Business

Thursday October 1, 2009

Malaysia to issue US$1b bonds to fund JV with Saudi


KUALA LUMPUR: The Government’s wholly owned 1Malaysia Development Bhd (1MDB) has teamed up with Saudi Arabia’s PetroSaudi International Ltd (PSI) to establish a US$2.5bil (RM8.7bil) joint venture company (JVC) designed to boost investments from the Middle East into the country as well as to invest in high-impact projects here.

Prime Minister Datuk Seri Najib Tun Razak was quoted by Reuters yesterday as saying that Malaysia will sell US$1bil worth of bonds to finance its share of the deal, while an investment of US$1.5bil by the Saudi Arabian partner had already arrived in the country.

“The JVC’s objective is to seek, explore and participate in business and economic opportunities which result in the enhancement and promotion of the future prosperity and long-term sustainable economic development of Malaysia,’’ according to a joint statement issued yesterday by the companies.

“It is expected to actively invest in the renewable energy sector.’’

According to the United Nations’ World Investment Report 2009, foreign direct investment (FDI) inflows into Malaysia fell 4% in 2008 from US$8.4bil achieved in 2007.

“The JVC is set up to further increase FDI from the Middle East, in particular Saudi Arabia,’’ said 1MDB chief executive officer Shahrol Halmi.

“We will leverage on PSI’s strong international presence, its networks and expertise to promote Malaysia as the preferred investment destination.’’

1MDB was set up recently to drive strategic innitiatives for long-term sustainable economic development and to promote inflow of FDIs into the country.

Al-Khobar-based PSI is mandated to carry out investments which can strengthen the relationships between Saudi Arabia and key countries worldwide.

The venture is the first undertaken by PSI in this region and underscores the confidence Saudi Arabia has in Malaysia and economic prospects here.

“The JVC is expected to be a vehicle for investments from the Middle East into the region, thereby giving Malaysia the edge in drawing investments from the cash- and resource-rich region,’’ the statement said.

PSI chief executive officer Sheikh Tarek bin Essam bin Ahmad Obaid said Malaysia had long been a model of stability and development for developing countries

“The recent economic liberalisation policies announced by the Prime Minister will only make Malaysia a more attractive place for investors.

“We envisage Malaysia becoming an important partner for the Kingdom of Saudi Arabia,’’ he said.

The statement said the JVC would initiate various projects in multiple sectors that were mutually beneficial.

  • E-mail this story
  • Print this story