The RM10 billion in Valuecap Sdn Bhd which was created by the state to boost share prices in the local bourse, is free of political influence and not meant to bail out ailing companies, said the government today.

Deputy Finance Minister Dr Shafie Mohd Salleh told the Dewan Rakyat that Valuecap is managed by professionals who invest under stringent policies.

"Valuecap stresses o­n long-term investment in companies with strong fundamentals and solid financial background," he said in winding up the Royal Address debate for the Finance Ministry today.

Some RM2 billion has been injected into the Kuala Lumpur Stock Exchange (KLSE) through Valuecap which is equally owned by Khazanah Nasional Bhd, Permodalan Nasional Bhd and Kumpulan Wang Amanah Pencen since the company was established in the middle of January this year.

However, noting the lacklustre performance of the KLSE, Abdul Rahman Yusof (Keadilan-Kemaman) interjected to ask whether Valuecap's failure had to do with government policies such as the currency peg which deters foreign investors from coming in.

The deputy minister replied that the decision to peg the ringgit in 1998 was made after taking into account experts' feedback.

Shafie said it was just unfortunate that, despite being financially viable, most companies in the KLSE are recording very low share prices.

"Most of these companies are still issuing dividends," he noted.

The government had earlier said that the Valuecap fund will be used to buy undervalued shares from viable companies for long-term gain.

MSC failure

On scepticism about the government's Multimedia Super Corridor (MSC) project, Shafie said the project did not merely aim to create a silicon-based industry, but was also meant to serve as a catalyst for the growth of the information and communication technology sectors.

"Up to March 2003, some 847 companies have been awarded with the MSC status with 55 of them being world-class companies," he said.

He named companies such as Nokia, IBM, Lucent, Motorola, Siemens, Intel, Microsoft, Ericsson, DHL, HSBC and Bloomberg as investors in MSC.

MSC has also created 18,906 jobs, with 84 percent or with 16,000 being knowledge-based workers, he said.

At this juncture, Fong Po Kuan (DAP-Batu Gajah) stood up to ask why the government breached the MSC Bill of Guarantees by raiding o­nline daily malaysiakini's office in January and mistreated Indian IT professionals during a police hunt for illegal immigrants in Kuala Lumpur, recently.

The deputy minister deflected the question, saying the matter was not under his jurisdiction.

RM90mil bill from NAM

To Opposition Leader Abdul Hadi Awang's (PAS-Marang) question o­n the reduction of import tax for the luxury cars used to ferry international delegates at the Non-Aligned Movement (NAM) summit in the capital recently, Shafie said the government suffered no losses in revenue as no tariff reduction was given to the companies which loaned the cars.

He revealed that the government spent RM90.4 million to host the event. Of that, RM1.3 million was used to sponsor the journey of 15 foreign delegates from less developed countries.

The deputy minister also stressed that the government has not spent any money to renovate the venue at Putra World Trade Centre (PWTC), which also houses the Umno headquarters.

"The government has o­nly paid rental fees to the PWTC," he said.

Shafie also said that the government has taken various measures to minimise the economic impact from the US-led war o­n Iraq which began this morning.