‘The underlying principles of sound investment should not alter from decade to decade, but the application of these principles must be adapted to significant changes in the financial mechanisms and climate.’
– Benjamin Graham, “Regarded as the Father of Value Investing”
‘You adapt, evolve, compete or die.’
– Paul Tudor Jones II, Founder of Tudor Investment Corporation
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The inception of the Sarawak Sovereign Wealth Future Fund (SSWFF), set to begin operations on January 1 next year, signifies a momentous and forward-thinking action taken by the state government to ensure the enduring economic prosperity of the state. It stands as a compelling testament to the government’s steadfast dedication to fostering economic resilience, sustainable growth, and the prosperity of its people.
A Bill that introduced the fund was tabled during the 19th State Legislative Assembly session on November 22 last year. It received unanimous approval from the lawmakers. Premier Datuk Patinggi Tan Sri Abang Johari Tun Openg highlighted that it will commence operations with an initial allocation of RM8 billion, which will be further supplemented by planned annual appropriations.
The fund is estimated to grow sustainably, with no withdrawals except for potential critical events or when the fund performs better than targeted. It will be managed strictly in accordance with the investment policy and mandate to deliver long-term risk-balanced real growth in its invested assets.
On Monday, nine distinguished professionals in finance and investment were appointed to its Board of Guardians, with former Federal Court judge Tan Sri Datuk Seri Panglima Sulong Matjeraie as the chairman. The appointments, approved on July 27, were in line with the Premier’s promise that the fund would be managed in a professional and transparent manner.
Sulong, currently the chairman of the Board of Directors of Universiti Malaysia Sarawak (UNIMAS) and holding several directorships in publicly listed companies, has over 30 years of legal and judicial experience. He has also served the Sarawak government in various leadership capacities for 17 years.
The other eight members are chairman of Limar Group and chairman and managing trustee of the Tun Jugah Foundation and Dayak Cultural Foundation, respectively, Tan Sri Datuk Amar Leonard Linggi Jugah; former chairman of Petronas and currently chairman of KLCC Group of Companies and chairman of Pelaburan Hartanah Berhad, Tan Sri Ahmad Nizam Salleh; former chairman of Shell Malaysia Ltd and currently an independent non-executive director of RHB Bank Berhad, RHB Investment Bank Berhad, and Digi Telecommunications, Datuk Iain John Lo; Dublin-based independent non-executive director Grainne Dooley; former member of the Pacific Investment Management Company LLC (PIMCO) US, Mohsen Fahmi; and director of Permodalan Nasional Berhad, Datuk Soedirman Aini. State Attorney General Datuk Seri Talat Mahmood Abd Rashid and State Financial Secretary Datuk Seri Dr Wan Lizozman Wan Omar will be appointed as ex-officio members of the board.
As mentioned by the Premier, the establishment of SSFWW takes inspiration from Norway’s renowned sovereign wealth fund, the Norway Government Pension Fund Global, which boasts an impressive fund size of US$1.25 trillion, equivalent to RM5.7 trillion. Its establishment promises multifaceted benefits and positive impacts for the state and its people.
The fund functions as a potent instrument for bolstering the state’s economic resilience amidst the challenges of global uncertainties. By channelling a portion of the country’s resources into diversified investments, the government effectively creates a buffer against fluctuations in commodity prices, market volatilities, and unforeseen economic downturns. This resilience ensures stability in public finances and minimises the impact of external shocks on the economy.
Through prudent investment strategies, the fund will generate consistent returns over time, contributing to state wealth accumulation. These returns can then be reinvested in critical sectors such as infrastructure, education, healthcare, and innovation, spurring sustainable development that benefits both current and future generations.
The positive impacts of the fund extend beyond economic indicators; they directly touch the lives of citizens. As it grows and yields return, the government can allocate a portion of these profits towards enhancing social welfare programmes. These include initiatives to improve education systems, healthcare accessibility, affordable housing, and poverty alleviation. The fund becomes a mechanism for uplifting the living standards and overall quality of life for citizens.
In a nutshell, the establishment of SSFWW sends a strong signal that the government is committed to fostering innovation and entrepreneurship. Through investment in diverse sectors, the fund will not only encourage innovation and research but also drive technological advancements and the growth of emerging industries. This, in turn, will create a dynamic environment for start-ups and entrepreneurs to thrive, spurring economic dynamism and job creation.
Regarding infrastructure development, SSFWW will provide a sustainable source of capital for large-scale projects. These range from transportation networks to renewable energy facilities. They will not only improve connectivity and energy efficiency but also stimulate economic activity, create jobs, and attract foreign investments.
The fund also underscores the government’s commitment to fiscal discipline and responsible financial management. By segregating a portion of revenues into the fund, the government ensures that resources are earmarked for future generations rather than being consumed solely in the present. This promotes transparent governance and instils confidence in domestic and international investors alike.
To maximise the positive impacts of the fund on the populace, the government should also consider several other key measures involving stakeholder engagement, impactful investing, and educational initiatives.
Wherever possible, the government must involve the public in discussions about the fund’s direction and priorities. Soliciting input from citizens ensures that the fund’s investments align with the needs and aspirations of the population. The government should also collaborate with financial experts, economists, and academics to devise strategies that optimise the fund’s impact and align with global best practices.
Furthermore, the government should allocate a portion of the fund’s resources to impact investments that directly address social and environmental challenges. These investments can generate both financial returns and positive societal outcomes.
Equally important is for the government to launch educational campaigns to improve citizens’ understanding of the fund, its purpose, and its benefits. Informed citizens are better equipped to engage in discussions and hold the government accountable for fund management.
By implementing these measures, SSFWW can truly benefit the people it aims to serve. It becomes a powerful tool for fostering economic growth, social progress, and long-term prosperity while adhering to principles of transparency, accountability, and responsible stewardship.
In conclusion, the government’s decision to establish the SSFWW is a laudable move that deserves applause. This forward-looking initiative demonstrates a commitment to securing the economic well-being of the populace, fostering long-term growth, and embracing responsible governance practices.
As the fund grows, its positive impacts will permeate society, enriching lives, fostering innovation, and reinforcing the nation’s position on the global economic stage. It is indeed a visionary step towards building a prosperous and sustainable future for all citizens.
The views expressed here are those of the writer and do not necessarily represent the views of the New Sarawak Tribune.
