Khazanah's and EPF's investments in the US: What are they?

Datuk Seri Najib Tun Razak's announcement on the intended investments by Khazanah Nasional Berhad (Khazanah) and the Employees' Provident Fund (EPF) in the US has sparked analysts' curiosity on what those investments might be.

During a delegation meeting with US President Donald Trump on Wednesday, the Malaysian Prime Minister had said EPF had invested close to US$7 billion in equity in the US and they intend to invest an additional US$3 billion to US$4 billion to support infrastructure re-development.

He had also said Khazanah, which has an office in the Silicon Valley, California, intended to increase its investments after having already invested about US$400 million in high-technology companies.

Astro AWANI business editor and correspondent, Rizal Zulkapli, said the premier's announcement was in line with both Khazanah's and EPF's policies – to continuously look for better investments and give good returns to their investors and depositors.

"EPF is seeking to increase its foreign investments from the current 29 percent to 30 percent, so they are almost reaching their mark. And they have said they are looking for more quality investment; they are continuously buying and selling assets and also investing overseas.

"For EPF, the percentage of their investment in equity and fixed income are very high, as well as in property and other assets. But in infrastructure, it is still low," Rizal told Markets Today on Wednesday.

"Datuk Seri Najib's statement on Malaysia looking to support investment in infrastructure in America, that could be an indicator as to how EPF will move forward in the US," he said.

So would EPF invest directly in American companies or in Malaysian companies that have set up shop there?

"Looking at the model that was undertaken in the Battersea project in the UK, where EPF joined with private companies, perhaps that model can be replicated to ensure that Malaysian companies can enter the US market," said Rizal.

(The Battersea Power Station rejuvenation in southwest London sees the Malaysian consortium of EPF, SP Setia Bhd and Sime Darby Bhd turning the symbolic 42-acre site into a huge complex of apartments, shops and offices in a £9 billion project.)

He also noted that with the US having recently experienced two devastating natural disasters – Hurricane Harvey in Texas and Hurricane Irma in Florida – this could be an opportunity for Malaysia to invest in infrastructure there, particularly in the affected areas.

As for Khazanah's intended investment in the US, Rizal said Datuk Seri Najib's statement was almost "like a promise" that Khazanah would look for more opportunities in the Silicon Valley.

"Khazanah’s current investments in the US pales in comparison to EPF's, so there's certainly room for Khazanah to do more. I presume Khazanah could be looking to invest between US$1 billion and US$3 billion there.

"Khazanah is not just about ringgit and sen, it's about nation-building. If you invest outside the country but not getting anything back in return except for dollars and cents, I don't think that’s in line with what Khazanah has planned. There must be knowledge-sharing as well," he said.

"I believe we will be seeing more investments and collaborations from companies in the Silicon Valley in Malaysia, which would be in line with the nation-building aspirations put forth by Khazanah," Rizal added.

Last year's trade between Malaysia and the US amounted to nearly US$33 billion.

In 2016 alone, American companies brought in RM5 billion, or more than US$1 billion, of foreign direct investment (FDI) into Malaysia.

The US is the fifth largest foreign investor in Malaysia, with a total of RM36 billion, or US$8.5 billion, worth of FDI stock.