1MDB: Is RM60b enough to pay for RM41.7b?
In his latest statement, DAP MP Tony Pua has alleged that Malaysian Tax-payers will have to bail-out 1MDB to the tune of RM41.7 billion
After the majority of bank loans and short term debts have been settled by 1MDB in their past rationalization exercise, Tony Pua’s statement lists out the remaining liabilities for 1MDB and details how he comes out with the RM41.7 billion figure.
Because 1MDB simply does not have any more substantial tangible assets or cash in its books, the Malaysians taxpayer will have to pay for most of 1MDB’s still-outstanding debts including:
* RM5 billion 30-year bond guaranteed by the federal government issued in 2009;(Due only in the year 2039)
* US$3.5 billion 10-year bonds issued in 2012, now guaranteed by MOF Inc;(due in the year 2022)
* US$3 billion 10-year bond issued in 2013, guaranteed with a ‘Letter of Support’ issued by Finance Minister Najib Abdul Razak; (due in the year 2023)
* US$1.23 billion borrowed from IPIC in 2015, guaranteed by MOF Inc; (it is actually an advance on the settlement – not a loan but it is due to repay by end of 2017)
* RM800 million loan from Socso in 2010, guaranteed by the federal government; and
* RM2.4 billion sukuk issued in 2013, which have already been assumed by MOF. (due in 2022)
The above sums up to RM8.2 billion and US$7.73 billion, (exchange rate USD1-RM4.33) or a combined total of RM41.7 billion.
* notice that other than the US$1.23 billion due within this year, the rest are all long-term debts.
Tony alleges that 1MDB has no more assets as these assets are now transferred from 1MDB to the Ministry of Finance (MOF).
Only lying politicians would say that assets are transferred but MOF do not need to take care of the liabilities.
When you transfer “businesses”, you transfer BOTH the assets and the liabilities attached.
In any case, it doesn’t really matter as 1MDB has always been 100% owned by tMOF. Whether the assets and liabilities are parked under 1MDB, which is parked 100% under MOF or the assets and liabilities are parked under different subsidiaries or holding companies under MOF, the end result is still the same.
The opposition will never admit that 1MDB’s current situation has been mitigated and well-managed or the rationalization plan has been successful.
Pakatan has invested too much time and energy over the past 3 years to attack 1MDB and will not give up now as the general elections are near.
They will just continue attacking 1MDB using any excuse. They simply cannot stop now as their entire elections campaign strategy will fail immediately.
Anyway, to examine Tony Pua’s claim, let us examine what are the assets left over from 1MDB’s businesses:
1. Remaining land in TRX and share of Lend Lease’s LifeStyle’s quarter – RM8 billion
After selling about 60% of the land in Tun Razak Exchange (TRX), there is still 40% of land left for sale which the govt says they would not sell in the next two to three years until the infrastructure is ready to allow it to unlock higher value and premium later.
The Govt also have ownership of 40% share in the June 2014 Joint-Venture for the 17 acres TRX LifeStyle Quarter project with Australia’s Lend Lease group with a gross development value of RM8 billion.
This project comprises a retail mall (which is already 25% leased out) and due to open in the year 2020, 6 residential block and a luxury hotel. Lend Lease is among the largest international property group and is in charge of funding the development (govt contributes the land and helps with approvals) and marketing them world-wide to its international clients.
At the present moment, this 40% remaining TRX land and 40% share of the LifeStyle Quarter is worth approximately RM8 billion but is expected to increase further as the infrastructure is put in place and due to property appreciation.
2. 100% of Bandar Malaysia land – RM26 billion
After the recent cancellation of the sale of 60% share in the Bandar Malaysia project signed in Dec 2015, the government now owns 100% of the land and project.
After value-enhancement, development plans completion, various approvals granted and increased visibility for the project, the former buyers had valued this land as high as RM26 billion today compared to RM10.35 billion valuation when the sale agreement was signed two years ago.
