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Tuesday, December 31, 2019

Turbulence ahead in plan to privatise money-making Malaysia Airports

Malaysia Airports operates 40 airports including an international airport in Turkey.
PETALING JAYA: The government-controlled public-listed company in charge of maintaining airports nationwide could see itself privatised and be paired with a US-based firm that has only two airports under its wing, if its majority shareholder Khazanah Nasional goes ahead with a proposal submitted to it.
FMT has been made to understand that the proposal was met with stiff resistance, mostly out of fear that any such move would not benefit either Malaysia Airports Holdings Berhad (MAHB) or the government.
MAHB is one of the largest airport operators in the world, handling 39 airports across Malaysia as well as an international airport in Turkey.
“The government does not seem to be in favour of the proposal,” said a source.
“The resistance is understandable. After all, MAHB has more airport assets and a far superior track record of managing assets than Global Infrastructure Partners,” it said, referring to the New York-based firm.
The proposal is one of a series of controversial plans that Khazanah, the sovereign wealth fund which reports directly to Prime Minister Dr Mahathir Mohamad, has received since a management shake-up in July this year.
The plan to take MAHB private had been met with criticism by none other than A Kadir Jasin, the communications adviser to the prime minister.
Kadir hit out at what he said was a deal shrouded in secrecy and being pushed by parties with vested interest.
An aviation source who required anonymity said MAHB was already profitable on its own.
“This is a boon for its shareholders including Khazanah, Permodalan Nasional Berhad, the Employees Provident Fund and Kumpulan Wang Persaraan,” he said.
The merger, the source said, has thrown the Regulated Asset Base (RAB) framework into doubt.
RAB allows airport operators to recover the investments they put in towards capacity expansion and service level enhancements, which ensures MAHB taking up a role as a developer-operator.
“Two days after the announcement on the merger, MAHB’s market capitalisation dropped by some RM1 billion,” the source added.
MAHB’s shares were badly hit following the leakage of Transport Minister Loke Siew Fook’s remarks behind closed doors, when he spoke about an alternative model to RAB.
“The transport ministry doesn’t seem to have a clear idea of how it wants to run its airports or how its decisions are affecting the profitability of its own company.” - FMT

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