KUALA TERENGGANU: The Government has agreed to the setting up the Terengganu Investment Authority, a sovereign wealth fund which will manage oil royalty payments to the state.
Deputy Prime Minister Datuk Seri Najib Tun Razak said the Cabinet had on Wednesday given the nod to the setting up of the authority with a starting fund of RM10bil.
“The Cabinet will continue to discuss the technical aspects of the setting up the fund at the next meeting,” he said after handing a cheque for RM408.6mil as part of the oil royalty to Terengganu Mentri Besar Datuk Ahmad Said here yesterday.
The amount is the remainder that the state was supposed to get for the 2007-2008 period. The TIA was proposed by Yang di-Pertuan Agong Tuanku Mizan Zainal Abidin as a way to channel part of the oil royalty into a sovereign wealth fund which would be operated by a team of professionals and supervised by foreign bankers and investors.
Tunku Mizan will be the chairman of the TIA board of advisers while the Mentri Besar will be also represented on the board.
Najib said the TIA would utilise oil royalty to invest in Terengganu and other parts of Malaysia.
The authority would also have the mandate to invest globally in bonds to ensure the state’s financial sustainability on a long-term basis.
He said revenue earned by the TIA would be able to complement the state’s income when oil and gas resources were exhausted.
Najib said he was confident that development in Terengganu would take off with the payment of oil royalty directly to the state.
“I hope that the state will utilise the royalty money wisely and make far-sighted development plans,” he said.
Asked whether the Government would now reduce its allocation to Terengganu, Najib said any allocation would be based on the requirement by the state.
“We have to evaluate certain criteria based on the development and per capita income before deciding on quantum of allocations from the Federal Government to the state,” he said.
Earlier in his speech, Najib said the royalty money would be transferred to the state’s treasury via electronic transfer.
“We (The Federal Government) will pay all dues of the oil royalty promptly through the transfer and I anticipate that the state government will not face any obstacles in initiating development projects.”