Not all Statutory Bodies are allowed to make investments. Statutory bodies are established at the Federal and State levels. And, each Statutory Body is regulated by its respective body act.
Permission to make investments is subject to the Statutory Bodies Act {Act 605] and for any Statutory Body which does not have the authority to make investments, any contrary actions can be considered “ultra vires” under the act.
Some Statutory Bodies set requirements to consult with the Ministry of Finance for approval regarding investment. In due process, the Ministry of Finance will take into account the mandate of the establishment of the Statutory Body, conduct risk management on the particular investment and the expertise of the Statutory Body.
Finance Minister II Datuk Seri Amir Hamzah Azizan said this in reply to a question raised by Wong Shu Qi [KLUANG] who asked the Minister of Finance to state whether a Statutory Body or a Non-Statutory Body is allowed to invest in options, private equity, forex and the like.
Amir Hamzah explained the Federal Statutory Body (BBP), which has GLIC status, — among them being the EPF, KWAP and LTH have establishment mandates with activities core to make investments and have a team of officers who have the expertise in managing investment portfolios.
With that, generally, GLICs are allowed to invest in broader classes which include options, private equity and internationally based investments.
However, there are risk controls and governance to reduce the risk of investment loss. For example, KWAP requires the approval of the Minister of Finance to appoint Investments Panel members and to on investments in assets such as buildings and private equity.
The Ministry of Finance has also imposed limits on the percentage of investment which can be invested abroad.
For GLIC who have the experience and expertise, they have a keen focus on investments that can bring high returns to the agency concerned such as equity, money market, debentures and securities.
However, for BBPs that are not GLICs or those agencies which are not tasked with implementing investments as a core activity and do not have a team of officers who have expertise in investment affairs, no such actions will be allowed.
Therefore, Ani Hamzah said, BBPs like public universities are only allowed focus on investments that are low risk, stable and bring minimal returns including Fixed Deposits and Government bonds or sukuk.
In some cases, BBP Articles of Association provide that any or all types of investments placed have to obtain Minister’s consideration; among them being MIROS, FINAS, SOCSO and others.
Just like HRD Corp, each comes under the purview of the respective ministries.
