THE government will ensure its exposure to fluctuations in the Japanese yen is kept to the minimum, said Finance Minister Lim Guan Eng.

Speaking in the Dewan Rakyat, Lim said Malaysia borrowed from Japan at 0.65% which was low.

“The 0.65% rate given by Japan is very low and will not affect our ceiling for foreign currency loans of RM35 billion,” said Lim.

The 10-year loan period of the samurai bonds also gives Bank Negara Malaysia the flexibility to adjust whenever the ringgit appreciates, he added.

Lim was replying to Reezal Merican Naina Merican (Kepala Batas-BN) on whether Malaysia had taken the yen’s volatility into account when it decided to borrow ¥200 billion (RM7.4 billion) from Japan.

“From our experience, the yen rose three times in the 1980s due to the Plaza Accord and affected those who borrowed in yen. But that was an extraordinary situation whereby Japan was pressured by the United States to rebalance trade between the two countries.

“Our analysis shows that what happened in the Plaza Accord is unlikely to happen again and our exposure is only for 10 years,” Lim said

The samurai bonds are to refinance the government’s existing foreign currency loans and reduce its fiscal deficit, he added.

Lim, who is the Bagan MP said, the 1Malaysia Development Bhd loans were much higher at 6% per annum.

“It is our aim to replace the higher interest loans with lower interest ones and the rate we are getting is more reasonable compared to the 1MDB ones arranged by Goldman Sachs.”

According to Lim as at September 2018, the Malaysian government’s loans stood at RM21.4 billion in various currencies.

“From January to November 2018, our bond and sukuk issuances total to RM104.5 billion – consisting of Malaysian government securities (RM49 billion) and Malaysian government investment issue (RM55.5 billion).”

Meanwhile, Lim said the government is still analysing which assets it would divest.

“The divestment of government assets will depend on value created, the value to the shareholder which is the government, and the ability of the new owners to create better value in the companies.

“We will also look into the performance of the companies and the impact of the sale on the fiscal situation and industries overall. 

“There won’t be any fire sale as the government wants to get the best value for its assets.” – December 10, 2018.