Khazanah aiming for RM5bil profit in 2019

Strategic move: Azmin (left) and Shahril Ridza shaking hands at the Khazanah Megatrends Forum 2019 at the Mandarin Oriental in Kuala Lumpur.

KUALA LUMPUR: Having pared down its debt level through asset sales this year, Khazanah Nasional is targeting a profit of RM5bil this year and a further reduction of debt to RM40bil in the medium term.

Economic Affairs Minister Datuk Seri Azmin Ali said the sovereign wealth fund had managed to shave its debt level by RM8bil to RM47bil this year.

Aiming to reduce debt further to between RM35bil to RM40bil, he said Khazanah’s sale of assets is a process that should not raise alarm.

“The process of selling assets is a normal business deal for Khazanah as well as the Employees Provident Fund and Permodalan Nasional Berhad.

“This is not something out of the ordinary, but a strategic consideration following market conditions and which will create value to assets.

“However, we must ensure that the assets we sell will generate money as well as new funds for us to re-invest into other assets and make more profits to Khazanah and then give dividends to the government,” he said at the Khazanah Megatrends Forum 2019 yesterday.

On Malaysian Airlines, Azmin said proposals were still being studied for its fate. But he added that he was not at liberty to provide details.

Khazanah managing director Datuk Shahril Ridza Ridzuan clarified that the organisation’s goal to pare down its debt to about RM40bil is expected to be achieved within three to five years.

He added that they aimed to recover profitability and to rake in profits of about RM5bil this year.

Khazanah previously posted a loss before tax of RM6.27bil in 2018, the first loss it suffered since 2005.

To a question about increasing bumiputra corporate equity stake, Shahril said Malaysian enterprises should focus on delivering consumer-driven products instead of depending on government contracts and businesses.

“People need to understand that GLCs, government-linked investment companies (GLICs) and the government basically are actually a small part of Malaysian economy.

“Government contracts and businesses are a really small fraction of the economy, probably no more than 15% of economy, while the other 85% is about responding to external demand and internal consumer demands.

“The Malaysian economy, like most developing economies, has evolved to become a consumer and demand-driven economy rather than an economy driven by government contracts and supplies.

“If we want to target greater bumiputra participation in the economy, we have to look at how to get them to participate especially in demand and consumer-driven products and services,” he said.

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