PM Says 1MDB Can Afford IPIC Payment, Delay Due to “Technical Issues”

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Prime Minister Najib Razak says the government is not short on funds and will fulfil all obligations under the state-owned 1 Malaysia Development Bhd (1MDB).

“It is a technical issue only. Not a question of us not being able to afford to pay back. It is not expected to disrupt the economy,” he told the Dewan Rakyat.

Najib was replying as finance minister to Wan Azizah Wan Ibrahim (PKR-Permatang Pauh), who raised the question that 1MDB had failed to make the payments to International Petroleum Investment Co (IPIC), which would have been made from proceeds of a 1MDB rationalisation plan.

“The situation might disrupt the investor sentiments of those who want to invest in Malaysia,” Wan Azizah said during a question and answer session.

 

Najib added that the debt repayment is not expected to impact investor confidence in the Malaysian economy.

On Apr 24, 1MDB agreed to pay IPIC US$1.2 billion to settle a debt dispute in two instalments which the state firm said would be made by monetising investment fund units. The first instalment of US$603 million (RM2.6 billion) was due on Jul 31 but 1MDB failed to make the payment. The second instalment is due on Dec 31.

In a statement yesterday, 1MDB said it was awaiting funds that were due in July.

“Due to the need for additional regulatory approvals, the receipt of those funds has been delayed to August 2017.

“As these are the funds which will be used to pay IPIC, 1MDB has written to IPIC to inform them of our commitment to meet the obligations, originally due on July 31, 2017, in August 2017,” the statement said.

IPIC said in a filing it hasn’t received the payment, as well as a further US$26 million amount due on July 31.

Wan Azizah also said that while Putrajaya has given assurances that the country’s economy is doing well, the public were still struggling with living cost issues and unemployment.

Najib said that Malaysia’s debts are under control and had even reduced from 54 percent of the GDP to 52.5 percent.

He added that the government is heading towards having a balanced budget.

While attending the fifth anniversary of Genovasi Malaysia yesterday, Najib expressed regret that Malaysians knock down the country sometimes.

“They spread lies about the country or half-truths.

“When people come to Malaysia and they experience what it’s like in Malaysia, they say Malaysia is not a failed state.

“What I want Malaysians to feel is that we are moving towards a better nation and there is hope for the future,” the prime minister said.

Mubadala, which now owns IPIC, said in a statement yesterday that 1MDB and the Malaysian finance ministry (MoF) have just five days to resolve the non-payment.

“Under the Settlement, there is a five business day cure period for MOF and 1MDB to remedy their non-payment before MOF and 1MDB become subject to additional obligations to IPIC and Aabar,” Mubadala said.

Yesterday, Second Finance Minister Johari Abdul Ghani said 1MDB has not asked the government for help to pay IPIC.