Malaysian SWF Khazanah seeks government clarification on investment mandate

The Khazanah Nasional office.

Malaysia’s sovereign wealth fund Khazanah Nasional Bhd has said it will seek further clarification from the government on its mandate and investments after prime minister Mahathir Mohamad said Khazanah has “deviated from assisting bumiputra objective”.

“We respectfully refer to various news reports today in respect of Khazanah’s mandate and investments. In this regard, further to various queries, we wish to inform that we are seeking further clarification as necessary from the government and other respective parties. This is with a view towards clarifying, reaffirming and implementing our mandate as the strategic investment fund of the government of Malaysia,” said the sovereign wealth fund in a statement on July 6.

Earlier on July 5, Mahathir was quoted by local media saying that Khazanah should go back to its core purpose of helping the bumiputras. He said the fund was initially formed to buy shares allocated to bumiputras, “who normally buy shares and sell them to others immediately”.

“So to stop them from doing that, we created Khazanah. But now Khazanah seems to be taking up all shares on their own, whether it was meant for bumiputras or not. So, maybe they should go back to their original purpose,” said Mahathir, as quoted by the Malaysian national news agency BERNAMA.

Bumiputra refers to “sons of the soil”, which is a term used to describe Malays and other indigenous people in Malaysia. Khazanah began operations in 1994, assuming a custodial role in managing the government’s commercial assets as investing in strategic and high-technology sectors.

It then underwent a revamp in 2004, resulting in a more active investment approach to enhance the performance of its portfolio while seeking opportunities in new economy sectors and geographies. As at December 31, 2017, Khazanah’s realisable asset value is RM 157.2 billion ($38.91 billion) while net worth adjusted stood at RM115.6 billion ($28.61 billion).

The newly-elected government led by Mahathir has been actively reviewing government-linked investment corporations. Last week, state-linked fund management firm Permodalan Nasional Bhd had replaced group chairman with former central bank governor Zeti Akhtar Aziz.

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