Zambry: Perak ‘debt-free’ after RM1b water asset swap PUTRAJAYA, May 23 — Datuk Seri Zambry Abd Kadir declared Perak “debt-free” after the state transferred RM999.2 million in water assets to Putrajaya’s Pengurusan Aset Air Berhad (PAAB) in exchange for it taking an equivalent amount in water-related debt. The Perak mentri besar told a press conference that the state had now wiped out debts to all parties except for RM72 million to the federal government for public housing projects and a loan taken for construction of the state secretariat building.
However, as the state’s water managers Lembaga Air Perak (LAP) will lease back the assets over a period of 45 years before it is handed back to the board, Zambry acknowledged it was a “restructuring of the 22-year water loan.”
“We are debt-free. If we use the same standards as Penang, then we have no debt at all,” the Pangkor assemblyman said. Penang had declared last October that it lopped off RM600 million or 95 per cent of the state’s debt since Pakatan Rakyat (PR) took over the state in March 2008. But Barisan Nasional (BN) pointed out that Penang’s outstanding loan of RM655 million was absorbed in a similar transfer of water assets to PAAB in June 2011. PAAB chairman Datuk Seri Tajol Rosli Ghazali also said that the move would make LAP “asset light” and improve its annual profits by RM25 million, nearly a quarter more than the net profit posted last year of RM104 million. All states in Peninsular Malaysia must transfer their water assets to the federal government to clear their water-related liabilities under the Water Services Industry Act (WSIA). (here)For the Cinabodoh claims go here and here
In case you all are wondering what is the actual accounting treatment for these transaction refer PAAB Annual Report Section 2.18 (here)
Leases where the Group retains substantially all the risks and rewards of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as rental income
Refer here and here for MASB Standards
In simple lay terms...once the state signs the agreement, the Water Assets is being exchanged for PAAB assuming the State Government Debt to the Federal and at the same time The State Water Operator enters into a Lease with PAAB in order for it to provide the services to the customers.
The level of kebingaian of this Ahbeng in Financial matters really had me laughing off the floor
As a result of budget surpluses, PR need not borrow to spend on social programs for the people. However BN Federal government has to borrow to spend, following its 15 years of continuous deficits. This can be seen by Federal government debt increasing by 71% from end 2007 of RM266 billion to RM456 billion by end 2011. Unfortunately this is not the full Federal go vernment debt as contingent liabilities of loans taken by private companies or government agencies are not included. If contingent liabilities are included, our government debt exposure will increase by RM97 billion in 2010.(Contingent liabilities for 2011 are still not available). Malaysians must remember that there is a day of reckoning for debts borrowed to be repaid. Ultimately, the ordinary people are the ones to pay for all these debts particularly when Malaysia goes bankrupt.
In 2010, the “off-balance sheet” financing activities has hit a record high of RM96.9 billion in 2010, a 14.9% increase from RM84.3 billion in 2009. These are loans which have been taken with a Government guarantee i.e., the Government is obligated to pay should the borrowers fail to settle the debts. As an example, if the Federal Territories Foundation is unable to repay the proposed RM300 million loan from EPF to provide financing for the low-cost housing purchasers, then the Government will have to step in to make the RM300 million payment to EPF.
Federal Government loan guarantees are expected to increase dramatically with loan guarantees for the West Coast Highway of RM 2.24 billion, at least RM20 billion to fund the first phase of the RM53 billion Klang Valley MRT mega-project, the construction of 74 police headquarters with government-guaranteed RM10 billion debt by MoF-owned Pembinaan BLT Sdn Bhd, or the proposed RM20 billion sukuk plan by Pengurusan Aset Air Bhd (PAAB) to restructure the country’s water assets. These loan guarantees are debt exposures to the Federal government that must be included in our total debt figures. In contrast, the state government debts of PR state of dropped dramatically just as the BN Federal government debt as soared. In Penang, state government debt was cut by 95% from RM630 million in 8.3.2008 to RM30 million by end of 2011.
Unfortunately PR’s debt reduction success compared to BN’s debt piling failure has not been communicated to the public as a result of BN’s successful campaign of deceit. Neither has the fact that BN has to borrow to give people money unlike PR can afford to do so from budget surpluses sunk into people’s hearts and minds. For this reason, I have asked DAP economic researchers led by DAP Publicity Secretary and MP for Petaling Jaya Utara Tony Pua to work closely with our General Election preparatory Team led by DAP National Vice-Chair And MP for Cheras Tan Kok Wai to expose BN’s cover-up of 3Ds of Deficit, Debt and Deceit. Source Ah Beng site here
Just to test the level of their knowledge on the matter gua pun kasi cucuk sikit DAP Economic "researchers"
First I asked this
mamat Tu buat tak tahu....
Gua tekan lagi pastu gua kencing sikit kata gua PJ Utara Voter
Baru la mamat ni jawap.....hampeh
Rempit siot mamat ni punye reply.
Don't understand my question......LOL!!!!!
I guess he must have slept during the E part of his PPE
You call yourself an Economic Advisor....for real dude
Well that was 27th of March....now its 23rd of May
Wonder what the 3D team are up to?
I will not lay my cards out too much today if you want to discuss in more detail with regards to Contingent Liabilities, how Government should properly account for it and the Fiscal Risks that it brings.....why don't the 3D team pergi baca dulu on the topic since one of your leaders went to the wrong school.
Maybe you can rope in some "intellectuals" like this synonym taichi kantoi kencing dude (here) who knows maybe he can teach you some moves.
Come back with a more informed engagement on the matter.
I'm in agreement that there are some Fiscal Risk embedded and have wrote about it way back in 2007 (here) but don't la send a Stupid Cheap Minister who don't know shit about economics to try to kencing his way while masuk dalam bakul pastu pakai forklift angkat sampai tingkat 3...
That is lame and so Ahbeng bingai....