THE National Trust Fund (KWAN) has come under the spotlight after Putrajaya amended the law, without parliamentary oversight, to tap into it for the procurement of Covid-19 vaccines.

KWAN was established on February18, 1988 under the National Trust Fund Act 1988 with the aim of ensuring optimal utilisation of depleting natural resources to provide a stable and continuous source of income for Malaysia.

Among the entities that are required to contribute to KWAN are Petroliam Nasional Bhd, any state in Malaysia which derives any form of royalties from the exploitation of petroleum or other depleting natural resources, and parties whose business includes the research or development of a depleting resource.

The money may be used for the expressed purposes as well as for loans or advances to the federal or state governments on a concessionary term.

KWAN is governed by the National Trust Fund Act 1988 under the auspices of Bank Negara.

The fund is also administered by a panel of trustees comprising a chairman – usually from Petronas – a deputy chairman representing the Finance Ministry, an officer from the Prime Minister’s Department and two members with business or financial expertise.

The panel is appointed by the minister of finance.

The panel of trustees are also allowed to invest the fund in securities, as bank deposits as well as in any investments instruments authorised by the Trustee Act-to generate returns.

KWAN’s investment portfolio comprises fixed deposits and fixed income securities issued by the government, government-linked agencies, supranationals and corporates, and the Asian Bond Fund.

Its domestic market investments are in the equity market through external fund management programmes and equity holding in Putrajaya Holdings Sdn Bhd.

The only time the fund was used was when RM42 million was withdrawn to finance the Malaysia Wetlands Sanctuary project in Ulu Langat.

According to the finance ministry, the fund’s balance stood at RM19.5 billion as of December 31, 2020.

Finance Minister Tengku Zafrul Tengku Abdul Aziz had said Putrajaya will take RM5 billion from KWAN for vaccination expenses.

The announcement drew much criticism from politicians and experts.

Tengku Zafrul said the RM3 billion allocation to buy Covid shots which was announced at the tabling of Budget 2021 was not in the budget itself and was to to be taken from the trust fund.

He assured that the government will not touch the principal, which amounts to RM10.4 billion and instead  draw the RM5 billion from the fund’s return on investments of RM9.1 billion.

He also said the government was committed to replenish the funds. – April 29, 2021.