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Part of the speech by Dr Tan Seng Giaw, DAP National Vice-Chairman and MP for Kepong during the debate on the 2001 Supply Bill (Budget) (the Ministry of International Trade and Industry) on 22 November 2000

The 2001 Malaysian Budget has incentives to attract investors and to promote confidence in trade and industry. These are not enough to give confidence. The Malaysian Government keeps prattling about a few transnasionals reinvesting in the country. However, its restructuring of debt-ridden companies attract attention.

The dominant party in the ruling coalition, United Malays National Organization, UMNO, reiterated its intention to eradicate money and business politics on 18 November 2000. On the other hand, it has yet to show how it is going to dissociate itself from its flagships such as an UMNO-linked conglomerate, Renong Berhad (Limited).

Through political connections, Renong has dominated the Malaysian business world since the early 1990s. Its assets include Crest Petroleum, Time Engineering, Park May, Faber Group, Commerce Asset-Holding, Camerlin, Project Usahasama Transit Ringan Automatik Sendirian Berhad (Company Limited) and Amra Resources S/B (the holding company of Prolink Development S/B).

Another UMNO-related giant, United Engineers (M) Berhad, UEM, runs the North South Highway through its subsidiary PLUS that rakes in money by tolls 24 hours a day. UEM is a construction company that has grown rapidly from obscurity.

PLUS has issued bonds on the above-stated assets on behalf of Renong in 1999. These have been pledged as security.

About three years ago, UEM acquired surreptitiously 32.3% of the total Renong shares, sending shock waves through the stock market. Still, UEM is proposing to acquire another chunk of the Renong equity valued at RM 6.7 billion. Apparently, Uday Jayaram of ING Barings in Kuala Lumpur values the assets at RM 5 billion only. The minority shareholders of Renong cry foul.

The profitable UEM intends to purchase unprofitable businesses under Renong. We hear that Renong owes Malaysian banks about RM 24 billion. It has grown from a samll company to a conglomerate by getting privatization projects from Malaysian Government.

UEM holds 32.3% of Renong equity. Time Engineering has 21.6%, its executive chairman Tan Sri Halim Saad 16.5% and effective capital 13.2%. How much will Halim Saad own following the new UEM proposal? 54%? UEM will become a subsidiary of Renong. Who says business deal is not complicated?

Since July 1997, Malaysia has had economic crisis. Renong suffers losses. It has bank loans. Then, in November 1997, UEM borrowed RM 2.34 billion to buy 32.3 % interest in Renong.

Where can Halim Saad get his money? One, the Finance Ministry forms the Khazanah Nassional Berhad to develop infrastructure. It issues bonds. Two, will consortium of banks lend say RM 3.2 billion to a person? It is risky. Who can ask these banks to lend?

From a conglomerate, Renong is likely to become a shell company. Why? We must know the truth.

The restructuring of Renong management and equity is another test case. We talk of transparency and accountability. We say we don't want money politics and business politics. We would like to take globalisation by its horns. Hence, the Government has to show that it is determined to make Malaysia an attractive place for investors. If it does not deal with Renong properly, it will damage our image further.

Dr Tan Seng Giaw