Stay healthy, stay public
The debate over healthcare reform that is currently raging in the US is indeed highly relevant to Malaysia. This is because since the 1980s, we have chosen to entrust the private sector with an increasingly important role in the provision of health services, while the US — that ultimate example of free enterprise — has been grappling with the inadequacies of its healthcare system for many decades now.
It is sobering that some 46 million Americans out of 300 million are not covered by health insurance, and a further 25 million cannot afford adequate coverage. This gives the US the dubious distinction of being the only developed economy that does not provide universal healthcare for its citizens.
In Malaysia, private medical facilities have grown exponentially, with hospital beds increasing 10-fold from 1980 to 2003, taking their share of hospital beds in the country from 3.9%-5.8% to 23.4%-26.7% in the same period. Drawn by the opportunities in private healthcare, about 300 doctors and 50 specialists leave the public service annually.
Doctors in private practice now account for some 55% of medical practitioners, but cater for just 25% of the population who pay for the quicker access out of their own pockets, through personal insurance or via their employers’ group policies. What is worse, many experienced specialists spend their time treating relatively minor conditions for an affluent clientele. This shows the kind of inefficiencies that blind faith in market solutions can bring about.
A constant refrain from public health officials is that escalating healthcare costs are leaving them with no choice but to draw on private capital for life support. However, that view should be more closely scrutinised. The escalation in the procurement costs of pharmaceuticals that was seen after the Government Medical Store was privatised is a case in point.
That said, public and private health facilities can play interdependent roles in the healthcare system. The nub lies in ensuring that a well-nourished private health industry does not leave an anaemic public health system behind.
Selling at a loss
Petra Perdana Bhd last Thursday sold 10.5 million shares, or a 5.4% stake, in Petra Energy Bhd, at RM1.53 per share, raising RM16.07 million cash. In a statement to Bursa Malaysia, the company says it will utilise the cash to pare down borrowings.
It is normal for a company to dispose of investments to pare down debts, but in Petra Perdana’s case, the share disposal resulted in a loss of about RM500,000, which translates to 3.1% of the proceeds, according to the company.
The question is, why sell the stake at a loss to raise an amount that seems insignificant for paring down the company’s net total borrowings of RM310.27 million as at June 30?
It does not seem like Petra Perdana is facing a cash crunch. Based on the company’s balance sheet as at June 30, it was sitting on RM203.78 million in cash versus RM133.79 million in short-term borrowings. (Long-term debt amounted to RM380.26 million.)
Meanwhile, its net current assets amounted to RM441.93 million as at June 30, indicating that it has plenty of short-term liquidity at its disposal.
Interestingly, two days after the share disposal, on Sept 11, the company announced that it had received a temporary letter of guarantee from a commercial bank for a facility of RM40 million, which matures on Nov 30.
This makes one wonder whether the disposal of Petra Energy shares was necessary. Other than incurring a loss of RM500,000 from proceeds of RM16.1 million, the disposal price of RM1.53 was also at a 12% discount to Petra Energy’s average price of about RM1.74 over the last two weeks. The shares were sold via placement by its broker.
After the sale, Petra Perdana has reduced its shareholding in Petra Energy to 106.5 million shares, or a 54.62% stake. It is not clear whether it will trim its interest further, but if it does, perhaps it will have a better reason for it.
All eyes on PKFZ
It is difficult to understand why one more task force is needed to get to the bottom of the Port Klang Free Zone (PKFZ) saga when it is as clear as daylight that the project is the most expensive fiasco involving public funds to date, as well as a blatant example of the breakdown of governance and accountability in public bodies.
No doubt the new task force, headed by Chief Secretary to the Government Tan Sri Mohd Sidek Hassan, has the mandate to address the troubling issues that led to the project’s huge cost, which could reach RM12.5 billion.
However, the violations unearthed by the PricewaterhouseCoopers audit are substantive enough for the Port Klang Authority (PKA), Transport Ministry, Malaysian Anti-Corruption Commission and Attorney-General’s Chambers to pursue legal and administrative remedies to protect the public interest.
It is quite apparent that establishing committees and task forces is a well-tested method of managing the fallout from damaging scandals, such as the PKFZ debacle. Malaysians can remember an endless list of such commissions that had been set up after every major crisis that threatened to erode the public image of the authorities. It is also “convenient” that the new task force serves to limit the scope for Transport Minister and MCA president Datuk Seri Ong Tee Keat and PKA chairman Datuk Lee Hwa Beng to make politically damaging moves against unfriendly figures in the saga.
The public will be keenly observing how the PKFZ scandal is finally resolved. No matter how many twists appear along the road to a full accounting of the fiasco, they will not likely forget the gravity of the transgressions that occurred.
This article appeared in The Edge Malaysia, Issue 772, Sep 14-20, 2009.