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Monday, December 20, 2010

What is Khazanah’s end game?


What's the end game being played by Khazanah? It's instructed to sell shares in the companies that it invested. Reason being- to flush the market with liquidity. But have we thought about the collateral damage?

I have long thought that it was wise before we appoint anyone to head GLCs- doesn't matter how clever they are, they should be re-schooled into understanding what it is to be Malay and the bigger Malay agenda. Now, don't get me wrong, I am not advocating anything sinister on the non-Malays. But imagine this- if those people whom we entrusted to implement policies that could have furthered the interest of Malays as laid down by our policies, didn't understand the reason they were put there in the first place, how could things be better?

Suppose, you install Malays who don't think much about affirmative policies, what do you get? You get results that they think are all right but in reality are detrimental to Malay economic interests. The Malay agenda becomes trivialized.

A few weeks ago, a leading newspaper interviewed a former Malay corporate leader. He was asked whether it is good business if KFC is sold to private Malay interest. He went on to answer if KFC business is to be sold, better to be sold to another GLC.

This is a stark example of someone who we extolled as a sound businessman who doesn't understand the Malay agenda. The idea has always been a GLC holds shares on behalf of Bumiputeras and somewhere along the line, there is a credible Malay entrepreneur who can take over the business, he should be given the chance. Hello- if you people must know, theer are many Malays out there whose name isn't Syed Mokhtar Bukhary. You give opportunities to many Bumiputeras. You don't keep the businesses in GLCs for infinity. This was why GLC was set up in the first place. But the stupid business leader didn't understand the bigger Malay agenda.

The same fools seem to head other GLCs at the moment. Many of them were placed at strategic GLCs by Nor Mohamad Yaakob. Obviously he is the chief culprit who doesn't understand the meaning of being Malay and the bigger Malay agenda.

What was the main reason Khazanah was set up? To invest in industries and businesses on trust for Malays. Now, if Nor Mohamad Yaakob says, sell into the open market, the value of Malay economic interests will be diluted. That is what I mean; having Malay technocrats who don't understand what it is to be Malay. Same goes for those in Equinas. Send them to be re-schooled first.

I think if I become a delegate at next year's UMNO General Assembly, I want to move a motion to lynch Nor Mohd Yaakob. By his balls the better. This is the man who just said we are nearing our goal of becoming a developed nation. Are we getting the fabled USD15, 000 per capita income already? Weren't we warned that that we are going to be a bankrupt nation if we go on spending on subsidies and then the same guy who gave the warning then launched a massive plan to spend and spend?

Maybe Nor Yaakob is seeing a lot of money flushed in the market. How? He has instructed his Khazanah boys to sell off shares to increase liquidity in the market.

As the man responsible over Khazanah, he famously endorsed the recruitment of brainy boys to helm Khazanah and GLCs. He then went on to announce, these people will be judged in accordance to various performance measures. The over rated KPIs.

KPIs are good only for marking term papers nowadays. The best KPI now seems to be the approval rating of ordinary Malaysians. Generally speaking, we don't have faith in the Khazanah mafia. The PM should now find ways to disband Khazanah and re constitute another sovereign wealth fund. Answerable to parliament if need be.

There are so many strange things done by the Khazanah people. It used to be a front for McKinsey at one time. I don't know why, these supposedly brainy people appear to be overawed by the Mckinsey name. Maybe because they are numeric people or maybe the confidence oozing from Mckinsey boys is secretly adored by inferiority complexed people at Khazanah. Nowadays we hear Azman Mokhtar going around sermonizing as a lay preacher. He has a diploma in some religious studies or something from UIA. Maybe by doing that, some of the questionable business deals are cleansed, no?

The man in charge of Telekom Malaysia for example was nominated by Azman Mokhtar. Azman's preference on ZamZairani is on the basis of "I can vouch for him as I know him since our MCgaygay days". Yes sir, this is great- we choose people on the basis of who I like and who I know.

What has Zam done for Telekom? Nothing other than serving as batman for Azman Mokhtar. And I hear it was Azman who moved the motion to increase Zam's salary to almost RM 100k a month. Holy cow- you pay RM 100k a month managing a company that's not moving anywhere.

What will Zam do that will not be different from what that Wahid Omar chap did before him? First, get rid of deadwood in Telekom. Wahid did that. And I have to say in all honesty; at least that was a credible achievement. It's amazing he didn't get blown up for doing that.

Retrench or VSS those who don't add value to the company. Then, there is the asset stripping much liked by accountants. Selling off Axiata shares appeared to be the latest. With the money, TM has funds to pay shareholder and probably avoid confrontation. They will go on selling whatever can be sold.

What is Khazanah's agenda?

Maybe Nor Yaakob and his KPI-steroided boys at Khazanah have different agendas. They want to be in business (more than 50 ventures all over the place) without a care about the bigger agenda. The bigger agenda is to push for Bumiputera ownership of economic resources at reasonable levels.

I maintain and believe that the primary purpose of Khazanah as is with GLCs is to hold shares on trust for bumiputeras. That should have been the primary agenda. It holds in trust the various companies in the name of Bumiputera. Then, if there are Bumiputera entrepreneurs who can take up the stakes that it holds, sell to them. In that way you build up a network of Bumiputera entrepreneurs which is in line with the overall government agenda of redistributing economic resources.

So when Khazanah sells its stakes, the right of refusal should vest with Bumiputera. It makes sense, because then the equities held on by Khazanah, made possible with government money, will divest into the hands of bumiputera.

Now I hear, Khazanah has been instructed to pare down its shares in the various companies so as to increase liquidity in the market. But if it sells in the open market, then the agenda of holding on to shares on trust for Bumiputera is diluted.

What's the reason for forming Khazanah? It was planned initially for khazanah to hold equity in strategic industries. But nowadays, Khazanah is into all sort of business. From agriculture rearing prawns, to creating a lego land.

What was the rationale of raising sukuk bonds in Singapore? Here, we are making all kind of braying noises that we are creating an integrated Islamic financial district. That district will be masterminded by a non-Muslim who is probably accompanying the PM this Christmas holidays to Dubai. Maybe after that, that Jho Low will be standing by in New York to party all night long.

Khazanah Nasional has substantial stakes in companies that are involved in various sectors such as:

Agriculture

  1. MAFC 100%
  2. Blue Archipelago 100%
  3. Biotropics 100%

Automotive

  1. Proton Holdings 42.74%
  2. Miyazu Seisakusho 9.12%

Basic Materials

  1. CIMA 100%

Financial Institution Group

  • Santubong Ventures 100%
  • ACRM 70%
  • Valuecap 33.33%
  • ACR Holdings 31.56%
  • ACR ReTakaful 40%
  • Bank Muamalat 30.0%
  • CIMB Group 28.39%
  • EON Capital 10.0%
  • Jadwa Investment 10.0%
  • IDFC 8.97%

Healthcare

  1. Integrated Healthcare Holdings (IHH) 100%
  2. Parkway 23.86% (held via IHH)
  3. Pantai Holdings 60%
  4. IMU Health 67.5% (held via IHH)
  5. Apollo Hospital 12.21%
  6. Pharmaniaga 86.8% (held via UEM Group)

Infrastructure & Construction

  1. Plus Expressways 16.74%
  2. UEM Group 100%
  3. UEM Builders 100%
  4. Opus International 96.39%

Leisure & Tourism

  1. Themed Attractions 100%

Media & Communications

  1. Axiata Group Berhad 44.51%
  2. Telekom Malaysia 36.78%
  3. TimedotCom 18.38%
  4. Time Engineering 45%
  5. Astro 29.34%

Property

  1. STLR 100%
  2. Iskandar Investment Berhad 60%
  3. Putrajaya Holdings 15.59%
  4. UEM Land 77.14%

Technology & Bio Tech

  1. Atlantic Quantum 100%
  2. MTDC 100%
  3. SilTerra Malaysia 98.05%
  4. Springhill Bioventures 33.33%

Transportation & Logistics

  1. Penerbangan Malaysia 100%
  2. Malaysia Airlines 17.08%
  3. Malaysia Airports 60%
  4. Pos Malaysia 32.21%
  5. Westport 8.55%

Utilities

  1. Tenaga Malaysia 35.69%
  2. Northern Utility 20%
  3. Shuaibah Water and Electricity Company 12%

Others

  1. KCS Green Energy 80%
  2. Parkson Retail 7.84%
  3. DRB-Hicom 5.13%

Let's watch who gets to buy shares in these companies as Khazanah divests them.

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