This article first appeared in The Edge Financial Daily on April 24, 2019
KUALA LUMPUR: Finance Minister Lim Guan Eng yesterday gave the assurance that Putrajaya will honour all 1Malaysia Development Bhd (1MDB)-related debt papers, in particular those in the hands of statutory bodies like the Employees Provident Fund (EPF) and the Retiremennt Fund Inc (KWAP).
He said this when asked to confirm whether there is a plan to convert 1MDB-related debt papers held by KWAP and Lembaga Tabung Haji into equity stakes in the Bandar Malaysia development project.
“I just want to say that any bond or loan provided by (the) EPF and KWAP related to 1MDB are guaranteed by the Ministry of Finance (MoF), on behalf of the government,” he told reporters yesterday, without confirming or denying that the proposal is on the table.
“Their loans are secured 100%. There is nothing to worry about. The one who should be worried is MoF and the government, because we guaranteed their loans. The government needs to find money to pay all these loans related to 1MDB, which we get nothing in return in terms of value,” Guan Eng said.
He had expressed a similar commitment last May, when he said Malaysia would honour all payments on debts raised by 1MDB, even though the new government was unhappy about money missing from the fund.
On Monday, The Edge Financial Daily reported that to reduce 1MDB’s debt burden, the government is proposing that the RM2.4 billion bonds held by KWAP and Tabung Haji currently be converted into equity stakes in the Bandar Malaysia project.
Meanwhile, on allegations by blogger Raja Petra Kamarudin saying that the government agreed to give 4,500 acres (1,821ha) adjacent to the East Coast Rail Link (ECRL) stations in exchange for a RM21.5 billion discount in construction cost, Guan Eng said he is not privy to the details of agreements related to the ECRL.
“I have not been informed about the 4,500 acres given for free, I don’t think that is correct, wait for the official contract details to be revealed,” he said.
Bombardier commits to RM700.7m local contents in Kelana Jaya LRT contracts
Guan Eng, meanwhile, revealed that Bombardier Hartasuma Consortium, the train set supplier for Prasarana Malaysia Bhd’s Kelana Jaya light rail transit (LRT) line, has committed to make use of an estimated RM700.7 million worth of local contents in delivering its RM2.7 billion contracts under the project.
This is based on its commitment to maximise the use of local contents to up to 35% in the delivery of the RM1.7 billion contract it secured in 2017 to deliver 27 new train sets for the project which is estimated at RM600 million.
This is on top of its agreement to extend the existing local supplier base by using components and services offered by 14 local companies, valued at RM100.7 million, in undertaking another RM473 million refurbishment job on the Kelana Jaya LRT’s existing train sets.
These commitments come under the government’s Industrial Collaboration Programme (ICP), a policy that applies to all government procurements that exceed certain thresholds; namely above RM50 million for contracts awarded to foreign companies, and above RM100 million for contracts awarded to local ones.
Once triggered, the ICP policy requires procurement vendors to make commitment in the forms of technology transfer, industrial training, global market access, development of local supply chain, the usage of local content and etc.
Guan Eng said priority is given to activities that contribute to the national aspiration towards achieving the status of developed country.