Meeting the electricity needs of a growing economy is a significant responsibility. But with the right policies, the right people, and by embracing the right opportunity, power providers have the potential to be a powerful catalyst for the wider national economy.
That’s the role enjoyed by Malaysia’s national power provider TNB in 2017, as they revealed their 4th quarter financial statement for FY2017 in October. Overall profit fell slightly by 6% year on year, down from RM7.37 billion to RM6.9 billion. Yet TNB was able to offer the benefits of record-breaking figures elsewhere – thanks to annual dividend payments totalling RM3.5 billion.
That record-breaking dividend isn’t just a celebration of TNB’s hard work, it’s a figure that offers the opportunity for greater celebration. According to analysts, those funds will present a positive spur for Malaysia’s economy.
Multiplying the benefits of strong dividends
The economic benefits of dividends paid by large companies such as TNB go far beyond the direct shareholders. These financial windfalls offer a multiplier effect that benefits the economy as a whole.
Large companies are often seen as a guide for the health of a national economy. That means positive results and dividend payouts help create an atmosphere of positive growth that feeds into wider economic opportunity. Investors are encouraged by such visible success, which in turn helps provide a more encouraging investment environment.
The wider trickle-down effect resulting from this significant dividend is likely to create a positive economic environment that will boost consumer spending and inject billions into the Malaysian economy. This will be an especially significant benefit to lower-income groups involved, noted Professor Dr Yeah Kim Leng of Sunway University Business School Economics in speaking with The Malaysian Reserve.
“This will help them cope with the rising cost of living. It also depends on the amount these individuals hold in the group. Nevertheless, it is still an injection into the economy that will generally be positive in terms of sustaining consumer spending,”
Recognising the results
The benefits of TNB’s financial success aren’t limited to investment portfolios. TNB’s nine million customers have enjoyed over in rebates from March 2015 to June 2018, a direct benefit resulting from the company’s efficient operation under the incentive-based regulation (IBR) scheme.
According to the Malaysian Ministry of Energy, Green Technology and Water, “although consumers will not experience any changes in the tariff schedule for the period 2018 to 2020, they will continue to receive reliable electricity supply along with more advanced infrastructure development initiatives and support programs by TNB.”
TNB’s strong financial performance underlines the foundations of a strong power landscape for Malaysia, a financial performance which led to the much-celebrated record dividend of RM3.5 billion this year. This impressive windfall saw confidence growing in financial markets to ensure TNB hit a record share price in 2017, a trend which continued with a strong positive start to 2018.
That record-high share price presents a positive reflection of how this success is viewed by financial experts. Thanks to the multiplier effect which will result from the financial windfalls which have emerged from this success, we can look forward to enjoying a greater positive boost to our wider economy.
Sustainable power helps a sustainable economy
Efficiency and sustainability aren’t just drivers in the vital production and transmission of electricity, but in the financial operations of any successful national power company. Building that efficiency into a reliable power network involves a strong financial foundation today, ensuring TNB is prepared to meet Malaysia’s power needs tomorrow.
TNB’s recent dividend not only reflects an efficient operation helping build that sustainable power landscape, it goes further to offer even greater benefit to the rakyat. The economic impact of this record-breaking dividend will help build and shape a more positive and increasingly sustainable economy for Malaysia.