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PNB must be very careful with its investments

August 21, 2017

PNB must give unit holders the assurance it will remain prudent and ethical and not go wayward on the pretext of seeking new investment opportunities.



From TK Chua

I read a news report on Permodalan Nasional Bhd (PNB) intending to hold less cash in its portfolio. Subsumed in it was the intention to invest more aggressively if opportunities arose.

PNB has been performing reasonably well since its inception. Professional management and less political interference have allowed PNB to perform to expectations. I think most PNB unit investors are quite satisfied with the returns so far.

However, since Abdul Wahid Omar took over as chairman of PNB, I have noticed a precipitated decline in dividends declared to unit holders.

Maybe it is too early for me to judge given the evolving economic circumstances and challenging environment. We shall see the expected dividend rates to be declared for Amanah Saham Wawasan 2020 and Amanah Saham 1Malaysia soon, on September 1 and October respectively.

Ahmad Sarji, a former government servant and former chairman of PNB, was in a way, not a gung-ho or adventurous type. Under his watch, PNB performed reasonably well despite numerous challenges, including the crises of 1997-1998 and 2008-2009.

Taking into consideration the issues at FGV and 1MDB, it makes me apprehensive when any new head of a GLC starts talking about “new directions” or finding “new investment opportunities” or wanting to be “more aggressive” in its investment strategies.

Wahid Omar was a professional before he was appointed minister in the Prime Minister’s Department. I have no doubt about his competency and ability.

But then managing a GLC has to do with more than just competency and ability. It is about having prudence, ethical standards, governance and the ability to withstand political expediency and interference. It is the ability to handle moral hazards which small-time investors fear most.

Thousands of unit holders, including many retirees, are dependent on their investments in PNB for their livelihood.

I urge the new leadership in PNB to be very careful and prudent when making the decisions on our behalf.

I believe the top management of PNB, including its chairman, are paid very well. It is time they give us the assurance that PNB will not go the wayward way we have seen in so many other organisations after the change of top management, on the pretext of seeking new investment opportunities.

There are no accusations made here, only caution expressed.

TK Chua is an FMT reader.

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RM266 billion state fund PNB wants to hold less cash


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