It was reported by a business newspaper,The Edge Malaysia that the government under
its 1MDB initiative has parked RM 18.1 billion of the country’s money overseas. The
Edge Malaysia which is also a part of The Edge Media Group (the same company who
bought the notorious political tabloid The Malaysian Insider) accused the government
of appointing unnamed financial managers and institution to manage the said fund.
Their lies is further elevated by their call for the public to urge the government
to bring back all the money home.
It is one thing to critic the government in its ways of investing the
nation’s money, but it’s another thing to fabricate facts in order to
support your assumptions.
Some even as far fetch as stating that the 1MDB takes a big portion of our very own
sovereign wealth fund (SWF) and use it for purely commercial purposes. This is
untrue as the 1MDB never claimed it was or an agent for the SWF. The 1MDB body
originates as the T.I.A. (Terengganu Investment Authority), after it has been
federalized in 2009, the T.I.A or now known as 1MDB became a national entity.
Basically, now the 1MDB is a development company wholly-owned by the Government of
Malaysia.
Some say because of the 1MDB our national debt has never been higher.
But the truth is all of 1MDB’s debts are backed by solid assets, with
healthy cash flows and strong growth potential beyond their finite life.
This means should there be a default, which is very unlikely at this
point, 1MDB’s assets would have covered any fallout. The level of
gearing for 1MDB is more than matched by the value of its assets. Total
assets stood at RM46 billion at the financial year end of March 2013,
compared to total debt of RM37 billion.
Thus 1MDB’s debt does not pose any significant risk to the sovereign’s rating and
stability of Malaysia. As a private limited company, any exposure of its risks to
the government is limited. The government guarantees only RM5.8 billion of 1MDB’s
total loan, and 1MDB has proven to be a good paymaster. It has never missed any
payment schedule.
As a public-private initiative aimed at catalysing critical industries
the 1MDB has specific challenges making them difficult for the public or
the private sector to tackle on their own. Thus it was give a small
start-up fund from the Government of Malaysia for RM 1 Million and a
Government guarantee of RM 5 billion worth of initial investment
borrowings.
Regarding the IPP (Independent Power Producer) the government has done
well in determining the outlook of our investments in the energy supply
sector. After identifying and purchasing energy assets ripe for
development, 1MDB has gone on leverage on these assets to win new power
plant projects in gas, coal and renewable energy. The success of this
business plan is due to bear fruition in the future listings of 1MDb’s
energy arm, projected to be one of the largest in South East Asia,
valued at a minimum of US$3billion (RM9.6billion). Even at this
conservative valuation, it almost fully covers the cost of acquisition
for all 3 plants 1MDB purchased. (Tanjong RM8.5b + KLPP RM2.3b + Jimah
RM1.2 b = RM12b). This does not even include the revenue that these
plants bring in yearly or the value of the new plant contracts 1MDB has
won since. Project 3B alone is worth RM11 billion.
The 1MDB takes pride in its corporate social responsibility activities.
As a responsible organisation, wholly-owned by the Government, 1MDB’s
CSR is part of the overall philosophy, not an afterthought. 1MDB’s CSR
activities are focused on three areas: education, quality of life, and
youth development.
These areas elevate Malaysians in need from basic worries from but not
limited to improving their homes and infrastructure to then be able to focus
on talent development via education and supporting skills for youth, which
1MDB also offers. As of July 2014, 2,786,694 Malaysian have directly
benefitted through programmes such as scholarships, school upgrades,
entrepreneurial training, energy and water infrastructure building, and
mobile healthcare for rural areas in Malaysia, sports and youth skills
development.
Maybe next time The Edge or any other newspaper need to check their facts
first before committing another false accusation that is intended to pit
the people against the government. They are lucky that by the laws of this
blessed country that criticising the government or a government related
body is not a crime. Imagine if they did this to a company or any other
corporate bodies. They would be “served” in a matter of hours.
Saturday, September 13, 2014
The Truth behind 1MDB
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