Azman Mokhtar the man to watch in coming months


BY B.K. SIDHU AND SIDEK KAMISO

AZMAN Mokhtar is the man to watch in the next few months. He assumes the position of CEO of national investment vehicle Khazanah Nasional Bhd from June 1. 

Not only will the position give him considerable clout in view of the 40-odd government-linked companies (GLCs) that will come under his care, he will also be seeing through Prime Minister Datuk Seri Abdullah Ahmad Badawi's vision of remaking Malaysian Inc. 

But to the market player, Azman's appointment matters little, unless it brings more liquidity and further vibrancy to the local stock market. 

The man-in-the-street's concern is whether Khazanah, in its quest to become bigger and more profitable, will neglect its social responsibility as it seeks higher tariff structures from the Government for the utilities companies in which it has majority stakes. 

“The issue here is how Azman wields his 'magic wand' to balance the two key elements – social responsibility and profit,” said a senior analyst with a local brokerage. 

Axman Mokhtar

In the past, Khazanah’s financial performance had been affected by its interest in new start-ups, such as in wafer manufacturing, and in high-tech ventures.  

Many people wonder if this policy will continue, and if Khazanah's mission will still include its “obligation” to rescue government-linked companies in the name of national interest. 

''Will Azman be in a position to not waver from only ensuring Khazanah's profit and social obligations?'' asked a market player. 

Analysts who know him say “given his commanding position, he should be able to balance these two.'' 

To state a point, Khazanah was not a loss-making concern until last year, when it incurred losses due to high provisions for its wafer fabrication venture. In 2002, Khazanah was reported to have made RM4.4bil in net profit, which included a one-off exceptional gain of RM3.6bil from the disposal of Plus Expressway. 

Azman's trademark lies in his ability to differentiate between a company's asset and profit, without affecting its social obligation. That was clearly seen in Malaysia Airlines' (MAS) widespread asset unbundling (WAU) exercise, which relieved the national carrier of its crushing debts, yet allowed it to operate comfortably when the industry was facing turbulence. 

He has since applied the WAU principle in the restructuring of Kuala Lumpur's public transport system, which is expected to improve dramatically. 

With some modifications, observers believe the WAU scheme can also be applied to various other GLCs such as Tenaga, Telekom, Plus Expressway, and even Proton Holdings Bhd. 

But in the case of Telekom and Tenaga, the changes will have to be more consumer-driven since it affects the masses. It should not all be about driving profits but also about raising efficiency and improving services to customers. 

It will also be interesting to see how Khazanah trims its massive shareholdings in some of the GLCs, when it is merged with Minister of Finance Inc. Khazanah's stake in Tenaga will then rise to 51% from 34.6%; in Telekom to 35.8% from 32.5%; and in Malaysia Airports Bhd to 72.7% from 23.5%. 

One way will be to issue covered warrants, and another via placements, an analyst suggested. This can drive liquidity and give Khazanah a boost in terms of funds, which can be invested beyond Malaysia's shores if it is serious about becoming a regional investment powerhouse. 

It is understood that Khazanah is working to achieve this objective over a three-year time frame. The success of this massive undertaking can well see the principle filter down to other government investment vehicles, such as Permodalan Nasional Bhd and the Employees Provident Fund. 

When this happens, market observers say, more state investment bodies will emulate the move.  

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