KUALA LUMPUR: A new legislation has been tabled to govern the National Trust Fund (KWAN), under which PETRONAS will no longer be the sole contributor to the federal fund.
The proposed law is looking to ensure that the fund continues to be maintained and replenished since RM5bil was taken out of it to purchase Covid-19 vaccines during the pandemic.
It aims to make KWAN a long-lasting financial reserve that will benefit the current and future generations of Malaysia. As of December 31, 2024, the fund reportedly held RM22.43bil in net assets.
This will be done through the National Trust Fund Bill 2026 which was tabled for its first reading on Tuesday (July 14), by Deputy Finance Minister Liew Chin Tong.
The Bill has been scheduled for its second and third readings within the current meeting of the Dewan Rakyat.
The Bill seeks to repeal the National Trust Fund Act 1988 (Act 339) after which KWAN will be governed under the new proposed law.
Under the proposed law, KWAN would be governed by the National Trust Fund (Incorporated).
Under the previous Act, PETRONAS was the sole contributor to the fund since its establishment in 1988. The contributions of the national oil company varied year to year and was based on the discretion of the PETRONAS Board.
However, under the new Bill, the Federal Government must contribute at least 0.1% of the projected annual Federal Government revenue to the fund, while 2% of dividends from PETRONAS will go into the fund.
The Federal Government will also have to contribute 2% of export duties collected from depleting natural resources such as crude oil, mineral ores and iron ore into KWAN.
The government shall transfer the contribution amounts at the end of every financial year. KWAN will be governed by a board.
States may also continue making voluntary contributions from petroleum royalties. In addition, the Fund may receive income from investments, as well as grants, donations, endowments, gifts, contributions and bequests. Contributions may also be made by individuals or authorities involved in the research or development of depleting resources.
Section 24 of the Bill states that the fund may only be used for education; healthcare; as well as climate change mitigation and adaptation.
The Bill limits withdrawals from the Fund each year to 50% of the Fund’s expected long-term real investment return for that financial year.
A motion must be tabled and approved by the Dewan Rakyat, if the Finance Minister deems necessary to withdraw an amount exceeding the set limit.
KWAN is allowed to invest in bank deposits and gold deposits with banks, central banks or monetary authorities; short-term money market instruments such as Treasury bills, bankers' acceptances and certificates of deposit with maturities of up to one year; shares listed on stock exchanges real estate investment trusts (REITs), among others.
Before making investments, the Board must prepare a Strategic Asset Allocation (SAA), which must be approved by the minister.
The Board is responsible for the overall administration and management of the National Trust Fund (Incorporated) and for investing the Fund.
Among its key responsibilities include administering and managing the Fund; investing the Fund with the objective of maximising long-term risk-adjusted returns on a prudent and commercial basis, while ensuring investments do not adversely affect Malaysia's global reputation; formulating investment policies, including benchmarks and standards for measuring investment performance and managing risk, and monitoring compliance with those policies among others.
The Board will comprise between five and seven members—all appointed by the Minister—including a Chairperson, a Deputy Chairperson from the Finance Ministry, an officer from the Prime Minister's Department, and two to four members with expertise in business, investment, banking or finance.
