Valid for govt to ask for higher dividend in trying times - Khazanah MD

 

It is a valid request for the government to ask for a higher dividend for 2020 due to the extraordinary financial pressure faced last year, said Khazanah Nasional Bhd managing director Shahril Ridza Ridzuan.

According to the Khazanah Annual Review 2021 released today, the sovereign wealth fund declared a dividend of RM2 billion for 2020 to the government, double the RM1 billion dividend declared for 2019.

Shahril (above) said the government’s traditional sources to fund the budget usually came from taxes, investment gains, and dividends.

“On the (dividend) request from the government, whether you consider it as a higher dividend for 2020, to help support the government during this time, I think it is a valid request and due to the higher budget approved for 2020,” he said.

He was responding to a question during a virtual press briefing in conjunction with the release of the annual review in Kuala Lumpur today.

However, Shahril declined to speculate whether Khazanah would continue paying higher dividends for the government in the coming years as “it all depends on the needs of the situation”.

To help spur economic growth, he revealed the fund is currently discussing with the government, including the finance ministry, to look at investing in new growth sectors moving forward.

He said the government is very keen to see how long-term investors like Khazanah could do their part to spur investments, build up a new industry, or even partner with the private sector in new growth sectors to boost economic growth.

“We are thinking about capital recycling, such as how do we recycle capital from older assets into newer assets in order to create companies with potential growth, as well as create more new jobs,” he said, adding that further details would be announced in the future.

Moving forward, Shahril said Khazanah would continue to diversify its global portfolio as it built sustainable value for Malaysia as part of its long-term mandate.

He also said its current capital position was at an “extremely comfortable” level.

Chief investment officer Tengku Azmil Zahruddin Abdul Aziz said at present, the majority of Khazanah’s investments were still made in Malaysia, and the sovereign wealth fund was gradually shifting its investment portfolio overseas.

“In 2020, we have seen higher profit from overseas than Malaysia,” he added.

According to the presentation slides, over the last two years, Khazanah has begun the rebalancing of its commercial fund portfolio to diversify the portfolio and improve risk-adjusted returns.

Its asset allocation in the global public market increased to 17 percent as of Dec 31, 2020, from 12 percent on Dec 31, 2018, while allocation in Malaysia’s public market reduced to 50 percent as at end-2020 from 58 percent as at end-2018.

- Bernama