Friday, September 12, 2014

Getting at Mohd Najib Through 1MDB

A Kadir Jasin

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HAVING withdrawn his support for the Prime Minister, Mohd Najib Abdul Razak, the former Prime Minister, (Tun) Dr Mahathir Mohamad, on Sept 10 added insult to injury.

He questioned the integrity of the Prime Minister’s pet corporation – 1Malaysia Development Berhad. It is like what the Malay proverb says “pukul anak sindir menantu.” You can’t beat Mohd Najib you beat his favourite undertaking.

Expressing his concern over the debt being amassed by the sovereign wealth fund, Dr Mahathir said it could overwhelm the government’s already strained finances.

He asked why Malaysia needs a state investment fund like 1MDB, when it is heavily in debt, pointing out that such a company is usually formed by countries with large government surpluses.

“The money for 1MDB is not from the country’s surpluses. It is borrowed. The billions of ringgit borrowed add massively to the nation’s debts. Debts taken by the country must be repaid. If not we will become insolvent like Argentina. A country that suffers deficits annually will not be able to repay debts of this size,” he wrote in his blog on Sept 10. (Read more here).

Very few people outside the PM’s inner circle know for sure how much debts 1MDB has accumulated and its true financial standing. The public is generally suspicious of the stories the company tells.

In June, it issued a statement assuring the public that its debt “does not pose any significant risk to the sovereign rating and stability of Malaysia.”

It said that its debt totalled RM37 billion for the financial year ended March 31, 2013.

In a textbook response to public concern it said: “As a limited liability company, 1MDB poses limited liability risks to the government as its shareholder.

“The government guarantees RM5.8 billion of the group’s total loan on which 1MDB has significant interest cover. 1MDB has never missed any payment schedule.”

It has repeatedly delayed the launch of its electricity IPO. Media reports suggest that it is now delayed to 2017.

The public in general may not be aware that 1MDB has been borrowing from them. If they know, they would understand Dr Mahathir’s worry.

For instance, in March this year, 1MDB issued RM1.5-billion worth of Sukuk (Syariah compliant bonds) and the buyers were the Lembaga Tabung Haji (LTH) and Permodalan Nasional Bhd (PNB). Ironically the LTH GMD/CEO, Ismee Ismail, is on the board of 1MDB. (Full board here).

What Now Dr M?

TO someone who loves to banter, Dr M must have found Mohd Najib’s not-so-elegant silence frustrating. Silence of that nature can be deafening.

In short it says, Mohd Najib is saying, Dr Mahathir can say whatever he likes, but I am the PM and I do whatever I like.

Dr Mahathir’s latest jab came at the wrong time for Mohd Najib. After five years of positioning himself as the great transformer, who gets the recognition? His high-profile Pemandu CEO, Idris Jala.

The Sarawakian was named one the 50 most influential policymakers in the world by Bloomberg Markets. The US-based magazine credited the 56-year-old Sarawak senator with “making it easier to invest and do business in Malaysia as he shapes economic policy meant to help the country catch up to its more-developed neighbours.”

Still Dr Mahathir stops short of doing the ultimate – calling for Mohd Najib’s resignation. That was what he did with (Tun) Abdullah Ahmad Badawi in the aftermath of the 2008 General Elections.

Within months Abdullah was put out to the pasture and in came Dr Mahathir's ultimate choice – Mohd Najib Abdul Razak. Ahhhh… the wheel of time keeps on turning.



the economist said...

Datuk AKJ,
I read with interest Datuk’s writing about corporatocracy as the new power replacing politics and bureaucracy in the Malaysian Business. I think 1MDB is an example of Corporatocracy at play.

1MDB may be a government company intended to be benefit the people. But the idea of its formation and its modus operandi, especially the involvement of shadowy figures like Jho Lo and his Arab associates, point to corporate endgame.

I think the government is in there only to give legitimacy and as the initial funder.

Benefit to the people is not its main objective. It is incidental to 1MDB business, which is to benefit large corporations and shadowy investors, commission agents, lobbyists and unscrupulous politicians.

Look who are benefiting from 1MDB businesses? All the power companies like YTL, Ananda Krishman’s group, Genting and Jimah. They have all sold their aging power plants whose power purchase agreements with TNB are running out to 1MDB.

Some of these companies immediately used the proceeds to start new businesses or to invest abroad like YTL which is negotiating to invest in power companies in India.

But there is nothing more dangerous than the government standing guarantor to 1MDB mounting debts and forcing Bumiputera trust agencies like PNB and Tabong Haji to subscribe to 1MDB bonds.

Datuk, Mohd Najib may lose the election or may even be thrown into jail, but we, our children and their children will have to carry the burden of 1MDB like we are now carrying RM13 billion that MAS owes us. So what Tun Dr Mahathir said is very important to all of us.


zainal abidin awang kechik said...


Perlu ambil ikabal dari sekatan Moscow terhadap barangan Dari eropah . Sekatan ini melimbatkan lintang pukang pasaran modal Antarabangsa .. Negara tidak boleh Di takbir mengikut nasihat orang orang BANK .. Kerna mereka banker tak tahu bagaimana saudagar bawahan berdagang... Jika kita ikut bank maka kita Kena telan

ab said...

Salam Dato,

Interesting topic.

Debt in any name is still a debt.

Do not worry dato..ada duit bolih bayar,takdak duit pinjam lagi untuk bayaq hutang lama dengan buat hutang baru...NORMAL ACTIVITY for ALL MALAYSIAN POLITICIANS (the past and the present laa) for that matter, and perangai banyak orang malaysia lain juga.... sebab itu domestic debt is so high,more than 80 %of GDP.

Anyway, saya tidak fikir PM janji that HE WILL PAY FOR THE DEBT, tak gitu?.

Mana mungkin untung business apa pun kalau pinjamam modal betui sebanyak 37 bilion..kalau margin 1-2% untung pun tak bolih bayar interest,tak mungin bolih bayar hutang tu,kecuali gagau duit dari tempat lain ie EPF,TH,LTAT,PNB etc.... kalau GAGAU TAK KENA BAYAQ balik!.

Abu Bakar Ab Rahman

kluangman said...

Jangan bimbang, selepas 1april..kita semua, rakyat tolong bayar melalui GST...

About Me

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I was born in 1947 in Kedah. I came from a rice farming family. I have been a journalist since 1969. I am the Editor-in-Chief of magazine publishing company, Berita Publishing Sdn Bhd. I was Group Editor NST Sdn Bhd and Group Editor-in-Chief of NSTP Bhd between 1988 and 2000. I write fortnightly column “Other Thots” in the Malaysian Business magazine, Kunta Kinte Original in Berita Harian and A Kadir Jasin Bercerita in Dewan Masyarakat. Books: Biar Putih Tulang (1998), Other Thots – Opinions & Observations 1992-2001 (2001), The Wings of an Eagle (2003), Mencari Dugalia Huso (2006), Damned That Thots (2006), Blogger (2006), PRU 2008-Rakyat Sahut Cabaran (2008), Komedi & Tragedi-Latest in Contemporary Malaysian Politics (2009) and Membangun Bangsa dengan Pena (2009).