Amanah leaders have voiced objection to reported merger plans between government-linked UEM Sunrise Bhd and private developer Eco World Development Group Bhd.
Senator Raja Kamarul Bahrin Shah said the government should reconsider the rationale behind the merger while Kuala Selangor MP Dzulkefly Ahmad also questioned how the government would benefit from the exercise.
In a statement, Raja Kamarul said reconsideration was necessary after the resignation of UEM Sunrise CEO and managing director Anwar Syahrin Abdul Ajib, following the company's acceptance of the proposed merger.
UEM Group is fully owned by Khazanah Nasional Bhd and holds a 66 percent stake in UEM Sunrise.
"Many parties view this merger will lead to losses for UEM Sunrise-Khazanah and favours Eco World.
"Eco World will reportedly also control the new company, while UEM Sunway owned by Khazanah will have less power to determine its direction," said the former deputy minister.
"Many parties also said this merger is a 'bailout' to rescue Eco World.
"We, therefore, urge the Perikatan Nasional government and Khazanah to reconsider the rationale behind moving ahead with this plan," said Raja Kamarul (photo, below), who is also Terengganu Amanah chairperson.
Earlier this week, former Permodalan Nasional Bhd president and group chief executive Jalil Rasheed had raised similar concerns over the merger plans. Jalil had suggested that UEM Group should not rescue a subsidiary in financial trouble by merging it with a company with a cash flow problem.
Eco World's net profit reportedly fell 72.7 percent to RM13.8 million in the third quarter (Q3) ended July 31, 2020, from RM50.5 million a year ago.
It also reported lower revenue of RM477.9 million in Q3 from RM521.4 million in the previous year.
In a filing with Bursa Malaysia on Monday, Eco World said it had received a letter from UEM Group outlining the proposed merger.
In the letter, UEM Group said the consolidation would harness the strengths and capabilities of UEM Sunrise and Eco World and make it one of the country's largest property companies.
Meanwhile, Dzulkefly, who is also Amanah's strategy director, questioned what benefit UEM Sunrise would gain from the merger.
"What is it that UEM Sunrise can’t do that warrants this merger? What additional advantage does UEM Group hope to achieve with this merger?
"What can Eco World do that UEM cannot do on their own especially of projects in Malaysia?" he asked.
He also wanted to know how the proposed merger would benefit the people and whether it would result in more jobs or conversely job losses.