Press Statement by DAP Secretary-General and MP for Bagan, Lim Guan Eng in Kuala Lumpur on 1 December 2020

Yesterday in Parliament, Finance Minister Senator Tengku Datuk Seri Zafrul Abdul Aziz’s clarified that the Federal government has still not decided on the application by Asian Development Bank for a sovereign loan guarantee for a RM2.04 billion loan to Penang state government to implement its Light Rail Transit(LRT) project. There was either a misleading written answer to a parliamentary question or there was a misreporting by the media which reported the cancellation of the said loan guarantee by the Federal government.

This proves again that the Pekan MP Datuk Seri Najib Tun Razak lied when he claimed that I had approved and secured a secret RM2 billion loan guarantee to Penang in my capacity as Finance Minister in 2019. This is not the first time that the former Prime Minister had hurled baseless allegations against me. Najib has already being convicted by the High Court for corruption and will be recorded by history as being responsible for billions of ringgit being stolen from Malaysians from the infamous 1MDB scandal handled by his operative Jho Low.

Zafrul said  in Parliament that the due diligence report from the ADB on the merits of the application for the loan by the Penang state government to finance the LRT project has not been presented to the Federal government. He asserted that the federal government did not withdraw the guarantee as there is currently none, but it does not mean that the project has been scrapped.

This means that the loan application by the Penang state government is still alive and Zafrul will consider when it is presented to him. ADB will only lend when the borrower has demonstrated clear repayment ability and satisfied its strict financial scrutiny. However, as ADB is governed by countries, ADB can only lend to countries directly or indirectly through a sovereign loan guarantee regardless of the merits of the loan application.

I would agree that there are other cheaper loans available, but this would be dependant on the willingness on the Federal government to provide prior approvals. No financial institution would even consider evaluating a loan unless the green light is given first by the Federal government.

Clearly Penang’s sterling financial performance since 2008 has been acknowledged by the yearly Auditor-General’s Reports and backed by key financial numbers. Penang has increased its asset reserves by nearly RM1.2 billion to RM2 billion in 2018. Penang also recorded the lowest debts amongst all states of only RM58 million compared to some BN states owing more than RM3 billion each to the Federal government in at end of 2018.

This strong financial standing has succeeded in convincing CIMB to lend RM1.5 billion to Penang Development Corporation, a wholly-owned subsidiary of the Penang state government. Penang has never defaulted on paying on these loans. In other words, there is no risk to the Federal government since the loan will be fully paid by the Penang state government.

Lim Guan Eng,
DAP Secretary-General,
MP for Bagan.