PUTRAJAYA, Sept 14 — The federal government is bringing back defunct equity fund ValueCap to help boost underperforming shares and stabilise the financial market, Prime Minister Datuk Seri Najib Razak said today in announcing his administration’s measures to address Malaysia’s sliding economy.
For this purpose, he announced a RM20 billion injection for the fund, initiated back in 2002, and added that he is confident it could provide a lifeline to the financial market.
“In 2002, ValueCap was created to support underperforming shares and it had proven to be effective in stabilising the equity market,” Najib told a press conference here.
Among ValueCap’s shareholders are key state investment fund Permodalan Nasional Berhad, state-owned Employees Pension Fund (EPF) and Khazanah Nasional Berhad, which Najib said had profited much from ValueCap’s set-up then.
ValueCap was mired in controversy during the Mahathir administration and faced allegations that the fund was meant to be used as a vehicle to bail out underperforming companies seen close to the ruling coalition.
Putrajaya denied the allegation, insisting that the investment fund was established to help nudge capable but undervalued companies.
Many of the so-called undervalued companies were reportedly affected by the 1998 Asian financial crisis.
Today Najib said the country’s financial market was still in solid shape compared to the crisis period in 1998.
He said many GLCs have since grown and diversified with investments growing overseas. As of June 2015, Malaysia’s investments abroad totalled RM522 billion.
But now Putrajaya is urging the GLCs to reinvest domestically.
“Most of them have already profited abroad so now is the time to bring it back and invest here,” he said.
The announcement was part of the Najib administration’s slew of measures to address trade slowdown.
Najib said Malaysia’s economy remains strong despite setbacks caused by low oil prices and the plunging ringgit, with inflation controllable and unemployment rate low.
He said Putrajaya’s Special Economic Committee will continue to monitor the situation and provide short- and long-term policies to tackle the economic milieu periodically.
