DAP: RM97b in hidden loans pushes public debt over legal limit

By Shannon Teoh
The Malaysian Insider
Feb 16, 2012

KUALA LUMPUR, Feb 16 — The DAP today accused the government of not reporting RM96.9 billion in loans it has guaranteed as public debt, which would push the amount of federal loans above the 55 per cent of gross domestic product (GDP) allowed by law.

Party publicity chief Tony Pua said the combined public debt of RM455.7 billion reported last year and the “off-balance sheet” financing would amount to RM552.6 billion, or 65.2 per cent of the economy.

“For all intents and purposes, even though these loans are not taken by the government, they are essentially government debt or otherwise known as contingent liabilities.

“This expanded figure would then constitute 65.2 per cent of our GDP, well above the 55 per cent federal government loan limit as defined in the Loan (Local) Act 1959 and Government Funding Act 1983,” Pua (picture) said in a statement today.

Malaysia’s national debt has been a hotly debated issue after the Auditor-General said in October it grew by 12.3 per cent to over RM407 billion in 2010, or 53.1 per cent of GDP.

Putrajaya’s economic report for 2011/2 said federal debt will hit RM455.7 billion at the end of 2011, which Pua said amounts to a record 53.8 per cent of GDP, the third consecutive year public debt is worth more than half the economy.

The government has tried to rein in the budget deficit from a two-decade high of over seven per cent in 2009 with Budget 2012 forecasting a 4.7 per cent deficit but the opposition has called for bigger cuts to public spending.

Pua said today government-guaranteed loans taken by its statutory bodies and corporatised entities rose by 14.9 per cent in 2010 from RM84.3 billion in 2009. These loans must be repaid using public funds should the borrowers default.

The Petaling Jaya Utara MP listed the Higher Education Fund (PTPTN) and state-owned public transport company Syarikat Prasarana Negara as owing RM17 billion and RM9.1 billion in government-backed loans.

“They have both been heavily criticised by the Auditor-General for their weak financial management and their inability to repay their loans,” he warned.

He also pointed out that logistics tycoon Tan Sri Syed Mokhtar Al-Bukhary’s Port of Tanjong Pelepas (PTP) has seen its government-guaranteed liabilities rise from RM715 million in 2009 to RM1.275 billion in 2010.

“The Greek financial crisis has unravelled as a result of hidden contingent liabilities not reflected as official government debt or reported in its balance sheet,” he said, referring to the euro-zone debt crisis that has seen the Mediterranean country teeter on the brink of default.

According to Pua, national debt grew by 11.9 per cent last year, and has ballooned from RM242 billion in 2006 and RM146 billion in 2002. He said the debt amounted to 44.6 per cent of GDP back in 2006.

Second Finance Minister Datuk Seri Husni Hanadzlah has insisted public debt is still manageable as Putrajaya still has large reserves and its loan payment to national revenue ratio was at 10 per cent, which was below the “prudent” level of 15 per cent.

  1. #1 by k1980 on Thursday, 16 February 2012 - 12:03 pm

    Federal debt will hit RM455.7 billion at the end of 2011, which Pua said amounts to a record 53.8 per cent of GDP

    So one more NKRA will be implemented, which is to more effectively hide public debts so that the opposition cannot dig them out. Hurrah for Ah Jib Gor’s NKRAs!

  2. #2 by sheriff singh on Thursday, 16 February 2012 - 12:50 pm

    But Bank Negara has ‘assets’ of RM 400+ billion so is this OK ?

    I am no financial expert but all these figures everywhere confuses the public and me.

    Just say in plain simple England : Are we Pokai now or not?

  3. #3 by yhsiew on Thursday, 16 February 2012 - 12:57 pm

    I predicted last year the 53.8 per cent of GDP federal debt for 2011 reported by Putrajaya was not a true figure. If a European (Greek) government could hide its debt, don’t expect the BN government to give a true figure of its debt.

    Najib’s Economic Transformation is a complete flop!

  4. #4 by dagen wanna "ABU" on Thursday, 16 February 2012 - 1:01 pm

    My gut feeling is that under umno, malaysia today had reached the point of no return as far as our debt problem is concerned. You see umno failed to grow the economy. As such our economy could not now generate enough revenue
    1) to turn the country’s economic wheel,
    2) to finance the business of governing the country,
    3) to cover up the massive losses and wastages of public funds due to umno’s stupidity and half baked ideas (like forex trading by dr mamak and angkasawan etc etc) and incompetence etc and
    4) to fulfil the insatiable greedy needs and demands of umnoputras.

    Because we are unable to generate the money for our own use therefore the pressure to keep on borrowing gets greater and greater. Look at umno’s records – from proton to hicom to msc and many many more. They are all records of failure. And the same people are controlling our country’s finances. OMG!


  5. #5 by Godfather on Thursday, 16 February 2012 - 1:11 pm

    You think that the rating agencies don’t know ? I was told by a source in Singapore that they are watching closely and have warned MoF of putting Bolehland on negative watchlist.

    The sad fact is that the government has run out of money, hence the recent attempts to hijack EPF and KWAP money for housing loans to the so-called poor.

  6. #6 by yhsiew on Thursday, 16 February 2012 - 1:22 pm

    Watch out for more borrowing by the government prior to GE13, as it needs money to entice the people for votes.

  7. #7 by k1980 on Thursday, 16 February 2012 - 1:44 pm

    When PR wins the 13GE, it should order a remake of the TV series ”The High Chaparral”, starring Mohd Salleh as Big John Cannon and Shahreecat as Victoria Montoya Cannon. However, they are not fighting any Apaches, but trying to cover up the losses of their RM350 million loan.


  8. #8 by Bigjoe on Thursday, 16 February 2012 - 4:41 pm

    The truth is initially Malaysia was less corrupted because of strong institutions and its open economy. When Mahathir took over what has kept corruption in check instead of ending up like Zimbabwe is our more open economy. Its got nothing to do with self-profess excuse of ‘we know what to do’.

    What will make corruption worst in this country is the fact, the economic model depend ever more on the govt to drive it – look at ETP failure to attract private investment and you can be sure corruption will increase.

    However, what is keep corruption at bay, even now is … the internet. Its not just that the internet is a easy outlet to expose instances of corruption – it makes even the most rural and traditional less feudal. Even an orang Asli or Felda farmer with internet connection get angry when he see RM250m being abused or see that UMNO is doing in rural areas against PR and Anwar is the same as of KFC restaurant workers that beat up customers..

  9. #9 by monsterball on Thursday, 16 February 2012 - 7:43 pm

    You owe more than you have…you are a pookai boss.
    But alot of commercial bosses owe more money to banks than what they are worth…and these banks are caught to keep the pookai bosses afloat..no going bankrupt…by lending more…until the bank itself become bankrupt.
    Than UMNO b leader like smart cunning Mahathir….who started it all…will do his stunts to move our money around ….until all disappear into thin air.

  10. #10 by raven77 on Thursday, 16 February 2012 - 11:36 pm

    Yep…just stop screaming wolf…and let the public know….are we broke and if our banks are going to go belly up tomorrow morning….if not , let’s move on to other more pressing issues….

  11. #11 by Anti Rasuah on Friday, 17 February 2012 - 8:54 am

    With debt mounting, Najib yesterday asked Pakatan: where does the money come from? This could be read at Sinchew.

    When he asked this, this shows clearly he does not know how to manage a big country (Malaysia). His managers (MCA, MIC, Gerakan, Parti Bersatu Bumiputra Sarawak, etc.) are all also don’t have the thought and skill to manage. ‘

    Just like Gerakan and UMNO ruling Penang for 37 years, they didn’t know how to manage Penang.

    Look at the fact that buying a pair of binoculars at RM56000 (original price was RM2k), they still said nothing is wrong openly. In private sector, we all know this is not allowed. So, we see Singapore Airline is profitable while Malaysian Airline have been struggling. Both the buyer and the seller must have gained from this deal by sucking the money from their department respectively.

    All Malaysia must fire these MD (UMNO) and the managers now. Change a new management and restructure the organisation (Malaysia’s cabinet).

  12. #12 by Anti Rasuah on Friday, 17 February 2012 - 9:01 am

    For Malaysians especially Malays friends who still support UMNO or BeEnd just because of the racial base policies (university entrance, government jobs, tenders, etc.), this would not go far anymore when Malaysia declares bankrupt.

    This is because, your salary would remain low (see how high is Singapore and Brunei there?) when BeEnd is mismanaging the country.

    Malay friends who enter university , after graduate, the number would be more than jobs (as happening now). So, what is good about BeEnd? Our Malay friends must be hard working and show to private corporations that they excel on their own not by spoon fed.

    When Malaysia goes bankrupt, we could expect the BeEnd government would not be able to contain the large civil servants. So, we now see BeEnd government wants to fire many government servants.

    It is a simple thing just look at a private company. If the appointed MD and those managers were unable to perform, they have to go. If they don’t go, the company would go bankrupt.

  13. #13 by good coolie on Saturday, 18 February 2012 - 2:13 pm

    The Malays are sitting up! They have begun to realize that an alternative government can run this country well. Look at the example of Penang and Selangor: there is less corruption and no racial problems except for those created by political enemies of Pakatan. Malays are happy with the economic opportunities open to them, though the Ali Baba type rentier economy has dissapeared in State government contracts; not to mention rampant corruption. Malays can hold their heads high now.

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