This article first appeared in The Edge Financial Daily, on November 13, 2015.
KUALA LUMPUR: Khazanah Nasional Bhd said it is in the midst of studying the impact of the Trans-Pacific Partnership (TPP) agreement on the sovereign wealth fund and its investments.
“We are still studying it (the TPP). In fact, our research team (Khazanah Research Institute) will be publishing a report on ‘Why Trade Matters’ to analyse free trade agreements,” Khazanah managing director Tan Sri Azman Mokhtar told reporters, after delivering a speech at the Malaysian Institute of Certified Public Accountants’ (MICPA) 56th Commemorative Lecture here yesterday.
Business and trade bodies have urged the government to explain transparently, all pros and cons, risks and opportunities to all stakeholders, before the TPP agreement is signed.
As soon as the TPP text was officially made public last Thursday, there have been criticisms of Malaysia managing to retain status quo when it comes to state-owned enterprises (SOE) — save for Petroliam Nasional Bhd (Petronas) with its upstream activities — providing preferential treatment to companies of bumiputera owners, based in Sabah and Sarawak, and small and medium enterprises.
For Khazanah and the companies it owns specifically, they will be exempted from the dispute settlement chapter for two years after the TPP is signed, “in light of ongoing development of SOE reform legislation”, according to a footnote in the text.
The dispute settlement chapter allows any of the 12 TPP member countries to seek legal action against each other over the implementation of the TPP, although alternative methods are encouraged to settle a dispute.
Khazanah has interests in a stable of government-linked companies (GLC) in various sectors, many of them making up a bulk of Bursa Malaysia’s market value. Khazanah has a controlling stake in one-fifth of the FBM KLCI constituents, more so than any other government-linked investment companies.
Azman was a speaker at this year’s MICPA Commemorative Lecture, joining a list of luminaries who have spoken at the event, including Datuk Seri Idris Jala, Tan Sri Ahmad Sarji Abdul Hamid and Tun Ismail Mohamed Ali.
Regarding Khazanah’s stance on the merger of Bank Muamalat Malaysia Bhd and Malaysia Building Society Bhd (MBSB) (fundamental: 1.20; valuation: 3.00,), Azman reiterated that Bank Muamalat is part of Khazanah’s non-core investment.
“Our main holding [in banking] is CIMB [Group Holdings Bhd] (fundamental: 1.05; valuation: 1.65,). Bank Muamalat is a spillover from our investments,” he added.
Khazanah holds a 30% stake in Bank Muamalat, while the majority stake is held by DRB-Hicom Bhd. It has been rumoured that Khazanah is looking to dispose of its stake in Bank Muamalat, though pricing is the sticking point.
Azman said majority owner DRB-Hicom (fundamental: 0.00; valuation: 2.00) will lead the negotiations on the merger and Khazanah will make a decision on its investment when the negotiations end.
He declined to comment on reports that Malaysia Airlines Bhd will undergo a massive rebranding exercise, including a possible name change, saying matters related to the national carrier are best referred to its new chief executive officer, Christoph Mueller.