Why was UJSB established with a RM19.9 billion asset transfer?

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Urusharta Jamaah Sdn Bhd (UJSB) Was Established to Address Tabung Haji's Asset-Liability Gap

Urusharta Jamaah Sdn Bhd (UJSB) was established as a special purpose vehicle (SPV) to manage Lembaga Tabung Haji's (TH) underperforming and non-core assets, which had created a significant gap between the institution's assets and liabilities. This financial imbalance, which first became apparent in 2017, posed a risk of breaching the Tabung Haji Act 1995 and jeopardising future dividend payouts to depositors. The transfer involved approximately RM19.9 billion in assets, financed through RM19.6 billion in sukuk and RM300 million in cash.
Addressing a Widening Financial Deficit

The establishment of UJSB was a direct response to a critical financial situation faced by Tabung Haji. By 2017, the disparity between TH's assets and liabilities had widened to a point where it threatened the institution's compliance with the Tabung Haji Act 1995. This act mandates certain financial health requirements, and a significant deficit could have led to regulatory intervention and, more importantly, the inability to distribute profits to depositors in the form of dividends. The government's intervention through the creation of UJSB aimed to ring-fence these problematic assets, thereby stabilising TH's financial position on paper.
Transfer of Underperforming Assets

UJSB was specifically tasked with taking over TH's underperforming and non-core assets. These were assets that were not contributing effectively to TH's overall financial health or were deemed outside its primary mandate. The scale of the transfer was substantial, amounting to approximately RM19.9 billion in asset value. This figure was financed through the issuance of RM19.6 billion in sukuk, a form of Islamic bond, and RM300 million in cash, indicating a structured financial operation designed to absorb these assets without immediately burdening TH's core liquidity.
The Cost of Solvency

The assets transferred to UJSB were subsequently valued at a considerably lower figure, between RM9.7 to RM10 billion. This discrepancy between the payment made by UJSB (RM19.9 billion) and the later valuation of the assets highlights the cost associated with maintaining TH's solvency at the time the accounting problem was identified. The difference represented a premium paid to ensure that TH's balance sheet appeared healthier, allowing it to continue its operations and dividend distributions. UJSB's mandate was to undertake a ten-year rehabilitation of these assets and redeem the sukuk used for the acquisition.

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Why was UJSB established with a RM19.9 billion asset transfer?

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