Plans to develop the Indonesian Haj Village project in Mecca, Saudi Arabia, further underscore the government's dual role as both regulator and operator of the haj pilgrimage. This policy is vulnerable to conflicts of interest, as its primary goal of reducing haj costs will clash with the need to generate profits from the investment.
The Daya Anagata Nusantara Investment Management Agency, or Danantara, is leading the Haj Village development project by acquiring a 1,461-room hotel and 4.4 hectares of land with a total investment of Rp8.46 trillion in mid-December, 2025. The government stated that the project was undertaken to increase the comfort, service, and cost efficiency for Indonesian pilgrims.
However, the government's claims regarding these benefits still leave a big question mark about the business feasibility of the project. From a policy governance perspective, the project is also highly problematic, as the public has yet to see any feasibility study documents, financing schemes, or risk analyses.
The hospitality industry in the Holy Land is a capital-intensive, high-risk sector due to its highly seasonal nature. Although occupancy rates surge sharply during the haj season and the holy month of Ramadan, they can drop by 30 to 40 percent outside of these periods. Therefore, thorough risk management – from strategic site selection to establishing a competitive rate structure – is essential for these facilities to compete with global players such as Marriott, Hilton, and Accor.
Amid the dominance of these giant investors, Danantara's acquisition of Novotel Makkah Thakher City faces significant challenges. Its location, 2.5 kilometers away from the Al-Haram Grand Mosque, forces pilgrims to rely on shuttle buses. This situation is very risky for pilgrims, as approximately 50 percent of them are elderly individuals over the age of 65 who would have difficulties if they had to push through crowds on their way to the Kaaba.
The urgency of this project is also questionable. In a tight domestic fiscal environment, trillions of rupiah in overseas investment could potentially balloon as Danantara also plans to build an integrated complex, including hotels, malls, hospitals, mosques, and restaurants. This massive-budget project also does not create a multiplier effect on the domestic economy because the construction, labor recruitment, and supply chain establishment will all take place in Saudi Arabia.
The government's dual role may give rise to unhealthy business competition and unchecked power dominance. Consequently, small travel agencies are at risk of being pushed out, leaving pilgrims with fewer accommodation options. This dual role has repeatedly caused serious problems, including the haj corruption case involving former Religious Affairs Minister Yaqut Cholil Qoumas, which resulted in state losses of Rp622 billion.
The government should focus on improving the management of the haj, which has been problematic for decades. This transformation can only be achieved through a clear separation of authorities: the government should act purely as a regulator and supervisor, while the operational functions should be entrusted entirely to the private sector.
– Read the complete story in Tempo English Magazine
Source: https://en.tempo.co/read/2094413/the-haj-village-who-is-it-fo