With Khazanah Nasional making an average annual return of below 1%, and the EPF making over 5% annually, some are lobbying for changes in its management and investment strategy, says report.
This has resulted in additional pressure on Khazanah to show higher returns to boost government coffers, according to a report in The Straits Times (ST).
The report said that senior state officials were lobbying for changes to the sovereign wealth fund’s management and investment strategy.
The report said the net worth adjusted (NWA) of Khazanah had dipped since 2014 from RM111 billion to RM102 billion. The NWA’s tabulation, it said, was unclear but that it largely measured the current value of Khazanah’s portfolio plus dividends returned to the treasury.
“In short, it lost 8% of its value or RM9 billion in public wealth over two years,” the report added.
The last time Khazanah declared a dividend lower than this year’s RM650 million was in 2011.
The bulk of the government’s direct business investments is managed by Khazanah, which has returned an average of just RM825 million in dividends annually over the past four years, from its RM145 billion worth of assets. This, the ST report said, amounted to less than 1% return a year between 2013 and last year.
According to the report, there is a push by some within Prime Minister Najib Razak’s “vast circle of advisers” to change Khazanah’s investment strategy, especially since the fund’s managing director, Azman Mokhtar, is due to leave in mid-2019, after a 15-year run at the helm.
Second Finance Minister Johari Abdul Ghani told ST that Khazanah’s succession plan would make increasing returns a priority. “I think that for anybody who is going to run that outfit, certainly that will be part of their KPI,” he said, referring to key performance indicators.
Umno Youth executive council member Rahman Hussin told the ST he had been tasked with raising the issue of non-performing government-linked firms at next month’s Umno asembly.
“Khazanah has so many subsidiaries, but as a custodian of public wealth, why is it not creating returns that we can channel back into the economy?” he was quoted as asking.
The ST report said the opposition believed better returns from state enterprises such as Khazanah could help ease Malaysia’s fiscal deficit, currently running at 3% of gross domestic product.
It said Pakatan Harapan’s budget committee chairman Wong Chen had estimated that the fund could and should declare RM2.5 billion in dividends yearly.
He was quoted as saying: “Although its expenditure is not transparent, we find that it spends RM4.5 billion of its revenue each year before declaring its profit before tax. One wonders why a holding company spends up to 80% of its revenue.”
Khazanah controls some of Malaysia’s biggest firms, including state electricity company Tenaga Nasional and telecommunication firms Telekom Malaysia and Axiata. It also controls CIMB. Its stakes in these four giants alone have garnered RM1.5 billion in dividends this year.
According to the report, Khazanah performs poorly when compared with the Employees Provident Fund (EPF). Since 2004, the report noted, Khazanah had returned a total of RM9 billion in dividends, which worked out to an average annual return of below 1% of the fund size, while the EPF added more than 5% annually to its members’ retirement savings.
The ST report said Khazanah’s profit before tax – not including unrealised capital gains – also lagged behind those of its peers, such as Singapore’s Temasek Holdings, China Investment Corporation, Alaska Permanent Fund Corporation, and the world’s largest sovereign fund, Norway’s Government Pension Fund Global.
The ST said Khazanah did not respond to a request for comment but that they and analysts often pointed to “national service” activities – investments in strategic industries that support government policies – as a factor that could drag down returns.
Khazanah has 458 staff in more than eight offices, including in London and San Francisco.
The views expressed in the contents are those of our users and do not necessarily reflect the views of FMT.
lagi info di : Gosip Artis Terkini