MARK the next few days in the calendar: they could have a great impact on Prime Minister Najib Razak’s longevity in office and even cast off the 1Malaysia Development Bhd (1MDB) millstone around his neck.
The big powers of the United States and China will make their presence felt in Kuala Lumpur this week, for discussions centred on security and economic prosperity. Both Washington and Beijing want something from Najib and in return, his government will receive the endorsement and approval he craves.
For Washington, last night’s meeting between Najib and US State Secretary Rex Tillerson centred on the security threat posed by North Korea.
Sources told The Malaysian Insight the US wants the Najib administration to share information on North Korean businesses run out of Kuala Lumpur and to do more to halt shipment of sensitive weapon-making materials to the renegade state.
Washington believes Malaysia is home to many North Korean persons of interest as well as a significant cache of resources for Pyongyang.
The US would like the cooperation of Malaysian authorities in sharing whatever intelligence they have on North Korea.
The Malaysian Insight understands that the threat of terrorism in the region was also discussed between Najib and Tillerson, who is making his maiden visit to Kuala Lumpur.
It is Putrajaya’s view that the Trump administration has little appetite for the Department of Justice (DoJ) probe into the outflow of money from 1MDB through the US financial system, given that it started in the waning days of the Obama government.
Government sources believe that if Malaysia accedes to Washington’s requests for assistance on North Korea and plays ball on security issues, the US will have more reasons to support the Najib administration in the name of political stability.
Towards this end, The Malaysian Insight understands that Najib has received some encouragement from the US State Secretary during their discussions last night.
A blossoming relationship with the US will allow Najib to trumpet to his base his ties with Washington as indication that all the doomsday talk stemming from the two DoJ suits has been overblown.
While regional security formed the spine of US-Malaysia discussions last night, the economy and a multibillion-ringgit infrastructure development will be the theme of the visit by a 1,000-strong delegation from China, comprising officials from the central government and state-owned enterprises.
The team led by President Xi Jinping’s special envoy is here for today’s ground-breaking of the East Coat Rail Link (ECRL), one of the biggest projects under China’s One Belt One Road (OBOR) programme.
Putrajaya is hopeful the massive landbridge project cutting across the Malay peninsula will be impetus for economic growth and job opportunities, both of which are in short supply in the east coast.
In addition, China is expected to announce the setting up of an engineering school in Najib’s home state of Pahang, capable of producing several thousand engineers.
The Chinese delegation will also confirm Beijing’s interest in having Chinese state-owned enterprises become the master developer of Bandar Malaysia. The process to select the master developer for arguably the best real estate in the country closed recently.
Seven Chinese and two Japanese firms have submitted bids. Putrajaya expects to sell the master development rights for between US$8 billion (RM34 billion) and US$10 billion, a sum that will allow Najib to pay off 1MDB’s debts.
Finally, this week will also test Najib’s ability to resolve the state investor’s embarrassing default on the debt payment of US$603 million owed to Abu Dhabi state fund International Petroleum Investment Company (IPIC).
Under an agreement struck in April, 1MDB said it would pay US$1.2 billion in two instalments to IPIC by the end of the year. The first instalment was due to be paid by July 31 but 1MDB failed to honour the commitment.
Abu Dhabi gave 1MDB a grace period of five days to make good the payment and the deadline was lapsed yesterday.
The government has managed to persuade Abu Dhabi to give it until the end of the month to settle the US$603 million payment. But a key condition of the extension is a payment tranche of US$310 million by August 12.
Failure to do so could set off another round of speculation on the financial standing of the Malaysian government.
The Malaysian Insight understands that the Ministry of Finance is looking at options to pay off the debt, including by selling parcels of land.
THE MALAYSIAN INSIGHT