On March 12, the defence minister announced that soldiers had earned 5.35% on their savings, the best rate in eight years. The money reached their accounts the next day.
A soldier has no say in any of this. He pays 10% of his salary into the Armed Forces Fund Board, or LTAT, and the government adds 15%. He cannot move it elsewhere, cannot draw on it before 50 except to buy a home, and cannot read the accounts before the rate is set.
What the announcement did not say is where the 5.35% came from.
Its own chief executive has said part of it. The fund’s largest holding is the businesses it owns and runs. They return 2.9% a year. Mohammad Ashraf Md Radzi said so last year, to the committee of MPs that checks how public money is spent. The fund credits members with almost twice that. One number is what the businesses earn. The other is what soldiers are told they earned. Picture a shop that makes RM3 for every RM100 of stock on its shelves, then pays the owner RM5. The extra has to come from somewhere.
What was sold
For three years, the fund has been selling the businesses that earn its money. It bought out the rest of Boustead Holdings in 2023 and took it off the stock market. With no outside shareholders left to object, any part of the group could now be sold. It sold most of its Affin Bank stake to the Sarawak state government. The fund now holds about 22%. Sarawak is the bank’s largest owner.
It is trying to sell Boustead Plantations for a reported RM2 to RM3 billion, four to six times its annual payout.
It tried once before. In 2023, it agreed to sell a third of that company to Kuala Lumpur Kepong for RM1.15 billion. The deal collapsed that October after political objections that a plantation company in bumiputera hands would pass to a non-bumiputera buyer. LTAT gave the buyer back its RM229 million deposit. The fund bought the company outright instead.
What the sales paid for
The rate soldiers get fell from 8.27% in 2017 to 2.0% in 2018, when new management stopped promising money the fund did not have. It climbed back to 5% for 2022 and stayed there for three years.
The rate barely moved. The cost of paying it jumped.
Last year LTAT handed out RM524.74 million, more than 96% of everything it earned. The year before it handed out RM514.2 million, which was 87.5%.
A fund paying out nearly everything it makes has little set aside for a bad year. LTAT has not said where this year’s money came from. It said it had RM541.56 million to hand out. It did not say how much was rent and dividends on what it still owns, and how much was cash from sales.
Rent arrives again next year. A sale arrives once.
What is left
Under a plan it calls Project Earth, approved by its board in August 2024, it wants the companies it owns and runs to fall from 57.8% of everything it holds to 35%. The defence minister gave those figures to parliament in November. It plans to keep selling until 2030.
Spreading the money is safer. If one company fails, less of the fund goes with it. Each sale also produces a profit that helps pay the dividend.
The case the other way
The fund is in better shape than it was in 2018. The money it keeps back for bad years grew to RM1.31 billion, faster than the payout.
Pharmaniaga supplies medicines. LTAT owns part of it. It has made a profit for eight quarters running and should soon come off the stock exchange’s watch list for companies in trouble. A parliamentary committee warned in November 2024 that Boustead’s cash problems could wipe out up to half the fund’s money. That warning has receded, largely because of the sales.
We are not saying the fund cannot afford the dividend.
Three years of rising payouts have run alongside a sell-off the fund has committed to continue, the assets being sold return 2.9%, and nothing published shows what happens when the selling stops.
In March, the minister announced a number and the soldiers applauded. None of them can check where it came from, and none can take their money anywhere else.
