KWAN is not a surname. It is an acronym for Kumpulan Wang Amanah Negara (National Trust Fund). It is a trust fund.

What is a trust fund?

It is simply a fund held on trust. A trust is a legal arrangement wherein one party (who is called a settlor) gives control of property or assets (which is called the trust property) to another party (who is called a trustee) to be administered on behalf of a third party (who is called the beneficiary).

A trust is like your money box for the family. You drop money into it every month and create rules that administer the money, such as how and when the money box shall be opened, and to whom shall the money be distributed.

Settlors, trustees and beneficiaries can be individuals, groups of individuals, institutions, or governments. A trust fund is therefore a fund that is managed under a legal arrangement that is described above.

There are many categories of trust and trust funds. There are private trust funds established by way of a trust deed as a way of preserving capital while making the income from that capital available to designated persons or purposes.

Then there are public trust funds that are established for public purposes by governments by way of legislation that creates the trust, sets out its legal terms, and assigns rights and duties to different persons or parties.

KWAN is such a public trust fund. Created in 1988 by the National Trust Act 1988 (Act 339), it is specified as a government trust fund and incorporated into the Second Schedule of the Financial Procedure Act 1957 (Act 61).

Section 3 of Act 339 further provides that the fund shall be administered by a panel of trustees known as the National Trust Fund Panel and designates Bank Negara Malaysia (BNM) as the party responsible “for the day-to-day administration and management of the affairs” of the fund.

The purpose for creating the fund was spelt out as follow:

“Kumpulan Wang Amanah Negara adalah bertujuan untuk menjaminkan hasil negara terus berada di paras yang tinggi apabila pendapatan negara dari sumber-sumber asli yang berkurangan telah merosot. Ini akan membantu Kerajaan membiayai perbelanjaan dan seterusnya memperkembangkan aktiviti ekonomi di masa hadapan. Sebagai permulaan adalah dicadangkan supaya PETRONAS mencarumkan sebanyak $100 juta dari keuntungan setiap tahun kepada Kumpulan Wang Amanah Negara ini. Caruman daripada lain-lain perusahaan yang berasaskan sumber-sumber asli boleh dibuat pada masa-masa yang sesuai kelak.” (Dewan Rakyat Hansard dated 15/10/1987)

As such, section 5(1) of Act 339 stipulates that moneys paid into the fund shall be:

(a) moneys from time to time appropriated from the Consolidated Fund to and for the purposes of the fund

(b) such contributions as may be made by Petroliam Nasional Berhad to the fund

(c) such contributions as may be made by any State in Malaysia which derives any form of royalty from the exploitation of petroleum or other depleting resources

(d) all moneys from any investments of the fund

(e) all grants, donations, endowments, gifts, contributions and bequests that may be made to or in favour of the fund; and

(f) such contributions as may be made by any person or authority whose business includes the research or development of a depleting resource.

Moneys standing to the credit of the fund can only be applied after 10 years from the date of the commencement of Act 339 for the purposes set out in section 6, which were (before the recent amendment vide the Emergency (National Trust Fund) (Amendment) Ordinance 2021):

(a) any of the purposes of the Development Fund as specified in the First Schedule to the Development Funds Act 1966 [Act 406]; and

(b) the granting of loans or advances on concessionary terms to the Federal Government or to the Government of any State in Malaysia.

Having been specified as a government trust fund and incorporated into the Second Schedule of Act 61 (see above), the fund is also governed by Act 61, where section 10(2) stipulates that the fund may be applied for the general purposes set out in Act 339 or “for such particular purposes as may from time to time be specified by resolution of the Legislature”, that is, Parliament.

Simply put, KWAN fits the bill of a public trust fund. It is established by the government under a legislation which creates the trust, sets out its legal terms, and assigns rights and duties to different persons or parties (see above).

Importantly, it is Parliament which creates it and sets out its legal terms. It is Parliament, therefore, which should set out changes to the terms.

It speaks volumes of emergency powers when the executive can be empowered under an Emergency Ordinance to make changes to the legal terms of a public trust fund.

KWAN can now be utilised for “the procurement of vaccines and any expenditure incurred in relation to the vaccines for an epidemic of any infectious disease as specified under the Prevention and Control of Infectious Diseases Act 1988 [Act 342].”

Little would have been known of KWAN if not for the Emergency (National Trust Fund Act) (Amendment) Ordinance.

But KWAN is only one of 49 public trust funds listed in the Second Schedule of Act 61. The majority are little known as well.

Will more be thrust into the limelight like KWAN? – April 24, 2021.

*Hafiz Hassan reads The Malaysian Insight.

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.