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AWise: Malaysia After Mahathir
By Andrew Ho
11/5/2001 9:24 pm Fri
[Mahathir gagal melakar seorang pemimpin pengganti yang teruji
dan mampu untuk memimpin Umno selepas beliau pergi. Ini menyebabkan
masa-depan Umno semakin malap lagi jika beliau diundurkan dari persada
kerusi presiden nanti. Umno ketandusan bakat kerana semua yang berbakat
sudah ditumpulkan oleh Mahathir sendiri. Mungkin kerana itu Mahathir
mahu bekerja sampai mati. Dengan Mokhzani sepenuh masa berguru di sisi,
dia seperti sudah tidak mempercayai sesiapa lagi. Akan bermulakah satu
dinasti di bumi Malaysia ini?
Malaysia After Mahathir
By Andrew Ho, AsiaWise
9 May 2001 10:30 (GMT +08:00)
After ravaging other ASEAN (Association of Southeast Asian Nations) countries, the
politics of business seems to be rearing its ugly head in Malaysia. Thailand, the Philippines
and Indonesia have each seen changes in leadership over the past 24 months, with
Indonesia heading for another change if the legislature succeeds in impeaching President
As for Malaysia, rumors that the Prime Minister, Dr. Mahathir Mohammed would not
complete his full five-year term started surfacing last year. That speculation was reinforced
when Dr. Mahathir announced in the middle of the year that the Deputy Prime Minister,
Datuk Seri Abdullah Ahmad Badawi (known as Pak Lah), would be his successor -- the
first time Dr. Mahathir had designated a successor during his two decades in power.
When Finance Minister and long time friend of Dr. Mahathir, Tun Daim Zainuddin
announced that he would be taking a 'long vacation' -- a two-month break starting April
23, the rumor mill went into overdrive, with talk that Daim's spring break was setting the
stage for Dr. Mahathir's exit.
To top it off, Dato' Mokhzani Mahathir, the eldest of Dr. Mahathir's three sons announced
last month that in order to protect his and his father's name, he was selling his stakes in
Pantai Holdings Bhd and Tongkah Holdings Bhd and exiting the corporate scene. That
leaves Mirzan, Dr. Mahathir's second son, as the sole family member with any corporate
Political observers also note that Dr. Mahathir has repeatedly called for an infusion of new
blood into UMNO's leadership, and that some recent moves suggest he recognizes the
need for a reduction in 'money politics.' In the latest of a string of events, Dr Mahathir has
backed the suspension of six party members found guilty of 'money politics' by the United
Malays National Organization's (UMNO) disciplinary council last week. Dr. Mahathir will
suggest that UMNO's supreme council, scheduled to meet this Saturday, endorse the
"We must clean up the party as we don't want people to be disgusted with us because our
leaders are chosen in a corrupt manner", he added.
The combination of these developments have led to mounting speculation that Dr. Mahathir
will step down this November and hand over the administration to Pak Lah.
So what does all this mean for the "Mahathir risk premium" Malaysia has been slapped with
since the Asian crisis? There's no doubt in the investment community that the stock market
would rise on news of Dr. Mahathir's resignation. However the rally would be short-lived
as investors awake to morning-after concerns about the country's political stability as it
adjusts to new leadership after 20 years of Dr. Mahathir.
The likely scenario is market limbo as investors wait to see what happens -- especially if
there is a free-for-all over the premiership. Given Pak Lah's current position as the
designated successor, he would likely be able to hold the number one position until the 2004
general and party elections.
There is concern however that Pak Lah would not be able to unite UMNO behind his
leadership -- most observers expect discord within the party to widen as various factions
jockey for the top posts in the post-Mahathir party. Among the contenders: Defense
Minister Datuk Seri Najib Razak teaming up with Pak Lah; and a faction composed of Tan
Sri Muhyiddin Yassin, Minister of Domestic Trade & Consumer Affairs and Tan Sri
Mohammed Taib, former Mentri Besar of Selangor.
There has also been talk that party veterans Tan Sri Musa Hitam, a former Deputy Prime
Minister, and Tengku Razaleigh Hamzah would be 'recalled' to provide the necessary
leadership to the party -- thus making it a three-cornered fight. So far, the master
politician, Dr. Mahathir, has denied these rumors.
The one thing that is certain is that the Malaysian market has been capped due to political
concerns. Some stocks however would be likely to suffer if Mahathir exits stage left. The
stocks at greatest risk being those with close political links to the present government. The
Renong group of companies tops the list and includes United Engineers Malaysia, which
owns and operates the highly profitable North South Expressway concession, Faber
Hotels, Propel Bhd, Crest Petroleum and ParkMay Bhd. Malaysia Resources
Corporation Bhd would be on the list as well. It has two media giants under its corporate
wings -- television station TV3, and daily newspaper group The News Straits Times
Companies that are dependent on the government for juicy construction contracts and
concessions will also have to look at diversifying their businesses. Construction companies
should start reviewing their business strategies in preparation for a new government.
They might want to look at Gamuda Bhd -- a company with the smarts to have locked in
long-term contracts in order to move away from dependence on government. In addition
to its three toll road concessions, a fourth in the pipeline and a lucrative water supply
concession, the company is making a foray into the operations and maintenance of water
systems to beef up its earnings base.
The safest bets in any potential political storm remain the traditional blue chips. The
favorites include Tenaga, Telekom, Sime Darby, British American Tobacco, Malayan
Banking, Commerce Asset Holdings and assuming the technology sector recovers,
Unisem and Malaysia Pacific Industries. These companies should fare better given their
size and neutral political stance.
Some stocks may even get a boost with the impending changes. For example, there have
been fears that Commerce Asset would be forced to extend loans to the beleaguered
Renong Group by virtue of Renong's 13% stake in Commerce. However, with a shift in
power at the top, Commerce could be relieved of any political pressure to make 'bad loans'
to the Renong.
However, if the succession proves to be long and drawn out -- or Mahathir's successor turns out to be as unpredictable as his predecessor, most foreign investors will be likely to remain right where they are at present -- far away from Malaysia.