MAHB Privatisation: Addressing Frustrations with Accountability and Transparency

The ongoing debate surrounding the privatisation of Malaysia Airports Holdings Berhad (MAHB) is a pivotal moment for the nation’s infrastructure and economic future. While the Transport Minister’s frustrations with the inefficiencies and sluggish decision-making of MAHB are understandable, privatisation raises critical questions about governance, accountability, and long-term benefits for stakeholders.

At its core, this move has been driven by Khazanah Nasional Berhad, along with its consortium partners, with the objective of streamlining operations and enabling MAHB to respond swiftly to industry demands. Yet, as this privatisation progresses, many Malaysians are left grappling with concerns over transparency, the treatment of minority shareholders, and whether this decision truly serves the public interest.

A Done Deal with Lingering Questions

Recent announcements reveal that the Khazanah-led consortium has reduced the acceptance threshold to 85%, with the offer price remaining at RM11 per share. This development strongly indicates that the privatisation is nearing completion. While the Transport Minister may find relief in this resolution, what about the broader implications for independent directors, minority shareholders, and the public?

To unpack this, let us consider the following key questions and challenges:

1. Role of the Securities Commission (SC): Investor Protection and Market Integrity

The Securities Commission (SC) plays a crucial role in safeguarding investors and maintaining market integrity. Under the Capital Markets and Services Act 2007 (CMSA), SC is tasked with ensuring transparency and accountability in corporate exercises such as this. However, in this case:

• Were adequate safeguards implemented to protect minority shareholders from potential risks, especially once MAHB is delisted?

• Is the SC actively reviewing the rules governing takeovers and mergers, particularly concerning conditionality and deadlines?

A comprehensive review of the “Rules on Take-overs, Mergers and Compulsory Acquisitions” is essential to address gaps in protecting minority shareholders and ensuring fair outcomes.

2. Minority Shareholders: Risks and Reduced Liquidity

For shareholders who have yet to accept the RM11 offer, the delisting of MAHB could lead to significant challenges:

• Reduced liquidity will make it harder for these investors to exit their positions.

• There is a real risk of holding unlisted shares, which are typically more difficult to trade and lack transparency.

Where is the assurance that minority shareholders’ interests are being safeguarded in this privatisation exercise? The absence of clear protections undermines investor confidence in Malaysia’s capital markets.

3. Independent Directors: Where Do They Stand?

MAHB’s five independent directors initially opposed the privatisation, citing strong financial performance, growth prospects, and concerns over reduced transparency and accountability. Their rejection of the RM11 offer—well below the valuation range of RM12.61 to RM13.71 estimated by Hong Leong Investment Bank—raises several red flags:

• Have these directors maintained their stance, or were they overruled?

• If their concerns remain valid, why was their advice sidelined?

The removal or sidelining of independent directors who act as the conscience of the board would severely undermine governance standards.

4. The Consortium’s Commitments: Financing and Best Practices

The privatisation proponents argue that transforming MAHB into a private entity will improve operational efficiency and enable much-needed investments. However:

• How much private capital will the new shareholders inject into MAHB’s expansion and system upgrades? Estimates suggest an investment of at least RM15 billion over the next decade. Will this come largely from public funds, given that Khazanah and EPF hold 70% of the shares?

• What mechanisms are in place to ensure the consortium adheres to international best practices post-privatisation?

Privatisation should not be a shortcut to financial gains for a select few at the expense of long-term benefits for the nation.

5. Accountability for Past Performance

The Transport Minister’s frustrations are directed at MAHB’s inefficiencies, but accountability for past shortcomings must also be addressed:

• MAHB has had five CEOs in the past decade. Who was responsible for these appointments, and why has there been such high turnover?

• Is the current board equipped to manage the technical and strategic complexities of privatisation?

6. National Interests and Policy Alignment

The privatisation of MAHB also has broader implications for Malaysia’s aviation industry and national interests:

• How does this align with the government’s policy on open skies and the role of Malaysia Airlines Berhad (MAB) as a national carrier?

• Have agencies like MAVCOM, MSWG, and MyCC been consulted to ensure stakeholder alignment and competition in the sector?

Infrastructure alone will not determine MAHB’s success. A holistic approach that integrates strong national carriers, open competition, and sound governance is essential.

Exploring Alternatives: Why Not a Management Contract?

One glaring question remains: Could the objectives of the privatisation exercise be achieved through alternative means, such as a management contract?

• Engaging a world-class operator through a management contract would allow MAHB to benefit from expertise without sacrificing public ownership.

• This approach could achieve operational efficiency and industry best practices while maintaining transparency and accountability.

Transparency and Accountability

Moving forward, the privatisation of MAHB must be approached with the utmost transparency and accountability. Key actions include:

1. A thorough review of the governance framework to protect minority shareholders and ensure fair valuations.

2. Clear oversight mechanisms to monitor the consortium’s commitments and performance.

3. Open communication with stakeholders to address concerns and foster trust in the process.

The Transport Minister may find satisfaction in resolving his frustrations, but the long-term implications of this privatisation demand careful scrutiny. Ultimately, the buck must stop somewhere and it is the collective responsibility of policymakers, regulators, and corporate leaders to ensure that the interests of all Malaysians are protected.

What say you?