Privatizing Malaysian Airport Problemishes “Pro-Israel” Controversial Treasury Holdings Faces Dissidents

Treasury Holdings (Khazanah) and the Employees Provident Fund Authority (EPF) joined forces to promote the privatization of Malaysia Airport (AIRPORT, 5014, main board transportation and logistics shares), which sparked a buzz and discussion in the market. Can this privatization deal actually benefit Malaysia?

On the 15th of this month, Malaysia Airport received a conditional acquisition proposal from a consortium formed by Gateway Development Alliance (GDA), treasury holding subsidiary Pantai Panorama, Kwasa Aktif (KASB), a subsidiary of the Provident Fund Authority, and GIP Aurea, a New York investment fund.

The three parties plan to buy 1,118.09 million shares or 67.01% of Malaysia Airport's shares in the open market for RM11 (equivalent to approximately RM12.3 billion) per share, and have no intention of maintaining Malaysia Airport's listed position.

To learn more about this privatization deal, “Malaysian News Agency” visited Dato' Amiru Faisa, managing director of the Treasury Holdings, and Amzoukanein, CEO of the Provident Fund Authority.

The biggest controversy caused by privatizing Malaysia Airport is the background of the New York Investment Fund in the US. Some politicians accuse BlackRock (BlackRock), which holds GIP, of being a “pro-Israel” company.

Amiru Faisa said, “As far as I know, BlackRock Group is interested in GIP, but the acquisition has not yet been completed. And our partner is GIP, not BlackRock Group.”

Treasury Holdings and the Employee Provident Fund Board together hold 70% of GDA's shares. The consortium plans to use the expertise of the three parties to ensure the long-term sustainable growth of Malaysia Airport, improve the airport's infrastructure, and provide better services to passengers and airlines.

The privatization deal is expected to bring many potential benefits to Malaysia Airport, including maintaining and upgrading the airport's infrastructure, improving airline connectivity, and improving passenger service levels, thereby increasing passenger traffic and the number of visitors to the country.

As to why the privatization operation was chosen now, Amiru Faisa said that China's airports face the risk of falling behind neighboring countries. Over the past 5 years, other countries have been actively investing in improving airport facilities.

“We have invested only RM1.4 billion in airport improvements over the past 5 years, while Thailand and Indonesia have invested as much as RM6.6 billion and RM12 billion respectively.”

In view of this, Malaysia Airport urgently needs to improve services and invest to ensure that Malaysia remains competitive.

“We have been delaying too long and the country's competitiveness is in jeopardy.”

Amiru Faisa pointed out that the region where Malaysia is located is ideal for the growth of long-distance passenger traffic. According to the International Air Transport Association (IATA) forecast, the passenger traffic growth rate (CAGR) over the next 20 years is about 4.5%.

“Malaysia Airport has the potential to improve air connectivity, yet the current performance is not ideal. The average growth rate of inbound tourism in Malaysia over the past 10 years was about 1.0% per year, far behind the 8.0% growth rate of neighboring countries.”

He pointed out that compared to Singapore and Thailand, our short-haul air service is good, but our long-haul flights are relatively backward. Last year, Kuala Lumpur had only 22 long-haul routes, while Singapore and Thailand had 40 and 55 respectively.

In order to enhance the competitiveness of Malaysia Airport, Amiru Faisa said that only through privatization can the shareholding structure of Malaysia Airport be streamlined, strategies can be adjusted more easily, and investment decisions can be made more efficiently and immediately, and help improve the competitive position of Malaysian Airport in the market.

On the question of why they chose to cooperate with foreign companies to privatize Malaysia's airport rather than cooperate with local companies, Amiru Faisa said that cooperation with foreign companies can introduce advanced international technology and expertise, and further improve the service level of Malaysian airports to international standards.

In response to the problem of foreign companies holding strategic assets in Malaysia, how will China's interests be protected?

Amiru Faisa replied that after privatization is completed, Treasury Holdings's shares in Malaysia Airport will increase from 33% to 40%. Amzukanain added that the shareholding of Treasury Holdings and the Employees Provident Fund Board will increase from the current 41% to 70%.

He pointed out that in 2018, the foreign shareholding ratio of Malaysia Airport Holdings reached 45%, so to a certain extent, this privatization will allow Malaysia Airport to be firmly controlled by China after going public.

Furthermore, he stressed that Malaysia's interests will be fully protected, and the government will hold special shares and board representation rights for Malaysia Airport, while the Malaysian airport's chairman and CEO will still be Malaysian.

On the other hand, on the question of whether there will be cost cuts and layoffs after the Malaysian airport is closed, Amiru Faisa said that the purpose of this deal is to help Malaysia prepare for the next stage of development, not to cut costs. As a result, priorities will focus on improving the passenger experience and enhancing aviation connectivity.

“We are committed to protecting the rights and interests of current employees at Malaysia Airport, and there are currently no plans to lay off workers. The employment rights of current employees at Malaysia Airport will be fully protected, and employees will also benefit greatly by sharing knowledge with experts around the world.”