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What price Malaysia’s corporate reconstruction?

Three years ago Khazanah, Malaysia’s state investment body, was instructed to become activist, holding on to most of the state’s corporate holdings rather than privatizing them, and setting tight performance targets. Chris Wright assesses the successful reconstructions, such as Malaysia Airlines, and those still under way, as at car maker Proton.

Malaysia Airlines made fit to fly

Malaysian prime minister Abdullah Badawi

Turning around Proton is one of the key challenges for Malaysian prime minister Abdullah Badawi as he tries to remake Malaysia Inc

THERE’S A NEATLY ordered timeline in the presentations that Khazanah, the investment arm of the Malaysian state, gives out to investors. It charts the progress and future of the agency’s attempts to reform the 47 government-linked companies (GLC) under its control. It’s divided into different phases with titles like "mobilization" and "generate momentum". Today it’s in the middle of a phase with a particularly strident title: "Tangible results". Is it delivering them? There is clear progress on many fronts, and most of the bigger companies look to be in better shape than they used to. There are a couple of unquestionable triumphs. But there are still challenges, most urgently a restructuring of the national car maker Proton, and there are concerns that Khazanah’s growing power is pushing more influence into the hands of the state when it should be going towards the private sector.

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