Who should benefit from Malaysia's natural resource wealth: today's generation or future generations?

That question lies at the centre of the Ministry of Finance's National Trust Fund, or Kumpulan Wang Amanah Negara (KWAN), Bill 2026.

The bill, which has been passed by the Dewan Rakyat, marks the most significant overhaul of KWAN since the fund was established in 1988. It introduces stricter rules on contributions, withdrawals and governance, with the aim of strengthening Malaysia's long-term national savings.

What is KWAN?

Established in 1988, KWAN was created to preserve part of Malaysia's national wealth for future generations.

The fund works on the principle that revenue generated from finite natural resources, such as petroleum, should not be entirely spent by the current generation. Instead, a portion of that wealth should be saved and invested so future Malaysians can benefit from it.

As of the end of 2024, KWAN's assets stood at RM22.43 billion.

Why is KWAN being reformed?

According to the Ministry of Finance, the existing framework had several limitations.

For decades, contributions to KWAN were largely discretionary, meaning there was no legal requirement for the government to make regular contributions. PETRONAS has remained the fund's only voluntary contributor since its establishment.

The previous framework also did not set clear statutory limits on withdrawals or specify strict conditions on how the funds could be used.

The RM5 billion withdrawal from KWAN in 2021 further highlighted the need for stronger safeguards and clearer governance rules.

The government said these experiences showed the need for a more robust framework to protect KWAN's long-term purpose.

What changes under the new bill?

The KWAN Bill 2026 introduces several major reforms.

One of the biggest changes is the introduction of mandatory contributions.

For the first time, the Federal Government will be legally required to contribute to KWAN. The minimum contribution will include 0.1% of projected annual federal revenue, 2% of PETRONAS dividends received by the Federal Government, and 2% of export duties collected from depleting natural resources, after transfers to state governments.

The contribution rates serve as minimum requirements, while the government may choose to contribute more.

The bill also introduces stricter withdrawal rules.

Funds can only be used for specific purposes, including education, healthcare, climate change mitigation and climate adaptation.

Annual withdrawals will also be limited to 50% of the fund's expected long-term real investment returns, a measure aimed at protecting the principal and ensuring the fund continues to grow. Any withdrawal beyond this limit would require approval from the Dewan Rakyat.

Beyond contributions and withdrawals, the bill also seeks to strengthen KWAN's governance structure.

It proposes the establishment of Kumpulan Wang Amanah Negara (Diperbadankan), a new statutory body responsible for administering, managing and investing the fund.

During the transition period, Bank Negara Malaysia will continue managing KWAN's investments to ensure continuity before the new body takes over.

The bill also introduces a more modern investment framework, allowing the fund to invest across approved asset classes based on a Strategic Asset Allocation approved by the Finance Minister.

At its core, the reform is about protecting Malaysia's wealth across generations.

Natural resources such as oil and gas are finite, meaning the wealth generated from them cannot be relied on forever. By creating clearer rules on contributions, withdrawals and governance, the government aims to ensure KWAN remains a long-term savings fund rather than a tool for short-term fiscal needs.

The success of these reforms, however, will depend not only on the legal framework but also on how consistently future governments uphold principles of transparency, accountability and fiscal discipline.

The bill will next be tabled in the Dewan Negara before completing Malaysia's legislative process.

If enacted, it would represent the first comprehensive reform of KWAN in nearly four decades, reshaping how Malaysia manages its national wealth for generations to come.