EVENING 5: Malaysia’s subsidy bill jumps to RM62b in 2022

The Edge TV

In today’s edition of Evening 5 — Putrajaya spent RM62 billion on subsidies last year — nearly five times more than in 2021. Meanwhile, Penang’s former deputy chief minister II urges the state to indefinitely suspend the controversial Batu Kawan land deal.

Transcript

00:00 [Music]

00:04 The Auditor General's report on the federal government's 2022 financial statement shows

00:09 Putrajaya spent RM62.11 billion on subsidies last year, nearly five times more than in 2021.

00:17 The bulk of RM55.443 billion were charged to the government's operating expenditure,

00:24 while part of the subsidy spending for petroleum products and cooking oil

00:28 amounting to RM6.67 billion were charged to the COVID-19 Trust Fund.

00:32 The total amount spent on subsidies in 2022 is RM4.73 times the RM13.134 billion

00:40 spent by the federal government in 2021. Within an OPEX allocation, the biggest component at

00:47 81.5% of the total was petroleum products' subsidy of RM45.18 billion, not including

00:54 the sum charged to the COVID-19 Trust Fund. The electricity subsidy charged to OPEX stood at RM4

01:00 billion. Subsidies for food aid and cooking oil amounted to RM2.47 billion, while the allocation

01:07 for highway tolls stood at RM861.22 million. Malaysia has projected a total subsidy bill at

01:15 around RM81 billion this year. To rein in ballooning subsidies,

01:20 the government expects to introduce a targeted subsidy system in 2024.

01:25 According to Economy Minister Rafizieh Romli, the system will rely on Putrajaya's Padu database

01:31 and make the calculations based on an individual's income, location and commitment.

01:36 Currently at a completion rate of 60%, Padu will be trialled on one million households

01:42 in November and go live in January 2024.

01:46 The Auditor General's report said the government wrote off RM4.6 billion in loans in 2022,

01:56 out from RM701.5 million in 2021. The write-off in 2022 comprised RM1.36 billion approved that year,

02:05 as well as another RM3.24 billion approved between 2011 and 2022. The biggest portion

02:12 comprised RM2.794 billion to Perwajar Trengganu, RM1.23 billion was to the Pahang State Government,

02:20 RM242.4 million to Velcro and RM173.5 million to the Melaka State Government.

02:27 The write-off last year also includes RM54.76 million to Malaysia Venture Capital Management,

02:34 RM46.05 million to Uda Holdings and RM40 million to Bank Bertanian Malaysia.

02:40 Putrajaya also saw lower loan payment arrears, totalling RM10.79 billion, down from RM11.96

02:47 billion in 2021. The payment arrears include Indah Water Consortium at RM3.606 billion,

02:54 SRC International at RM627.22 million, Sabah Electricity at RM501.84 million and KTMB, RM477.85 million.

03:07 1MDB's Assets Recovery Trust account balance shrank by 87.4% last year,

03:18 tumbling from RM15.281 billion in 2021 to RM1.927 billion at the end of 2022,

03:26 according to the National Audit Department. This followed the payments of RM13.9 billion in 1MDB

03:32 borrowings last year, which left the amount guaranteed by Putrajaya at RM18.17 billion as

03:39 at end 2022, down 43.3% from RM32.07 billion at end 2021. Prime Minister Datuk Sri Anwar Ibrahim

03:48 said in August that Putrajaya aims to recover more funds from Goldman Sachs. The bank arranged

03:54 billions of US dollars in bond sales for 1MDB and received some $600 million in fees in return.

04:02 Two of its former bankers have been accused of helping facilitate the theft of over $2.7 billion

04:08 of the proceeds from those offerings. It agreed to $3.9 billion in cash and assets recovery to

04:14 Malaysia as part of a global settlement in 2020. Penang's former Deputy Chief Minister to Professor

04:26 Dr P Ramasamy is urging the state government to indefinitely suspend the controversial RM646

04:33 million Batu Kawan land deal in the interest of Malaysians pending investigations or risk

04:38 having it blown out of proportion. Ramasamy was referring to the sale of a 558.96-acre plot in

04:46 Batu Kawan Industrial Park II to Sunway's subsidiary UMEK Land. He said the exposure

04:51 of the deal is akin to opening Pandora's box and the more Penang Chief Minister Chow Kwon-yew

04:57 attempts to defend the sale, the more it becomes indefensible. Ramasamy is a former board member

05:03 of state investment arm Penang Development Corp or PDC which sold the tract to UMEK Land. Recall

05:10 that Penang entered into a direct negotiation deal with UMEK Construction yet the agreement

05:15 signed with PDC was with UMEK Land which has shareholders in common with UMEK Construction

05:21 but is not legally related to the firm. UMEK Land was 70% acquired by a subsidiary of Sunway

05:28 just two days before the land deal was signed on September 27th.

05:32 Kejaya Prospect Group has bagged a RM226 million contract from Aspen Vision City

05:44 for a development in Batu Kawan, Penang. The job entails the building of a 37-storey residential

05:50 building with 980 units in two blocks on top of a seven-story podium comprising car parks,

05:56 community recreational facilities and shop lots. Construction works are expected to commence on

06:02 October 27th, 2023 and be completed within 42 months from the commencement date. With the

06:09 latest contract win, Kejaya Prospect has managed to surpass its target of securing RM1.2 billion

06:16 in new contracts this year. It brings the builder's outstanding order book to RM4.7 billion

06:22 and is expected to provide an additional stream of revenue for the group over the next four years.

06:27 Kejaya Prospect's share price finished unchanged at RM1.37,

06:31 giving the group a market capitalization of RM1.74 billion.

06:35 it

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