Pembinaan PFI’s dealings under MACC’s scrutiny

PV’s debt is said to total RM50.2b — the largest debt under committed govt guarantees

By AZREEN HANI / Graphic By TMR

The Malaysian Anti-Corruption Commission (MACC) is investigating the operations and deals related to a government-owned special-purpose vehicle (SPV), Pembinaan PFI Sdn Bhd, for any possible breaches.

The SPV, created in 2006 as a wholly owned unit of the Ministry of Finance (MoF), had accumulated debts of around RM50 billion. It is part of the government’s massive RM1 trillion total borrowings which include contingent liabilities.

Bangi MP Ong Kian Ming (picture) confirmed he had briefed MACC officers over Pembinaan PFI based on what he had gathered on the SPV, which had an initial seed fund of RM20 billion from the Employees Provident Fund (EPF).

“I was asked to brief and explain to them upon their request on what I have gathered so far on Pembinaan PFI. My role is to help facilitate the investigation by the authorities,” Ong told The Malaysian Reserve.

It is estimated that Pembinaan PFI’s debt stands at RM50.2 billion — the largest debt under committed government guarantees.

Ong had earlier shared on Twitter that he had submitted all of his press statements to MACC.

“I passed all my press statements and reports on Pembinaan PFI to @SPRMMalaysia this morning upon their request. Hope a thorough investigation will follow…”

Little is known about Pembinaan PFI except it was created to source for funding to finance government-related projects.

It took a five-year loan of RM20 billion from the EPF in 2007, paying interest charges of the Malaysian Government Securities (MGS) rates plus 0.5%. It was reported that the EPF restructured the loan after the full drawdown and at the end of the five-year, term-loan period.

Based on the available financial statement for 2014, Pembinaan PFI held a total debt of RM28.75 billion.

Despite the worrying debt, Ong said Pembinaan PFI and 1Malaysia Development Bhd (1MDB) have different circumstances.

“Basically, this company (Pembinaan PFI) is an example of the waste in which the previous administration tried to shift development expenditure into the operational expenditure (opex),” he said, shielding the debts from falling into the official borrowing category.

He said it was one of the the previous government’s “creative” ways to hide development expenditure in order for it not be accounted as the official government debt.

“I have always maintained there is a need to review all MoF Inc entities to ensure issues like this will not recur in the new government,” said the international trade and industry deputy minister.

Ong reiterated that despite the high debt level, the government will continue to service Pembinaan PFI’s financial obligations.

“The government has to service Pembinaan PFI’s debt interests, such as to the EPF and KWAP (Retirement Fund Inc). That’s what we have to do.”

The previous administration had maintained the country’s debt was below the 55% threshold of the gross domestic product. Contingent liabilities and government guarantees were omitted from the equation.

The Pakatan Harapan government, however, revealed the total debt was RM1 trillion, raising alarm on the country’s financial health.

Malaysia is already saddled with 1MDB’s billions of debts. Other agencies which have accumulated debts guaranteed by the government are Perbadanan Tabung Pendidikan Tinggi Nasional and Lembaga Pembiayaan Perumahan Sektor Awam.