Malaysia’s 1MDB recoveries will not erase billions in losses, minister says

Malaysia’s Second Finance Minister Amir Hamzah Azizan told Parliament in Kuala Lumpur on 28 October that further recoveries from the 1MDB scandal would not erase the country’s losses, according to a Straits Times report credited to The Star/Asia News Network. He put the estimated net financial burden at RM20.1 billion if there are no further recoveries, tying the scandal to a continuing cost for public finances.

The government had paid RM42.5 billion towards 1MDB debts and commitments as of 31 August, including principal, interest and other costs, Amir Hamzah said. Another RM8.9 billion remained payable under government-guaranteed Islamic Medium Term Notes: RM5 billion in principal and RM3.9 billion in interest. The notes are scheduled to mature in 2039, bringing the amount paid and still payable to RM51.4 billion.

How 1MDB debts affected development spending

Amir Hamzah said the government had used RM18.7 billion from operating and development budget allocations since 2017 to meet 1MDB obligations. In March 2023, it allocated RM13 billion from development expenditure to redeem US$3 billion in government-guaranteed 1MDB bonds. That allocation represented about 13.1% of the year’s RM99 billion development budget, he said.

The minister said money used for those obligations could otherwise have financed schools, hospitals, roads, rural water supply and other public programmes. Paying down a debt, he added, did not mean the government had recovered the public money spent on it. The South China Morning Post has also described the 1MDB scandal as carrying a lasting cost for Malaysia’s public finances; its separate account notes that former prime minister Najib Razak has been imprisoned since 2022 following his SRC International conviction and maintains his innocence.

Why the final recovery amount is uncertain

Amir Hamzah said the government could not yet determine how much outstanding 1MDB claims would yield. The outcome depends on court decisions and appeals, identifying recoverable assets and enforcing orders, particularly overseas. Amounts sought in legal proceedings or awarded by courts cannot automatically be counted as money returned to Malaysia, he said.

Any estimate must also account for third-party rights, settlements, earlier recoveries and claims that may overlap on the same assets. Amir Hamzah said there was no definitive deadline for resolving all the legal claims and asset recovery efforts. The notes’ 2039 maturity date is a separate timetable; the government intends to continue pursuing recoveries at home and abroad while meeting its scheduled obligations.