Why is the cost of Haj pilgrimage expected to exceed RM25,000?

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Haj Pilgrimage Costs Expected to Exceed RM25,000 Per Person This Year

The cost for Muassasah pilgrims to perform the Haj this year is projected to surpass RM25,000 per individual, a significant increase primarily driven by new taxes and service charges implemented by the Saudi Arabian government. This escalation reflects a 12 per cent rise in expenses compared to the RM22,900 incurred in 2019, with further cost implications from potential new standard operating procedures yet to be factored in.
Impact of Saudi Arabian Government's Fiscal Changes

A substantial contributor to the increased Haj costs is the Saudi Arabian government's decision to raise the Value-added Tax (VAT) from five per cent to 15 per cent. In addition to this significant tax hike, new service charges have also been introduced, directly impacting the overall expenditure for pilgrims. These fiscal adjustments by Saudi authorities necessitate a higher outlay for the services required for the pilgrimage.
Breakdown of Haj Expenses

The majority of the Haj cost, approximately 70 per cent, is allocated to direct expenses such as flights and accommodation. Additional costs encompass essential services provided over the 40 to 45-day pilgrimage, including food, bus transportation within Saudi Arabia, and the provision of tents in Arafah and Mina, as well as Mutawif services. The increased VAT and general inflation rates in Saudi Arabia have affected the pricing of nearly all these services.
Lembaga Tabung Haji's Financial Support and Cost Management

Beyond the direct costs borne by pilgrims, Lembaga Tabung Haji (TH) incurs annual indirect expenses amounting to RM60 million. These cover crucial preparatory elements such as Haj preparation courses, handbooks, health services, and the logistics for Haj staff. Despite the escalating costs, TH has maintained the pilgrimage payment rate at RM9,980 for the past 13 years and has provided approximately RM2 billion in financial assistance to first-time Muassasah pilgrims since 2001. This financial aid has helped mitigate the rising expenses for many pilgrims, especially considering that Haj costs have surged by 139 per cent between 2001 and 2019, while the payment rate only increased by 16 per cent during the same period.

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Why is the cost of Haj pilgrimage expected to exceed RM25,000?

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