Why Hajj Funds Must Not Be Treated Like a Sovereign Wealth Fund
Large figures are a familiar sight on the pages of state finance. Trillions of rupiah in the state budget are debated, hundreds of billions in state-owned enterprise assets are consolidated, and billions of dollars in foreign exchange reserves are tightly guarded.
But there is one figure that is different from all the rest—because it does not belong to the state, nor to an institution, nor to the market. It may well belong to Pak Soleh in Madura, who has waited more than two decades to fulfil the call of the hajj pilgrimage.
It belongs to Bu Ratih in Makassar, who has been setting aside part of her honorary teacher’s salary since her child was still a toddler. That figure is around Rp 184 trillion in hajj funds now under the management of the Hajj Financial Management Agency (BPKH).
Amid discussions on the revision of Law Number 34 of 2014 on Hajj Financial Management, which has entered the 2026 Priority National Legislation Programme, one fundamental question must be answered clearly: for whom does this fund actually exist?
The answer to that question will determine the entire direction of governance, risk profile, and institutional design of BPKH going forward. It should be stressed that the comparison with Danantara in this article is not intended to equate the two institutions, but rather to show the differences in mandate and risk profile that the public needs to understand.
Two Institutions, Two Logics That Cannot Be Interchanged
Danantara is a sovereign wealth fund in the conventional sense. It manages a portfolio of state-owned enterprise assets estimated to be worth more than 900 billion US dollars, with a mission to maximise the value of state assets for long-term development.
Under this logic, Harry Markowitz’s portfolio theory (1952) works well: losses in one instrument can be absorbed by gains in another (Markowitz, 1952). The beneficiaries are the Indonesian people collectively. Its risk tolerance is relatively wider.
BPKH operates on an entirely different track. Every rupiah under its management already has a name attached to it—there is a portion number, a waiting period, and a concrete dream that cannot be substituted by any other position in any portfolio. Hajj funds are not idle state surplus waiting to be optimised. They are entrusted deposits with specific schedules and purposes.
Edwin M Truman (2010), in Sovereign Wealth Funds: Threat or Salvation?, emphasises a simple but often overlooked principle: the success of a public fund management institution always begins with clarity about for whom the fund actually exists.
Without that clarity, every investment decision will always be shadowed by debate over its ultimate purpose.
The Multiple Mandate Dilemma
This ambiguity of mandate is what has been highlighted as the multiple mandate governance dilemma (CNBC Indonesia, 9 July 2026): should BPKH focus on safeguarding pilgrims’ funds or transform itself into an instrument of national development like a sovereign wealth fund?
The answer is not a binary choice. But it demands careful institutional design, not merely good intentions. As long as the position of hajj funds remains in a grey area between ‘state finance’ and ‘trust funds’, the entire ecosystem will treat the funds inconsistently.
Commission VIII of the House of Representatives has rejected the proposal to merge BPKH with another institution—a correct step to preserve the integrity of its function and prevent conflicts of interest. The law revision must go further: explicitly affirming the fiduciary character of hajj funds within the body of the law itself.
A Trust That Cannot Be Substituted
BPKH has demonstrated solid performance. In August 2026, the first phase of benefit value amounting to Rp 2.06 trillion was distributed to 5.7 million pilgrims through the Virtual Account Benefit Value mechanism.
Of the hajj cost of Rp 87.4 million per person, 38 percent is already covered by BPKH’s investment returns. Its financial reports have received an unqualified opinion from the Supreme Audit Agency for eight consecutive years.
Furthermore, BPKH’s involvement in Orange Sukuk—a socially impactful investment instrument that empowers millions of women entrepreneurs—shows that hajj fund management can generate competitive returns as well as measurable social impact, without sacrificing prudential principles (Gunawan, 2026).
This is proof that fiduciary character and investment productivity are not contradictory—provided the fiduciary mandate is safeguarded from the outset. These achievements are precisely the reason why the legal foundation must be locked in more firmly.
Warren Buffett once said, ‘It takes twenty years to build a reputation and five minutes to ruin it.’ For BPKH, that reputation is not measured by annual reports.
It is measured one by one, in every pilgrim departure that is realised as promised. The Rp 184 trillion fund is not a figure on the state balance sheet. It is hope that has been entrusted—and hope safeguarded with the right foundation is hope that can be kept.