KUALA TERENGGANU: Datuk Seri Najib Tun Razak said on Saturday the government has agreed in principle to the proposal by the Terengganu government to set up the Terengganu Investment Authority (TIA) with an initial fund of RM10 billion.
The deputy prime minister said the cabinet gave the nod for the proposal at its meeting on Friday, reflecting a strong relation between the federal and state government.
"In principle, the proposal has been approved by the cabinet," he told reporters after handing over oil royalty payment to the Terengganu government on Saturday.
At the event, Najib, who is finance minister, handed over a cheque worth RM408.6 million in oil royalty to Menteri Besar Datuk Ahmad Said.
Also present were International Trade and Industry Minister Tan Sri Muhyiddin Yassin, Education Minister Datuk Seri Hishammuddin Tun Hussein, Rural and Regional Development Minister Tan Sri Muhammad Muhd Taib, Information Minister Datuk Ahmad Shabery Cheek and Wanita Umno chief Tan Sri Rafidah Aziz.
Najib said the setting up of TIA, a brainchild of Yang diPertuan Agong Tuanku Mizan Zainal Abidin, was to spur the state's economic growth.
"We will discuss the details of the TIA set up including its administrative structure when the cabinet receive the papers," he said.
The TIA, among other things, will operate as a sovereign wealth fund and aimed at managing state investments.
Elaborating further, Najib said, the RM10 billion fund would be sourced from the bond market using proceeds from the oil royalty, with the Terengganu government making investment mostly outside the state.
He said the move was to ensure sustainability of state revenue because oil, the state's main source of revenue, would be depleted one day.
In his speech, Najib said, the cabinet felt that it was not proper to continuously pay out compassionate fund to Terengganu.
On the contrary, he said, the royalty should be paid in full so that Terengganu could utilise it to implement development programmes.
"We should not deprive the Terengganu people of their rights, neither should we give the impression that we are not confident of Terengganu's ability to manage the oil royalty," he said.
Asked whether the royalty payment would mean that there would be less allocation for development in Terengganu, Najib said, it would depend on several criteria including per capita income.
Speaking at another event, Najib said, Terengganu should be able to witness heightened economic activities following the royalty payment.
The state government could now spend more money on human capital development as well as projects to bring development to the people, he said.
"Terengganu will now have enough money to implement development programmes," he said in his speech at the Tengku Intan Zaharah Mosque.-Bernama