Crooked bridge over troubled water

bdmetronews Desk ॥ It must be exhausting for officials at the Ministry of Foreign Affairs (MFA) to have to constantly correct statements in Malaysia.

For instance, they had to disabuse Johor Menteri Besar Osman Sapian this past week of what he thought will be discussed during his visit to Singapore on Oct 27. Osman reportedly said the construction of the “crooked bridge” would be on the table. Other items he said would be on the agenda were the price at which Singapore buys raw water from Malaysia, as well as bilateral development and investments.

In a statement, MFA said the coming meeting does not have the mandate to discuss the 1962 Water Agreement, nor did Singapore receive any official word to discuss the “crooked bridge”.

However, Malaysian government officials are now also feeling the need to correct statements in Singapore. On Oct 7, The Sunday Times reported that Malaysia faces a looming interest payment of US$50.3 million ($69.47 million) to Abu Dhabi in connection with the 1Malaysia Development Bhd scandal. It suggested that a full settlement of the payment would set a “dangerous precedent”, as it would amount to an explicit recognition by the Pakatan Harapan government of the liabilities and commitments it inherited from the previous government on all 1MDB-related matters.

On the other hand, failure to honour the interest payment would trigger a default on the Abu Dhabi debt estimated at US$3.5 billion, and crystallise cross-defaults on other 1MDB-related debt amounting to more than US$2 billion. That would have negative consequences for Malaysia’s credit rating and weigh on its currency.

Then, on Oct 14, The Sunday Times reported that a statement to the London Stock Exchange showed that Malaysia owes Abu Dhabi US$6.9 billion. The report stated that the revelation had sent shock waves through the Malaysian government, as this is twice what the government says it owes Abu Dhabi.

The announcement to the London Stock Exchange relates to a plan by Abu Dhabi’s state-owned International Petroleum Investment Co (IPIC) on Oct 1 to transfer specific liabilities and financial commitments related to multibillion-dollar bonds issued by 1MDB to its parent entity, Mubadala Development Co PJSC. IPIC shareholders are set to vote on the corporate restructuring at end-October.

The Edge Singapore
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