Govt stands firm on 3.1% fiscal deficit target

KUALA LUMPUR: The fiscal deficit target of 3.1% this year for Malaysia will be maintained despite a claim by International Petroleum Investment Corp (IPIC) amounting to US$1.2 billion (RM4.8 billion) on 1Malaysia Development Bhd (1MDB) that could ultimately fall on the government, according to Deputy Finance Minister Datuk Chua Tee Yong.
Chua, who was asked to comment on the matter, said it will engage with 1MDB on the recent developments and "do the necessary".
"We'll maintain our fiscal deficit at 3.1% (of gross domestic product)," he told a press conference at the Southeast Asia Venture Capital & Private Equity Conference 2016 here yesterday.
IPIC has written to 1MDB and Minister of Finance Inc, Malaysia (MoF) demanding that they fully indemnify it for interest payments on two bonds issued by 1MDB, which the Abu Dhabi fund paid "pursuant to its obligations under the guarantee of the notes".
On Wednesday, IPIC said it made full payment of the interest due and payable by 1MDB Energy Ltd and 1MDB in respect of the US$$1.75 billion fixed rate 5.99% notes due 2022 issued by 1MDB Energy and unconditionally and irrevocably guaranteed by 1MDB, after 1MDB defaulted on the payment. It was the second such payment it has made in recent weeks.
IPIC has said the current total amount due to it from 1MDB and MOF is US$1.2 billion plus accrued interest.
At the event earlier, Chua said the government recognises the potential benefits from crowdfunding and Malaysia is pioneering the introduction of equity crowdfunding within Southeast Asia through a facilitative regulatory framework that was issued by Securities Commission Malaysia in 2015. Six equity crowdfunding platforms have been approved and registered with the commission thus far.
Meanwhile, the Malaysian venture capital (VC) industry has committed funds of RM7.2 billion as at end-2015, investing in 220 companies. Malaysia ranked 12th in the overall Global VC and Private Equity Country Attractiveness Index in 2015.