KHAZANAH Nasional Bhd has identified five strategic priorities for the coming years to enable the sovereign wealth fund to fully reap the benefits of economic recovery in the post-pandemic era.
These priorities include (i) further enhancing its commercial returns; (ii) delivering impactful value through its strategic investments; (iii) becoming a responsible organisation through embedding ESG (environmental, social governance) considerations across all investment activities, (iv) building a strong digital and technology foundation, and (v) investing in people to achieve a culture of high performance and collaboration.
“As we gradually expand our global assets portfolio to move away from a reliance on domestic sources of income, we are hopeful that Malaysia as a whole will move towards increasing its economic complexity and do more to make it easier for businesses to open, including further deregulation,” managing director Datuk Shahril Ridza Ridzuan pointed out.
His comments follow the sovereign fund’s Annual Review 2021 which took place today.
“This will lead to a more resilient and diverse economy to mitigate future negative shocks. Being the sovereign wealth fund for Malaysia, Khazanah will continue to focus on investing to deliver sustainable value for all Malaysians.”
Against the backdrop of adverse economic conditions, Khazanah’s profit from operations fell 61% to RM2.9 bil in 2020 from RM7.4 bil in 2019.
While dividend income from its investee companies rose to RM5.2 bil from RM3.8 bil a year ago, this was offset by lower divestment gains of RM2.7 bil compared to RM9.9 bil in 2019.
The impact of the COVID-19 pandemic led to higher impairments of RM6 bil, particularly in its aviation and hospitality assets compared to RM4.9 bil in the previous year.
Even with a poorer performance, Khazanah declared a dividend of RM2 bil for 2020 to the Government as opposed to RM1 bil for 2019.
According to Khazanah, various measures to curb the spread of COVID-19 resulted in the tourism, hospitality and aviation sectors taking a considerable hit. Investee companies such as Malaysia Airlines (MAB), Malaysia Airports Holdings (MAHB) and Themed Attractions Resorts & Hotels (TAR&H) were not spared.
Khazanah had to impair several assets, namely RM3.1 bil for MAB’s parent Malaysia Aviation Group Bhd (MAGB) and RM1.8 bil for TAR&H to account for these effects.
As the sole shareholder of MAGB, Khazanah continues to provide full support and close cooperation in the comprehensive efforts to ensure the national carrier’s sustainability post-pandemic.
Recall that on Feb 22, the High Court of Justice of England and Wales sanctioned a Scheme of Agreement between MAGB’s leasing entity, MAB Leasing Ltd, and the majority of MAGB’s aircraft operating lessors, following unanimous support from the lessors.
“This represents an important component of the wider restructuring exercise which will achieve a reduction in MAGB’s liabilities of over RM15 bil,” noted Khazanah.
“Moving forward, MAGB will focus on working closely with the Government and stakeholders on restarting air travel and promoting industry recovery as well as continuing cash conservation while capturing demand recovery as part of its internal restructuring.” – March 4, 2021