Malaysia’s Sarawak state legislators have passed a law to set up a sovereign wealth fund that will invest the resource rich state’s surplus capital reserves in order to maximise the returns.
Chief Minister Johari Openg says management and custody of the fund will be placed under the Sarawak Sovereign Wealth Future Fund Board, a corporate body established under the new law.
The wealth fund will be managed in a professional and transparent manner by a Board of Guardians comprising finance and investment experts and professionals, he says in a statement on November 22, when lawmakers approved the bill in the state legislature.
Lawmakers and members of political parties from anywhere in Malaysia cannot be members of the Board of Guardians.
“It is imperative that the fund and the people managing the fund be independent of any political interference,” Johari says.
Malaysia has two federal sovereign wealth funds. One, Khazanah Nasional, was set up nearly three decades ago, and had 106 billion ringgit (US$24.10 billion) of assets under management as of end-2021.
The other fund is the scandal-ridden 1 Malaysia Development or 1MDB, which was declared insolvent in 2018 and is under global scrutiny for multi-billion-dollar losses from money laundering.
Former Prime Minister Najib Razak was sentenced to 12 years jail and fined 210 million ringgit in August after losing his final appeal in a case involving SRC International, a unit of 1MDB. He still faces several other charges related to the wealth fund.