KUALA LUMPUR – Hospitals controlled by government-linked companies (GLCs) should take the lead in offering their services if the private sector is called upon to help with Covid-19 mitigation, said market observers.
“Two of the country’s largest healthcare providers, IHH Healthcare Bhd and KPJ Healthcare Bhd, are owned by GLCs, and they have sufficient cash reserves,” an analyst said.
IHH owns the Pantai chain of hospitals and its major shareholder is Japan’s Mitsui & Co Ltd (32.91%). But GLCs own around 41% of the health group, with Khazanah Nasional Bhd, the Employees Provident Fund and Permodalan Nasional Bhd making up the other three largest shareholders with stakes of 26.03%, 9.63% and 5.71%, respectively.
KPJ is majority owned by Johor Corporation, a state-owned entity, with a 52.8% stake, while national GLCs make up substantial shareholders in the healthcare provider. Khazanah, EPF and Retirement Fund Inc own 15%, 9.1% and 6.2%, respectively, in KPJ.
Both companies are also listed large-cap entities. IHH, with market capitalisation of RM47.84 billion, posted a net profit of RM309.95 million for the third quarter ended September 30 last year (3Q20), a 31% increase from last year’s RM236.34 million.
KPJ has a market value of RM4.35 billion but the group’s latest quarterly filing registered a 26% drop in net profit from last year’s RM46.41 million to RM33.96 million for 3Q20.
For the period under review, IHH and KPJ’s cash and cash equivalents stood at RM4.19 billion and RM288 million, respectively.
Other GLC-owned unlisted healthcare providers include Ramsay Sime Darby Health Care and the National Heart Institute. The former is 50% owned by Sime Darby Bhd while NHI is wholly owned by the Ministry of Finance Inc.
The Emergency (Essential Powers) Ordinance 2021 gives extended powers to Putrajaya to enforce the emergency order, including demanding “any resources to be utilised for any purpose the Yang di-Pertuan Agong or any person authorised by the Yang di-Pertuan Agong deems necessary”.
This includes the temporary possession of any land, building or movable property, to be used in any manner deemed expedient, as well as the management and control of these resources, from staff to facilities, utilities and assets. Any compensation for the use of these properties or resources will be assessed and cannot be challenged.
The ordinance also gives powers to the government to fine up to RM5 million any person who contravenes these sections, or fails to comply with any demand or direction of the Agong or any person authorised by the king. Offenders may also face imprisonment not exceeding 10 years.
Association of Private Hospitals Malaysia president Dr Kuljit Singh told Malaysiakini earlier that private healthcare providers have reached preliminary agreements on how to assist the Health Ministry. Measures include allowing private hospitals to handle Covid-19 patients under their care, instead of referring them to ministry facilities.
But fund managers have adopted a wait-and-see approach, believing the government will streamline operations and rope in private healthcare to participate, as opposed to expropriating resources.
“The private health sector has taken a hit due to elective surgeries and medical tourism suffering from the pandemic. They will certainly be more than happy to help.
“So, the government does not need to even threaten fining them RM5 million. But, for now, investors have not priced in a forced takeover of private assets yet,” one said. – The Vibes, January 15, 2021
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