Malaysia asking for yen credit to solve its S$336 billion debt, says Dr Mahathir
KUALA LUMPUR - Malaysia has asked the Japanese government for yen credit to help solve its whopping RM1 trillion (S$336 billion) debt pile, Prime Minister Tun Dr Mahathir Mohamad said on Tuesday (June 12).
KUALA LUMPUR - Malaysia has asked the Japanese government for yen credit to help solve its whopping RM1 trillion (S$336 billion) debt pile, Prime Minister Tun Dr Mahathir Mohamad said on Tuesday (June 12).
Speaking at a joint press conference with Japanese Prime Minister Shinzo Abe following his three day visit to the East Asian nation, Dr Mahathir said he was told Japan was considering the request.
“I have explained the financial problem faced by Malaysia, and towards solving this financial problem, I have requested for yen credit from Japan and Mr Abe, the prime minister, will study this request,” Dr Mahathir said.
In his meeting with Mr Abe, Dr Mahathir said he brought up a soft loan from Japan during his first tenure as Malaysia's prime minister between 1981 and 2003.
That particular loan carries an interest rate of 0.7 per cent, repayable over 40 years.
“At that time, Japan’s financial position was very good. But, this time, we also asked him to consider providing the yen credit to Malaysia and he agreed to consider,” national news agency Bernama quoted Dr Mahathir as saying.
“The credit that they (Japan) will provide us is to be used for what we promise them, perhaps we will retire some of the high-cost borrowings that we have and replace them with the yen credit. Then the interest rate will be cheaper and we don't have to bear the interest for many, many years to come."
After securing a surprise election win on May 9, Dr Mahathir's Pakatan Harapan government looked through the nation’s accounts and raised alarm over debt that was nearly double than was previously disclosed by the previous Barisan Nasional administration.
A number of liabilities, including guarantees on troubled state fund 1MDB’s borrowings, brought the total burden to RM1trillion, compared with the federal debt at RM686.8 billion.
The government is now in the middle of cost-cutting measures including disbanding agencies, cutting ministerial salaries and cancelling mega projects to meet its budget deficit target of 2.8 per cent of gross domestic product in 2018.
Dr Mahathir said Japanese investors would find Malaysia an attractive investment destination once its debt problem was resolved.
“The resolution of the debt problem of Malaysia would enable Malaysia to once again be a good market for Japan and also, for Japanese investments.”
Bernama also reported that the premier met with major Japanese economic organisations and extended them the invitation to invest in Malaysia, where he once again assured that the new government will be business-friendly.
"We are not going to have too many bureaucratic hindrances or procedures that would deter foreign investors," Dr Mahathir said. AGENCIES