‘TABUNG HAJI MAY DISTRIBUTE 3.0-3.5PC DIVIDEND’
It could take up to two years for pilgrims’ fund to match EPF’s performance, says economist
TABUNG Haji is expected to announce a profit distribution of between 3.0 and 3.5 per cent for financial year 2023, according to an economist. Dr Barjoyai Bardai, of Universiti Tun Abdul Razak, also forecasts that Tabung Haji’s profit distribution for this year would not deviate much from the previous year.
He opined that its profit distribution might eventually align with that of Perbadanan Nasional Bhd’s (PNB) unit trust management company Amanah Saham Nasional Bhd (ASNB).
ASNB has declared an income distribution of 5.25 sen per unit for Amanah Saham Bumiputera 2 and a 4.75 sen per unit for Amanah Saham Malaysia for financial year ended March 31, 2024.
Barjoyai emphasised a distinctive aspect of Tabung Haji’s dividend that accounts for a 2.5 per cent zakat upfront.
“Although the declared rate may be marginally lower than that of ASNB funds, it holds a significance as zakat has been factored in. I believe the 2023 profit distribution will be between 3.0 and 3.5 per cent,” he added.
Tabung Haji is expected to announce its profit distribution next week.
Tabung Haji’s distribution for financial year 2022 stood at 3.1 per cent after a 2.57 per cent zakat. A total of RM2.65 billion was distributed to more than 8.7 million depositors.
In 2018, Tabung Haji distributed profit after zakat of 1.25 per cent. In 2019, it was 3.05 per cent and for 2020 and 2021, the profit after zakat stood at 3.1 per cent.
Barjoyai said Tabung Haji needed an investment strategy that could offer a higher dividend rate.
He said Tabung Haji used to have dividends of up to 9.0 per cent, which was considered favourable given that it had invested in several venture capital projects.
“However, investing in exploratory capital ventures carries higher risks, resulting in a decline in performance.
“Subsequently, it went into safer options with slightly lower returns.”
He referred to Tabung Haji’s choice to align its investment strategy with that of the Employees Provident Fund (EPF), which was maintaining a balanced portfolio comprising fixed income, overseas investments, equities and other assets.
“It has started to yield results. However, it may not immediately match EPF’s performance. Investment institutions like EPF and PNB are managed by professional investment teams with their own strategies.
“PNB was known for its strong performance because it received initial public offering (IPO) allocations, but when IPOs declined, PNB’s performance also decreased slightly.
“EPF has consistently performed well, but it has its limitations due to its large fund size, so a 6.0 per cent return can be considered good, but the key is its consistency,” he said.
Barjoyai said it could take up to two years for Tabung Haji to match EPF’s performance.
UniKL Business School economic analyst Assoc Prof Dr Aimi Zulhazmi Abdul Rashid said Tabung Haji could not invest in the long term like EPF or Retirement Fund Inc (KWAP), whose contributors could made withdrawals only at a certain age.
Tabung Haji depositors can withdraw their savings any time, and this limits its investment portfolio, especially in terms of savings liquidity or making cash available.
“Tabung Haji must have enough liquidity and not be overcommitted to large-scale, long-term investments.
“It has two main responsibilities, managing haj pilgrims and paying profit distribution. Tabung Haji cannot afford to have high-risk and long-term investments because every year it has to give returns (hibah) to depositors as well as subsidise haj pilgrimages.”
Aimi said depositors should comprehend Tabung Haji’s essential role, which was to aid Muslims in amassing sufficient savings to meet the obligations of the fifth pillar of Islam.
“It is inappropriate to make a comparison between Tabung Haji’s rate of return and other organisations such as EPF, KWAP and PNB.
“We cannot expect too much from Tabung Haji because it has to finance the cost of performing the haj, which increases every year.”
Aimi said haj financial assistance increased every year.
“ThecostofperformingthehajwasRM22,900 in 2019. This year, it could hit RM33,300, compared to RM30,850 last year.”
He said the government’s targeted haj financial assistance would continue this year.
Under this scheme, individuals in the Bottom 40 income group pay up to RM12,356, with TH subsidising RM20,944, or 63 per cent of the cost.
For the Middle 40 income group, a person pays RM14,148 with a subsidy of RM19,152.
Tabung Haji recorded its highest dividend in 1994 at 9.5 per cent, while its lowest dividend was in 2018 at 1.25 per cent.