Published April 1, 2009

M'sian minister vows economic equality for all

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(KUALA LUMPUR) Malaysia's International Trade Minister Muhyiddin Yassin has vowed to end economic discrimination against the country's ethnic Chinese and Indian minorities in a bid to revive government support, an official said yesterday.

Malaysia, which has a substantial population of minorities, has a system of affirmative action that gives preference to its Muslim-Malay majority in awarding contracts, government jobs and scholarships.

Ethnic Chinese and Indians, who together make up a third of the country's 27 million people, want to see an end to the policy. Many are also non-Muslims and complain that their religious rights have also been threatened.

Mr Muhyiddin pledged the government would ensure that the 'economic cake' was shared equally in Malaysia, where Malays comprise 60 per cent of the population, said an aide to Mr Muhyiddin.

Mr Muhyiddin, who last week was elected deputy president of the ruling party, is expected to take over as deputy prime minister this week. He replaced Najib Razak, who was elected party president, and will succeed Prime Minister Abdullah Ahmad Badawi.

'We want to implement more effective social programmes. We begin by having a new leadership,' the New Straits Times quoted Mr Muhyiddin as saying. 'We admit that we have weaknesses and have made mistakes in the past.'

His comments, while speaking to reporters on Monday, come at a crucial time for the ruling National Front coalition. The alliance, which has ruled Malaysia since independence in 1957, has lost significant support recently to Anwar Ibrahim's opposition alliance amid rising complaints by the minorities.

Mr Muhyiddin is currently leading the National Front's campaign for three by-elections to be held on April 7. He said the by-elections were the right time for the new government leaders to show their commitment to reforms. -- AP

Published April 1, 2009

Naza Italia launches Ferrari showroom in M'sia despite slump

RM20m centre comes a year after it was appointed sole importer, distributor

By PAULINE NG
IN KUALA LUMPUR

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DESPITE the current economic slump Ferrari's biggest showroom outside of Italy was officially launched in Malaysia to much fanfare yesterday by the country's monarch.

New niche: (from left) Malaysia's monarch with Mr Faisal and Int'l Trade Minister Muhyiddin Yassin at the opening of the showroom

Naza Italia - established by the Italian luxury fast-car maker and its local partner, the Naza Group of Companies - is a 45,000 sq ft state-of-the-art service centre, a 'lifestyle boutique' offering 'something for anyone who lives and breathes Ferrari and Maserati', declared its chief executive SM Faizal Nasimuddin at the opening.

The RM20 million (S$8.3 million) flagship centre comes after just a year of Naza Italia's appointment as the sole importer and distributor for Ferrari. It got the same status for Maserati a month ago.

'It's a very niche market,' observed president and CEO of Ferrari Asia-Pacific, Marco Mattiacci. 'The size of the showroom is not related to the volume of sales,' he said of the 20 Ferraris sold last year.

He said Malaysia would become 'a key market' in the region in the next two to three years, and complimented Naza Group founder SM Nasimuddin Amin.

'Nasimuddin approached me two years ago and I was impressed with his vision and achievements,' he said of the businessman who died last year of cancer at the age of 53.

Describing him as 'one of Malaysia's most talented entrepreneurs', he said, Mr Faizal, his 29-year old eldest son who now helps the group, was realising that dream (of a flagship store).

Mr Nasimuddin was regarded as Malaysia's motor czar, successfully negotiating the re-badging of Kia and Peugeot vehicles as Naza vehicles, but also cleverly parlaying the government's car import licensing system into a vast automotive business empire.

Because a licensed permit, or AP issued by the trade ministry is required for imported vehicles, many licensee firms - mainly Malay majority-owned ones - benefited from the system as often such APs were sold to motor distributors for tens of thousands depending on the make of the vehicle.

Mr Nasimuddin was a major AP recipient and a sought-after partner given his contacts with the government.

The Straits Times had previously reported the Malaysian tycoon and Singapore businessman Alfred Tan Chor How and his son Edward had been partners of privately held Next Car which had since 1996 owned the franchise to import Ferrari cars into Malaysia.

But a disagreement over the direction of the business in about 2007 led to a major fall-out between both parties and allegations by the Tans that they were harassed and their business targeted by the authorities.

In August of the same year Ferrari terminated the franchise agreement with Next Car, and in April appointed Naza Italia its sold distributor and importer. Mr Mattiacci declined to comment on the matter yesterday.

There are more than 250 Ferrari and about 50-60 Maserati car owners in the country. The Maserati models at Naza Italia are priced from RM1.1 million, while the Ferrari models cost upwards of RM1.6 million.

Published April 1, 2009

When shareholders could have been spared the agony...

By EMILYN YAP

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REALLY? That must have been the immediate question of disbelief that many investors were asking when Singapore-listed Babcock & Brown Global Investments (BBGI) first assured them that the company was safe despite the voluntary administration proceedings faced by Australian-listed Babcock & Brown Limited (BBL).

Why the initial scepticism on the part of investors? To a large extent, it has something to do with the common 'Babcock & Brown' name of both companies. But, more important, their worry could have been spared - if only BBGI had explained more in its initial comments on the BBL news. It was commendable that BBGI had responded promptly to the news on March 13, but the pity was that the response was just a two-paragraph statement that said little about why repercussions were 'not expected' when there appeared to be a name link.

The term 'voluntary administration' was also alien to many investors. Even after BBGI followed up with more detailed statements on its situation six days later, investors with no access to Australian news reports or professional advice would still not have known what the process meant.

It would help to first understand what voluntary administration entails. The process usually happens when a company is insolvent or deemed insolvent, and an external administrator has to step in to investigate affairs and recommend an exit strategy for creditors.

As a partner at law firm Shook Lin & Bok LLP, Robson Lee, explained, the parallel applicable course of action would be judicial management under the Singapore Companies Act here, or Chapter 11 proceedings in the United States. Administration provides companies 'with a period of moratorium protection', during which creditors cannot take legal action to wind up or sue the companies, he said.

In BBL's case, voluntary administration came about after investors in its New Zealand-listed subordinated notes voted against a proposed restructure of the notes. The company has not been liquidated, though this could be an option. Its administrators may conclude that it is possible to derive more returns from the business compared with an immediate winding up.

Debt-laden BBL is one of the latest victims of the credit crisis - it has gone through business and debt restructurings since last year and its shares have been suspended after plunging more than 90 per cent at one point.

With the situation looking dire for BBL, why would BBGI not be affected then? Herein lies the key: although they share the same Babcock name, BBGI comes under another entity separate from BBL.

BBGI's manager is Babcock & Brown Global Investments Management Pty (BBGIM), which comes under Babcock & Brown International Pty (BBIPL). The troubled BBL has no claim over BBIPL's assets, the latter's spokesman said.

'BBL and the BBGI group have separate ownership, boards of directors and legal structures,' said a BBGI statement on March 19. This is the critical statement that should have been, but was not, included in the March 13 release. The explanation of the relationship would have given BBGI investors greater peace of mind.

More pertinently, BBL's voluntary administration has no impact on BBGI's solvency. BBGI used to rely on the Babcock and Brown group for acquisition opportunities but it is now looking to delink from the group and change its name.

Still, the case highlights one difficulty faced by many investors - trying to understand investment in large or complexly structured companies which operate mainly in other countries and under different regulatory frameworks.

What such companies should do, especially when major events unfold, is to piece all relevant information together for investors quickly so that they can make an informed decision about their holdings. BBGI could have saved investors some anxious moments had it been more explicit in its disclosure right from the start.