KUCHING: Sarawak will set up a sovereign wealth fund with an initial amount of RM8bil to strengthen the state's financial sustainability.
This comes after the state legislative assembly unanimously approved the Sarawak Sovereign Wealth Future Fund Board Bill on Tuesday (Nov 22).
Sarawak Premier Tan Sri Abang Johari Openg said the fund would enable the state 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.
"Ultimately, this will create an endowment to generate sustainable sources of income for future generations," he said when tabling the Bill.
Abang Johari said money for the sovereign wealth fund would come from the state consolidated fund through annual appropriations approved by the state legislature.
He said the initial amount would be RM8bil, followed by annual appropriations of RM300mil in the second to fifth years, RM550mil in the sixth to tenth years and RM650mil in the eleventh to twentieth years.
"With this appropriation, the fund is expected to grow sustainably with no withdrawals except in the case of critical events which might arise within this 20-year period or when the fund performs better than targeted," he said.
Abang Johari also said excess income from the fund would be transferred to an endowment fund account, which would then be used for the people's education in tertiary institutions, improving Sarawakians' standard of living based on socioeconomic needs and developing Sarawkians' talents, expertise and entrepreneurial skills.
He said the sovereign wealth fund would be managed professionally and transparently by a board of guardians comprising finance and investment experts and professionals.
To maintain the fund's independence from political interference, he said MPs, state assemblymen and members of political parties and local authorities would not be eligible to be appointed to the board of guardians.
"An independent investment advisory panel will also be established to advise on the management and administration of the fund," he added.