KUALA LUMPUR (July 26): Former Prime Minister Datuk Seri Najib Razak is concerned over the future of the country's corporate sector following the offer by Khazanah Nasional Bhd's board of directors to resign en masse from their posts.

"I didn't know about their resignation but what I read is that they resigned on the issue of principle because Khazanah was never set up with the intention of restructuring the economy.

"It was never the raison d'etre of Khazanah," Najib told reporters at the Parliament lobby.

Khazanah this morning confirmed media reports that all members of its board of directors — including managing director Tan Sri Azman Mokhtar — have offered to resign from the board.

The sovereign wealth fund said this would facilitate a smooth and orderly transition under the new government.

Earlier this month, Prime Minister Tun Dr Mahathir Mohamad said Khazanah should go back to its original focus of helping Bumiputeras grow their ownership in companies.

He said the fund has strayed from its purpose of holding shares allocated to the Bumiputera public until they are able to acquire the shares for themselves.

Najib said Khazanah was envisioned as a financial investment institution for the country, while the growth of Bumiputera entrepreneurship is handled by Teraju Malaysia (a unit under the Prime Minister's Department) and Perbadanan Usahawan Nasional Bhd.

He said when wealth is created, Khazanah will give back good dividends, and develop new companies that enter the international market while strengthening the talent base in the country.

"For the country to prosper to become an advanced economy, you need talent, and institutions like Khazanah were designed like Singapore's investment arm Temasek Holdings Private Ltd to create talent.

"(And) if the talent is not given the opportunity in the country, talent will flow where they get the highest reward, and Malaysia would lose talent, and you will get mediocre management in the country," he added.

Najib said this would cause the country to suffer and Malaysians would also not get the type of dividends and returns through the Employees Provident Fund and Permodalan Nasional Bhd.

"So, I am concerned about the future of the corporate sector," he said.