It is not rocket science to understand that the PM’s Make in Malaysia programme will be derailed without fresh investment. When first world outrage meets third world reality, what we get is a surfeit of legislation and a spiraling deficit of justice. We can enact all the laws we want, but in a country where very few interactions with the forces of administration occur without needing force or inducement the law on paper not only becomes ineffective, but it often turns into an instrument of exploitation. We seek minute perfection at the top, but make do with routine injustice at the bottom, and react only when the injustice turns horrific, preferably in a large metro town involving someone from the educated middle class. The disinterest in fixing the realities on the ground means that every new incident that displeases us, creates fresh outrage and new acts of tokenism. The cycle is seemingly never-ending, and hopes that someday, the realization will dawn that nothing has really changed, have so far been belied.A rule of law is not about creating the best legislation, but it is about creating a sense of predictable order. It comes from people knowing that there is a discernible relationship between action and consequence and that there is a price to pay for crossing boundaries that have been set. When things work as they are meant to, in an everyday unglamorous way. Where getting routine tasks accomplished is an act that is truly routine, and not a heroic endeavor. An environment of certainty needs the uneventful discharge of everyday responsibilities by those charged with these roles.
When a problem occurs, an administrative tantrum is thrown. In praise of boring governance
Saying "The assets are good, I'm sure they will rise again" is hardly satisfactory. Bland rhetoric empty of substance just won't do when RM40 billion debt isn't a big deal? What would happen to us all if this actually does collapse
vitiates the investment climate because of several factors — extreme complexity of UMNO's politics combative and rent seeking attitude of UMNO war lords, aggressive pursuit of revenue targets,The political class has made it worse by often using the department to settle scores with political rivals, upright bureaucrats or even an investigating journalist. Remember the witch-hunt against those even remotely connected with the sting operations against a former defence minister Najib?
over dependence on judicial remedy dependent on judicial outcome., extensive recourse to retrospective measures, and contentious interpretations of legal provisions. This not only renders the entire process of appeals and judicial review virtually infructuous, it also creates huge uncertainty for investors. The upshot is a strong negative perception aboutMalaysia as an investment destination. This is not good for Make in Malaysi.These features, which have created an environment of great uncertainty and outright harassment for both domestic and foreign direct investors, must be urgently addressed if Malaysiais to revert to a high growth trajectory.
many ways, this is the single biggest problem that the country- its inability to translate legislative intent into delivered reality. Without fixing this, political will, elusive as it is in any case, counts for little.
Over the last few years, we have seen the gradual emergence of the idea of citizenry. As we transition from locating ourselves in a social matrix to a more civic one, we start depending much more on the rule of law. The ability of societal mechanisms to provide order, and to create a sense of right and wrong, acceptable and unacceptable is rapidly diminishing. The societal interdependencies begin to play a less significant role, and the responsibilities shift to more secular structures like the state transformation and the obvious opportunity of leveraging our abundant English speaking talent. For many of us, that period is best described as a ‘hurricane of happy change’.But as we look around today, that time is almost like a sail in the pond. The earth seems to be spinning at a pace that is dizzy. Over the last ten years, frontiers have been defied and horizons repainted in colours hitherto unknown.
Today, the largest company in the world owes the significant majority of its revenues to products that did not exist till very recently. Apparently, there are almost 100 billion searches each month on Google, up 100 times since just a few years ago. Technology is changing so rapidly that if you are undertaking a 4 year technical course it is possible by the 3rd year that about half of what you learned in the 1st year has become obsolete. A study in developed labour markets indicates that the top ten jobs today were unheard of ten years ago. Do not believe it? Think – App Developer, Cloud Services Manager, Social Media Manager and Sustainability Expert. Get the picture?
What does one do when confronted with change of such velocity? Who dares to attempt answer the question? On the contrary, there is abundant spice to cloud the confusion that business people are faced with currently. A few weeks ago, a leading daily featured an amazing Indian technology company, Zohology. This company is based in Chennai and is fast becoming the new darling of tech-watchers. Zohology obviously knows how to impress, with more than 100,000 customers across 100 countries on their books. What is their mantra? They believe in acquiring a deep knowledge of their customers and then teaching each client how to do their business better. The story of Apple and Steve Jobs is legendary. The mercurial Mr. Jobs did not quite ask customers what they want; he re-defined their needs with every innovation. Nothing can argue success, but how can we follow a model built by the extraordinarily gifted and delivered with maniacal brilliance?
Then there are enterprises who make their customers ‘work’ for them – when I get on to Google I am helping them enhance their own information about me. The better they get, the more I like them. The more I use Google, the better they get! Duo Lingo is a free service for learning languages. They get users to translate text as part of the learning process. You learn your chosen language; they get a free translator and the opportunity to sell translation services! In the book ‘Wired and Dangerous’ Chip Bell and John Patterson talk about the balance of power having moved from the corporation to the customer because of the Internet. The web has created a market without boundaries where information moves at the speed of electrons. There is a lot of noise and it is growing, making it difficult to be heard. Even as new fortunes are built there are no guarantees for survival. I am pretty sure someone will soon coin a word to replace ‘adaptation’ – there just is not time for all that jazz anymore!Get the picture? Well, I do not. It is a new jungle with amazing opportunity and incredible danger lurking side by side. If you are in business and serious about it, then bear in mind, this time there are no rules.
Deputy Finance Minister Ahmad Maslan will scare away investment if it is allowed be in the Finance Ministry he tries hard to convince that all's well with 1MDB (1Malaysia Development Berhad) without specifically addressing the issues which gave rise to the misgivings in the first place.The rakyat want clear answers to the questions raised. How can he say "I hope he gets the correct information on 1MDB" when he does not furnish such information or, one suspects, he himself does not have such information?1MDB have never missed a payment schedule, and its consistent ability to raise funds on the international markets and from quality investors, reflects the confidence that they place in the company.The RM40 billion debt is obviously a small problem to Ahmad Maslan. He must think 1MDB doesn’t need to repay it. Not to mention the mind-boggling leakages that came with the borrowing and refinancing
There is mounting evidence suggesting that government debt impacts the corporate sector. Using a novel data set of accounting and market information that spans most publicly-traded non-financial firms over the last century, we find an economically large negative relation between US federal government debt and corporate debt and investment.
Theoretically, fluctuations in the supply of government debt can impact investor demand for alternative securities, the relative prices of those securities and, consequently, firms’ incentives to issue different securities. The presence of market imperfections, such as information frictions, can, in turn, link variation in financing decisions to variation in investment and firm value.
Empirically, recent evidence has shown that variation in the supply of Treasuries influences corporate bond spreads and the maturity structure of corporate debt. Our data enable us to exploit both time-series and cross-sectional variation, the latter of which we show is critical for uncovering and understanding the link between government debt policy and corporate behaviour.
Our results show a robust negative relation between government debt and corporate debt.… We find that an increase in the ratio of government debt to total assets of the corporate sector is associated with a decrease in the ratio of corporate debt to total assets, i.e., corporate leverage.
Once the Goods and Services Tax is implemented next year, trips to the bank and even ATMs would become a more costlier affair.
Responding to the police report lodged against 1MDB by Batu Kawan Umno division vice-chairperson, Dato’ Khairuddin Abu Hassan, Datuk Ahmad pointed out how 1Malaysia Development Bhd (1MDB) had made profits for four years consecutively.
“They only recorded losses last year. I am sure the company has no big problems except for the negative perception made by the police report lodged by Khairuddin,” he said in a press conference yesterday.
Dato’ Ahmad’s reputation is already in tatters after being forced to apologise and retract his answer in Parliament where he denied the existence of a US$3 billion “letter of support” issued to secure a loan for 1MDB. Now, if the above assurance is the most convincing response which one could elicit from the Deputy Finance Minister, then he is certainly doing the worst possible job defending 1MDB.
It has been repeated umpteen times that 1MDB had made consecutive years of profits from 2010-2013 only as a result of revaluation of assets and properties, and not as a result of any tangible operating profit!
In 2010, 1MDB made a “profit” of RM424 million on the back of a revaluation of its unlisted shares in joint venture investment of US$200 million (RM660 million).
Subsequently, 1MDB recorded paper profits of RM544 million, RM44 million and RM778 million on the back of revaluation of its properties of RM827 million, RM570 million and 2,736 million respectively in 2011, 2012 and 2013. These properties were acquired at rock-bottom prices from the Federal Government.
If not for the massive asset and property revaluation, 1MDB would have made consecutive losses of RM236 million, RM273 million, RM526 million and RM1,964 million from 2010 to 2013.
Even in 2014 when it reported losses of RM665 million, that was despite recording a property revaluation of RM897 million. This means that without the revaluation, 1MDB would have lost another RM1,562 million.
In total over the five years, 1MDB which has taken more than RM42 billion to date, has incurred a staggering cumulative loss of RM4.56 billion.
Earlier in November, the Deputy Finance Minister has also attempted to assure the Parliament that 1MDB is in good financial health by claiming that the Company has “never missed a debt repayment deadline” and is “financially strong”.
He could not be further from the truth. 1MDB has, not for the first time, missed the deadline to repay an outstanding debt. On 30 November 2014, 1MDB was due to repay a RM2 billion debt but has failed to do so to date. Instead, it has asked for an further extension from the financiers. This sum was part of a debt which was due in November 2013 which has already been restructured and extended multiple times.
Worse, the “financially strong” 1MDB is practically insolvent without the injection of new funds because it is now unable to execute the multi-billion ringgit projects it has secured from the Government.
For example, despite being awarded a RM11 billion coal-fired power plant project located at Negeri Sembilan in February 2014, 1MDB has failed to kick-off the project because it doesn’t have any funds to do so! At the same time, an attempt to raise RM8.4 billion in November failed and had to be postponed which in all likelihood is due to the reluctance of investors and financial institutions to lend more money to 1MDB.
Believing in 1MDB’s innocence, Datuk Ahmad has asked the Company to “clear the air” with the public over the various controversies. This is a move which we would wholly agree with. Hence we call upon Datuk Ahmad to recommend that 1MDB offers itself to testify to the Parliamentary Public Accounts Committee (PAC) and an audit by the Auditor-General to dispel all accusations of financial shennigans and impropriety, as well as to restore confidence in its state of financial health. If not, then clearly the Deputy Finance Minister is just putting up a fake front to hide the real truths behind the RM42 billion 1MDB scandal.
The finance minister should be keenly aware of these issues. He has ensured that no fresh cases have risen. But there are about a dozen or so issues that this government has inherited, which need to be urgently addressed and resolved. The need of the hour is to perhaps set up a high powered task force, which can recommend steps to resolve these issues in time for the next budget. That will be a real contribution to the PM’s
It is not rocket science to understand that the PM’s Make in Malaysia programme will be derailed without fresh investment. When first world outrage meets third world reality, what we get is a surfeit of legislation and a spiraling deficit of justice. We can enact all the laws we want, but in a country where very few interactions with the forces of administration occur without needing force or inducement the law on paper not only becomes ineffective, but it often turns into an instrument of exploitation. We seek minute perfection at the top, but make do with routine injustice at the bottom, and react only when the injustice turns horrific, preferably in a large metro town involving someone from the educated middle class. The disinterest in fixing the realities on the ground means that every new incident that displeases us, creates fresh outrage and new acts of tokenism. The cycle is seemingly never-ending, and hopes that someday, the realization will dawn that nothing has really changed, have so far been belied.A rule of law is not about creating the best legislation, but it is about creating a sense of predictable order. It comes from people knowing that there is a discernible relationship between action and consequence and that there is a price to pay for crossing boundaries that have been set. When things work as they are meant to, in an everyday unglamorous way. Where getting routine tasks accomplished is an act that is truly routine, and not a heroic endeavor. An environment of certainty needs the uneventful discharge of everyday responsibilities by those charged with these roles.
When a problem occurs, an administrative tantrum is thrown. In praise of boring governance
Saying "The assets are good, I'm sure they will rise again" is hardly satisfactory. Bland rhetoric empty of substance just won't do when RM40 billion debt isn't a big deal? What would happen to us all if this actually does collapsevitiates the investment climate because of several factors — extreme complexity of UMNO's politics combative and rent seeking attitude of UMNO war lords, aggressive pursuit of revenue targets,The political class has made it worse by often using the department to settle scores with political rivals, upright bureaucrats or even an investigating journalist. Remember the witch-hunt against those even remotely connected with the sting operations against a former defence minister Najib?
over dependence on judicial remedy dependent on judicial outcome., extensive recourse to retrospective measures, and contentious interpretations of legal provisions. This not only renders the entire process of appeals and judicial review virtually infructuous, it also creates huge uncertainty for investors. The upshot is a strong negative perception aboutMalaysia as an investment destination. This is not good for Make in Malaysi.These features, which have created an environment of great uncertainty and outright harassment for both domestic and foreign direct investors, must be urgently addressed if Malaysiais to revert to a high growth trajectory.
Today, the largest company in the world owes the significant majority of its revenues to products that did not exist till very recently. Apparently, there are almost 100 billion searches each month on Google, up 100 times since just a few years ago. Technology is changing so rapidly that if you are undertaking a 4 year technical course it is possible by the 3rd year that about half of what you learned in the 1st year has become obsolete. A study in developed labour markets indicates that the top ten jobs today were unheard of ten years ago. Do not believe it? Think – App Developer, Cloud Services Manager, Social Media Manager and Sustainability Expert. Get the picture?
What does one do when confronted with change of such velocity? Who dares to attempt answer the question? On the contrary, there is abundant spice to cloud the confusion that business people are faced with currently. A few weeks ago, a leading daily featured an amazing Indian technology company, Zohology. This company is based in Chennai and is fast becoming the new darling of tech-watchers. Zohology obviously knows how to impress, with more than 100,000 customers across 100 countries on their books. What is their mantra? They believe in acquiring a deep knowledge of their customers and then teaching each client how to do their business better. The story of Apple and Steve Jobs is legendary. The mercurial Mr. Jobs did not quite ask customers what they want; he re-defined their needs with every innovation. Nothing can argue success, but how can we follow a model built by the extraordinarily gifted and delivered with maniacal brilliance?
Then there are enterprises who make their customers ‘work’ for them – when I get on to Google I am helping them enhance their own information about me. The better they get, the more I like them. The more I use Google, the better they get! Duo Lingo is a free service for learning languages. They get users to translate text as part of the learning process. You learn your chosen language; they get a free translator and the opportunity to sell translation services! In the book ‘Wired and Dangerous’ Chip Bell and John Patterson talk about the balance of power having moved from the corporation to the customer because of the Internet. The web has created a market without boundaries where information moves at the speed of electrons. There is a lot of noise and it is growing, making it difficult to be heard. Even as new fortunes are built there are no guarantees for survival. I am pretty sure someone will soon coin a word to replace ‘adaptation’ – there just is not time for all that jazz anymore!Get the picture? Well, I do not. It is a new jungle with amazing opportunity and incredible danger lurking side by side. If you are in business and serious about it, then bear in mind, this time there are no rules.
Deputy Finance Minister Ahmad Maslan will scare away investment if it is allowed be in the Finance Ministry he tries hard to convince that all's well with 1MDB (1Malaysia Development Berhad) without specifically addressing the issues which gave rise to the misgivings in the first place.The rakyat want clear answers to the questions raised. How can he say "I hope he gets the correct information on 1MDB" when he does not furnish such information or, one suspects, he himself does not have such information?1MDB have never missed a payment schedule, and its consistent ability to raise funds on the international markets and from quality investors, reflects the confidence that they place in the company.The RM40 billion debt is obviously a small problem to Ahmad Maslan. He must think 1MDB doesn’t need to repay it. Not to mention the mind-boggling leakages that came with the borrowing and refinancing
There is mounting evidence suggesting that government debt impacts the corporate sector. Using a novel data set of accounting and market information that spans most publicly-traded non-financial firms over the last century, we find an economically large negative relation between US federal government debt and corporate debt and investment.
Theoretically, fluctuations in the supply of government debt can impact investor demand for alternative securities, the relative prices of those securities and, consequently, firms’ incentives to issue different securities. The presence of market imperfections, such as information frictions, can, in turn, link variation in financing decisions to variation in investment and firm value.
Empirically, recent evidence has shown that variation in the supply of Treasuries influences corporate bond spreads and the maturity structure of corporate debt. Our data enable us to exploit both time-series and cross-sectional variation, the latter of which we show is critical for uncovering and understanding the link between government debt policy and corporate behaviour.
Our results show a robust negative relation between government debt and corporate debt.… We find that an increase in the ratio of government debt to total assets of the corporate sector is associated with a decrease in the ratio of corporate debt to total assets, i.e., corporate leverage.
Once the Goods and Services Tax is implemented next year, trips to the bank and even ATMs would become a more costlier affair.
Responding to the police report lodged against 1MDB by Batu Kawan Umno division vice-chairperson, Dato’ Khairuddin Abu Hassan, Datuk Ahmad pointed out how 1Malaysia Development Bhd (1MDB) had made profits for four years consecutively.
“They only recorded losses last year. I am sure the company has no big problems except for the negative perception made by the police report lodged by Khairuddin,” he said in a press conference yesterday.
Dato’ Ahmad’s reputation is already in tatters after being forced to apologise and retract his answer in Parliament where he denied the existence of a US$3 billion “letter of support” issued to secure a loan for 1MDB. Now, if the above assurance is the most convincing response which one could elicit from the Deputy Finance Minister, then he is certainly doing the worst possible job defending 1MDB.
It has been repeated umpteen times that 1MDB had made consecutive years of profits from 2010-2013 only as a result of revaluation of assets and properties, and not as a result of any tangible operating profit!
In 2010, 1MDB made a “profit” of RM424 million on the back of a revaluation of its unlisted shares in joint venture investment of US$200 million (RM660 million).
Subsequently, 1MDB recorded paper profits of RM544 million, RM44 million and RM778 million on the back of revaluation of its properties of RM827 million, RM570 million and 2,736 million respectively in 2011, 2012 and 2013. These properties were acquired at rock-bottom prices from the Federal Government.
If not for the massive asset and property revaluation, 1MDB would have made consecutive losses of RM236 million, RM273 million, RM526 million and RM1,964 million from 2010 to 2013.
Even in 2014 when it reported losses of RM665 million, that was despite recording a property revaluation of RM897 million. This means that without the revaluation, 1MDB would have lost another RM1,562 million.
In total over the five years, 1MDB which has taken more than RM42 billion to date, has incurred a staggering cumulative loss of RM4.56 billion.
Earlier in November, the Deputy Finance Minister has also attempted to assure the Parliament that 1MDB is in good financial health by claiming that the Company has “never missed a debt repayment deadline” and is “financially strong”.
He could not be further from the truth. 1MDB has, not for the first time, missed the deadline to repay an outstanding debt. On 30 November 2014, 1MDB was due to repay a RM2 billion debt but has failed to do so to date. Instead, it has asked for an further extension from the financiers. This sum was part of a debt which was due in November 2013 which has already been restructured and extended multiple times.
Worse, the “financially strong” 1MDB is practically insolvent without the injection of new funds because it is now unable to execute the multi-billion ringgit projects it has secured from the Government.
For example, despite being awarded a RM11 billion coal-fired power plant project located at Negeri Sembilan in February 2014, 1MDB has failed to kick-off the project because it doesn’t have any funds to do so! At the same time, an attempt to raise RM8.4 billion in November failed and had to be postponed which in all likelihood is due to the reluctance of investors and financial institutions to lend more money to 1MDB.
Believing in 1MDB’s innocence, Datuk Ahmad has asked the Company to “clear the air” with the public over the various controversies. This is a move which we would wholly agree with. Hence we call upon Datuk Ahmad to recommend that 1MDB offers itself to testify to the Parliamentary Public Accounts Committee (PAC) and an audit by the Auditor-General to dispel all accusations of financial shennigans and impropriety, as well as to restore confidence in its state of financial health. If not, then clearly the Deputy Finance Minister is just putting up a fake front to hide the real truths behind the RM42 billion 1MDB scandal.
The finance minister should be keenly aware of these issues. He has ensured that no fresh cases have risen. But there are about a dozen or so issues that this government has inherited, which need to be urgently addressed and resolved. The need of the hour is to perhaps set up a high powered task force, which can recommend steps to resolve these issues in time for the next budget. That will be a real contribution to the PM’s It is not rocket science to understand that the PM’s Make in Malaysia programme will be derailed without fresh investment. When first world outrage meets third world reality, what we get is a surfeit of legislation and a spiraling deficit of justice. We can enact all the laws we want, but in a country where very few interactions with the forces of administration occur without needing force or inducement the law on paper not only becomes ineffective, but it often turns into an instrument of exploitation. We seek minute perfection at the top, but make do with routine injustice at the bottom, and react only when the injustice turns horrific, preferably in a large metro town involving someone from the educated middle class. The disinterest in fixing the realities on the ground means that every new incident that displeases us, creates fresh outrage and new acts of tokenism. The cycle is seemingly never-ending, and hopes that someday, the realization will dawn that nothing has really changed, have so far been belied.A rule of law is not about creating the best legislation, but it is about creating a sense of predictable order. It comes from people knowing that there is a discernible relationship between action and consequence and that there is a price to pay for crossing boundaries that have been set. When things work as they are meant to, in an everyday unglamorous way. Where getting routine tasks accomplished is an act that is truly routine, and not a heroic endeavor. An environment of certainty needs the uneventful discharge of everyday responsibilities by those charged with these roles.
When a problem occurs, an administrative tantrum is thrown. In praise of boring governance
Saying "The assets are good, I'm sure they will rise again" is hardly satisfactory. Bland rhetoric empty of substance just won't do when RM40 billion debt isn't a big deal? What would happen to us all if this actually does collapsevitiates the investment climate because of several factors — extreme complexity of UMNO's politics combative and rent seeking attitude of UMNO war lords, aggressive pursuit of revenue targets,The political class has made it worse by often using the department to settle scores with political rivals, upright bureaucrats or even an investigating journalist. Remember the witch-hunt against those even remotely connected with the sting operations against a former defence minister Najib?
over dependence on judicial remedy dependent on judicial outcome., extensive recourse to retrospective measures, and contentious interpretations of legal provisions. This not only renders the entire process of appeals and judicial review virtually infructuous, it also creates huge uncertainty for investors. The upshot is a strong negative perception aboutMalaysia as an investment destination. This is not good for Make in Malaysi.These features, which have created an environment of great uncertainty and outright harassment for both domestic and foreign direct investors, must be urgently addressed if Malaysiais to revert to a high growth trajectory.
Today, the largest company in the world owes the significant majority of its revenues to products that did not exist till very recently. Apparently, there are almost 100 billion searches each month on Google, up 100 times since just a few years ago. Technology is changing so rapidly that if you are undertaking a 4 year technical course it is possible by the 3rd year that about half of what you learned in the 1st year has become obsolete. A study in developed labour markets indicates that the top ten jobs today were unheard of ten years ago. Do not believe it? Think – App Developer, Cloud Services Manager, Social Media Manager and Sustainability Expert. Get the picture?
What does one do when confronted with change of such velocity? Who dares to attempt answer the question? On the contrary, there is abundant spice to cloud the confusion that business people are faced with currently. A few weeks ago, a leading daily featured an amazing Indian technology company, Zohology. This company is based in Chennai and is fast becoming the new darling of tech-watchers. Zohology obviously knows how to impress, with more than 100,000 customers across 100 countries on their books. What is their mantra? They believe in acquiring a deep knowledge of their customers and then teaching each client how to do their business better. The story of Apple and Steve Jobs is legendary. The mercurial Mr. Jobs did not quite ask customers what they want; he re-defined their needs with every innovation. Nothing can argue success, but how can we follow a model built by the extraordinarily gifted and delivered with maniacal brilliance?
Then there are enterprises who make their customers ‘work’ for them – when I get on to Google I am helping them enhance their own information about me. The better they get, the more I like them. The more I use Google, the better they get! Duo Lingo is a free service for learning languages. They get users to translate text as part of the learning process. You learn your chosen language; they get a free translator and the opportunity to sell translation services! In the book ‘Wired and Dangerous’ Chip Bell and John Patterson talk about the balance of power having moved from the corporation to the customer because of the Internet. The web has created a market without boundaries where information moves at the speed of electrons. There is a lot of noise and it is growing, making it difficult to be heard. Even as new fortunes are built there are no guarantees for survival. I am pretty sure someone will soon coin a word to replace ‘adaptation’ – there just is not time for all that jazz anymore!Get the picture? Well, I do not. It is a new jungle with amazing opportunity and incredible danger lurking side by side. If you are in business and serious about it, then bear in mind, this time there are no rules.
Deputy Finance Minister Ahmad Maslan will scare away investment if it is allowed be in the Finance Ministry he tries hard to convince that all's well with 1MDB (1Malaysia Development Berhad) without specifically addressing the issues which gave rise to the misgivings in the first place.The rakyat want clear answers to the questions raised. How can he say "I hope he gets the correct information on 1MDB" when he does not furnish such information or, one suspects, he himself does not have such information?1MDB have never missed a payment schedule, and its consistent ability to raise funds on the international markets and from quality investors, reflects the confidence that they place in the company.The RM40 billion debt is obviously a small problem to Ahmad Maslan. He must think 1MDB doesn’t need to repay it. Not to mention the mind-boggling leakages that came with the borrowing and refinancing
There is mounting evidence suggesting that government debt impacts the corporate sector. Using a novel data set of accounting and market information that spans most publicly-traded non-financial firms over the last century, we find an economically large negative relation between US federal government debt and corporate debt and investment.
Theoretically, fluctuations in the supply of government debt can impact investor demand for alternative securities, the relative prices of those securities and, consequently, firms’ incentives to issue different securities. The presence of market imperfections, such as information frictions, can, in turn, link variation in financing decisions to variation in investment and firm value.
Empirically, recent evidence has shown that variation in the supply of Treasuries influences corporate bond spreads and the maturity structure of corporate debt. Our data enable us to exploit both time-series and cross-sectional variation, the latter of which we show is critical for uncovering and understanding the link between government debt policy and corporate behaviour.
Our results show a robust negative relation between government debt and corporate debt.… We find that an increase in the ratio of government debt to total assets of the corporate sector is associated with a decrease in the ratio of corporate debt to total assets, i.e., corporate leverage.
Once the Goods and Services Tax is implemented next year, trips to the bank and even ATMs would become a more costlier affair.
Responding to the police report lodged against 1MDB by Batu Kawan Umno division vice-chairperson, Dato’ Khairuddin Abu Hassan, Datuk Ahmad pointed out how 1Malaysia Development Bhd (1MDB) had made profits for four years consecutively.
“They only recorded losses last year. I am sure the company has no big problems except for the negative perception made by the police report lodged by Khairuddin,” he said in a press conference yesterday.
Dato’ Ahmad’s reputation is already in tatters after being forced to apologise and retract his answer in Parliament where he denied the existence of a US$3 billion “letter of support” issued to secure a loan for 1MDB. Now, if the above assurance is the most convincing response which one could elicit from the Deputy Finance Minister, then he is certainly doing the worst possible job defending 1MDB.
It has been repeated umpteen times that 1MDB had made consecutive years of profits from 2010-2013 only as a result of revaluation of assets and properties, and not as a result of any tangible operating profit!
In 2010, 1MDB made a “profit” of RM424 million on the back of a revaluation of its unlisted shares in joint venture investment of US$200 million (RM660 million).
Subsequently, 1MDB recorded paper profits of RM544 million, RM44 million and RM778 million on the back of revaluation of its properties of RM827 million, RM570 million and 2,736 million respectively in 2011, 2012 and 2013. These properties were acquired at rock-bottom prices from the Federal Government.
If not for the massive asset and property revaluation, 1MDB would have made consecutive losses of RM236 million, RM273 million, RM526 million and RM1,964 million from 2010 to 2013.
Even in 2014 when it reported losses of RM665 million, that was despite recording a property revaluation of RM897 million. This means that without the revaluation, 1MDB would have lost another RM1,562 million.
In total over the five years, 1MDB which has taken more than RM42 billion to date, has incurred a staggering cumulative loss of RM4.56 billion.
Earlier in November, the Deputy Finance Minister has also attempted to assure the Parliament that 1MDB is in good financial health by claiming that the Company has “never missed a debt repayment deadline” and is “financially strong”.
He could not be further from the truth. 1MDB has, not for the first time, missed the deadline to repay an outstanding debt. On 30 November 2014, 1MDB was due to repay a RM2 billion debt but has failed to do so to date. Instead, it has asked for an further extension from the financiers. This sum was part of a debt which was due in November 2013 which has already been restructured and extended multiple times.
Worse, the “financially strong” 1MDB is practically insolvent without the injection of new funds because it is now unable to execute the multi-billion ringgit projects it has secured from the Government.
For example, despite being awarded a RM11 billion coal-fired power plant project located at Negeri Sembilan in February 2014, 1MDB has failed to kick-off the project because it doesn’t have any funds to do so! At the same time, an attempt to raise RM8.4 billion in November failed and had to be postponed which in all likelihood is due to the reluctance of investors and financial institutions to lend more money to 1MDB.
Believing in 1MDB’s innocence, Datuk Ahmad has asked the Company to “clear the air” with the public over the various controversies. This is a move which we would wholly agree with. Hence we call upon Datuk Ahmad to recommend that 1MDB offers itself to testify to the Parliamentary Public Accounts Committee (PAC) and an audit by the Auditor-General to dispel all accusations of financial shennigans and impropriety, as well as to restore confidence in its state of financial health. If not, then clearly the Deputy Finance Minister is just putting up a fake front to hide the real truths behind the RM42 billion 1MDB scandal.
The finance minister should be keenly aware of these issues. He has ensured that no fresh cases have risen. But there are about a dozen or so issues that this government has inherited, which need to be urgently addressed and resolved. The need of the hour is to perhaps set up a high powered task force, which can recommend steps to resolve these issues in time for the next budget. That will be a real contribution to the PM’s 
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