Media Statement by Dr. Ong Kian Ming, MP for Serdang, on the 11th of March, 2015
1MDB has dominated the headlines over the past week or so because of the shocking revelations by the Sarawak Report. At the same time, there is another little known company, Pembinaan PFI, which had accumulated debts of RM27.9 billion at the end of 2012 and could have reached RM47.4 billion in debt at the end of 2014 – much more quietly. Without accountability on how Pembinaan PFI is spending its borrowings and without transparency on how it is servicing its debts and without vigilance from the Minister of Finance, Prime Minister Najib, Pembinaan PFI could easily turn into another 1MDB.
To recap, Pembinaan PFI, is a 99.9% Ministry of Finance incorporated company with the Federal Land Commission holding one share. According to the Attorney General’s report in 2013 (Series 3), Pembinaan PFI Sdn Bhd had the third highest liabilities among all government owned entities at the end of 2012. Its total liabilities were RM27.9 billion, behind two well-known companies with huge assets, revenues and profits namely Petronas (RM152 billion) and Khazanah (RM69 billion) (See below)
But unlike Petronas and Khazanah, Pembinaan PFI does not have any operational income as shown by the same Auditor General’s report. (See below) Its RM1.94 million in revenue in 2012 was derived from interest income. This means that Pembinaan PFI cannot service its liabilities without help from somewhere else, namely the federal government.
Even though the AG’s report also lists Pembinaan PFI as having the third most assets among all government owned companies (see below), its assets consists of land being leased to Pembinaan PFI by the Federal Lands Commission (FLC). This was part of a complicated deal where Pembinaan PFI then sub-leased the land back to the FLC in exchange for rent totally RM29 billion to be paid over 25 years. In other words, unlike Petronas and Khazanah, which actually owns their own assets, Pembinaan PFI doesn’t really have any real assets of its own.
Pembinaan PFI’s liabilities would almost certainly have gone up in 2013. Unfortunately, three months into 2015, Pembinaan PFI still has not filed its company accounts for 2013 at the time of writing.
In addition, Pembinaan PFI also took out a Bai Muajjal Islamic Loan Facility with the Employee Provident Fund (EPF) on the 22nd of August, 2014 with a maximum amount of RM19.5 billion. The terms of this facility was not disclosed in Pembinaan PFI’s submission to the Companies Commission of Malaysia (CCM).
This means that the total liabilities of Pembinaan PFI can potentially increase to RM47.4 billion (RM27.9 billion at the end of 2012 plus the RM19.5 billion Bai Muajjal Islamic Loan Facility with EPF in August 2014) at the end of 2014.
Note that the spending of Pembinaan PFI does not appear anywhere in any of the federal government budget accounts which means that all expenditure are ‘off-budget’ items. Neither are the debts of Pembinaan PFI listed as part of the federal government’s contingent liabilities. One cannot help but raise the possibility that the lack of transparency on the part of Pembinaan PFI is to ‘hide’ government spending from the actual budget.
For this parliamentary session, I have submitted a parliament question asking for the latest loan figures for Pembinaan PFI as well as the reason for the late submission of its company accounts. In the interest of transparency, Prime Minister Najib, as Finance Minister, must ensure transparency in the spending, borrowings and debt repayment involving Pembinaan PFI to avoid another 1MDB scandal from occurring.