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Saturday, January 17, 2015

1MDB woes ‘causing jitters’ in Mideast

Appointment of new boss aimed at calming Qatar, Abu Dhabi, Kuwait says paper.
gulf business 1MDB kuwait2KUALA LUMPUR: The problems of 1Malaysia Development Berhad and questions about Malaysia’s credit ratings have raised the alarm at two of its Middle Eastern investment partners, the Qatar Investment Authority and Abu Dhabi’s Aabar Investment, according to the Gulf Times newspaper.
Aabar has US3bn in a 50:50 venture with IMDB to develop the multi-billion-ringgit Tun Razak Exchange financial centre at the site of the former Sungai Besi air force base.
Qatar has pledged US5bn as a partner in the 200-hectare Bandar Malaysia integrated urban development also in Kuala Lumpur.
Gulf Times, an English-language newspaper based in Doha, Qatar, said both projects were way behind schedule, and the Middle East partners have reportedly become displeased with the lack of transparency in sharing 1MDB’s plans and strategies with investors, as well as with delays that are causing financing costs to rise.
Qatar and Abu Dhabi are considering stepping back from the projects, as is an Islamic bank from Kuwait, reportedly Kuwait Finance House, and US-based Insurance company Prudential, the newspaper said, quoting Malaysia media reports.
1MDB has come under fire from critics of prime minister Najib Razak, who conceived of 1MDB as a government-investment vehicle, and questions have been raised about 1MDB’s finances and its deposits in offshore tax havens such as the Cayman Islands.
A loan-repayment of US$563mn due at the end of December to Maybank and RHB Bank caused further concerns. 1MDB has since said that the funds had been repatriated from the Caymans.
Gulf Times said “it is quite obvious” that 1MDB’s appointment of Abu Dhabi-based Malaysian investment banker Arul Kandasamy was driven by 1MDB’s strategic partners in the Gulf after rumours of a possible default of 1MDB started spreading.
The newspaper said 1MDB’s critics argued that the debt-ridden investment fund has become a “threat” to Malaysia’s entire financial system where 45 per cent of sovereign debt was held by foreign creditors, mainly in sukuk and other Islamic financial instruments.
It said 1MDB’s problems posed a threat to Malaysia’s sovereign credit rating of the country, its continued refinancing problems or even a bailout by the government, would be a huge embarrassment for Najib, who is also chairman of 1MDB’s board of advisers.

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