Obama Urges Prime Minister Najib to apply the Rule of Law apolitically

March 13, 2015

Obama Urges Prime Minister Najib to apply the Rule of Law apolitically

The malaysianinsider.com


Barack Obama

The White House today expressed its disappointment over Datuk Seri Anwar Ibrahim’s guilty conviction for sodomy, and urged Putrajaya to apply the rule of law to promote confidence in the country’s democracy, judiciary and economy.

In a statement following the close of a petition launched by former US Ambassador to Malaysia John Malott to press for Anwar’s freedom, the Obama administration said the worry was compounded by the Malaysian government’s intention to expand the sedition law against critics, despite Prime Minister Datuk Seri Najib Razak’s promise to repeal it.

The statement said the US had made its concerns on Anwar’s conviction clear through statements and interactions with Putrajaya and would continue to do so.

“The initial decision to prosecute Mr. Anwar, the decision to appeal the not guilty verdict, and the overturning of that verdict raise a number of serious concerns about the rule of law and the fairness of the judicial system in Malaysia,” the White House statement said.

It added that the two countries were committed to work together on the economy and security challenges, but said Washington would continue to urge Malaysia to apply the rule of law fairly, transparently and apolitically.

“History has shown that countries that uphold the human rights of all their citizens, regardless of their political affiliation, ethnicity, race, religion, or sexual orientation, are ultimately more prosperous and more stable, the White House said.

The petition for Anwar’s freedom achieved 113,122 signatures, more than the 100,000 required to qualify a response from the Obama administration.

The Federal Court on February 10 upheld Anwar’s sodomy conviction and his five-year jail sentence.

Meanwhile, the US Embassy said yesterday more than 60,000 signatures were removed from a counter-petition to the White House on Anwar because they originated from disposal email services.

From more than 70,000 signatures initially, the petition that took issue with the Washington’s stand on Anwar’s conviction was reinstated online with around 12,000 signatures.

“The White House did remove 60,789 signatures deemed to be fraudulent because a vast majority of those signatures originated from slipry.net.

“Other fraudulent signatures originated from trashmail, sharklasers, and mallinator – all disposable email services. Those fraudulent signatures occurred over the life of the petition,” the embassy added.

The counter petition was started nearly a month ago after the petition in support of Anwar’s freedom was launched.

It said Malaysians were “outraged” with the White House’s statement expressingJohn R. Malott2 disappointment with Anwar’s jailing, and told the US to “stop interfering in Malaysia’s judiciary and rule of law”.

Malott’s petition, “Make the release of Malaysian Opposition Leader Anwar Ibrahim from prison a top priority for US policy towards Malaysia”, was also temporarily removed after standard fraud checks by the White House erroneously identified it as a petition with fraudulent signatures.

The embassy clarified on Wednesday that it was not the free Anwar petition but the counter petition which had fraudulent signatures.

The counter petition, titled “Respecting the Sovereign Nation of Malaysia”, reached 12,612 signatures as of this morning.



The IMF on the Malaysian Economy

March 8, 2015

The IMF on the Malaysian Economy


This message contains the Press Release issued after the conclusion of IMF’s recent Article IV Consultations, with a link to the full Staff Report and a background paper entitled: “SELECTED ISSUES PAPER ON MALAYSIA”. These highly nuanced documents represent a kind of independent treasury report card on the Malaysian economy.





[Executive] Directors praised Malaysia’s impressive strides in economic development, which is the outcome of comprehensive initiatives to boost investment, improve infrastructure, and upgrade human capital. They agreed that Malaysia’s commitment to regional integration should also help support the country’s transition to high-income status by further enhancing competition and productivity.

IMF Executive Board Concludes Article IV Consultation with Malaysia

Press Release No. 15/88
March 3, 2015

On February 13, 2015, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation1 with Malaysia.

Malaysia’s well diversified economy continued to perform well in 2014. Growth accelerated to 5.9 percent, aided by robust domestic private demand and a recovery in exports. Lower energy costs helped contain inflation to 3.1 percent despite the removal of fuel subsidies and increase in electricity tariffs. Investment sustained its rising trend, reaching 26.8 percent of GDP in 2014, fueled by accommodative financial conditions and continued public spending on infrastructure.

Growth is expected to moderate to 4.8 percent in 2015. Strong investment momentum should help offset headwinds from continued fiscal consolidation. Lower energy prices will be a drag on oil and gas production but should provide a boost to the large non-oil sector. Consumption growth will moderate following the introduction of goods and services tax (GST), although a strong labor market and supportive—albeit gradually tightening—domestic financial conditions and lower energy costs should help consumers.

Fiscal consolidation is well timed, appropriately paced, and remains on track. The authorities recently revised the federal budget resulting in a slight change of the budget deficit ceiling, to 3.2 percent from 3.0 percent of GDP, in a timely and pragmatic response to the sharp recent decline in international crude oil prices. They took bold fiscal action in 2014, continuing a multi-year drive to reduce costly and untargeted subsidies. After raising electricity tariffs in early 2014, they took advantage of lower energy prices in the second half of 2014 to reduce and ultimately remove remaining gasoline and diesel subsidies. Subsidy reform together with the GST, which is on track to be introduced in April, should help offset the reduction in energy revenues. They should also help broaden the base of federal revenue system and diversify it away from volatile oil and gas revenues. A strengthening of Malaysia’s social safety net is an integral part of the authorities’ fiscal strategy.

The removal of subsidies freed up resources that can be redirected to better support poorer households through better targeted cash transfers. Malaysia is making progress in reforming its fiscal institutions. Top-down fiscal management and control are also being strengthened and the size of supplementary budgets has been substantially reduced. These reforms will help reinforce the sustainability of Malaysia’s public finances and make the fiscal system more effective in promoting efficiency, equity and growth.

Bank Negara Malaysia (BNM) took a step at normalizing monetary conditions in July but has since paused as downside risks to growth increased and inflation remained low, while risks to financial stability abated. Headline inflation will increase slightly, to 3.2 percent in 2015 from 3.1 percent in 2014, reflecting the net impact of subsidy rationalization, GST implementation, and exchange rate depreciation. BNM has adopted a wait-and-see attitude, and this cautious stance is appropriate for now taking into consideration lower expected inflation, the slowdown in domestic economic growth, and increased uncertainty surrounding the domestic and global outlook.

It would be prudent to move to a neutral monetary policy stance as soon as the uncertainty in the external environment dissipates. Malaysia’s financial system is sound and well-placed to withstand stresses, including from a potentially bumpy and asynchronous normalization of monetary policies in the advanced economies. The high level of household debt together with large participation of foreign investors in Malaysia’s financial markets warrant continued vigilance. The flexible exchange rate system and substantial financial buffers, as well as offsetting action by domestic institutional investors, provide multiple lines of defense against capital flow volatility.

Favorable domestic economic conditions offer a window of opportunity to continue structural reforms to raise productivity growth by increasing innovation, raising the quality of education, addressing youth unemployment, and increasing female labor force participation. Malaysia also stands to benefit from its outward economic orientation and the strengthening of regional economic and financial integration underway, including the creation of the ASEAN Economic Community in 2015 and other trade initiatives. Accelerating the pace of regional integration should help unleash Malaysia’s and ASEAN’s economic potential.

Executive Board Assessment2

Executive Directors agreed with the thrust of the staff appraisal. They considered that Malaysia’s economic prospects remain favorable, notwithstanding risks from softening external demand, volatile capital flows, and lower commodity prices. Directors shared the view that Malaysia is well-placed to address these risks, given a track record of skilful macroeconomic management, strong policy frameworks, and a sound financial system.

Directors commended the authorities’ continued commitment to fiscal prudence. They welcomed their response to weaker oil-related revenues, especially the removal of poorly-targeted fuel subsidies which creates budgetary space for needed social and capital investment. Directors cautioned, however, that a prolonged period of depressed commodity prices may require further fiscal adjustment. Accordingly, they encouraged the authorities to consider broadening the revenue base, phase out remaining untargeted subsidies, and further improve public financial management and social transfers.

Directors agreed that the current accommodative monetary policy stance is appropriate, given subdued inflation and the likelihood that prospective price increases related to the introduction of a value-added tax will be offset by lower energy prices. More broadly, they commended Bank Negara Malaysia’s cautious policy making to ensure that monetary policy continues to support non-inflationary growth and financial stability.

Directors noted that Malaysia’s financial system is sound and benefits from a strong regulatory and supervisory framework. They considered that policies have been successful so far in containing financial vulnerabilities, although high household debt warrants continued vigilance. In this regard, Directors cautioned that additional macro prudential measures could be needed if the low interest rate environment leads to excessive leverage.

Directors welcomed the ongoing reduction of Malaysia’s current account surplus, which reflects in part the economy’s rebalancing toward domestic demand. They took note of the staff’s assessment that the external position remains somewhat stronger than warranted by medium-term fundamentals, but stressed the uncertainty surrounding such an assessment.

Directors praised Malaysia’s impressive strides in economic development, which is the outcome of comprehensive initiatives to boost investment, improve infrastructure, and upgrade human capital. They agreed that Malaysia’s commitment to regional integration should also help support the country’s transition to high-income status by further enhancing competition and productivity.

Note: Due to space constraints, Table 1 Selected Macro Economic Indicators cannot be posted. I recommend that you read the full report. That is a good idea since the IMF Consultation report needs careful reading for what is not said, rather what is written in the Press Release. The IMF report does not deal with the implications of the 1MDB scandal. The IMF does not audit Malaysia’s financial affairs. That is why there must be an independent forensic audit on 1MDB and its report must be released for public knowledge.  For this, I suggest you read The Edge (March 9–March 15 issue) article pages 62 and 63 and  pages 64 and 65.–Din Merican

Kassim Ahmad: Stay Granted vs JAWI!

January 14, 2015

Newsflash: Breaking News

Kassim Ahmad: Stay Granted vs JAWI!

by Din Merican

Last week January 6, 2015, Public Intellectual Kassim Ahmad was devastated that Judge Asmabi dismissed his Judicial Review application despite seeing all the illegalities committed by JAWI in breaching their own laws, the laws of other states and the Federal Constitution just to arrest Kassim Ahmad and abduct him to Kuala Lumpur.

On January 8, 2015, Kassim’s lawyer Rosli Dahlan filed his appeal to the Court of Appeal. On January 9 the lawyer filed a Stay Application to hold back the syariah prosecution from proceeding. On January 10, Judge Asmabi Mohamed heard arguments from Rosli Dahlan and Senior Federal Counsel Shamsol Bolhassan. Judge Asmabi orderd the court’s doors to be locked and declared the open court as her chambers. Reporters were barred from coming in.

Rosli further argued that the warrant of arrest issued by the Putrajaya Syariah subordinate court was in breach of the Federal Territory Syariah Criminal Procedure Code (FT Syariah CPC) and Kedah Syariah Enactments. Kassim, argued Rosli, was wrongfully charged before the Syariah subordinate court and hence the charges were also illegal.

Rosli  argued that the warrant of arrest issued by the Putrajaya Syariah subordinate court was in breach of the Federal Territory Syariah Criminal Procedure Code (FT Syariah CPC) and Kedah Syariah Enactments.Kassim was wrongfully charged before the Syariah subordinate court and hence the charges were also illegal.

Judge Asmabi also fixed clarification and decision to this morning January 14. However, this morning was also fixed for the Syariah Trial. The Syariah prosecutors refused to back down. They disregarded Rosli’s request for postponement. They insisted that he must come. But Rosli can’t be in two courts at the same‎ time, one in Jalan Duta and the other in Putrajaya.

Rosli laid down these facts to Judge Asmabi including the fact that JAWI instituted disciplinary action against Rosli for acting for Kassim in filing the Judicial Review. They wanted to disqualify him from ever appearing in the Syariah Court. They wanted to make sure that they do not have an opponent like him ever again.

Finally the Judge saw how oppressive JAWI can be.‎ Finally something pricked the Judge’s conscience after Rosli showed all the facts and the law that are all in Kassim’s favor and there was just no reason for the Judge to still rule against Kassim. Finally, Rosli’s perseverance paid off. And it helped that this morning reporters were in court to hear further arguments from Rosli and SFC Maisarah which clearly showed that the facts and the law were all in Kassim’s favor. Rosli was unmincing in his words in pointing out that the Federal Counsel had misled the court in the cases cited.

Just now at 12.30, Judge As‎mabi relented. She held that the civil High Court can stay JAWI and the Ketua Pendakwa Syarie from proceeding with the Syariah Prosecution in the Syariah Court. ‎Rosli thanked the Judge profusely and then ran off to go to the Syariah Court in Putrajaya. What drama!

Congrats to Kassim Ahmad. Congrats to Rosli Dahlan. And shame on you JAWI and the Ketua Pendakwa Syarie for acting in such oppressive way. In the end, that became JAWI’s undoing. In the end, the Judge had to look into her conscience and decided enough is enough. Kudos to Judge ‎Asmabi.

Much as the Judge did wrong in not granting the Judicial Review, she still had judicial wisdom and conscience not to perpetrate an injustice. Kassim Ahmad is 82 yrs old, frail and sickly. What good does JAWI achieve in doing all these? In the end, JAWI will only earn public displeasure and disapproval.

To Kassim and his lawyer, I say well done. I say your fighting spirit will help develop a more robust law. Your fighting spirit will inspire younger people that the history of Man has shown that you cannot imprison the mind.

That is what democracy is about. That is what the Rukun Negara states that Malaysia shall be a democratic society where pluralism of cultures and beliefs are embraced and liberal ideas shall flourish. Judges must therefore uphold the philosophy of the country and the Federal Constitution!. Hidup Malaysia!

READ: http://www.themalaysianinsider.com/malaysia/article/jawi-barred-from-acting-against-kassim-ahmad-rules-court-bernama

Moderate Malay Voices drown Ibrahim Ali’s racist rhetoric

December 25, 2014

Moderate Malay Voices drown Ibrahim Ali’s racist rhetoric

by Jocelyn Tan@www.thestar.com.my

PERKASA President Datuk Ibrahim Ali’s voice has been so dominant that many think his views reflect that of all Malays. But are things about to shift now with more moderate Malays speaking out?

DATUK Ibrahim Ali knows that size matters in politics. Hence, he made sure that the annual assembly of his PERKASA group last week was packed to the rafters. But the reality is that the numbers did not really matter because Ibrahim’s larger-than-life personality has completely overshadowed PERKASA.

Moreover, controversy has sort of become the second name of the PERKASA President and media people covering the gathering were looking out for, well, more controversy.

He did not disappoint. His “bangsat” (scum) roll-call of several UMNO leaders earned him a spot on what was trending in social media. It was not the first time he was trending and, as in previous occasions, it was not for the best of reasons.

There is no denying Ibrahim has a following among the Malays. The fact that so few in UMNO have dared to criticise him says a lot about his Malay agenda clout.

PERKASA has also managed to attract some pretty big names into its rank and file such as former Election Commission Chairman Tan Sri Abdul Rashid Abdul Aziz and former IGP Tan Sri Rahim Mohd Noor.

Ibrahim-ali and MahathirIbrahim Ali and Patron

The biggest fish to date is former Chief Judge Tun Hamid Mohamad who has been quite vocal. Leading statesman Tun Dr Mahathir Mohamad is also a key supporter who attends PERKASA events.

In short, Ibrahim had been riding high. He is arguably Malaysia’s most controversial politician and his ultra right-wing views have dominated the Malay political landscape so much so that many non-Malays had imagined that all Malays were like Ibrahim – that is, until recently.

The emergence of a group of 25 prominent Malays, since dubbed G25, has created a stir among the intelligentsia following their open letter which appeared in The Star on Dec 8. The letter stood out for what the group had to say as well as for its eloquent and well-argued points.

Group of 25Group of 25

The group was concerned about the country’s future and how Islam had been politicised. They called for a review of Syariah and civil law so that it would be consistent with the Federal Constitution.

Blogger Ahiruddin Attan, better known as Rocky, was impressed enough to write in his blog: “Some of them are genuinely eminent. Their arrival will provide another great avenue for the silent majority to channel their views and feelings and be heard.”

A week later, another group of 32 distinguished Malay individuals that included two serving muftis, lawyers and academics, penned their own open letter that was also published by The Star.

Their views, especially on Islamic laws and its administration, differed markedly from that of the G25. But, again, what struck many readers was the reasoned and civil manner by which they put across their arguments.

The G32, for want of a better name, advocate a central role for Syariah law. They cited a 2013 global survey that showed that 86% of Muslims in Malaysia favoured making Syariah the official law.

“They are a very credible group of eminent Muslims. You have the muftis for Perak and Penang. For people like them to come out, it shows they are concerned about the discussion going on about Islam and the Syariah system,” said Dr Yusri Mohamad, Deputy Chairman of the Islamic Dakwah Foundation.

One might say, two open letters, so what?But it is more than that. It shows that there are credible Malays who are concerned enough to want to take a stand and make a difference.

They are part of the thinking Malays out there who can differ and disagree without being confrontational or resorting to insults and name-calling.

They are also proof of the diverse Malay intellectual landscape out there. So long as individuals like them remain silent, they are allowing those like Ibrahim to own the Malay intellectual space.

Ahmad Kamil JaafarMembers of the G25 were part of the early Malay elite who ended their careers as top government officials. For instance, one of them, Tan Sri Ahmad Kamil Jaafar, had a glittering career as a diplomat before becoming secretary-general of the Foreign Affairs Ministry. His memoirs Growing Up With The Nation came out a few years ago and it is said that even Dr Mahathir deferred to him on foreign affairs in their heyday.

“Why is it so hard to find the middle ground to move forward? You are expected to fit into a certain pigeonhole but life is not that simple,” said lawyer Khairuddin Mohd Zain.

It is also apparent that not all Malays are thrilled with what theG25 has to say, especially their stand on transgender rights and their defence of Sisters in Islam. The Islamists are concerned that theG25 will go down the same path as Sisters in Islam whose liberal interpretation of religion appeal largely to non-Muslims.

Any debate about the Malays, said Dr Yusri, is very much centred around the question of Islam.“We cannot run away from that,” he said.

The Malays are bound together by a great religion but as a race they are far from being the homogeneous entity that they have been made out to be.

Balanced view

“It’s mind-boggling that we have come to this juncture. To me, alternative voices must be allowed to be heard, let’s hear from both sides,” said Khairuddin, who is an occasional columnist in Utusan Malaysia.

But even contemporary-minded Malays like Rocky Bru and Khairuddin are not against PERKASA per se. They identify with the Malay agenda that PERKASA stands for but are uncomfortable with Ibrahim’s personality and tactics.

Rocky had actually signed up to be a member of PERKASA in its birthing years. But the application got lost along the way, which was just as well because he feels that the organisation has lost its compass.

“It’s fine if Malays like Ibrahim want to speak on behalf of those who think like him. The G25 are people who feel that PERKASA is not representative of who they are. Of course, they are not representative of all Malays but neither is PERKASA or ISMA or, for that matter, UMNO.

“Call them names if you have to, but once you’re done, let’s hear the 25 out. They are Malays too, you know, and right now, what we need is for all Malays to stand up and speak up,” said Rocky who is also an advisor to an English publication.

Ibrahim is not going away anytime soon. He will continue to be a force mainly because he has support. But what has changed is that people now know that Ibrahim’s audience is not as all-encompassing as it was made out to be. They know now that his voice does not represent all Malays.

Sarawak, for one, has shut its doors to PERKASA. The group has been told that it is not welcome in the state. Recently, Minister in the Prime Minister’s Department Nancy Shukri, who is Nancy Shukrifrom Sarawak, faced a firestorm back home after telling Parliament that no action would be taken against Ibrahim over his alleged statement about burning the Malay language Bibles. He was supposed to have said that after the father of a Malay student lodged a police report of Bibles being distributed at his son’s school in Penang.

Nancy was so badly bashed on the Internet that she said she was at the “lowest ebb of my life”. “I never dreamt that one day I would be branded as someone who is anti-Christian or a supporter of those calling for Bible burning,” she said. What she went through was an indication thatPERKASA has become the bogeyman in Sarawak politics.Ibrahim has always been this way – loud, confrontational and a street fighter. Those who love him see him as a hero who is doing what UMNO has failed to do. Those who dislike him see him as a bully, an extremist and even a racist. They make jokes about him and they run him down.

His reputation is such that when he opens his mouth, people no longer look at the message, they only see the messenger and that is not good. He has become his own worst enemy. For instance, the media was so fixated on him that they ignored the keynote address of the ex-Chief Judge who had some hard truths for PERKASA.

Hamid, now a target of the opposition parties, told PERKASA members that nothing is free in life and that the way to success is hard work rather than a “buat kenduri” or happy-go-lucky attitude. He said PERKASA wants to put UMNO back on the right path but it should not be at the expense of a split among the Malays.

He has probably heard of how certain PERKASA people have been lobbying the government for projects because he urged them to be clean and uphold integrity.”I wouldn’t want to be part of a group with worms,” he said.

Will the more diverse Malay debate lead to greater understanding or more conflict?

Puzzled NajibA Confused Leader

“Not conflict, but it will cause more confusion before there is greater understanding,” said Dr Marzuki Mohamad, the Political Secretary to the Education Minister.

The Malay debate is not new. At the same time, it is very much a work in progress. Marzuki has the best suggestion for the road ahead: “It will be fine if everyone keeps to the ethics of disagreement. That means giving room for each other to speak, respecting each others’ views and abiding by the law.”

1MDB Chairman Lok Wok Kamaruddin Explains

December 22, 2014

1MDB Chairman Lok Wok Kamaruddin Explains

lodin-wok-kamaruddinAs the Chairman of the Board of Directors of 1MDB, I have viewed with surprise recent statements, both in the media and by certain individuals, suggesting that the company has failed to respond to various questions that have been directed at it over the past months.

As the Board of Directors, we welcome debate, and as a company that is wholly-owned by the Ministry of Finance – and by extension, the people – we believe that public scrutiny of 1MDB is a good thing, and will only serve to strengthen the company and its governance.

In the interests of increasing the company’s transparency, I have held meetings with members of the media where I listened to and responded to their concerns.

Furthermore, the company has taken various other measures such as issuing multiple statements responding to allegations directed at the company, publishing a detailed document answering frequently asked questions, and releasing a public statement outlining key highlights from 1MDB’s last financial results – the first time 1MDB has done so since the company’s inception in 2009.

All of this information is freely available on 1MDB’s website, and we believe that these actions reflect our efforts to engage in a more open and constructive dialogue than has perhaps been the case in the past.

Despite this, issues that have previously been raised and, subsequently, addressed by the company continues to be regurgitated by certain individuals. In the interests of providing clarity, we would once again like to respond to the various concerns.

1MDB’s funding and debt levels

Contrary to claims, 1MDB is not a sovereign wealth fund but rather a strategic development company. In practice, this translates into a company that is independently run and funded, but one whose investment decisions are driven by the interests of the national economy.

Whilst a sovereign wealth fund and a strategic development company may not sound very different, there is an important distinction between the two: whereas a sovereign wealth fund is directly funded by the government and invests on its behalf, 1MDB raises and invest its own capital.

In fact, in terms of actual funding, the company has only ever received RM1 million in equity, which was provided by the Ministry of Finance at the time of its inception.

Given that 1MDB does not receiving any funding from the government, it is therefore simply not true to claim that the company is investing or worse, wasting, the state’s – or the people’s – money.

As 1MDB funds its own operations, it should not be surprising that, from time to time, the company raises capital on the international debt markets in order to finance some of its projects. However, all of this debt is backed by solid assets.

trx 2

At present, this includes the 15 power and desalination plants in five countries that comprise our energy business, as well as our extensive property portfolio which includes 70 acres of prime real estate currently being developed as TRX – Kuala Lumpur’s first dedicated financial district, 495 acres of land on the site of the old airport in Sultan Besi earmarked for Bandar Malaysia – a mixed-use urban development, and 234 acres of land in the centre of Air Itam, Penang.

The total value of the company’s assets (RM51.4 billion as at the financial year end of March 2014) comfortably exceeds the value of its total debts (RM41.9 billion for the same period). This means that the company has net assets of close to RM10 billion, representing the value it has created since its inception five years ago.

Furthermore, this does not take into account the expected benefit to be realised from the initial public offering of the group’s energy portfolio, which will help de-leverage the group and contribute towards reducing its debt profile.

Finance costs and interest rates paid by 1MDB

Like any business, 1MDB attempts to secure the lowest rate of interest and finance costs when taking out a loan or conducting a bond issue. However, in certain instances, these interest rates and finance costs have been towards the higher end of the market rate.

It has to be understood that, when it comes to raising debt on the financial markets, there is no one size fits all solution.A number of factors determine the finance costs and the interest rate applied to a loan or bond issuance. These include the length of maturity, whether the loans are underwritten or guaranteed, macro-economic factors, and many more.

To take one example, we are aware that concerns have been raised about the 5.75% interest rate assigned to a RM5.0 billion Islamic bond that was issued by 1MDB in 2009. As a comparison, it has been noted that another government-linked company PETRONAS paid an interest rate of 3.60% on a bond at the same time.

This is an unfair comparison that does not take into account a number of important factors. To highlight just one: when subscribing to a bond, lenders take on a certain degree of risk and the longer the tenure, the higher the risk for the bondholder. Therefore, bonds that have a longer maturity period typically have a higher interest rate.

To the best of our knowledge, the only PETRONAS-related bond issued in 2009 that carried a coupon rate of 3.6% was for a RM100 million bond with the tenure of only three years, whereas the 1MDB bond had a tenure of 30 years. As such, given the significant difference between the maturity periods, it should not be surprising that the bond issued by 1MDB had a higher interest rate.

More broadly, it is important to note that the bond issued by 1MDB in 2009 was the first Malaysian bond with a 30-year tenure, and the first Islamic bond to be issued with a maturity period of that length. Given the economic climate at the time, the fact that 1MDB successfully managed to raise this amount of capital reflects the support, goodwill and confidence placed in the company.

Funds regulated by the Cayman Monetary Authority

There has also been substantial debate about funds invested by the company regulated by the Cayman Monetary Authority. However, anyone familiar with the financial world should be able to confirm that there is nothing unusual about companies of this size investing their funds in the Cayman Islands, which is one of the largest registered fund jurisdictions internationally, with the Cayman Monetary Authority recognised as one of the leading fund regulators in the world.

Thousands of international blue-chip companies have funds regulated by the Cayman Monetary Authority, including over 200 Malaysian companies, many of which are household names.

To provide some background with respect to 1MDB’s investment: in 2009, 1MDB and a Saudi Arabian company entered into a joint venture to facilitate long-term economic cooperation between Malaysia and Saudi Arabia. As part of this, a joint-venture fund was set up to undertake investments on projects which would generate financial and strategic benefits to both countries.

However, due to various factors, both parties eventually decided not to proceed with these plans. As a consequence, 1MDB’s investment in the company was converted into a fixed income instrument in the form of Murahaba notes, essentially a loan, with an annual interest rate of 8.75%. This loan was paid back in full, for US$2.318 billion with a profit of US$488 million, in 2013.

Repatriating these funds to Malaysia would have exposed them to fluctuations on the foreign exchange market, as being witnessed at the moment. In order to ensure that 1MDB maintained a strong liquidity position with a truly diversified global portfolio, these funds were invested in a 1MDB subsidiary that was registered in the Cayman Islands. However, the company has already redeemed a significant portion, US$1.4 billion, of the fund and expects to redeem the remaining amount in the coming months.

Overpaying for power assets

In line with the government’s strategic aim of ensuring Malaysia’s energy security, 1MDB has acquired a number of energy assets since 2012. These acquisitions have allowed the company to diversify its fuel mix and country risks, as well as benefit from healthy cash flows and the expertise of their excellent management teams.

The claims relating to the amounts 1MDB paid for its energy assets revolve around values that were attributed to the assets at the time they were acquired and on the basis of certain assumptions made by external parties.

However, the company takes a long term view and consider broader synergies for the group, as well as the social and economic impact on the country, when we evaluate assets and forecast economic returns.

As such, it is the management team’s strong belief that the value paid for these assets, which may have involved a premium in certain instances – as is common when acquiring another business, is commensurate with their existing and future potential.

It is also important to note that since acquiring its first energy assets in 2012, 1MDB has built this into the second largest independent power producer in Malaysia, with a strong presence in international markets within three years.

In total, 1MDB’s energy business has consolidated 5594MW of net capacity, comprising both gas and coal fired plants. This portfolio provides the business with healthy cash flows and enables 1MDB to participate in bids for coal and gas fired plants, the two primary fuel source for power generation assets in the markets that the company operates in, allowing it to create further value and drive future growth.

As such, the economic benefit gained from these assets means that the company has recuperated any excess value it may have paid at the time of the acquisitions.

Overpaying for land

Any decision the company makes to invest in real estate is reached following an extensive period of due diligence, which includes the appointment of independent appraisers to determine the value of the land at the time of the acquisition, whilst also taking into account the value the company can add to it.

All of 1MDB’s investments are undertaken in line with the best interests of the business, and with a view to stimulating economic growth and prosperity in Malaysia.

We understand that there has been some speculation about the value paid by 1MDB for a land parcel in Penang. This land is located in the centre of the town of Air Itam, a much sought after area where property prices have seen a substantial increase in recent years.

This is reflected in the prices that other developers have paid to acquire land in neighbouring areas which, at over RM200 per sq ft, is substantially higher than what 1MDB paid.

In fact, in one instance dating back to 2013, approximately 9.8 hectares in Air Itam were purchased for RM267.4 million, about RM251 per sq ft, for a mixed-use development. In another, approximately RM251 per sq ft was paid for a mixed development project near the Kek Lok Si Temple.

Given the general difficulty companies face in finding sizeable plots of land in prime areas of Penang, that are suitable for carrying out large-tier development projects, the amount paid by 1MDB for this land was not only commensurate with its value but highly attractive.

Preferential treatment on power contracts

Any award takes a number of factors into consideration: the technical standards of the bid, the track record of the company, the bidding price, the urgency of the project and the whole systems cost of the bid to name a few. The projects that 1MDB have been awarded, in Malaysia and abroad, have been on this basis.

Earlier this year, a joint consortium consisting of 1MDB and Mitsui & Co, Japan’s second-largest general trading company, participated in an open and competitive tender exercise for a 2,000MW coal-fired power plant known as Project 3B. Following due consideration of the various bids, the Energy Commission announced that the joint 1MDB-Mitsui consortium had been chosen as the preferred bidder.

Subsequently, there have been suggestions that 1MDB received preferential treatment, and the basis of these claims is that the company’s bid was not the lowest offered. This rationale is flawed as it fails to take into account the fact that any award is based on a number of considerations, not just the tariff.

Whilst there was a bid that was slightly lower than the one presented by 1MDB, the fact is that 1MDB’s was the lowest compliant bid, with a proposed levelised tariff of 25.33 sen/kWh. There was a bid that was fractionally lower, of 25.12 sen/kWh, but this proposal did not comply with a number of requirements set out by the Energy Commission, key amongst which was their lack of experience operating a coal plant.

As the Energy Commission announced in a public statement, the 1MDB-Mitsui Consortium won the bidding exercise “in a fair and square manner with a well-proven technology that would enhance security of supply expected of a 2000MW coal-fired power plant operating in a grid system of our size”.

It is also important to note that there are other tenders that 1MDB has participated in where the contract has been awarded to other parties.

For example, despite 1MDB offering the lowest bid for a gas-fired plant in Prai, another company was deemed as offering a better overall package and awarded the contract on that basis. – December 22, 2014.

*Tan Sri Lodin Wok Kamaruddin is Chairman of the Board of Directors, 1MDB.


Anwar Ibrahim’s D.S.S.A. Award revoked by HRH Sultan of Selangor

December 4, 2014

Anwar Ibrahim’s D.S.S.A. Award revoked by HRH Sultan of Selangor

Commentary by The Malaysian Insider


It must take a lot for any Malay Ruler to strip someone of a royal award.

sultan-selangorToday, Datuk Seri Anwar Ibrahim learnt that the Seri Sultan Salahuddin Abdul Aziz Shah (S.S.S.A.) award given by the Selangor palace in 1992 has been revoked. The royal award bestows the title “Datuk Seri” but of course, Anwar possesses similar awards from other royal households.

These royal awards mean a lot to any politician or businessman, and for civil servants who have served the country. Especially if it comes from one’s own home state.

But the simple fact is we come into the world without titles – just plain old Encik, Cik, Mr. and Miss – and when we finally leave the world, all this worldly baggage has to be left behind – titles, wealth, wives, houses and mansions, super yachts and the latest sports car.

In the past, others have also been stripped off their awards, including the former MCA Deputy President Tan Sri Lee Kim Sai, who lost his Selangor award in 1987. And probably in the future, some others might also lose such awards.

People are still people without titles, and it goes the same for politicians or any leader for that matter. A royal award is meant as a rare recognition and being revoked of one is a royal rebuke.

So, it is within the prerogative of the Selangor Sultan to revoke the royal award which his father had issued but also within the prerogative of Malaysians to have opinions and views about him and other rulers, however pungent they may be.

Anwar Ibrahim Ops LeaderAfter all, what does any man or woman leave behind as their name or legacy once they are dead and gone? Their deeds and misdemeanours, if any.

In Anwar’s case, as is for any other Malaysian politician, their life and legacy is from what they do to serve and lead Malaysia, a constitutional monarchy and a parliamentary democracy. Their ultimate recognition will be from all Malaysians, not the few.