KUALA LUMPUR - Minister in the Prime Minister's department Abdul Wahid Omar has admitted that state fund, 1Malaysia Development Bhd (1MDB), is a burden because of its failure to generate cash flow against its huge debts, it was reported on Friday.
"All this while, they have expanded by taking loans from banks and the capital market. They purchased assets, including IPPs (independent power producers), causing their debt to rise,'' the Malaysian Insider quoted the minister as saying on Thursday night.
"So you can imagine the quantum; it is very high and tough," he said at a forum.
1MDB's total debts have been reported as RM42 billion (S$15.5 billion), according to the news portal.
"Unless it can generate cash flow, it will not be sustainable," Mr Wahid was quoted as saying.
"They have taken strategic steps to re-evaluate the business model and structure, and three decisions have been taken," he said.
The strategic steps included stopping all forms of new loans unless it is to meet the current debt obligations or to refinance their current debt obligations, focusing on two main property projects - Tun Razak Exchange (TRX) and Bandar Malaysia - and ensuring the initial public offering of IPP Edra Energy can take place soon.
Criticism has been mounting over 1MDB and has led to Prime Minister Najib Razak ordering the Auditor-General to "independently verify 1MDB's accounts", with the findings to be submitted to the Public Accounts Committee (PAC).
Meantime, a survey by independent pollster Merdeka Centre and business radio channel BFM has shown that nearly 70 per cent of Malaysians were uninformed on the controversy surrounding 1MDB and nearly three-quarters of Malaysians polled did not even know the role of the strategic investment fund, Malay Mail Online reported on Friday.
Despite that, nearly half of the respondents, or 49 per cent, expressed their lack of confidence in the government's handling of the1MDB issue, according to the news website.