Thursday, July 26, 2018

Khazanah the Mahathir way to making billionaires

From Malaysiakini by P Gunasegaram:-

What exactly is this Malaysia Inc? Let’s quote from the Economic Planning Unit, the division within the Prime Minister’s Department:

“The Malaysia Incorporated concept was first announced by the Prime Minister in 1983 and it represents a new way of approaching the task of national development. Both the public and private sectors adopt the idea that the nation is a corporate or business entity, jointly owned by both sectors and working together in pursuit of a common mission of the nation.”

To operationalise this, some concepts were adopted, says the EPU, including deregulation, improving the delivery system, institutionalising consultation, establishing smart partnerships and pursuing privatisation.

Instant billionaires

If Malaysia Inc had been done properly and executed completely above board, things might have been alright. But Malaysia Inc and the attendant privatisation of core government assets to crony companies and individuals saw the largest exercise of government patronage and a prerogative to manufacture instant billionaires in some instances and countless smaller deals in many others.

In fact, it would not be far wrong to say that Mahathir oversaw the unprecedented transfer of wealth from government to the private sector with plum projects given to those closely associated with Mahathir and his finance minister then Daim Zainuddin, who is now ironically the head of the Council of Eminent Persons, as well as companies related to subsequent finance minister, Anwar Ibrahim.

This period saw the blossoming of the first generation independent power producers - or IPPs - with awards for massive power generation contracts to the YTL group (Francis Yeoh), Segari (MRCB, and subsequently Syed Mokhtar Albukhary, a close Mahathir associate to this day, under Malakoff), Genting Sanyen (the Genting casino group) and to PD Power (Ananda Krishnan) amongst others.

Profits were ensured by ironclad power purchase agreements (PPAs) with the sole national power company, Tenaga Nasional Bhd (TNB) which had either “take or pay” contracts (YTL) and/or capacity charge payments where a fixed amount is paid based on fixed asset investment whether the energy is taken up or not.

Well, if you and I had got these contracts, we would have become billionaires too. None of those successful had previous power generation experience.

Not just IPPs but a whole slew of privatisation and related arrangements came up. Toll roads were pioneered via Halim Saad’s Plus Expressway in the mid-80s, a known crony of Daim who had many other cronies. Another, Tajudin Ramli, bought over cellular operations, now Celcom, from Telekom Malaysia and was given a period to get it up and going before others were allowed in.

The Sapura group, owned by Mahathir’s close friend Shamsuddin Abdul Kadir, got a cellular licence as well as Ananda Krishnan, tycoon Vincent Tan (right in photo) and the MRCB group associated with Anwar.

Other instances of awards included to Malaysia Mining Corp (Syed Mokhtar), Gamuda (Lin Yun Ling), Samsuddin Abu Hassan (a Daim crony) of Peremba and Wan Azmi Wan Hamzah (a close Daim associate). Apart from IPPs and telecommunications, other lucrative areas included water and numerous state and federal operations.

In almost all cases, there were no open bids and many of these licences were awarded for free with no payment whatsoever to the government. The government was basically giving away assets. In many cases, the awards of these contracts were blatantly and highly questionable.

Ani Arope's tale of woe

Former TNB chairperson the late Ani Arope (known also as the man who refused Mahathir) had a tale of woe to tell regarding the award of power purchase agreements to the first generation IPPs.
He talks of delays to TNB projects which caused a massive blackout in 1992, lopsided contracts which gave sweetheart deals to privileged people at the expense of TNB and 30 percent bumiputera stakes to companies and individuals who were not clearly identified.

In an interview with The Star in 2006, after Mahathir had stepped down as prime minister in 2003, he described how TNB got a rather raw deal and he was asked to resign after he refused to sign the PPAs.

He said, “There was no negotiation. Absolutely none. Instead of talking directly with the IPPs, TNB was sitting down with the EPU. And we were harassed, humiliated and talked down every time we went there. After that, my team was disappointed. The EPU just gave us the terms and asked us to agree. I said no way I would.
“It was all fixed up. (They said) this is the price, this is the capacity charge and this is the number of years. They said you just take it and I refused to sign the contracts. And then, I was put out to pasture.

“It was grossly unfair. At 16 sen per unit (kWh) and with the take or pay situation, actually it was 23 sen per unit. With 23 sen, plus transmission and distribution costs, TNB would have had to charge the consumer no less than 30 sen per unit. If mixed with TNB’s cost, the cost would come down but that was at our expense because we were producing electricity at 8 sen a unit. We can deliver electricity at 17 sen per unit.”

Why was this done? In a 2014 interview with KiniBiz, six months before his death, Ani (photo) had this to say: “The crux of the whole thing was who got the 30 percent. The first PPA with YTL, there was a 30 percent shares (requirement) for the bumiputera. That explains the whole thing.” Subsequent PPAs also had this same clause.

If Mahathir, and Pakatan Harapan, want the return of Malaysia Inc, they should do it differently. No more cronies. Have open tenders. Have a properly constituted tender board with members whose credentials are impeccable - no council of elders please, professionals will do.

Consider everyone’s bids regardless of political and other affiliations but cut out middlemen. Bids must be from those who provide the service. Pick the best one from there. Be true to the manifesto - open tenders, fairness, transparency, accountability.

Holding bumi shares

On to Khazanah Nasional Bhd and Mahathir’s statement about the government-owned company deviating from the role of helping the bumiputera, a rather strange statement to make when Khazanah had actually done quite a lot in terms of its transformation programme under former prime minister Abdullah Ahmad Badawi in 2004.

"But along the way, Khazanah decided it should take all the shares for itself and if they are good shares, well, why not acquire the shares at the time of listing when the price of shares was very low, and so they forget entirely about holding the shares for the bumiputera. They decided that they should be holding the shares forever as a part of the government companies owned by the government," said Mahathir.

And what’s wrong with that? Imagine what would have happened to government revenues if Petronas, the national oil corporation, had been privatised many years ago. It would have gone bankrupt without the oil revenue. And what would have happened to the previous government without the GST?

Don’t sell everything. Keep some for the future benefit of the country and the people.
FMT - Khairy fears return of ‘old school’ Khazanah:

“My fear is that government-linked companies (GLCs) will be broken up and flogged off to a new set of 1990-esque businessmen. We all know how that ended,” Khairy said.

Khazanah was established in 1993 to manage commercial assets owned by the federal government and to undertake strategic investments.


Meanwhile Lil Boy Blue was reported by MM Online as saying Smart decision to let PM choose Khazanah board, Guan Eng says:

KUALA LUMPUR, July 26 — Finance Minister Lim Guan Eng today said the nine corporate leaders made a “smart decision” by offering their resignations to allow the prime minister the opportunity to choose the board of sovereign fund Khazanah Nasional Berhad.


  1. New Minister of Energy Yeo Bee Yin already righting TDM’s early IPPs, with his blessings. Four IPPs already terminated, more to follow. New Malaysia, come on board for the ride......I’m Lovin It....

    BTW, Khazanah worth 160B divided by 30 million population equals RM5,333 per citizen. Pitiful amount. Not a good idea with the unit trusts Guna. Better to just dissolve Khazanah and reduce the 1T debt. This will reduce annual debt servicing, LGE our powerful FM will have more money to allocate to development projects.

  2. we shd judge mahathir on what he do now, we cant do much on what is past.

  3. Khazanah should divest everything to the private/foreign investors thru open competetive bidding and pricing.

    That should help reduce the Govt. debt by a few hundred billions.

    Khazanah should no more be the vehicle for BN cronies and supporters to earn fat salaries and perks.

    It does not have any purpose at all.

  4. The only instant billionaires that we seen are his THREE sons, and a millionaire daughter as well.

    1. u mean kim yew, vincent n francis? lge got chance kah?

    2. LGE is billionaire by proxy thru his father.

  5. In the run-up to GE14, some Khazanah Board members were openly politicking in the media, praising Najibnomics and disparaging Pakatan's manifesto.
    Obviously, they had crossed a boundary from being non-political custodians of the Sovereign Fund into being BN operatives.

    So, Some , though not all, Khazanah Board members cannot be trusted to serve the new Administration's agenda and decisions.
    Those heads obviously need to roll.

    If the Board made a common decision to resign en masse , that's fine by me.

  6. LGE made an urgent phone call to TDM yesterday...

    LGE: Hello Toonsie, how are you? Dah makan?

    TDM: Apa you mahu Guanee, saya sibuk lah. Ask Azmin to help you lah.

    LGE: Toonsie, saya ada problem sikit. Tabung Harapan saya stuck at RM163 million. After we pay next 1MDB installment, kosong lah Tin Milo saya

    TDM: Don't worry, my strategy not to meet that Khazanah guy, apanama dia, worked. He got the message, all 9 directors resigned. Now I can fix the problem. This Khazanah is just a holding company. They don't do any business. In fact they don't do anything at all these 9 directors. Just goyang kaki, makan gaji, sing karaoke, terima saham from kerajaan and dapat untung. You know they made 1.5B profit from an asset base of 150B. What kind of performance is that? Useless managers, useless BOD. Lebih baik kita mansuh Khazanah and masuk 200 Billion dalam Tin Milo Tabung Harapan. After all Khazanah is owned by MoF. You punya lah Guanee.

    LGE: Huuahh...FATT TAT LAH !!....I mean that's an interesting idea Toonsie. That would take care of all the 1MDB, ECRL, Gas Pipelines, HSR and Allah knows what else Red Files I find in the MoF drawers here. Then we don't need to allocate so much money to service our 1 Trillion debt. I, as the Finance Minister, can allocate more funds for development, helping the poor etc. Wah, you very crever lah!

    TDM: Don't get too excited. It's not a done deal. Please work with Azmin on this proposal. I need the two of you to work as a team, Check and Balance, First Among Equals, two of you don't gadoh ok?

    LGE: Roger that.....bye!!

    1. Wakakakaka. Good enough to viral this convo, TS !

  7. Suggest KT start a special file just on M and his cronies. It will be very useful to get to compare the facts and see whether there is anything to the constant spins (lies) being churned out.

  8. Khazanah as it stands NOW should be completely revamped!

    No bumi agenda! Just a pure & simple M'sia soverigns fund, just like many other sovereign funds throughout the world, to serve the future generations of M'sians!

    Mamak SHOULDN'T get his old 'wish' of creating useless bumi entrepreneurs, as in mamak1.0, as examples to inspire the younger melayu.

    U want success, works EXTRA hard & be prepared READILY to face the REAL challenges.

    No handout via whatsoever means!

    The parties of equal SHOULD see to it.

  9. What Sovereign Fund is everyone talking about when the country is in debt of RM 1 Trillion?

    SELL Khazanah to reduce debt first since no one seems to gain anything from it except those BN cronies and supporters holding posts in all those crony companies.

    After the Nation's financial position and economy improve, then only think of a Sovereign Fund. Meantime, there's no Money for development and implement all those promises in PH manifestos.

    Does PH Govt. knows where is the Priority?

    SELL useless Khazanah or abandon PH promises in the Manifestos?