Institutional economic analysis of Tabungan Haji or the Indonesian Hajj savings scheme

Abstract

This paper analyzes Indonesia’s Tabungan Haji through the lens of Williamson's institutional economic perspective. The government-regulated Hajj savings scheme is found to accommodate the demand of the Indonesian Muslims for Hajj effectively. In addition, the length of the wait times does not stop people from starting to save for Hajj. 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 contractual relationship between the government and the appointed banks allows the Hajj management in Indonesia to continue being well-managed and accommodate the demand well.