Well, we didn't know that our country can actually support so many sovereign wealth funds. A bit of trivia, the most number of monarchies in the world reside in Malaysia, by virtue of our Sultanate states within the country. Looks like we will have the most number of sovereign wealth funds within a country as well soon. Obviously, the Penang's initiative is to "counter reflect" how audacious the move by Terengganu was, and not an entirely genuine request. I guess Penang leaders will argue that it is genuine if we all treat things at face value.
The key point is that the Federal government will act as guarantor for the bond issuance by Terengganu. A similar backing will almost allow any state to start their own sovereign wealth fund, or should I say, state wealth fund. Cynical yet smart, now Federal government has to come up with a reasonable rebuttal on how to say no to Penang.--------------------------- The Penang government today sent a proposal and letter to Prime Minister Datuk Seri Najib Tun Razak office, seeking the approval from the federal government a guarantee of RM5 billion for the creation of Penang Sovereign Wealth Fund.
Chief Minister Lim Guan Eng said the fund to be known as Penang Investment Authority (PIA) shall be capitalised at RM5 billion, to be raised via an Islamic Bond issuance, fully guaranteed by the federal government. "PIA is something similar to the Terengganu Investment Authority (TIA), where the fund is to be given to Penang to carry out the state's high-impact economic projects with high-end value," he told reporters after receiving a courtesy call from a delegation comprising members of the Thailand Senate Committee of Foreign Affairs here today. TIA, which was set up in February this year, will have an initial fund size of RM11 billion, with RM5 billion to be raised from the capital market on the back of a government guarantee and the remainder to be raised through the assignment to TIA of some of the future oil royalties due to the Terengganu state government. Lim said if the federal government can guarantee in support of the PIA with RM5 billion, the state government was confident of raising another RM5 billion.
"With RM5 billion guarantee from the federal government, we believe we can raise another RM5 billion to carry out infrastructure works, research and development and education projects for Penang. "We are not asking for another RM11 billion, we are only asking for RM5 billion guarantee from the federal government," he said. In the letter to Najib who is also the Finance Minister, Lim stated that the state government has identified several economic activities as key growth drivers for the state over the next five to 10 years. He hoped for a fair treatment from the federal government, saying Penang was are also in dire need of infrastructure projects. He said all the projects were crucial in order to turn Penang into an international city to be a destination of choice for tourists, a location of choice for investors and a habitat of choice for those who desire sustainable living. - BERNAMA p/s photo: Fasha Sandha
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