[Bahaya atau tidak Azman boleh dinilai dengan kegemarannya yang ganjil iaitu memandu kereta dan motorsikal sebegitu laju... seorang yang betul-betul bergeliga tidak menceburi bidang seperti itu. Itu tanda ada sedikit sewel dalam otaknya itu yang boleh menjahanamkan bukan sahaja dirinya malah ekonomi negara. Masa yang tinggal kini sudah semakin singkat kerana hutang-hutang dan bon itu akan matang sedikit masa lagi. Azman perlu mengemudi ekonomi dengan terlalu laju jika tidak 'bom' ekonomi akan meletup dulu. Seandainya dia terkandas dalam kelajuan yang tinggi - doktor yang pakar pun tidak akan mampu menyelamatkan nyawanya.....
- Editor]

http://www.asiaweek.com/asiaweek/magazine/ Enterprise/0,8782,173042,00.html

Asiaweek

SEPTEMBER 7, 2001

Mahathir's new economic hit man, Azman Yahya, is revved up and ready to remodel Malaysia Inc. Can he do it? An accountant without obvious political connections, he's got a tough road ahead

By ARJUNA RANAWANA

When Malaysian banker Azman Yahya regained consciousness in hospital a few years ago, his body a mess of fractures, it struck him that he should curb his fascination for high-speed motor sports. Duly, Azman retired the 750cc superbike that had been the instrument of his downfall - and switched to racing souped-up production cars. He may soon be applying that same lesson in his role as Malaysia's new economic hatchet man: Go in fast, steer things back on track, but take care not to crash. "I'm in a hurry to finish this job and get back to the private sector," says the 37-year-old speedmeister. "Failure for me is not an option."

Just as well Azman has a taste for risky, high-stakes challenges. Last month the London School of Economics graduate and chartered accountant became the face of Prime Minister Mahathir Mohamad's new crusade to remodel Malaysia Inc. With a stagnating global economy beginning to ravage a weakening domestic one - plus growing complaints about corporate rescues and favoritism - Mahathir could put off no longer reforms that Malaysia so publicly avoided after the 1997 crisis. Azman probably was chosen because he has what must be a rare resume in Malaysia. As the head of Danaharta, the government's asset-management company established in 1998, he has solid reform credentials. This summer, the prime minister handed him control of the Corporate Debt Restructuring Committee, an agency set up under the Ministry of Finance, and appointed him an executive director of Syarikat Danasaham, a new Treasury-backed group authorized to buy selected companies. Mahathir added sweeping powers - and instructions to report directly to the top. The goal: to restructure heavily indebted companies with a future, bankrupt the ones that look hopeless and restore the prime minister's tarnished economic legacy.

There is no time to lose. Debt is already dragging down the country's banks, and the entire economy is showing wear. Analysts predict growth rates of 0.3%-2% this year - compared to 8.3% in 2000. Manufactured exports are down 9.1%. Foreign direct investment is being sucked up by China. And a system of capital controls put in place three years ago - not to mention a notoriously opaque corporate sector - does little to entice foreign investors back to the stock market.

Not so many years ago, Malaysia seemed to be thriving as Mahathir pursued his dream: a booming, world-class corporate sector, aided and abetted by government, and headed by bumiputra (indigenous Malay) tycoons. Guided mostly by former finance minister Daim Zainuddin, Mahathir handpicked promising Malays, delivered to them ownership and management of government companies, and expected the best. Many of the largest companies delivered - at least for a time. But some of their owners got carried away with easy credit. They became known for their company jets, luxury cars, multiple-room mansions and questionable management. When the region's 1997 financial crisis hit, favored Malays such as Renong's Halim Saad and former Malaysia Airlines chief Tajuddin Ramli were criticized for having rung up extraordinarily high debts. Before long, whispers about the wisdom of Mahathir's economic plan grew into a howling chorus of complaint. How long would the government nurture companies that were performing so poorly? And what would be done to ensure that losses didn't grow?

Now it is up to Azman, more than any other individual, to provide answers. He's already started with toll-road owner-operator United Engineers (Malaysia), formerly Halim's responsibility. The company is still among Malaysia's biggest, and it's also heavily indebted. Azman intends to grab UEM by the throat and shake off any dead financial wood. Indeed, he has similar plans for 14 of the country's most indebted outfits - plus some rude instructions for banks to share some pain.

That would be none too soon. As far back as April Mahathir recognized the need for bold action. Then, Malaysia Inc.'s spiritual adviser, Daim Zainuddin, announced his departure as finance minister. Analysts pondered whether Mahathir might just be serious about implementing economic reforms. The prime minister quickly appointed two former central bankers as key advisers. Last month two young Cambridge University-trained Malays, both from Azman's Danaharta team, were moved into government-linked Malaysia Resources Corp. This effectively sidelined chairman Abdul Rahman Maidin, viewed as a Daim associate, from a company that controls key media institutions. Such initiatives "will eventually cause the unraveling of the nexus between politics and business," says Khairy Jamaludin, an executive committeeman from the youth wing of Mahathir's party, the United Malays National Organization. "They have got these jobs not because of whom they know, but because of what they know."

Is Azman up to the task? "Azman Yahya is a respected person, not a political player," says Ng Ein Kiam, a fund manager at Indocam Asia in Singapore. "That has helped calm fears that the exercise might be just an attempt to talk up the market." Yet Azman is not entirely free of connections to the government - it's unthinkable that anyone could achieve such an important post without such links. Azman worked for two merchant banks with government ties before he arrived at Danaharta. His overseas education (first-class honors) came thanks to a government scholarship aimed at high-achieving Malays. Indeed, he is the perfect product of Mahathir's controversial New Economic Policy, which doles out special breaks to bumiputra. Few doubt to whom Azman owes his allegiance.

But in Malaysia, a shortage of strong political connections can cut two ways. At the moment, Azman is talking tough about his new brief. Yet being the hit man means stamping on some well-connected toes. Many observers believe Azman has the skill to do the job, but wonder if he has the fortitude to weather the political storms. "He is yet to be tested in a situation like this," observes Singapore-based economist Song Seng Wun of GK Goh research. Counters Azman: "The guidelines set out are hardly revolutionary. The government has the necessary political will."

The first real test of that will is UEM, the poster-company for many of Malaysia Inc.'s missteps. Once the crown jewel of the stock exchange, UEM remains part of Halim's government-linked holding company, Renong - though Halim quietly quit as UEM chairman before Azman's appointment. In many ways the old favorite and the new tyro are alike. Both are bright, middle-class boys who won scholarships to study overseas. Both like fast cars. Yet Halim was given both ownership and management control of his companies. Azman and the new bumiputra have been selected only to manage - and can be sacked if they don't perfom. Committeeman Khairy says this is the big change in Mahathir's thinking. "In the past when there was a merging of ownership and management, there was no accountability and the wishes of the minority shareholders were often trampled upon," he says. Notes Azman: "The government is quite serious about institutionalizing shareholdings and appointing professionals to run companies."

To that end, Azman has signaled that he will brook no nonsense over UEM. Cross-holdings with Renong, complex corporate maneuverings and most especially a huge debt have knocked the company's share price from nearly $8 at the start of 1997 to about 84 cents. To roll over debts in 1998, UEM issued bonds worth $2.2 billion based on its best asset, the expressway that links Thailand to Singapore. Payment is due in 2005. Complicating matters, the thicket of cross-ownerships and debts must be untangled. Renong has borrowed money from UEM and, in turn, pledged all its assets back. Halim himself owes UEM $842 million.

Slicing through the confusion, Azman effectively has announced that he will oversee a $1-billion hostile takeover to buy UEM for the government. The company will be restructured, pruned if necessary, then offered back to the market. Azman cheerfully admits that he did not discuss these moves with Renong or, by implication, with Halim. "That is the best news," says one Kuala Lumpur-based analyst. Standard & Poor's ratings agency sees the initiative as a potential watershed in Mahathir's quantum economic shift. "Will the UEM-Renong restructuring herald a new corporate environment?" it has queried. "The jury is still out." But Morgan Stanley securities analyst Daniel Lian is upbeat. "This is a marked departure from the relative inaction on corporate reform from 1997 to 2000," he says. Adds Andrew Seah, of securities house Vickers-Ballas: "Whoever can sort this out will be remembered forever."

Next in line for Azman are the other 13 companies mired in debt. Noncore assets will be sold, he says, and none of the money realized will be used for new purchases that do not help the company. On the other side of the coin, banks that do not comply with his rules will be reported to the Central Bank. "It cannot be denied some [restructuring] cases have been dragging on due to intransigence on the part of both borrowers and lenders," he says. "All parties need to get realistic, clean the slate and start afresh. This has to be done no matter what the economic projections are." He plans to wrap up the whole sorry mess within a year.

No one is exhaling just yet. In many ways, Malaysia is only just starting the reform that countries such as South Korea and Thailand began in 1998. "Malaysia has been ahead in debt restructuring in the context of the rest of the region and we must remain so," says banker Nik Hassan Nik Mohd Amin, executive vice president of Bumiputra Commerce. Failure to do so, says OCBC Securities research chief Franklin Tan, will have "disastrous consequences for the economy."