International Journal of Instructional Cases (IJIC)


Financial Sustainability the Case of Tabung Haji Malaysia and Badan Pengelola Keuangan Haji Indonesia

Mohd Hisham Hashim
Universiti Kuala Lumpur Business School, Malaysia.
Eddy Yap Tat Hiung
University of Wollongong, Malaysia.
Ratna Januarita
Universitas Islam Bandung, Indonesia.
Abdul Razak Abdul Hadi
Universiti Kuala Lumpur Business School, Malaysia,


Understanding the pivotal role of a robust financial model in fostering sustained growth for a business entity is paramount. This investigation focuses on the financial frameworks of Tabung Haji Malaysia (TH) and Badan Pengelola Keuangan Haji Indonesia (BPKH), with a particular emphasis on TH's financial model and the contribution of its subsidiary, Tabung Haji Plantations Berhad (THPB), to TH's dividend disbursements spanning the past 27 years since 1994.  While the study scrutinizes TH's financial model, it excludes an evaluation of BPKH's financial model due to its recent establishment in July 2017, primarily tasked with safeguarding collections from Indonesian hajj pilgrim depositors. Furthermore, the study endeavours to explore the intricate relationship between crude palm oil prices (CPO) and TH's dividend yields (DY) within the theoretical frameworks of residual dividend theory and dividend expectation theory. Utilizing the Engle-Granger cointegration test (1987) on annual secondary data from 1994 to 2020, the empirical findings reveal a significant equilibrium relationship between fluctuations in CPO prices and TH's declared dividends. However, the study fails to establish short-term causality between these variables. Notably, a negligible positive correlation between TH dividends and the percentage change in CPO prices is observed, indicating that TH's plantation business, facilitated by its subsidiary, does not predominantly drive overall group income in the short term. This suggests the existence of other business segments within TH that may substantially contribute to sustaining annual dividend pay-outs. Consequently, TH is advised to reassess its entire revenue streams within the current financial model to adequately reward depositors and ensure long-term income growth.

Keywords:Tabung Haji (TH), Badan Pengelola Keuangan Haji (BPKH), Crude Palm Oil Prices, Dividends and Engle-Granger Cointegration Test.