Thursday, September 30, 2010


Came across a worrying piece of news in the Straits Times today. Often one has to refer to the foreign media to keep tabs on what's happening in our own country.

The PM is desperately seeking loans to fund its investment projects. Through its secretive 1Malaysia Development Berhad (1MDB), which raised RM5 billion from a bond issue just over a year ago, the government is now looking to tap the Malaysian banking system for another RM5 billion in loans.

The reaction from bankers is one of worry as the loans "will not be guaranteed by the government  but will be settled within three years through a separate issue of state-backed bonds, a fund-raising exercise in which the wealth fund is hoping to raise another RM10 billion."

The fear is that the 1MDB's aggressive fund-raising strategy could turn into a financial debacle that would make the billion-dollar debt accumulated by the Port Klang Free Trade Zone project look negligible. All these loans mean 1MDB will have long-term liabilities of $6.4 billion by end-2013.

I quote from the ST article: "1MDB is the brainchild of Prime Minister Najib Razak. He had originally envisaged setting up a RM10 billion fund for Terengganu, the country's top oil and gas producing state, and tapped Malaysian business executive Taek Jho Low to lay the groundwork for the fund."

Now get this: Jho Low is the very same guy who made headlines recently for partying with Hollywood celebrities such as Paris Hilton at New York nightspots. Would his name inspire enough confidence among banks to agree to the loans?

The government recently unveiled its Economic Transformation Programme (ETP) to lift Malaysia's economy and make it more competitive. The ambitious plans include
  • achieving an annual growth rate of 6% in the next 10 years
  • raising GNI per capita from RM23,700 to RM48,000
  • creating 3.3 million new jobs
  • transforming KL into a world-class city
RM43b is needed for the proposed MRT

To achieve the above, the government would need investments for the following:
  • RM172billion for the Greater KL Plan
  • RM271.6 billion for the oil and gas NKEA
  • RM124.2 billion for the palm oil industry NKEA
I'm only listing a mere few. For the ETP to succeed, the government is hoping the private sector will invest some RM1.27 trillion from now to 2020. But will the private sector have enough faith in the government of the day to deliver?

The PM and other VIPs admiring the ambitious, sprawling model of Greater KL.

Who will end up paying for the billions of debt racked up by our government? Will the taxpayers and the good people of Malaysia be called upon to make sacrifices again? Will we have to dig deeper into our pockets to pay higher taxes, higher prices? Will we be asked to tighten our belts? Will we have to make do with less for ourselves and our children?
There must be more transparency in how the government is spending taxpayers money, what plans it has to drive the ETP, and what debts it is incurring in our name. We have a right to know.


pinsysu said...

sequel to ocean 12?!

Anonymous said...

Billgates has gone to the banks .
why ? does he need loans too !?
NO, the banks DO !!