KUALA LUMPUR (March 4): Lembaga Tabung Angkatan Tentera (LTAT) aims to reduce its strategic asset holdings to 35% under ‘Project Earth’, while addressing the gap between investment costs and balance sheet value to ensure more competitive returns.
Currently, 62.9% of LTAT’s portfolio consists of strategic assets, said its chief executive officer (CEO) Mohammad Ashraf Md Radzi.
Defence Minister Datuk Seri Mohamed Khaled Nordin announced the revised plan for a more inclusive and strategic approach to restructuring Boustead and its subsidiaries in Parliament last week, without disclosing details.
Speaking at the Public Accounts Committee (PAC) proceeding on Jan 22, 2025 Mohammad Ashraf explained that the project seeks to enhance operational efficiency and productivity, allowing each company within the group to operate within its respective industry and compete effectively against both government-linked companies (GLCs) and private firms.
“How we achieve this — whether through monetisation or other means — is something we need to carefully strategise to ensure optimal value from each transaction. At times, these transactions must be conducted discreetly to protect them from external influences,” said the CEO.
A key concern for LTAT is its low fixed income and financial market exposure, which stands at just 8%, compared to the 20% benchmark for well-managed retirement funds. To address this, the fund plans to reallocate capital from overexposed asset classes and “redirect it accordingly,” he said.
Regarding LTAT’s current investment portfolio, Mohammad Ashraf said the pension fund faces three major challenges: overexposure to strategic assets which yield only 2.9%; a disparity between investment costs and fair value which led to qualified audit opinions prior to 2023; and uncompetitive returns that remain below expected levels.
Mohammad Ashraf said its scrapped restructuring effort, Project Moonshot, has slightly reduced LTAT’s high exposure to strategic assets, but the level still exceeds 50%.
“Addressing this remains a key priority. To resolve this, we have devised a plan to determine which assets LTAT should retain a larger direct shareholding in and which should remain under Boustead’s management,” he said during the proceedings on the follow-up actions by the Ministry of Defence and the LTAT on the recommendations of the PAC report regarding the LTAT.
Project Earth was approved by the LTAT board on Aug 9, 2024, and has been presented to the minister of defence, the deputy minister of finance, and the senior director of Economic and Financial Affairs, Prime Minister’s Office.
LTAT informed the Cabinet about project Earth through a Cabinet Note on Dec 13, 2024. The PAC is yet to be presented with the plan.
The PAC’s report on LTAT in November 2024 warned that further delays in restructuring could force asset liquidations, potentially reducing LTAT’s total value from RM11.5 billion to RM10.5 billion.
The report stressed the urgency of implementing reforms to secure LTAT’s financial stability.
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