The proposed privatisation of Pos Malaysia to Phileo Allied Bhd seems, on the basis of information disclosed so far, advantageous to both the government and Phileo.

The Ministry of Finance (MOF) gets RM550 million cash and RM250 million worth of convertible loan stocks carrying interest of five percent per annum whereby MOF can within the next five years convert them into Phileo shares that constitute 32.9 percent of Phileo's enlarged capital.

Pos Malaysia's debts to the government (about RM200 million) is deemed assumed by Phileo. (This means that if Phileo does not run Pos Malaysia well, the government could return by converting the loan to equity and maybe with a general offer of the remaining shares that it does not have, take the substantial but much diluted shareholder, Avenue Assets, out of control and revert Pos Malaysia to majority control by the government. That provides a stage for another second round of privatisation of same assets!)

Based on Pos Malaysia's unaudited accounts for financial year ended 2000, its net tangible asset (NTA) stood at RM561.6 million, its recorded net profit being RM55 million. The government is being paid a premium of about 14.5 times its net historical price-earnings ratio and 1.4 times NTA per share.

Phileo on the other hand could take advantage of Pos Malaysia's extensive network of branches, distribution and delivery channels. Besides the normal postal and delivery services, still relevant in an export-orientated economy like ours, these distribution and delivery channels will prove immensely useful to Phileo (which boasts of considerable forte in information technology) should it go into e-commerce in a big way. (Pos Malaysia has the monopoly to supply PCs to Employees Provident Fund (EPF) members.) See the synergies?

If one watched TV3's random interviews (screened last Sunday), members of the public expressed hope and confidence that the privatisation would bring greater efficiency in delivery of postal service to the public as well. But do they have the facts to express such hope and confidence?

As for me, a layman, the following thoughts, pending clarification, suspend spontaneous enthusiasm.

The public rescue of troubled privatisation projects of late (for examples, LRT, MAS, Proton, Bakun, to name a few) give little cause for optimism unless the privatisation of Pos Malaysia contains unique features that distinguishes it from the failed ones aforesaid. If there were indeed such distinguishing features, it will be good that they be disclosed to the public to give them a genuine basis to be confident that it may not suffer the same fate as the earlier ones.

The first amongst the many questions yet unanswered is that of valuation.

For example, Pos Malaysia has many landed properties throughout the country on which its branch offices are situated. It will be good if disclosure is made on the basis of valuation of these properties (whether based on historical or market value, the latter being fairer to the government, and by extension, the public).

The second thing that comes to mind is why can't privatisation of Pos Malaysia be equally by open tender in the manner the government decided to do for the Shah Alam Highway and Seremban-Port Dickson Highway as evinced in the government's master privatisation plan (MPP)?

If the privatisation award is made without open tender and competitive bidding, how do we know which other companies were in the running that could have offered higher premium than what Phileo would pay for acquiring Pos Malaysia?

These two issues have a bearing on whether the government gets a fair deal for divesting the national asset. After all, getting the best price offer is also one of the basic objectives of the government's MPP, to reduce the government's administrative as well as financial burden.

Given that Phileo like many other financially strong companies has no track record in postal services and delivery (except maybe franking or affixing stamps!), it will be good if there were greater disclosure regarding what other value-added strengths that Phileo could bring to the table over other competitors which, by taking over Pos Malaysia, will enable the latter to carry out the postal service and delivery with greater operational efficiency and less bureaucratic complexities to the public benefit.

In the light of the growing public clamour for corporate governance and transparency and their disquiet due to lack thereof, it would be preferable if the government seizes this opportunity in respect of what to many is a privatisation of 'the last monopoly' to make a historical departure from the many previous awards of failed privatised projects, by paying greater regard to transparency and disclosure of considerations raised above.

There are several advantages. Firstly, such a move is political capital in that it will be an effective rebuttal of complaints of lack of governance and transparency from the opposition's side. Secondly, with the slowdown of the American economy and that of the world in its wake, such a move is a bold statement (helpful to the moribund KLSE) to foreign fund managers that the country is now prepared to conform to international standards of disclosure governance and transparency in respect of privatisation, in keeping with its professed developed status (unlike those privatisation projects in not-so-developed Third World Africa or even neighbouring countries) and commitment to develop a more market-orientated economy to enhance access to foreign market capital and technology.