Malaysian state fund 1MDB will be 'shut down' once debts are cleared: Chairman

A construction worker talking on the phone in front of a 1MDB billboard in Kuala Lumpur in 2016.
A construction worker talking on the phone in front of a 1MDB billboard in Kuala Lumpur in 2016.PHOTO: REUTERS

KOTA BARU - Malaysia's scandal-plagued strategic investment arm 1Malaysia Development Berhad (1MDB) will be wound up after it has cleared all its debts, its chairman said on Tuesday (Feb 27).

Speaking to reporters after addressing students of Universiti Malaysia Kelantan in Kota Baru, Kelantan, Tan Sri Dr Mohd Irwan Serigar Abdullah said he was confident the firm would be able to repay all its debts through the ongoing rationalisation plan, the New Straits Times (NST) reported.

1MDB, a pet project of Prime Minister Najib Razak, has been mired in controversy, especially over claims that up to US$4.5 billion (S$6 billion) was misappropriated by its senior officials and people linked to Datuk Seri Najib Razak.

Mr Najib has insisted over US$700 million found in his personal accounts and allegedly linked to 1MDB was a donation from Saudi royals. He has been cleared in Malaysia of any wrongdoing.

Mr Irwan Serigar said on Tuesday that the debts would be paid from revenue generated from the government's mega projects, including the upcoming commercial skyscraper Tun Razak Exchange (TRX) in the heart of Kuala Lumpur, the East Coast Rail Link (ECRL) and the second Mass Rapid Transit (MRT) project, the NST reported.

"Soon, residents who own a place in the TRX city will pay rent, and we will also sell land plots of Bandar Malaysia which will be developed with public transport such as high-speed train, ECRL and MRT," said Mr Irwan Serigar.

Bandar Malaysia is an urban development project on the fringe of the capital.

 
 

"Through this, we will pay the debts... Rome wasn't built in a day, we will not get the revenue immediately, instead it will take more than 10 years to generate income from the long-term development," said Mr Irwan Serigar, who is also the Treasury secretary-general.

"Once the debts are paid, there will be no need for 1MDB," he added.

1MDB forked out US$602.7 million last December to settle a debt with Abu Dhabi's International Petroleum Investment Company (IPIC).

Questions are now growing around the Malaysian central bank's recent purchase of government land for RM2 billion (S$677 million), with observers saying it is unusual for the institution to pay market price for state land.

The hefty price tag has also sparked claims that the government is raiding Bank Negara Malaysia's coffers to bail out troubled 1MDB, which is owned by the Ministry of Finance.

The dispute between 1MDB and IPIC revolves around an IPIC loan and another US$3.54 billion in cash advances 1MDB claimed it made to several Abu Dhabi-controlled entities as part of obligations under a May 2012 bond arrangement.