Khazanah's RM6.3 bil loss stirs up debate

PETALING JAYA (March 7): Khazanah Nasional Bhd's RM6.3bil loss in the FY2018 has set tongues wagging, and fingers pointing.

Malay Mail reports that on Tuesday, Khazanah announced its FY18 results, which recorded RM6.3bil losses, compared with RM2.9bil profit due to impairment. Net asset value (NAV) declined by over 20% or RM25bil to RM91bil as at Dec 31, 2018 from RM116bil a year earlier.

Malaysia Airlines' poor performance accounted for half of the impairment charge, and another large portion was reported to have come from the write down on Khazanah’s investment in Astro.

Datuk Seri Najib Razak posted on social media, questioning Khazanah’s declining NAV of RM25bil, and saying that the sovereign fund never incurred any losses during his tenure.

“In the 10 years I was Prime Minister and chairperson of the company, Khazanah never suffered losses,” he wrote.

Economic Affairs Minister Datuk Seri Azmin Ali said that the losses made by Khazanah stemmed from the review of its assets and investments made prior to Pakatan Harapan's time in power.

“While it is true that Khazanah reported RM6bil losses caused by impairments that increased to more than RM7bil, this was a result of a review of the assets and investments made ‘before’ the new govt took over. What did they say about a little knowledge being dangerous?”

Large investments made over the past few years, failed to turn around Malaysia Airlines and had caused an RM3bil impairment.

“The investment made over the last few years into the airline before Pakatan took over have to be impaired,” he said. 

It was the first loss reported by Khazanah since 2005.

Despite the losses, Khazanah announced an RM1.5bil dividend, up from RM1bil in 2017.

It was reported that Khazanah managing director Shahril Ridza Ridzuan, who took the helm at Khazanah last August, said the government had asked the fund to refresh its mandate, which includes dividing its investment objectives to commercial and strategic categories.

The refreshed mandate, amidst an ongoing restructuring would put Khazanah on stronger footing, enhancing profitability and performance in 2019 and beyond, he said. 

“Forget the blame game. Every cloud has a silver lining,” Azmin tweeted. 

“Look at 2018 as a clean-up of the problem assets left behind in the portfolio. Having taken these measures, I dare say that Khazanah will return to profitability in 2019,” he said. 

Najib added that Khazanah’s NAV of RM82.3bil at the end of 2008 went up to RM116bil at the end of 2017.

“RM25bil is not a small amount. It can pay nearly all of 1MDB debts or half of the cost of ECRL, which is RM55bil,” he said.