Principal Global Investors will launch a mobile app in Indonesia later this month designed to help the country's 80 million millennials get an early start on saving for the hajj — the pilgrimage to the holy city of Mecca that's obligatory for Muslims to make at least once in their lifetimes.
Company executives say they see the "Young Hajj" program as the first step in building a direct-to-consumer "Islamic ecosystem" capable of being expanded, eventually, to cover a range of goals-based saving needs for the world's largest Muslim population.
Agung Budiono, Jakarta-based CEO of PT Principal Asset Management, said in an interview that Principal is answering a call from the government body dedicated to helping Indonesians save for the pilgrimage, Badan Pengelola Keuangan Haji. BPKH currently oversees roughly 135 trillion rupiah ($9.1 billion) on behalf of those aspiring pilgrims.
A few years ago, BPKH launched an initiative with the goal of helping Indonesians go on the hajj earlier in life — in middle age as opposed to retirement, as is more often the case now.
Indonesians have to save roughly 25 million rupiah (about $1,700) to book a place in the queue for Indonesia's hajj quota, set by the religious authorities in Saudi Arabia, and then accumulate another 10 to 20 million rupiah from further contributions or investment gains to cover expenses on the pilgrimage, said Chee Khiong Tan, Singapore-based head of business innovation, Asia, with Principal Financial Group, in the same interview.
The government typically subsidizes a portion of the total cost of the trip, which covers roughly a week of religious rites but can extend another month or more due to the logistical challenges of getting to the holy lands and flying out again, said Mr. Tan. That subsidy came to about 27 million rupiah in 2019, when the cost of the hajj was set at 72 million rupiah.
With demand far exceeding annual quotas, at present an Indonesian in Jakarta who can plunk down that first 25 million rupiah has to wait more than 20 years to make the trip, he said.
Mr. Tan said that while his company's surveys of Indonesian millennials between the ages of 25 and 40 found all eager to go for the hajj, "saving 25 million rupiah (is) quite a big ask for a lot of them."
Many try to save early, but "guess what — a kid came along, they need to buy a motor bike" and the money gets diverted, Mr. Tan noted. By the time they're ready to save, they're in their 40s, which more often than not means embarking on the physically demanding hajj when they're well into their 60s, he said.