The Institute for Democracy and Economic Affairs (IDEAS) has welcomed the Government’s efforts to strengthen the National Trust Fund through the National Trust Fund Bill 2026.
The Bill introduces several important reforms, including placing contributions to the Fund on a statutory footing, establishing a dedicated governing body and broadening its investment mandate. It also replaces PETRONAS’ discretionary contribution arrangement by requiring the Government to contribute at least 2% of PETRONAS dividends, 0.1% of projected federal revenue and 2% of export duties from depleting natural resources.
Established in 1988 to preserve Malaysia’s natural resource wealth for future generations, the Fund was intended to convert finite resource revenues into long term national assets. Its modest growth over the past three decades underscores the need to strengthen not only its investment mandate but also its governance, transparency and accountability.
While the Bill significantly expands the Fund’s investment powers, it provides comparatively limited safeguards to ensure these powers are exercised transparently, independently and with meaningful parliamentary oversight.
As drafted, the Bill concentrates significant authority within the Executive. The Minister appoints the entire Board, approves the Strategic Asset Allocation, appoints the principal fund manager, authorises the establishment of investment companies and may issue directions to the Board. Clause 7 requires the Fund to submit reports and accounts to the Minister of Finance but does not require reporting directly to Parliament. While ministerial accountability remains an important constitutional principle, these powers should be balanced by stronger safeguards that reinforce operational independence, transparency and parliamentary accountability.
The Bill also misses an opportunity to strengthen Parliament’s oversight role. Parliamentary approval is required only for withdrawals above the statutory limit. Parliament has no formal role in scrutinising appointments, reviewing investment strategy, monitoring performance or assessing governance arrangements.
Similarly, while the Bill permits the National Trust Fund (Incorporated) to establish investment companies with ministerial approval, it provides little guidance on their governance, ownership, reporting or accountability. Nor does it require the publication of the Strategic Asset Allocation or key investment benchmarks, limiting transparency over how national wealth will be managed.
Strong institutions depend not only on investment powers but also on clear accountability, transparency and effective oversight. These safeguards should be embedded in legislation rather than left to future regulations or administrative practice.
Malaysia now has an opportunity to strengthen the Fund’s governance framework in line with internationally recognised sovereign wealth fund standards, including the Santiago Principles. Doing so will enhance public trust and help protect the Fund from short term political pressures while preserving its long term national purpose.
To strengthen the Bill, IDEAS recommends that Parliament:
- Strengthen the independence of the Board through a more transparent and merit-based appointment process, with appropriate parliamentary scrutiny;
- Require the publication of the Strategic Asset Allocation, investment objectives, performance benchmarks and risk management framework, subject to legitimate commercial confidentiality;
- Requiring the Fund to table annual reports covering audited financial statements, investment performance, compliance with the investment mandate, governance developments and major risks; and
- Clarify the governance, ownership, reporting and audit requirements for investment companies established under the Act, while requiring periodic independent governance and performance reviews against internationally recognised sovereign wealth fund governance standards
The National Trust Fund should be more than a vehicle for investment. It should serve as a model of transparent, accountable and professionally governed public financial management. Strengthening the Bill before its passage will better safeguard Malaysia’s national wealth and reinforce public confidence in the stewardship of public assets.
