Published December 19, 2008

Sime clears hurdle to buy 51% of IJN

Takeover to ease funding of hospital, ensure market pay for doctors: Najib

By PAULINE NG
IN KUALA LUMPUR

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STATE-CONTROLLED plantations and automotive group Sime Darby yesterday said that it had received approval from the government for its proposed acquisition of a majority stake in IJN, Malaysia's leading heart hospital.

Sime Darby's statement came after the country's Deputy Prime Minister Najib Razak said earlier in the day that the government would not object to Sime buying a stake in IJN Holdings, which operates the hospital.

'Sime Darby . . . received approval-in-principle from the Government of Malaysia on the proposed acquisition of a 51 per cent equity stake in IJN,' the company said in a statement issued late yesterday.

Mr Najib said that as long as the National Heart Institute continued to cater to the needs of the poor, the government had no objection in principle to Sime Darby's proposal to take a stake in IJN, the Malay acronym that it is known by.

'We are in the process of finalising the matter with the Ministry of Health although in principle we have no objection to the proposal,' he told the media yesterday.

Sime had confirmed its interest in IJN to the stock exchange on Wednesday, stating that it had written to the government to express an interest in acquiring a stake in IJN Holdings - in which the Ministry of Finance (MOF) holds a 99.99 per cent stake. However, Sime did not reveal the stake or price that it was contemplating.

Mr Najib rationalised that the proposed takeover of the one-stop heart specialist centre by Sime would make it easier for the hospital to obtain funding plus ensuring that its doctors were paid salaries that reflected market rates.

Few are convinced, with the proposal raising fears of a renewed intent on the government's part to privatise public assets.

'IJN is corporatised and the doctors, although drawn from the public hospitals, enjoy a better salary scale,' said a doctor who did not want to be named.

'Why is funding an issue,' he asked, pointing to MOF's ownership of IJN Holdings compared with other government hospitals which come under the Health Ministry.

Indeed, IJN's website said that it has treated over a million patients since its formation in 1992 and its expansion 'has been so remarkable, we achieved our goal of being financially self-sustaining within a year of operation'.

Mr Najib said that the government was examining IJN's role if ownership was transferred. He acknowledged that IJN was an important social programme as its rates are cheaper than most private hospitals and, the poor and civil servants only pay nominal charges. This is because the government subsidises the bulk of IJN patients' treatment.

Officials in the Health Ministry are said to be against the move, given that IJN is already recognised as a premier heart specialist centre, and did not see why Sime Darby, which already owns two medical groups and a nursing school, should be allowed to leverage it to further its own healthcare ambitions at the expense of the public.

Even the Malaysian Chinese Association - a major component of the ruling government - has said that it hopes that IJN would not be privatised.

Given the poor record of privatisation of government assets in Malaysia with little benefit to the people to speak of, there are grave suspicions that, warranties of good faith notwithstanding, IJN's fee structure would eventually be increased should the private sector take control.