Magazine article Global Finance

Payback Time for an Empire Builder

Magazine article Global Finance

Payback Time for an Empire Builder

Article excerpt

It looks like payback time for Halim Saad. The Malaysian entrepreneur, whose Renong conglomerate benefited hugely from the Mahathir government's largesse, is now being pressured to bail out a troubled company and a big infrastructure project-a tit-for-tat practice known in Kuala Lumpur as "national service," which he appears to have eluded so far. But the screws are tightening.

How this game plays out could have repercussions on the Malaysian economy. If Renong's highly leveraged balance sheet is saddled with two big losers, the decline of its stock could drag down the whole Malaysian market. Renong shares have already dropped more than 40% since February because of investors' anxieties. But if Halim doesn't intervene, the sour deals could cast a pall on Malaysia's reputation for economic management. "It will be a sign that Mahathir Inc does not work," says the manager of a Malaysian fund. That could touch off an exodus of investment and bring down the ringgit even more.

Halim, 43, is the biggest of the bumiputra (ethnic Malay) empire builders. He has been the chief beneficiary of Prime Minister Mahathir Mohamed's efforts to build up a Malay business community to keep the ethnic Chinese and Indians from dominating the economy. The mastermind behind "Mahathir Inc" is Mahathir's top economic adviser, Daim Zainuddin, who doles out important companies, financing, and government contracts.

Like many of today's wealthiest Malays, Halim worked for Daim in the early 1980s at Peramba and was his star pupil. Halim later became head of a construction company and won his stripes by building the country's 418-km North-South Highway. Daim also ran United Malays National Organization (UMNO), which held the government's business interests. When Malaysia's supreme court ruled that UMNO could not legally control the companies, Daim parceled out the plums-in toll roads, construction, engineering, property development, financial services, telecoms, and oil and gas-to Halim in 1990. …

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