Corporate governance and doing it right

What Are We To Do
By TAN SRI LIN SEE-YAN

OF late, the issue of governance has been in the limelight. I have just returned from the Asian Shadow Financial Regulation Committee (ASFRC) meeting, held in conjunction with the Asian Financial Management Conference in Singapore.

Corporate governance (CG) was the sole preoccupation of the 10 ASFRC members present. To better cope with the unique characteristics of corporate Asia, its communiqué emphasised that real improvements in governance have become ever more urgent and critical.

Furthermore, new recognition that financial institutions should “assist in protecting taxpayers... creates new challenges” for their boards of directors. This realisation can result in a “potential dilemma” which requires a new mindset to resolve.

The big picture 

The recent financial crisis, triggered by the bankruptcy of Lehman Brothers, raised serious issues on governance of SIFIs (systemically important financial institutions) and how they are regulated and supervised.
The massive injection of public monies in the United States and Europe – estimated at up to 25% of gross domestic product – raised a huge outcry among taxpayers about the moral hazard and the diminished responsibility of private stakeholders.

The European Commission’s Larosière report highlighted three crucial gaps: Boards of directors (BoDs) and supervisory and regulatory authorities (SRAs) failed to understand the nature and scale of risks taken, shareholders failed to effectively perform their role; and lack of effective control mechanisms led to excessive risk-taking.

What’s most worrying is that CG determines and regulates business life, which raises the question: Is existing CG deficient or at best, badly implemented?

Traditionally, CG is relied upon to chart the relationship among senior management, BoDs, shareholders and other stakeholders (e.g. employees, society at large, creditors), and to determine the organisation and means used to meet goals and monitor their implementation.

But interdependence and connectivity among fast growing SIFIs can lead to systemic risks. In the recent crises, this led governments to shore-up bad large banks with public funds. Consequently, taxpayers have since become reluctant stakeholders – adding a new dimension of CG.

At the heart of it all, as I see it, is greed, mostly at the expense of the innocent, perpetuated within organisations supposedly well-run by professionals with business acumen.

In reality, key management were lying, living-it-up and cheating, or just being downright suckered by liars and cheats around them. Those charged to notice didn’t do so, or failed to raise their hands.

To reform, an effective CG system (based on smart control mechanisms with checks and balances) must make the main stakeholders (BoDs, owners, senior management) assume greater responsibility with transparency.

Bear in mind rule-based supervision focused on internal control, risk management, audit and compliance structures could not prevent excessive risk taking by SIFIs. To restore confidence, a number of critical issues have to be addressed.

Conflict of interest

The model of shareholder-owner who looks to long-term business viability has since been severely shaken. The emergence of new shareholders with little long-term interest have amplified risk-taking for short-term gains (and contributed to excessive remuneration).

This is reminiscent of the old Jack Welch adage that a firm’s sole aim is to maximise shareholders’ return, which dominated US business for the past 25 years.

With the crisis, even “Neutron Jack” had since retracted: “(Maximising) shareholders value is the dumbest idea...” he said last year. Traditionalists in the US and UK showed disdain for “stakeholder capitalism” practised in Europe where interests of employees, creditors and society at large are taken seriously.

Such conflict came to the fore in the recent BP US oil spill – many BP shareholders were eyeing hefty dividends and didn’t pay enough attention to environmental risks.

Given systemic risk and the high volume, diversity and complexities of SIFIs’ business, conflicts of interest can arise in a variety of situations, ranging from exercising incompatible roles and activities to clash on performance measurement between management and shareholders/investors.

The current travails of Goldman Sachs epitomises the conflict. When it went public in 1999, Goldman embraced the axiom of maximisation of shareholders’ value.

As wooing sustainable customers became increasingly important, concentration on maximisation over the short-term put at risk building stable relationships that rely on long-term success.

Or, when US Senators questioned Goldman on their fiduciary duty to clients when selling them sophisticated products, it admitted caveat emptor is the only rule.

To improve CG, perhaps long-term shareholders (LTShs) should be given more clout. In the US, shares traded on the New York Stock Exchange changed hands every three years on the average in the 1980s. Today, the average tenure is less than a year (10 months).

Last year, a taskforce comprising seasoned investors (Warren Buffett, Peter Peterson, Felix Rohatyn, et.al) advocated in a report “Overcoming Short-Termism” measures to encourage LTShs, including withholding voting rights for new shareholders for a year.

Netherlands is considering loyalty bonuses for LTShs. Roger Carr (Cadbury’s ex-chairman) suggested that investors who bought shares in a takeover bid should not be allowed to vote on the offer.

Would these work? As I see it, the real issue is not the length of time investors hold on to shares, but how to encourage them to take their duties as owners more seriously.

One hat is enough

The US is unusual in lavishing power on chief executive officers (CEOs) who also act as chairman of BoDs (chairman).

Splitting the job is commonplace in the UK, Canada, Australia, and much of Europe and Asia. In the UK, 95% of FTSE companies have an outside chairman.

In contrast, 53% of Standard & Poor’s (S&P) top companies combine the two jobs. Activists in the US have since been up in arms against these “imperial bosses.”

In April 2009, they forced Ken Lewis to surrender his second hat (chairman) at Bank of America. The case for “two” lies in the basic principle of separation of powers.

How to monitor the boss when he sits at the head of the table? It conjures images of CEOs writing their own performance reviews and determining their own salaries.

One of the notable steps taken by troubled US banks (Citigroup, Washington Mutual, Wells Fargo) when the crises hit was to separate the two jobs. No doubt, the arguments are compelling.

Empirical evidence is not conclusive. Enron and World Com both split the jobs as did Royal Bank of Scotland and Northern Rock.

Separation has its problems – it’s harder for CEOs to make quick decisions, ego-driven CEOs and chairmen do squabble over who’s in charge, and shortage of talent makes separation sub-optimal.

Be that as it may, BoDs have since become more independent; 90% of the US S&P companies now have a “lead” or “presiding” director to act as counterweight.

Indeed, recent changes make the old-style strongman an anachronism. However, I see no one-size-fits-all solution. Best way has to be evolutionary: split or explain-why-not (comply, or explain).

Independent directors

Independent non-executive directors (or indies) are at the apex of CG. Widely criticised during the crisis, indies failed to foresee troubles ahead or push management to find solutions.

They are usually well connected and often sit on several boards as companies seek their experience and connections. SRAs now want them to be more diverse.

Traditionally, when appointing new indies, existing BoDs are inclined to look in the mirror – appoint in their image rather than look through the window and recognise diversity.

This “old school tie” approach is too cosy. Also, BoDs need to be more transparent in recruitment. In the UK, the Financial Reporting Council code now requires firms to explain if indies are not put up for re-election.

More controversial is the annual election of chairman and other board members in an attempt to promote the best long-term performance in an intensively competitive environment.

However, says its critics, this promotes a focus on short-term results, makes boards less stable, and discourage robust challenges in boardrooms.

Good CG relies on indies to set smart checks and balances, and fix the boundaries of organisational behaviour. They hold the key to maintain confidence in the company’s integrity.

To do their job well, indies need to be independent from management, business relationships and substantial shareholders.

In practice, they ensure that internal and external rules of conduct are applied, risks taken are commercially sound and consistent with the board’s risk appetite, and future success of the business is reasonably assured.
This is an onerous task. To succeed, its best practices code needs to operate under well-defined core values which the board and management are committed.

A true indie knows how much work he can take on and still be effective. He needs no code on age, maximum appointments or terms served or time spent to bind him.

Integrity demands he will not accept a role he can’t fulfil, unlike many who comply on paper. Companies and stakeholders cannot be readily protected from the vagaries of human frailty.

Like it or not, their behaviour reflects the ethics and mores of society. What is really needed is to rediscover moral values. SRAs just can’t regulate for ethics and common sense.

 Asia on the go

Asian economies encounter two rather unique limitations in CG. First, cultural differences and being more “tradition-bound” place less emphasis on formal contacts but face greater subservience to authority and age.

Second, Asia has a limited pool of qualified and experienced indies since CG is a relatively new phenomenon.
While it is desirable for Asia to recognise and learn from new codes of conduct being proposed in the US and Europe, these need to be adapted and modified to fit local culture and experiences.

In Asia, while CG sets the tone, it is imperative that indies take individual responsibility not only to do the right thing by the firm they serve, but also as individuals when it comes to ethical behaviour. After all, Asia has 5,000 years of history, diversity, culture and tradition.

An evolutionary approach towards excellence in CG is what’s really needed. Best practices work best in an ecosystem of “comply or explain.”

Augmented critically by purposeful continuing education to develop and improve skills and expertise. Building, in the process, a culture of strict compliance, rigorous risk assessment and common-sense ethical behaviour. To succeed, CG and ethics must go hand-in-hand.

·Former banker Dr Lin is a Harvard-educated economist and a British Chartered Scientist who now spends time writing, teaching and promoting the public interest. Feedback is most welcome at
starbiz@thestar.com.my.

Parkway – an expensive investment with good potential, Fortis continues to look for growth in the region

Parkway – an expensive investment with good potential

By RISEN JAYASEELAN
risen@thestar.com.my

WITH Khazanah Nasional Bhd potentially forking out a whopping S$3.5bil (RM8.2bil) to acquire all the shares in Singapore’s Parkway Holdings Ltd they don’t already own, is it getting its money’s worth?

On the face of it, one could argue that Khazanah is overpaying. The S$3.95 price per Parkway share is above all analysts’ target prices and a price earnings (PE) ratio of 39 times FY2009 earnings.

Still, Khazanah could be the one laughing all the way to the bank if a few years down the road, Parkway is re-floated on the stock exchange or sold to another party at a much higher valuation.

Parkway is not only Singapore’s premier healthcare provider, it is also Southeast Asia’s largest private healthcare group and has even ventured into India and China.

No wonder then that most analysts had Parkway on a buy call even before this tussle broke out over the last few months.

Parkway’s promise is best surmised by analyst Jaj Singh of UBS. In a February 2010 report, Jaj pointed out that Parkway is in a “sweet spot” as it stands to gain from a number of factors. These are: Asia’s increasingly aging population and the growth in purchasing power of Asian economies.

“Parkway’s expertise, reputation and growing regional footprint puts it in a good position to capture the secular growth of the Asian healthcare market,” Jaj wrote.

That’s a view shared by Winston Lum of AmFraser Singapore, “As Singapore’s premier healthcare player, we remain bullish on Parkway’s long-term fundamentals”.

Singapore itself is Parkway’s key market. Analysts point out that Singapore has the fastest ageing population in Asia. “This would form the backbone of Parkway’s patients,” said a Singapore-based analyst.

It is estimated that currently only about 10% of Singapore’s population is over the age of 60. Analysts estimate that by 2020 that would rise to 30%.

Parkway, which ventured from property development into healthcare in 1987 with the purchase of Singapore’s Gleneagles Hospital Pte Ltd, today operates 16 hospitals in four countries across Asia. It also has a network of general-practitioner clinics, health-screening and professional radiology and laboratory services in Singapore and a few in China.

It operates hub hospitals in Singapore, Malaysia and India, with satellite hospitals or specialist clinics and medical centres that provide intermediate health services. These centres potentially refer patients that need more intensive care or specialist attention back to the hub hospitals, where specialists are based in clusters.

In Malaysia, Parkway operates through two brands, Gleneagles (one in Kuala Lumpur and another in Penang) and Pantai. Parkway owns 40% of Pantai Holdings, which operates nine hospitals in the country.

Singapore remains the key market

In Singapore, where Parkway derives the bulk of its earnings, it operates the Mount Elizabeth, Gleneagles and East Shore hospitals, which have 1,008 beds in total.

Singaporeans make up the bulk of the patients of these hospitals. Analysts put this down to a few factors.
“Singapore has one of the highest GDP per capitas in Asia, which means its citizens have the means to patronise private facilities such as those owned by Parkway,” explains a Singapore based analyst.

He adds that while the Singapore government provides an impressive level of healthcare facilities and services, private hospitals provide the additional attraction of patients being able to choose their own doctors or specialists. Private healthcare also offers better service standards such as shorter waits, he points out.

According to UBS, private healthcare for the wealthy costs only around 28% higher that the fees charged by government hospitals. “This is not a very significant difference for the well-heeled, especially if Parkway continues to provide differentiated services,” says Jaj.

But there is also a significant number of foreigners from neighbouring countries who are flocking to Singapore for their medical treatment. It is estimated that 35% of patients of Parkway’s Singapore hospitals are foreigners. Of this, about 65% are Indonesians, followed by Malaysians at 25%, says one analyst.

Indeed, Singapore’s push for medical tourism is well known, and so is the fact that foreigners who go to Singapore for healthcare because of the high quality of medical facilities and specialists.

And as the wealth of neighbouring countries grow, so too will the fortunes of Parkway’s hospitals in Singapore, analysts say.

The Singapore government is targeting 3% market share of the Asian healthcare market by 2012, up from its 1% share it held in 2000.

Another gem – Novena

Enter Parkway Novena Hospital. This being-built S$1.5bil hospital is one of Parkway’s prized assets. It is coming up on Irrawaddy Road, not far from the upmarket Orchard Road in Singapore and is slated to commence operations next year or by 2012.

It is designed as a luxurious hospital and the first private hospital to offer only single beds. It will have 333 beds.

But it wasn’t too long ago when analysts downgraded Parkway because of its costly venture to start Novena.
In 2008, Parkway had paid a whopping S$1.25bil for the land on which it is now putting up Novena. The price was about two times higher than what the next nearest bidder had offered to pay.

Since then the critics have been silenced. In March, Parkway said all of the 100 units of the first phase of its Novena Medical Suites were sold out at S$3,588 psf, exceeding market expectations.

In a report dated March 29, Lim & Tan Securities said: “The strong response (for its suites) has vindicated Parkway’s aggressive bidding for the Novena site in February 2008 that sent its share price 15% lower to S$2.48.”

The sale of the 100 units, which measured 452 to 1,431 sq ft, is expected to bring in more than S$200mil in revenue in progressive payments, of which 5% is paid upfront as booking fee.

JPMorgan says stronger demand and pricing for the medical suites mean more refinancing options for the S$500mil loan due in July 2011. Parkway has another S$560mil loan due in July 2013.

“A lowering of the cost of capital for the project and the group could result in an accelerated return to restoring Parkway Holdings’ historically higher dividend payouts of 89.3% from FY2003 to FY2007,” says JPMorgan.

Kim Eng Research Singapore says that the sale of half of the medical suites will take care of the entire construction cost.

Deutsche Bank expects Parkway to sell the remaining 159 suites at a higher price of S$3,900 psf in FY2011 and S$4,100 psf in FY2012 versus the average price of S$3,708 psf in phase one.

Overseas expansion

Aside from Malaysia and Singapore, Parkway has also ventured into the burgeoning private healthcare market of India, tying up with Apollo Hospitals, which is India’s largest private hospital group. Parkway owns 49% in the joint venture that runs Apollo Gleneagles in Kolkata, India, which is a 425-bedded multi-specialty hospital.

Interestingly, Khazanah has a 12.2% stake in Apollo Hospitals, which means it is likely that under Khazanah, Parkway should be able to work more closely with Apollo.

Parkway is also building a new hospital in Mumbai. This is a joint venture with a local businessman who is supplying the land while Parkway will do the construction. This is a 500-bed facility in the heart of India’s financial and commerce capital. Analysts expect this venture to do well given the strong demand from one of the largest developing markets with a population of over 1.1 billion.

Parkway also has a small presence in China with six medical and specialist centres with 14 beds. Analysts say that while Parkway is keen to expand its presence in China, getting a licence for a new facility is challenging and attracting local patients, who are used to traditional Chinese medicine, to western medicine remains an uphill task.

Asset light strategy

Another positive aspect of Parkway, say analysts, is the group’s asset light strategy, whereby since 2007, it has injected its Singapore hospitals into a separate listed entity, Parkway Life Real Estate (Preit). The hospitals were leased back on a long-term lease. Parkway owns 35% of the Parkway Life Reit and also receives fees as the manager of the REIT.

The REIT has subsequently acquired nine nursing homes and one healthcare products distribution and manufacturing facility in Japan.

UBS’ Jaj says this strategy enables Parkway to expand without having to leverage up. “In areas where it still needs to take a stake such as in India, it has roped in local partners.”

“We believe management plans to use this asset light framework for most of its future expansion. The proposed sale of the Novena Medical Suites is part of this strategy,” Jaj says.

Interestingly, Singapore-based DMG & Partners Research says that Khazanah’s takeover of Parkway will be positive for Parkway Life Reit. “Parkway Life has indicated that it will be focusing part of its acquisition strategies on Malaysia, which could possibly include the Pantai hospitals. Hence, with Khazanah in control of Parkway (which in turn owns 35.8% of the REIT), we think it will be a positive for the healthcare trust,” DMG’s Lynette Tan wrote in a note this week, recommending a buy on Parkway Life Reit.

Khazanah’s plans for Parkway

According to reliable sources, Khazanah is excited about its impending takeover of Parkway. The sovereign wealth fund, apparently, has moved beyond “a deal mode” and into firming up plans of growing its regional healthcare platform and garnering more synergies from all its healthcare assets. Khazanah has already indicated that if it were to gain control over Parkway that the path would be clear for the creation of Asia’s premium regional healthcare platform via the consolidation of Parkway, Pantai, Apollo Hospitals Enterprise Ltd and IMU Health Sdn Bhd (the latter runs the International Medical University at Bukit Jalil).

Indeed, medical education will be one of the focus areas for Khazanah. “There are education units in all the healthcare assets in the group, which gives them the ability to come up with an attractive value proposition for training of healthcare professionals, from nurses right up to specialist doctors,” says the source. He adds that since the hospitals cover a wide range of countries and levels of specialisation, the ability to move personnel around within the group also gives them an advantage over other standalone operators.

Other synergies should flow from global procurement and developing a team that specialising in putting up new hospitals.

“With control (over Parkway), a lot of these initiatives can be carried out quicker as Khazanah now will have less to contend with other shareholders that have diverse interests in terms of how capital should be deployed for example,” notes an analyst.

While the stage has been set for Khazanah to grow its healthcare business by leaps and bounds with the likely takeover of Parkway, the fund has its work cut out. “There is always the execution risk. Lets see if Khazanah is able to rope in the right expertise and make the right business decisions,” points out the head of research of an investment firm.

In May this year, JP Morgan’s Christopher Gee had written in a report that the risks associated with Parkway related to execution. In particular, the building of Novena Hospital could suffer from cost-overruns and potential delays to completion. He also highlighted operational risks such as lower-than-expected revenues or higher-than-expected costs that limit the group’s growth trajectory.

Fortis continues to look for growth in the region

By RISEN JAYASEELAN
risen@thestar.com.my

THE vehicle (Parkway) may have changed but not the vision, according to Malvinder Mohan Singh recently in an interview with India’s Business Standard newspaper.

Malvinder was talking about Fortis Healthcare’s decision to cede control over Singapore’s Parkway Holdings Ltd to Khazanah Nasional Bhd, by accepting the latter’s general offer of S$3.95.

The tussle for Parkway has put Malvinder (right) and Shivinder Singh into the spotlight.

 

The tussle for Parkway had put Malvinder and his brother Shivinder into the spotlight after they had emerged to take control of Parkway by buying a 23.9% block from TGP Capital in March, which they subsequently increased to 25.3%.

The Singh brothers had said that they had wanted to make Parkway their vehicle to build a global healthcare chain.

It is understood that the brothers had also intended to inject Fortis Healthcare, their Indian healthcare vehicle, into Parkway.

The 30-somethings brothers had in 2008 sold their family’s 35% in Ranbaxy Laboratories to Daiichi Sankyo, Japan’s third largest drug maker, for about US$2.1bil. They used some of that money to buy hospitals in India and then proceeded to buy into Parkway.

In India, Fortis operates 48 hospitals and would build 10 more in the country in the next two years, adding about 2,500 beds.

Besides investments in India, Fortis has a hospital in Mauritius and one in Afghanistan, ‘’but that will change soon,’’ Malvinder said recently. ‘’Our growth in this region will be a mix of organic, inorganic and managing facilities,’’ he said.

Shivinder and Malvinder have a net worth of US$3.2bil, ranking them at 297 in the list of the world’s richest people and among the 20 wealthiest in India, according to Forbes magazine. They also own the Religare group whose operations include wealth management, investment banking and life insurance.

Soon after they bought into Parkway, the brothers set out to gain control of the company, getting four board seats and making Malvinder the chairman.

The brothers stand to gain a gross profit of some S$116.7mil from the sale of their Parkway shares into Khazanah’s general offer. That money, they say, will be used to look for other opportunities.

Shivinder said the group now has between US$800mil and US$900mil in cash and a well-established credit line which could be used for one or more acquisitions, adding that Singapore remained a base for them to grow in Asia.

“For the next five years, Asia is the story,” he is reported to have said.
In the interview with Business Standard, Malvinder said that beyond the S$3.80 price they had bid for Parkway, “it didn’t make any financial sense” for them to raise the price.

“It was a collective decision in the best interest of our shareholders. We are not emotional about our decisions. There is a price point for everything,” he said in the interview.

Malvinder also said that Fortis was not a financial investor and would only wish to drive the businesses that they invest in. He added that selling out to Khazanah has not been a setback as the whole episode was a valuable learning experience. “One would have never understood the business environment, the geo-political issues, competition in other Asian markets by remaining in India,” he said in a media conference.

Fortis officials also recently said they plan to list their pathology unit in India next year and will continue to use Singapore as a base to become a “pan-Asia healthcare leader’’ and has a team scouting for opportunities in the region.

Battle for Parkway,Parkway’s long history with Malaysia,Cash-rich Fortis eyes acquisitions in Asia

Takeover battle for Parkway pits two different cultures

 How did Khazanah and Fortis get to this point?

“I’VE fired people for stealing as little as US$125,” Fortis Healthcare Ltd CEO Shivinder Mohan Singh once boasted to business magazine Forbes in an interview.

With a wealth of some US$3bil shared with his brother Malvinder Mohan Singh, the Singh brothers from India are widely known for their swagger as much as their insatiable appetite for deals and penchant to rattle the operational status quo in the companies they’ve gobbled up.

So, even a tamed imagination should be able to figure out what could have possibly led to the simmering tension between Fortis’ controlling shareholders Malav and Shivi Singh (as they are commonly known) and Malaysia’s relatively subdued Khazanah Nasional Bhd since the former’s emergence as a major shareholder in Singapore-listed Parkway Holdings Ltd – divergent weltanshauung or world view.

After months of tiptoeing around the rivalry, Khazanah, quite unlike itself, had outflanked the Singh duo who hurriedly reconstructed the board with four new additions, by launching a partial takeover for Parkway Holdings.

If successful, Khazanah will wrest control of South East Asia’s largest healthcare company with a market value of US$3.08bil. Will Fortis walk away or will it make a counter bid? If they do, will Khazanah bite?
More importantly – should other shareholders of Parkway hold out for a better offer?

The possibilities are aplenty but at this point, there is only one offer on the table. Everything else is meaningless chatter.
Just how badly do Malaysia’s Khazanah and India’s Fortis want Singapore-based Parkway? No doubt, executives from both the companies have spent long nights asking themselves exactly that. The question, however, really is – just how much should they want Parkway?

First a quick recap as it is easy to get lost in this maze of corporate one-upmanship:

·March 11: Bombay Stock Exchange-listed Fortis Healthcare acquires a 23.9% stake in Parkway for US$685.3mil or S$3.56 apiece.

·March 19: No time wasted in board revamp – Malvinder is made chairman, Shivinder becomes CEO and managing director while two other directors join the board.

· Between March 11 and May 24, Fortis ups its stake to 25.29% through a series of transactions, pipping Khazanah’s 24% stake

· May 27: Trading halt on Parkway shares.
Khazanah sets up wholly-owned Integrated Healthcare Holdings Sdn Bhd (IHH) which makes a voluntary conditional partial offer for Parkway shares at S$1.18bil (US$833mil) or S$3.78 per share cash. The offer price represents a 25% premium over the share price then. (Offer closes on Aug 10).

· May 31: Trading halt lifted. From the last traded price of S$3.02, Parkway’s shares surge 23% to S$3.71
· June 9: Fortis seemingly fires a salvo; it reveals plans to raise US$584mil and increase borrowing limit to US$1.3bil. Many read this as a signal that it is crafting a counter bid

· June 10: Parkway’s shares jumps to a high of S$3.87, surpassing Khazanah’s offer price on intense speculation of a competing bid. (It has since calmed down to levels close to Khazanah’s offer price)

· June 15: Malvinder shoots out a clarification that the fund raising exercises are “merely enabling resolutions” and that it was keeping its options open. The remarks fan further speculation.

· June 16: Singapore’s SIC steps in before the tussle degenerates into a protracted vicious cycle. The regulator gives Fortis until July 30 to make a counter bid.

Amid all the read-between-the-lines rhetoric, wild speculation and adrenaline rush that a corporate takeover battle emits, one thing stands out – a national irony.

Khazanah’s ties with Parkway began in 2005. In September 2005, much to the chagrin of many “upholders of national-interest”, Parkway acquired a 31% controlling stake in Pantai Holdings Bhd. While many in the investing fraternity viewed the news as positive for Pantai given Parkway’s established track record and expertise in managing hotels (for why else would Parkway be the takeover target of two mega corporations today?), the transaction found itself smack in the middle of a Malaysian political landmine. Critics bemoaned that Pantai, a national strategic asset with two medical concessions, ought to remain in the hands of locals.

Many months later in August 2006, in swooped Khazanah. Newly set-up Pantai Irama acquired Parkway’s stake in Pantai and took the latter private. Parkway ended up with 40% in Pantai Irama while the rest was controlled by Khazanah. In 2008, Khazanah acquired a 16% stake in Parkway, which it has since raised to 24%.

Can’t seem to have enough

Fast forward four years, today Khazanah and Fortis – two large foreign corporations – one a state investment arm with assets worth RM92bil (US$28bil) as at end-2009 and the other, India’s second largest hospital operator by market value of US$1.1bil – are competing for more than a slice of Parkway.

The issue this time is not that they can’t have a piece of Parkway, a healthcare group which derives over 60% of revenue from Singapore operations, but this – they just can’t seem to have enough.

Parkway’s main allure is its dominant domestic position and growing regional franchise in Malaysia, India, UAE, Brunei and China. It also owns a 35.4% stake in Parkway Life REIT, which invests in healthcare/healthcare related real estate assets.

In short, it possesses the sweet combination of high quality assets and strong growth prospects.
To launch a general offer, Fortis would need to cough up some US$2.3bil. No easy feat. There’s talk that Fortis has lined up India’s wealthiest person Mukesh Ambani of Reliance Industries to buy a stake in the former.

If this happens, Khazanah will find itself facing off with India’s giants.

Asia’s premium healthcare platform

If Khazanah were to emerge triumphant, the path would be clear, as per its own pitch to Parkway shareholders, for the creation of Asia’s premium regional healthcare platform via the consolidation of Parkway, Pantai, Apollo Hospitals Enterprise Ltd (Fortis’ archrival) and IMU Health Sdn Bhd.

To safeguard its interest, Fortis has two moves – come up with a bag full of money to stage a counter offer or thwart Khazanah’s bid and maintain status quo. Either one of these scenarios would see Fortis emerge victor (if its offer pulls through, that is) as it already has control of the company. Right? Not quite.

Khazanah’s final trump card could be Pantai Irama, which controls the Malaysian operations. Pantai Irama is governed by air-tight shareholder as well as operational and management agreements which, if push comes to shove, could be used to backfire on the Singh duo.

So, what’s the big deal, you ask? Malaysia is currently the jewel in Parkway’s blossoming overseas operations and major contributor to its revenue and operating profits.

Even Fortis should appreciate that there’s no point shooting oneself in the foot all in the name of expanding the group’s footprints in the region.

·Business editor Anita Gabriel thinks that in a race like this, sometimes the one who walks away may not necessarily be the loser as everything has a price. What’s yours?

By SIDEWAYS By ANITA GABRIEL

Anita@thestar.com.my

Parkway’s long history with Malaysia

By RISEN JAYASEELAN
risen@thestar.com.my

YOU could call it a home-coming of sorts. Parkway Holdings Ltd, which will likely fall into the hands of Khazanah Nasional Bhd, was founded back in the 1970s by Malaysians.

Then, individuals from the Tan family of IGB Corp and the Ang family of Petaling Garden had bid for the privatisation of land by the Singapore government.

A key member of the founding team was Tony Tan Choon Keat. Tony had identified the plot of land and won the bid. He then roped in the Ang family and together they built Parkway Parade, Singapore’s first shopping complex.

From there, Parkway sought to get into the private hospital business. It was an idea mooted by Tony, then the managing director of Parkway and nephew of Datuk Tan Chin Nam of IGB, who was then chairman of Parkway.

This led to the group acquiring Singapore’s Gleneagles Hospital Pte Ltd in 1987, followed by the Penang Medical Centre, which it renamed Gleneagles Medical Centre, Penang. In 1995, Parkway bought the Mount Elizabeth and Parkway East hospitals and became the largest private healthcare provider in Southeast Asia.

The Tan family eventually sold most of their holdings in Parkway in 1997, which was believed to have been the result of certain Singapore-based shareholders raising concerns over the profitability and lackadaisical share price of Parkway.

Tony remained in the driving seat for a while after that. He was the founding managing director of Parkway until 2000 and then as its deputy chairman until his retirement in 2005.

It is understood that DBS Land had then become a major shareholder.

Another shareholder who had sold their Parkway shares to DBS Land was Pantai Holdings. Indeed, Parkway and Pantai have had a long history of co-owning each other.

Pantai’s involvement in Parkway started in 1995. Then Pantai was under the control of the Berjaya Group. In December 1995, Vincent Tan along with Indonesian businessman Johannes Kotjo announced plans to acquire a 20% stake in Parkway.

Later Datuk Mokhzani Mahathir gained control of Pantai and through a series of corporate exercises, had sold off Pantai’s stake in Parkway to DBS.

Mokhzani subsequently sold out of Pantai, to Datuk Lim Tong Yong.

Then in September 2005, Parkway under the stewardship of US private equity fund, Newbridge Capital, had acquired 30% of Pantai, said to be Lim’s stake in Pantai.

(Newbridge subsequently morphed into TPG Capital, which incidentally is the party that sold its stake to India’s Fortis Healthcare that started the whole sage for the tussle for control over Parkway.)

Going back to Parkway’s entry into Pantai, soon after that deal, a political storm brewed in Malaysia as it was alleged that since Pantai’s subsidiaries held key Malaysian government concessions, the group should not fall into the hands of foreigners, in accordance with the terms of the concessions.

The issue was resolved by a cleverly structured deal between Khazanah and Parkway which jointly formed a vehicle to hold the Pantai stake.

The vehicle in turn was majority held by Khazanah. Pantai’s hospitals though would continue to be run by Parkway through management contracts. However, if Parkway had gone into the hands of Fortis, there was the possibility of problems surfacing with Parkway’s management contract of Pantai. Pantai, in which Parkway owns 40%, contributes under a third of Parkway’s earnings before interest tax depreciation and amortisation. But with Khazanah firmly in control of Parkway, analysts say the relationship between Parkway and Pantai can only grow stronger now.

Parkway was in fact started by Malaysian individuals in the 1970s and even had Tan Sri Vincent Tan and Pantai Holdings as substantial shareholders in the 1990s.

Parkway had then started as a property development company with the Tan family of IGB Corp and the Ang family of Petaling Garden very much in the driving seat.

Cash-rich Fortis eyes acquisitions in Asia

Malvinder Singh, Chairman of Fortis, speaks during a news conference in New Delhi July 26, 2010.

Credit: Reuters/B Mathur

Thu Jul 29, 2010 11:13am IST

By Raju Gopalakrishnan and Saeed Azhar

SINGAPORE (Reuters) - Fortis Healthcare(FOHE.BO) is eyeing acquisitions of other healthcare companies in Asia after losing out in the bidding war for Singapore's Parkway Holdings(PARM.SI) but making a tidy profit, its chairman said.

Malvinder Singh, one of the two billionaire brothers who run the Indian company, said the group now has between $800-$900 million in cash and a well-established line of credit, which would be used for the acquisition of one or more assets.

"There's also family money, if need be," he said. "Money has never been an issue. It depends on the opportunity," Singh told Reuters in an interview on Thursday.

Singh refused to identify any targets or give a time frame, but said Singapore remained the pan-Asian hub for the sector.

"We have regrouped, discussed and decided what we need to do," he said. "There are a bunch of opportunities we have already identified which we will evaluate and engage with. We will look at partnerships, we look at alliances, we look at acquisitions. We will do all of that."

"We are here to stay, Singapore will remain the base," said Singh, who had moved to Singapore from New Delhi as chairman of Parkway.

Other healthcare firms based in Singapore include Raffles Medical, Pacific Health and Singapore Medical. Prominent companies regionally in the sector include Thailand's top listed hospital operator Bangkok Dusit Medical Services and second-ranked Bumrungrad Hospital.

"For the next five years, Asia is the story," Singh said. "Emerging markets, significant demand-supply gaps in terms of healthcare, opportunity for growth and its got some strong institutions which we can build upon and leverage and create a good business."

OPPORTUNITY COST

Earlier this week, Fortis agreed to sell its about 25 percent stake in Parkway bought just four months ago after Malaysian state investor Khazanah made a general offer of S$3.95 per share in response to Fortis' bid of S$3.80.

Fortis said it made a profit of S$116.7 million ($85 million) on the deal.

"At S$3.80 we were clear buyers, at S$3.95 we were sellers " Singh said. "The issue to me was what does that (price) mean for a Fortis shareholder? What does it mean in terms of return on investment, what does it mean in terms of opportunity cost for other opportunities?"

Malvinder, whose interests include golf, photography, travel and art, worked at American Express Bank and Merrill Lynch and joined family-founded Ranbaxy Laboratories as a management trainee in 1994.

Two years ago, Singh and his brother Shivinder sold their controlling stake in Ranbaxy to Japan's Daiichi Sankyo. They now have a combined fortune estimated at $3 billion.

"Today where we are, rather than Parkway being a vehicle, we will find a different vehicle," he said. "It could be more than one vehicle. The destination doesn't change."

(Editing by Muralikumar Anantharaman)
(For more business news on Reuters India click in.reuters.com) 

Related News

• Khazanah wins battle for Parkway; Fortis bows out
  Jul 26, 2010
• Fortis made S$116.7 mln profit on Parkway deal
  Jul 26, 2010
• Fortis says to pursue other opportunities in SE Asia
  Jul 26, 2010
• Fortis makes $3.1 bln offer for Parkway
  Jul 1, 2010
• Fortis battles Khazanah with $3.1 bln deal for Parkway
  Jul 1, 2010
• India's Fortis makes $3.1 bln offer for Parkway
  Jul 1, 2010

Quality-adjusted life years lost to US adults due to obesity more than doubles from 1993-2008

Although the prevalence of obesity and obesity-attributable deaths has steadily increased, the resultant burden of disease associated with obesity has not been well understood. A new study published in the September issue of the American Journal of Preventive Medicine indicates that Quality-Adjusted Life Years (QALYs) lost to U.S. adults due to morbidity and mortality from obesity have more than doubled from 1993-2008 and the prevalence of obesity has increased 89.9% during the same period.

Using data from the 1993-2008 Behavioral Risk Factor Surveillance System, the largest ongoing state- based health survey of U.S. adults, Haomiao Jia, PhD, Columbia University, and Erica I. Lubetkin, MD, MPH, The City College of New York, examined trends in the burden of obesity by estimating the obesity-related QALYs lost, defined as the sum of QALYs lost due to morbidity and future QALYs lost in expected life years due to premature deaths, among U.S. adults. They found the overall health burden of obesity has significantly increased since 1993 and such increases were observed in all gender and race/ethnicity subgroups and across all 50 states and the District of Columbia.

"The ability to collect data at the state and local levels is essential for designing and implementing interventions, such as promoting physical activity, that target the relevant at-risk populations," according to Dr. Lubetkin. "Although the prevalence of obesity has been well documented in the general population, less is known about the impact on QALYs both in the general population and at the state and local levels….Our analysis enables the impact of obesity on morbidity and mortality to be examined using a single value to measure the Healthy People 2020 objectives and goals at the national, state, and local levels and for population subgroups."

From 1993 to 2008, the obesity prevalence for U.S. adults increased from 14.1% to 26.7% (89.9%). Black women had the most QALYs lost due to obesity, at 0.0676 per person in 2008, which was 31% higher than QALYs lost in black men and about 50% higher than QALYs lost in white women and white men. A direct correlation between obesity- related QALYs lost and the percentage of the population reporting no leisure-time physical activity at the state level also was found.

The prevalence of obesity increased over time for all states, while obesity-related QALYs lost tended to follow a similar pattern. However, disparities among states lessened over time, with less obese states "catching up" to more obese states and producing a greater percentage change of QALYs lost.

"Collaborative efforts among groups at the national, state, and community (local) levels are needed in order to establish and sustain effective programs to reduce the prevalence of obesity, "commented Dr. Jia. "Although the impact of current and future interventions on curtailing the burden of disease might not be available for a number of years, this method can provide an additional tool for the Healthy People 2020 toolbox by providing a means to measure objectives and goals. The availability of timely data would enable the impact of evidence-based interventions to be assessed on targeted populations and subgroups, promote continuous quality improvement through monitoring trends, and facilitate head-to-head comparisons with other modifiable health behaviors/risk factors and diseases."

More information: The article is "Obesity-Related Quality-Adjusted Life Years Lost in the U.S. from 1993 to 2008" by Haomiao Jia, PhD, and Erica I. Lubetkin, MD, MPH. It appears in the American Journal of Preventive Medicine, Volume 39, Issue 3 (September 2010). DOI: 10.1016/j.amepre.2010.03.026

Provided by Elsevier
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Technology upgrade needed to stay competitive

M'sia must catch up technologically to stay competitive in E&E sector

By EUGENE MAHALINGAM
eugenicz@thestar.com.my

PETALING JAYA: Malaysia needs to step up its pace technologically if it wants to remain competitive in the electrical & electronics (E&E) sector, according to a report by RAM Rating Services Sdn Bhd.

“Malaysia must catch up technologically to compete against players that are higher up in the value chain, as reliance on lower-end operations will keep the local E&E industry in a vulnerable position.

“In this regard, we believe that investments, which are picking up again industry-wide to revitalise earlier plans halted amid the crisis and expand into new technologies, will enable local E&E players to tap new businesses,” RAM said.

The rating agency also noted that the Government’s efforts to boost the local E&E sector, such as the development of training centres and academic programmes, as well as focus incentives towards strategic segments of the value chain such as design testing and precision machining, were steps in the right direction.

“Nevertheless, it remains to be seen whether these initiatives are sufficient for the sector to leap to the next level,” RAM said.

According to the rating agency, the E&E industry is characterised by the need for continuous capital investments as well as technology upgrades.

“E&E players are required to continually develop new features and capabilities, which require them to also attract and retain developmental talent. As such, technological capabilities and the ability to be ahead of rapid technological changes are key to the success of E&E players.” it said.

It said those that were highly skilled in technology would have a competitive edge, thus making it easier for them to maintain their market positions.

RAM also said having a wide product mix would reduce the exposure of E&E players to just a single market.
“A broader and more diversified clientele also adds strength to a company as it would then be less vulnerable to the loss of any single key customer.

“In addition, more extensive geographical coverage is viewed positively as this would reduce the company’s vulnerability to economic cycles in a particular country.”

The rating agency also said that the competitiveness of an E&E company was underpinned by its operational efficiency.

“Cost structure is important for E&E companies because of pricing pressures, particularly from other emerging economies like China,” RAM said, adding that constant cost-reduction initiatives could offset such pressures.

“Improved operating efficiencies can be derived from cost-efficiency drivers such as economies of scale, mechanised operations or localised benefits, such as easy access to raw materials as well as cheap and skilled labour.”

RAM said the competitiveness of local E&E players had been diminishing when compared with regional counterparts in more technologically advanced economies and countries with lower production costs.

“Malaysia’s overall market share in the global E&E industry has been sliding amid intensifying competition, with the main threat being China’s booming E&E industry.

RAM highlighted that China had evolved into the world’s largest producer of consumer electronics, with exports charting a compound annual growth rate (CAGR) of 28% from 1998 to 2008, compared with Malaysia’s CAGR of 6% during the same period.

“Furthermore, China’s exports of industrial electronics show a CAGR of some 31% from 1998 to 2008, compared with Malaysia’s 8%.”

RAM said the local E&E segment also faced a shortage of skilled personnel, such as software and design engineers, which could hinder the industry’s long-term growth and competitiveness. “Additionally, the E&E industry in other emerging economies, such as Vietnam, are picking up fairly quickly.”

The rating agency also said there was a notable “technological gap” between Malaysia and countries such as Taiwan and Singapore, especially within the electronic components segment.

Jho Low, love him or hate him

ON THE BEAT WITH WONG CHUN WAI

Malaysians, and the world, will continue to hear about Low Taek Jho if his present flamboyant lifestyle continues.

Low: Wants to bring his Hollywood friends to visit Malaysia to promote the country.

US$1m before graduation -On the best stocks he had invested in, Mr Low said 'at the end of the day, it was all about returns and diversification'. -- PHOTO: THE STAR

LET’S admit it – a lot of us would like to be in the shoes of businessman Jho Low. He is flush with cash, parties with Hollywood celebrities and rubs shoulders with the most influential and powerful.

You either love or loathe the 28-year-old businessman who has been dubbed the international mystery man by the world media for his parties with Paris Hilton and Megan Fox and his penchant for expensive champagne.

I had the opportunity to meet this chubby Penangite last week at his office in one of the top floors of Petronas Twin Towers.

He was more interested in talking about how he made his money, mostly in the Middle East, and his friendship with Arab princes who studied with him at Harrow, an English boarding school that has produced seven prime ministers, and the Wharton School of Business at the University of Pennsylvania.

I was more interested in asking him about his exploits, if the word is appropriate, with Paris Hilton and his Hollywood friends.

It was obvious that Low Taek Jho wanted to clear the many media stories, mostly fabricated, that had been reported about him.

He tried to play down the hefty bills for his champagne, his parties and the limousines at his New York apartment, which he said he shares with 11 others.

But I couldn’t help feeling that Low wanted to say that as a single, young man who has made millions, he has the right to be a party animal.

Never mind if he is using his own money – or that of his Arab friends. His lifestyle may be seen as excessive and a waste by others in conservative Malaysia.

Low, who described himself as a businessman and entrepreneur, makes his money by making money for his clients. That’s what people who handle funds do, and he has a portfolio of rich clients.

He puts deals together for businessmen and even governments, using his extensive networking and mostly friendships from his school and university days.

No one can dispute his link with powerful Arab figures like Yousef Al Otaiba, who is currently the ambassador for the UAE to the United States and Mexico.

He talked about certain Hollywood celebrities as if they are his drinking buddies, which they are.

When asked if he had invited Mick Jagger, the Rolling Stones legend, to watch the World Cup in South Africa, his reply was: “I didn’t. I invited Leonardo (Dicaprio) who in turn invited Mick Jagger.”

Are actor Daniel Craig, who plays James Bond, and multi-millionaire rapper Sean “P. Diddy” Combs his neighbours at his apartments?

His reply was: “I don’t know but I have been inside the lift with Sean Combs.”

He denied having any romantic links with Paris Hilton nor any interest in her sister Nicole, saying he was a family friend of the Hiltons and that he handled their investment portfolio.

Low talked of bringing his Hollywood friends to visit Malaysia to promote the country, saying these people had millions of followers on their Twitter.

“Can you imagine the impact they can create for tourism when they promote Malaysia on their Tweets with their millions of followers?”

That would certainly be cheaper than placing advertisements on billboards and in the media, particularly when the international media would also follow these celebrities here.

An advocate of the Blue Ocean Strategy, he has put that on his status message of his Blackberry.
He also sees West Asia and China as massive markets.

Low sees himself as a loyal Malaysian who wants to bring Arab investors to his country, including to Johor’s Iskandar Development project.

But he has also invited criticism with his new-found fame.

His detractors have questioned his credibility and integrity and there are unflattering comments about how he conducts himself and his business deals.

Some have said he is hardly the brilliant financial strategist he has made himself out to be, brushing him off as merely a good salesman. They were outraged by the media prominence accorded to him, including by this newspaper.

But many of these critics have also admitted that they do not know him personally but picked up the negative remarks from friends or friends of friends or the blogs.

His friends, including some powerful figures, say he does not need to open himself to these criticisms as he could choose to stay away. After all, New York and Abu Dhabi are his two working bases.

Malaysians, and the world, will continue to hear about him if his present flamboyant lifestyle continues. He will make good copy for the media.

Hate him or love him, he has attracted attention. This writer has received endless telephone calls from media and business people who want to know him personally, and they include those who hate his guts.

Interest rate hikes starting to help ringgit

Household consumption is watched even though rates rise has not affected debt repayment

WHEN Bank Negara raised interest rates for the third time this year earlier this month, expectations were that the ringgit would appreciate.

That, together with the removal of China’s yen peg to the US dollar, led to suggestions that the ringgit could regain some of the buoyancy in its value against the US dollar that had seen the local currency emerge as one of the best-performing currencies this year.

There was also the school of thought that suggested those domestic interest rate hikes had created a buffer between rates in Malaysia and elsewhere that might see the local currency becoming a carry trade currency.
While the ringgit is not yet seen as a carry trade currency, its slow ascendency against the US has been seen after the third rate hike earlier this month.

After interest rates were raised by 25 basis points to 2.75% in the July 8 meeting of the Monetary Policy Committee, the ringgit saw a brief spurt against the dollar but has since see-sawed in a narrow band.

But that has changed a wee bit as the ringgit has strengthened to its highest level this year as RM3.18 to the dollar yesterday.

That pattern of trade has somewhat broken away from the initial pattern seen after the yuan ended its peg against the US dollar last month.

After a surge, the Chinese currency has traded within a narrow band of between 6.77 and 6.78 to the dollar.
Notwithstanding the slow rise towards the year high for the local currency, the interest rates hikes in recent months, which the central bank says is a move towards normalisation, has led to money entering Malaysia.

While higher domestic rates might have been the main factor, another was the fact that selected Asian currencies were the flavour of the month, given the economic malaise in Europe and the sluggishness of the US economy.

In a response from Bank Negara to StarBizWeek, the central bank says portfolio capital flows were influenced by both domestic and external factors. Domestically, the impressive 10.1% GDP growth in the first quarter of the year, talk of a stronger economy and the transformation of Malaysia into a high-income economy have whet the appetite of investors.

The central bank said in the first quarter of 2010, portfolio inflows amounted to US$3.4bil, a healthy gain from the US$1.4bil in the fourth quarter of 2009.

“Nevertheless, the pace of portfolio flows in recent months has been relatively modest, given the volatility arising from the European sovereign debt crisis and the lingering concerns over the global economic recovery,” says Bank Negara.

“Overall, the flows have been manageable and well-intermediated by the financial system.”

Bank Negara points out that because of the strength and depth of the domestic financial system, inflows are more effectively intermediated without causing undue risk to the economy.

It cites the fact that the ringgit bond market is one of the largest in this region, with a size of 94.1% of GDP.
Furthermore, the country’s Islamic bond market is also deeper than other markets, with the highest number of sukuk issuances recorded this year thus far.

“At the same time, Bank Negara has developed a robust surveillance system that enables us to monitor capital flows on a near real-time basis and Bank Negara is equipped with a wide range of monetary instruments to sterilise these inflows,” says the central bank.

“Bank Negara’s policy is solely to maintain orderly market conditions while at the same time ensure that the ringgit is not misaligned from its fundamentals so that it will not contribute to the build-up of internal and external imbalances.”

Bank Negara adds that interest rate differentials is a determinant of capital flows, but it is not the only one.
“Some of the other factors include economic growth prospects, exchange rate expectations, anticipated returns in the equity market and other investments, as well as investor sentiments,” it says.

The central bank adds that the overnight policy rate of 2.75% was broadly in line with other regional interest rates and that there are many other countries that have higher official interest rates.

The official borrowing rates of Indonesia, the Philippines, China, India and Australia are 6.5%, 4%, 5.31%, 5.5% and 4.5% respectively.

A recent report by Morgan Stanley suggests that the interest rate hike might also have been used as a tool to attract foreign capital to bolster the country’s foreign exchange reserves, which have not kept pace with the rise seen in the reserves of Malaysia’s neighbours.

Foreign exchange reserves saw a drop in the middle of last year and has basically plateaued from the last quarter of 2009.

While the hikes would lead to more capital flowing in, which is welcomed, considering the quantum of the fall, the country is comfortable with the level of reserves as data for the middle of June says it is sufficient to finance eight months of retained imports and 4.4 times the short-term external debt.

The interest rates hike, however, is seen to have an influence on the real sector as a means to cap skyrocketing property prices.

“One of the major assets facing some strong pressure has been the property market,” says RAM Holdings group chief economist Dr Yeah Kim Leng.

“We needed a tightening to prevent a further build-up in those asset prices.”

The effectiveness of a 75-basis-point rise in interest rates might not quell speculation on properties but with the household sector debt now at 76.6% of GDP, higher repayments for debt taken to buy cars, houses and for other consumption needs would bite into private consumption.

Yeah says the rate hike was a move towards a balance between consumption and savings.

The rise in household debt to GDP was partly due to the contraction of GDP of 1.7% in 2009 but authorities are confident that the financial asset side of the ledger remained sound as financial assets to debt was 2.44 times.

The ratio and growing affluence of households has allowed for increased access to financing and with gross non-performing loan ratio for household remaining low at 2.7% at the end of April 2010, over extension of debt might not be a problem just yet.

By JAGDEV SINGH SIDHU

jagdev@thestar.com.my