Post-Budget 2011 Interview with Finance Malaysia

* Please take note that this blog is for reading pleasure only, and NOT intended to offend any party.

Below are some questions posted to Finance Malaysia (FM), with some interesting reply:

Q    : Let's start off with the famous KL MRT project. Any comment?

FM : Well, this is definitely a good public transport reformations for KL citizen. However, please bare in mind that the extensions of two existing LRT lines still not yet started. Implementation is problem, not project.

Q    : How about the development of the Malaysian Rubber Board land in Sg. Buloh by EPF?
FM : The project costs RM10bil for 15 years. I don't know when EPF (Malaysians' retirement fund) role has changed to being a developer?

Q    : Malaysia's tallest building - 100-storey Warisan Merdeka. Is it necessary?
FM : So that Osama can either choose this or Twin-towers. Haha. Since EPF can be a developer, why not PNB? Malaysia Boleh spirit for all...

Q    : Existing income tax relief of up to RM6,000 extended to Private Pension Fund contributions. Good?

FM : Sounds good, but not viable. Because, first, those who afford private pension fund most likely already exceed the limit. Second, if we bought a simple life insurance, the premium plus with EPF contributions, already exceed the limit. Instead, government should separate life insurance premium with those contributions.

Q    : Wow... RM 3bil Karambunai eco-nature resort in Sabah.
FM : Yes. We have another "first" of the world, but, with RM 3bil we can buy the whole Sabah already.

Q    : Service tax increased from 5% to 6%. How would it affect us?
FM : Watch online TV, instead of Astro. 20% (5% to 6%) increase yet considered minimal as stated?

Q    : To develop football, a Football Academy will be build in Pahang. Why Pahang?
FM : First, can we revive our football team? Second, maybe Pahang is the home of prime minister (not football).

Q    : NO toll rate hike from PLUS expressway for next 5 years?
FM : I believe this is the only thing which directly benefiting me. Would it be better if this is permanent?

Why MMC want to take over UEM Group?

When the RM15.6 billions take-over news broke out, MMC share price has been rallying to multi-months high. It was reported that MMC is pairing with EPF and PNB with MMC holding a 40% stake of the consortium. On the other hand, Khazanah Nasional Bhd is the ultimate holding company of UEM Group Bhd.

The Pull factors…

1. PLUS Expressways, is one of the key assets that spark MMC interests? The national’s largest cash-generating toll-operator undeniably is Khazanah’s golden asset with 55.2% direct and indirect interest.
2. UEM Land, which has a huge land bank in southern corridor – Iskandar Development Region. This is favorable to Johor based MMC’s investments.
3. To boost its construction arm with stronger muscle? UEM Group is having several projects in Malaysia, such as the Penang Second Bridge. MMC can leverage on the latter expertise and also to gain market share, given the lack of domestic awards.

What makes me interesting is the alternative MRT proposed by IJM-UEM recently. By acquiring UEM, MMC could break-up the joint venture and effectively eliminate the said rival proposal which reportedly costing much lower than the Gamuda-MMC RM35bil proposal. There are two possibilities:

1. Take-over succeeds.
2. Failed. But, MMC guaranteed succeeds in MRT project, because government is running out of time to consider an alternative proposed by IJM-UEM joint venture, which is remain uncertain.

Either way, MMC will gain more than harm. Or, is this the strategy employed by MMC?