As home to the world’s largest Muslim population, Indonesia sees an immense demand for the Hajj, the annual Islamic pilgrimage to Mecca (Saudi Arabia) which stands as one of the Five Pillars of Islam. However, a fragile rupiah and high global oil prices heavily impact the costs of overseas hospitality, aviation, and medical care, making the pilgrimage significantly more expensive.
Not only is that a challenge for the Indonesian Muslim who wants to perform the Hajj but also for the government as it ‘subsidizes’ a significant portion of the traveller’s costs.
The Hajj subsidy structure is actually a unique one as it differs markedly from conventional subsidies that are taken from the annual State Budget (APBN). When someone signs up for Hajj in Indonesia, they pay an initial deposit of IDR 25 million (approx. USD $1,400) to get on the waiting list. Considering there are currently around 5.5 million Indonesians on that list, it accumulates a massive pool of money that is managed by the Hajj Financial Management Agency (BPKH).
BPKH takes this huge pot of money and invests it into safe, Sharia-compliant instruments (such as state Islamic bonds/sukuk and Islamic banking deposits). These investments generate returns (called Nilai Manfaat) of about IDR 10 trillion to IDR 12 trillion every year. When a group of pilgrims finally gets their turn to fly out, the government uses those accumulated investment returns to pay for a huge chunk of their total bill.
So, in 2026, the structure is as follows. The government ‘subsidizes’ 38 percent of the Hajj costs for the individual through the generated investment returns (Nilai Manfaat), while the individual has to cover the remaining 62 percent (deducting the IDR 25 million deposit that was paid to get on the waiting list).
Table 1 – Hajj Costs (BPIH) in 2026:
Costs % of Total
Individual’s Costs IDR 54,193,306 62%
Government Assistance
(Nilai Manfaat) IDR 33,215,559 38%
Total Costs IDR 87,409,365 100%
Source: Ministry of Religious Affairs of the Republic of Indonesia
However, rising costs mean that the costs in Table 1 have to go up in 2027. The Ministry of Hajj and Umrah proposed the Hajj Pilgrimage Implementation Cost (BPIH) for next year at a total of IDR 107.34 million (approx. USD $6,000) per pilgrim, marking an increase of approximately IDR 19.93 million compared to 2026. This surge poses a risk to the long-term financial sustainability of Hajj funds in the coming years.
At the same time, the government also proposed a cost scheme for next year with a 60:40 composition, meaning 60 percent will be covered by the government (Nilai Manfaat) while 40 percent will need to be paid by the pilgrim. The higher share of government assistance aims to keep the expenses paid by pilgrims affordable amidst a potential surge in Hajj operational costs. With this composition, the actual out-of-pocket cost paid by each pilgrim is estimated to be around IDR 43 million (approx. USD $2,400), while approximately IDR 64 million per pilgrim will be pulled from the value of benefits.
Minister of Hajj and Umrah Mochamad Irfan Yusuf explained that the price hike is driven by shifting rupiah exchange rate assumptions, rising aviation costs, accommodation expenses in Mecca and Madinah, ground transportation, and healthcare services. The expansion is also influenced by changes to Masyair services; the Saudi Arabian government has eliminated the entry-level Masyair Service Package D, simplifying its offerings into three higher-tier categories that drive base service costs up. Irfan noted that the figures remain a proposal for now, pending detailed discussions with the Working Committee (Panja) of Commission VIII of the House of Representatives (DPR).
However, there are concerns that the bigger subsidy will strain the liquidity of the Hajj Financial Management Agency (BPKH), which needs to sustain the needs of millions of other waitlisted pilgrims still awaiting departure. Chairman of the National Hajj Commission (Komnas Haji), Mustolih Siradj, warned of severe consequences if the government fails to run careful, long-term calculations.
Assuming around 203,000 regular Hajj pilgrims depart in 2027, Siradj calculated that a subsidy of IDR 64 million per person would require approximately IDR 13 trillion (USD $1 billion) in total funding. According to Siradj, while this policy successfully lowers immediate costs for departing pilgrims, it drastically shrinks the distribution space of the value of benefits for millions of prospective pilgrims still on the waiting list.
Moreover, the financial risk will compound exponentially if Indonesia’s Hajj quota increases significantly in the future. With plans to scale up the quota to 400,000 or even 500,000 pilgrims per season in line with Saudi Vision 2030, the demand for Hajj cost subsidies would skyrocket. Beyond just pure volume, the cost of implementing the Hajj will also face upward pressure from global inflation, supply chain disruptions, energy dynamics, and shifting geopolitical realities.
The Hajj quota is a strict annual limit on the number of citizens Saudi Arabia permits to perform the pilgrimage, calculated based on a country’s Muslim population. For Indonesia, this cap means that despite receiving the largest allocation in the world, overwhelming demand has created a massive backlog, forcing over 5.5 million people to wait anywhere from 15 to over 40 years for their turn. For 2026, the Hajj quota for Indonesia was set at 221,000 individuals.
Source: indotoday
