The Terengganu Investment Authority can uplift the state

SOVEREIGN funds have been in business for a long time and over the years have been accumulating assets and seeking returns for the vast oil or non-oil resources of a particular country.

Be it Abu Dhabi Investment Authority, Government of Singapore Investment Corp, Government Pension Fund of Norway or China Investment Corp, these names are just examples of sovereign funds that have been locking up stakes in companies and businesses in search of long-term yields for their respective countries.

When the state of Terengganu decided to set up its own fund, the objectives were similar with the other larger funds but its purpose a little different.

It’s a little different because there was already an agency handling the development and investment needs of the state - Terengganu Inc.

But the push to set up Terengganu Investment Authority (TIA) was very telling.

Terengganu is the main source of the country’s oil reserves and while Petroliam Nasional Bhd has become one of the most profitable companies on the Fortune 500 list today, driven by oil in the state, the state itself remains one of the country’s poorest states.

And with oil a finite resource, something had to be done to elevate the state’s prospects because the current method, by the looks of it, is not working sufficiently.

Drive along the state’s prized petrochemical complexes and you will see the shiny steel structures that have defined the country’s progress in the oil and gas industry.

However, journey on just a short radius away from the state’s oil centres and you will witness the wide gap that TIA, and the income it plans to generates, hopefully can narrow and improve on.

The sum of money that TIA is raising is peanuts compared with the size of some of the world’s large sovereign funds.

RM10bil is even less cash than what a few public listed companies in Malaysia have on their balance sheets.

But the idea of raising the cash now and investing it as quickly as possible in today’s depressed environment makes that RM10bil a lot more potent than it would have a year ago.

In short, there is more bang for the buck today.

TIA seeks to garner long-term sustainable growth and income from its investments, and the process and lengths it proposes to go through to ensure its money is not frittered away is also commendable.

TIA will have separate boards of advisors and directors, and a team of managers, to put in safeguard procedures to ensure the independence of each strata within the company.

Risk management processes will also be strictly adhered to.

Apart from that, Terengganu’s model of securitising its future oil revenue stream can also provide an idea to other cash-rich states.

And should TIA be a success the state’s ruler intends it to be, it can be a model for other resource-rich states to ponder.

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

RM400mil boost for Terengganu sovereign wealth fund

The Star) - Tereng­ganu’s sovereign wealth fund will be given a boost when Deputy Prime Minister Datuk Seri Najib Tun Razak hands over RM400mil in oil royalties to the state government.

The money is the first part of the RM3bil oil royalties promised by the Federal Government to the state government.

Much of the royalties will be banked into the proposed Terengganu Investment Authority (TIA), which will be launched by the middle of next year.

State Commerce, Industries and Environment committee chairman Toh Chin Yaw said the TIA would manage prudently the oil royalties for the benefit of the state and the people.

“We have to look into the finer details before setting up the TIA. We have to check the legal aspects and also agree on how to manage the fund successfully on a long-term basis,” he said yesterday.

Toh said the state government would study which areas the RM10bil TIA fund should be invested in so that it could benefit the state.

This, he noted, is for the future when Terengganu’s oil runs out. He said the establishment of TIA was discussed for some time after the Federal Government agreed to hand over the management of the oil royalties to the state government in May.

Toh was commenting on a report in a news portal that the state government would set up the TIA which would be run solely by professionals.

The report said the proposal for a sovereign wealth fund was put forward by the Yang di-Pertuan Agong Tuanku Mizan Zainal Abidin.

Under the TIA, the Sultan of Terengganu will be the chairman of the Board of Advisers. The Mentri Besar will also be represented on the board.

Pakar ekonomi sambut baik LPT

KUALA LUMPUR 14 Dis. - Pakar ekonomi yakin penubuhan Lembaga Pelaburan Terengganu (LPT) dengan dana permulaan sebanyak RM10 bilion mampu memastikan wang royalti minyak negeri itu diuruskan dengan telus dan sekali gus dapat menjana ekonominya.

Pensyarah Pengurusan Strategik, Universiti Utara Malaysia (UUM), Haim Hilman Abdullah berkata, idea itu amat baik dan bagi memastikan keberkesanannya, ia perlu dilaksanakan dengan telus dan tidak ada pertindihan dalam matlamat utamanya.

''Penglibatan dan pelaksanaan daripada golongan bijak pandai yang tidak terlibat dalam agenda politik adalah perlu bagi memastikan keberkesanan penubuhan LPT.

''LPT merupakan idea yang berwawasan jauh dan bagi melaksanakannya perlu ada golongan berwibawa dalam pengurusan dan kerajaan perlu menjadi pemantau untuk memastikan keberkesanan lembaga tersebut'' katanya ketika dihubungi Utusan Malaysia di sini hari ini.

Semalam, Timbalan Perdana Menteri, Datuk Seri Najib Tun Razak berkata, kerajaan pada prinsipnya telah meluluskan penubuhan lembaga itu untuk mengendalikan pelaburan wang royalti minyak negeri tersebut.

Najib berkata, LPT akan menggunakan pendapatan daripada hasil royalti minyak untuk membuat pelaburan di dalam dan luar negara menerusi pasaran bon bagi menjamin kelangsungan pendapatan negeri pada masa depan.

Haim berkata, pemeriksaan daripada badan kira-kira bebas dan audit profesional perlu ada selain meletakkan kepentingan rakyat Terengganu mengatasi segalanya.

Pakar ekonomi, Tan Sri Ramon Navaratnam pula berkata, LPT merupakan inisiatif yang baik bagi negeri Terengganu kerana ia merupakan hasil negeri dan mesti dikembalikan kepada rakyatnya.

''Perlu ada tabung yang ditubuhkan untuk menyimpan hasil daripada pelaburan yang dibuat,'' katanya.

Menurutnya, lembaga seperti itu juga perlu diwujudkan di negeri-negeri yang mempunyai sumber petroleum seperti Sabah dan Sarawak kerana ia merupakan inisiatif yang amat baik.

Sementara itu, Pensyarah Ekonomi dan Muamalat, Universiti Sains Islam Malaysia (USIM), Mohamad Noorizzuddin Nooh juga bersetuju dengan penubuhan LPT yang disifatkannya sebagai satu idea baik tetapi perlu dipastikan pelaksanaannya berada di landasan yang betul.

''Bagi memastikan ketelusan LPT, perlu ada badan-badan lain seperti Petroliam Nasional Bhd. (Petronas) dan Khazanah Nasional Berhad (Khazanah) yang boleh bekerjasama dengannya.

''Pelaburan dana RM10 bilion itu perlu diuruskan dengan baik dan LPT perlu mencontohi Khazanah dan Petronas serta peranan yang dimainkan haruslah sama seperti mereka,'' katanya.

Menurutnya, LPT juga perlu memainkan peranan utama dan tidak hanya sebagai penyumbang dana sahaja

Katanya, kewujudan lembaga itu akan lebih berkesan sekiranya pelaburan yang dibuat ditumpukan pada Koridor Pembangunan Wilayah Timur (ECER) dan memberi kesan kepada negeri-negeri Pantai Timur yang lain.

Terengganu forms own investment fund

KUALA LUMPUR, Dec 12 — History will be made soon when the Terengganu state government sets up its own RM10 billion sovereign wealth fund, the first state in Malaysia to do so and a move aimed at ensuring steady revenue after the oil and gas money dries up.

The decision to set up the Terengganu Investment Authority — a body to be run solely by professionals — is also an indictment of the unsatisfactory manner royalty funds from oil and gas have been used by politicians for the last two decades.

The Malaysian Insider has learnt that the proposal for a sovereign wealth fund was put forward by the Yang di-Pertuan Agong, Tuanku Mizan Zainal Abidin, who is also the Ruler of the east coast state. The state exco endorsed the proposal at its weekly meeting yesterday.

Political observers say that the decision to set up the authority is probably driven by the desire to ensure that royalty from oil and gas is spent wisely and in the long-term interest of the state, and not squandered on flashy projects.

While the oil and gas resources in the state have not been tapped fully, concerns have been raised that insufficient emphasis has been placed on how to maximise the royalty payments.

Under the TIA, the Sultan of Terengganu will be the chairman of the Board of Advisors. The Menteri Besar of the state will also be represented on this board.

But the Board of Directors will comprise only professional managers. The idea here is to ensure that investment decisions are made by professionals and without the interference of politicians.

Sources in the state said that RM10 billion will be invested both within Terengganu and also the rest of Malaysia. But the TIA will also have a mandate to invest globally.

The RM10 billion will be sourced from the local and foreign capital markets with a proposal for the Federal Government to provide a government guarantee of up to RM5 billion.

As a measure of long-term sustainability, TIA will continue to reinvest its profits to generate higher growth. Dividends will be declared to the state of Terengganu and its partner investors.

It is interesting that the idea of the wealth fund was mooted by Tuanku Mizan. Since Election 2008, the Malay Rulers have played a more active role in the affairs of their respective states as well as set the markers on important national issues.

This higher profile is a result of the changed political landscape with five states under the Opposition and power no longer concentrated with the Prime Minister or the Barisan Nasional government.

The more uncertain political terrain marked by incessant politicking and little else has led to the Malay Rulers providing leadership and guidance on several issues, including the debate over the social contract and race relations.