Indonesia’s ‘Haj Village’ in Mecca: A Breakthrough but Strong Management and Caution Needed

The Indonesian government is pressing ahead with its plan to build a ‘Haj Village’ in the holy city of Mecca, Saudi Arabia. On 17 December 2025, Daya Anagata Nusantara (Danantara), Indonesia’s sovereign wealth fund, announced that it had acquired real estate and hotel assets in Thakher City, 2.5 kilometres from the Ka’bah (the House of Allah), around which Muslims circumambulate when they perform one of the five pillars of their faith, the Haj. Danantara is competing against dozens of others in a bid for another plot of land called ‘Western Hindawiyah’; at time of writing, the bidding process was in progress. If the plan materialises, Indonesia’s Haj Village will accommodate 23,000 pilgrims from Indonesia.

This would be a breakthrough in improving haj pilgrimage services for Indonesians. Such a village can theoretically reduce the fluctuating price of accommodation and make Indonesian pilgrims, many of whom are older, more comfortable. However, unless the village can be commercially viable and socially managed, it could be a waste of public money. Whether the project can bring money to Danantara and whether it can avoid becoming a social burden for Indonesia government and its Muslim community, while helping to promote the good name of Indonesian Muslims, are uncertainties.

The idea for building such a village arose in 2020, at a legislators’ meeting at Indonesia’s national parliament, when an official with the Indonesian Haj & Umrah Travel Association named Firman M. Nur proposed that the government establish an “Indonesian town” in Mecca. Mr Firman suggested, for instance, that by renting hotels for longer periods for citizens to stay in during their pilgrimages in Saudi Arabia, the Indonesian government could control accommodation prices. Building a “town” could also provide the Indonesian government a chance to equip it with facilities to support Indonesian pilgrims, such as Indonesian shops and restaurants.

This idea took further shape in late 2025 under President Prabowo Subianto, who has suggested an even bigger plan, that his government would not only rent hotels for long periods but would buy hotels and land to build an Indonesian Haj Village near the House of Allah. Already, the government has purchased a hotel, the Novotel Makkah Thakher City, and a five-hectare plot in front of this hotel. Currently, the three-tower hotel has 1,461 rooms with a capacity of 4,383. The government apparently plans to build 13 new towers (on that plot) to accommodate about 19,000 more pilgrims and a mall.

This property is expected to accommodate 23,000 pilgrims (Indonesian haj pilgrims total some 200,000 each year). Annually, about 100,000 Indonesian pilgrims stay in Mecca, while others stay in Madinah. If the plan works, it will resolve accommodation problems for one quarter of the Indonesian pilgrims who visit Mecca. The government plans to begin building the rest of the Haj Village in the fourth quarter of 2026. This plan is plausible, as the Saudi Arabia government has relaxed its land ownership scheme by recently approving a law allowing foreign entities, including foreign governments, to buy land in Saudi Arabia.

Major Muslim organisations in Indonesia agree with the plan. Muhammadiyah supports it wholeheartedly, arguing it can reduce the cost of accommodation, while the Indonesian Council of Ulema (MUI) supports it but has warned that the village’s management must be of sound social and commercial quality. Otherwise, it could create a sense of exclusivity among Indonesian haj pilgrims or worse, be a waste of public money. After all, Danantara is a sovereign wealth fund managing public money, so if it is losing money, it is bringing losses to the public.

The Indonesian government is pressing ahead with its plan to build a ‘Haj Village’ in the holy city of Mecca, Saudi Arabia.

This warning makes sense. The Indonesian Haj & Umrah Travel Association estimates the Haj Village would be operating just 70 and 80 days annually for the annual Haj. Thus, its management needs to be savvy enough to maximise occupancy rates, including by attracting Umrah (minor pilgrimage) pilgrims to stay there. As the number of Indonesian umrah travellers has grown, from 2014-2015’s 598,077 to 1.8 million travellers by 2024-2025, in line with Indonesia’s middle-class growth, this is possible. More Indonesians treat the umrah as part of their holiday planning, turning to religious tourism. Some undertake the umrah more than once in their lifetime, since unlike for the haj, there is no restriction or national quota for those who perform it. 

Despite potential challenges, government officials and key Muslim leaders are upbeat about the project. Danantara has US$900 billion of assets under its management and can well afford the estimated US$1.3 billion cost of this village, for which Danantara apparently plans to use investment revenues to finance. However, during the construction and after it is estimated to be completed in 2029 (the next election year), the right management team must be selected. Danantara’s management consists of finance and other professionals, who have been exposed to international corporate practices, so there is a chance that the selection of the Haj Village management team might be transparent. Yet there is no guarantee that village management would be free from political intervention: the record shows that haj affairs in Indonesia have been dogged with corruption. Secondly, the management team needs to coordinate with the relatively new Ministry of Haj and Umrah Affairs and other stakeholders so that management is smooth. This could be a daunting task as the officials’ and other stakeholders’ interests could challenge the village management team. For example, the latter can probably expect demands for special treatment like requests for the allocation of certain rooms to senior state officials or influential figures.

2026/13