Pembinaan PFI: Financial “Engineering” or Financial Disaster?

 

The Malaysian Anti-Corruption Commission (MACC) is currently investigating Pembinaan PFI Sdn Bhd (“PFI”). The MACC investigation raises the spectre of another possible scandal blowing up in the aftermath of Barisan Nasional’s fall from power. At RM50.2 billion, PFI’s borrowings are on the same scale as 1MDB’s debt. It amounts to a quarter of the federal government’s committed government guarantees, which came to RM199.1 billion as announced on May 24. And further investigation may shed more light on what a strange and convoluted scheme is already to dip into local pension funds. 

The Employees Provident Fund (EPF) confirmed it lent RM21.16 billion to PFI and that all repayments are currently in order. While EPF’s lending to PFI is not a secret, its statement was understood to be a response to a renewed wave of viral WhatsApp messages alleging impropriety in its involvement with PFI. 

Source: https://en.wikipedia.org

The latest available data shows that PFI has an unsatisfied RM19.48 billion charge on its assets in favour of EPF, created on Aug 22, 2014. Another known lender to PFI is Retirement Fund Inc (KWAP), although the latest quantum was unclear at the time of writing. PFI is wholly owned by the Minister of Finance (MOF) Inc, the finance ministry’s corporate vehicle. 

It was essentially set up to borrow money on behalf of the federal government— that is, without adding to the government’s official debt figures. This is done by disguising loan repayments for the debt as “rental payments” from the Treasury to PFI, which was done via a leaseback arrangement involving government land. This way, the repayments are classified as operating expenditure in the government’s accounts, rather than debt servicing. 

On Aug 22, 2007, PFI inked a term loan facility from EPF for RM20 billion. The facility was for a 60-month period, and the interest rate was the prevailing rate of Malaysian Government Securities (MGS) plus 0.5% per annum, calculated on a six-monthly basis. A day earlier, PFI and the Federal Lands Commissioner (FLC) — which legally owns land on behalf of the federal government — had signed an agreement whereby PFI would lease 186 parcels of government land for a lump sum of RM20 billion. 

To create cash flow so it can repay the EPF term loan, PFI then proceeded to sublease the 186 land parcels back to the federal government for a total of RM29.18 billion, spread over 30 twice-yearly payments between 2013 and 2027. 

The rationale for the PFI arrangement is that it enables the government to raise additional money to fund its development programme. But this is done at the cost of kicking the repayments — with interest — down the road, with the debt pile now snowballing to RM50.2 billion. The scheme’s origins trace back to the time of then prime minister Tun Abdullah Ahmad Badawi, who had set out to execute infrastructure projects with the private finance initiative (PFI) model under the Ninth Malaysia Plan (9MP). Some RM20 billion was earmarked for PFI projects in 9MP. A private finance initiative (PFI) is basically a concessional procurement method whereby the government outsources the construction of public infrastructure to private contractors. In exchange for a concession to operate and maintain the infrastructure, the PFI concept means the private contractor would have to raise its own funding to complete the project. 

When will these schemes stop? Never, if you have politicians who have the same stripes as Najib. They are still there and surprisingly voters still vote them in! If you want a country to progress and have accountability in the system, then you need to come clean on many others like PFI. It beats me why PMX has not gone after those responsible and strengthen his position for another term? 

Reference:

Cover Story: A ‘secret’ government debt that has ballooned to RM50 billion, Khairie Hisyam Aliman / theedgemarkets.com, 26 Jul 2018

When Poverty Meets Pregnancy…!

 

At around 20 to 30 years, many young adults are just beginning to find their footing in life. Some are fresh graduates embarking on their first careers. Others are saving for a home, pursuing higher education or planning for marriage.  

But a recent viral video on X paints a different reality. In the clip, a young woman is seen sitting along a public walkway with a baby in her arms, selling small items to earn a living. When approached by a concerned passer-by, she is asked about her age. Her answer is just 23. What comes next is even more heartbreaking. She reveals that she already has three children. At an age when many are still trying to establish their own lives, she is already struggling to provide for three young children. Netizens who watched the video were equally touched by it.

 

Source: Wiki Impact

At just 23, this young mother has become the face of a struggle shared by many whose stories never make it onto social media. Her plight should not merely leave viewers feeling sorry for her. Instead, it should remind others that compassion is most meaningful when it is matched by understanding. 

Note also that the measure of a caring society lies not in how loudly it reacts to viral videos, but in how quietly it supports those who are struggling long after the cameras are gone. 

There are many others who suffer from mental issues, homelessness, drug dependence, insufficient income or wealth. We may not be able to solve all their problems. But surely Madani can devise a scheme for NGOs, voluntary organisations, churches and others to help directly in the areas they operate? It requires leadership and coordination. Otherwise, we must take on the responsibility to discern and contribute to the needs of the less fortunate without the government (of compassion)! 

Reference:

When poverty meets pregnancy, expect a tale of hardship and a stark lesson in family planning, CS Ming, Focus Malaysia, 29 July 2026

 

High Income Status: Chasing a Moving Goal?

 

Based on the latest data published by the World Bank using the Atlas method, Malaysia’s 2025 gross national income (GNI) per capita reached US$12,380. Although Malaysia’s GNI per capita improved by 6.5% last year, it fell short of the 2025 high-income nation status threshold of US$14,375 per capita by a wide margin, which is the threshold used by the World Bank based on 2025 GNI per capita for the financial year July 2026 to end June 2027. 

Thus, our per capita GNI in US dollar terms will still need to grow by 16.1% before we can be classified as a high-income nation and join 87 other nations that have already achieved the status based on the latest classification. As the high-income status threshold seems to increase by a few percent every year, our total GNI per capita will need to improve at a faster pace. As the measurement is in US dollar terms, the other variable that will have an impact on our GNI per capita is the exchange rate itself. For example, Malaysia’s GNI per capita in US dollar terms was also helped by the ringgit’s appreciation as our GNI in local currency terms rose by 4.3% year-on-year to RM1.95 trillion.

 

Source: https://www.wikihow.com

Malaysia’s GNI per capita has been rising at a compounded annual growth rate (CAGR) of 4.1% per annum over the past five years. Malaysia is on the right track in moving up the income threshold, thanks to concerted efforts in raising income and salaries of households and employees. In fact, over the past 25 years, Malaysia’s per capita income grew at a strong 5.2% CAGR, surpassing the 3.9% CAGR in the global high-income threshold. This allowed Malaysia to close the gap between our per capita income and the global threshold for a high-income nation. 

Malaysia came close to surpassing the global threshold for high-income status in 2014, falling just short by US$119 of the World Bank’s threshold of US$10,959 in per capita income. 2014 was also a period when the ringgit was stronger, allowing our per capita income in US dollar terms to grow much faster due to currency gains. 

For context and understanding, the GNI measurement adopted by the World Bank’s Atlas method is based on a three-year average exchange rate, adjusted for inflation based on a country’s inflation rate vis-a-vis developed economies. Hence, the calculated 2025 GNI per capita of US$12,380 is based on a three-year average US dollar-ringgit exchange rate of 4.4727 to arrive at RM58,524 per capita, which is higher than the reported GNI in ringgit terms for 2025 at RM57,200. The difference of 2.3% is likely related to the inflation-adjusted Atlas method used by the World Bank. 

Malaysia’s GNI per capita in US dollar terms would be much higher at US$13,665 if the average US dollar-ringgit exchange rate of 4.2829 for 2025 was used. Based on the current exchange rate, the GNI per capita for last year would have been at US$14,307 – just a whisker away from the high-income threshold of US$14,375. 

Malaysia’s journey towards achieving global recognition as a high-income nation has been a long one. We first entered the current income classification of upper middle-income economy in 1994 and have been stuck there for more than three decades. As the per capita income measurement is in US dollars, the average three-year exchange rate between the dollar and ringgit also makes a significant impact on our per capita income. 

Even assuming a modest 3% growth in the high-income per capita threshold and if Malaysia’s GNI per capita in US dollar terms grows by 5% per annum, it will take us another eight years before we are able to surpass the global threshold. Hence, even on an optimistic assumption, Malaysia will remain stuck in the upper middle-income category up to 2032 and only achieve high-income status by 2033. 

Achieving the high-income status can be said to mean that we have finally “arrived” after decades of being stuck in the upper middle-income category. The reality is that Malaysians remain poor as the median salary is at just RM3,027 per month (as of March 2026) or RM36,324 per year, which is RM20,876 or 36.5% below the GNI per capita level. Over 85% of the Malaysian labour force do not earn enough to fall within the income tax paying bracket. 

Malaysia’s gross domestic product (GDP), when measured on an income basis, shows compensation of employees (CE) remains low at just 33.9%, a marginal 0.3 percentage point increase from 33.6% recorded in 2024. (The target is to raise income share to 40% by 2030). For advanced economies, this accounts for 50% to 60% of GDP. 

Although CE grew by 5.8% in 2025, outpacing the GDP growth of 4.8% at current prices, the growth in CE has not been strong enough. At the current pace of increase, Malaysia’s target to hit CE of 40% by 2030 will be hard to achieve if real wage reforms are not carried out.

The other is income inequality. With a Gini coefficient of 0.39 (in 2024) we need to do much better in income redistribution. Most developed economies show disposable Gini scores of between 0.25 and 0.38. The average for the entire world is between 0.61 and 0.68. So, in that sense, we are better off! 

References:

The long climb to high income, Pankaj C. Kumar, The Star, 01 Aug 2026 

For most, EPF savings may no longer by enough, Alysha Edward, FMT, 3 February 2026

Asia’s Economic Power Map

 

Asia’s Economic Power Map is being redrawn. Asia is no longer simply the world’s manufacturing centre. It is becoming the global engine of economic growth, technological innovation, industrial investment and capital formation. China continues to dominate the region by economic size, while India is steadily reducing the gap with exceptional long-term growth potential. Japan remains one of the world’s largest advanced economies, and countries such as South Korea, Indonesia, Saudi Arabia, Singapore, Vietnam and the United Arab Emirates continue to strengthen their strategic importance across technology, commodities, finance and manufacturing. 

For investors, Asia should not be viewed as a single market. Each economy offers a distinct investment profile shaped by demographics, industrial policy, natural resources, innovation, governance, currency dynamics and capital market maturity. The region’s transformation is creating opportunities across multiple sectors, including: 

• Artificial Intelligence & Semiconductors

• Energy & Commodities

• Advanced Manufacturing

• Infrastructure

• Financial Services

• Consumer Markets

• Logistics & Global Trade

 • Renewable Energy 

The key challenge is no longer deciding whether to invest in Asia—it is identifying the countries, industries and companies best positioned to outperform over the coming decade. As global capital increasingly shifts eastward, understanding Asia’s economic landscape will become an essential competitive advantage for investors and business leaders alike.

 

 

Reference:

IMF World Economic Outlook (2026 projections).

 

 

One-Month Deadline: Really?

 

PMX has given the relevant ministries and departments one month to resolve the foreign worker application issue, particularly for the restaurant sector. For years, we've been told that the foreign worker issue is incredibly complex. It involves multiple ministries, Immigration, labour policies, quotas, security concerns, industry needs, and the delicate balancing act of reducing Malaysia's dependence on foreign labour while ensuring businesses have enough workers to survive. And now, apparently, only one month is needed.

 

Source: https://www.wikiimpact.com

This isn't a new problem. Restaurant operators have been raising the alarm since at least 2023. Every few months, another headline appears. Labour shortages. Delayed applications. Businesses struggling to stay open. Associations urging the government to act. Ministers acknowledging the issue. Promises to review the system. Assurances that solutions are being worked on. 

Three years later, the government gives itself one month. 

We all hope that PMX succeeds. If the bureaucratic bottlenecks can finally be cleared, businesses will benefit, workers will benefit, and ultimately consumers will benefit too. Nobody wins when restaurants have to shorten their operating hours or delay expansion because they cannot find enough staff. 

But the announcement does raise an uncomfortable question. If this issue can genuinely be resolved within one month, why wasn't it treated with the same urgency three years ago? After all, the labour shortage didn't suddenly appear this week. Restaurant operators didn't wake up yesterday and decide they needed workers. The government has known about this issue for years because businesses have been reminding them... repeatedly. 

If one-month deadlines are effective, perhaps we've discovered the solution to governing Malaysia.

 

·      Let's give one month to repair every pothole.

·     One month to resolve the stray dog and cat issue.

·     One month to restore every broken public park and playground.

·     One month to unclog drains before the next flash flood.

·     One month to clean and repair our public toilets.

·     One month to improve the cleanliness of our cities.

·    One month to reduce unnecessary bureaucracy that frustrates businesses and ordinary Malaysians alike.

 Why does urgency always seem to arrive when politics enters the calendar?

Governments often tell us that change takes time. That policies must be studied carefully. That different agencies need to coordinate. That procedures exist for good reason. Most Malaysians understand that. Which is exactly why this one-month deadline sounds so extraordinary. It creates the impression that a problem described as highly complex for years can suddenly become an administrative sprint. 

Malaysia doesn't suffer from a shortage of reports, committees or policies. Every year, there are plans, roadmaps, blueprints and frameworks promising improvement. What Malaysians have often complained about isn't the lack of ideas. It's the lack of urgency in turning those ideas into action. Because if one month is all it takes to move the machinery of government, Malaysians may soon stop asking for new policies. We'll simply start asking for more one-month deadlines. 

Reference:

OPINION | PM Anwar's Extraordinary One-Month Deadline, Fa Abdul, Newswav, 29 July 2026

Revamp of the National Trust Fund

 

Kumpulan Wang Amanah Negara (National Trust Fund) or Kwan has now RM22.4 billion in funds. Not many know that we had a plan for a sovereign wealth fund since 1988. It was resource-based - to be funded from depleting resources such as oil and other natural products. Amazingly and tragically, it was flawed from the start when it was to be set up with voluntary contributions from national oil company Petronas and other bodies. Only Petronas contributed, with RM13.5 billion up to 2021 and a further RM3 billion in 2023. 

The fund has achieved little since its inception 38 years ago, losing much in lost opportunities because the contributions, being voluntary, have not been much on a relative basis. Although a respectable return of six percent per year was achieved, the small contributions did not make the fund a heavyweight. On top of that, poor controls and the use of emergency regulations to tap into the fund depleted it even further. 

A comparison with Norway, which began extracting oil and gas in 1971, following discoveries in 1969, is illustrative of our own missed opportunities to preserve the proceeds from the sale of depleting resources for future generations. When oil contributed substantially to the economy, Norway set up a sovereign fund in 1990. 

Malaysia set up Kwan two years earlier in 1988 under the Dr Mahathir Mohamad administration, but as with many other such projects, such as the national car and heavy industries, it suffered from lack of follow-through and misplaced strategies.

While Norway’s Government Pension Fund Global received huge mandatory contributions, mainly state net revenue from oil and gas, Kwan’s only voluntary contributor was Petronas, which is 100 percent owned by the government. 

The Norwegian fund is 357 times larger than ours now. Norway’s output of oil, gas, and condensate in May was around 1.9 million barrels of oil equivalent per day. Malaysia’s output is very similar, with Petronas announcing in January that it aimed to sustain production at about two million barrels of oil equivalent per day. That’s a very stark and sorry representation of our situation. It could have been tremendously positive if we managed revenue from depleting resources well, by first allocating enough money into the fund. 

While the revamp of the fund with safeguards on withdrawal is welcome, it is rather late and has caused us trillions of ringgits. The new contributions set, although mandatory, may still be too little to make a real difference in the future. 

The new annual contributions are:

 

·         - at least 0.1 percent of the federal government’s projected annual revenue. This is estimated to be RM343 billion for 2026. So the contribution to Kwan should be RM343 million. 

·         - at least two percent of the dividend the government receives from Petronas. The government expects to receive RM20 billion in dividends from the national oil company in 2026. Contribution to Kwan should be RM400 million. 

·        - at least two percent of export duties collected on depleting natural resources, including crude oil, minerals, and iron ore. The Statistics Department estimates the export value of crude petroleum and condensates to be about RM25 billion. At 10 percent, the export duty is RM2.5 billion. Two percent of that is RM50 million. 

Total contributions to Kwan should come to just under RM800 million a year. Meanwhile, the Employees Provident Fund received contributions of RM120 billion in 2025, 150 times what Kwan is to get. 

The new act strictly ring-fences dipping into the coffers by the government. Annual withdrawals are legally capped at a maximum of 50 percent of long-term real returns, implying capital can’t be touched. Usage is restricted strictly to three national development pillars: education, healthcare, and climate change mitigation. Any change requires a parliamentary vote. 

It may be too little too late, but at least it is a change in the right direction. 

Reference:

COMMENT | Revamp of national trust fund is very late, but welcome, P Gunasegaram, Malaysiakini, 21 July 2026   

 

Managing or Leading?

 

How does it feel for a global CEO to walk into a board meeting with a big decision to make? Only that after ninety minutes there is still no decision.

 

The board discussed it thoroughly. Every perspective was heard. The room took careful note of the intended way forward.  Without endorsing it, the CEO managed the meeting perfectly. Nothing had moved.

 

Why does this happen? The process isn’t the problem. The agenda was clear. Supporting data was adequate. The discussion was structured and civil and thorough. But there is a problem. Below the structure and civility, the CEO didn’t check what message had landed. Those listening didn’t speak out compellingly for or against the proposal. The result?  Fog instead of clarity. Because something was happening beneath the discussion that wasn’t revealed through the discussion.

 

A senior partner protecting a position they had held publicly for three years. A regional leader whose firm would bear a disproportionate cost of the decision going one way. A board chair managing the temperature of the room rather than prioritising the direction of the organisation. This remained hidden. All of it was felt. By not intervening to raise these unspoken points, the conversation remained opaque.

 

The CEO managed to avoid disagreement rather than create a compelling endorsement of the proposal. Leading and managing a room are different. Managing prioritises everyone is comfortable. Leading prioritises moving something forward. Your board doesn’t need better management.

 

It needs someone courageous enough to hear the answers to the difficult questions and get things moving!

 

Reference:

Chris Rawden’s Post on LinkedIn