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Umno backbencher accused the Najib administration favouring Tan Sri Syed Mokhtar

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KUALA LUMPUR, – A senior Umno backbencher accused the Najib administration today of favouring Tan Sri Syed Mokhtar al-Bukhary in government procurement, saying the logistics tycoon is “like a king.”

Kinabatangan MP Datuk Bung Mokhtar Radin told Parliament this when criticising the selection of Syed Mokhtar’s Seaport Terminal to take the finance ministry-owned Penang Port Sdn Bhd (PPSB) private, saying it was “unsuitable in current conditions.”

“Syed Mokhtar is like a king with so many banks backing him,” the Barisan Nasional (BN) backbenchers deputy chief said when debating the supplementary supply bill, referring to the former’s empire which has a reported total debt of RM34.3 billion, or about 10 per cent of all local corporate bonds.

The Sabah Umno leader asked “why must we make one man king?” and suggested instead that “we have more princes as Sri Gading and myself are ready,” referring to his parliamentary colleague Datuk Mohamad Aziz.

The surging debt of companies under Malaysia’s richest Bumiputera has raised fears of a repeat of the financial system’s collapse in 1998 that had then been spurred by the failure of Renong Bhd to fulfill its liabilities.

With China’s economy quickly cooling and the persistent euro-zone crisis looming over Malaysia’s export-oriented economy, Petaling Jaya Utara MP Tony Pua told Parliament last week a recession may cause the logistics tycoon’s empire to fall.

“Syed Mokhtar’s group of companies have a combined debt of RM34.3 billion or more than 10 per cent of all local corporate bonds as of 2011 with only RM7.8 billion cash as of May 2012,” the DAP publicity chief said earlier in the supplementary supply bill debate.

He also pointed out that debts raked up by Renong, led by Tan Sri Halim Saad, was about RM20 billion or seven per cent of loans in the banking system 14 years ago, far less than the risk posed by Syed Mokhtar’s four listed entities. “But Renong’s bankruptcy caused hundreds of millions in losses to investors, the collapse of the stock market and a RM10 billion government bailout,” he also told a press conference.

Penang’s DAP-led state government has also been strongly opposing the move to privatise the island state’s port to Syed Mokhtar, warning that the latter may engage in asset stripping by bringing the seven units of Super Port Panamax cranes from Penang to his Tanjung Pelepas Port (PTP) in Johor.

Penang Port Commission chief Datuk Seri Dr Chua Soi Lek has insisted the deal will make the port more competitive, saying no private player will take on PPSB’s RM1.3 billion debt without looking to increase returns. But DAP lawmakers and industry players believe Syed Mokhtar will prefer to concentrate his resources in Johor and allow Penang Port, which has recorded at least six consecutive years of profit, to become a feeder port.

Renong won various government contracts for highway, rail, property and telecommunications deals in the 1990s while Syed Mokhtar now controls power, water, ports, rail and toll businesses as well as national carmaker Proton with billions in government-guaranteed debt.

The Asian financial crisis was a period of financial crisis that gripped much of Asia beginning in July 1997, and raised fears of a worldwide economic meltdown due to financial contagion. By the end of 1997, credit ratings had fallen from investment grade to junk and the stock market and ringgit lost more than half their value, the latter falling from above 2.50 to under 4.57 to the US dollar.

It forced then prime minister Tun Dr Mahathir Mohammad to impose strict capital controls and a 3.80 peg against the dollar. -By Shannon Teoh (The Malaysian Insider)