Once-indebted conglomerate United Engineers Malaysia (UEM) is making a comeback on investors' radar screens with today's flotation of its new flagship firm, but analysts are mixed over whether its revival signals a new era of improved corporate governance.

UEM World will take over the listing status of Renong Bhd following the completion of a complex restructuring which helped cut UEM's group debt by half to RM15 billion in just two years after the government took control of the company.

Following the revamp, the infrastructure-based giant now has 35 major operating companies, of which 12 are listed, involved in expressways, engineering and construction, healthcare, environmental services, property and telecommunications.

It has shareholders funds of RM5.46 billion and total assets of RM19.6 billion as at the end of August.

UEM and Renong previously had cross-shareholdings but Renong became a subsidiary of UEM under the revamp.

Biggest corporate headache

Renong was once the investment arm for the ruling United Malays National Organisation (Umno) during the reign of former premier Mahathir Mohamad but it became Malaysia's biggest corporate headache some two years ago when its huge debt burden at the time deterred foreign investors to its stock market.

Mahathir retired Oct 30 after 22 years in power and was succeeded by Abdullah Ahmad Badawi.

Analysts say it is premature to tell whether the deeply-rooted patronage system linking the corporate sector to Umno is easing with the disappearance of Renong from the bourse, UEM's new image and with Mahathir out of the scene.

"The expectations are that with a new PM, corporate governance would improve, linkages between politics and business will loosen but it's too early to conclude if it marks a new corporate era," said Paul Schymyck, economist with Singapore-based IDEAglobal.

"There has to be more concrete moves."

Manu Bhaskaran, economist with consultancy firm Centennial Group Holdings in Singapore, noted that there has been "changes in the overall policy approach" on how the government viewed the role of such companies and the Malay entrepreneurs they seek to develop.

In UEM's case, it has nationalised the company and brought in young professional managers to restructure the firm rather than just sell assets to certain individuals, he said.

"It is part of a broader process which will make Malaysia generally more attractive to foreign investors whether in equity or investment portfolio but it is premature to say whether there will be significant changes because Abdullah has not announced his policies," he said.

While corporate governance has improved, he said enforcement was still lacking.

Same game, different players

Another analyst with a local brokerage was pessimistic, noting that projects were still concentrated in the hands of a few individuals such as tycoon Syed Mokhtar Albukhary who has businesses ranging from ports, power, mines, plantations to manufacturing, health care and tourism.

"Despite the restructuring, I don't see any significant changes. They just put on new make-up under the UEM brand name and clean-up some balance sheets," said the analyst who declined to be named.

"Unless Abdullah proves otherwise, it is still the same game but with a different set of players and using different vehicles."

The issuing price of UEM World share is RM1.60.