It doesn’t look good when a government agency such as the Economic Planning Unit (EPU) makes an about-turn and withdraws an approval for a company to make an acquisition.  

This is just what happened in TH Plantations Bhd’s sale of its two plantation assets — Bumi Suria Ventures Sdn Bhd and Maju Warisanmas Sdn Bhd, which own 6,513ha of oil palm plantations in Bintulu and Sibu — to Tamaco Plantations Sdn Bhd for RM170 million.

The problem is that Tamaco Plantations was required, based on the guidelines, to establish equity ownership of at least 30% for bumiputera interest within one year from the conditional approval, which was not met.

Two ministers, Minister in the Prime Minister’s Department (Economy) Datuk Seri Mustapa Mohamed and Minister in the Prime Minister’s Department (Religious Affairs) Datuk Seri Dr Zulkifli Mohamad Al-Bakri, in announcing the reversal, voiced their determination to continue developing TH Plantations and Lembaga Tabung Haji more successfully locally and internationally.

Unfortunately, the message that is being sent is that the green light for a business acquisition can be withdrawn. Couldn’t the authorities and parties have worked out a palatable solution?

Earlier, questions were raised about the transaction price, which was among the reasons behind a review of the proposed deal by the EPU. However, this was not mentioned in reports on the withdrawal of the approval.

Meanwhile, what about TH Plantations, which was looking to hive off the assets as part of a rationalisation exercise and reduce its gearing from 1.09 times to 0.94 times. Shouldn’t this account for something?

In any business deal, regulatory risks often come into play to complicate matters. Will the withdrawal for this deal add to the perception that Malaysia is losing its business friendliness?