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Selangor plans RM1b sovereign wealth fund

 | October 22, 2013

The fund is aimed at turning Petaling Jaya and Klang into world-class cities based on the concept of conducive, sustainable and smart urban living.

By P Vijian

The Selangor state government is planning to set up a RM1 billion sovereign wealth fund as a way to develop its major urban centres like Petaling Jaya and Klang into “worldclass” cities.

The Selangor Urban Development Fund will raise part of the money from private sector businesses in real estate and infrastructure development by leveraging assets like state-owned land. The fund will be parked under the state’s Mentri Besar Inc.

Selangor Menteri Besar Khalid Ibrahim revealed the plan in Johor while presenting a paper at the Future of Urban Living Conference in Iskandar.

“Realising several constraints, especially financial in nature, the state government will unlock the value of the underlying assets, in particular parcels of land belonging to the state, by reconfiguring or leveraging on assets themselves as major funding sources,” he said.

“With this model, the state government and local authorities will be the initiator or catalyst of the urban development by coming up with a comprehensive and well-encompassing master plan, while private sector players will merely be executors of the plan.”

The state, together with the relevant local authorities, will also allocate a certain percentage of cash reserves or budgetary surpluses for the fund.

Khalid said a task force will be established to finalise details including general planning and design, percentage of cash reserves to be set aside by the state, quantum of contribution from the private sector and risk return profile.

The fund is aimed at turning Petaling Jaya and Klang into world-class cities based on the concept of conducive, sustainable and smart urban living.

If successful, the fund would be Malaysia’s second sovereign wealth fund after Terengganu Investment Authority (TIA), which has now been transformed into 1Malaysia Development Bhd (1MDB).

TIA was initially set up as a sovereign wealth fund to promote the development of the east coast state but was renamed as 1MDB in 2009.

1MDB has positioned itself as a strategic development company to propel the economic growth of the country. It is primarily involved in the energy sector, real estate development and promoting foreign direct investment.

This content is provided by FMT content provider The Malaysian Reserve


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