Public funds have been and still need to be used to bear the debt, either in terms of direct assistance or through 1MDB’s asset recovery fund
THE government still has more than RM13 billion in the 1Malaysia Development Bhd (1MDB) debt to repay by 2023.
Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz said the public funds have been and still need to be used to bear the debt, either in terms of direct assistance or through 1MDB’s asset recovery fund.
“As of Feb 28, assuming US$1 is equivalent to RM4.2 in exchange rates, the balance of 1MDB’s debt commitment involving principal payments as well as interest three bonds and one sukuk amount to RM38.8 billion,” he said in Parliament yesterday.
He said the Finance Ministry (MoF) and MoF Inc have also channelled financial assistance in the form of loans or advances amounting to more than RM10 billion for the payment of commitments and interest on 1MDB’s debt from April 2017 to November 2021.
“Apart from direct financial assistance from the government, 1MDB’s debt interest is also funded using 1MDB’s asset recovery funds deposited into a trust account under MoF, called the Assets Recovery Trust Fund,” he added.
Thus, Tengku Zafrul noted that the government has so far made a total payment of RM13.31 billion for 1MDB’s debt.
However, he said the remaining RM15.76 billion of trust funds is still not enough to pay off all the principal debts.
Concurrently, he said the government still needs to cover the shortfall of total funding requirements of RM17 billion to settle the balance of principal and interest on 1MDB’s debt of RM38.8 billion for the period 2023 to 2039.
Meanwhile, he said the early redemption of 1MDB bond issues is not easy as it requires consent from bondholders and involves complex legal aspects which they need to agree to.
“For bonds issued in American dollars, the government has lost because the redemption value will be higher based on current exchange rates, as well as 1MDB bond prices, which have now soared due to its highinterest rates,” he added.
Nonetheless, he assured that the government will continue to pay 1MDB’s debts on time to prevent the occurrence of a default that will have adverse implications on the national economy as the debts are guaranteed by the government via the Government Guarantee and Letter of Support.
“At the same time, the government will continue to strive to recover 1MDB-related funds that have been similarly misappropriated either through legal action or settlement negotiations to pay off 1MDB’s debt and reduce its financial burden to the government,” he said.
On taxing foreign-sourced income, Tengku Zafrul noted that income that has been taxed in foreign countries would not be taxed again, meanwhile, only income generated from Malaysia will be taxable.
“The Malaysian taxation system is put into practice together with the Double Tax Agreement with other countries which will ensure the income already taxed in a foreign country will not be taxed again in Malaysia.
“This system is fair to taxpayers both individuals and companies,” he said in response to Bagan MP Lim Guan Eng.
He also recalled that during the Budget 2022 tabling in October 2021, the government announced to withdraw tax exemptions to foreign-sourced income from abroad beginning Jan 1, 2022.
“The main objective of this measure is to provide equal treatment to all taxpayers, especially within the country who have been paying taxes on all kinds of income generated domestically,” he said.