Sorry, Singapore: Malaysia dumps assets to cope with US$245 billion debt

March 29, 2018

Sorry, Singapore: Malaysia dumps assets to cope with US$245 billion debt

  • Malaysia is holding a fire sale of its ‘non-strategic’ assets.
  • Critics fear the moves will privilege an elite group and worsen ties with neighbouring Singapore.

Malaysian Prime Minister Mahathir Mohamad. Photo: Xinhua
Malaysian Prime Minister Mahathir Mohamad. Photo: Xinhua
A year into a new ruling administration, Malaysia continues to grapple with a whopping 1 trillion ringgit debt (US$245 billion) – but as it goes on a selling spree of “non-strategic assets”, questions are being asked over who is benefiting from the exercise and whether the moves could cause ties with neighbouring Singapore to take a further hit.

Government-linked investment company Khazanah, which has resolved to pare down its “non-strategic” assets, has so far got rid of its stakes in telcos, health care groups, banks and properties. Reports have indicated larger projects, such as the popular theme park Legoland, may also be up for grabs for the right offer.


In parliament earlier this week, Finance Minister Lim Guan Eng said a tower building in Hong Kong – which once housed the Malaysian Consulate-General – was being sold for 1.6 billion ringgit (US$392 million). This came just days after Khazanah was reported to be selling the 39-storey Duo Tower in Singapore, owned by M+S – a joint venture by Khazanah and its Singaporean equivalent, Temasek Holdings. Last month, Malaysia’s Axiata Group, in which Khazanah has shares, announced it would sell its stakes in Singapore’s M1 telco.

The DUO tower, in Singapore. Photo: Ole Scheeren
The DUO tower, in Singapore. Photo: Ole Scheeren



Khazanah also last year began selling shares in CIMB Bank, and dumped a 16 per cent stake in Malaysian-Singaporean private health care group IHH Healthcare. This move has raised eyebrows among analysts and opposition politicians, who have criticised the ruling Pakatan Harapan coalition for vague economic policies and failing to focus on remedying wealth inequality, with others commenting the sale reflected a cooling of interest in joint Singapore projects.


Khazanah, which is managed by the Minister of Finance Inc and modelled after Singapore’s Temasek Holdings, last year posted its first pre-tax loss in 13 years, partly due to its takeover of the loss-riddled Malaysia Airlines.

It attributed the 6.27 billion ringgit loss in 2018 – compared with a profit of 2.89 billion ringgit in 2017 – to both the resetting of the government’s mandate as well as global and domestic developments.

IHH Healthcare's Mount Elizabeth Novena Hospital in Singapore. Photo: Bloomberg
IHH Healthcare’s Mount Elizabeth Novena Hospital in Singapore. Photo: Bloomberg


In line with the new government’s strategy, Khazanah split its assets into “commercial” and “strategic” holdings, with managing director Shahril Ridza Ridzuan telling local media the commercial fund was “really gearing up towards being a long-term real return provider for the government”, as the government needed it as an alternative source of revenue.


Disgraced former prime minister and sitting Member of Parliament Najib Razak has fiercely questioned Khazanah’s new strategy, saying it was illogical to reduce investments, citing its annual growth rate of 14.7 per cent from 2008 to 2017.


“Even if this is to pay government debt, where is the logic in selling assets which generated a profit of 14.7 per cent each year to pay debt which has interest charges of 3.8 per cent per year?” said Najib, who served as both prime minister and finance minister when Malaysian debt rose to an all-time high. Najib is currently facing scores of charges of corruption and money-laundering over his role in the 1Malaysia Development Berhad (1MDB) financial scandal.

Meanwhile, observers have questioned whether the asset sale strategy will truly benefit the nation, or backfire by creating oligarchies because of the administration’s concurrent focus on a Bumiputra economic agenda.


In Malaysia, ethnic Bumiputra – Malays and indigenous peoples – make up about 69 per cent of the population, and are constitutionally granted special privileges: affirmative action that takes the form of enhanced access to scholarships, civil service positions, land, and real estate purchases.


Upon coming to power last May, Pakatan Harapan pledged to chart a “new” Bumiputra-centric economic empowerment agenda that would generate growth and allow Bumiputra entrepreneurs to lead the economy – although some senior leaders such as prime minister-in-waiting and democracy icon Anwar Ibrahim have stressed that the government must focus on Malaysia and poverty eradication.

“If they are going to divest and also abide by this Bumiputra agenda, then it limits the cohort of people who can acquire assets such as government-linked companies,” said top political economist Terence Gomez of University Malaya. “Who can afford to do this – and of that group, who are the Bumiputras with the resources to invest? Is the government going to channel even more wealth to a rich elite? Divestment of assets should not be an ethnic issue.”

Doing so could result in an oligarchy of rich businessmen who run key national services and corporations, Gomez said.



“When countries like Indonesia democratised by turfing out draconian governments, they also began divestment exercises. But this created oligarchs, which is not a road Malaysia should go down,” he said. “Is this the reform Pakatan Harapan promised? If so, it is just creating new problems that can emerge from this divestment exercise. Wealth inequality is a problem and taking assets from the government and passing them on to only rich people who have the resources will only make the rich richer.”

The divestment strategy can be made even more problematic if the government does not clarify what it means by “non-strategic”, as it could extend to institutions such as banking or utilities which should remain under state control, Gomez said.


‘I love Malaysia Airlines, but we can’t afford it’, Mahathir says. Moves such as the selling of Axiata’s stake in Singapore’s M1 and the rumours of Duo Tower being sold down have also raised questions about Prime Minister Mahathir Mohamad ’s often hawkish relationship with neighbouring Singapore, and whether he considers these assets unessential.

“I won’t discount the possibility that Mahathir views such joint ventures with Singapore as being ‘non-strategic’,” said Eugene Tan, a law and public policy expert with Singapore Management University. “There could be the assessment that such investments benefit the Singapore economy more than Malaysia’s public coffers. This, arguably, stems from his perception that many of the deals his predecessor entered into – especially with Singapore – were and are not necessarily in Malaysia’s best interests.

Putting it bluntly, Mahathir could be flagging that he is not confident in the Singapore economy Eugene Tan, Singapore Management University

“But it could be about something simpler: the imperative of the Malaysian government to monetise its assets in order to reduce its budget deficit – and the assets in Singapore are probably best to monetise given the returns,” he said.


“Mahathir could also be signalling that the prognosis for the Singapore economy may not be good in the short-term, and so it is best to strike while the iron is hot and fully capture the value of these assets,” Tan said. “Putting it bluntly, Mahathir could be flagging that he is not confident in the Singapore economy.” Singapore-Malaysia tensions put Lion City’s lawyers to the test.


Political analyst Mustafa Izzuddin of Singapore’s ISEAS-Yusof Ishak Institute shared a similar view, saying that besides being an economic decision, the sale of stakes in Singapore projects could also be viewed as a “political decision” that reflects Mahathir is not as “genuinely interested as his predecessor Najib was of embarking on joint ventures with Singapore”.

“If the joint ventures are not in Malaysia, as is the case with the Duo office, the Pakatan government under Mahathir are more likely to monetise it, especially if it does not bring direct domestic economic benefits to Malaysia,” said Mustafa.


Najib and Singapore Prime Minister Lee Hsien Loong had entered into joint projects in Singapore and in the Iskandar region of Malaysia’s southernmost state of Johor as part of efforts to entwine the two nations with a “prosper thy neighbour” philosophy and place bilateral ties on a surer footing.


But the two countries have recently experienced a cooling off in ties following differences of opinion oversea and air borders, as well as disputes over water prices, though their leaders will meet on April 8-9 in Kuala Lumpur for a retreat.
In an attempt to better manage its debt of over 1 trillion ringgit, Malaysia has also cancelled or delayed several infrastructure megaprojects, including the High Speed Rail between Singapore and Malaysia, and several China-backed gas pipeline projects.

Mahathir has urged the people to be patient, saying that if Malaysians “cooperate in an atmosphere of peace and calm, then we can restore the financial position and develop our country”. 

8 thoughts on “Sorry, Singapore: Malaysia dumps assets to cope with US$245 billion debt

  1. Isn’t Khazanah managed by Economic Minister and Tun as all BUMI structure with deliberate exclusion of the Chinese Finance Minister LGE. Since Malaysian economy is run by and by Malay Bumis as one large sector and one General MOF . Let us be factual do not leave out the racial structure of the economy. Just today Tun Admitted Malays are not astute in managing business and Azmin is a Malay.

  2. Day in, day out we hear about the supposed RM 1 Trillion ‘Nasional’ debt dreamt up by Tokong and his Master’s Voice. Add that to the persistent yodeling that 1MDB is the sole cause of Malusia’s debt crisis and fiscal imbalance and we have a nation of retards who can’t differentiate the durian pulp from the thorny husk! Politics et Mort!

    Doesn’t explain why our national debt has increased instead of decreasing.. Samurai Bonds are as dastardly as any conceived. No advantage there except the Son of the Father can speak a smattering of Japanese.. Tokong? Accountancy clerk only. No major decision making, except giving free pass to direct nego and closed tender mah.. Also expert in Tunneling software, dangerous slopes and offshore artificial islands, while espousing tree hugging warrior status, like colleagues who yodel about the dangers Lynas and red earth choking bauxite dust .

    Now, we have 2 subsequent quarters of deflation – according to official figures – yet the Bank N Gov insists that it’s not Bisa (poisonous), but Biasa (normal).. due to ‘headwinds’. Like we need to be shot in the head..

    Yup – we have similar governing environment as before – Incompetent Arrogant Goalkeepers, Mega Liars and Practicing Corruptors in this regime. The problem is not just Inexperience, Oppo Mindset but something more troubling: Revenge Politics and Mindless Standalone Policies! Unintegrated and Reactionary. Tainted by incomprehension, distrust and poor implementation.

    That’s why we have all these daily KleptoMo1 whackings. Becoming Institutional Briefings aided by neurally challenged RedBeans, ya? Disquiet to deflect attention to more substantive issues.

    But, the seized yacht Equanimity still ain’t sold, and treasury is probably using the “Harapan” Fund to pay for it’s mega-million upkeep. Then, we have the ‘arresting’ of the FeiJoLow ‘s family home of and so on.. Besides, the court case of KleptoMo1 is delayed by the incompetence of the AGC – change in charges, additional charges etc etc. What about the RM 116 mil and other bullion seized from JibMah’s ‘borrowed’ condos that haven’t yet seen the light of an Octo bulb?

    Meanwhile, the poor guys on the street, watch in ‘expectant’ trepidation as Octo and his Cabinet of Super-Effluents eructate non stop – instead of grappling with the real stuff and actual problems that beset our economy and politico-social SNAFU situation.

    Blame, blame, a lil bit here, a lil there; a daily spoonful of palm oil; black school shoes; flying car-drones; protiga cars, increasing housing density and legislating tobacco inhalation etc – ain’t, in the long run, effective for anything. That’s why Malusians QoL (quality of life) suffers and our happiness index has tanked 45 spots in one year.. Woe! Woe!

    So yeah, the fire-sale of GLC assets etc is just an excuse. It’s meant only for Cronies and Selected Supporters. Better still, if you happen to be a Billionaire whose fruit-of-loins can marry one of the unwedded or divorced ladies in waiting. 3K Lil Dottians need not apply. Temasek and Khazanah are world’s apart.

    • @brave new world disappeared. The real David Pua who slayed the Goliath 1MDB has disappeared. The report from the eminents were not known. A 20+ yo future PM preaches nothing but the dying wish of a 90+ yo. FOMO ministers like to talk more about flying cars, colored schools children shoes, and sexy flight attendants. Why apologize to Singapore? Apologize to your own gran children first. GLC, GIC .. Singapore would just say.. silly Malaysians. When are you stepping down, Tun M?

    • (..preaches nothing but the dying wish of a 90+..),

      Haha.., true, true. All of them so called ministers and Tokongs do.

      Tony the Pua didn’t slay anything.. The first intimation of something awry about 1MDB was by Anwar in Parliament way before Octo was even awake – and Jambu Rafizi and Tony were given the odious scent to chase. Their olfactory bulbs need to be refurbished.

      Philip Yeo, the doyen of Singapore’s mighty EDIS (see here: and others of similar distinction and stature, are probably being pursued and feted by our clueless donkeys in Putar-jaya. But they don’t really don’t have the backup, political will nor intellectual capacity to carry out any advice.

      Btw, no one is apologizing to Lil Dot. What exactly have you been smokin? Trying cannabinoids?

      But i do wish that Octo and Geng behave more responsibly in International Relations and Diplomacy. Shooting his gap off as a means of Jingoism (cf Singapore, PRC and now EU) seems to be de Rigeur for one as recalcitrant as him. Malusia needs all the help it can get – especially with the Global Economy and Trade starting to deflate. We need new ideas and innovation, as it were. FDI of quality (like koff! koff! Lynas-LAMP).

      Don’t even breathe Industry 4.0 – when we can’t even achieve Industry Tiga point Kosong. Our mojo blokes can’t even understand that and Octo is way behind the curve (Protiga.., really la), and what Bank N and Bursa is trying to yodel. Somemore, Cashless indeed!

      Instead of flogging dead horses like the E&E manufacturing (don’t even think about Quantum Computing or Swarm AI) and Commodities like CPO (who’s minister i/c is like a fish outta water), we should be looking at downstream industries and choose the most appropriate ones. The Pengerang O&G complex is actually a temporary, stalling tactic as it’s a Sunset industry.

      Now since you are so smart and well informed, can you suggest some new or sunrise downstream industries that can help the Ensolied Sons and us Nons? Provided we are able?

    • Oops! Errata in Para 3: “But they don’t really don’t have..”, should read @ ‘But they really don’t have..’

  3. //since you are so smart and well informed, can you suggest some new or sunrise downstream industries that can help the Ensolied Sons and us Nons?

    I am definitely not smart enough. But, I know Tony Pua is. Members of our council of eminents are. I also know many overseas Malaysians are.
    Grab CEO is.

    Change our Welayu state of mind a little, and there would be so much the nation could work on. Well.. just a wishful thinking…

    • Old tech supply chain logistics could still be a fantastic opportunity for the nation, as the nation still has deep roots into so many cultures, and a new logistic map would have to be generated soon.

  4. Throwing away “good money chasing good money ” and putting “good money into bad ” . That seems to be the strategy in practicing cronyism as a cover by using Azemin to execute after taken the role of the MOF, to show on surface, the New Malaysia is reducing the national debts, swiftly.

    In fact it is a short gain and a longer term pain to fool the people as if they are acting prudently to save Malaysia from the bogus 1 Trillion debts accumulated by the previous government, Najib.

    People will not buy this.

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