By KINIBIZ
On Wednesday, deputy finance minister Johari Abdul Ghani told Parliament that ailing 1Malaysia Development Berhad (1MDB) can work out its issues without government financial intervention.
In his own words: “1MDB has planned and is implementing the rationalisation measures, including asset sale and equity partnership. We are confident of resolving the amount of debt incurred without government financial assistance.”
The questions arises – can it, really?
Already the government has intervened before — financially. Among other examples, recall in March this year that the government extended what it called “standby credit” to 1MDB amounting to RM950 million. Sources say 1MDB initially asked for much more although in the end the government only allowed this much.
And then we have the latest deal from 1MDB, in which it is selling its entire power assets to China state-owned China General Nuclear for nearly RM10 billion.
To enable this deal to happen, the government exempted the 49% foreign shareholding cap on local power plants so that China General Nuclear can take full ownership – however this relaxation does not extend to the rest of the power sector.
So there, 1MDB has been getting government assistance to rationalise its debts, although to be fair the Johari specifically stated that it does not require “financial assistance”.
Going forward it remains to be seen if 1MDB requires further help – likely so, though whether it would be financial is also up in the air — as it grapples with double-digit billions in borrowings after selling its power assets which accounted for roughly 80% of what revenue it has.
What is certain is that all eyes remain on 1MDB’s attempt to sell a 60% stake in its Bandar Malaysia project and who will bag the stake eventually.
Meantime here are some of our best news, analyses and commentaries this past week for your weekend reading pleasure:
Fixing our housing mess. As homes get too expensive, the low- and middle-income households risk becoming a homeless generation, a scenario we had never seen before in Malaysia. How did we get to this point and how do we fix this mess before it is too late? Read on in our five-part issue series on it here.
Did Bank Negara know about that RM2.6 bil donation? On Monday AmBank said it agreed to pay a penalty of RM54 million to Bank Negara Malaysia, setting aside another RM100 million to improve its governance. But which regulations did it breach? This possibly goes back to the infamous donations. Read here.
Breaking the rules for 1MDB. So this week 1MDB finally announced the winning bidder for its power assets. To no one’s surprise it is a foreign entity offering nearly RM10 billion in cash, but at the same time the government seems to bend the rules specifically for 1MDB to make it happen. Read here.
CGN says may list 1MDB power assets down the road. Barely 24 hours after signing the deal to buy 1MDB’s power assets for nearly RM10 billion, China General Nuclear issued a statement saying it is open to divesting some equity to Malaysian investors and does not rule out an IPO in the medium-term. Read here.
1MDB fire sale reeks of desperation. While we’re on the subject of 1MDB, let’s not forget that it is also selling a majority stake in one of its real estate developments. The entire exercise reeks of the desperation that is driving the company while raising one question: What’s the entire point of 1MDB then? Read here.
TPP ‘access window’ a win for Malaysia, says chief negotiator. As concern brew over a possible hike in medicine prices from the Trans-Pacific Partnership should Malaysia sign, chief negotiator J Jayasiri explains that we have secured an “access window” which may go some way towards mitigating this concern. Find out more here.
Sime Darby starts raising funds. Conglomerate Sime Darby announced plans to raise RM3 billion via a sukuk issue, the first step towards paring down its borrowings which KINIBIZ previously estimated would require some RM6 billion or so. Group chief Mohd Bakke Salleh says the group is taking it one step at a time. Read here.
When Obama did not take questions. One week ago US president Barack Obama was in town and invited dozens of local press to cover a press conference. Yet he did not take one question from Malaysian journalists, only those from US reporters travelling with him. What’s the point then? Read here.
Malaysian ministers say the darndest things, 2015 edition. Quick question, how do you save on highway tolls? Wake up early, says one minister. Seriously. Our resident cat reviews the latest collection of ridiculous incredulities bombarding Malaysia courtesy of our dear national leaders here.
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— by Khairie Hisyam Aliman, News Editor
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