KUALA LUMPUR, March 12 — Government-linked investment companies (GLIC) in Malaysia are statutory bodies that are generally allowed to carry out investments through options, private equities and even overseas, while non-GLIC statutory bodies like public universities are only allowed to make low-risk investments, the Finance Ministry said today.

In a written parliamentary reply at the Dewan Rakyat, the Finance Ministry was responding to a question by Kluang MP Wong Shu Qi on whether statutory bodies and non-statutory government bodies are allowed to invest in options, private equities and forex or foreign exchange.

In its reply, the ministry said statutory bodies formed at either the federal or state level are governed by the respective laws that were used to establish them, and that whether statutory bodies are allowed to invest would depend on their respective laws.

The ministry said a statutory body cannot make investments if it is not empowered to do so under the law that was used to form the body, as investments would in such situations amount to "ultra vires” or going beyond these laws.

The ministry also explained the different scope of investments that can be made depending on the type of statutory bodies involved.

It said that some statutory bodies are required to obtain investment approval from the Finance Ministry and that the ministry — when considering the type of permitted investments — would take into account the mandate for which the statutory body was established, the investment risk management and investment expertise of the statutory body.

For federal statutory bodies with GLIC status such as the Employees Provident Fund (EPF), the Retirement Fund (Incorporated) (KWAP) and Lembaga Tabung Haji, they have the mandate when formed with their core activity to make investments and also have teams of officers with expertise in managing investment portfolios, the ministry said.

"With that, generally, GLICs are allowed to invest in wider investment classes including options, private equity, and investments abroad,” the ministry said.

But it also noted that there are risk controls and governance to reduce the risks of losses from investments, such as KWAP requiring the finance minister’s approval to appoint members of its investment panel and to make investments in assets such as buildings and private equity.

"The Finance Ministry also limits the percentage of investment that can be invested overseas,” it said.

The ministry said GLICs with investment expertise have focused on investments with high returns for those agencies such as equities, money markets, debentures and securities.

But for non-GLIC federal statutory bodies, they do not have investment as their core activities and also do not have teams of officers with investment expertise.

"Therefore, federal statutory bodies like public universities are only allowed to focus on investments that are low in risks, stable and return minimum returns, among which are fixed deposits, bonds or government sukuk,” it said.

The Finance Ministry said there are also some federal statutory bodies which are required by the law used to create them to obtain the finance minister’s considerations for all their investments, including the Malaysian Institute of Road Safety Research (Miros), the National Film Development Corporation Malaysia (Finas) and the Social Security Organisation (Perkeso or Socso).

As for entities such as the Human Resource Development Corporation (HRD Corp), they would come under the control of their relevant ministers, it said.