Author Topic: PPB oil moving to singapore  (Read 1840 times)

Offline junn yun

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PPB oil moving to singapore
« on: December 29, 2006, 06:59:17 AM »
lets do a little case study shall we?  ;D

here is the news on PBB oil

 Business Time Singapore

Time to scrap equity requirements
In order to avoid firms delisting and relisting elsewhere, M'sia should do away with measures put in place under the NEP

KUALA Lumpur's decision to scrap the Foreign Investment Committee (FIC) requirement to 'approve' foreign purchases of residential property worth over RM250,000 (S$109,032) is welcome, if long overdue.

Now someone should spell it out to the civil service. Reason: executives in the property sector complain that FIC relaxations applications for development at the state level are often met with statements like: 'Show us the FIC's relaxation in writing.'

In this age of competition for global investment, Malaysia's penchant for bureaucratic backsliding is absolutely mind boggling. Which brings us to another area that deserves scrutiny. The local papers have recently seen much hand wringing over the takeover of PPB Oil Palms by Singapore-based Wilmar International. The two firms are part of Malaysian tycoon Robert Kuok's empire.

The sense of loss is understandable: As a nation that takes pride in its position as the world's largest and most efficient palm oil producer, the delisting of a sizeable producer in KL and its relisting across the Causeway is a blow to everyone except, perhaps, PPB Oil shareholders.
More important for KL, however, is an assessment of the reasons behind the move. PPB isn't saying anything but equity considerations obviously played a part. By 'equity', we refer to measures that have been in place since 1971 when the govern ment implemented the New Economic Policy (NEP) to uplift Malaysia's poorer bumiputras, or ethnic Malays, into economic parity with their richer non-Malay countrymen.

One such measure is the allocation of 30 per cent of a company's equity to selected Malay investors ahead of a listing on the stock exchange. The investors are either selected by the company itself or are 'suggested' by the Ministry of International Trade and Industry.

The ministry usually suggests state-owned trust agencies like Permodalan Nasional or the Armed Forces pension fund.

In days of yore, these 30 per cent allocations were a big deal as they usually came at steep discounts to the market.

Nowadays, however, initial public offerings (IPOs) are priced close to the market so the allocations have lost their allure somewhat. Between 2001 and 2005, many IPOs have listed below their offer prices, this has sometimes seen few individual bumiputra investors raising their hands for allocations.

The state agencies have often been forced to step up to the plate on those occasions. Having said that, it must be emphasised that almost no one quibbles with the 30 per cent requirement. The problem is after the fact, the pattern of bumiputra investors selling down their shares post-listing to take profit or to cut debt.

Here is the rub because there is nothing in the guidelines that says that the company isn't required to top up its bumiputra equity. Now this is potentially serious for it involves an earnings dilution.

Coming back to PPB Oil, this must have been one of the factors considered. If PPB Oil had, for instance, bought over the assets of Wilmar en route to a bigger listing on Bursa Malaysia - as suggested by some - it would have had to provide more shares to comply with NEP requirements. As a listed entity, PPB Oil requires countless permits that government agencies can stall on the grounds that the company does not comply with NEP requirements.

On strict legal grounds, it's hard to say that PPB Oil complies with the NEP. This is because the single largest state-owned shareholder in PPB is the Employees Provident Fund (EPF) with a stake of over 8 per cent. The government may ask PPB to top up its bumiputra equity as EPF is not considered a bumiputra institution.

But by going private, all those requirements can be avoided. The way out is clear. The government should only allow one bite at the cherry: Post-listing - there should be no more talk about NEP-style equity requirements. Only in that way, will we avoid future Wilmars

cut the NEP crap, my questions is if i'm one of the shareholder of PPB oil, what is the effect on the shareholder after delisting from malaysia?

Offline Smart Investor

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Re: PPB oil moving to singapore
« Reply #1 on: January 17, 2007, 02:45:49 PM »
you will own sg stocks and need to open sg account if you want to trade, that is.