At noon, 1MDB’s “five business day cure period” was scheduled to expire.

What do you call it when a “sovereign wealth fund” (or should it be “sovereign borrowing fund”) is unable to pay a debt? A technical default? Or something far more serious.

The alarm bells were already ringing a few years ago, when if not for RM5.0bn in property revaluation gains (paper gains) booked into the accounts, 1MDB’s shareholders’ funds would already have been in negative territory – a real sign of trouble.

Perhaps 1MDB will be able to negotiate a one-month extension period to sort out its “technical matters”. But the deadline, if missed, already leaves a bad taste in the mouth.

And a one-month extension would take us to 31 August 2017 – not the best way to celebrate the 60th Merdeka of the peninsula. Certainly, Jho Low won’t be popping any champagne bottles this time.

So we are now in uncharted territory. And many Malaysians simply cannot understand how the Pas leadership can say they are puas hati (satisfied) with 1MDB CEO’s Arul Kanda’s explanation. If anything, they should be demanding that he appears before Parliament to give a frank and detailed explanation.

Coincidentally or otherwise, the new tourism tax on foreign tourists (RM10 per hotel room per night) takes effect on 1 September.

Please help to support this blog if you can.

12 COMMENTS

  1. One way or another, public will pay 1MDB’s debt
    https://m.malaysiakini.com/news/391338

    Since 1MDB’s “rationalisation” exercise in 2015, it has has exhausted of its fund. Its assets have been transferred to the Finance Ministry Inc (MOF Inc) while its debt guaranteed by the government. It is now a shell company with no asset. It will end up using public funds to repay debts!!!

      • The ECRL will be funded by a loan from China’s state-owned Exim Bank, with the Malaysian government, i.e., taxpayers, serving as guarantor. Thus, the risk and liability will be completely borne by Malaysia.

        So, Malaysia will essentially be borrowing money from a China bank to pay a China company to build ECRL. Very little of the loan will get to Malaysia as the Exim Bank loan will be used to pay CCCC. Malaysians will bear all the risks for ECRL while the China firms are guaranteed profits by Malaysians.

        https://m.malaysiakini.com/news/391563

        Will the ECRL be an expensive ‘white elephant’ paid for by Malaysians for many years to come? The Kemaman-Kuantan rail link, completed several years ago, has hardly been used to date.

      • 1MDB must disclose where funds to pay IPIC came from
        https://www.malaysiakini.com/news/391681

        Kim Quek: 1MDB has made a US$350 million payment to the International Petroleum Investment Company (IPIC). The payment was made before the investment firm was scheduled to pay IPIC US$310 million on Aug 12, as part of its settlement with the Abu Dhabi state-owned fund.

        The coincidence of the announcement of 1MDB’s payment to IPIC two days after the joint ground-breaking ceremony of the East Coast Rail Link (ECRL) project evokes the memory of the leaked information from China in July 2016 that the price of ECRL was allegedly doubled up to cover 1MDB’s debts.

        In an article by Sarawak Report on July 26, 2016, screenshots of the leaked documents were published to show how the originally estimated cost of RM30 billion was purportedly inflated to RM60 billion to pay off 1MDB’s debts in advance (allegedly to meet IPIC debts) and progressively thereafter.

        And unless the government truthfully discloses its specific source of funds for the IPIC payment and the feasibility study undertaken by its own consultant that showed construction cost at half of current cost, one is inclined to associate the ECRL-China contract with 1MDB’s debt payments.

  2. Supposedly no. Apparently Bandar Malaysia with financially unviable ECRL may be enough to convince Xi JinPing to do the deal to bail out IPIC without the Chinese having to launder money for Najib. Never mind our kids, pension and old-age healthcare are royally screwed.

    But Rex Tillerson promise to rein in DOJ, I think Najib still believe US is not so different than Malaysia where the rich and powerful can do with impunity regardless of rules and procedures. He will learn DJ Trump is a bad faith negotiatior

    • The Justice Department on Thursday (Aug 10) asked a judge in Los Angeles to put on hold civil forfeiture lawsuits against assets acquired by Malaysian financier Low Taek Jho, also known as Jho Low, because pursuing these may have “an adverse effect” on its ability to conduct the criminal investigation.

  3. By 13 August 2017, Malaysians will have to bear the national title of ….
    Even those with pawn shop debts/borrowings are doing far, far better as they have tangible collaterals.

    High time for wives to report corrupt politician husbands to MACC to avoid being charged as Malaysian Bonnie + Clyde criminals.
    Read: MACC: Wife protecting corrupt hubby can be charged too
    http://www.news365.my/content/5366493

    Hope (wishing the near impossible) MACC means what it said with 2 fingers symbol of public confidence.

    • Perhaps we are asking too much. Despite the vast promises, threats, expenditure, organisation and manpower, they seem to have great difficulty tackling (1) illegal immigrants coming on a daily basis at many points of our borders, some with low-cost goods to sell – forget the big-time smugglers (2) professional beggars on the streets with babies (3) foreign hawkers (4) takeover of shops by illegals (5) brothels, illegal by current “public morals” (6) widespread, illegal gambling (7) loan sharks who advertise their phone numbers (8) investment, housing development and other conmen (9) poor public contracts, unauthorised approval and payment for poor or incomplete work (10) reliable water supply (11) abusive teachers (12) student gangsters (13) “unregistered” schools (14) poisonous goods (15) profiteering from illness (16) generous pay rises close to elections (17) staying within budgets…

  4. Where is our Saudi benefactor who generously ‘donated’ to the PM, who, incredulously, ‘returned’ the money because he found no use for it (technical blunder?)??

    New deadline on 31 August Hari Merdeka!

  5. Sovereign rating will affect ringgit value in global market performance.
    EPF may be used to monetise debt payment?

LEAVE A REPLY

Please enter your comment!
Please enter your name here