NOW NAJIB CONCEDES POSSIBLE 1MDB 'FAILURE' BUT ASSURES EFFECTS 'CONTAINABLE'

KUALA LUMPUR - 1 Malaysia Development Berhad (1MDB) debts poses no systemic risk and its financial effects are ‘containable’ even if the state investment fund fails, Prime Minister Datuk Seri Najib Razak has said.

In an interview with The Star daily published today, Najib said that 1MDB’s previous business model was “too idealistic” and that its investments in Edra Global Energy did not meet its fast initial public offering (IPO) listing target.

This, according to the prime minister, was why 1MDB became saddled with large debt financing.

“Bank Negara has come out to say there is no systemic risk related to 1MDB. In other words, even if it fails, the financial effects are containable,” the English daily quoted Najib as saying.

Najib, who is also Finance Minister said that 1MDB’s debts are expected to be reduced by about RM16 billion and that there are already proposal to take over its power assets.

“For instance, with Edra Global Energy Bhd, there are two very real and huge proposals on the table to take over its power assets.

“I am confident that as we conclude 2015, 1MDB will undergo a successful rationalisation process with a massive reduction in debts,” the Pekan MP explained.

Najib is currently facing pressure over the multi-billion ringgit 1MDB controversy, which opposition MPs are using to seek for a no confidence vote against him in Parliament.

But the prime minister has maintained that although there are issues surrounding the state investment fund, foreign investors were still confident in the country’s economy.

How do you view the 1MDB issue, which continues to be contentious?

Najib: The business model was too idealistic previously and its investments in Edra Global Energy did not meet its fast IPO listing target, hence it became saddled with large debt financing. Bank Negara has come out to say there is no systemic risk related to 1MDB. In other words, even if it fails, the financial effects are containable.

We expect to reduce the total debt for 1MDB by a significant amount – in the region of RM16 billion. For instance, with Edra Global Energy Bhd, there are two very real and huge proposals on the table to take over its power assets.

I am confident that as we conclude 2015, 1MDB will undergo a successful rationalisation process with a massive reduction in debts.

The 1MDB controversy has led to serious concerns on governance in Malaysia.

Najib: I agree that there are concerns about governance as a result of the problems with 1MDB. We are applying rigorous and exhaustive processes of investigation, and the wrongdoings will be dealt with in accordance with the law.

There are three agencies involved: the police, Malaysian Anti-Corruption Com­mission (MACC) and Bank Negara. All these investigations are ongoing and we will get answers.  - Malay Mail/The Star