KUALA LUMPUR, May 23 — Mubadala Development Co, the investment arm of the Abu Dhabi government, will invest about US$1.8 billion (RM6.3 billion) in a property development project in Malaysia, a local newspaper reported today.
The project involves the construction of hotels and villas on a 1,200-hectare site in Terengganu, the Edge Weekly reported, citing Shahrol Azral Ibrahim Halmi, CEO of the Terengganu Investment Authority (TIA).
Mubadala will invest the amount over seven years while TIA will buy the land from the state government and inject it into the joint venture, said Shahrol.
TIA has been set up and labelled as
The Malaysian fund this week said it is to sell RM5 billion of bonds guaranteed by the federal government.
Shahrol said the fund aims to raise another RM6 billion later this year by forward selling the oil royalty to be received by the oil-producing state over the next few years.
Mubadala, which manages over US$10 billion in assets, is also developing a US$600 million city in a planned economic zone in Johor. — Reuters
Saturday, May 23, 2009
Mubadala to invest US$1.8b in Malaysian property project, says paper
Monday, May 18, 2009
Malaysian State Plans 11 Billion-Ringgit Wealth Fund
By Netty Ismail
May 18 (Bloomberg) -- The Malaysian state of Terengganu is starting a sovereign wealth fund of 11 billion ringgit ($3 billion), of which 5 billion ringgit will be raised from capital markets this week.
The Terengganu Investment Authority, the first sovereign wealth fund set up by a Malaysian state, said it will manage the long-term oil revenue of the state, located on the east coast of peninsular Malaysia.
The country’s King Mizan Zainal Abidin, who is also the Terengganu sultan, proposed the fund to ensure sustainable income for the state should its oil and gas reserves run out, the fund said in an e-mailed statement today. The state is one of Malaysia’s biggest oil and gas producers.
The fund seeks to “generate long-term sustainable and recurring returns” and to promote Terengganu’s economic development, Chief Executive Officer Shahrol Halmi said in the statement.
The Terengganu Investment Authority, which was set up on Feb. 27, will team up with “well-known sovereign wealth funds” to invest in tourism, energy and agriculture projects, he said.
The fund plans to invest in “high-impact, strategic projects in Terengganu, other parts of Malaysia, and in regional and international projects that have positive spillover benefits to Terengganu,” said Shahrol, a Stanford University graduate who worked for more than 15 years at consulting firm Accenture Ltd., according to the statement.
It will seek funds from domestic and foreign capital markets, and the 5 billion ringgit it plans to raise this week will come with a Malaysian government guarantee, the fund said. The remaining 6 billion ringgit will come from future oil royalties.
Companies including Exxon Mobil Corp. produce crude oil from projects offshore Terengganu. The state is also home to Petroliam Nasional Bhd.’s Kertih refining and petrochemical complex.
May 18 (Bloomberg) -- The Malaysian state of Terengganu is starting a sovereign wealth fund of 11 billion ringgit ($3 billion), of which 5 billion ringgit will be raised from capital markets this week.
The Terengganu Investment Authority, the first sovereign wealth fund set up by a Malaysian state, said it will manage the long-term oil revenue of the state, located on the east coast of peninsular Malaysia.
The country’s King Mizan Zainal Abidin, who is also the Terengganu sultan, proposed the fund to ensure sustainable income for the state should its oil and gas reserves run out, the fund said in an e-mailed statement today. The state is one of Malaysia’s biggest oil and gas producers.
The fund seeks to “generate long-term sustainable and recurring returns” and to promote Terengganu’s economic development, Chief Executive Officer Shahrol Halmi said in the statement.
The Terengganu Investment Authority, which was set up on Feb. 27, will team up with “well-known sovereign wealth funds” to invest in tourism, energy and agriculture projects, he said.
The fund plans to invest in “high-impact, strategic projects in Terengganu, other parts of Malaysia, and in regional and international projects that have positive spillover benefits to Terengganu,” said Shahrol, a Stanford University graduate who worked for more than 15 years at consulting firm Accenture Ltd., according to the statement.
It will seek funds from domestic and foreign capital markets, and the 5 billion ringgit it plans to raise this week will come with a Malaysian government guarantee, the fund said. The remaining 6 billion ringgit will come from future oil royalties.
Companies including Exxon Mobil Corp. produce crude oil from projects offshore Terengganu. The state is also home to Petroliam Nasional Bhd.’s Kertih refining and petrochemical complex.
Tuesday, April 21, 2009
Oil-rich Terengganu is planning to establish a multibillion-dollar sovereign wealth fund
Source: 21-APR-2009 Intellasia | Straits Times
Apr 21, 2009 - 7:00:00 AM
Oil-rich Terengganu is planning to establish a multibillion-dollar sovereign wealth fund, but it is causing unease among businesspeople and government officials as Malaysia's economic crisis deepens.
The chief bugbear is that the planned RM10 billion (S$4.1 billion) fund, which is to be managed by the Terengganu Investment Authority (TIA), will be created using borrowed money and not existing capital held by the Terengganu state, said bankers and government officials.
'To turn in a profit, the fund must ensure a return higher than the cost of its borrowing, and there will be the pressure to go into risky investments to get better returns,' said a chief executive of a state-controlled bank, who asked not to be named.
A senior TIA official, who spoke on condition of anonymity, told The Straits Times that governance issues and rules that will determine how the fund will invest its money are being hammered out ahead of the planned end of the year launch.
'It (the fund) is still being cooked and we want to model (it) along the lines of Mudabala,' he said, referring to Abu Dhabi's highly reputable sovereign wealth fund.
Detractors of the proposed fund point out that the Mudabala investment model was not established on borrowed money.
The TIA is proposing to raise RM5 billion through a bond issue that will be guaranteed against future earnings the state will receive in royalties from national oil corporation Petronas for oil and gas extracted from Terengganu territory.
Another RM5 billion will be raised through a separate bond issue that will be guaranteed by the federal government.
'We are in the final stages of finalising the government guarantee and we are deciding on how to draw down on the facility,' said the TIA official.
Many analysts worry that the federal government's green light for TIA and its backing for the fund through financial guarantees could prompt other oil-producing states such as Sabah and Sarawak to demand funds of their own.
'With all the spending that the government has to undertake to stimulate the economy, funds like TIA's and others will only stretch the government's finances further,' said Jason Chong of UOB-OSK Asset Management in Kuala Lumpur.
Apr 21, 2009 - 7:00:00 AM
Oil-rich Terengganu is planning to establish a multibillion-dollar sovereign wealth fund, but it is causing unease among businesspeople and government officials as Malaysia's economic crisis deepens.
The chief bugbear is that the planned RM10 billion (S$4.1 billion) fund, which is to be managed by the Terengganu Investment Authority (TIA), will be created using borrowed money and not existing capital held by the Terengganu state, said bankers and government officials.
'To turn in a profit, the fund must ensure a return higher than the cost of its borrowing, and there will be the pressure to go into risky investments to get better returns,' said a chief executive of a state-controlled bank, who asked not to be named.
A senior TIA official, who spoke on condition of anonymity, told The Straits Times that governance issues and rules that will determine how the fund will invest its money are being hammered out ahead of the planned end of the year launch.
'It (the fund) is still being cooked and we want to model (it) along the lines of Mudabala,' he said, referring to Abu Dhabi's highly reputable sovereign wealth fund.
Detractors of the proposed fund point out that the Mudabala investment model was not established on borrowed money.
The TIA is proposing to raise RM5 billion through a bond issue that will be guaranteed against future earnings the state will receive in royalties from national oil corporation Petronas for oil and gas extracted from Terengganu territory.
Another RM5 billion will be raised through a separate bond issue that will be guaranteed by the federal government.
'We are in the final stages of finalising the government guarantee and we are deciding on how to draw down on the facility,' said the TIA official.
Many analysts worry that the federal government's green light for TIA and its backing for the fund through financial guarantees could prompt other oil-producing states such as Sabah and Sarawak to demand funds of their own.
'With all the spending that the government has to undertake to stimulate the economy, funds like TIA's and others will only stretch the government's finances further,' said Jason Chong of UOB-OSK Asset Management in Kuala Lumpur.
Sunday, April 19, 2009
Terengganu: It may not be all that bad for Najib
Abdul Ghani Hamat
The Edge 19 April, 2009
THE leadership crisis in Umno Terengganu has surfaced at the wrong time for new party president and Prime Minister Datuk Seri Najib Razak. Or has it?
Think again. With reform on his mind and PAS party polls around the corner, the timing of the “crisis” cannot be all that bad for Najib.
In fact, it could be just what the doctor ordered.
First, it gives Najib an early, perfect excuse to ring the changes in the Umno Terengganu leadership without much resistance.
Dousing the festering feud that contributed to Barisan Nasional’s (BN) inability to defend the Kuala Terengganu parliamentary seat is important. But having a progressive, pragmatic leader at the head of the state is more important.
Also, the sooner Najib straightens out the issues besotting Umno in the state, the more time he will have to rebuild public support for the party. Terengganu, an overwhelming Malay-majority state, is crucial to Umno. It cannot afford to see the state go the way of Kelantan and Kedah.
Second, PAS at its upcoming convention in June could be forced to show both its hands with respect to its ties with other Pakatan Rakyat (PR) components. This could influence political developments in Terengganu, the home state of PAS president Datuk Seri Abdul Hadi Awang and several other party bigwigs, in view of their differences with the so-called Erdogans.
The ambiguity and fuzziness characterising PAS’ position in PR due largely to these differences clearly is unsustainable. More so when Umno’s problems are no longer stealing the limelight.
At some point, PAS must come clean about its PR ties, and the time for that has arrived. People want to know if PR as an alliance is going anywhere, and if PAS’ liaison with PR is “real” or just a silly infatuation.
PAS has shared a platform with PKR and DAP on so many occasions, including in campaigning ahead of the KT by-election. Naturally, people would want to see PAS take the relationship forward.
Its nemesis Umno has swallowed the bitter pill and moved on, and so PAS must show that it is ready to move on, too. Without PAS’ full commitment to the alliance, the scope of what PR can achieve would be severely curtailed. Clearly, unless PAS leaders think and act as one, the PR structure will remain flimsy, and the country can forget about a two-coalition political system.
Alas, at the moment it’s difficult to envisage the party’s traditionalist faction, which predominates in Terengganu, sharing a dinner table with alliance partner DAP, for instance.
So what hope is there for the parties to take the relationship a step further if they can’t be expected to sink and swim together.
No doubt Najib will be looking closely at how the tussle for dominance within PAS will play out at the party’s convention in Shah Alam, as the outcome may have a significant influence on how Umno goes about growing its fortunes in Terengganu.
But whilst the timing of the “crisis” in Terengganu could be advantageous to Najib, can he be sure that the right person is picked to lead the state? He has given the two factions in Umno Terengganu one month to sort things out themselves.
Menteri Besar Datuk Ahmad Said may emerge stronger from this episode, but when the one-month grace is up, Najib may have his man ready to take charge of the state nonetheless.
Whomever he picks to lead Terengganu, Najib must understand that the state needs a chief executive more than an administrator. It needs a person who can look after its “sovereign wealth” properly and not squander it on cheap handouts and construction projects of dubious benefits.
The person must think about the state’s welfare for the long term. He must know how to create employment and raise the standard of living of a rural population and ensure a revenue stream for the state after oil runs out.
The state is rich in resources no doubt, but over the years, its people have been stood up by their leaders, including during PAS rule.
If Terengganu Investment Authority ever gets off the ground, perhaps Najib should think long and hard about keeping these politicians away from the establishment.
He may not get any objections from PAS Terengganu on this, given that its leaders are not averse to working with Umno for the sake of Malay unity. It’s a stance that has riled the Erdogans. The PAS convention in Shah Alam may just rekindle interest in the unity idea if the party is pushed to show both its hands.
So there, the “crisis” in Terengganu opens up plenty of options for Najib. It is not surprising, therefore, to find those who believe this whole episode has been cleverly stage-managed
The Edge 19 April, 2009
THE leadership crisis in Umno Terengganu has surfaced at the wrong time for new party president and Prime Minister Datuk Seri Najib Razak. Or has it?
Think again. With reform on his mind and PAS party polls around the corner, the timing of the “crisis” cannot be all that bad for Najib.
In fact, it could be just what the doctor ordered.
First, it gives Najib an early, perfect excuse to ring the changes in the Umno Terengganu leadership without much resistance.
Dousing the festering feud that contributed to Barisan Nasional’s (BN) inability to defend the Kuala Terengganu parliamentary seat is important. But having a progressive, pragmatic leader at the head of the state is more important.
Also, the sooner Najib straightens out the issues besotting Umno in the state, the more time he will have to rebuild public support for the party. Terengganu, an overwhelming Malay-majority state, is crucial to Umno. It cannot afford to see the state go the way of Kelantan and Kedah.
Second, PAS at its upcoming convention in June could be forced to show both its hands with respect to its ties with other Pakatan Rakyat (PR) components. This could influence political developments in Terengganu, the home state of PAS president Datuk Seri Abdul Hadi Awang and several other party bigwigs, in view of their differences with the so-called Erdogans.
The ambiguity and fuzziness characterising PAS’ position in PR due largely to these differences clearly is unsustainable. More so when Umno’s problems are no longer stealing the limelight.
At some point, PAS must come clean about its PR ties, and the time for that has arrived. People want to know if PR as an alliance is going anywhere, and if PAS’ liaison with PR is “real” or just a silly infatuation.
PAS has shared a platform with PKR and DAP on so many occasions, including in campaigning ahead of the KT by-election. Naturally, people would want to see PAS take the relationship forward.
Its nemesis Umno has swallowed the bitter pill and moved on, and so PAS must show that it is ready to move on, too. Without PAS’ full commitment to the alliance, the scope of what PR can achieve would be severely curtailed. Clearly, unless PAS leaders think and act as one, the PR structure will remain flimsy, and the country can forget about a two-coalition political system.
Alas, at the moment it’s difficult to envisage the party’s traditionalist faction, which predominates in Terengganu, sharing a dinner table with alliance partner DAP, for instance.
So what hope is there for the parties to take the relationship a step further if they can’t be expected to sink and swim together.
No doubt Najib will be looking closely at how the tussle for dominance within PAS will play out at the party’s convention in Shah Alam, as the outcome may have a significant influence on how Umno goes about growing its fortunes in Terengganu.
But whilst the timing of the “crisis” in Terengganu could be advantageous to Najib, can he be sure that the right person is picked to lead the state? He has given the two factions in Umno Terengganu one month to sort things out themselves.
Menteri Besar Datuk Ahmad Said may emerge stronger from this episode, but when the one-month grace is up, Najib may have his man ready to take charge of the state nonetheless.
Whomever he picks to lead Terengganu, Najib must understand that the state needs a chief executive more than an administrator. It needs a person who can look after its “sovereign wealth” properly and not squander it on cheap handouts and construction projects of dubious benefits.
The person must think about the state’s welfare for the long term. He must know how to create employment and raise the standard of living of a rural population and ensure a revenue stream for the state after oil runs out.
The state is rich in resources no doubt, but over the years, its people have been stood up by their leaders, including during PAS rule.
If Terengganu Investment Authority ever gets off the ground, perhaps Najib should think long and hard about keeping these politicians away from the establishment.
He may not get any objections from PAS Terengganu on this, given that its leaders are not averse to working with Umno for the sake of Malay unity. It’s a stance that has riled the Erdogans. The PAS convention in Shah Alam may just rekindle interest in the unity idea if the party is pushed to show both its hands.
So there, the “crisis” in Terengganu opens up plenty of options for Najib. It is not surprising, therefore, to find those who believe this whole episode has been cleverly stage-managed
Sunday, December 14, 2008
Govt agrees to body to handle oil royalty
The Star Sunday December 14, 2008
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.
In good hands: Najib handing over the cheque for part of the oil royalty to Ahmad Said in Kuala Terengganu Saturday. — Bernama
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.”
Kerajaan Setuju Cadangan Penubuhan TIA Oleh Terengganu, Kata Najib
KUALA TERENGGANU, 13 Dis (Bernama) -- Datuk Seri Najib Tun Razak berkata kerajaan secara prinsipnya bersetuju dengan cadangan kerajaan negeri Terengganu menubuhkan Lembaga Pelaburan Terengganu (TIA) dengan dana permulaan bernilai RM10 bilion.
Timbalan Perdana Menteri berkata persetujuan itu dicapai pada mesyuarat Kabinet semalam, yang menggambarkan kerjasama erat kerajaan pusat dan kerajaan negeri Terengganu bagi menjamin masa depan rakyat negeri berkenaan.
"Pada prinsipnya, cadangan ini telah pun diluluskan oleh jemaah menteri pada mesyuarat semalam," katanya kepada pemberita selepas majlis penyerahan bayaran royalti minyak separuh kedua 2008 di Stadium Negeri di sini hari ini.
Pada majlis itu, Najib yang juga Menteri Kewangan menyerahkan cek bayaran royalti minyak berjumlah RM408.6 juta kepada Menteri Besar Terengganu Datuk Ahmad Said.
Turut hadir, Menteri Perdagangan Antarabangsa dan Industri Tan Sri Muhyiddin Yassin, Menteri Pelajaran Datuk Seri Hishammuddin Tun Hussein, Menteri Kemajuan Luar Bandar dan Wilayah Tan Sri Muhammad Muhd Taib, Menteri Penerangan Datuk Ahmad Shabery Cheek dan Ketua Wanita Umno Tan Sri Rafidah Aziz.
Najib berkata penubuhan TIA yang diilhamkan oleh Yang di- Pertuan Agong Tuanku Mizan Zainal Abidin, adalah bagi menjana pertumbuhan ekonomi mampan serta menjamin pembangunan negeri secara berterusan.
"Perincian (cadangan penubuhan TIA) serta beberapa aspek serta struktur pentadbiran dan perjalanan TIA akan kita bincang bila kertas sebenarnya dibawa dalam mesyuarat jemaah menteri," katanya.
TIA akan beroperasi sebagai satu "dana kekayaan" bagi Terengganu bertujuan mengurus pelaburan negeri bagi menghasilkan pulangan jangka panjang daripada segi ekonomi kepada rakyat negeri itu dan Malaysia amnya.
Mengulas lanjut, Najib berkata dana RM10 bilion itu akan diperoleh daripada pasaran bon daripada royalti minyak dengan kerajaan negeri Terengganu akan membuat pelaburan yang sebahagian besar dilakukan di luar negeri itu.
Beliau berkata langkah kerajaan negeri Terengganu itu adalah bagi menjamin kelangsungan pendapatan negeri itu pada masa depan kerana minyak sebagai sumber hasilnya mempunyai jangka hayat tertentu.
"Seandainya minyak pupus (habis), Terengganu dengan langkah ini akan dapat punca pendapatan tambahan," katanya.
Ketika berucap, Najib berkata jemaah menteri berpendapat royalti minyak itu perlu diserahkan sepenuhnya kepada kerajaan negeri Terengganu dalam menguruskan serta melaksanakan pelbagai program pembangunan di negeri berkenaan.
"Saya harap wang royalti minyak ini digunakan secara baik untuk melaksanakan pembangunan dan pembaharuan. Kita mahu rakyat Terengganu miskin dan kemiskinan tegar dihapuskan. Kita mahu kerancakan ekonomi di Terengganu berterusan," katanya.
Ditanya sama ada kerajaan pusat akan mengurangkan peruntukan untuk pembangunan setelah wang royalti minyak dikembalikan semula kepada Terengganu, Najib berkata perkara itu akan bergantung kepada beberapa kriteria.
Timbalan Perdana Menteri berkata kerajaan pusat akan melihat kepada kemajuan, pendapatan perkapita dan sebagainya di negeri itu, sebelum menentukan peruntukan bagi tujuan tersebut.
Beliau berkata jumlah pembayaran royalti sebanyak RM408.6 juta itu dibuat setelah kerajaan pusat menolak segala peruntukan kepada kerajaan negeri Terengganu untuk projek pembangunan di negeri berkenaan, sebelum ini.
"Ini untuk akaun 2007/2008. Kita tutup semuanya apa yang kita hutang kepada kerajaan negeri (Terengganu), ia dianggap sudah selesai. (Jumlah) ini juga daripada surat yang saya terima daripada Menteri Besar," katanya.-- BERNAMA
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.
In good hands: Najib handing over the cheque for part of the oil royalty to Ahmad Said in Kuala Terengganu Saturday. — Bernama
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.”
Kerajaan Setuju Cadangan Penubuhan TIA Oleh Terengganu, Kata Najib
KUALA TERENGGANU, 13 Dis (Bernama) -- Datuk Seri Najib Tun Razak berkata kerajaan secara prinsipnya bersetuju dengan cadangan kerajaan negeri Terengganu menubuhkan Lembaga Pelaburan Terengganu (TIA) dengan dana permulaan bernilai RM10 bilion.
Timbalan Perdana Menteri berkata persetujuan itu dicapai pada mesyuarat Kabinet semalam, yang menggambarkan kerjasama erat kerajaan pusat dan kerajaan negeri Terengganu bagi menjamin masa depan rakyat negeri berkenaan.
"Pada prinsipnya, cadangan ini telah pun diluluskan oleh jemaah menteri pada mesyuarat semalam," katanya kepada pemberita selepas majlis penyerahan bayaran royalti minyak separuh kedua 2008 di Stadium Negeri di sini hari ini.
Pada majlis itu, Najib yang juga Menteri Kewangan menyerahkan cek bayaran royalti minyak berjumlah RM408.6 juta kepada Menteri Besar Terengganu Datuk Ahmad Said.
Turut hadir, Menteri Perdagangan Antarabangsa dan Industri Tan Sri Muhyiddin Yassin, Menteri Pelajaran Datuk Seri Hishammuddin Tun Hussein, Menteri Kemajuan Luar Bandar dan Wilayah Tan Sri Muhammad Muhd Taib, Menteri Penerangan Datuk Ahmad Shabery Cheek dan Ketua Wanita Umno Tan Sri Rafidah Aziz.
Najib berkata penubuhan TIA yang diilhamkan oleh Yang di- Pertuan Agong Tuanku Mizan Zainal Abidin, adalah bagi menjana pertumbuhan ekonomi mampan serta menjamin pembangunan negeri secara berterusan.
"Perincian (cadangan penubuhan TIA) serta beberapa aspek serta struktur pentadbiran dan perjalanan TIA akan kita bincang bila kertas sebenarnya dibawa dalam mesyuarat jemaah menteri," katanya.
TIA akan beroperasi sebagai satu "dana kekayaan" bagi Terengganu bertujuan mengurus pelaburan negeri bagi menghasilkan pulangan jangka panjang daripada segi ekonomi kepada rakyat negeri itu dan Malaysia amnya.
Mengulas lanjut, Najib berkata dana RM10 bilion itu akan diperoleh daripada pasaran bon daripada royalti minyak dengan kerajaan negeri Terengganu akan membuat pelaburan yang sebahagian besar dilakukan di luar negeri itu.
Beliau berkata langkah kerajaan negeri Terengganu itu adalah bagi menjamin kelangsungan pendapatan negeri itu pada masa depan kerana minyak sebagai sumber hasilnya mempunyai jangka hayat tertentu.
"Seandainya minyak pupus (habis), Terengganu dengan langkah ini akan dapat punca pendapatan tambahan," katanya.
Ketika berucap, Najib berkata jemaah menteri berpendapat royalti minyak itu perlu diserahkan sepenuhnya kepada kerajaan negeri Terengganu dalam menguruskan serta melaksanakan pelbagai program pembangunan di negeri berkenaan.
"Saya harap wang royalti minyak ini digunakan secara baik untuk melaksanakan pembangunan dan pembaharuan. Kita mahu rakyat Terengganu miskin dan kemiskinan tegar dihapuskan. Kita mahu kerancakan ekonomi di Terengganu berterusan," katanya.
Ditanya sama ada kerajaan pusat akan mengurangkan peruntukan untuk pembangunan setelah wang royalti minyak dikembalikan semula kepada Terengganu, Najib berkata perkara itu akan bergantung kepada beberapa kriteria.
Timbalan Perdana Menteri berkata kerajaan pusat akan melihat kepada kemajuan, pendapatan perkapita dan sebagainya di negeri itu, sebelum menentukan peruntukan bagi tujuan tersebut.
Beliau berkata jumlah pembayaran royalti sebanyak RM408.6 juta itu dibuat setelah kerajaan pusat menolak segala peruntukan kepada kerajaan negeri Terengganu untuk projek pembangunan di negeri berkenaan, sebelum ini.
"Ini untuk akaun 2007/2008. Kita tutup semuanya apa yang kita hutang kepada kerajaan negeri (Terengganu), ia dianggap sudah selesai. (Jumlah) ini juga daripada surat yang saya terima daripada Menteri Besar," katanya.-- BERNAMA
Monday, December 1, 2008
Sovereign Fund – Overall Look
When the Abu Dhabi government announced late in November that it was buying 4.9% of Citigroup for $7.5 billion, the general reaction was relief that the firm was finding a way out of the subprime mortgage mess.
The same response followed the early December news that UBS was selling a 10.8% share to the government of Singapore and an unnamed Middle Eastern investor for $11.5 billion, for much the same reason.
But is foreign ownership — or, more precisely, foreign government ownership — really a good thing? Many experts think this mushrooming trend bears watching, especially for any sign that these funds are evolving from pure investment vehicles into tools for exerting political pressure on the "target" countries. "I think pressure is a legitimate worry, but I’m not sure we have seen signs of that yet," says Wharton finance professor Franklin Allen.
There is nothing intrinsically wrong with foreign ownership, suggests Wharton finance professor Richard Marston, but ownership by foreign governments could be different from ownership by foreign businesses. "Clearly, there are industries where we would be concerned about certain countries having an ownership interest," he says, citing airlines and military contractors. "You do worry that these are governments, and you worry about their motivation."
Governments, through investment pools known as sovereign wealth funds, have put tens of billions of dollars into Western financial firms this year, from Bear Stearns and Barclays to HSBC Holdings and Blackstone Group, investing at bargain prices amid the subprime crisis. Two Middle Eastern government funds now even own a third of the London Stock Exchange.
None of this investment has drawn the kind of outrage that greeted a 2006 plan for a government-owned business in the United Arab Emirates to buy a firm that ran a number of U.S. ports. Much of that involved unease with a Middle Eastern country having a role controlling potential entry points for terrorists. "A lot of this becomes emotional when you’re talking about the Chinese and Arabs as opposed to the French," Marston says.
Concerns over Secrecy
Still, some politicians and economists are concerned about the growing power of sovereign wealth funds, most of which are based in the Middle East and Asia. The International Monetary Fund estimates that sovereign funds control as much as $3 trillion in assets, up from $500 million in 1990, and it expects them to grow to $10 trillion by 2012.
While cross-border investments are nothing new, the sovereign funds raise special questions because the investment decisions are controlled by governments rather than individuals or corporations. And, unlike central banks, which tend to invest reserves in assets like U.S. Treasury bonds, the sovereign funds often invest in corporations. This year, the largest target country for such investment has been the United States.
The 20 largest sovereign wealth funds, each worth more than $10 billion, are estimated to control more than $2 trillion in assets, overshadowing the $1.5 trillion thought to be managed by hedge funds, which have been subject to calls for greater regulation because of their market clout. Like hedge funds, most sovereign funds are secretive. There is no comprehensive list of what they own, nor any mandatory reporting of their investment policies.
The Abu Dhabi Investment Authority, established in 1976, is the largest sovereign fund, with assets estimated at $500 billion to $875 billion, according to a widely cited analysis last August by Edwin M. Truman, senior fellow at the Peterson Institute for International Economics in Washington, D.C. Next is the $100 billion to $330 billion controlled by the Government of Singapore Investment Corp., founded in 1981. Singapore also runs $108 billion Temasek Holdings, started in 1974. Early in December, Temasek said it would provide $1 billion to a private-equity fund set up by Goldman Sachs Group of the U.S. to invest in China.
Norway has $308 billion in its Government Pension Fund. Kuwait’s two funds total $213 billion. Russia has a $122 billion fund, and China a $66 billion fund. Other big funds are run by Qatar, Algeria, Australia, Brunei, Korea, Malaysia, Kazakhstan, Venezuela, Canada, Iran and New Zealand.
Though the funds are typically found in countries with big trade surpluses, there is one in the U.S: the state-run Alaska Permanent Fund, founded in 1976 to reinvest oil profits.
The oldest major fund, Kuwait’s General Reserve Fund, has been around since 1960. But the funds are getting more attention now because of their mushrooming size, thanks to soaring oil prices. Truman says the funds could grow even bigger if the countries that run them were to divert more of their foreign exchange reserves into them. China, for example, has $66 billion in its sovereign fund, but more than $1.2 trillion in reserves, mostly invested in U.S. Treasury bonds. According to Allen, China might want to put more money into its sovereign fund for fear that more Treasury purchases would destabilize the Treasury market. "If they put it all into Treasury bonds, they are going to start having price effects," he says.
Reinvesting Oil Profits, for Now
Most of the sovereign funds that are soaring in size have rising oil prices to thank. In fact, it’s no coincidence that the biggest funds belong to oil-producing states, which are using the funds to reinvest oil profits so there will be new sources of income when the oil is gone, Marston notes, adding that Norway’s fund, considered the poster child of well-run funds, was established to reinvest North Sea oil profits. "They basically said, ’Well, we want to put some wealth aside rather than distribute it immediately, so we will have an annuity for the Norwegian people to make up for the fact that the oil is running out."
Countries that build up foreign-exchange reserves typically invest them in liquid assets like U.S. Treasuries. But once reserves are big enough to cover any short-term needs like currency intervention, countries feel they can afford to tie money up on long-term investments that offer better returns, says Wharton finance professor Richard J. Herring. "If you have your liquidity needs taken care of, then you start thinking about making longer-term investments. It’s a very natural thing."
Since sovereign funds have traditionally taken a long-term approach to investing, they have had a stabilizing influence on world financial markets, Herring says. But because the top 20 sovereign funds are so large, they do put a lot of concentrated economic power under the control of a small number of people, often in autocratic countries. The smaller sum controlled by hedge funds is divided among thousands of players.
Writing in the Financial Times last July, former Treasury Secretary and Harvard president Lawrence Summers noted that government shareholders may not always have the same interests as ordinary shareholders. "The logic of the capitalist system depends on shareholders causing companies to act so as to maximize the value of their shares," he wrote. "It is far from obvious that this will over time be the only motivation of governments as shareholders. They may want to see their national companies compete effectively, or to extract technology or to achieve influence."
Governments of target, or "host," countries could find themselves in awkward situations, he said. "What about the day when a country joins some ’coalition of the willing’ and asks the U.S. president to support a tax break for a company in which it has invested? Or when a decision has to be made to bail out a company, much of whose debt is held by an ally’s central bank?"
So far, there have not been any serious cases of this power being used for political or other non-investment purposes. One of the few examples is relatively mild: In June 2006, the Norwegian fund sold its more than $400 million in Wal-Mart holdings, criticizing the way the company treated its workers.
Still, the temptation to use financial clout to further non-financial goals is ever-present, Herring says, recalling that many American universities and pension funds divested themselves in the 1980s of companies doing business in South Africa. "You had many large players reallocating their portfolios for other than economic reasons. That’s simply the nature of things when government [of a fund] is in part political."
An Inside Look at Western Companies
According to Herring, the sovereign funds’ investments in financial-services firms may be motivated not just by hopes of good investment returns, but by the desire to learn how those Western companies operate. In addition to the recent deals, China earlier this year paid $3 billion for a 9.3% share in Blackstone Group, the New York-based private-equity firm. "My guess is that these [investments] are substantially different than the kind of passive portfolio investment you see out of Norway."
Even so, he adds, that’s no cause for alarm, as the U.S. government can step in if it sees a real problem. "The rules can change if we should become enormously concerned that, say, the agricultural-refining business is of strategic importance." U.S. law welcomes foreign investment so long as it poses no security risk.
For many observers, the biggest concern today is not the potential for political shenanigans but uncertainty about how sovereign funds might affect the financial markets. In an article this fall in Finance & Development, a quarterly publication of the International Monetary Fund, IMF research director Simon Johnson noted that: "Unfortunately, there’s a lot we don’t know about sovereign funds. Very few of them publish information about their assets, liabilities or investment strategies."
If the funds emphasize a buy-and-hold strategy, as is widely thought, they help stabilize markets, he said. At the same time, he cited some anecdotal evidence of sovereign funds investing in other funds, such as hedge funds, that multiply their impact through borrowing. Leveraging can destabilize markets when bets go wrong.
The global value of traded securities is about $165 trillion, so $3 trillion in sovereign funds is not yet a major concern, he wrote. But if the figure rises to $10 trillion, and if many funds do employ leverage, the funds will bear watching, he added.
The Peterson Institute’s Truman advocates "a quantum increase in transparency and accountability" for sovereign funds. At a minimum, he says, the funds should publish annual reports detailing investment strategies and holdings. This fall, the U.S. Treasury Department called on the IMF and World Bank to develop a "best practices" guideline for sovereign funds.
Allen, Herring and Marston agree that greater transparency would be good. But Herring notes that such requirements would not be easy to impose: "It’s hard to see how you get compliance with so-called ’voluntary’ guidelines when the people who are making the investment decisions are really not involved in putting together the guidelines."
The same response followed the early December news that UBS was selling a 10.8% share to the government of Singapore and an unnamed Middle Eastern investor for $11.5 billion, for much the same reason.
But is foreign ownership — or, more precisely, foreign government ownership — really a good thing? Many experts think this mushrooming trend bears watching, especially for any sign that these funds are evolving from pure investment vehicles into tools for exerting political pressure on the "target" countries. "I think pressure is a legitimate worry, but I’m not sure we have seen signs of that yet," says Wharton finance professor Franklin Allen.
There is nothing intrinsically wrong with foreign ownership, suggests Wharton finance professor Richard Marston, but ownership by foreign governments could be different from ownership by foreign businesses. "Clearly, there are industries where we would be concerned about certain countries having an ownership interest," he says, citing airlines and military contractors. "You do worry that these are governments, and you worry about their motivation."
Governments, through investment pools known as sovereign wealth funds, have put tens of billions of dollars into Western financial firms this year, from Bear Stearns and Barclays to HSBC Holdings and Blackstone Group, investing at bargain prices amid the subprime crisis. Two Middle Eastern government funds now even own a third of the London Stock Exchange.
None of this investment has drawn the kind of outrage that greeted a 2006 plan for a government-owned business in the United Arab Emirates to buy a firm that ran a number of U.S. ports. Much of that involved unease with a Middle Eastern country having a role controlling potential entry points for terrorists. "A lot of this becomes emotional when you’re talking about the Chinese and Arabs as opposed to the French," Marston says.
Concerns over Secrecy
Still, some politicians and economists are concerned about the growing power of sovereign wealth funds, most of which are based in the Middle East and Asia. The International Monetary Fund estimates that sovereign funds control as much as $3 trillion in assets, up from $500 million in 1990, and it expects them to grow to $10 trillion by 2012.
While cross-border investments are nothing new, the sovereign funds raise special questions because the investment decisions are controlled by governments rather than individuals or corporations. And, unlike central banks, which tend to invest reserves in assets like U.S. Treasury bonds, the sovereign funds often invest in corporations. This year, the largest target country for such investment has been the United States.
The 20 largest sovereign wealth funds, each worth more than $10 billion, are estimated to control more than $2 trillion in assets, overshadowing the $1.5 trillion thought to be managed by hedge funds, which have been subject to calls for greater regulation because of their market clout. Like hedge funds, most sovereign funds are secretive. There is no comprehensive list of what they own, nor any mandatory reporting of their investment policies.
The Abu Dhabi Investment Authority, established in 1976, is the largest sovereign fund, with assets estimated at $500 billion to $875 billion, according to a widely cited analysis last August by Edwin M. Truman, senior fellow at the Peterson Institute for International Economics in Washington, D.C. Next is the $100 billion to $330 billion controlled by the Government of Singapore Investment Corp., founded in 1981. Singapore also runs $108 billion Temasek Holdings, started in 1974. Early in December, Temasek said it would provide $1 billion to a private-equity fund set up by Goldman Sachs Group of the U.S. to invest in China.
Norway has $308 billion in its Government Pension Fund. Kuwait’s two funds total $213 billion. Russia has a $122 billion fund, and China a $66 billion fund. Other big funds are run by Qatar, Algeria, Australia, Brunei, Korea, Malaysia, Kazakhstan, Venezuela, Canada, Iran and New Zealand.
Though the funds are typically found in countries with big trade surpluses, there is one in the U.S: the state-run Alaska Permanent Fund, founded in 1976 to reinvest oil profits.
The oldest major fund, Kuwait’s General Reserve Fund, has been around since 1960. But the funds are getting more attention now because of their mushrooming size, thanks to soaring oil prices. Truman says the funds could grow even bigger if the countries that run them were to divert more of their foreign exchange reserves into them. China, for example, has $66 billion in its sovereign fund, but more than $1.2 trillion in reserves, mostly invested in U.S. Treasury bonds. According to Allen, China might want to put more money into its sovereign fund for fear that more Treasury purchases would destabilize the Treasury market. "If they put it all into Treasury bonds, they are going to start having price effects," he says.
Reinvesting Oil Profits, for Now
Most of the sovereign funds that are soaring in size have rising oil prices to thank. In fact, it’s no coincidence that the biggest funds belong to oil-producing states, which are using the funds to reinvest oil profits so there will be new sources of income when the oil is gone, Marston notes, adding that Norway’s fund, considered the poster child of well-run funds, was established to reinvest North Sea oil profits. "They basically said, ’Well, we want to put some wealth aside rather than distribute it immediately, so we will have an annuity for the Norwegian people to make up for the fact that the oil is running out."
Countries that build up foreign-exchange reserves typically invest them in liquid assets like U.S. Treasuries. But once reserves are big enough to cover any short-term needs like currency intervention, countries feel they can afford to tie money up on long-term investments that offer better returns, says Wharton finance professor Richard J. Herring. "If you have your liquidity needs taken care of, then you start thinking about making longer-term investments. It’s a very natural thing."
Since sovereign funds have traditionally taken a long-term approach to investing, they have had a stabilizing influence on world financial markets, Herring says. But because the top 20 sovereign funds are so large, they do put a lot of concentrated economic power under the control of a small number of people, often in autocratic countries. The smaller sum controlled by hedge funds is divided among thousands of players.
Writing in the Financial Times last July, former Treasury Secretary and Harvard president Lawrence Summers noted that government shareholders may not always have the same interests as ordinary shareholders. "The logic of the capitalist system depends on shareholders causing companies to act so as to maximize the value of their shares," he wrote. "It is far from obvious that this will over time be the only motivation of governments as shareholders. They may want to see their national companies compete effectively, or to extract technology or to achieve influence."
Governments of target, or "host," countries could find themselves in awkward situations, he said. "What about the day when a country joins some ’coalition of the willing’ and asks the U.S. president to support a tax break for a company in which it has invested? Or when a decision has to be made to bail out a company, much of whose debt is held by an ally’s central bank?"
So far, there have not been any serious cases of this power being used for political or other non-investment purposes. One of the few examples is relatively mild: In June 2006, the Norwegian fund sold its more than $400 million in Wal-Mart holdings, criticizing the way the company treated its workers.
Still, the temptation to use financial clout to further non-financial goals is ever-present, Herring says, recalling that many American universities and pension funds divested themselves in the 1980s of companies doing business in South Africa. "You had many large players reallocating their portfolios for other than economic reasons. That’s simply the nature of things when government [of a fund] is in part political."
An Inside Look at Western Companies
According to Herring, the sovereign funds’ investments in financial-services firms may be motivated not just by hopes of good investment returns, but by the desire to learn how those Western companies operate. In addition to the recent deals, China earlier this year paid $3 billion for a 9.3% share in Blackstone Group, the New York-based private-equity firm. "My guess is that these [investments] are substantially different than the kind of passive portfolio investment you see out of Norway."
Even so, he adds, that’s no cause for alarm, as the U.S. government can step in if it sees a real problem. "The rules can change if we should become enormously concerned that, say, the agricultural-refining business is of strategic importance." U.S. law welcomes foreign investment so long as it poses no security risk.
For many observers, the biggest concern today is not the potential for political shenanigans but uncertainty about how sovereign funds might affect the financial markets. In an article this fall in Finance & Development, a quarterly publication of the International Monetary Fund, IMF research director Simon Johnson noted that: "Unfortunately, there’s a lot we don’t know about sovereign funds. Very few of them publish information about their assets, liabilities or investment strategies."
If the funds emphasize a buy-and-hold strategy, as is widely thought, they help stabilize markets, he said. At the same time, he cited some anecdotal evidence of sovereign funds investing in other funds, such as hedge funds, that multiply their impact through borrowing. Leveraging can destabilize markets when bets go wrong.
The global value of traded securities is about $165 trillion, so $3 trillion in sovereign funds is not yet a major concern, he wrote. But if the figure rises to $10 trillion, and if many funds do employ leverage, the funds will bear watching, he added.
The Peterson Institute’s Truman advocates "a quantum increase in transparency and accountability" for sovereign funds. At a minimum, he says, the funds should publish annual reports detailing investment strategies and holdings. This fall, the U.S. Treasury Department called on the IMF and World Bank to develop a "best practices" guideline for sovereign funds.
Allen, Herring and Marston agree that greater transparency would be good. But Herring notes that such requirements would not be easy to impose: "It’s hard to see how you get compliance with so-called ’voluntary’ guidelines when the people who are making the investment decisions are really not involved in putting together the guidelines."
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