Malaysian Finance Minister Lim Guan Eng says asset recovery on 1MDB much slower than expected

Malaysian Finance Minister Lim Guan Eng said that asset recovery in the 1MDB fraud is going slower than expected.
Malaysian Finance Minister Lim Guan Eng said that asset recovery in the 1MDB fraud is going slower than expected.PHOTO: ST FILE

HONG KONG (REUTERS) - Malaysian Finance Minister Lim Guan Eng said on Thursday (Sept 13) that asset recovery in the 1Malaysia Development Berhad (1MDB) multibillion-dollar fraud investigation is going much slower than expected.

Mr Lim, a former banker and chartered accountant, said at the CLSA Investors' Forum in Hong Kong that realistically "we will be lucky if we get 30 per cent back".

He added that Goldman Sachs is on the radar screen to get back some fees from 1MDB.

Meanwhile, Mr Lim also said that the South-east Asian country can sustain 5 per cent annual economic growth as its new administration reviews mega projects and copes with hefty debts left by the previous government.

In August, Malaysia cut its 2018 growth forecast to 5 per cent, from 5.5-6 per cent, and reported much slower second-quarter expansion of 4.5 per cent, compared with the previous period's 5.4 per cent.

Slower growth also signals the economic risks facing Tun Dr Mahathir Mohamad, 93, after his stunning election win in May that brought him the premiership in South-east Asia's third-largest economy.

Mr Lim told the forum in Hong Kong that there is an urgent need to review expensive development projects because Malaysia does not have "enough money to pay for them".

"We want to see reductions (in debt) over the course of three years and, at the same time, we are able to service these debts, we will not be in default," Mr Lim said.

"When we are talking about belt-tightening, cost rationalisation, then we are doing it."

Before being named finance minister in May, Mr Lim was chief minister of Penang state, a popular tourist destination. Earlier this month, he was acquitted of corruption charges brought against him two years ago when he was a senior opposition leader.

Mr Lim will oversee the new administration's first budget in November, which he said on Thursday will not run a deficit.

After taking over, Dr Mahathir repealed an unpopular goods and services tax. He has also pushed to review major infrastructure projects launched by the past administration.

About the need for tough fiscal measures, Mr Lim said: "It's painful, but it's necessary... I'm willing to be the most unpopular finance minister in Malaysian history."

The minister said Malaysia will not be a victim of the contagion effects from emerging markets due to its strong trade and current account surpluses and high foreign-exchange reserves.

"I think that would put Malaysia off the radar as far as being victim of the contagion effects from... so-called emerging markets currency risk. I'm still confident that we should be able to ride out the storm, if any."