Kuala Lumpur: Malaysia's state-owned Khazanah Nasional and Petroliam Nasional will sell stakes in subsidiaries as the government accelerates efforts to reduce its business interests, Prime Minister Najib Razzaq said.
Khazanah, the government's investment arm, will sell its stake in the national postal service, and state oil company Petronas will sell shares in two units on the stock exchange, Najib said in a speech in Kuala Lumpur yesterday.
"These initiatives have the goal to reduce the government's presence directly or indirectly in business activities that are best carried out by the private sector," Razzaq said. They "are a clear signal of our commitment to promoting competition in the economy, risk taking and long-term economic growth".
Since taking office last April, Razzaq has eased investment rules and opened up the nation's companies to foreign ownership to lure funds as China draws money away from the rest of Asia. Malaysia also needs to free up more shares for investors to trade in to make its financial markets more attractive, Razzaq said yesterday.
The Employees Provident Fund, a state-controlled pension fund also known as EPF, accounts for 50 per cent of daily volume in Malaysia's local equity and bond markets, Razzaq said. The fund will be allowed to invest more overseas to create additional room domestically for new participants, he said.
"EPF presently has about 6 per cent of assets invested offshore and this will increase significantly," he said. The pension fund is "crowding out" investors in the Malaysian capital markets "and it is not healthy", Nazir Razzaq, Razzaq's brother and chief executive officer of Bumiputra- Commerce Holdings, said yesterday.
Khazanah, which currently makes 12 per cent of its investments outside Malaysia, will explore more international acquisitions in Asia, Managing Director Azman Mokhtar said on March 23. It had no overseas interests five years ago.
Divestment
Back home, Khazanah will divest its remaining 32 per cent controlling stake in Pos Malaysia, the state postal company, in two stages, Razzaq said. Pos Malaysia's shares rose 10.2 per cent to 2.27 ringgit (Dh2.54) in Kuala Lumpur trading at 12.20pm local time, their biggest gain in 10 months.
The government will first draft corporate governance and regulatory processes before Khazanah begins a bidding process, Razzaq said, without naming other stakes the fund might sell.
"Obviously it will increase the free flow of these large government-linked companies," Khair Mirza, an analyst with Maybank Investment Bank, said in an interview. "Specifically we could be looking at Malaysian Airline System and Malaysia Airports Holdings which are dominated by Khazanah, over 70 per cent-owned."
Petroliam Nasional, or Petronas, already has three listed units on Kuala Lumpur's stock exchange, including MISC, the world's biggest owner of liquefied natural gas tankers. Razzaq said two additional subsidiaries with "good track records" would be listed this year, without naming them.
