KUALA LUMPUR (Nov 21): Permodalan Nasional Bhd (PNB) continues to be committed to upholding Shariah-compliant investments in Malaysia and strengthening its position as an investment institution with products that comply with Shariah principles.

PNB head of Shariah management department Dr Ahmad Basri Ibrahim said PNB aspires to progress with more significant achievements through the continuous implementation of its initiatives to assist in encouraging stability and growth of the Islamic investment industry in Malaysia.

Driven by this objective, PNB is committed to generating sustainable returns for its stakeholders and at the same time, proactively playing its role in safeguarding the public trust in its Shariah-compliant investment operations.

"PNB has its own mandate entrusted by the government and not based solely on profit, hence it is important for PNB to operate a strong process from end to end in selecting investments. We are always cautious as PNB invests using money from unitholders, that is, the Malaysian people.

"PNB has its own asset class and is not easily influenced by the investment trends of other companies. We only invest with conviction," he said in a media briefing recently.

As at Dec 31, 2020, assets under management of the biggest fund manager in Malaysia continued to increase to RM324.5 billion.

100% Shariah-compliant

According to Ahmad Basri, the National Fatwa Council and all state Fatwa Committees in Malaysia have recognised that investment in unit trust funds, Amanah Saham Bumiputera/Amanah Saham Nasional and other unit trust funds under the management company owned by PNB — Amanah Saham Nasional Bhd (ASNB), are investments that are allowed according to Islamic principles.

Additionally, PNB also has its own Shariah Advisory Panel (SAC) that is responsible to give advice and views as well as monitor matters relating to PNB/ASNB unit trust fund investments to ensure they comply with Shariah rules as suggested by the National Fatwa Council.

"PNB focuses on strategic sectors of national importance in line with the main objectives of its establishment, that is, to increase the economic wealth of the bumiputera community and the people of Malaysia," he said.

Ahmad Basri said PNB's SAC, which is currently chaired by Tan Sri Dr Mohd Daud Bakar, is an independent body comprising prominent Shariah scholars, jurists, and financial market practitioners.

The panel meets four times a year and will carry out reviews on the Shariah-compliant status of investee companies every three years to ensure they continue to comply with the Shariah principles.

The next review is scheduled for 2023.

PNB Maqasid al-Shariah screening methodology

Ahmad Basri said PNB is committed to ensuring ASNB unit trust funds are Shariah-compliant based on Shariah principles and the Maqasid al-Shariah screening methodology is agreed by PNB SAC.

He said the size of PNB's investments is so huge that the Islamic financial industry and capital market are not sufficient to accommodate it.

Hence, PNB develops the Maqasid al-Shariah screening, undertake several initiatives to improve and structure its investments to attain its objectives and ensuring they comply with Shariah principles, he said.

"As at Sept 30, 2021, the total market size for over 900 listed companies on Bursa Malaysia was RM1.8 trillion, but for Shariah-compliant companies, the market size was only 67.8%, equivalent to RM1.2 trillion.

"Most companies that do not meet the Securities Commission Malaysia's (SC) Shariah compliance are not because of issues with business activities such as involving in liquor or gaming but due to their financial ratio, wherein the debt with conventional banks exceeds 33% of the total assets of the company.

"Besides Shariah-compliant, PNB Maqasid al-Shariah screening also classifies companies accordingly, by looking at their contributions to the public. Therefore, don't misunderstand if PNB invests in companies deemed non-Shariah-compliant by the SC," he explained.

In 2020, some 75% of PNB's investments succeeded in achieving Shariah compliance according to the SC's Shariah-compliant benchmark, while the other 25% complied with Shariah principles based on PNB's Maqasid al-Shariah screening methodology.

PNB has majority stakes in 10 strategic companies in Malaysia, namely Malayan Banking Bhd, S P Setia Bhd, UMW Holdings Bhd, Sime Darby Bhd, Sime Darby Plantation Bhd, Sime Darby Property Bhd, Velesto Energy Bhd, Sapura Energy Bhd, Duopharma Biotech Bhd, and MNRB Holdings Bhd.

PNB also has more than 10% shareholdings or exposures of over RM1 billion in several selected core companies, among them Telekom Malaysia Bhd, Tenaga Nasional Bhd, Gamuda Bhd, Petronas Gas Bhd, BIMB Holdings Bhd, and Axiata Group Bhd.