Thursday, February 4, 2016

In Response to AMANAH Leader's Question on Tabung Haji Dividend

The Malaysian Insider’s article on “Is Tabung Haji paying dividends with profit or reserves, asks Amanah” written by Nabihah Hamid, 4 February 2016 has attracted my attention and makes me feels obliged to speak my mind.

I don't know whether the dividend (actually hibah in Tabung Haji context) that Tabung Haji is paying derives from profit or reserves. What I know is, a good business entity pays dividend to investors using profits from business activities. It will not borrow or sell assets for the purpose of paying dividend. The profit can be from current year profit and/or retained profits (which is the accumulated portion of unutilised profits brought forward from previous years).

As in the case of Tabung Haji, it was reported that the dividend is paid using the combination of the current year profit and the accumulated reserves (say it again as Retained Profit). From the financial perspective, it is not abnormal and allowed by Islamic Finance scholars.

One more thing, do not get carried away or confused by AMANAH about the negative value of assets versus liability. It has nothing to do with the ability of a company to pay dividends!

Please read more books on financial and accounting. This call is for the dear leaders of AMANAH. You are not short of highly educated followers from the PhD holders to the so called "progressive" leaders to refer.


Don't wait until the people of Kelate say to you "Belake pare la mu kecek weh!"

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