Khazanah’s divestment plan — who are the beneficiaries?

There are risks that the proposed transfer of Khazanah’s current assets may fall into the wrong hands


WHILE Khazanah Nasional Bhd is looking to cut its stake in several state-linked firms, as the government revamps the sovereign wealth fund’s investment strategy, conjectures are being made on who the beneficiaries would be.

University of Malaya political economist Prof Dr Edmund Terence Gomez said the move, which has received mixed reviews from critics and audience, is indicative of the new government’s wealth redistribution agenda.

Gomez, who is the author of a report titled “Government in Business: Diverse Forms of Intervention” by the Institute for Democracy and Economic Affairs, said the lack of Bumiputera capitalists has raised some concerns over Khazanah’s plan to sell off its assets.

“The next stage is the divestment process. It is going to come. The question is how are they choosing these people, the beneficiaries of these divestments?

“That is a serious issue because in Malaysia today, we don’t have any major Bumiputera capitalist,” Gomez told The Malaysian Reserve (TMR) recently.

He said there are only a handful of “financially capable” candidates in the country’s top 100 publicly listed firms, and this includes the likes of tycoons Tan Sri Syed Mokhtar Albukhary and Tan Sri Azman Hashim.

“There are not many and that itself will raise a red flag right away,” he added.

The sovereign fund has made some notable divestments in the past including its stake in homegrown automaker Proton Holdings Bhd and Pos Malaysia Bhd, both to conglomerate DRB-Hicom Bhd. Many years prior to that, Khazanah sold a controlling stake in Time dotCom Bhd.

While there have been examples of success, Gomez said there are risks that the proposed transfer of Khazanah’s current assets may fall into the wrong hands.

“We don’t want to take the risk of divesting it, only to bail them out again because that has been CIMB Group Holdings Bhd’s history, at least.

“CIMB used to be Bank Bumiputera Malaysia Bhd and the latter had to be bailed out on many occasions because we were not stringent in the way we dealt with the bank,” Gomez said.

So far, there have been suggestions that Khazanah will trim its stakes in CIMB, Axiata Group Bhd, IHH Healthcare Bhd and Telekom Malaysia Bhd.

TMR had also reported that the fund was in talks to dispose of its 60% stake in M+S Pte Ltd to joint-venture partner Temasek Holdings Pte Ltd.

“We don’t know what they are going to do, but based on what they have said, we are speculating that this is what they are going to do. If they do realise it, it is a repetition of what they did in the past which, by their own admission, failed,” Gomez said.

Khazanah manages nearly US$40 billion (RM157.2 billion) in assets and is the majority shareholder of some of Malaysia’s biggest companies including the country’s second-largest commercial bank CIMB and top telecommunications operator Axiata.

Prime Minister Tun Dr Mahathir Mohamad has taken Khazanah under his wings, in addition to being its chairman by default since taking office.

As the government investment arm’s founder, the 93-year-old premier seems to think that Khazanah has strayed from its intended purpose of helping Bumiputera entrepreneurs and is bent on setting it right.

To do this, he has brought in Economic Affairs Minister Datuk Seri Mohamed Azmin Ali to Khazanah’s board.

Azmin, whose four-month old ministry hosted the Bumiputera Economic Congress on Sept 1, has declared the birth of a “new Bumiputera”, which he described as those with integrity and are different than the “Ali Baba” of the past.

The disposal is part of the federal administration’s move to get the government-linked investment company to shed non-related assets, capitalise on its investments and deliver higher returns.

The government, which is saddled with a whopping RM1 trillion debt, needs to raise capital to finance the country’s expenditure.