http://www.atimes.com/se-asia/CE31Ae02.html

Asia Times
31st May 2001

DIRE STRAITS

If you can't beat 'em, buy 'em

By Anil Netto

PENANG - Two Chinese-language newspapers in Malaysia are on the brink of being taken over - but this is no ordinary business deal. The sale of these relatively independent newspapers to the investment arm of the Malaysian Chinese Association (MCA), the second largest party in the ruling coalition, has triggered a storm of protests and split the already faction-ridden MCA leadership.

The deal for the takeover of the two newspapers, Nanyang Siang Pau and China Press, is due to be inked on Thursday, but mounting opposition is threatening to scuttle it.

Hume Industries (M) Bhd announced on Monday it had agreed to sell its 72.35 percent stake in Nanyang Press Holdings, the publisher of the two papers, to Huaren Management Sdn Bhd for 230 million ringgit (US$60 million). Huaren, the MCA's investment arm, already controls Star Publications, publisher of the top-selling pro-establishment English daily, The Star. Hume is owned by tycoon Quek Leng Chan's Hong Leong group.

Critics fear the takeover could undermine the editorial independence of the two Chinese dailies and further erode what's left of media freedom in Malaysia. If the deal goes through almost all the major electronic and print media will be owned by firms linked directly or indirectly to the ruling coalition.

The fears about interference in editorial policy are not unfounded despite assurances from the MCA that the papers' editorial integrity will be preserved. Already several senior management and editorial staff have been removed.

There have been daily protests, pickets and press conferences to protest the takeover. Some 40 writers for the Nanyang Siang Pau and China Press have announced they will quit contributing to the two dailies if the takeover goes through. A growing number of independent Chinese associations have also come out in opposition to the deal. Public interest groups are treating it as their last stand in the defense of print media freedom.

But what has surprised observers is that top MCA leaders have broken ranks over the deal. MCA president Ling Liong Sik says that Huaren will go ahead with the purchase if it proves commercially viable. But other key MCA leaders worry that the backlash from Chinese associations, public interest groups and the public could erode support for the ruling coalition in the next general election due by 2004.

MCA deputy president Lim Ah Lek has expressed dissatisfaction with the deal, while party vice president Chua Jui Meng issued a strongly worded statement upon his return from Europe on Tuesday. Two MCA members of Parliament and six state assembly members have also voiced their disapproval.

Chua revealed that he is one of the four trustees and shareholders of Huaren Holdings and there had been no meeting among them to discuss the acquisition of Nanyang Press. "Yet I am told that an agreement has been entered into with Hume Industries, the owners of Nanyang Press, by certain parties purporting to represent Huaren and that they have paid 10 percent of the purchase price and immediately took over administrative control of Nanyang Press. Is this proper?"

Chua complained that the MCA central committee meeting that was scheduled for Wednesday would be presented with a "fait accompli" of a done deal. He asserted that a meeting of the Huaren trustees and shareholders should be called first to consider a feasibility report of the proposed takeover, the financing of the deal and its financial implications for Huaren.

Nanyang's circulation at the end of June 2000 was 177,000, while China Press sells 127,000 copies. Nanyang was for many years the top-selling Chinese paper until it was overtaken by Sin Chew Jit Poh, which now has a circulation of 276,000.

Sin Chew Jit Poh and its sister paper, Guang Ming Daily News, were initially also expected to take up a stake in Nanyang, effectively putting all the major Chinese newspapers under one roof. Speculation of Sin Chew's involvement had mounted when the group chief executive of Sin Chew group, P C Liew, took charge of Nanyang operations over the past week. But Permandangan Sinar, the Sin Chew/Guang Ming publisher, denied that it was involved in the Nanyang takeover and clarified that Liew has resigned from his post in Sin Chew.

Still, the MCA's takeover of Nanyang is reminiscent of United Malays National Organization's (Umno's) takeover of the Malay-language daily Utusan Melayu in 1961. That takeover triggered a bitter but unsuccessful 93-day strike among Utusan journalists and production workers. In the 1980s, the MCA took over the Tong Bao newspaper, which eventually collapsed due to declining Chinese readership.

In recent months, the Chinese dailies have provided a range of views on controversial subjects such as factional struggles within the MCA, the character and future of Chinese vernacular schools and ethnic-based quotas for university admission. Many of these issues have upset the community and potentially undermined support for the MCA. Analysts say the MCA is probably hoping that the takeover of the Chinese dailies will limit the range of views expressed.

Prime Minister Mahathir Mohamad has adopted a hands-off approach to the deal: "I wouldn't know. It's not my business to look after." He dismissed talk that the deal was politically motivated. "Nanyang is a newspaper. Anybody can take it over."

But analysts have pointed out that Mahathir's Umno, which now increasingly relies on non-Malay support following an erosion in Malay support, will also stand to gain from the takeover as the independence of the media is further curtailed. On World Press Freedom Day this year, the Committee to Protect Journalists named Mahathir as one of the top 10 enemies of press freedom for the third straight year.

The Chinese-language papers have been relatively more independent than the Malay and English-language press. They have provided a broad spectrum of news including coverage of reformasi demonstrations and statements by opposition politicians.