It's valid for govt to ask for higher dividend during trying times - Khazanah MD

According to the Khazanah Annual Review 2021 released today, the sovereign wealth fund declared a dividend of RM2.0 billion for 2020 to the government, double the RM1.0 billion dividend declared for 2019.

Shahril Ridza 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 Khazanah Annual Review 2021 here today.

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

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

According to Shahril Ridza, the government is very keen to see how long-term investors like Khazanah could do their part to spur their investments, build up a new industry, or even partner with the private sector in these 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 Ridza 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 Datuk Seri Azmil Zahruddin Raja 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 per cent as at Dec 31, 2020, from 12 per cent in Dec 31, 2018, while allocation in Malaysia’s public market reduced to 50 per cent as at end-2020 from 58 per cent as at end-2018.