Sarawak sets up RM8bil state fund

Quest for better living: Abang Johari (centre) arriving at the state legislative assembly complex. — ZULAZHAR SHEBLEE/The Star

KUCHING: The Sarawak Legislative Assembly has approved a Bill to set up a sovereign wealth fund for the state with an initial amount of RM8bil.

Sarawak Premier Tan Sri Abang Johari Tun 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 while tabling the Sarawak Sovereign Wealth Future Fund Board Bill yesterday.

The Bill was unanimously passed after 10 assemblymen argued in support of it.

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 year, RM550mil annually in the sixth to 10th year, and RM650mil annually in the 11th to 20th year.

“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 Sarawakians’ 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 trustees comprising finance and investment experts.

To maintain the fund’s independence from political interference, he said MPs, state assemblymen, and members of political parties and local authorities, will not be eligible to be appointed to the board.

“An independent investment advisory panel will also be established to advise on the management and administration of the fund,” he added.

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