a contrarian, time deposits can currently exceed 6%,” Fadlul added.
For fund managers with long-term investment horizons and measurable liquidity needs, these conditions provide the space to place funds into instruments with more predictable income characteristics. Fadlul explained that a key characteristic of Hajj funds is the continuous inflow of capital as members of the public register for the pilgrimage.
He noted that the motivation of the Muslim community to perform the Hajj pilgrimage makes registration a long-term necessity. “For those who have not yet registered, the ultimate goal as a Muslim is to perform Hajj. Therefore, they focus on how to go, how to save money, and so on,” he said.
This accumulating cash flow provides the manager with the capacity to manage portfolios on a large scale. According to Fadlul, the larger the funds managed, the greater the bargaining power in fund placement, including when negotiating with banks to secure competitive interest rates.
“The profitable cash flow from a management perspective, combined with large accumulated funds, allows us to enter deposits with the bargaining power to request better rates,” he said.
This strategy also applies when there are price fluctuations in the securities market. Fadlul stated that when the market faces pressure and yields increase, it presents a momentum to enter specific instruments.
“When the market is struggling slightly, that is our opportunity. For example, if we see a yield of 7.3% or 7.2%, we ask, ‘Can we buy this?’ When else can we get a yield above 7%? It is as if we do not have to do much; we simply buy SBSN and receive 7%,” he remarked.
It is important to note that security prices and yields move in opposite directions. When security prices fall, the yield offered to investors can increase. For investors with large funds and appropriate investment horizons, rising yields make these instruments more attractive.
However, such opportunities are not always easy to execute. Fadlul revealed another challenge in Sharia investment: it is not merely about finding instruments with attractive yields, but also about the availability of securities in the market.
“I always ask my colleagues, ‘Can we buy this?’ even though there are certain specificities in the Sharia market,” said Fadly.
He noted that the limited issuance of Sharia securities means the volume of available instruments does not always match investor demand. “Liquidity is not the issue. Why? Because the issuance of the securities themselves is not very high, while demand is increasing,” he concluded.