MALAYSIA’S request for yen credits from Japan will be in the form of a soft loan, Prime Minister Dr Mahathir Mohamad said.

The credits will be used to help reduce Malaysia’s borrowing costs, which were “too high” under the previous administration, he told the Malaysian press in Tokyo today at the end of his three-day official visit to Japan.

“We were borrowing at 6% interest and even had to pay 10% commission for some to arrange the loan.

“When we pay 10% as a commission for a RM100 million loan, we only get RM90 million. But we still have to pay interest for RM100 million. This results in an interest rate of 7% to 7.5%.

“This causes the cost of borrowing to be too high. If we can reduce the cost by borrowing from a source with lower rates, we can retire the old loan,” he added.

Dr Mahathir had said earlier at a joint press conference with Prime Minister Shinzo Abe that Japan would consider giving yen credits to Malaysia.

“If the yen credit is given as a soft loan, it will help us deal with the huge debt.”

However, Dr Mahathir said discussions were still in the early stages and both countries had not yet determined the quantum of the loan.

Between 2012 and 2013, the Barisan Nasional government paid US$600 million (RM2.3 billion) in fees and commission to Goldman Sachs to arrange three bonds amounting to US$6.5 billion for 1Malaysia Development Bhd. 

The Pakatan Harapan government is considering asking the US Department of Justice to help recover the commission paid to Goldman Sachs. – June 12, 2018.