Of 47 MoF companies, only four are sound, says audit report

The Auditor-General’s Report says the companies owned by MoF Inc are financially weak and dependent on government assistance.

KUALA LUMPUR: Only four out of 47 companies owned by the Minister of Finance Incorporated were financially sound, according to the Auditor-General’s report for 2018.

It said 33 companies were stable and 10 unstable.

The four stable companies are the national oil compny Petronas, Prokhas Sdn Bhd, MyCreative Ventures Sdn Bhd and Syarikat Jaminan Kredit Perumahan Bhd.

The report said the financial liability of MoF Inc companies had risen in 2018 compared to 2016, which showed their dependence on debts/loans.

“Other than that, contingent liabilities were high at RM13.178 billion,” the report said.

The valuation on the financial position of those companies with a majority equity holding by the government from 2016-2018 found the cash flow ratio of 26 companies (54.2%) at less than one, which is an indicator that they needed financial assistance from the government.

A financial analysis and monitoring of the MoF Inc companies also found that the ratio of returns on equity was less satisfactory with 47 companies (97.9%) recording a return of less than one.

The report said the use of 41.2% of government funds to repay loans to the government, including the change of loans to equity, showed the weak financial position of the companies and their continued dependence on government assistance.

“The use of sukuk/bonds by the MoF Inc companies was also less satisfactory with 33% being utilised to sustain the redemption of matured sukuk, to repay loans, as well as sukuk profit/ loans at RM23.097 billion.

“The rise in the issuance of sukuk/bonds in 2018 totalling RM12.040 billion to finance infrastructure projects also showed the government’s financial position was limited,” it added.