KUALA LUMPUR: Malaysian government’s liability and commitment will increase moving forward as higher guarantees have been given to borrowings or sukuk issuances undertaken by special purpose vehicles (SPVs) that were set up under the Minister of Finance Inc (MoF Inc), said the Auditor-General.

As at 2015, SPV borrowings guaranteed by the Malaysia government amounted to RM32.29 billion, up 15.4% from RM27.99 billion in 2014.

Based on the Auditor-General’s analysis, Danainfra Nasional Bhd got the highest amount of guarantee, at RM20.7 billion, due to the issuance of two series of new sukuk in 2015.

In response, the ministry of finance (MoF) said the guarantees were provided to ensure that these SPVs get financing even without a track record.

“Danainfra recorded the highest increase of guarantee for 2015. This is to accommodate the fund to execute MRT (mass rapid transit) Line 1 and MRT Line 2 projects. The total cost to complete these two projects is RM73.97 billion. However, total government guarantee that will be given to Danainfra is RM71 billion,” MoF explained.

Meanwhile, the Auditor-General also noted there was only one out of 19 SPVs under the MoF Inc, which paid dividend to the government between 2012 and 2014.

The Auditor-General said throughout the said period, only KL International Airport Bhd managed to pay a dividend of RM100 million to the government in 2013, and RM30 million for 2014.

The Auditor-General’s audit covers the financial statements of 18 SPVs under MoF Inc throughout 2012 to 2014. The 19th SPV, namely Malaysia Sovereign Sukuk Bhd, was only incorporated in 2015 and thus has no financial statements yet.

And as at 2014, seven out of the 18 SPVs had more liabilities than assets on their balance sheets.

“Perwaja Terengganu Sdn Bhd recorded the highest liability surplus (RM2.76 billion), followed by Piramid Pertama Sdn Bhd (RM688 million). Perwaja Terengganu’s liability component was borrowings from the government. While Piramid Pertama’s liability component consists of debts [owed] to the ministry of finance,” the Auditor-General said.

The other SPVs include GovCo Holdings Bhd, Assets Global Network Sdn Bhd, Malaysia Sukuk Global Bhd, Wakala Global Sukuk Bhd and SDE Solution Sdn Bhd.

Liability surplus among these companies ranged from RM10,000 to RM198 million.

In response to the Auditor-General’s findings, MoF said MoF Inc will take “appropriate” action in regard to the balance liability recorded in Piramid Pertama’s financial statements, which it said was RM605 million.

The RM605 million consists of a few past transactions in relation to the acquisition of Pos Malaysia Bhd, which is considered as “shareholder’s advance” by MoF Inc to the company.