While we are rattled by the Allah controversy and the spate of attacks on places of worship, others are eyeing big bucks – in Sarawak.
The State Grid Corporation of China (SGCC), one of the world’s largest utility firms, and 1Malaysia Development Berhad (1MDB) have signed an agreement to enter into joint venture negotiations to undertake projects reportedly worth up to RM37 billion (US$11 billion).
The agreement reportedly involves the construction of three hydroelectric dams and a smelter plant in the Sarawak Corridor of Renewable Energy (Score) – and that’s just for starters. What are they going to do with all that electricity? Feed it to power-guzzling smelters, it would seem – and perhaps transmit the rest to the peninsula? What kind of impact will that have on local indigenous people, their land and the environment, especially Sarawak’s rainforests (what’s left of them) and the biodiversity? Don’t ask.
Among those witnessing the signing of the agreement between the two parties on 11 January was PM Najib, who is the chair of 1MDB’s Board of Advisors, Sarawak Chief Minister Taib Mahmud and SGCC President Liu Zhenya.
1MDB is a “strategic development company” owned by the Malaysian government. The firm started life as the Terengganu Investment Authority (TIA), which was set up to manage Terengganu’s RM1 billion annual revenue from oil royalties under what would be the country’s second sovereign wealth fund. TIA was established with the approval of the federal and state governments in March 2009, around the time Najib was set to take over as PM.
One of the key figures who advised the King (who comes from Terengganu) to establish the TIA is a now familiar figure, Low Taek Jho, better known as Jho Low, reported the Edge on 14 December 2009. (Low was reportedly described as being part of Najib’s inner circle and having close ties with Middle East investment funds. He is also group advisor/non-independent non-executive director of UBG Bhd, whose chairman is Mahmud Abu Bekir Taib, son of Taib Mahmud. UBG has acquired a couple of CMS companies.)
The original idea behind TIA was to create a sovereign wealth fund with RM5 billion from the federal government and another RM6 billion to come from Terengganu’s securitised future oil royalties receivable from Petronas.
After reported problems over who should control the fund, TIA was turned into a federal entity, 1MDB.
1MDB raised RM5 billion by issuing 30-year government-guaranteed bonds with a coupon rate of 5.75 per cent, in a deal arranged by AmInvestment Bank. Questions were raised about who the investors were, how it was sold in the secondary market, and the sell-down spread compared to the Malaysian government securities’ benchmark. 1MDB responded that it acted on professional terms to secure the most competitive terms possible.
1MDB is managed by a 33-strong team helmed by Shahrol Halmi, previously of Accenture Malaysia. The firm has so far invested US$1 billion in a US$2.5 billion joint venture partnership with Petro-Saudi International Limited. This is supposed to “spearhead the flow of foreign direct investments from the Middle East as well as make strategic investments in high-impact projects here”.
Question: If – and that is a big if – Sarawak falls to the Pakatan in the coming state election, will Pakatan be bound by this cooperation agreement in Sarawak? What is Pakatan’s stand on this?
By the way, does anyone know what happened to ValueCap?