Only 4 MoF Inc companies financially sound, audit finds

Updated 4 years ago · Published on 2 Dec 2019 5:44PM · 1 Comments

AN audit of 47 Minister of Finance Inc companies’ financial statements has found that only four are financially sound.

The National Audit Department (NAD) said of the remaining firms, 33 are stable and 10 unstable.

The four financially sound companies are Petronas, Prokhas Sdn Bhd, MyCreative Ventures Sdn Bhd and Syarikat Jaminan Kredit Perumahan Bhd.

NAD said the rise in MoF Inc companies’ financial liability last year compared with 2016 showed their increasing dependence on debts and loans.

“Other than that, contingent liabilities were high at RM13.178 billion,” said the department in the Auditor-General’s Report Series 2 2018 released today.

A valuation of the financial position of companies with a majority equity holding by the government from 2016 to last year found the cash flow ratio of 26 firms (54.2%) at “less than one”, which indicates that they need financial help from Putrajaya.

An analysis found the ratio of returns on equity to be “less satisfactory”, with 47 companies (97.9%) recording a return of “less than one”.

NAD said the use of 41.2% government funds to repay loans to Putrajaya showed the companies’ weak financial position and continued dependence on government assistance.

“The use of sukuk/bonds by MoF Inc companies was also less satisfactory, with 33% utilised to sustain the redemption of matured sukuk to repay loans, as well as sukuk profit/loans at RM23.097 billion.

“The increase in the issuance of sukuk/bonds in 2018, totalling RM12.04 billion, to finance infrastructure projects also showed the government’s limited financial position.” – Bernama, December 2, 2019.

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Comments

  • This is not surprising at all since they are operating in businesses which are not subject to competition and where there is no meritocracy. Now that the scale of the problem is known, the government should perhaps carry out a study to determine the reasons for their failure and make a prompt decision which companies to shutter up. This will ensure the tax payer will not be shoulder further massive losses and that the GLC will not engage in business which is not the business of the government. Crutches need to be removed for the patient to overcome its paralysis.

    Posted 4 years ago by Panchen Low · Reply