This article first appeared in The Edge Malaysia Weekly on July 13, 2026 - July 19, 2026

HRD Corp’s financial investments have expanded markedly over the past decade, growing from RM157.75 million in 2016 to RM1.92 billion in 2025. The composition of the portfolio has also evolved significantly. In 2016, the agency’s investments were limited to quoted securities and unit trusts before venturing into financial derivatives in 2020 through put and call option arrangements linked to equity investments. In 2023, it added redeemable convertible cumulative preference shares (RCCPS), further broadening its range of financial assets.

The shift reflects HRD Corp’s growing appetite for financial investments, from relatively conventional assets to a portfolio incorporating more sophisticated financial instruments.

At the same time, HRD Corp’s cash and bank balances have remained substantial, almost doubling from RM1.25 billion in 2016 to RM2.39 billion in 2025, after reaching a peak of RM2.46 billion in 2023. The agency’s combined holdings of cash and financial investments now exceed RM4.3 billion.

The scale of these financial assets increasingly resembles that of a mid-sized investment institution. HRD Corp was established under the Pembangunan Sumber Manusia Bhd Act 2001 to collect employer training levies and administer the Human Resources Development Fund to develop Malaysia’s workforce through training and skills development.

HRD Corp’s total income grew 37% from RM243.53 million in 2021 to RM333.58 million in 2025, driven by higher operating income from investment returns, service fees and other commercial activities, alongside non-operating gains such as fair value changes in investments.

Over the same period, total expenses climbed 64% from RM231.47 million to RM379.38 million, reflecting higher operating costs, fair value losses on derivatives and expected credit losses, as well as spending on development activities. By 2025, total expenses had exceeded total income, resulting in an overall deficit for the year. HRD Corp also recorded deficit in 2018.

HRD Corp’s flagship annual event, the National HRD Conference, has also become a growing source of income, generating RM11.21 million in 2023, RM11.3 million in 2024 and RM14.79 million in 2025. Organising costs remained high, however, at RM10.93 million, RM10.71 million and RM11.72 million respectively, leaving only modest financial returns from the event.

HRD Corp’s investments in financial derivatives recorded significant fair value losses in 2020, 2022 and 2025. While gains in the fair value of other financial investments have partly offset those losses, it should be noted that its hedging positions have grown increasingly large.

HRD Corp began using financial derivatives in 2020, acquiring put and call options to hedge the price risk of selected equity investments. The fair value of its put options rose from RM16.09 million in 2020 to a peak of RM81.01 million in 2024 before falling to RM29.13 million in 2025, while the fair value of its call options widened from a liability of RM31.35 million to RM137.44 million over the same period. 

Consequently, HRD Corp’s net derivative position fluctuated from a liability of RM15.26 million in 2020 to an asset of RM11.15 million in 2021, before reverting to a net liability that deepened to RM108.31 million by 2025.

According to HRD Corp’s 2025 annual report, the put options allow the agency to sell its shares back to the original vendor at the original purchase price plus an annual premium of 8% to 8.5%, while the call options give the vendor the right to repurchase the shares on similar terms.

The widening gap between the fair value of the put and call options highlights the growing financial risks in its investment portfolio. When the prices of shares held by the agency fall, vendors are unlikely to exercise their call options to repurchase the shares, leaving HRD Corp holding the investments. As the fair value of the call option liabilities has grown, the agency has become increasingly exposed to falling equity prices despite the intended hedging structure.

The HRDF is financed by levies collected from employers and is intended to support the training and development of employees through approved training grants.

A major expansion of the HRD Corp levy on March 1, 2021, to cover almost all private sector employers resulted in levy collections nearly doubling from RM474.86 million in 2020 to RM847.97 million in 2021, before more than doubling to RM1.81 billion in 2022.

Previously, only the manufacturing, services, and mining and quarrying sectors were subject to the levy. The expanded scope brought industries such as retail, food and beverage, construction, agriculture, education, healthcare and professional services into the levy system.

Since then, both levy collections and grant disbursements have continued to increase, with collections rising to RM2.53 billion in 2025 and grant payouts more than tripling from RM758.34 million in 2022 to RM2.44 billion in 2025. Even so, the fund’s year-end balance has continued to expand, almost doubling over four years from RM1.96 billion in 2021 to a record RM3.91 billion in 2025.

Read also:
Cover Story: HRD Corp faces an uphill task

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's App Store and Android's Google Play.