Institutional Economic Analysis of Tabungan Haji or the Indonesian Hajj Savings Scheme

Abstract

The Indonesia’s Tabungan Haji seems to effectively accommodate the demand of the Indonesian Muslims for Hajj. The number of new account openings keeps increasing, regardless of the long wait times. To this end, the institutional economics perspective has helped explain how the government-regulated-and-promoted Hajj saving arrangement successfully mitigates future risks of failing to perform the Hajj. The scheme seems to take advantage of the Muslims’ cognitive dissonance over potential risks and uncertainties such as the uncertain time of the initial deposit completion, long wait times once the candidate has registered, and potential fund corruption by the government as has happened in the past.