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Friday, January 30, 2009

> Blue-eyed boy of Coporate Malaysia

He is without doubt the blue-eyed boy of corporate Malaysia, sitting atop the country’s top investment agency and lording over the vast government-linked company empire.

But Tan Sri Azman Mokhtar’s recent statements in the press have caused some unease with members of the outgoing Abdullah administration and raised some red flags with some supporters of incoming prime minister, Datuk Seri Najib Tun Razak.

Senior government politicians are wondering why he has been bent on embarrassing the government with comments about Valuecap and KLIA East, statements which have put the administration on the back foot.

In comments published in the New Straits Times on Saturday, he said that Valuecap has yet to get the RM5 billion capital injection from the government.

“It’s on the way,” he said.

Last October, the government said that it would help boost Valuecap’s fund by RM5 billion to buy undervalued stock and provide a boost to the market.

The government’s move to support Valuecap and obtain a loan from the Employees Provident Fund has been criticised sharply inside and outside Parliament.

As a result, the government has been particularly prickly to any statements made on Valuecap, especially in the economic slowdown climate where it wants to assure Malaysians that all funds promised by the administration to create economic activity is being disbursed in a timely fashion.

The Malaysian Insider understands that following the worsening global economic situation late last year, the Ministry of Finance decided that the RM5 billion loan from EPF to Valuecap will be drawn down in tranches and not as a lump sum.

The reason: the government believes that it may need to seek further help from EPF during this drawn out economic crisis to stimulate domestic demand and create a multiplier effect across the Malaysian economy.

While boosting Valuecap funds is important to creating movement on Bursa Malaysia, it is not likely to have as strong an impact on the economy as pump-priming.

So a decision was taken by the government to allow Valuecap to drawn down the RM5 billion in tranches. A sum of RM1 billion was released by EPF in December and more money will be given to Valuecap as and when necessary.

“The last thing the government needs now is for confusing statements to be made in public. The public and stakeholders expect the government to follow up each plan or policy statement with concrete plans. Only then will there be confidence,” said a government official, adding that

Najib may have to clarify the funding situation with Valuecap.

Valuecap is jointly owned by Khazanah, Permodalan Nasional Berhad and the

Retirement Fund Inc.

Earlier this month, Azman went public with his views on the RM1.6 billion new low-cost carrier terminal in Labu. He said that there was no need to build a new LCCT away from KLIA.

Khazanah is a shareholder in Malaysia Airport Holdings Berhad and would naturally be opposed to any move by Air Asia to move away from KLIA and operate its own LCCT.

But government officials felt that Azman should have made known his objections about the LCCT project to the Prime Minister, Deputy Prime Minister and Second Finance Minister privately, given that all three members of the Cabinet are also members of the Khazanah Nasional board of directors.

They charge that Azman has access to the top decision makers in government and he could have made persuasive arguments to the PM, DPM or anybody else in Cabinet.

Was there a need to exert pressure on government by going public, they wondered.

Supporters of Azman, Khazanah Nasional and MAHB say that he had little choice but to go public given the firestorm of protests the new LCCT project provoked. Staying silent as the biggest shareholder of  MAHB was not an option.

Also, they point out that Air Asia had many powerful supporters in government in its corner and Azman’s statement helped to shift the balance of power a bit, at least in the public arena.

Or, at least, it set the stage for more public debate on this project, which has an impact beyond Air Asia, Khazanah and MAHB.

The Edge which has been critical of the plan to build a new LCCT away from KLIA, noted in its editorial this week that Khazanah Nasional has a vested interest in making sure that KLIA East does not happen, not only because it is the substantial shareholder of MAHB but also a controlling shareholder of Malaysia Airlines.

“The idea of an aggressive Air Asia, now Air Asia X with full control of its own airport must worry Khazanah, MAHB and MAS… Here is a case of a tenant (Air Asia) that wants to get out of its tenancy because its landlord (MAHB) has a close relative (MAS) who competes in the same business and thus would not make things easy for it. But will it be allowed to?

“And what’s wrong with the idea of a privately-owned managed LCCT competing with MAHB? Isn’t it true that competition leads to improved services and lower cost for customers?, ‘’ said the Edge.

The impasse over KLIA East is likely to be settled this Friday with odds on the government reversing an earlier decision to allow Air Asia to finance and build its own LCCT.

It will be a victory of sorts for Azman and may vindicate his tactic of going public with his opposition to the airport project - The Malaysian Insider.

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