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From The Far Eastern Economic Review
Issue cover-dated 14th June 2001

NOT SUCH A GOOD DEAL

TWO CHINESE NEWSPAPERS FALL INTO GOVERNMENT HANDS

By Lorien Holland

When a Malaysian investment company announced out of the blue in late May that it was buying a controlling stake in a publishing group called Nanyang Press Holdings, the company's chairman insisted the deal was purely commercial. But the outrage that ensued showed that few believed him. And the impact of the deal could have far-reaching consequences for the nation's ethnic Chinese community and for Malaysia's political make-up.

That is because the company in question, Huaren Management, is no ordinary one, but the investment arm of the Malaysian Chinese Association, Malaysia's largest ethnic-Chinese political party and a key component of the ruling coalition. The MCA's new acquisition gives it control of two of the country's three main Chinese-language newspapers, and has prompted loud objections from journalists, highbrow Chinese associations and even top-ranking officials in the MCA itself.

"The majority of the Chinese community is against us, and we cannot afford to sweep this negative sentiment under the carpet and risk losing support," says MCA Deputy President Lim Ah Lek.

Lim, along with seven other members of the MCA central committee, voted against the 230.1 million ringgit ($60.6 million) purchase of a 72.3% stake in Nanyang. He says the deal is not a good commercial investment, will curb press freedoms and will alienate the Chinese community at large.

But the party central committee's remaining 32 members, including MCA President Ling Liong Sik, approved the deal. Ling said that the purchase of the two dailies, Nanyang Siang Pau and China Press, was too good a deal to miss, even with the heavy borrowing needed to finance it. The two papers have a combined circulation of 390,000.

Outside the committee, few agreed with Ling. The Chinese-language press in Malaysia is known for its relatively independent stance, and the Chinese community wants to keep it that way.

Though Ling pledged editorial freedoms, reporters at the MCA-controlled The Star, Malaysia's largest English-language daily, say they already experience daily interference on matters relating to the party.

"When the MCA does the right thing, we support them, but when they do things we don't agree with, then we don't support," says Ngan Ching Wen, chairman of the newly formed National Assembly of Chinese Organizations Against the MCA Takeover of Nanyang Press, or CAT. That body comprises 245 influential Chinese business and social associations which normally keep a low profile and do not voice open criticism.

In a May 30 letter to CAT members, which urged a boycott of the Nanyang Siang Pau, Ngan said that the MCA should stop stirring dissent and stifling the press, and warned it would "pay a very high price in the next general election" if it refused to listen to the Chinese community.

The next general election will be in 2004. Although the Chinese community makes up less than 30% of the electorate, its vote will be crucial for the future of the ruling coalition. Much of the Malay vote has already swung to the opposition, whereas the Chinese vote is wavering, with the majority still supporting the MCA and the ruling National Front coalition.

A number of sources indicate that the MCA's purchase of Nanyang from previous owner Quek Leng Chan was endorsed by the government and was aimed at shoring up Chinese support by ensuring positive coverage of the ruling coalition in the run-up to 2004. They say that Ling did not anticipate such a strong adverse reaction from the Chinese community.

This would not be the year's first case of government intervention in the press. The English-language daily The Sun saw circulation soar earlier this year when its new owner endorsed a more independent editorial line. Then, before the purchase was completed, the newspaper reverted to its previous ownership. According to Sun employees the deal was blocked by the government.

However, sources within the Chinese community tell a more convoluted tale about Nanyang that revolves around internal MCA politics. Both Nanyang Siang Pau and China Press were critical of the MCA's handling of a number of recent issues, including an outbreak of disease in pig farms, the future of a primary school in Damansara and an educational trust fund that the MCA never distributed. Both papers also gave coverage to a testy succession spat between Ling and his popular deputy Lim that highlighted divisions within the MCA. Since Ling's move to purchase Nanyang, the MCA-controlled newspapers have played down the feud, even though the split now seems irreversible.

Ling plans to finance the new purchase with a loan backed by Huaren's newly acquired Nanyang shares and the MCA's entire stake in The Star. Both Lim and another MCA deputy president, Chua Jui Meng, have criticized the deal as too risky, given the threat of a boycott from the CAT. They both point to the MCA's purchase of a now defunct Chinese-language daily, Thung Bao, in the 1980s: After that deal, perceived editorial intervention by the MCA sent circulation plummeting from 100,000 to under 20,000.

Ling has assured supporters that the MCA will reduce its financial risk by divesting a significant portion of Nanyang to a third party. Sources within the media community indicate that a likely partner could be the third Chinese-language daily in Malaysia, Sin Chew Jit Poh, which was earlier linked to the MCA purchase, and was the source of much of the new management team at Nanyang. Sin Chew, however, denies all involvement and says the managers quit their positions at Sin Chew to join the competition.

Whatever the final outcome, the MCA's purchase has brought Malaysia's media into a closer political orbit, which does not bode well for press freedoms. "This all leads to a monopoly on public opinion," says K. Baradan, a veteran Malaysian journalist. "Politics aside, there are other issues in this country, like the environment and health and financial management which need to be addressed through independent thought."

Behind the takeover is a convoluted tale of political squabbling and government monopoly.