Khazanah Nasional: Malaysia's treasure trove

Abstract

Malaysia's Khazanah Nasional, established in 1994, is one of the 20 largest sovereign wealth funds in the world. In the first decade of its existence, Khazanah had remained a relatively secretive organisation, sheltered by virtue of being wholly owned by the government and reporting directly to the prime minister who provided the organisation with investment direction. However, at the dawn of its second decade of existence, Khazanah became much more transparent and accountable, and provided the public with more information about its activities, including a limited range of financial indicators. The change in leadership and democratic demands explain this turnaround. A reformed Khazanah was also given a new mandate to invest more aggressively internationally. The bulk of its investments has, however, remained in Malaysia and continues to be affected by the dynamics of local politics.

Industrial Policy and Islamic Finance

“…The Malaysian government issued the world's first sovereign sukuk in 2002 worth USD600 million, half of which was subscribed by investors in the Gulf Cooperation Council (GCC) (Wilson 2009: 22). The government also adopted an oft-used developmental strategy and leant on state-owned institutions, such as Cagamas and Khazanah Nasional, to issue Industrial Policy and Islamic Finance financial papers (Goh 2012;Lai 2012b). Cagamas, a national agency set up to promote broader home ownership by issuing debt securities to finance the purchase of housing loans, has about a 9 per cent share of outstanding Islamic securities in Malaysia in 2010 and is now one of the world's top issuers of Islamic securities (Goh 2012).…”

The Influence of Government Shareholding on Dividend Policy in Malaysia

“…Company size may capture stock selection criteria by government-related investors. Economic development projects have long horizons and affect a substantial cross-section of Malaysian society (Lai 2012). For example, in 2008, Telekom Malaysia Berhad was awarded the contract to be involved in a public-private partnership for the roll-out of high-speed broadband.…”

“…The investment opportunity set is another potential determinant of government shareholding. Since capital investment projects, related to public policy implementation, generally have long time horizons (Lai 2012), government-related investors may be more attracted to companies at early life-cycle stages (Dickinson 2011). HiDQGDEDum, a variable constructed from the Dynaquest sub-rating for earnings and dividend growth, is the proxy for growth opportunities, consistent with Sinnadurai (2016).…”

The Strategic Logics of State Investment Funds in Asia: Beyond Financialisation

“…Moreover, this strategic mandate did not signify a more active investment approach. In the first ten years of its existence, Khazanah was mostly a passive custodial investor that did not interfere with the direction and management of the companies it owned (Lai 2012).…”

“…This policy has been only possible politically by growing the economy, thereby reducing the relative effects of the redistribution on minority groups and consequently their propensity to challenge the policy. Khazanah, as with other GLICs and GLCs, was and is employed to facilitate economic expansion and redistribute wealth to the ethnic Malay majority (Lai 2012). The shift towards professionalised (or financialised) management techniques at GLCs and GLICs does not change the underlying developmental aims of the state and the maintenance of Bumiputra preferences.…”