Cover Story: An Overview of Entities Benefiting from Government Guaranteed Loans
THE amount of government guaranteed debt has more than tripled in less than a decade – and that only takes into account loans that have direct government guarantees.
From 66.42 billion ringgit in 2008, the figure reached 187.23 billion ringgit or 15.2% of gross domestic product in 2016. In the first nine months of last year, it increased further to reach 226.876 billion ringgit.
According to an article in the Economic Report 2017/18, the main objective of government guarantees is to facilitate risk spreading in infrastructure spending and propel the country to advanced and high-income status. These guarantees are given to enable an entity to undertake development projects, which are primarily infrastructural and social in nature and of national and strategic importance, he said.
It should be noted that around 42% of guarantees were given to infrastructure-related projects while service guarantees constitute 24.4%.
According to The Edge’s compilation of federal government loan guarantees between 2008 and 2016, most of it was for the National Higher Education Fund Corporation, or better known as PTPTN, which was established in 1997. Of $ 11 billion of ringgit in 2008, the amount of guaranteed debt for the statutory body quadrupled to reach 40.35 billion ringgit in 2016.
The second largest issuer is DanaInfra Nasional Bhd, whose government guaranteed loans increased from RM2.4 billion in 2012 to RM29.7 billion in 2016.
Fully owned by the Ministry of Finance, DanaInfra undertakes fundraising exercises for national infrastructure projects. Its current flagship project is the rapid transit network. According to his website, he has raised 46 billion ringgit in sukuk to date for the project.
The third line is Prasarana Malaysia Bhd, which had government guaranteed debt of RM 18.7 billion in 2016, up from RM 7.1 billion in 2008. Prasarana is the owner of the assets and the operator of the transmission network. light rail, monorail and fast bus. services.
Other well-known names on the list are Khazanah Nasional Bhd, with RM18 billion in 2016, up from RM10.4 billion in 2008; and Projek Lebuhraya Usahasama Bhd, whose guaranteed loans remained unchanged at Ringgit 11 billion from 2012 to 2016.
There are also several companies owned by the Ministry of Finance Inc among the 34 recipients of government guaranteed loans between 2008 and 2016, including 1Malaysia Development Bhd (1MDB), with only RM 5 billion of directly guaranteed debt between 2012 and 2016. Those who know 1MDB would. be aware that he has at least $ 3 billion in additional debt with government “letters of guarantee” – but that is not on the list.
Jambatan Kedua Sdn Bhd, however, has seen its guaranteed loans skyrocket from RM 719 million in 2009 to RM 7.39 billion in 2016. According to its website, the concessionaire, who built, and now operates and maintains the Penang Second Bridge, is wholly owned by the MoF. . The bridge, which opened to motorists in March 2014, is said to have cost RM 4.5 billion to build.
According to its audited financial statements, the company incurred a net loss of RM 316 million in the year ended December 31, 2016. However, the loss decreased by RM 190 million from the previous year. Its total liabilities stood at RM 7.64 billion and its total assets at RM 7.2 billion, according to the filings.
Meanwhile, Govco Holdings Bhd, which had an outstanding RM 4.6 billion government guarantee at the end of 2016, is also 100% owned by the Ministry of Finance. In 2012, the amount was 3 billion ringgit.
An investment holding company, Govco is the issuer of RM3 billion in asset-backed sukuk and holds certain investments in unlisted preferred shares of Khazanah. He also owns RM 1.2 billion of preferred shares in Proton Holdings Bhd. For the fiscal year ended June 30, 2016, it posted net profit of RM 90.76 million on revenue of RM 157.96 million.
Other lesser-known names include Turus Pesawat Sdn Bhd (RM 5.3 billion) and Assets Global Network Sdn Bhd (RM 658 million), which buy planes and buildings and lease them to Malaysia Airlines Bhd.
The latest available financial statements of Turus Pesawat for the year ended June 30, 2014, show an after tax profit of RM 2.94 million. Meanwhile, Assets Global Network recorded a profit of RM14.97 million in the fiscal year ended December 31, 2014.
Another lesser-known company is Sentuhan Budiman Sdn Bhd, which was incorporated in October 2015. Its financial data is not known, but the amount of government guaranteed loans it carried was relatively small, at RM 650 million, in 2016, compared to RM400 million previously. .
While the growth rate of the outstanding public guarantees had slowed to 4.3% between 2014 and 2016 against 14% between 2012 and 2014, as the economic report underlines, the fact remains that the outstanding of the direct guarantee of 187.23 billion ringgit as at the end of 2016 represents a significant sum and a contingent liability that should be closely monitored.
Already, the increase in the stock of federally guaranteed debt in the first nine months of 2017 is well above the year-over-year growth for all of 2016. It remains to be seen how many new issuers of debt government guarantee will emerge. in 2017 and if more details on the nature of these guarantees and how the country benefits from them will be provided.