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Ride The Bull Short The Bear
CS Tan
4.9 / 5.0
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
Posted by izoklse > 2014-02-16 01:59 | Report Abuse
READ MORE HERE AN EYE OPENER : http://1-million-dollar-blog.com/rm500-billion-debt-malaysian-government-bankrupt/ “We are going bankrupt in five years time” “The government has no more money and we have RM500 billion of debt” “Mismanagement and Corruption has made us poorer” These are the routine statements you may have heard regarding the state of the Malaysian government finances. But do they hold any water? A while back, in Book 3 of the 259 Trillion Vs 5 Trillion Series, my co-author and I have presented the calculations of the US Government assets and compared them to the so called “mountain of debts” and found out that the opposite was the truth, that the US has far more asset than debt. People with their own agenda use half-baked statistics to propel “unsuspecting” citizens to become angry and extremely emotional toward their own governments, masking their true intention, which is mostly for power grabs. As such, with such roaring emotional outburst of various camps on small issues, I will try to dispel a few myths on the Government of Malaysia. One should view things with brains and facts and not on sensationalized half-truths and emotion. I have dispelled the myth on the increasing price of Roti Canai in my first Malay book, complete with historical prices and charts. The conclusions was clear, relative to Malaysians income level, the price of roti canai has dropped significantly. We can’t blame the government for everything, including the price of ordinary goods. One such myth is the impending bankruptcy of the Malaysian Government. One condition of being a bankrupt, is by having more debt than asset. The following is an extract of the statement from the Government’s Accountant which, to a great extent, compounded the public’s perception that the government is doing very poorly financially. “The Federal Government assets disclosed in the Statement of Memorandum Accounts only include Recoverable Loans RM95,493 million and Investments RM27,194 million, whereas the liabilities comprised Public Debt RM501,617 million and Other Liabilities RM276 million”. [Extract from 2012 Federal Government Financial Statements report]. The statement clearly implies that the government is withholding assets worth a mere 95+27 = 122 billion ringgit while the debt is now in excess of 500 billion. But is it really true that the government’s debts exceed its assets, or in other words, bankrupt? In the government’s consolidated and unified balance sheet statement, it was reported that the government was only holding a sum of RM27 billion in investments in select companies including that of Kumpulan Wang Amanah Pencen (KWAP) as of the year 2012. Unfortunately it does not seem to mention the real market value of these assets, which is of many times greater. Or take for instance that in the same report, it was mentioned that the government’s holding of Petronas is only worth 99.99 million ringgit. Everyone knows that Petronas is worth a lot more than this. Fortune500 as well as Petronas itself, reported that it is worth as much as RM521 billion as of Sep 2013 with an amazing 123 billion in an essentially all cash assets! The investments made into Khazanah Nasional Berhad, a well known investing arm of the government, is worth only RM 5 billion according to the government’s report, but Khazanah itself puts the figure of all of its investments well in excess of RM134 billion, a really significant sum. The government is simply aggregating the original money it invested into these companies; however the actual marketable value of these investments today is far larger. To add to its burden, the government also listed the entire, I repeat, the ENTIRE amount of money in the EPF, as its financial obligation by way of government guarantees. That is worth about RM480 billion at the end of 2012! Now, this is a colossal amount to guarantee, but the government explicitly guarantees the entire savings of Malaysia’s future retirees. Not just the EPF will take care of your retirement money, on top of that, the government itself guarantees it. This is very similar to the banking system, where the bank guarantees all deposits, and the PIDM insure the majority of the deposits in the system while the government, although not being explicit, would guarantee the entire system as well. [Note: as evident in 2009, the government then had publicly provided an express written guarantee to all deposits in Malaysian banks for a period of several years, without any limitation on the deposited amount] The total statutory financial guarantees extended by the government is RM690 billion of which, as already stated earlier, 480 billion is due to the guarantees to EPF. Bet that you have not heard that in the year 2011, the total financial guarantees of the government was in excess of 771 billion ringgit, thus recording a significant drop of about 80 billion in the year 2012.