Next Car S/B Malaysia loses Ferrari Franchise

S'pore duo 'edged out' of Malaysian car deal

Tussle at luxury car importer gives investors glimpse of industry's opaque
ways
By Leslie Lopez, South-east Asia Correspondent


BROKEN PARTNERSHIP: Singapore businessman Alfred Tan (above) plans to sue
their Malaysian partner and the Malaysian government for their actions
that allegedly led to his company losing the lucrative franchise to
distribute Ferrari cars in Malaysia. -- PHOTO: STAR

AN ACRIMONIOUS shareholder dispute at one of Malaysia's main luxury car
importers is set to offer a peek into the workings of the country's
coddled auto industry, and could undermine foreign investor sentiment.
Singapore businessman Alfred Tan Chor How and his son Edward Tan told The
Straits Times they plan to sue their Malaysian partner, Tan Sri Nasimuddin
Amin, and the Malaysian government for their actions that allegedly led to
them losing their lucrative franchise to distribute Ferrari cars in
Malaysia.

The Tans and Tan Sri Nasimuddin are partners of Next Car, a private
concern that until recently owned the franchise to import Ferrari cars
into Malaysia since 1996.

But the partnership broke down in June after the Tans initiated moves to
remove Tan Sri Nasimuddin as chairman of Next Car on grounds that he
allegedly undermined the company's business reputation.

Since then, the Tans say that they and their other partners in Malaysia
have been victims of a campaign that eventually destroyed their business.

Two of their Malaysian partners were arrested by the Anti-Corruption
Agency, which has also demanded the two Singapore businessmen return to
Malaysia for questioning.

The Tans have refused to return to Malaysia and have filed a police report
in Singapore citing concerns over their safety.

'We just want what is fair,' says the younger Mr. Tan, whose family
company Hong Seh has been the sole distributor of Ferrari in Singapore
since 1984.

A legal battle to resolve the shareholder dispute will be watched closely
by local and foreign investors because it will offer a glimpse into the
opaque workings of Malaysia's auto import industry, a business that is
worth close to one billion ringgit (S$438 million) annually.

Under the system that began in the mid-1970s, the Ministry of
International Trade and Industry issues approved permits or APs, which
every car manufactured or assembled outside Malaysia must secure before it
can be imported or sold locally.

The licensees are usually companies that are majority controlled by ethnic
Malay investors, who receive the APs without any open tender and at no
cost to the recipient. These APs are then sold to auto distributors for
prices ranging between RM10,000 and RM50,000, depending on the make and
model.

Over the past three decades, this controversial import licensing scheme
has enriched a small group of well-connected ethnic Malay businessmen. One
of the wealthiest license-holders is Tan Sri Nasimuddin, who heads the
privately held Naza Group. He did not respond to requests for comment on
this article.

Because of Malaysia's ownership laws in the auto sector, the Tans invested
in Next Car by providing the initial seed money for the Ferrari franchise
business to two ethnic Malay business partners, who controlled 60 per cent
of the company. Tan Sri Nasimuddin, who has been Next Car's chairman since
the company was incorporated in 1996, held the remaining 40 per cent.

Troubles began to surface at Next Car in mid-2005 after the Tans and Tan
Sri Nasimuddin started to disagree over the direction of the auto
importing business.

In June this year, the Tans sought to take a joint 30 per cent interest in
the car distribution concern and remove Tan Sri Nasimuddin as chairman.

Under their plan, Mr Mohd Zain and Ms Radhiah would each sell half of
their holdings in the company to the elder and younger Tan at a price that
would be determined by independent financial consultants.

At a board of directors meeting on June 8, Tan Sri Nasimuddin objected to
the planned sale of shares to the Tans, but was outvoted by both Mr Mohd
Zain and Ms Radhiah.

According to minutes of the directors' meeting seen by The Straits Times,
Mr Nasimuddin warned that Next Car risked losing its APs for the import of
its luxury autos.

Shortly after that, on June 12, Next Car received a notice from Ministry
of International Trade and Industry secretary-general Abdul Rahman Mamat,
stating that all its AP allocations had been suspended with immediate
effect.

The company's plan to re-organise its shareholding was said to be in
breach of ownership rules set by the government for auto importers.

Why the Ministry of International Trade and Industry reacted without
calling for an inquiry into the proposed shareholding change is not clear.
Datuk Abdul Rahman did not respond to requests for comment.

Two days later, officers from Malaysia's Anti-Corruption Agency visited
Next Car's office. Ms Radhiah was detained for more than four hours by
agency officers and was made to sign documents to state that she was a
corporate nominee for the Tans, lawyers close to the Singaporean
businessman say.

On June 19, Mr Mohd Zin went to the agency's headquarters voluntarily
where he was detained for questioning for one week. Immediately after his
release, the agency seized the shares of Next Car held by Mr Mohd Zin and
Ms Radhiah.

A senior agency official involved in the investigation into Next Car said
the agency had received a corruption complaint against the company, but
declined to identify the complainant.

From Singapore, the Tans sought to clarify matters with the Malaysian
authorities through their lawyers. But they never got far.

As the problems with the Malaysian government deepened, Ferrari told the
Tans on August 8 that it was terminating the franchise agreement in
Malaysia with Next Car.

[email protected]

 

Yeah,

For me I'm neutral. Coz I heard Alfred Tan is one arrogant bast**d old man who look down on Malaysians.

Tho I guess Next Car staffs would support malaysians running the company too

 

Naza King Pin Tan Sri Nasimudin is well connected to the malaysian govt. Alfred Tan has good and long relationship with Ferrari S.p.A.

Jean Todt: "Since Malaysia practises Nepotism, I shall follow its foot steps by appointing the love of my life Datuk Michelle Yeoh to be the sole importer of Ferrari and Maserati cars in Malaysia"............."what the heck! I'll convince Sergio Macchione to let her import Fiat, Alfa Romeo and Lancia too!!"

 

I do hope the car prices and parts prices as well will come down if Tan Sri will take over.

Problem is this kind of gangster power struggle, (Suspended APs and ACA investigation just because Tan Sri lost the vote in the AGM) especially with foreigners, will cast a very very negative light on Malaysia's way of doing business. But then again, besides Singapore, all South East Asian countries are the same.

 

If Ferrari Malaysia will be independent of Hong Seh Motors Pte Ltd, it's very possible to have a service centre in JB as to attract Ferrari/maserati owners from spore. Parts might be almost the same but service will be almost halved (RM/ SGD conversion assuming dollar for dollar service cost). So we don't really need a lot of Ferrari owners residing in Johor to justify this.

 

Normal oil change would take max 1/2 a day, so maybe while waiting at the service lounge, watch movies on the 50" plasma TV or listen to their Krell or Mark Levinson sound system, check your emails on the complimentary wi-fi connections is not bad at all while waiting.

As for major service like cambelt change, I'm guessing RM10,000 in malaysia and SGD10,000 in spore, would make the trip worth while.

 

KUALA LUMPUR, March 21 (Bernama) -- Naza Italia Sdn Bhd, a unit of the Naza group of companies, was today appointed as the sole importer for Ferrari cars in Malaysia.

The company is scheduled to begin operations early next month.

Naza Italia, which signed an agreement with Ferrari today, is expected to launch a flagship showroom with service centre by the third quarter of this year.

Its chief executive officer S. M. Faisal Tan Sri S.M. Nasimuddin said as Ferrari's representative, Naza Italia aimed to make a greater contribution to the brand image.

"Investment will include showrooms equipped with 4S -- sales, service, system and spare parts -- and Ferrari merchandise," said Faisal, who is also executive vice president of the Naza group.

"A substantial amount of the investment will be allocated for customer relationship management, sales and after-sales services, training, branding and marketing activities," he said at a media conference here.

Naza Italia will be bringing to local customers the whole Ferrari line-up, ranging from the F430 range to the 599 GTB Fiorano and the flagship 612 Scaglietti, Faisal said.

"Our existing automotive business has enabled us to build significant relationship with the niche market which is demanding access to high quality automobiles," he said.

Asked about target sales, Faisal said the luxury car market in Malaysia was experiencing strong growth, adding that there was always a strong demand for such niche market cars.

"Our mission is to provide an experience to the Malaysian market. We plan further enhancements with new additions, innovative facilities and services, all of which will significantly contribute to the success of Ferrari in Malaysia," he said.

Commenting on the partnership, Ferrari's communication director, Asia Pacific, Matteo Bonciani, said the company started the relationship because Naza has proven to be the premier distributor in Malaysia.

He said Ferrari sold 1,054 units in the Asia Pacific last year, adding that the company considered Malaysia as an important market