Immediate task to “heal the nation by healing the country’s financial condition” and this can only be done by being truthful and transparent, and by knowing what the country’s actual financial status is.
‘Time bombs’ include:
- A lot of falsified accounts
- Many items recorded do not tell you actual costs involved – not transparent and complete
- Questionable payment system where more payment made than for amount of work completed
- Chop or reduce shell companies where there is “no money, some are empty, but payment is made every year”
- No to previous “creative accounting”, instead speak the truth and not cheat ourselves
For the country’s new Finance Minister Lim Guan Eng, there is much to be done and his immediate priority, he said, is to clean up the mess left behind by his predecessor.
He finds himself in new territories every day, and his daily discoveries have brought him sleepless nights.
“Sometimes, I cannot sleep in the night, because every day, there are time bombs found somewhere or another,” Lim said in an interview with Malaysiakini in Penang over the weekend.
Since assuming office in Putrajaya, Lim has found the time to return to Penang on weekends, to meet his constituents, both in the parliamentary seat of Bagan on the mainland and the Air Putih state seat on the island.
But his immediate task in his new portfolio is to “heal the nation by healing the country’s financial condition”.
However, this can only be done by being truthful and transparent, he said, and by knowing what the country’s actual financial status is.
In several interviews with the media since he took office, Lim has revealed that he discovered many hidden or “red files” in the ministry, where the documents were only accessible to then prime minister and finance minister Najib Abdul Razak.
Najib, who is the MP for Pekan, was ousted in the May 9 general election and is currently being investigated for money laundering activities related to the 1MDB scandal.
“Secondly, there are a lot of falsified accounts and thirdly, many of the items recorded do not really tell you the actual costs involved. The accounts are not transparent and complete,” claimed Lim, who is the former Penang chief minister.
Here, he was referring to so-called public-private partnership (PPP) programmes, which he said were worth RM63 billion.
There are also lease payments, including availability payment, maintenance and asset replacement related to the PPP programmes.
“Do you know how much these are? They total up to RM140 billion, but they (the previous administration) do not want to mention this,” Lim told Malaysiakini.
Questionable payment systems
He also revealed questionable payment systems previously carried out by the Finance Ministry.
“When you make a payment, it is normally based on work done, for example, we will pay you 20 percent for work done that is 20 percent completed.
“But here it is different, payment is made every six months. Even for projects that were only 25 percent completed, they were paid up to 60 to 70 percent, and some even claimed up to 90 percent payment,” he said.
Lim said these items were included in the national debt when he made the shocking announcement that the debt stood at RM1 trillion as at December last year.
The expose, Lim’s first since his new appointment, prompted Najib to say that the announcement of RM1 trillion debt has unnecessarily spooked the market.
Lim has also been ticked off for being not tactful when announcing the country’s debt situation and for also including contingent liabilities in his national debt figure.
But he clarified that the items were added into the national debt calculation as some companies have run out of money but were guaranteed payment by the Finance Ministry.
“You see, they are quite smart, they adopt a Cash Basis, which means the amount is only counted when you make payment.
“Accrual Basis is different, where once you sign (the deal), it is counted. We want to implement the Accrual Basis system,” he said.
“However, we cannot consolidate (the funds) if they refuse to give us all the files. That’s the problem,” he added.
Many shell companies
Lim also revealed that there were many shell companies, where there is “no money, some are empty, but payment is made every year”.
“We need to renegotiate how to chop or reduce such companies,” he said, indicating these are some of his immediate tasks in the coming days as Harapan races against time to fulfil the promises for the first 100 days in office, as laid out in their election manifesto.
Lim said he is currently working on the cost centre, but would have to focus on revenue and productive centres soon, as the country strives to heal the economy.
While he eagerly needs to know the actual costs the government faces, he said focusing on the productive centre, to invest in industry 4.0, art, culture and heritage is also important.
“These are the areas to invest in and stimulate the economy, if you want to increase revenue, you need to find new sources of income, you need to put that in the productivity centre, then you have to simplify the regulations as they are costly,” he explained.
Meanwhile, Lim also cited the case of a billion ringgit worth of bonds where Malaysia has borrowed from others, saying the payments needed to be made every year.
“If we are required to pay for them, why can’t we recognise these as debt?” he asked.
When told that international standard accounting does not calculate or include government guarantees and lease payments for PPP projects as national debt, Lim said this was because they treated these items as “Off-balance sheet”.
“That is some sort of creative accounting, but we want to speak the truth and do not want to cheat ourselves,” said the finance minister who is also DAP secretary-general.
“After all, you have to pay back the lease payment for the PPP projects and government guarantees.
“For example, in the 1MDB case, payment has already been made to the company, it is impossible for 1MDB to pay itself.
“For PPP programmes, at least some projects are visible, but what can you see from the 1MDB, all are merely castles in the air,” he said.
“They (previous government) are so great. They can see some things that we cannot see. Do they have a third eye where they can see the projects, buildings and returns?
“We cannot see all these – but we are the ones who have to pay the debts,” Lim added. – Malaysiakini