Mahathir Mohamad

Malaysia PM’s to-do list: cut costs, rein in US$251 billion debt, review MH370 search contract

New Prime Minister Mahathir Mohamad, who was swept into power in a surprise election win this month, is moving swiftly to stabilise the nation’s finances

PUBLISHED : Wednesday, 23 May, 2018, 2:37pm
UPDATED : Wednesday, 23 May, 2018, 10:28pm

Thousands of government workers in Malaysia will lose their jobs, state agencies dissolved and some projects could be aborted as Prime Minister Mahathir Mohamad moves to cut the national debt of 1 trillion ringgit (US$251 billion).

The government will dismiss 17,000 contractual employees and reduce ministers’ salaries by 10 per cent, Mahathir said in a press briefing after his first cabinet meeting in Putrajaya on Wednesday. Contracts, including those for the search of aircraft MH370 and for the Singapore-Kuala Lumpur rail, will be reviewed, he said without giving a timeline.

Agencies, including the regulator Land Public Transport Commission and the Special Affairs Department, which is tasked with advising the state on maintaining public perception, will be dissolved.

“I’ve been informed that our debt is actually 1 trillion ringgit, but today we were able to study and look for ways to reduce this debt,” he said

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Mahathir, who was swept into power in a surprise election win this month, is moving swiftly to stabilise the nation’s finances after the government reported that debt was higher than previously disclosed under the former administration.

Total debt stands at 65 per cent of gross domestic product, higher than the self-imposed limit of 55 per cent, Mahathir said.

Mahathir has also announced plans to revoke a controversial goods and services tax that was intended to rake in 43.8 billion ringgit (US$11.05 billion) this year, and reinstate fuel subsidies amid rising oil prices.

Newly-installed Finance Minister Lim Guan Eng said Tuesday that debt was higher than previously disclosed under the administration of ousted leader Naib, partly masked by the way the accounts were reported.

The Ministry of Finance’s most recent economic report puts federal government debt at 685 billion ringgit in 2017.

“It is clear that the previous government has conducted an exercise of deception to the public about certain hot-button items, especially 1MDB, and even misrepresented the financial situation to parliament,” Lim, 57, said on his first day at work at the ministry.

“A thorough investigation and discovery is still ongoing to uncover the necessary financial information and data.”

Najib faces a graft probe into a multibillion-dollar scandal at state fund 1Malaysia Development Berhad (1MDB).

Since his electoral defeat, authorities have searched properties owned by Najib and his wife, Rosmah Mansor, and seized cash and items, including jewellery and luxury handbags, estimated to be worth millions of dollars.

Najib denies wrongdoing.

Mahathir also said he would also review the search by a US firm for Malaysia Airlines Flight MH370 which disappeared on its way from Kuala Lumpur to Beijing on March 8, 2014, with 239 people on board, in one of the world’s biggest aviation mysteries.

The previous Malaysian administration had agreed in January to pay Houston-based Ocean Infinity up to US$70 million if it found the plane during a search in the southern Indian Ocean that is expected to end in June.

“We want to know the details of this (search), the necessity of this, and if we find it is not necessary, we will not renew,” Mahathir said.

“We are reviewing the contract and we need to terminate it if not useful.”

Voice 370, a group representing the relatives of those aboard the flight, called on the new government to review all matters related to MH370’s disappearance, including “any possible falsification or elimination of records related to MH370 and its maintenance”.

“We urge the new government to include as part of its agenda in the next 100 days … a further investigation and inquiry into any act or omission across the entire spectrum of operations that may have impaired tracking, search, rescue and recovery,” the group said in a statement.

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The decision to engage Ocean Infinity came after Australia, China and Malaysia ended a fruitless A$200 million (US$159 million) search across a 120,000 square-km (46,332 square miles) area in the Indian Ocean last year, despite investigators calling for the target area to be extended 25,000 square kilometres (9653 square miles) north.

The Seabed Constructor vessel has covered 86,000 square kilometres (33,205 square miles) so far but has yet to identify any significant findings, Ocean Infinity said in its weekly search update on May 15.

Bloomberg, Reuters