There’re always two sides of the same coin. Certain people argued that you can’t re-negotiate a contract particularly in relation to the IPP. They asked how I would feel if I’m one of the IPPs owners. They strongly condemn any changes to the lop-sided agreement and would blacklist Malaysia as their investment destination if anyone dares to review the agreement. Whoa! We have scary and violent “investors” who would form the first-line of infantry to protect the interest of IPPs. I envy Syed Mokhtar Albukhary (MMC Corp), Lim Kok Thay (Genting Group), Francis Yeoh (YTL Group) and Ananda Krishnan (Tanjong Inc.).

Sure, it was not the fault of these tycoons when a bunch of idiots from the ruling government were sent to the negotiation table. Wait a minute! they are not idiots though if you really study how fool-proof the agreement was drafted in the first place. Where else could you find IPPs in other parts of the world which could seal such a deal – sell every single unit of electricity generated with zero inventories left for the next day? Fine, you don’t like the agreement to be re-negotiated then I guess it is fine to slap them with Windfall Tax then. And since U.S. practices such (windfall tax) creative way to tax certain companies, I suppose critics won’t say Windfall-Tax is unacceptable. All right, I’ve to declare that I don’t own a single share in any of these IPPs *grin*.

If you view these IPPs holistically you will see that indirectly such a business model does not help the country, the people and the economy especially during such challenging time. There’s a tipping point along the chain whereby the macro and micro economy could collapse when the string was overpulled. Unfortunately the ruling government runs the country as if it’s one huge piggy bank and suddenly they woke up from the slumberland with little money left to spend. Armed with scalpels they need to operate on cash-rich companies and where else to go if not those IPPs, the same cronies that had benefited for so many years? Do I feel sorry for the IPPs owners? Not at all! Should I pity minority shareholders? Definitely but I suppose as minority you can’t do much, can you?

Speaking of minority shareholders, I was surprised that the Minority Shareholder Watchdog Group (MSWG) finally showed their little fangs when it says it is against the Maybank-BII deal for three reasons: the bank was late in entering the market, the pricing and the timing. The Watchdog Group barked and asked Malaysia biggest lender Malayan Banking Berhad’s (KLSE: MAYBANK, stock-code 1155) board of directors and senior management to step down if the bank fails to get back its RM480 million deposit for the PT Bank Internasional Indonesia (BII) (JAK: BNII) deal. I’m not very sure if the bank was late in entering the market but the pricing was definitely not right. Any successful investors such as Warren Buffett would tell you that any time is a good time to enter the stock market provided the price is right.

Hence if Maybank could just negotiate a good price and not proudly gave away 4.6 times book value as if they could print money from their home, investors might just respect the level of competency the top decision makers this country possess. Furthermore RM480 million is a lot of money, mind you. Also, can someone throw this Second Finance Minister Nor Mohamed Yakcop into the dustbin? He defended Maybank-BII deal initially saying it was necessary to catch up with neighbouring Singapore. He further screamed “This is a golden opportunity … It will bring long-term benefits”. Today surprisingly he told reporters that it was not for the Finance Ministry to intervene (Maybank-BII deal) since it was a commercial agreement. It’s dangerous to have a silly person who thought that you can compete with Singapore just by paying top dollar for such acquisition.

Other Articles That May Interest You …

• Maybank’s losses before it can even make a penny
• MPs grill Maybank CEO – let the worms come wriggling
• Why you should avoid Maybank stock – Money Sucked Out
• Hanky-Panky in Maybank-BII deal? How about MAS?
• Maybank’s stock punished after $2.7 billion BII purchase
• Windfall Tax – Punishment or Desperation for Money?

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August 7th, 2008 by financetwitter

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