SCwatch


GOVT ‘TAKEOVER’ OF MALAYSIAN CHINESE OWNED LISTED COMPANIES : DONE IN A STRATEGIC CONTEXT?

 

In my mind, there has been too much ‘hot air’ and over-speculation about the acquisition by Government Linked Companies (GLCs) of public listed companies owned, in particular, by Malaysian Chinese entrepreneurs:

  1. It all started with UEM Land taking over listed Sunrise Berhad from Tong Kooi Ong, who had made a name for himself in Malaysia (Allied Bank, properties and securities) and Canada.

  2. Then there was the widely believed takeover of Air Asia Bhd by government agencies …. that explains the share price support up to RM3.95 …… and culminated in Tony Fernandes’ “rescue” of Malaysia Airlines (MAS).

  3. This was followed by the controversial takeover by Sime Darby of boutique developer E&O Berhad from major shareholders led by Terry Tham.

  4. And finally, PNB’s apparent ‘hostile’ takeover of SP Setia led by Liew Kee Sin.

First and foremost, I think this is part and parcel of the government’s plan to pare down its holdings in GLCs.

Why?

Because the government requires cash and Foreign Direct Investments are only trickling in …… and even then, it’s going to opposition controlled Penang and Selangor!

The monies will be needed for the government to stimulate and prop up the economy since it cannot export its way out of recession as it did in the late 1990s downturn …. the economies the world over are in trouble!

At the same time, the government realises that they cannot just arrange for cronies to buy these ‘significant’ stakes and run the companies profitably …… they will generally run them down; if not seek government ‘help’ in meeting their skewed KPIs.

Therefore, the government buys up these Malaysian owned, well run, profitable listed companies …. (I’m not too sure about Air Asia though!)

This is with the proviso that the previous controlling shareholders (Tong Kooi Ong, Tony Fernandes, Terry Tham and Liew Kee Sin) help run the bigger entity (UEM Land, MAS, Sime Darby and PNB respectively).

Effectively, the GLCs have the ‘bullets’ but they need these ‘marksmen’!

As a result, we now see Tong Kooi Ong is already in the Exco of UEM Land.

Same in the case of Tony Fernandes who sits on MAS’s Board and Exco.

As for Terry Tham (who worked for Wan Azmi in Land & General Berhad then), the collaboration agreement is not revealed in detail but it was mentioned he would still be there for E&O for the next three years.

As for Liew Kee Sin, he was effectively working for UMNO (read: Rashid Manaf) by building up the SP Setia group for his political master. The arrangement does not seem to change ….. as long as it enriches him.

Of course, this will face the brunt of the fury of right wingers in UMNO and condescending racists ….. but that’s how Malaysia works!

At the same time, it is assumed that these ‘successful entrepreneurs’ will act in the best interest of the larger government owned entity.

Well, most of us live on a wish and a hope!

This is at best, the start of the Malaysian meritocracy regime ……. in its own convoluted way!


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