Tuesday, November 28, 2006

What Now, Brown Cow?
Just Don't Be A Bigger Sime Darby

If the end result of the mega merger of PNB companies result in just a much bigger Sime Darby, then don't do it. It is very silly and exhausting. I basically agree to the concept. There are a few questions though:

1) It looks like Synergy Drive was "created" as an independent party so that PNB could vote on the deal, which requires 50% plus 1 vote to push it through. If PNB has mooted the deal on its own, PNB will be forbidden from voting its stake. Hence Synergy Drive may not as "sinister" as the cynics might have it. However, Securities Commission could be tasked to look over Synergy Drive's existence, and whether PNB is in cohorts to circumvent the regulations to the detriment of minority shareholders. Ball in your court SC.

2) The entire exercise is expected to be complete by 4Q2007. This is one of the major hurdles we have to eradicate. By making companies having to jump through so many hurdles, and knowing that each hurdle tends to take time - this is what we call red tape, bureaucracy, causing misallocation and wastage of resources = inefficiency and lower productivity. Can the powers to be, please, implement a task force to reduce the red tape-gate. It is certainly not hard. If this deal were to be done via SGX or HKSE, I can tell you it will be completed with all the approvals within 4-6 months. The sad thing is, we don't seem to care, and just accept it as status quo - we could do things so much better. Dragging out the approval process to 12 months is highly unacceptable. Yes or no, it should be decided asap, as a lot of things get hung in the air, suspended like inert useless things.

Corporate moves like this is welcomed and would excite foreign investors. I am surprised that Bank Negara would be so welcoming to ANZ's investment into AMBank Group. This is yet another positive step and would win points in the eyes of foreign investors. As a whole, we need to keep an open mind and not be so nationalistic if we are to compete and attract FDIs. We can lock ourselves up and not sell anything and end up like North Korea. Certain critical sectors, we need to maintain national ownership but we must also be flexible. As proposed before, if we could revamp the rules regarding REITs - e.g. foreign controlled REITs need no longer comply with NEP equity ratio, watch the flood of funds snapping up commercial properties in Malaysia. Its a willing buyer, willing seller, no need to protect and say foreign interest owns a majority of our commercial properties - so what, its a reallocation of resources. Our minds need to think bigger than that.

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