Only Parliament can change terms of use for public trust fund

 

From Hafiz Hassan

KWSP is a well-known acronym for Kumpulan Wang Simpanan Pekerja. The name says it all. It is employees’ savings.

But KWAN is little known.

No, it’s 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 create rules on deposits into and withdrawals from it, and to whom shall the withdrawals be distributed and for what purposes.

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 which 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 RM100 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 Petronas 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 that creates the trust, sets out its legal terms, and assigns rights and duties to different persons or parties (see above).

Importantly, it is Parliament that 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].”

KWAN would remain little known if not for the Emergency (National Trust Fund Act) (Amendment) Ordinance.

KWAN is unlike KWSP into which “every employee and every employer of a person who is an employee within the meaning of [the Employees Provident Fund Act] shall be liable to pay monthly contributions on the amount of wages at the rate respectively set out in the Third Schedule.” It is employees’ savings held on trust.

KWAN is also unlike KWSP where under the Employees Provident Fund Act 1991 (EPF Act) the minister is empowered – by Parliament – to vary or modify the purposes for which a withdrawal may be made by an employee if the minister “thinks it expedient and after consulting the EPF board by order published in the gazette.” [Section 54(7) of EPF Act]

Even so, the minister is accountable to Parliament. It is one of Parliament’s main roles to scrutinise, examine, check and challenge the work of the government.

Therefore, those who complained about allocation from KWAN being used for the procurement of Covid-19 vaccines are not “kluster merungut” (complaining cluster).

They should rightly be called “kluster prihatin” (concerned cluster) who are concerned that the terms of a public trust fund are varied and modified without the authority of Parliament.

Hafiz Hassan is an FMT reader.

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.