1MDB unsustainable from the start, minister admits to CNBC

Modified 4 Apr 2016, 5:37 am

With its low capital and high debt, Minister in the Prime Minister's Department Abdul Wahid Omar reportedly admitted that the 1MDB model was unsustainable from the very beginning.

“The model that they took was low capitalisation and huge borrowings, and I think as they found out, it wasn't a sustainable model.

“With that came debt realisation, where the board has now embarked on a rationalisation plan,” he reportedly told the US broadcaster CNBC on Monday.

Wahid was referring to 1MDB's debt rationalisation plan launched in May last year.

Among others, it involved the sale of 1MDB assets to China General Nuclear Power Corporation, and 1MDB's stake in Bandar Malaysia to China Railway Engineering Corporation.

According to 1MDB president Arul Kanda Kandasamy on Dec 31 last year, this reduced the company's debt by RM39 billion to RM42 billion.

Meanwhile, Abdul Wahid reportedly told CNBC that 1MDB is also exceptional in the fact that it is wholly owned by the Ministry of Finance, rather than being a listed company.

“The norm (in Malaysia) is successful transformation of the government-linked companies that we've embarked on,” he was quoted as saying, while pointing to Maybank, CIMB Bank, Axiata, Telekom Malaysia, and Sime Darby as examples.

This was done by steadily improving the companies' financial performance and governance, while also enhancing its role in nation building, he reportedly said.

In a written reply last Thursday, Finance Minister Najib Abdul Razak told the Parliament that 1MDB does not have any overdue debt .

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