"Laman Reformasi Anti Kezaliman"
        ALIRAN: Another Bailout [MAS]
        By Anil Netto
        23/12/2000 am

        Aliran Media Statement

        Another Bailout

        The Finance Ministry's bailout of Tajudin Ramli's Naluri Bhd appears to be another case of
        "privatising the profits and socialising the losses."

        The deal will see the Ministry buying Naluri Bhd's 29.09 per cent stake in loss-making
        Malaysia Airlines System Bhd (MAS) at more than twice the market price. In effect, Naluri will
        receive a premium of 121 per cent or close to RM1 billion more than market value as the
        Finance Ministry (and, by extension, Malaysian taxpayers) will be paying RM8 ringgit per
        MAS share when the market price was only RM3.62 on 20 December.

        The premium will relieve Naluri, saddled with RM888 million in bank borrowings, and Tajudin,
        reportedly burdened with huge personal debts, of much of their financial difficulties. Tajudin is
        chairman of both MAS and Naluri.

        MAS has posted four straight years of losses and is saddled with over RM9 billion in debts.
        Its financial position today is much worse than it was when Naluri acquired the shares; so
        there is no justification for the Finance Ministry to pay any premium over market price.

        Even if there was a premium to be paid - which considering MAS' financial woes sounds
        ridiculous - how can the Finance Ministry justify paying a 121 per cent premium? Was there
        an independent valuation carried out?

        Recently Finance Daim Zainuddin announced Khazanah's pending purchase of 20 per cent of
        TimeDotCom Bhd shares and added that the "price per unit share would be based on a
        professional evaluation by a consultant" - an independent one, we presume. The people have
        a right to know if a similar independent professional valuation was carried out to determine
        the MAS share value.

        The news of the Naluri-MAS deal comes together with the revelation that Halim Saad is
        deferring payment on the exercise of his put option in the Renong-UEM deal. Halim
        announced that he would only be paying the RM3.2 billion for the 31 per cent stake in Renong
        Bhd he is buying from United Engineers (Malaysia) Bhd (UEM) in instalments. He is now
        expected to pay RM300 million in three equal tranches next year and the balance on 14 May
        2002. Halim's deferred payment and the disposal of Renong assets to UEM for RM5.43
        billion have triggered a selldown on Renong and in particular UEM shares.

        Prime Minister Mahathir Mohamad has condemned foreign critics for suggesting that the lack
        of transparency and reforms in corporate governance was pulling down the Malaysian
        stockmarket. If the government would only care to listen, it is not just foreign analysts but also
        many concerned Malaysians who are critical of what are widely perceived as incestuous
        deals and wheeling-and-dealing, often at the expense of minority shareholders and other
        ordinary Malaysians.

        As long as mismanagement goes unpunished and favoured but troubled tycoons are allowed
        easy escape routes, confidence in the Kuala Lumpur Stock Exchange and the economy in
        general will not improve.

        Although the authorities have introduced some minor reforms in the capital markets, they
        seem to be missing the wood for the trees. Certainly, the introduction of measures such as
        T+3 will help to curb unscrupulous market players. But the government should take a closer
        look at why there has been much criticism and uneasiness over recent major deals.

        Anil Netto
        Executive Committee Member
        21 December 2000