Malaysian PM: Khazanah to emerge as investment giant in Southeast Asia

Malaysian PM: Khazanah to emerge as investment giant in Southeast Asia

M.Jegathesan Agence France-Presse Putrajaya

Malaysia said on Friday it will transfer shares worth billions of dollars in some 30 publicly listed companies held by the Ministry of Finance to its top investment arm Khazanah Nasional Bhd.

"The government would like to see Khazanah emerge as one of the biggest and most dynamic investment houses in the region," Prime Minister Abdullah Ahmad Badawi told a meeting of some 100 business leaders.

The board of Khazanah would be restructured and reduced in number to help achieve this goal, he said.

"New professional management will be injected into the senior ranks of Khazanah. There will be a transfer of public listed company shares belonging to Ministry of Finance Inc," he said, referring to the finance ministry's holding company.

Abdullah, who is also finance minister and Khazanah chairman, said he believed the changes would see "Khazanah emerge stronger, more nimble and able to create more value for the government."

Business leaders immediately hailed Abdullah's plan, saying it was a bold and progressive move that would further boost Malaysia's capital market.

"Such a step forward will definitely boost the economy and stock market," said Ridza Abdoh, chief executive officer of Pasarana Negara Bhd, which operates the light rail transit system.

Abdullah later told reporters that some 30-odd companies' shares would be moved to Khazanah. "It is going to be huge sums of money," he said when asked if the value could total some billions of dollars.

Companies with government stakes would include some of the country's main blue-chip stocks such as the power company Tenaga Nasional and Telekom Malaysia, the dominant telephone company.

Abdullah said Kazanah's new management team would be led by 43-year-old Azman Mokhtar, formerly director and research head with Soloman Smith Barney and Union Bank of Switzerland, Malaysia.

"We are not suggesting anyone for chief operating officer. We are not filling that post. As for other appointments ... it is up to Azman and its management," he said.

Azman described his appointment to a three year term beginning on June 1 as a "very heavy responsibility."

When asked about rumors that the prime minister's son-in-law, Khairy Jamaluddin, would be appointed as the new chief operating officer, he said: "It is not up to me to answer that.

"Once we have figured out what is our strategy mission and direction, we will figure out a structure to support that, and then we will fill up the structure with the best people for the right job.

"Without fear or favor, without prejudice, anybody should qualify," he said.

Abdullah said foreign investors would not be prevented from taking stakes in the government-linked companies (GLCs).

"We will not prevent (them) but the amount and percentage of shares is something we will have to decide," he said.

Abdullah said that he expected to see similar improvements in other government-linked companies and holding companies very soon.

There are 40 listed government companies which make up 34 percent of the total market capitalization of the local bourse, or a total 232 billion ringgit (US$61 billion), he said in his speech.

Abdullah said that was equivalent to more than half of Malaysia's gross domestic product.

"Thus, any considerable improvement in the efficiency and performance of government-linked companies would bring about massive benefits, not only to the stock exchange but also to the income, consumption and wealth of the nation," he said.