Mooted by Malaysian King Sultan Mizan Zainal Abidin, Malaysia is introducing greater transparency into the use of its oil royalties by setting up a SWF with a seed capital of RM10 billion (S$4.2 billion) to manage Terengganu’s petroleum revenues through a committee made up by professionals that are not politically-motivated.
This would also avoid mismanagement of the past. The King himself would head a board of advisors but cannot intervene with veto powers on the management of the fund. Some viewed the use of oil revenue to construct them parks and events such as the Monsoon Cup international sailing competition as white elephants and non-productive prestige events.
Besides setting up wealth funds, Malaysia has other ways to help domestic industries. Malaysia scrapped import taxes on some raw materials (400 products including iron, steel, textiles and chemicals) and also eased up manufacturing license application to cope with global economic downturn with effect from 1 December 2008.
By scrapping the import tax, Malaysia is doing exactly the opposite of Indonesia as reduction of import tax will also decrease the government’s earnings substantially. Unlike Indonesia’s doctrine of self-reliance, Malaysia is also lifting export ban on scrap metal. Malaysia is not modifying its export orientation view in any way.
Hassan, Hazlin, “Malaysia unveils measures to avert economic slowdown” dated 15 November 2008 in The Straits Times (Singapore: the Straits Times), 2008, p. C18.
Lopez, Leslie, “Terengganu plans fund for oil revenue” dated 12 December 2008 in the Straits Times (Singapore: Straits Times), 2008, p. B1.