Finally some good news after so many uncertainties surrounding Malaysia's 1MDB. The $9.4 billion (RM40.4 billion) debt is one of the biggest financial scandal in the country. Prime Minister Najib Razak has been criticized heavily both by Opposition party and within UMNO, especially by former Prime Minister Tun Mahathir but he has persevered on...the result: a reduction of the billion of debt. Prime Minister Najib Razak has pleaded for patience from all parties and to give 1MDB til end of last year (2015) to settle the huge debt and on Thursday, 31st December 2015, Prime Minister Najib Razak said that 1Malaysia Development Bhd. will trim its debt by 40.4 billion ringgit ($9.4 billion) once it completes agreed asset sales, after the state-owned fund announced its latest asset-disposal pact.
|Photos credit to http://1mdb.net/|
1MDB said earlier Thursday it would sell a 60 percent stake in a Kuala Lumpur project known as Bandar Malaysia Sdn. to a joint venture between Iskandar Waterfront Holdings Sdn. and China Railway Construction Corp. for 7.41 billion ringgit.
The disposal is part of a broader plan the company announced in February to unwind its assets after drawing criticism from lawmakers for amassing about 42 billion ringgit of debt in its less than five years of existence.
“1MDB’s major challenges are now behind it,” said Najib, who heads the fund’s advisory board, in an e-mailed statement. “All that remains is for the deals it has entered into to be completed and the final steps of 1MDB’s rationalization program to complete.”
A RECAP ON 1MDB IN 2015
Here's a recap on the heavily scrutinized entity after the Kuala Lumpur based company came close to a loan default earlier in 2015.
- As of March 2014, 1MDB had a total debt of $9.8 billion.
- Faced cash flow problems and a planned initial public offering of its energy unit was delayed amid unfavorable market conditions.
- The listing was canceled, and in November, the company agreed to sell the assets to China General Nuclear Power Corp. for 9.83 billion ringgit.
- According to a Dec 17 statement, 1MDB has also entered into an agreement with International Petroleum Investment Co. for the Abu Dhabi company to assume its obligation for a $3.5 billion bond, including principal and interest.
- A sale of 60 percent stake in a Kuala Lumpur project known as Bandar Malaysia Sdn. Bhd. to a joint venture between Iskandar Waterfront Holdings Sdn. and China Railway Construction Corp. for 7.41 billion ringgit.
While the 1MDB's debt crisis would be a forgotten nightmare now that we begin 2016, the question on accountability and transparency remains a big question mark.
According to Bloomberg report, James Lau, a Kuala Lumpur-based investment director at Pheim Asset Management Asia Bhd, which oversees $300 million, said , "The sales will resolve 1MDB's financial issues but the bigger issue has always been accountability and transparency.”
"The asset sales so far have managed to pare down 1MDB’s debts substantially. If the strategic fund was not debt-laden, it would have been a cash-rich entity by now," Edge Weekly said.
PM Najib Razak said he kept his promise
Malaysian Prime Minister Najib Razak on his New Year's message said he had kept his promise to rationalise the debts of troubled state fund 1Malaysia Development Berhad (1MDB).