So, the modus operandi would be to continue to focus on regulated assets?
We will continue to add capacity, as our margins are high. We don’t want to overpay for pricey assets. We always buy assets at the right price so we can dividend out. That continues to be our predominant model – using our core competency of construction to build efficiently, combined with good management.
Which markets are you currently looking at?
Inevitably, regulated assets are from countries that respect the law and sanctity of legal contracts, namely Australia, Singapore, Dubai – all these little enclaves, international crème de la crème centres with financial elements are easy territory for us. Banks are there, they know us – it s very easy to go to those territories.
What about the Middle East, the current flavour of the month?
Yes, we are looking at the Middle East but in a different way – only at Dubai and Abu Dhabi. I'm going to markets that are transparent, have low tax regimes and are friendly. It's a no-brainer to focus on territories that welcome us with transparent rules of law. We won't waste our time and resources going into difficult territories.
Indonesia is a bigger Malaysia as far as I'm concerned. We invest in regulated assets – my grandfather came here and adopted Malaysia and we stayed here forever. There have been many problems in this country, politically and economically through the various cycles, but we stayed and built up the company. We look at Indonesia the same way. We adopted the country and we're going to stay there forever.
The Indonesian market is 10 times the size of Malaysia. It's quite the same matrix, and we're used to Indonesian workers working for us here in construction and so on, so there is not much basic difference. Geographically, part of Indonesia is closer to us than Sabah and Sarawak, and from cement to power we are already there.
Likewise, we've adopted Britain. We are going to invest there forever and we are not going to sell that. We're doing the same in Australia. Wherever we are, once we are there, our management and our office will be there. But we have problems when things are not transparent, and politically it's very difficult in a corrupted country it's very difficult for us, if you have to go through a corruption curve and all that wastes too much time.
Do you think projects should be awarded on an open tender basis?
As far as I'm concerned, if a project is important for the economy and country's infrastructure and it has to be built, whichever way you want to do it, whether through the private sector or government spending, open tender or negotiated, it doesn't matter as long as you move the project. Its worse when there is no project taking off and then it gets painful and frustrating for the people. I'd rather not have that. Therefore, things like PFI should be vigorously encouraged as the private sector is also putting money and risking their capital.
In relation to cement assets, are you looking to expand any more of your assets here? CIMA's up for sale, is that something you're keen on?
We are keen to buy if the seller is keen to sell. I don't think I would be a hostile bidder in our country's context. But if people think that combining or merging with YTL is a synergy and they both can benefit, that's fine with me. I heard CIMA is in talks to be sold. It's also very good that there are foreign investments in this country.
Many observers are upbeat about the group, with new projects coming in. What are the projects that you're eyeing?
A lot of these projects that we're going to do were relevant projects that have been postponed. One of the things that we did in a semi-PFI way and completed was the Mahameru highway to Sentul. That eases the traffic jam a lot now. We began some three years ago and completed it last year, so we've done very well in a PFI way.
We are quite familiar with PFI-type investments. We have been doing low-cost housing with the government, with a regulatory framework that was friendly to us. The consumer gains at the end of the day. So there are many ways that the private sector can take part in a very active way with the government to solve problems for the poor.
We welcome the RM20bil in PFI. We are quite sure we are going to win some of that. As long as the government is transparent, they want to welcome groups to come up with good ideas, in this kind of environment, I am very happy.
Do you think that because YTL came up with an idea, for example the bullet train, it is necessary that you are awarded that particular project?
No. I think awarding a contract is predominantly the prerogative of the government. However, the government has consistently been rewarding initiatives and consistently rewarding companies that are world-class. Under Pak Lah, the government consistently wants to benchmark against world-class benchmarks.
Why should I discourage it? It's not that I am a monopoly in anything. It's just that I have a track record in doing the ERL already, and I could do it so competitively that even the taxi guys are complaining about how cheap I am.
I hope the RM20bil in PFI will be rolled out quickly and the public will be less cynical. I think it is a great program.
What's the status on the negotiations of the PPAs between IPPs and TNB?
No comment. The way it works is that we should not scream and shout. I want things to move on in this country, slowly but surely in a proper manner. Rhetoric and talk does not help, unless what I say makes sense and there is a balance...I like to share results with my shareholders, I do not need to be a hero.
I've always advocated the PPAs and their future and vision. I've always advocated a regulatory framework and I've said it many times as it's the most transparent and there is no need for speculation.
In most cases, we would love to talk about some extensions of the contract, etcetera. This would have come naturally as a business model if not for the fact that there is a perception that the PPAs are too good. So I think it's the right thing for the Minister to call all the IPPs and TNB and come out with something fair, without changing the sanctity of the contract. At the end of the day there are shareholders, people who want stability and consistency.
I think the Malaysian Government is very responsible and very pragmatic, and will come out with solutions for the IPP issue. And I believe the IPPs will be pragmatic as well. My opinion is that its good to let the Government understand our side of the story and find a solution, like all things.