Yesterday’s application for merger talks between investment banking group OSK Holdings Berhad — whose single biggest shareholder is Ong Leong Huat, 67, and ranked by Forbes magazine as Malaysia’s 34th richest man — and RHB Capital Berhad has become the latest talking point.
Concern over where this trend is headed was sharpened by Permodalan Nasional Berhad’s (PNB) bid on Tuesday to take over the nation’s second-largest developer by market value, SP Setia.
“GLCs are [funded by] taxpayers. Why are they using taxpayers’ money to buy them up?” Datuk Lee Hwa Beng, the former Port Klang Authority chairman, told The Malaysian Insider.
“And then after the buying is over, they leave the country. They cash out and go invest outside the country. I thought we are encouraging private entrepreneurship? These are wealthy companies. Why buy them up? They are sending out the wrong signals.”
Amid the race-related backdrop, there is also concern that some of Malaysia’s richest tycoons and businessmen are cashing out and headed overseas because of concerns over Malaysia’s economic prospects.
Before the latest corporate exercises, a number of Chinese Malaysian-held businesses had already started setting their sights away from Malaysia.
Casino operator Genting started its Singapore operations two years ago while YTL Group made a S$3.8 billion (RM9.1 billion) purchase in 2009 of the second-largest power generation company in the island re, the 3,100-megawatt PowerSeraya.
And in 2007, Malaysia’s richest man Tan Sri Robert Kuok also moved his palm oil operations out of Malaysia and listed them in Singapore in a move that was speculated to be caused by concerns over the government’s continuation of Bumiputera equity policies.
But the latest corporate selling moves are ostensibly on a willing-seller-willing-buyer basis.
RAM Ratings chief economist Yeah Kim Leng said the key issue is whether GLCs can add value to the acquired company, and to what extent.
“We have to remove politics and race from commercial considerations,” he said, but noted those issues lingered whenever takeovers and mergers were discussed.
“We still have an atmosphere of a so-called siege mentality, in the sense that there is still a legacy of robbing Peter to pay Paul, of widespread concern or feeling of being deprived,” Yeah said.
The economist said that despite its snub, SP Setia’s case will be closely monitored because it is seen as the industry model in the construction sector and a GLC takeover may still happen.
The DAP’s economic expert Tony Pua echoed Yeah’s view, saying racial arguments no longer held much traction with the Chinese ground.
“It does not matter who controls these companies — whether Chinese or Malay — the issue is what is the value-added these GLCs are bringing to the companies through the acquisition exercises,” he said.
“The major implication is the direct opposite of what the prime minister and the cornerstone of NEM want to achieve — that our economy must be private sector-led,” he told The Malaysian Insider, referring to Najib’s New Economic Model to free up more sectors in the economy.
But race remains the elephant in the room.
Political scientist James Chin observed that the Chinese community could get upset because they have little confidence the ruling Barisan Nasional (BN) government, controlled by lynchpin Malay party Umno, will be able to lift the companies’ performance higher.
“It becomes a racial issue because the Chinese now equate Umno to corruption,” the Monash University lecturer told The Malaysian Insider.