IJN survives from another stupid government proposal.

07-01-2009: Sime Darby drops bid for IJN


by Surin Murugiah
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KUALA LUMPUR: Plantation giant Sime Darby Bhd has withdrawn its bid to privatise the National Heart Institute (IJN), a move that effectively relieves the cabinet from reversing its earlier approval of the proposal.

In an announcement to Bursa Malaysia yesterday, the conglomerate said it decided not to pursue the plan after taking into consideration the public sentiment and feedback received since its proposal was made public on Dec 18.

“Sime Darby would nevertheless continue to look for opportunities for expansion in the healthcare sector,” the company said.

Last Dec 17, The Edge Financial Daily had reported that Sime Darby had expressed its interest to privatise IJN. The following day, the company announced that the government had, in principle, approved its plan to acquire a 51% stake in IJN.

The announcement was greeted with a huge public outcry, drawing criticism from various quarters, despite Sime Darby coming out to assure the public that the social obligations of IJN would not be affected in any way by the proposed privatisation.

Even Sime Darby’s chairman Tun Musa Hitam, who rarely comments on the business proposals of the company, came out to state that the privatisation of IJN would not burden poor patients and pensioners as those requiring medical attention were always given priority. Musa said Sime Darby spent about RM3 million annually at its Subang Jaya Medical Centre for needy patients, including heart cases.

But public sentiment against the proposal was overwhelming, forcing the government to relook at the proposal, just two days after the cabinet had given its green light.

On Dec 19, Finance Minister Datuk Seri Najib Razak announced that the government had decided to defer the decision on the matter pending further study. He said that the finance and health ministries, and the Economic Planning Unit would conduct an in-depth study before the government decides on its privatisation.

The finance ministry owns IJN via its 99.99% stake in IJN Holdings.
Najib had then dismissed suggestions that the cabinet decision had something to do with the Kuala Terengganu by-election.

Critics of the privatisation were primarily concerned that a privatised IJN would deprive civil servants of the almost-free medical treatment they enjoy now while non-civil servants would end up paying higher charges.

Civil servants pay a nominal fee of RM1 not just at IJN but also at all government hospitals for treatment.

There were also issues raised as to why a profitably run heart centre needs to be privatised.
IJN posted a revenue of RM287.3 million last year, up 11.7% from RM257.5 million in 2006, according to filings with the Companies Commission of Malaysia. However, net profit was lower at RM13.6 million against RM22 million previously.

Since its establishment, IJN has earned a reputation as a leading centre for cardiac care in the region. It has treated well over a million patients, including former premier Tun Dr Mahathir Mohamad.

(Extract from :THE EDGE DAILY )