KUALA LUMPUR: The Sarawak Sovereign Fund, to be established with an initial sum of RM8 billion, has passed registration and is now progressing towards the formation of its board of guardians, announced Sarawak Premier Datuk Patinggi Tan Sri Abang Johari Openg.
He said that the board will comprise professionals who are selected based on their integrity, background, and expertise in investment and capital markets.
“It’s not only composed of Sarawakians or Malaysians, but also includes professionals from multinational backgrounds. We are seeking individuals with experience in investment in the capital market and expertise in multiplying seed capital. According to the law, we require a board of 11 members, we plan to appoint eight.”
“I have attended sovereign fund forums in Norway, London, Singapore, as well as our own. The core principle of it is the Santiago principle, which we must comply with in terms of fund management. Furthermore, we aim to ensure that the returns are well calibrated to effectively protect the fund,” he told reporters during the 5th Malaysian Banking and Finance Summit which took place yesterday.
In November last year, Abang Johari announced that Sarawak will set up a sovereign wealth fund with an initial amount of RM8 billion to strengthen the state’s financial sustainability. This comes after the state legislative assembly unanimously approved the Sarawak Sovereign Wealth Future Fund Board Bill.
“Sarawak must grow and diversify our source of revenue to be economically and financially sustainable. I learned that sovereign wealth funds are a strategy for many countries to invest excess capital into markets or other investments. Therefore, we must build up wealth for Sarawak when our oil and gas reserves run out in the future,” he said during his keynote speech.
Sarawak Sovereign Wealth Future fund will adopt a capital maximisation model, where it benchmarks against Norway’s sovereign wealth fund known as Norway Government Pension Fund Global with a fund size of US$1.25 trillion (RM5.7 trillion). The same model is also adopted by US Alaska Permanent Fund Corporation with a fund size of US$70.6 billion.
Abang Johari said that these countries’ sources of revenue are also from oil and gas, similar to Sarawak.
“Simply, the fund would enable Sarawak to convert nonrenewable 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.
“This fund is set up according to best international practices to ensure appropriate governance and an internationally accepted level of integrity and transparency when dealing with public funds,” affirmed Abang Johari.
