Zetrix Collapse Poses Governance Test for Anwar Government
The firm's financial crisis has raised questions about Malaysia's privatisation model, public funds and how the state monitors companies that collect money for it.
Key points
- Zetrix AI shares have fallen more than 90 per cent since August, wiping out over RM5 billion in market value.
- The government says the company failed to remit RM314 million in road tax collections between May and September.
- Zetrix faces a potential breach of covenant on its RM2 billion sukuk programme, though it says no immediate repayment is due.
- Opposition leader Rafizi Ramli has demanded that the government disclose public funds' exposure to the company.
According to a commentary published by CNA, the financial crisis at Zetrix AI, formerly known as My EG Services, is becoming a serious test for Prime Minister Anwar Ibrahim’s government. The company’s shares have fallen by more than 90 per cent since August. That decline has erased more than RM5 billion, or US$1.23 billion, in market value.
The share price now sits at around 6 sen, down from over 70 sen in August. The commentary says this makes the collapse the largest loss of listed-market wealth during Anwar’s time as prime minister.
Unpaid government collections
The most serious issue for the government is money owed to the state. The government has acknowledged that Zetrix and its corporate units did not pass on more than RM314 million in collections to the Road Transport Department. The period covered runs from May 19 to September 30.
Transport Minister Anthony Loke has said the authorities sent the company 35 reminders. Local media report that the government also received a post-dated cheque for RM231 million. That cheque could not be processed after the company gave instructions to stop it.
Zetrix provides collection services for several parts of public administration. These include road tax and licence renewals. The commentary argues that money gathered from citizens for the state should never be treated as ordinary working capital.
Sukuk covenant and shareholder exits
The company also faces pressure on its RM2 billion sukuk programme. The trigger was a fall in the founder’s stake. Wong Thean Soon, who founded the company and was its main shareholder, pledged shares to brokerages and financial institutions. Those disposals shrank his share of the company from close to 30 per cent to under 2 per cent.
The sukuk terms required him to keep at least 2 per cent. A breach of that covenant has triggered a dissolution event. A local rating agency has also downgraded the Islamic bond, citing financial and liquidity pressures.
The company has told the market that it does not have to pay off the whole outstanding sum straight away. It adds that every payment due on schedule has already gone out. Talks with sukukholders and the trustee are continuing.
Political pressure and the wider model
Rafizi Ramli, leader of the opposition Bersama party and a former economy minister in the Anwar Cabinet, has asked the prime minister to reveal how much public money is exposed. He has also asked what will happen to the immigration systems the company runs. He named the Employees Provident Fund and KWAP, the civil service pension fund, as state agencies that held shares. The government had not responded to these demands at the time of the report.
The commentary places the case within Malaysia’s privatisation programme, which was a central part of former prime minister Mahathir Mohamad’s economic agenda. Private operators were given public services in the early 1990s. Supporters credit the model with bringing in capital and building infrastructure. Critics say it blurred the lines between public service, private profit and political power. The 1997 financial crisis exposed weak finances at several connected companies and forced state intervention.
The commentary argues that the government must explain why Zetrix was allowed to keep public funds for so long. It also calls for a full audit of how third-party public money was outsourced and handled. Creditors and management, it says, should be left to deal with the company’s remaining obligations, while the Treasury’s claims are accounted for.
Frequently asked questions
Why are Zetrix AI shares falling?
The shares dropped sharply from August after large forced sales of shares pledged by founder Wong Thean Soon. Those sales cut his stake sharply and triggered a potential breach of a sukuk covenant.
How much does Zetrix owe the government?
The government says Zetrix and its units failed to remit more than RM314 million in road tax collections between May and the end of September. The company has been sent 35 reminders, according to local media.
Does Zetrix have to repay its sukuk immediately?
Zetrix maintains that it need not settle the entire balance at once, and that every scheduled instalment has already been paid. It is in talks with sukukholders and the trustee.
Sources
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