KUALA LUMPUR: The federal government through the Minister of Finance Inc (MoF) will receive a 10% share of Terengganu Investment Authority Bhd’s (TIA) annual after-tax profits.

Another 10% of TIA’s after- tax profit will go to TIA Foundation, an entity that will “fund and implement social benefit programmes in Terengganu and Malaysia”.

This is by virtue of MoF Inc and TIA Foundation each holding one preference share in TIA, which also comes with certain approval rights, including that to appoint nominees to TIA’s the board. The Menteri Besar Terengganu (MB Inc) owns 100% of TIA’s ordinary shares.

Prime Minister Datuk Seri Najib Razak yesterday defended the federal government’s move to provide the guarantee. Speaking to reporters after the Barisan Nasional supreme council meeting, he said: “There is no money involved as it’s a federal government guarantee and because this is a partnership with the state government where there will be an additional RM11 billion invested not only in Terengganu but the whole country. As such, it will stimulate the national economy and will also leverage on bringing in foreign direct investment to above RM11 billion. Also, the federal government will benefit in terms of the 10% of net profit of TIA,” Najib said.

“There will be an increased flow of talent, economic activity and value-add into Terengganu and Malaysia as a result of TIA’s strategic investments in tourism, energy and agriculture. The success of these economic development projects will raise the quality of life in Terengganu,” TIA said in a statement issued yesterday.

Other salient points of TIA:
•     TIA will invest in high-impact and strategic projects as well as hard and soft infrastructure in Terengganu and other parts of Malaysia, and in regional and international projects that have positive spillover benefits to the state and the country.

•     TIA will be a professionally managed organisation supported by a triple-tier check and balance system comprising the board of directors, board of advisers and a senior management team. The members of board of directors, board of advisers and TIA Foundation’s board of trustees will be a mix of experienced prominent local and international individuals. The directors will comprise representatives from MB Inc, MoF Inc and TIA Foundation. Members cannot hold positions in the government or occupy any political positions.
 
•     The Sultan of Terengganu Tuanku Mizan Zainal Abidin, who is also the Yang di-Pertuan Agong, will be the first chairman of the board of advisers. Other members include the Prime Minister or the Minister of Finance as the alternate appointee, the Menteri Besar of Terengganu and Khaldoon Al-Mubarak, who is the CEO of Abu Dhabi’s investment arm, Mubadala. Other advisers have been identified and will be announced shortly. The board will also receive advice from an economic advisory panel comprising experienced fund managers and those with expertise in areas where TIA is investing.

•     TIA Foundation has its own dedicated board of trustees, management team, operating budget and processes. TIA will provide initial seed capital to fund the set-up of the foundation and initial social development initiatives. One example of a potential social development initiative that has been identified is microfinance — to provide small loan facilities to micro-entrepreneurs, fishermen and farmers in Terengganu. The establishment of the foundation will be completed by early June.