Why a Sunway–IJM Merger Must Be Opposed?

A Case for Competition and National Interest

Lately, speculation has swirled about a possible merger between Sunway Bhd and IJM Corporation. Whether or not the deal actually materialises, the very fact that “the tree leaves are rustling” is a warning sign that there’s a wind blowing. 

Back in 2021, IJM divested its non-core businesses to Sunway. The relation was established. There is a need to be suspicious even though IJM has denied that any approach or proposal has been made. 

This blogger argue strongly against such a merger. The risks are profound as it is creating a near-monopoly in Malaysia’s construction and infrastructure sector, undermining Bumiputera institutional interests, and potentially masking deeper corporate governance and political problems.

Monopolistic Risk and Structural Disruption to the Construction Industry

A merger of Sunway and IJM could produce a construction behemoth unmatched in scale, influence, and reach. Analysts have warned that this “mega construction firm” would be capable of dominating large public and private infrastructure contracts, sidelining smaller contractors. 

 As one academic put it, consolidation at this scale risks creating an oligopoly, or worse — in effect, reducing competition, distorting contract awards, and enabling undue pricing power over raw materials. 

Such dominance would distort the equilibrium of the industry. Rather than a healthy market where many players compete, you get a giant that can absorb precious contracts, stifle smaller firms, and dictate terms. 

This misallocation of resources is dangerous. Capital will flow into the large merged entity, away from smaller players who may lack the strength to compete. Over time, that weakens entrepreneurship, stunts innovation, and concentrates risk in the hands of very few.

Moreover, if one company controls too much of the construction pipeline, there’s a real danger that existing contracts will be “rebalanced” in its favour — putting enormous pressure on rivals. Jobs for smaller contractors could vanish. Margins will be squeezed. 

And the diversity of the construction ecosystem, which is good for resilience and long-term national development, will erode.

From a public-interest viewpoint, this kind of consolidation benefits the very wealthy. Public scrutiny already exists. Critics point to the Prime Minister’s warning that the ultra-rich ("mahakaya") risk becoming even more wealthy. A Sunway–IJM merger could very well accelerate that trend.

In the long run, the existence of monopoly situation means such company's can impose a "take it or leave it" cost squeeze on the market.  

Dilution of Bumiputera Institutional Interests

An often under-discussed dimension is shareholding structure, particularly the significant Bumiputera institutional presence in IJM. 

According to reports, more than half of IJM’s shares are held by institutional Bumiputera-linked entities and GLICs — including EPF, PNB, KWAP, Tabung Haji, Amanah Raya, and Amanah Saham Bumiputera. 

A share-swap merger would almost certainly dilute that participation. Over time, the merged entity may no longer reflect the strategic public-policy goals of preserving Bumiputera interest in key industries. The concern is not abstract: similar dilution has happened in other GLCs and PLCs over the past decade, where Bumiputera institutions see their shares marginalized in privatisation or consolidation exercises.

When you weaken institutional Bumiputera ownership in such a strategically important space — construction and infrastructure — you erode not only economic participation but also long-term policy influence. 

Given the role of GLCs to safeguard national economic interests, letting a mega-contractor consolidate in such a way is not a neutral business matter — it’s a public policy risk.

Why are GLC CEOs being paid million dollar salary just to be Auctioneers?

Another uncomfortable question arises: why do government institutions pay GLC CEOs multimillion-ringgit salaries, when in effect they often operate simply as auctioneers? 

It concerns the value we are actually getting from the CEOs of GLCs and GLIC-linked companies who are paid multimillion-ringgit annual salaries. These are among the highest-paid executives in the country. They receive remuneration packages comparable to leaders of complex multinational corporations with global markets, high-risk portfolios, and deep R&D pipelines.

Yet, increasingly, the corporate strategy coming out of GLC-linked entities looks less like nation-building stewardship and more like lazy investment-banker playbooks: buy, merge, divest, consolidate — rinse and repeat. 

Sime Darby-E&O deal (2011-2015), UEM Sunrise-Ecoworld (2019-2020) and UEM Land-Sunrise (2025) are example of M&A deals in which public owned GLCs relinquish control on assets to private hands. 

The real hard work of building businesses, strengthening operations, innovating, expanding into new markets, improving productivity, or developing technology and intellectual property is too often ignored, or treated as optional.

This is not leadership. This is outsourcing.

Malaysia did not establish Petronas, PNB, Khazanah, KWAP, and other GLICs merely to become auction houses for strategic assets, selling stakes, rubber-stamping mergers, or absorbing troubled companies so that past mistakes can be buried under larger balance sheets. Yet that is precisely what the pattern appears to be: shortcuts instead of stewardship.

A high salary is supposed to reflect high responsibility, deep expertise, and hands-on management. These CEOs should be rolling up their sleeves, getting their hands dirty, reforming lagging subsidiaries, pushing operational excellence, nurturing new sectors, and driving difficult — often unpopular — improvements. The job is not supposed to be glamorous. It is supposed to be tough.

Instead, we see too many corporate “leaders” content to behave like fund managers or dealmakers rather than builders of industry. The obsession with M&A as a strategy — rather than a tool — is a hallmark of the lazy investment banker mentality:

• Don’t grow revenues organically — just buy someone else’s.
• Don’t develop capabilities — just restructure and claim synergy.
• Don’t fix operational problems — just merge and bury them.
• Don’t innovate — just monetise assets.

This approach might win applause from consultants and short-term investors, but it produces fragile conglomerates, not national champions.

Worse still, in industries that are strategically critical — construction, property, utilities, infrastructure — this mentality encourages consolidation for the sake of appearances or short-term financial cosmetics. A merger can make balance sheets look stronger, earnings appear larger, and debt seem more manageable. But the underlying issues remain unresolved.

What Malaysia needs from its GLC leadership is not financial engineering. It needs nation-builders, people who understand that running a strategic company requires engagement with industry ecosystems, talent development, supply chains, and technology adoption. It requires being present on the ground — not in boardrooms approving mergers designed by investment banks.

And most importantly, it requires accountability for failures.

When privatised highways suffer under mismanagement, when aerotrain projects collapse, when companies underperform for years, the CEOs are rarely held responsible. Yet these same leaders continue to draw enormous salaries while proposing the same old M&A shortcuts as if mergers magically solve operational incompetence.

This is why the potential Sunway–IJM merger must be viewed with suspicion. It risks becoming yet another example of GLC-linked leadership choosing the shortcut — a grand consolidation exercise — instead of doing the hard work of solving IJM’s long-standing governance, performance, and reputational problems.

Malaysia does not need more investment-banker CEOs. Malaysia needs builders, innovators, and leaders who earn their pay by strengthening the foundations of the companies under their care — not by flipping assets like real-estate speculators.

What are They Trying to Cover Up?

Perhaps most troubling concern is the merger could be a smokescreen to obscure deeper issues? 

There are at least two major corporate controversies plaguing IJM that raise red flags.

First, allegations of dirty money as there have been reports linking IJM to offshore accounts totaling RM 2.5 billion, allegedly tied to Seow Lun Hoo and Tan Sri Krishnan Tan. 

Also raised in some quarters is the political dimension which reported involvement of senior figures, possibly including Ismail Sabri, in UK deals. Whether these are true or not, the risk of a mega-merger is that political and financial entanglements become more complex, and less transparent.

These are serious governance and regulatory concerns — and a merger could help bury these under corporate restructuring, and diluting accountability.

Second, there's the matter of Pestech and the failed RM450 million Aerotrain project at KLIA. IJM has been associated with Pestech, and the termination of that contract (or worse, its non-performance) raises very important questions. 

A consolidation with Sunway could create a larger, more opaque structure in which risks are harder to trace, accountability is diluted, and prior missteps can be glossed over as “legacy issues.”

For the Public Good, Say No to the such Merger

In sum, a merger between Sunway and IJM is not simply a corporate event — it's a national issue. It threatens to:

• Monopolise the construction and infrastructure sector, undermining competition and disadvantaging smaller players.
• Dilute Bumiputera institutional ownership, undermining long-term strategic and public-policy objectives.
• Entrench contract-award power in a private conglomerate, potentially marginalizing the role of GLCs to be strategic owners rather than mere enablers.
• Obscure governance and accountability issues, including alleged dirty money scandals and failed mega-projects, by burying them in a larger corporate structure.

Even though both Sunway and IJM have denied any merger talks so far, the mere possibility demands public scrutiny. This is not just about financial deals — it's about national economic sovereignty, equitable ownership, and defending the public interest.

The public should shout out on the regulators, institutional shareholders, and civil society to oppose any such merger, and to require full transparency if any proposal is indeed put on the table. Preserving a competitive, balanced, and accountable construction sector is not a luxury — it is a necessity for Malaysia’s long-term economic health and equity.