Abdullah: Restricting Companies From Going Private Will Not Help Bursa

KUALA LUMPUR, June 18 -- Setting conditions to prevent a company from going private will reduce the interest of other companies wishing to be listed on Bursa Malaysia, says Prime Minister Datuk Seri Abdullah Ahmad Badawi.

Abdullah, who is also Finance Minister, said the move will cause other foreign investors to lose interest in investing in the country, while other initiatives taken to liven up the share market and trade will also be affected.

"Besides many other reasons, the share market also exists to allow companies to realise their value and for investors to make profits from investments made.

"Because of this, the market must give way to corporate activities, such as mergers and acquisitions which will only increase the value of a listed company. This will make the market more active," he said.

The prime minister said this in his written reply to eight questions posed by Members of Parliament on the privatisation of telecommunications company, Maxis Commmunications Bhd (Maxis).

Among the questions were on why the government, through the Securities Commission and Foreign Investment Committee allowed the telecommunication giant to be taken private and the implications to the stock exchange and the country's economy.

Explaining further, Abdullah said that there was very little evidence that supported claims that privatisation deals resulted in the outlfow of funds from the domestic market.

In fact, the revenue collected from the take over offer is usually rechannelled into the market by Malaysian and foreign investors who are keen to retain their investments in the capital market assets of the country.

A market which sees active takeovers, regardless of whether the companies retain their listed status or go private, will create a dynamic market which will attract many more investors to see other opportunities in the market.

Such a market will also encourage more active trade, he added.