Malaysia sets up fund for donations to ease national debt

Malaysia's new Prime Minister Mahathir Mohamad. Reuters.

Malaysia's new Prime Minister Mahathir Mohamad said on Wednesday the government will set up a trust fund to let the public contribute to easing the country's huge national debt.

Mahathir's government last week revealed that the national debt and liabilities exceed 1 trillion ringgit (USD 250.6 billion), or 80 per cent of Malaysia's gross domestic product, after taking into account government guarantees and other payments. It has blamed economic mismanagement and corruption under former scandal-tainted leader Najib Razak and the long-ruling coalition that was ousted by a surprise defeat in a May 9 national election.

"There are many Malaysians who were willing to donate to the government when they found out how bad our country's financial situation is. We welcome their patriotic stand," Mahathir said today.

The finance ministry said in a statement that the "Malaysia Hope Fund" will provide a systematic and transparent platform to manage all public donations.

The move is unusual for a government but it comes as a response to a crowdfunding campaign started recently by a Malaysian to help settle the staggering government debt. The election victory by Mahathir's alliance inspired patriotic sentiment among many citizens who have expressed pride on social media about being part of a new Malaysia that is free from graft and race politics.

In her fundraising campaign, Nik Shazarina Bakti, 27, said Malaysians in the past had given jewellery, money and valuables to help raise funds in seeking independence from Britain. "This time, we are doing it. We can tell our children and grandchildren of this initiative that we all took part in to save Negaraku (my country) Malaysia," she said.

The government has said it will axe a multi-billion-dollar high-speed railway project to Singapore and review other large-scale infrastructure projects, mainly Chinese investment, to cut costs. It has also reopened an investigation into a massive corruption scandal at the 1MDB state investment fund set up by Najib when he took power in 2009 but partly blamed for the rising debt.

The 1MDB fund accumulated billions in debts and is being investigated in the US and several other countries. US investigators say Najib's associates stole and laundered at least USD 4.5 billion from the fund. Najib, who denies any wrongdoing, and his wife have been barred from leaving the country pending the investigation. 

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Malaysia sets up fund for donations to ease national debt

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