Challenging first year as finance minister.
To Finance Minister Lim Guan Eng, it is better to speak the truth and uphold the integrity of the administration rather than keeping to oneself the state of the country’s finances.
Clearing up the perception of him of being too aggressive despite being an effective minister, he said he was angry over the malpractices of the previous government when he took office in May 2018.
“I tell you why they feel I am aggressive and too truthful. It is because when I first became the finance minister, I was so angry during my first press conference. When I looked at the figures, they were worse than I had expected. We are really paying for 1Malaysia Development Bhd’s (1MDB) loans.
“And look at the bulk of tenders, 88 per cent of the project value (of projects) or RM8.3 billion had been paid but on the ground only 10 per cent (were completed). How can it be? If you’re not angry, you’re not human.
“So, when I am angry at this type of malpractice. I want to speak the truth, and if that is wrong, what can I say, but I will still tell the truth, I will still say it as it is,” he said.
Lim was speaking in a selected media interview at his office recently ahead of the first anniversary of the Pakatan Harapan government in power.
Asked whether his aggressiveness has dented investor sentiment, Lim conceded that it might have sent shockwaves across the market at the outset of the new administration as many governance issues were unearthed.
“I think maybe they are not used to it and may have (felt) the effect, but eventually, in the long run, investors want a government they can trust.
“So, when we went to the international rating agency, although the deficit has to be raised to 3.7 per cent to Gross Domestic Product due to the 1MDB and other scandals, but our ratings still remained unchanged,” he said.
Having noted some quarters questioning why the country’s credit ratings were maintained, Lim asserted that the government would continue to be transparent and committed to its institutional reforms.
He assured the people that the government would gradually strengthen the country’s fiscal and financial conditions.
“After three years, the people will see a more sustainable, stronger and more transparent country and the most important thing much more cleaner,” he added.
He also said that it will take between 20 and 30 years to settle 1MDB’s RM44 billion debt, which is draining public coffers and taking money away from much-needed programmes.
He revealed that the sum is part of the country’s total debt of RM1.087 trillion accumulated over decades of mismanagement under Barisan Nasional rule.
The amount could have paid for nine years of the government’s Cost of Living Aid, benefiting 4.1 million households, with RM1 billion left over.
Alternatively, the government could have settled RM39 billion in National Higher Education Fund Corporation loans, wiping out university students’ debts.
Or, it could have paid for 184,000 affordable homes costing RM250,000 each.
The RM44 billion is the balance of 1MDB’s “total bill” of RM51 billion, said Lim, with the government having paid RM7 billion to date.
Of the RM51 billion, interest payments alone total some RM20 billion, while the principal is about RM31 billion.
Lim said he is “sick of 1MDB” after spending close to a year organising payments to settle the massive debt racked up by the Najib administration.
“I’m sick and tired of 1MDB,” he said.
The previous administration attempted to hide the fact that public funds were being used to pay off the 1MDB debt, which the government had guaranteed, said Lim.
“They (BN) were very smart. They played on definition (in accounting). Only direct (government) debt was recorded. What was guaranteed has now crystallised as the borrower cannot pay, and they don’t admit this.”
Along with the 1MDB debt, other government-guaranteed borrowings that Putrajaya now has to pay have driven Malaysia’s debt load to RM1.087 trillion, or 80.3% of the country’s gross domestic product.
Lim said the PH government’s payments thus far have brought down the total to RM1.07 trillion.
“From 80.3% of GDP, we’ve managed to bring it down to 74.8%. The 5.5% drop is due to the fact that our GDP is expanding, so it helps bring our debt-to-GDP ratio down.”
In three years, the government hopes to reduce the figure to 65% of GDP, or below RM1 trillion.
“It is not easy to reduce it to RM1 trillion, but we’ll try. Either below 65% (of GDP) or below RM1 trillion,” said Lim.
He said all the effort put into finding new sources of funds to repay the national debt has taken him away from an important aim: creating jobs for graduates.
“One thing that I wanted to do, but just don’t have the means to carry out, was to create more jobs, especially for graduates, and to check and reduce cost-of-living pressures.
“We hope that we can do this in the next budget…create jobs, especially for unemployed grads. This is something the previous government never focused on. They looked at big projects, not at ensuring jobs for ordinary Malaysians.
He said he wanted to shift the government’s focus away from mega projects and onto ordinary Malaysians.
“I am sick and tired of 1MDB. Can we think about one Malaysia, not 1MDB? One Malaysia that can get jobs, and have higher purchasing power and lower cost of living,” he added.
1MDB is a sore issue for Lim, who is often criticised for not being able to move on beyond the subject.
For the finance minister, his job now is “330 per cent” harder than being Penang chief minister – deriving the percentage by comparing the island state’s budget against the federal budget.
But he appeared proud when listing the things that the government did manage to achieve over the past year.
Lim said the government had succeeded in replacing the goods and services tax (GST) with the sales and services tax (SST) “without bankrupting the country”.
He is also proud that the government had begun paying back GST and income tax arrears it had owed.
Another achievement, Lim added, is that the government was able to maintain a good economy.
“Even though we are faced with financial problems following the 1MDB scandal, but the confidence of foreign investors and institutions are still strong, they’ve still maintained Malaysia’s credit ratings (at A-).
“That is a test that Malaysia passed,” he said.
Lim said foreign direct investments were up 48 per cent last year compared to 2017, while unemployment was at 3.3 per cent.
All these, he added, were signs that the country still had strong economic fundamentals.
He is confident Malaysia can get back on track to a pre-1MDB time by 2021.