Abang Johari said the state government is seeking “guardians” who can act both professionally and transparently to make sure that the fund is well-protected. — Bernama
PETALING JAYA: The Sarawak government is looking to form a Board of Guardians, comprising eight finance and investment experts and professionals, to provide professional management for its sovereign wealth fund, says Sarawak Premier Tan Sri Abang Johari Tun Openg.
Speaking at the the fifth Malaysian Banking and Finance Summit, Abang Johari, who was the guest of honour, said the state government is seeking “guardians” who can act both professionally and transparently to make sure that the fund is well-protected, regardless of their origins, extending beyond Sarawak and not limited solely to Malaysians.
“We have to check the personality, integrity and background of our professionals to be on the board. It (the board) is multinational and comprises people who have experience in investment in the capital market,” he said in his keynote address at the summit.
Late last year, the Sarawak Legislative Assembly approved a bill to set up a sovereign wealth fund for the state with an initial amount of RM8bil.
Abang Johari pointed out that the sovereign fund adopted a capital maximisation model, benchmarked against Norway’s sovereign wealth fund known as the Norway Government Pension Fund Global, with a fund size of US$1.25 trillion (RM5.71 trillion).
He added that the same model is also adopted by US Alaska Permanent Fund Corp, with a fund size of US$70.6bil (RM322.39bil).
“Intriguingly, these countries’ sources of revenue are also from oil and gas, similar to Sarawak. Simply, the fund would enable Sarawak to convert non-renewable assets to financial assets, invest for the future through forced savings and secure the continued growth of financial reserves through diversified investments,” he said.
Abang Johari said that ultimately, the fund will create an endowment to generate sustainable sources of income for future generations.
At the event, participants were also told that more banks need to adopt a hybrid approach of offering physical and digital banking services.
The concept of phygital banking, which refers to the hybridisation of both physical and digital banking, emerged as the answer to the question of “what is the future of banking?” in a panel discussion among prominent leaders, technology experts and transformative minds from the banking and finance industry.
Speaking as one of the panellists, Affin Bank president and group chief executive officer Datuk Wan Razly Abdullah Wan Ali said his bank adopted a hybrid approach, focusing on both physical and digital banking.
He emphasised that physical banking remains the preferred option for big transactions, whereas digital banking is more suitable for small-ticket transactions.
“We believe that there is a need for both of this (physical and digital banking) to coexist,” he said during a panel discussion at the event.
Wan Razly believes digital banks, which are coming onboard within a year tentatively, are sort of pressuring conventional banks to evolve and embrace digitalisations.
“In the past, maybe we were slow to embrace digital banking. Now that digital banks are coming onstream, we (conventional banks) have to evolve faster,” he told reporters on the sidelines.
However, he emphasised that these are all beneficial to the customers.
“The customer gets instant service, at any time of the day and better service,” he said, adding that customers are to gain but banks need to elevate their game.
Moreover, he stressed that Affin’s focus is to accelerate its digital plans, stating: “the faster, the better for Affin”.
When asked about Affin’s current account-savings account (CASA) ratio, Wan Razly said it is now at 23%.
However, the bank has a goal to achieve a 30% CASA ratio by 2025.
Echoing Wan Razly, another panellist, Silverlake Axis Sdn Bhd Islamic finance CEO Othman Abdullah, said banks would embrace the hybrid model going forward.
He added that any transaction that involves big monies would require physical human presence.
Othman, however, noted that the key word towards the future of banking still remains as “customer experience”.
He believes that banks should look into technology integration to enhance customer experience.
Among technologies that he pointed out include artificial intelligence, blockchain, predictive analytics, cloud infrastructure and application programming interface.
Interestingly, Juwai IQI global chief economist Shan Saeed opined that paper currency will sooner or later be phased out.
“Technology will revolutionise it and change the whole spectrum of the banking system,” he stressed.
