Malaysia's sovereign wealth fund Khazanah Nasional is under pressure to show higher returns to boost government coffers, with senior state officials lobbying for changes to its management and investment strategy.

The bulk of the government's direct business investments is managed by Khazanah, which has returned an average of just RM825 million (S$270 million) in dividends annually over the past four years, from its RM145 billion worth of assets. This amounts to a less than 1 per cent return a year between 2013 and last year.

The Straits Times understands that there is a push by some within the Prime Minister Najib Razak's vast circle of advisers to change Khazanah's investment strategy, especially since the fund's managing director, Tan Sri Azman Mokhtar, is due to leave in mid-2019, after a 15-year run at the helm.

Their case is helped by Khazanah's recent struggles, with its net worth adjusted (NWA) dipping since 2014 from RM111 billion to RM102 billion. The NWA's tabulation is unclear, but it largely measures the current value of Khazanah's portfolio plus dividends returned to the Treasury.

In short, it lost 8 per cent of its value or RM9 billion (S$2.9 billion) in public wealth over two years.

Meanwhile, the last time it declared a dividend lower than this year's RM650 million was in 2011.

The opposition believes better returns from state enterprises like Khazanah can help ease Malaysia's fiscal deficit, currently running at 3 per cent of gross domestic product.

Opposition alliance Pakatan Harapan's Budget committee chairman Wong Chen estimates that the fund can and should declare RM2.5 billion in dividends yearly.

"Although its expenditure is not transparent, we find that it spends RM4.5 billion of its revenue each year before declaring its profit before tax. One wonders why a holding company spends up to 80 per cent of its revenue," the Kelana Jaya MP said of the firm, which employs 458 staff in more than eight offices, including in London and San Francisco.

While income tax rates have not risen, public grumbles over the 6 per cent goods and services tax as well as aggressive income tax collection have begun to affect ruling party politicians, who are feeling the heat from the grassroots.

Umno Youth executive council member Rahman Hussin told The Straits Times he has been tasked with raising the issue of non-performing government-linked firms at next month's party congress.

"Khazanah has so many subsidiaries, but as a custodian of public wealth, why is it not creating returns that we can channel back into the economy?" he said.

Khazanah controls some of Malaysia's biggest firms, including state electricity company Tenaga Nasional, telecommunication firms Telekom Malaysia and Axiata, as well as one of the region's biggest banks, CIMB. Its stakes in these four giants alone have garnered RM1.5 billion in dividends this year.

The fund performs poorly when compared with the country's Employees Provident Fund (EPF), which all private workers and employers must contribute to. Since Mr Azman took over Khazanah in 2004, it has returned a total of RM9 billion in dividends, which works out to an average annual return of below 1 per cent of the fund size. Meanwhile, the EPF has added more than 5 per cent annually to its members' retirement savings.

Khazanah's profit before tax - not including unrealised capital gains - also lags behind those of its peers, such as Singapore's Temasek Holdings, China Investment Corporation (CIC), Alaska Permanent Fund Corporation (APFC) and the world's largest sovereign fund, Norway's Government Pension Fund Global (GPFG).

APFC's and Temasek's reported dividend rates are also higher than Khazanah's, while CIC and GPFG are not dividend-paying funds.

When presenting its 2016 annual report earlier this year, Khazanah boasted a cumulative average annual growth of 9.3 per cent in NWA under Mr Azman's leadership. But this growth is lower than that registered by the Malaysian bourse's benchmark Kuala Lumpur Composite Index.

Khazanah did not respond to a request for comment, but the fund and analysts often point to "national service" activities - investments in strategic industries that support government policies - as a factor that could drag down returns.

One such example would be ailing national carrier Malaysia Airlines, which has cost taxpayers more than RM17 billion in bailout packages since the government took control in 2001.

Second Finance Minister Johari Abdul Ghani told ST that Khazanah's succession plan would make increasing returns a priority. "I think that for anybody who is going to run that outfit, certainly that will be part of their KPI," he said, referring to key performance indicators.