OCT 9 - Datuk Seri Najib Tun Razak has taken little time to try to push the Malaysian economy back on track.
With two stimulus packages under his belt, the country’s sixth prime minister has quickly scored a major economic breakthrough with the Middle East by getting the new sovereign wealth fund 1 Malaysia Development Berhad (1MDB) to form a US$2.5 billion joint-venture company with PetroSaudi International Ltd (PSI).
1MDB came about from the only state sovereign wealth fund, Terengganu Investment Authority (TIA), and the joint-venture will spearhead flow of foreign direct investments (FDI) from the Middle East into Malaysia as well as make strategic investments in high-impact projects here including oil and gas, real estate and renewable energy sources.
The new state asset manager, backed by RM1 billion in government bonds, is set to be even more aggressive than Khazanah Nasional Berhad, the behemoth that holds shares in public-listed companies such as utilities Tenaga Nasional Berhad, Telekom Malaysia Berhad, pan-Asian telecoms giant Axiata Berhad and satellite television provider Astro.
The finance minister has also launched the RM10 billion private equity fund named Ekuiti Nasional Bhd (Ekuinas), which with an initial capital of RM500 million, will invest in unlisted companies to expand Bumiputera shareholdings.
While the results of his efforts have yet to be seen, one question remains. Whither Khazanah?
Under Najib’s latest stimulus plan, Khazanah had received RM10 billion for what it called “shovel-ready” projects, apart from government funds sent directly to Telekom Malaysia for its High Speed Broadband project.
Khazanah joint-venture fund manager ValueCap Sdn Bhd also doubled its capital to RM10 billion after pension fund EPF loaned it RM5 billion last year. Established in 2003, ValueCap invests specifically in the Malaysian equity market and is jointly owned by Khazanah, PNB and the Retirement Fund (Incorporated).
Thus far, ValueCap has yet to reveal what it has done with the new loan, issued a year ago, and possible profits. There is already talk that the Public Accounts Committee might ask them to answer for the public funds they received from EPF.
More importantly, competition from 1MDB and Ekuinas is expected to be good for Khazanah which has played safe and docile thus far by reshuffling paper assets to create value from utilities like Telekom Malaysia and its mobile units.
But such methods go against Najib’s economic plans which place a premium on creativity and innovations as a means to jumpstart the economy and move it to a higher-income level. Hence fresher ideas and newer funds such as 1MDB and Ekuinas.
Both are unfettered by Khazanah’s reliance on analysts from McKinsey or the Boston Consulting Group who have added little value but gained a lot of revenue from the various plans executed by the state asset manager.
The government is also impatient because, over the past few years, Khazanah has hired the best and brightest Malaysian minds from across the world to seek investment opportunities and new ideas for the country but the results have not been spectacular.
Some of the brightest minds have now been reduced to supervising flagging investments in the Iskandar Development Corridor (IDR) or figuring out ideas to redevelop Georgetown, an Unesco heritage site, rather than just giving the RM25 million to the Pakatan Rakyat state government.
Which is a waste of time, talent and purpose for Khazanah, turning it into a political tool of Barisan Nasional.
Hence the creation of 1MDB and Ekuinas. But the Najib Administration can’t go on forever creating new entities in their impatience over the handling of older funds.
The best way is to get rid of the dead wood, the non-performers and bring in or promote those who have confidence in their own abilities to work for the country and its people.
Show/Hide comments
Show/Hide comment form
