Pembinaan PFI's projects viable: Irwan

BUKIT JALIL: The government is confident that the private finance initiative (PFI) projects of Pembinaan PFI Sdn Bhd, a company owned by the Finance Ministry, are viable in the long run.
Pembinaan PFI has come under flak as another company that has accumulated huge debts in recent years, as the probe on the 1Malaysia Development Bhd (1MDB) continues.
Treasury secretary-general Tan Sri Dr Mohd Irwan Serigar Abdullah said the government debt level is still below 55% of the country's gross domestic product, dismissing questions of any "bailout".
"All PFI projects are viable and can survive on their own as they are evaluated both technically and financially. They're moving fast, for example Line 1 of the (Klang Valley) MRT project will be completed in 2016 and will be operational so there's no such thing as a bailout. It's within the government financing programme," he told reporters after launching Ascent 2015, a scholarly conference on emerging trends in business, computing and education here yesterday.
Pembinaan PFI's nature of business is to source for financing to undertake government projects. It is 99.9% owned by Finance Ministry Incorporated. The Federal Land Commission holds one share in Pembinaan PFI.
For the financial year ended Dec 31, 2013, Pembinaan PFI's registered a net profit of RM31.18 million and a revenue of RM1.11 billion, with assets of RM26.66 billion and liabilities of RM26.6 billion. It has RM19.48 billion that is unsatisfied to the Employees Provident Fund in August 2014 and has fully satisfied a total of RM40 billion in August 2007.
"For certain projects we look at the technical viability, in the long run. Some of the infrastructure projects are not one year, two years... it goes to 100 years. In terms of capital expenditure, we finance through our development expenditure or through borrowings and the operation part is financed through the revenue. But it will take a long gestation period for huge projects like MRT but in the long run, it's viable," explained Irwan.
He added that similarly, infrastructure and transportation projects are also undertaken by the government in other countries and will be beneficial for the nation and the people in the long run.
"We need some form of mechanism of financing but that doesn't mean we're going into a huge debt position," said Irwan.
Serdang MP Dr Ong Kian Ming had said that Pembinaan PFI recorded RM27.9 billion in debts at the end of 2012 but the amount could have reached RM47.4 billion at the end of 2014. It was reported that Pembinaan PFI had the third highest liabilities among all government-owned entities at the end of 2012, according to the Auditor-General's (AG) report in 2013 (series 3). Its total liabilities were RM27.9 billion, behind two well-known companies with huge assets, revenues and profits namely Petronas (RM152 billion) and Khazanah Nasional (RM69 billion).
Meanwhile, Irwan declined to comment on 1MDB, saying that it is under investigation by the AG.
"I don't want to speculate. Let us wait for the AG's report."
He said the country's financial position is strong and sound and does not see any problem in terms of the economic position of the country.