Malaysia to review political representation in govt-linked funds

Malaysia's newly elected Prime Minister Mahathir Mohamad attends a news conference in Menara Yayasan Selangor, Pataling Jaya, Malaysia May 12, 2018. REUTERS/Stringer

KUALA LUMPUR (Reuters) - Malaysian Prime Minister Mahathir Mohamad's new government will review political representation in the country's largest government-linked investment firms, including the main sovereign and state pension funds, the funds have said.

A joint statement from six funds said Mahathir's government, which took power after last week's general election, emphasised the importance of "separation between professional management of the institutions and any undue interference from political or any other external parties."

Malaysia's biggest funds are headed by executives mostly appointed during the nearly decade-long tenure of ousted Prime Minister Najib Razak. It was not immediately clear if any of them would be affected by the review.

The funds include sovereign fund Khazanah, pension fund Employees Provident Fund (EPF), investment fund Permodalan Nasional Berhad (PNB), retirement fund Kumpulan Wang Persaraan (KWAP), military retirement fund Lembaga Tabung Angkatan Tentera (LTAT) and Lembaga Tabung Haji (LTH), a fund for the pilgrimage to Mecca.

These funds control billions of dollars in assets, including significant shareholdings in some of the country's biggest publicly traded companies, including banks.

On Saturday, Mahathir appointed a special team - a 'Council of Eminent Persons' - to advise the government on economic and financial matters for the next 100 days. Former central bank governor Zeti Akhthar Aziz, billionaire tycoon Robert Kuok, among others, were named to the team that is headed by former finance minister Daim Zainuddin.

"For funds that had political representation on their respective board of directors, Daim reaffirmed that this will be reviewed and changed, as required," the funds said in a joint statement, after meeting Daim on Sunday.

Daim also sought feedback from the funds on the outlook for the economy, the market and the ringgit currency.

"Collectively, we agreed that while the market may see some short-term volatility as it factors in changes, the outlook beyond that is positive. We highlighted the emerging consensus of independent commentators that sees this as a historic opportunity to reset the nation's economy," the statement said.

Daim also said the council will be use the government-linked funds and companies to review projects and contract and other issues like toll roads.

(Reporting by Liz Lee and A. Ananthalakshmi; Editing by Raju Gopalakrishnan)