ASEAN Economic Community: Shining light of the East


May 24, 2016

Ten countries in Southeast Asia are attempting to launch a single market for goods, services, capital, and labor, which has the potential to become one of the largest economies and markets in the world. Here are 12 things to know about the ASEAN Economic Community.

  1. The center of global economic gravity is shifting toward Asia. Within Asia, it is shifting toward the two giant economies of the People’s Republic of China and India. Their emergence as economic superpowers suggests that “economic size” bestows significant advantage in accelerating growth and fostering development.
    Source: ADBI. 2014. ASEAN 2030: Toward a Borderless Economic Community
  2. The Association of Southeast Asian Nations (ASEAN) is in the process of creating a single market and production base, called the ASEAN Economic Community, which will allow the free flow of goods, services, investments, and skilled labor, and the freer movement of capital across the region. This is envisioned to be in place by 31 December 2015.
    Source: 24th ASEAN Summit. 2014. Myanmar. Nay Pyi Taw Declaration
  3. If ASEAN were one economy, it would be seventh largest in the world with a combined gross domestic product of $2.4 trillion in 2013. It could be fourth largest by 2050 if growth trends continue.
    Source: Speech by ADB Vice-President Stephen Groff. 2014. Berlin, Federal Republic of Germany. ASEAN Integration and the Private Sector
  4. With over 600 million people, ASEAN’s potential market is larger than the European Union or North America. Next to the People’s Republic of China and India, ASEAN has the world’s third largest labor force that remains relatively young.
    Source: Speech by ADB Vice-President Stephen Groff. 2014. Berlin, Federal Republic of Germany. ASEAN Integration and the Private Sector
  5. ASEAN is one of the most open economic regions in the world, with total merchandise exports of over $1.2 trillion – nearly 54% of total ASEAN GDP and 7% of global exports.
    Source: ADBI. 2014. ASEAN 2030: Toward a Borderless Economic Community
  6. ASEAN is taking a more cautious approach to regional economic integration than Europe. In Asia, there is currently no serious consideration of a single currency.
    Source: ADB news release. 2015. An Increasingly Unified Asia Is Keeping an Eye on Greece
  7. The ASEAN Economic Community is founded on four basic initiatives: creating a single market and production base; increasing competitiveness; promoting equitable economic development; and further integrating ASEAN with the global economy.
    Source: ASEAN. 2007. Singapore. Declaration on the ASEAN Economic Community Blueprint
  8. ASEAN’s physical infrastructure is critical to the ASEAN Economic Community’s goal of establishing a single market and production base. Cross-border roads, power lines, railways and maritime development will help propel the community forward. This will boost existing and new value chains or production networks.
    Source: Speech by ADB President Takehiko Nakao. 2015. 19th ASEAN Finance Ministers’ Meeting. Kuala Lumpur, Malaysia 
  9. One of the challenges to the ASEAN Economic Community is bridging the perceived “development divide” between the older and economically more advanced members – Brunei, Indonesia, Malaysia, Philippines, Singapore, and Thailand, known as the ASEAN-6, and the four newer members – Cambodia (1999), Lao People’s Democratic Republic (1997), Myanmar (1997), and Viet Nam (1995).
    Source: ADB. 2013. The ASEAN Economic Community: A Work in Progress
  10. Some analysts believe that the ASEAN Economic Community will miss its December 2015 deadline because of the challenging requirements of economic integration, including changes to domestic laws and in some cases constitutional changes.
    Source: ADB. 2015. Realizing an ASEAN Economic Community: Progress and Remaining Challenges
  11. The flexibility that characterizes ASEAN cooperation, the celebrated “ASEAN way,” may hand member states a convenient pretext for noncompliance, according to one ADB report. How to enforce the accords remains an issue. Currently, the economic integration commitments lack sufficient mechanisms to ensure compliance.
    Source: ADB. 2015. Realizing an ASEAN Economic Community: Progress and Remaining Challenges
  12. ASEAN needs a plan beyond the ASEAN Economic Community to achieve the long-term development aspirations of its 10 member countries, according to an ADB study. This includes introducing structural reforms nationally and taking bold actions regionally to further deepen economic integration.
    Source: ADBI. 2014. ASEAN 2030: Toward a Borderless Economic Community

ASEAN Economic Community: Shining light of the East

by Dr. Munir Majid

http://www.thestar.com.my

THE level of interest in the ASEAN Economic Community (AEC) among the business community in the world at large has increased tremendously since its pronouncement at the end of last year.

While not discounting its imperfections, foreigners are more focused on the opportunities and promise of the single market and production base.

With 90% of global economic growth coming from outside the advanced economies, one can understand why. But there are also ASEAN’s particular strengths which attract attention.

Many are becoming increasingly aware of the size of the ASEAN economy (US$2.7 trillion, the seventh largest market in the world with over 620 million people). Beyond that, they also realise that its growth potential is very capable of achievement with the demographic dividend ASEAN will reap from its young population (60% under 35 years of age).

 The latter means a high level of productivity from a work force when a lot of the world would see an ageing population not part of the work force increasingly dependent on the resources of the economy.

The young population will also be a huge part of the growing middle class which, on the demand side, will drive the consumption of a multiplicity of goods and services.

The expectation that ASEAN will become the third largest economy in the world after China and India (or fourth if the European Union is counted as one economy before mid-century is therefore not seen as fanciful.

At the same time, the very disparity in economic development in Asean is also seen as an opportunity to bring up the less developed countries from a low base. Here, large infrastructure development needs are making a number of foreign businesses consider where they might be involved.

Estimates of annual ASEAN infrastructure development needs vary widely from US$ 60bil to US$ 600bil, depending on the definition of what is the base requirement, but the sectors most in need are quite clear: energy, transportation and telecommunications.

The countries farthest behind in infrastructure development are also obvious, with Indonesia requiring around US$ 500bil for the rest of the Jokowi administration and Myanmar estimated to need US$ 350bil into 2025.

Companies in countries not so fashionable in ASEAN economic thinking, such as Russia, are seriously examining the technology they can bring to ASEAN economic development, in areas such as renewable sources of energy, water treatment and modern construction materials.

One Russian company is looking at, in the first instance, developing business-to-business e-commerce with ASEAN to facilitate two-way trade.

On the soft side – particularly with ASEAN’s young population – the greatest infrastructural need is for education and training. The more traditional investors in ASEAN, such as Britain, are looking at how they can address this beyond the conventional schools and universities.

Training in and introduction of new technologies in ASEAN are being mulled by many countries, particularly in Britain but also Russia. Creation of Artificial Intelligence in ASEAN for other markets as well is being looked at by one Russian company.

While not all this new interest in the ASEAN economic space has arisen from pronouncement of the AEC, that historic event last year has no doubt concentrated business minds on its promise and potential.

The United States, China, Europe and Japan no doubt have a long and abiding interest, but new interest among businesses in countries such as Russia is noteworthy. In August last year, the Russian and ASEAN economic ministers identified 57 new projects to be pursued.

The Russians now do not want just a roadmap. They want projects to be materialised.Of course, Russia has geopolitical reasons for wanting to develop trade and investment with ASEAN. At the Sochi summit this week with Asean leaders, after 20 years the Russian relationship with the region was raised to the level of a strategic partnership.

At the same time the Russians are drawing in the Eurasian Economic Union on their side of the partnership. They are also urging ASEAN to relate with the Shanghai Cooperation Organisation.

All this reflects the geopolitical factors for Russia’s desire to develop the relationship with ASEAN – their deteriorated relations with the West and the sanctions against them.

Russia therefore needs to look East. ASEAN is a bright star. Whatever the geopolitical motive however, Russian businesses would not want to come to ASEAN if there were no opportunity.

Without taking sides or being drawn into any alliances, ASEAN  should get engaged with diversification of economic relationships for its own benefit. Russia, for instance, has got some very advanced technologies that could compete with the usual suspects to provide good terms and choice.

The ASEAN promise is not limited to the region. The foreign interests looking at and wanting to come to ASEAN also see how the market would expand, and how having ASEAN as their base makes good business sense.

It is to be hoped ASEAN companies see this too, and might want to engage with them for their own further expansion.

Beyond ASEAN there is the Regional Comprehensive Economic Partnership (RCEP). Comprising ASEAN and six other countries – China, India, Japan, Korea, Australia and New Zealand – the expanded free trade area would comprise three billion people and over a quarter of global Gross Domestic Product, and is growing. An ASEAN base, with its already large market, can be a springboard to an even larger one.

In addition, the Trans-Pacific Partnership (TPP), often seen as in opposition to the RCEP, could very well work to be complementary. With a market size of over 40% of global GDP, the TPP already has four Asean countries committed to join, with three more mulling over it.

Again, an ASEAN base would be a good platform from which to penetrate that already huge TPP market. An irony would be if, say, a Russian company in partnership with a Malaysian one were to produce goods or services in our country destined for America.

That prospect would be a test of US commitment to free trade. But that is another story.

The story now is about ASEAN and its AEC, which is engaging a lot of foreign business interest, whether driven by geopolitical or purely commercial considerations. The promise foreigners see in it is something we in ASEAN must also see. It is good to want to ensure an optimal AEC, but we must make business decisions now, as others are making.

Malaysia’s Aurat Air–Regulatory Incompetence


May 23, 2016

Malaysia’s Aurat Air:  Regulatory Incompetence

by Mariam Mokhtar

Did the government simply rubber-stamp Rayani Air’s license to operate, without conducting detailed checks, including its cash-flow analysis and break-even point?

Mr. A A Kaprawi

The statement by  Deputy Transport Minister Dato Abdul Aziz Kaprawi that the government will “be more stringent and impose a stricter standard operating procedure on all airlines” should set alarm bells ringing. It suggests that the government acted with haste and was extremely complacent.

So, how deeply committed is our government to safety and good management practices? Rayani Air is Malaysia’s first syariah compliant airline, but like any other airline, it must comply with rules and regulations.

Starting an airline is not merely about buying or leasing aeroplanes, then painting them in the new livery. Nor is it about finding the pilots, ground and cabin crew, engineers, and other personnel, to operate an airline.

Providing halal food, prayers before take-off and on landing, not serving alcohol, and staff who cover their aurat will not make an airline popular. Good and reliable service, efficient and friendly staff, well maintained planes, popular routes and accessible airports are part and parcel of a good airline experience.

Like any other business, Rayani Air’s owners would need funding and would have provided a business plan, to satisfy its backers or the bank. Did Rayani Air not do enough homework with regards to long-term funding? It cannot run Rayani Air for a few months, and hope that revenue from sales will enable it to continue. Even a simple home-based business does not operate like that.

When Rayani Air soared above Kuala Lumpur, in December, many people were sceptical because few people choose a certain airline, because it serves halal food. They base their judgement on the price, good safety record and reliability.

The Con-Artists of Aurat Air

Within months, the airline was dogged with delays, cancellations, a cracked cockpit windscreen and maintenance issues. Amongst other things, passengers were furious that their boarding passes were not printed.

Passengers were forced to travel on a coach service provided by the airline, although they would have preferred to be put on a later flight. Delays were common and stories about 485 employees not being paid, were leaked to the press.

Things came to a head on April 11, when Rayani Air’s Air Operation Certificate (AOC) was suspended, for three months, after it temporarily halted its operations following a pilot strike. The airline had failed to seek the Department of Civil Aviation’s (DCA) permission before ceasing operations.

Instead of dealing with the criticism of the passengers and staff, Rayani Air’s Chief Executive Officer, Ravi Alagendrran, said that the cracked windscreen was due to sabotage. He did not bother to wait for the results of an investigation. His statement attracted bad publicity, because it suggested that the airline had enemies.

He later retracted this statement, but he had introduced doubt in people’s minds about safety and security. The shattered windscreen was spotted by pilots, before the flight took off. Passengers may have wondered whether the alleged saboteur had damaged a vital piece of equipment, in a hidden part of the aeroplane and the fault was not detected in time.

The CEO’s statement about sabotage, probably infuriated the people managing Langkawi airport, as passengers wondered if security in the airport was lax.

According to The Malay Mail Online, pilots had refused to fly because the company’s two aircraft had structural faults. The airframe, which is the aircraft’s mechanical structure, that  includes its fuselage, wings and undercarriage, was unsafe.

Perhaps, the blame should not rest solely with the airline bosses. The government and the DCA are also to blame. They gave Rayani Air the go-ahead. They rubber-stamped the permit to fly, without checking the safety and viability of the aeroplanes, and funding to operate, for more than three months.

The government must tell would be business owners not to commercialise Islam. The government must stop deluding itself and thinking that a syariah compliant service need not follow normal business guidelines. It is not God’s will that makes an airline safe, but man’s endeavour. –

http://www.theheatmalaysia.com/

 

David Cameron is playing coy with Najib’s Corruption for Business


May 17, 2016

Conservative Party’s David Cameron is playing coy with Najib’s Corruption for Business

What can we expect from him? After all, David Cameron is just another politician who happened to be re-elected Prime Minister. His job is to take care of British interests. He will even entertain the most corrupt Prime Minister of Malaysia ever if  British businessmen can be benefit from deals out of Malaysia, be these be in Britain or in our country.–Din Merican

Don’t miss the ASEAN bus


May 14, 2016

Don’t miss the ASEAN bus Comment | The Star Online

by Dr. Munir Majid

Phnom Penh: Cambodia is now an emerging ASEAN Tiger with opportunities for investment in hotels, infrastructure, industrial estates, agriculture and tourism  and related services. Don’t miss the boat.–Din Merican

BREADTALK, a Singapore bakery, will open its first outlet in Myanmar in early 2017, in a franchise agreement with that country’s real estate giant the Shwe Taung Group. Breadtalk has spread to nearly 800 locations in primarily ASEAN countries.

A leading Singapore logistics group is looking to extend its trucking reach to Vientiane and as far as Kunming while driving also for the expansion of e-commerce across the region. Thai retail and real estate companies, such as the Central Group, have large footprints, particularly in continental South-East Asia, as they prepare and seek to tap demand and consumption from the growing and young middle classes in ASEAN.

VietJet, a low-cost Vietnamese airline, is fast spreading its wings and wants to fly all over ASEAN, using colors of bold red, albeit with a touch of yellow, made all too familiar by AirAsia.

China has a huge infrastructure development agenda in ASEAN, through the AIIB and One-belt, One-road initiatives, and through financing commitments in more focused areas such as the Mekong sub-region, the most recent, in March, being US$11.5bil in loans and credit for infrastructure under the Mekong-Lancang Co-operation framework.

American investment in ASEAN (total capital stock US$226bil) is larger than that in Japan, China and India put together (capital stock US$202bil), even if the European Union is still the largest foreign investor in ASEAN.

Japanese companies are all over the region, Toyota’s and Honda’s automobile hubs in Thailand being quite impressively well placed to take advantage of the free movement of the supply of parts under the ASEAN Economic Community (AEC), of the growing market of 630 million (the third largest in the world), and of the single market and production base to export worldwide.

This is ASEAN. That frequently cited combined GDP of US$2.6 trillion, seventh largest economy in the world, poised to become the third largest, after only China and India, in 2030 or just after.

Across the region, proactive companies from within and outside ASEAN, from a range of businesses, traditional and conventional, digital and new world economy, are on the move to realise value from its growth and potential.

There are gaps and gaping holes in the integration process, including in the AEC and in socio-economic and political development, but a company or business would be left behind if it just dwelt on them.

Many Malaysian companies are of course in ASEAN and trading with ASEAN countries, in the financial services sector, in legal services, oil and gas, power, manufacturing and other businesses. However, there are also others who are not engaged and only have many complaints about the AEC’s imperfections.

Many of these complaints are not misplaced. However, in business you cannot wait for the perfect circumstances before you move. You wait and you lose all the first mover advantages. You wait and you don’t develop relationships, and it will be too late and take too long to cultivate them when the time is ripe. You take risks, calculated against potential benefits.

A bakery venturing into a rice-eating country, only just now coming out of the economic dark ages, is not something without risk. But a calculation that the mostly young people in the population of 52 million will form the basis of a growing future sophisticated demand counterbalances it.

Political change is taking place in Myanmar. It is early days. There is no clear succession plan after Aung San Suu Kyi. But is the change not irreversible? Will economic empowerment and the spread of its benefit not act as a check against any reversal?

And, coming back to the region as a whole, will not the imperfections and weaknesses of the AEC be addressed over time? Indeed they are being addressed. As ASEAN Business Advisory Council (ASEAN-BAC) chair last year, we worked very hard to obtain explicit recognition of the private sector role in the ASEAN integration process, and a hard-wiring of the collaboration in that process, rather than just top-end picture opportunity dialogues with leaders and ministers.

As a result, the AEC 2025 Blueprint made extensive mention of the role ASEAN-BAC is expected to play, in association with other ASEAN and non-ASEAN private sector councils, representatives and interested sectoral expert bodies. There are actually 19 such councils and at least 66 sectoral expert bodies.

ASEAN-BAC is already working to ensure effective representation of views in a coordinated manner to the leaders, ministers and officials. Perhaps, more importantly, ASEAN-BAC is identifying expert resources who can make their contribution in official ASEAN committees and working groups in sectors and areas of concern. This bottom-up work is perhaps more important than the big-ticket dialogues whose outcomes are often diffused and dissipated.

Therefore, working both top-down and bottom-up, ASEAN-BAC and all associated private sector groups will achieve better outcomes to address AEC shortcomings and imperfections.For example, in the vexed area of non-tariff barriers (NTBs) there is an understanding with officials to prioritise their removal in four sectors: agri-food, healthcare, logistics and retail (including e-commerce). The ASEAN Co-ordinating Committee on NTBs has to set up the four working groups to get cracking.

As another example, the proposal by the ASEAN Business Club to have a private sector Financial Services and Capital Markets expert group work with the ASEAN Secretariat could be adapted to have the experts work in the relevant committee or working group for faster financial sector integration.

All this takes painstaking work not always compensated by desired progress. There will be frustrations, even recriminations. But it has to be done. The private sector must be committed and involved, even as they complain about the many shortfalls of the AEC.

Having said all this, it does not mean companies should sit on their hands and just wait and see. Those who have not made their ASEAN move should really ponder on what they would be missing and on why those who have, have done so.Everyone is operating in the same ASEAN, warts and all. Those who are still waiting could very well miss out.

Indeed their very business will be threatened as markets become more open and competitive with a more integrated AEC – something which, ironically, they are waiting for.

Tan Sri Munir Majid, chairman of Bank Muamalat and visiting senior fellow at LSE Ideas (Centre for International Affairs, Diplomacy and Strategy), is also chairman of CIMB ASEAN Research Institute.

1Malaysia Development Bhd. Nears a Sorry End


May 5, 2016

With International Relations Student at University of Cambodia Techo Sen School of Government and International Relations, Ven. Thy Theoun who is interested in Buddhist Economics and Ethics

COMMENT: The easy part of the whole saga is to dismantle  1MDB and then the Malaysian Treasury, basically the Malaysian taxpayers, will  absorb the losses. We are  now told that 1MDB directors have resigned and the Chairman of the Advisory Board who is also the Prime Minister cum Minister of Finance is absolved of any wrongdoing, despite irrefutable evidence that he admitted he had received money in the form of “donation” from a generous Arab into his personal bank account at Arab-Malaysian Bank.

This whole affair makes a mockery of transparency and accountability of directors and management. It is a disgrace that we haven’t done anything about coming to grip with our failure to hold our corporate leaders and their political leader to account. Recall that the Prime Minister of Iceland had to quit over the Panama Papers revelation and the President of Brazil is running the risk of being impeached for budgetary violations. What signal is the Najib administration sending to the banks and capital markets around the world? How long do  we in Malaysia want to perpetuate this culture of impunity.–Din Merican

­

1Malaysia Development Bhd. Nears a Sorry End – Asia Sentinel | Asia Sentinel

by John Bethelsen

Wan Saiful Wan Jan, Head of the Institute for Democracy and Economic Affairs, a think-tank in Kuala Lumpur, said: “The most powerful person in the country was chair of the advisory board. This is someone whose advice must be obeyed. It’s a serious conflict in terms of corporate governance — who is in charge, the Board of Directors or the Prime Minister?” 

The Malaysian government has begun to officially dismantle 1Malaysia Development Bhd., the Ministry of Finance-backed development fund that was brought into being by Prime Minister Najib Razak in 2008 and which has morphed into what arguably is the biggest scandal in Malaysian history.

The implications for investors are unclear. What assets are not sold off are expected to be moved into the Ministry of Finance, with the Board of Advisers – headed by Najib – and the Board of Directors being dissolved. A well-connected businessman told Asia Sentinel last week that the government – and thus the taxpayers – will probably end up having to eat the losses.

However, the eight-year history of the fund is an astonishing tale of greed and chicanery, with billions of dollars apparently having been stolen or otherwise unaccounted for, diverted into accounts in the Cayman and British Virgin Islands. Investigators believe that as much as US$1 billion was routed into Najib’s own accounts in March of 2013 before being diverted out again in October of that year, to disappear into cyberspace.

The scandal has played a major part in fomenting distrust in the United Malays National Organization, the leading party in the national ruling coalition, with Najib firing his own Vice President and Deputy Prime Minister, Muhyiddin Yassin, as well as Attorney General Abdul Gani Patail, in an effort to contain the scandal. Other government officials have been sidelined or neutralized.

It has driven former Prime Minister Mahathir Mohamad (above) to seek a deal with opposition figures including Lim Kit Siang, the head of the Democratic Action Party, whom he jailed in 1986, and others, in the vain attempt to bring down Najib. So far, propped up as head of UMNO and thus as Prime Minister by the votes of 196 district chiefs who are said to have been bought off with rent-seeking jobs and contracts as well as outright bribes, Najib has remained invulnerable, also by threatening opponents with jail, closing influential newspapers temporarily and short stopping a reported investigation by the Malaysian Anti-Crime Commission that was on the edge of recommending his indictment. A similar request from Bank Negara, the central bank, for an investigation into the movement of funds was simply ignored.

The scandal has also ensnared Goldman Sachs’ former Southeast Asia head, Tim Leissner, who engineered a huge US$3 billion sale of 1MDB bonds that earned Goldman an estimated US$500 million. Leissner left the firm and moved to Los Angeles, where he has reportedly been meeting with FBI officials.

The fund is believed to be RM42 billion (US$11.6 million) in debt against an unknown amount of assets, and with the government in a protracted squabble with an Abu Dhabi entity, the International Petroleum Investment Corp. (IPIC) over as much as US$3.5 billion of funds that 1MDB officials thought they were transferring to an IPIC subsidiary, Aabar Investments PJS.

The money instead went into a BVI-registered company called Aabar BVI and has since disappeared. IPIC officials refused to make a payment of US$50 million to bondholders when it discovered that the money had been diverted, stirring fears of a cross-default that could imperil the country’s financial system.

Rafizi Ramli, the Secretary -General of the opposition Parti Keadilan Rakyat, in March reportedly displayed figures indicating that transfers from Tabung Haji, the fund that invests savings for Muslims to make the Haj to Mecca, were depleted to the point that the fund was endangered. Rafizi was charged with sedition and briefly jailed. Several other opposition figures including Tony Pua, spokesman for the DAP, have been threatened with sedition charges for questioning the 1MDB operations.

Officials of 1MDB and others associated with the sovereign investment company, with interests in power and property, are being pursued by investigators in five countries, most prominently the United States, whose US Attorney for the Southern District of New York Preet Bharara, has sent FBI investigators to Malaysia to seek clues to allegations of money laundering on the part of the Najib family for the purchase of expensive real estate in New York and California and for the funding of the blockbuster movie Wolf of Wall Street.

Other law enforcement agencies include the Attorney General of Switzerland, which has accused unnamed individuals of laundering as much as US$4 billion from 1MDB through Swiss bank outlets in Singapore. Singapore is said to have frozen the bank accounts of several individuals as well. Most recently, officials in Luxembourg opened an investigation into 1MDB’s affairs.

The fund got its start in 2008 when Jho Taek Low, then a 27-year-old Penang-born financier and friend of the Najib family, persuaded Najib to take over a budding investment fund that he had proposed to the Sultan of Terengganu, who backed away from it. The fund embarked on a torrid acquisition process, buying vastly overpriced independent power producers from companies and individuals closely connected with the UMNO ruling clique including the Genting gaming and plantation conglomerate and Ananda Khrishnan, one of the country’s richest men. With 1MDB facing huge debts from the purchases, the government pushed through no-bid contracts to hand 1MDB’s power units lucrative deals at the expense of competitive bidding.

It was given the gift of the obsolete Sungei Besi air force base, close to downtown Kuala Lumpur, which it sought to turn into a high-priced financial center called the Tun Razak Exchange, named for Najib’s father

But hundreds of millions of dollars allegedly were diverted into Jho Low’s personal accounts. As Asia Sentinel reported in 2014, Jho Low – a private individual – attempted to use 1MDB guarantees in a vain attempt to buy three of London’s finest hotels, the Connaught, the Berkeley and Claridge’s. He acquired a 300-foot yacht and a flock of enormously expensive paintings that he has since begun to sell off.

Reuters reported in April that RM18 billion of 1MDB’s debt linked to its power assets would go under Edra Energy, which is due to be sold off in nine months’ times. It is also expected to sell off two high-profile property projects, the Tun Razak Exchange and Bandar Malaysia, after splitting them into separate entities. Critics have charged that the land under the stalled projects has repeatedly been revalued upward to unrealistic levels in an attempt to cover the indebtedness.  Once the assets are sold off, 1MDB is expected to be dissolved completely.