Khazanah Malaysia Bhd chief executive officer Datuk Azman Mokhtar outlines what the national investment arm intends to do to address the problems at some of the companies in which it has interests. He has pledged to complete by end of the year the restructuring of Proton Holdings Bhd. He also talks on Malaysia Airports Holdings Bhd (MAHB), the UEM Group as well as Time Engineering Bhd and its unit Time dotCom Bhd.

Proton

Khazanah is the major shareholder of Proton but we are not the only shareholder. You have to recognise that Proton represents the manifestation of the Government's industrial policy for the past 20 to 25 years.

It is the instrument of economic and industrial policies.

As shareholders, first of all, we are very concerned with its performance, including the decline in operations, financials, as well as structurally. No, we were not surprised with the results.

What have we done about it? We have representatives on the board. The management is doing its best to turn some of these things around but there are structural issues. As the major shareholder, we take primary responsibility for the structural and shareholder issues.

In that regard, we have done our studies and we are very clear on what needs to be done.

We need a strategic alliance. All the reported interested parties, including Volkswagen AG and General Motors (GM), are still in the picture.

The Prime Minister (on Thursday) was referring to VW's indication for a meeting in late March or April.

We briefed the PM today (yesterday) to explain that talks indeed were ongoing and meetings have been set. It does not contradict the PM. Discussions are very much on. VW is still interested.

This month, meetings will continue between the interested parties and us. My team is determined to solve this as soon as possible and certainly by the end of the year.

Several local parties have declared their interest and they remain in the picture. The door is open even to the locals as this is a public sale and a free market. It is not inconceivable to have both a foreign and local partner.

We are looking at narrowing down the choices of both international and local strategic alliances.

Khazanah is willing and able to do a strategic alliance. Basically, we will sell some equity. We will be happy to share and work on a collaborative model in terms of management to bring scale, technology and also considerable local capabilities that have been built over the past 20 years.

We are willing to look at the control of certain parts of the business, for example, the manufacturing side. It also means that we need to retain certain things, which the foreign partner will be happy to retain, for example, the distribution and the brand.

There are still a lot of positives. Malaysia is still the largest passenger car market in the region and the Afta (Asean free trade area) liberalisation is happening.

Proton also has many valuable assets, including the plant and the capabilities of its franchise, as well as land value.

If we need to sell, we will sell. We will sell for financial value but we will sell it in a responsible manner because we’re carrying the responsibility of ensuring that the national auto sector has its best chance of being put on a sustainable path.

What if there is no strategic partner? Then we will look at the financials, which will be an issue of price. On the other hand, there is a Government decision that needs to be made that looks at the strategic and national objectives.

The Government will be making a decision based on who the potential buyer is and who can carry out the national auto policy interest. We will be making our recommendations to the Government.

MAHB

MAHB is not so much on operational but financial restructuring. In fact, it is doing quite well operationally. It has even won several international awards.

The issue is more on the financial restructuring, which is ongoing. The matter is now with the Government. Hopefully, it will be resolved soon.

There are some structural mismatches in terms of assets and duration management. Internally, they should do more on the retail operations, which they have started.

Time Engineering and Time dotCom

We have done a detailed study, not just on the companies but also on the telecommunications industry.

This is a very challenging asset in terms of the dynamics of the sector, the utilisation of the asset and the quality of services.

The company has secured the 3G licence. Khazanah has made known to the board whether we need to review the rollout of 3G. It is a tough business and even tougher when they are starting out.

As speculated, there have been expressions of interest from parties that I do not have the liberty to mention on buying the 3G licence. We’re reviewing all these options.

Our decision is based more on financials and the policy framework of the industry. This will involve consultation with the Energy, Water and Communications Ministry on what is possible.

There are many expressions of interest on the licence, the company and its assets. All these things have to be in consonant with the policy and framework. We are in discussion with the ministry.

UEM Group

I'm not happy that Pharmaniaga (part of the group) had to write off RM20mil in China. At the UEM board meeting yesterday, we asked for accountability because this represents a potential relapse (in good corporate governance).

Pharmaniaga went into China during our time and (it's) not a legacy. It reflects on our investment. Now they have set up an investment committee to investigate the RM20mil write-off.

 
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