KUALA LUMPUR (Mar 11): The federal government must take steps to control rising external debt which amounted to RM740 billion in the third quarter of last year (3Q14), said Selayang Member of the Parliament William Leong Jee Keen.

“Although the Finance Ministry said the government’s foreign debt was RM16.8 billion and therefore the remaining RM723.2 billion were by public enterprises and private sectors, the federal government must take steps to control the rising foreign debt,” he said.

He pointed out there are currently some agencies under the government that have huge foreign borrowings.

“The most famous one is 1MDB (1Malaysia Development Bhd, of course. How have the loans amounting to RM41 billion benefit the people?” he asked.

“It is of concern that government-linked companies such as 1MDB and Pembinaan PFI Sdn Bhd have substantial foreign borrowings,” Leong said.

“We do not have a contingency plan now to ride out the high foreign debt, unlike back in 2008 when we experienced the subprime crisis,” Leong told theedgemarkets.com today.
 
He said, back in the 1990s, the government was stringent in taking loans from foreign lenders and that was the reason the country could pull through the financial crisis.

The policy implemented after 1998 enabled the country to withstand the 2008 global financial crisis due to the low exposure to foreign lenders. This was reversed from 2009 and was allowed to balloon to RM744.7 billion, Leong said.

“The federal government appears to have forgotten the lessons learnt during the 1998 financial crisis on the problems that will affect the economy with a high external debt,” he said.