Breaking News : Likes our Facebook page and join us as members, you will receive email updates and instant updates in Telegram group.
CLICKS HERE FOR INFO TO JOIN AS X-PREMIUM MEMBER
Malaysians could end up paying more for electricity over the next few years as Putrajaya helps debt-ridden 1Malaysia Development Berhad (1MDB) settle its loans totalling RM42 billion, said Petaling Jaya Utara MP Tony Pua. Since 2011, 1MDB has achieved profitability entirely as a result of revaluation of properties which were sold to 1MDB by the federal government at heavily discounted prices. In 2011, 1MDB made a profit of RM544 million on the back of a property revaluation of RM827 million. In 2012 and 2013, 1MDB continued to make profits of RM45 million and RM778 million on the back of RM570 million and RM2,736 million in property revaluation respectively. For the most recent financial year, 1MDB made a loss of RM665 million despite a revaluation of RM897 million.
In a recent case, 1MDB has had to postpone the payment of RM317.3 million for the purchase of land from Tadmax Resources, he said.
“It still cannot pay that amount till today and yet the government boasts that it has billions. There is something not quite right about this.
“The truth is, its loan costs are too high and its earnings are too low,” said Pua.
The press briefing became even more urgent because the company had just suffered a reversal of fortune. It reported a group loss of RM665.3 million for the financial year ended March 31, 2014 against a profit of RM778.2 million the previous year.
Admittedly, 1MDB does have some good assets although they might have been purchased at inflated prices. To show some semblance of balance between its assets and liabilities, it had resorted to revaluing its assets yearly, which is not done by other developers. A case in point is its Tun Abdul Razak Exchange (TRX), now under development in Kuala Lumpur. The 70-acre prime land was bought cheaply from the government and re-valued several times to produce what some call “paper profits.” As some analysts put it, many of the things Lodin revealed at the press conference are different from what is in 1MDB’s book. For instance, its highly controversial RM7.7-billion “investment” with a Segregated Portfolio Company (SPC) in the Caribbean tax haven of Cayman Islands and managed by Hong Kong-based Bridge Partners.
One analyst said, for all the controversies the fund transfer generated, the company earned only RM437 million in dividends, which represents a paltry return of 3.26%. A further question is, how does this rate of return compares with its cost of funds?
Deputy Finance Minister, Datuk Ahmad Maslan, in his gallant attempts to defend the company in the Dewan Rakyat had been found to have given misleading information while his efforts to cast 1MDB in a kinder light by revealing that it had spent RM382 million on corporate social responsibility (CSR) activities is debatable because the company’s principal responsibility is to its shareholders. A loss-making company is not expected to be generous with shareholders’ funds. It is an open secret that 1MDB spent lavishly, particularly in Penang, during the last general elections, feasting and entertaining the people of the DAP-led state. It also paid close to RM2 billion for several pieces of land in the state days before last year’s GE, leading to the Penang Chief Minister, Lim Guan Eng, to wonder why the company paid almost 100% higher than what the land in the state was valued just two years earlier in December 2011.
For 2015, 1MDB’s operating income is not going to increase because the new contracts for power plants are not even built yet. At the same time, work hasn’t even started for Tun Razak Exchange and Bandar Malaysia for any revenues to be recognised. Since financing cost is expected to be even higher due to costly loan restructuring which was undertaken, 1MDB would therefore not fall too far to convince Malaysian if the losses were not higher for the year ending March 2015.
No comments:
Post a Comment