Govt-linked companies (GLCs) shake-up as they sing a different tune


EPF Building in Kuala Lumpur.- Art Chen / The Star..
On the rise: A man walks past the Employees
Provident Fund headquarters in Kuala Lumpur. Remuneration of GLC chiefs,
senior management and directors have been on the uptrend following a
transformation initiative to make them more competitive commercially. 

 

Overpaid CEOs and social duties of GLCs set for review

The new government has clearly said that there is a need to review the role of GLCs and the remuneration paid out to their top executives

A GLANCE at one of the annual reports of the country’s government-linked companies (GLCs) reveals that its chief human resource officer earned close to a million ringgit or about RM80,000 per month, last year.

Other senior personnel were also compensated with generous remuneration, with its chief executive taking home over one and the half million ringgit in financial year 2017.

More importantly, this was at a company that had courted much controversy in recent times over allegations of mismanagement and under-performance.

Such a scenario, however, is not uncommon at GLCs, where remuneration of key executives tend to run in the millions but performances sometimes leave much to be desired.

By definition, GLCs are companies where the government has a direct majority stake via their entities such as Khazanah Nasional, Employees Provident Fund, Permodalan Nasional Bhd (PNB), the Armed Forces Fund (Lembaga Tabung Angkatan Tentera) and the Pilgrims Fund (Lembaga Tabung Haji).

In recent years, remuneration of GLC chiefs, senior management and its directors have been on the uptrend following a transformation initiative to make them more competitive commercially.

The thinking behind this is that in order to attract talent – subjective as the definition of that may be – top dollar should be paid.

Some, however, argue that GLCs should in fact prioritise national service a little more.

Universiti Malaya’s Faculty of Economics and Administration professor of political economy Edmund Terence Gomez says GLCs have social obligations.

“What this essentially means is that GLCs cannot operate in a purely commercial manner as they also have to look at the social dimension,” he says. “The GLC professionals have many times articulated that they are doing national service. Going on that alone, one can argue that they shouldn’t be paid private sector salaries,” Terence adds.

And so it is now, there is a disquiet building up among GLCs following the change in government.

The new government has clearly said that there is a need to review the role of GLCs and the remuneration paid out to their top executives and senior management.

In this regard, the Pakatan Harapan government is understood to be mulling over making drastic changes in the appointment and remuneration of key directors at GLCs which include government agencies.

It was reported recently that the Council of Eminent Persons, headed by Tun Daim Zainuddin, who was Finance Minister in the 1980s, has requested details of the salaries of some of the top executives at GLCs as part of the review.

Already, there have been a couple of GLC chief executives who have left and more of this is expected to materialise over the coming weeks.

“It appears to be a purge of Tan Sri Nor Mohamed Yakcop’s boys,” quips an industry observer, referring to the veteran politician who was instrumental in the revamp and transformation of Khazanah which started in 2005 and subsequently, driving the GLC transformation initiative.

UM’s Terence says if the new government is to appoint new individuals, it must ensure that the process is transparent.

“If you are removing these people, who are you replacing them with? More importantly how are you selecting these people?

He adds there needs to be a transparent mechanism in the appointment of this new breed of professionals that will be brought in and what must also be looked into is the kind of check and balances being put in place to ensure governance.

“There should be a debate on these things,” he says.

Economist Yeah Kim Leng believes that a review is timely and appropriate as part of a deeper institutional and structural reform.

“The broad aims are firstly, to reduce excessive payoffs which don’t commensurate with performance and secondly, to address the widening wage and benefits gap between the top and bottom rungs of the organisation,” he says.

Such rationalisation will result in a more equitable salary structure as well as raise the generally depressed wages of middle management and support staff which form the largest number of most organisations, Yeah adds.

Unfair advantage

The role of a head honcho, be it at a GLC or non-GLC, is seldom a walk in the park.

CEOs make critical operational decisions that affect everything from future business directions to the health of a company’s balance sheet and employee morale.

The job generally entails long hours and tremendous pressure to meet expectations of shareholders and stakeholders.

But again, while local GLCs have been key drivers of the economy, one key feature is that they are ultimately owned by the government.

This, some argue, give GLCs unfair advantages such as access to cheap funding and political patronage over their private counterparts.

So, is running a GLC more of a stewardship role as opposed to an entrepreneurship role?

Therein lies the issue that in turn will have a bearing on the remuneration levels of GLC heads.

Minority Shareholders Watch Group (MSWG) chief executive office Devanesan Evanson puts it this way.

“Entrepreneurs have their skin in the game in that there are often the major or substantial shareholder in a company.

“It is in their direct interest to perform as this will be translated into share price appreciation which will impact the value of their shareholdings – this is motivation to grow the entrepreneurial spirit,” he says.

On the other hand, GLC heads do not have their skin in the game save for their limited shareholding through ESOS or share grant schemes.

“If a GLC loses money, the impact on them is limited. They may be prepared to take perverse risks as the eventual loser is the government-linked investment companies or GLICs (and the minority shareholders of the GLC), which eventually are the people who are the members or subscribers of the GLICs.

“In that way, we are not comparing apple to apple and yet, we need talent to run GLCs.

“So we can conclude that, we need to pay for talent at GLCs but it should not be as much compared to what one would pay the CEO of a firm which he started,” Devanesan says, noting that remuneration of some of the GLC heads have risen too fast in recent years.

Rising remuneration is a given, others say, as the government had recruited top talent from the private sector to helm these companies.

A case in point is  Axiata Group Bhd , which has done relatively well with the infusion of the “entrepreneurial spirit” under the helm of president and group CEO Tan Sri Jamaludin Ibrahim, who has helmed the Khazanah-owned telco since 2008, they point out.

Prior to that, Jamaludin was with rival Maxis Communications Bhd, a private company controlled by tycoon Ananda Krishnan.

Other GLCs which have performed consistently over recent years include banks like Malayan Banking Bhd
and CIMB Group Holdings Bhd which have expanded their operations out of Malaysia, carving a brand name for themselves regionally.

Under a 10-year transformation programme for GLCs initiated in 2005, companies were given quantitative and qualitative targets to meet as measured by key performance indicators.

Now, the 20 biggest GLCs currently make up about 40% of the local stock market’s market capitalisation.

One of the principles under the programme was also the national development agenda, which emphasised the principle of equal growth and development of the bumiputra community with the non-bumiputras.

Asian Strategy and Leadership Institute (ASLI) Centre of Public Policy Studies chairperson Tan Sri Ramon Navaratnam says the purpose of establishing GLCs to encourage bumiputras to participate in business has largely been fulfilled.

“Now that the bumiputras are on a strong footing in the corporate sector with able leaders who have wide experience, it (GLCs) could be seen as an erosion to the welfare and progress of the smaller and medium-sized industries, particularly those where other bumiputras are involved,” Ramon says.

Having said that, he says although many GLCs are doing well, they have performed well “mainly because of protective policies and monopolistic practices”.

“The time has come in this new Malaysian era for more competition and less protection.”

Benchmarking

Still, if simplistic comparisons are to be made, the CEOs of the country’s two largest GLC banks, Maybank and CIMB for instance, took home less than the CEO of the country’s third largest bank, the non-GLC Public Bank Bhd
last year.

In 2017, Public Bank’s managing director Tan Sri Tay Ah Lek took home some RM27.8mil in total remuneration while Maybank’s Datuk Abdul Farid Alias earned RM10.11mil and CIMB’s Tengku Zafrul Abdul Aziz made RM9.86mil.

Across the causeway, a survey of CEO remuneration of Singapore-listed companies by one financial portal shows that Singaporean GLC CEOs earned 31% more than their non-GLC counterparts in 2017.

Singapore’s Temasek Holdings-owned DBS Bank, which is Singapore’s largest bank, paid out S$10.3mil (RM30.36mil) to its head honcho, while in the telecommunication sector, SingTel’s remuneration to its top executive was some S$6.56mil (RM19.34mil) for the most recently concluded financial year.

By definition, Singapore GLCs are those which are 15% or more owned by the city-state’s investment arm Temasek Holdings.

UM’s Terence does not think Singapore should be a benchmark for Malaysian companies.

“Singapore is a much smaller country and the manner in which they operate in is also different … their GLCs are deeply conditioned by their holding company, which is the Minister of Finance Incorporated,” he says.

MSWG’s Devanesan notes that determining remuneration is “not exactly science” as there are many parameters to be considered.

Some of the factors to note include whether the companies are in a monopolistic or near monopolistic position and the performance of the GLC heads over the years.

“Based on these parameters, we can instinctively know if a GLC head is over-remunerated,” he says. Over in China, state-owned Industrial and Commercial Bank of China (ICBC), the country’s largest lender by assets, paid out about 63.43 yuan or about RM39mil in total remuneration before tax for the year 2017 to its top executive.

Notably, the Beijing-based ICBC’s net profit’s was at a whopping US$45.6bil (RM182bil) in 2017.

Sources: Gurmeet Kaur and Yvonne Tan The Star

GLC singers sing a different tune

Some officials singing ‘Hebat Negaraku’.

 Swan song for some after ‘Hebat Negaraku’ post-GE14 – CEO think video to showcase musical talents

 

 Several heads of government-linked companies (GLCs) have come together bin a heartwarming music video titled “Hebat Negaraku” (my country is great).

 GLC chiefs show off musical talent in ‘Hebat Negaraku’ music video …

The heads of government linked companies (GLC) who sang a song that later became the theme song for the Barisan Nasional’s election campaign have distanced themselves from the controversial music video.

Those who sang and played musical instruments in the music video titled “Hebat Negaraku” (my country is great) said they did not know the video or the song was going to be a political theme song.

There have been repercussions on the CEOs who appeared in the music video. They have come under scrutiny for making a song that was used as propaganda by Barisan in the last general election.

Three of the GLC bosses in the video have either retired or resigned since the new government took over.

Several more have been speculated to leave in the coming weeks or months but nothing is cast in stone. Sources said this is because most of the CEOs are not known to have campaigned openly for either Barisan or Pakatan Harapan.

“None of the CEOs had a clue it would become a political song. Do you really think the CEOs would have done it if they knew it would become political?” asked one of the CEOs who appeared in the video but declined to be named.

“We have said no to so many things, and we could have easily have said no to this if it was political.’’

Another CEO said he was approached and felt it was “more of a patriotic song and nothing more.”

“At that point in time, we did not think much (of the repercussions). Hebat Negaraku was announced as Barisan’s campaign theme long after the recording was made. We did not know that.’’

Another CEO added: “We thought it was a casual thing when we were approached as some of the CEOs have their own band.’’

It all started when several CEOs were called to be part of a music video and they thought it was to showcase the musical talents of 14 GLCs heads, plus staff members of the 20 key GLCs.

The song is about the greatness, advancement and inspiration of Malaysia. It was released on YouTube on March 22 but has since been taken down.

But fingers have been pointed at the GLCs bosses who made the music video because it became a political video.

Datuk Seri Shazalli Ramly has been said to be the main orchestrator for the group in terms of making the music video. He was also said to be the branding chief for Barisan’s elections campaign.

Barisan lost the elections held on May 9 to Pakatan, which has since formed a new government and is scrutinising all the performance, processes, remuneration and procurement of the government and GLCs.

Shazalli quit his job as group CEO of  Telekom Malaysia Bhd (TM) on June 6. Malaysian Resources Corp
Bhd (MRCB) group managing director Tan Sri Mohamad Salim Fateh Din has retired as group MD last week and it was something he had planned to do.  Malaysia Airports Holdings Bhd
Datuk Badlisham Ghazali did not get his contract renewed. All three were in the music video.

There is a GLC secretariat that now comes under the purview of TM, which was earlier parked under Khazanah Nasional Bhd. The secretariat organised the making of the music video, according to sources. The CEOs were called to attend a session and within a few hours it was all done with no prior rehearsals.

“When you are called, it could be difficult not to comply since it is the secretariat that called you. We have to oblige but we really did not know it was going to be a campaign slogan. This is really unfortunate that it has turned out like this.

“We were surprised when we found out it was a party slogan but it had already been done and what can we do, we are in the picture,’’ said another CEO.

Not all CEOs who were invited took part in the video. Prior engagements were the reason used for declining to appear. – By b.k. Sidhu The Star

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Impact of manifestos policy lead from Malaysia’s General Electioon (GE14)


Market impact: The reaction of investors following the past two GEs is an example of how investors value certainty and how Bursa will be affected in the event of a Pakatan victory this time around.

 

Policy directions from political pledges have business and economic consequences.

EVER since Parliament was dissolved ahead of polling for the 14th general election (GE14), the combustible campaigning period has been mirrored by the volatile stock market.

The FBM KLCI hit an all-time high of 1,895 points on April 19, just a week after the dissolution of Parliament, but has since tracked lower as election day nears.

With the market edgy prior to polling day, UOB KayHian in a note on the election says that the election factor is a short-term sway phenomenon.

“While unexpected election results can be a significant market sway factor in the near term, such market reactions have been short-lived in the past.

“For example, when the Barisan Nasional’s control of parliamentary seats surprisingly slipped below two-thirds during GE12, the FBM KLCI plunged by as much as 9.5% in a day, triggering a trading circuit breaker at the worst level,” it says.

The research house notes that the FBM KLCI recouped most of the losses within a couple of weeks, once investors were assured of the continuity of political stability and business-friendly policies.

Both Barisan and Pakatan Harapan are mindful of maintaining business-friendly policies, it says. “Pakatan has on various occasions highlighted that it will generally uphold the sanctity of government contracts should it win the election. Eventually, equity markets will be dictated by external and domestic economic fundamentals and liquidity considerations.”

Market volatility and fierce campaigning do go hand-in-hand, given the uncertainties the outcome of the GE will bear on the stock market and businesses. Experts have said that the direction of the ringgit and also the economy will be determined after polling day as the country charts its political, along with economic and business, direction for the next five years.

“If Barisan wins, it will be seen as a vote for continuity. It will be business as usual, given the various plans and policies the Barisan government has laid out in the past and for the future,” says an economist.

“For businessmen, that mindset of what to expect is important for future planning and direction and they will like not to have any anxiety on what to expect in the future.”

The economic and business direction

The Barisan government, which has been in power since independence, has a track record of what it has done and will do for the country when it comes to business and economic planning.

The various Malaysia plans, budgets and policies announced over the decades have plotted the economic direction of the country. But in recent times, some will look at its manifesto as to the future policy direction the country will adopt should it retain power.

Policy promises are something more voters pay attention to these days, and judging by the manifestos of Barisan and even the Opposition, their documents are detailed with measures they will carry out in the impending five years.

For the Barisan government, the launch of its manifesto was done with much pomp, with it even detailing how it has fulfilled 99.4% of its 2013 manifesto pledges. Much of the focus of its latest manifesto is on the people, in order to lift their incomes and well-being.

These promises include raising the minimum wage in phases to at least RM1,500 within five years to setting up a Fair Works Commission to ensure that the salary levels of private-sector workers are more equitable.

BR1M recipients who enrol in higher education institutes will, meanwhile, receive a one-off assistance of RM1,500 plus there are a slew of measures for the country’s Felda settlers and their family members who are spread out over 317 settlements in 54 parliamentary seats nationwide in the manifesto.

Barisan is also promising to create three million jobs, and among the measures promised to help achieve this is by speeding up the development of the Malaysian Vision Valley, a 150,000ha area that is projected to create 1.3 million job opportunities.

On housing, the manifesto pledges a number of measures including setting up a special bank to facilitate loans for affordable and low-cost housing priced RM300,000 and below.

In addition, tax incentives or development funds will be provided to encourage banks and housing developers to offer rent-to-own schemes.

CIMB Research in a note on Barisan manifesto points out the key pledges which include low-income households, Felda settlers, females, the elderly and farmers.

It points out that the key promises include a top-up on the BR1M payments, raising the minimum wage to RM1,500 within five years, potential revisions in personal and corporate income taxes, expansion of affordable housing aid, special incentives and funds for Felda settlers, and subsidised public transport passes, broadband and other consumer goods/services.

It says that the additional BR1M payments will amount to at least RM3.71bil or 0.25% of gross domestic product (GDP) in 2018, which comes on top of the prior week’s civil servant pay hikes of RM1.46bil effective July 1.

“New spending commitments imply that the budget deficit is unlikely to improve significantly from the target of 2.8% of GDP despite windfalls from higher oil prices and GDP growth,” CIMB says.

It believes the market is expecting the ruling coalition, Barisan, to win the majority of the Parliament seats.

“We view Barisan’s widely expected win as neutral to positive for the market. The stock market’s performance post-election will depend on the degree of selling pressure during the campaigning period and the poll results.”

What the additional cash injection to households will mean is a lift in consumer spending. Consumption is a big driver of the economy and the BR1M payments have been one of the reasons for the steady performance of domestic demand.

“Furthermore, the economy will get a lift from the lift-off from projects that have already been identified for construction. The MRT, the high-speed rail between Kuala Lumpur and Singapore, and the construction of Bandar Malaysia will be some of the projects that will lift the construction sector and also the economy,” an economist says.

During the years when pledges from the past Barisan manifesto were being carried out, the economy had its ups and downs given the crunch felt by the collapse in crude oil prices.

The GDP, nonetheless, during the past five years has been positive, given the rollout of projects during that period. Growth came in at 5.9% in 2017 and was 4.2% in 2016, 5% in 2015, 6% in 2014 and 4.7% in 2013.

There have been concerns that spending pledges contained in the manifesto would leave a hole in government finances, but indicators so far do not point to that being a problem.

The government’s debt-to-GDP ratio has fallen below the self-prescribed ceiling of 55% to 51% and going by what the data shows in the first quarter, government finances seem to be holding up.

Nomura in a note says that Malaysia’s fiscal deficit was RM11.2bil in the first quarter of 2018, or 3.3% of GDP, which was below its forecast of 6%.

“This is smaller than any of the first-quarter deficits in the previous five years,” it says.

Nomura says revenue collection appears to have exceeded expectations significantly, surging by 16.5% year-on-year in the first quarter and was likely boosted by higher oil prices and possibly some lagged effect from strong GDP growth last year.

“However, more surprisingly, spending appears to have been quite restrained, falling by 2% despite the GE on May 9. Spending details have yet to be released but such restraint may prove temporary with the government likely concentrating the use of its fiscal firepower closer to election day,” it says.

“This likely explains the government’s confidence in maintaining its 2018 deficit target of 2.8% of GDP despite announcements of additional cash handouts around the election.

“While we continue to expect government spending to spike in the second quarter, the surprising outturn in the first quarter suggests that fiscal tightening in the second half may be less severe than we currently forecast,” it says. By Jagdev Singh Sidhu The Star

Election a short-term market sway phenomenon

THE consensus is for the Barisan Nasional to win the upcoming general election (GE) to be held next Wednesday. But what if Pakatan Harapan were to win?

The immediate implications of a Pakatan win will be on the financial markets. The other implication is the impact in the mid to long-term of a Pakatan win on the economy.

The financial markets

There is no precedence for a win by the parliamentary Opposition in Malaysian history, and because investors prefer certainty, the financial markets are sure to be volatile.

The reaction of investors following the past two GEs is example of how investors value certainty and how Bursa Malaysia will be affected in the event of a Pakatan victory this time around.

The local bourse’s benchmark, the FBM KLCI, slipped 9.5% on the first day of trading after the 2008 election, which was held on a Saturday. This was after Barisan lost its two-thirds majority in Parliament for the first time and also lost control of five state legislatures.

In 2013, the stock market fell the week before the election on speculation of an Opposition victory at the federal level. That was the year when many felt sure that Barisan would lose. The Barisan clung on to power but lost the popular vote. The stock market rallied.

While there certainly was a reaction by investors, it must be noted that the Malaysian financial markets, including the stock market, do not act in isolation.

In 2008, fund flows were also influenced by broader movements in the global markets made volatile by the global financial crisis.

“Don’t forget that news flow from the US markets was bad on a daily basis,” a fund manager with an emerging-market portfolio points out.

Shortly after the 2008 election, Bear Stearns Companies Inc, an investment bank, was taken over by another investment bank, JPMorgan Chase & Co, in an operation largely directed by the US Federal Reserve (Fed), which was afraid of what the failure of a Wall Street institution would do to market confidence.

The fund manager tells StarBizWeek that investors just took the opportunity to offload riskier emerging-market assets following the outcome of the election.

“It’s normal to point to market swings either way to domestic factors but in reality, for the index to move, institutional shareholders must react and they rarely do so on just domestic factors, especially in that period of time,” he says.

The same reasoning goes for currency movements. The ringgit’s weakness in the past month has been blamed on investor jitters prior to the upcoming election, but pressure on the currency is really coming from rising US bond yields.

Investors are repositioning on market speculation of four instead of three US interest rate hikes and this has had an impact on emerging-market currencies as well as equity markets.

Although the Fed left the benchmark interest rate unchanged in a recent meeting, officials say that inflation is close to the 2% target. The market expects the Fed to raise the federal funds rate a second time in June when it next meets.

How this works is that investors are anticipating that new US government bonds will now be issued with a higher coupon rate, which is the interest that is paid out annually on the bonds because of the higher interest rates. Also, because of the anticipation, the earlier issued bonds, with a lower coupon rate, will now be traded at a lower price, and because there is an inverse relationship between bond prices and yields, there is a rise in bond yields.

This is why the benchmark 10-year US Treasuries yield is now higher, because the price has dropped, causing US bond yields to narrow against the yields of similar-tenor bonds of foreign government issuers.

For example, the yields between the 10-year Malaysian Government Securities and the 10-year Treasuries have narrowed, making Treasuries – because of its safe-haven status and underlying currency strength – a more attractive asset.

An interest rate hike also means that inflationary pressure is picking up because of economic growth and that will attract investors too.

The steady US economic outlook, US dollar strength and safe-haven status at a time of much geopolitical uncertainty are also attractive factors. Currency strategists point to US dollar movements as more important when taking into account the US dollar/ringgit pairing. The decisions of US policymakers as well as other external factors such as trade will have more weight on the ringgit’s direction rather than purely domestic factors.

Even the rising oil price has not been able to stem the weakness in the ringgit, and that is because of the investors repositioning rather than any inherent political risks.

However, a political analyst did say that without the higher oil price, the ringgit could have seen a steeper fall. “It could be that rising US bond yields is the reason for the ringgit’s weakness but I believe that political factors are at play too and that without the higher oil price, the ringgit would have fallen even more,” he says.

The economy

A Pakatan government will have to find a middle path in unravelling some of the more unpopular policies, while ensuring policy continuity and assuaging the concerns of investors.

Both Barisan and Pakatan claim to have the people’s welfare at heart, and both claim they want to alleviate the cost-of-living issue that Malaysians have been grappling with in recent years. The Pakatan coalition is also calling for the shaping of the nation’s economy in a fair and just manner.

The Pakatan promises must take into account the urgent need for the economy to move up the value chain. In one respect, a focus on high-end manufacturing will have a positive spillover effect, as such initiatives will attract high-end service jobs including banking and financial services as well as research and development opportunities.

The Pakatan manifesto launched in early March includes 10 promises to be implemented within 100 days of winning the election. Among the promises are the abolishment of the goods and services tax, reintroducing the petrol subsidy and increasing the minimum wage to RM1,500 by their first term in office.

Moody’s Investor Service analysts say in a report released yesterday that the implications on the country’s credit standing will be determined by the impact of the election results on existing government policies, with particular regard to fiscal consolidation and debt trend.

“Ahead of the election, Barisan and the key opposition, Pakatan, have both unveiled their manifestos and specific spending programmes targeted at key voter bases. These measures include raising the minimum wage, greater cash handouts and relief for Federal Land Development Authority settlers, among others,” they say.

The rating agency, which has maintained the country’s A3 credit profile with a “stable” outlook, says the impact of these programmes on the sovereign credit will depend on how they are funded and whether they have a negative effect by delaying the government’s ongoing efforts at fiscal consolidation.

“Economically, these programmes are likely to boost consumption over the near term but against the backdrop of Malaysia’s export-driven growth, the impact is not likely to be material and could be offset by inflation,” they note.

Another crucial promise is to launch detailed studies of multi-billion-ringgit projects awarded to foreign countries. This particular promise is likely aimed at China, which has become a major investor, if not the largest in recent years, with not only infrastructure projects but also property development.

Pakatan will have to tread carefully where reviewing contracts is concerned, as the sanctity of contracts is crucial to investor confidence.

“Any review of the mega-projects will have to be done in a tactful manner. Malaysia is not the United States, we don’t have the heft, so we need to be careful,” an analyst says.- by Fintan Ng The Star

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Towering achievement: The Tun Razak  Exchange is one of the projects Ng says will be halted if the Opposition wins the polls. — Bernama…

Chinese are the unsung heroes of South East Asia: Robert Kuok Memoirs


They are the most amazing economic ants on Earth, ‘Sugar King’ writes in memoir

Good Chinese business management is second to none; the very best of Chinese management is without compare. I haven’t seen others come near to it in my 70year career. Robert Kuok

The overseas Chinese were the unsung heroes of the region, having helped to build South East Asia to what it is today, said Malaysian tycoon Robert Kuok (pic).

He said that it was the Chinese immigrants who tackled difficult task such as planting and tapping rubber, opening up tin mines, and ran small retail shops which eventually created a new economy around them.

“It was the Chinese who helped build up Southeast Asia. The Indians also played a big role, but the Chinese were the dominant force in helping to build the economy.

“They came very hungry and eager as immigrants, often barefooted and wearing only singlets and trousers. They would do any work available, as an honest income meant they could have food and shelter.

“I will concede that if they are totally penniless, they will do almost anything to get their first seed capital. But once they have some capital, they try very hard to rise above their past and advance their reputations as totally moral, ethical businessmen,” Kuok said based on excerpts of his memoir reported in the South China Morning Post .

“Robert Kuok, A Memoir’ is set to be released in Malaysia on Dec 1.

Kuok said the Chinese immigrants were willing to work harder than anyone else and were willing to “eat bitterness”, hence, were the most amazing economic ants on earth.

In the extracted memoir published by the South China Morning Post, Kuok, pointed out that if there were any businesses to be done on earth, one can be sure that a Chinese will be there.

“They will know whom to see, what to order, how best to save, how to make money. They don’t need expensive equipment or the trappings of office; they just deliver.

“I can tell you that Chinese businessmen compare notes every waking moment of their lives. There are no true weekends or holidays for them. That’s how they work. Every moment, they are listening, and they have skilfully developed in their own minds – each and every one of them – mental sieves to filter out rubbish and let through valuable information.

“Good Chinese business management is second to none; the very best of Chinese management is without compare. I haven’t seen others come near to it in my 70-year career,” he said.

“They flourish without the national, political and financial sponsorship or backing of their host countries. In Southeast Asia, the Chinese are often maltreated and looked down upon. Whether you go to Malaysia, Sumatra or Java, the locals call you Cina – pronounced Chee-na – in a derogatory way,” he said.

He added that the Chinese had no “fairy godmothers” financial backers.

“Yet, despite facing these odds, the overseas Chinese, through hard work, endeavour and business shrewdness, are able to produce profits of a type that no other ethnic group operating in the same environment could produce,” he said.

Kuok ultimately attributed the Chinese survivability in Southeast Asia to its cultural strength.

“They knew what was right and what was wrong. Even the most uneducated Chinese, through family education, upbringing and social environment, understands the ingredients and consequences of behaviour such as refinement, humility, understatement, coarseness, bragging and arrogance,” he said.

 

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Malaysia’s economy: stronger but eroding purchasing power


The story is the same everywhere – the rising cost of living has not been accompanied by an increase in wages.

HERE we go again – another set of impressive growth figures. Bank Negara has announced Malaysia’s latest economic growth at a commendable 6.2% in the third quarter of 2017.

The pace of economic growth for the three months up to September was faster than the 5.8% registered in the second quarter of the year.

This growth rate was the fastest since June 2014.

On a quarter-on-quarter seasonally adjusted basis, the Malaysian economy posted a growth of 1.8% against 1.3% in the preceding quarter, according to the Statistics Department.

Malaysia’s robust economic growth has been attributed to private-sector spending and a continued strong performance in exports.

To quote Bank Negara governor Tan Sri Muhammad Ibrahim last Friday: “Expansion was seen across all economic sectors.”

But try explaining this impressive economic growth rate to the average salaried worker struggling to pay his monthly household bills.

Stretching the ringgit is especially great for those living in urban areas, and Malaysia is increasingly becoming urbanised.

The story is the same everywhere – the rising cost of living has not been accompanied by an increase in wages.

Compounding matters is the depreciation of the ringgit, reducing the purchasing power of the ordinary folk. They can’t buy the same amount of food as they used to previously.

Employers are being forced to cut operating costs to match declining profits.

Job security is becoming paramount. Many are fearful of losing their jobs, as companies cut cost to cope with the challenging business landscape.

And the reality is that many companies are not hiring, as evident from the unemployment rate of 3.4%.

The Malaysian Employers Federation (MEF) has cautioned that more people would be out of a job this year due to the current economic challenges.

Apart from the challenging landscape, technology has disrupted several brick-and-mortar businesses, forcing them to change their way of doing business.

According to MEF executive director Datuk Shamsuddin Bardan, economic challenges will compel bosses to review their workers’ requirements.

While official statistics show that the economy is charting a strong growth path, the trickle-down effect is not being felt.

Why is the sentiment on the ground different from what the politicians and officials are telling us? Why is there a disconnect in the economy?

Are the figures released by the government officials more accurate and authoritative compared with the loud grumblings on the ground that are anecdotical in nature devoid of proper findings?

We hear reports of supermarkets and hypermarkets closing down, but could that be because their business model no longer works as more Malaysians turn to online shopping, with e-commerce companies announcing huge jumps in traffic?

It is the same with the malls – retail outlets are reporting lower sales and this is compounded by the fact that there is an oversupply of malls.

International restaurant chains such as Hong Kong’s dim sum outlet Tim Ho Wan and South Korean bakery Tous Les Jours and South Korean barbeque restaurant Bulgogi Brothers have ceased operations.

But then again, it could be that their offerings and prices had failed to compete effectively against the local choices.

According to the central bank, demand is anchored in private-sector spending.

“On the supply side, the services and manufacturing sectors remain the key drivers of growth,” Muhammad said.

Looking ahead, the governor said that the economy this year is poised to register strong growth and likely to hit the upper end of the official target of 5.2%-5.7%.

The trickle-down effect is not being felt simply because there is uneven growth in the various sectors of the economy.

The property sector, which provides the biggest multiplier effect, continues to be in the doldrums.

The weak ringgit has had a big impact on the price of food, especially processed food and beverages that make up 74.3% of Malaysian household spending.

It was reported that Malaysia had imported a whopping RM38bil worth of food between January and October last year.

In recent weeks, the ringgit has strengthened to about RM4.16 against the US dollar. But it is still far from RM3.80 to the dollar and the outlook of the currency remains uncertain.

We can’t even hold our heads up against the Thai baht and Indonesian rupiah – two currencies that have appreciated against the ringgit.

The headline economic numbers are showing good growth, but Malaysians’ purchasing power has dropped and our living standards have eroded. That is the bottom line. We are living in denial if we do not admit this.

This column first appeared in StarBiz Premium.
Source: On the beat by Wong Chun Hai, TheStaronline

 

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What concerns Malaysians most ?


Supermarket shopping food

THE biggest concern among Malaysians, as we head towards the general election, is the cost of living. It’s as simple as that.

There have been plenty of political and religious side shows, but for many Malaysians, regardless of race, settling the many bills each month is what worries them the most.

Although Malaysia remains one of the cheapest countries to live in, its citizens have been spoilt for too long.

We are so used to having so many food items subsidised, including sugar, at one time, to the point that some of us have had difficulties adjusting ourselves.

Our neighbours still come to Malaysia to buy petrol, because ours is still cheaper than theirs.

But, as in any elections, politicians will always promise the heavens to get our votes. One of the promises, we have already heard, is the abolishment of the Goods and Services Tax.

No doubt that doing away with GST would appeal to voters, but seriously, even the opposition politicians calling for this are aware that it is a counter-productive move.

In the words of Tan Sri Mohd Sheriff Mohd Kassim, a highly-respected retired government servant, “it is too much of a fairy tale.”

The danger, of course, is that populist electoral pledges are always appealing, even if they are not rational.

Malaysia cannot depend on just about two million tax payers to foot the bill in a country of over 30 million people. It is unfair and unsustainable.

Taxing consumption gives more stability to revenue because income tax is regarded as highly volatile, as it depends very much on the ups and downs of businesses, according to Mohd Sheriff. When the market is soft, revenue collection always sees a dip.

For the government, which has already been criticised for having such a huge civil service, without GST, it could even mean its workers may not get paid when there is a downturn in the economy.

In the case of Malaysia, we have lost a substantial amount of revenue following the drop in oil price.

So, when politicians make promises, claiming plugging leakages is sufficient to end GST, it is really far-fetched and irresponsible.

The Malaysian tax system needs to continue to be more consumption-oriented to make it recession-proof, and, more importantly, the tax net just has to be widened. The bottom line is that, it is grossly unfair for two million people to shoulder the burden.

The government has done the right thing by widening the tax base and narrowing the fiscal deficit. The move to implement GST, introduced in 2014, has been proven right.

GST is needed to provide a strong substitute as a tax consumption capable of off-setting revenue loss from personal and corporate tax.

Beginning next month, India will join nearly 160 countries, including Malaysia, in introducing GST. Like Malaysia, when GST was first introduced, plenty of loud grumblings and doubts have rolled out.

Unlike Malaysia’s flat 6% across the board, India is introducing a more complicated four-tier GST tax structure of 5%, 12%, 18% and 28%, with lower rates for essential items and highest for luxury and demerits goods that would also attract additional cess.

In Singapore, GST was introduced on April 1, 1994, at 3%. The rate was increased to 4% in 2003, then 5% in 2004. It was raised to 7% on July 1, 2007.

Some politicians came under fire recently for purportedly calling for the abolishment of GST, however, some others clarified that they had merely called for a reduction in the tax’s percentage.

Another top opposition politician has come out as the strongest opponent of GST, reportedly saying the claim that Malaysia needs GST is false.

Some other politicians have described GST as regressive, but have not come out with clear ideas on how it should be tackled.

Nonetheless, the ruling party should not make light of these electoral promises.

For many in the urban middle class, they feel the squeeze the most.

They have struggled against the rising cost of living, paying house and car loans, and earning deep levels of debt, as one report aptly put.

The middle class, consisting of over 40% of Malaysians, is also in the income tax bracket, it must be noted.

Last year, an economist was quoted saying that 2016 was a year of a shrinking urban middle class and a happy upper class.

Shankar Chelliah, an associate professor at Universiti Sains Malaysia, said that the Malaysian middle class shrank in metropolitan centres across the country, and that most of its members would end the year almost 40% poorer than they were in 2015.

He said this would be due to the withdrawal of cooking oil and sugar subsidies, depreciation of the ringgit, decrease in foreign inflows and increase in outflows, among other factors.

For many in this middle class range who do not qualify for BR1M handouts, the government clearly has to come up with a range of programmes which can relieve them of these burdens.

It isn’t race or religious issues that will appeal to voters – they want to know how they can lead better lives, and if the opposition thinks contentious issues will translate into votes, they will be in for a surprise.

It is true that the heartland will continue to deliver the crucial votes, and the ruling party will benefit from this, but Malaysia has also become more urban and more connected.

At the end of the day, it is the bread and butter issues that matter most. Let’s hear some solid ideas and programmes which will reduce the burden of Malaysians.

By Wong Chun Wai On the beat, The Star

Wong Chun Wai began his career as a journalist in Penang, and has served The Star for over 27 years in various capacities and roles. He is now the group’s managing director/chief executive officer and formerly the group chief editor.

On The Beat made its debut on Feb 23 1997 and Chun Wai has penned the column weekly without a break, except for the occasional press holiday when the paper was not published. In May 2011, a compilation of selected articles of On The Beat was published as a book and launched in conjunction with his 50th birthday. Chun Wai also comments on current issues in The Star.

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Money games over for JJPTR! Operator closes shop, founder Johson Lee arrested, demanded!



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JJPTR money game operator closes shop

 

Zero activity: JJPTR’s Bayan Baru office is all quiet following the arrest of the scheme’s founder.

Police set the record straight on founder’s fanciful claims – Nation

Whereabouts of JJPTR founder unknown

GEORGE TOWN: Offices of money game operator JJPTR have reportedly been closed since last Friday following raids by a task force investigating the scheme. There was no sign of employees or investors at its offices in Perak Road, Bandar Baru Air Itam and Bayan Baru yesterday.

Investors too seem resigned to the fact that they will not be seeing their money after JJPTR founder Johnson Lee and two of his key leaders were remanded in Klang. Facebook pages and social media sites promoting the scheme have also gone silent.

Investor Y.L. Ho, in her 50s, said she knew her fate was sealed when the task force raided eight JJPTR premises in Penang and recorded statements from 15 workers and four investors.

She has yet to recoup her RM4,700 capital, and had lost about RM1,600.

“I was told the founder has been remanded. I don’t think I will ever get back my money,” she said.

Another investor, known only as Goh, believes his investment is as good as gone.

“There is no point going to the office to make further enquiries,” he said.

On Friday, the task force team carted away documents and computers from the main office in Perak Road between noon and 5pm.

Besides JJPTR offices, the team also raided another operator Change Your Life’s (CYL) office at Icon City in Bukit Mertajam.

Businessman S.K. Yeoh, who has invested in a few money games like CYL and Richway Global Venture, said he has lost hope of getting his monthly payouts.

“Following the intervention of the authorities, I think my handsome returns will be up in smoke.

“Luckily I have recouped my capital. If not, it could have been worse,” he said.

A money game player, Ben Chow, 35, said many of his friends knew it was a gamble when they decided to invest in the many get-rich-quick schemes.

“Just look at the number of police reports lodged and you will get some hints. Many of my friends know how these schemes work. They will not go to the police.

“They are always on the lookout for new platforms, knowing they can find easy money if they are among the pioneers. If they lose, they would just curse their luck,” said Chow, who invested in BTC I-system and several other money games.

Meanwhile, Penang police chief Comm Datuk Wira Chuah Ghee Lye said they were waiting for instructions from Bukit Aman before taking the next course of action.

“We won’t jump the gun. We will wait and see the outcome of the investigations on JJPTR.

“There is no reason for us to call up investors to record statements, unless they come to us and make a complaint.

“The Inspector-General of Police has given us three months to investigate the matter.

“Bank Negara is playing an active role in the investigations,” he said after launching a blood donation campaign at Tanjung City Marina yesterday.

Comm Chuah said several businessmen had raised concerns over the prevalence of money game schemes when he first assumed the state police chief post in January.

Source: The Star by  tan sin chow, farik zolkepli, adrian chan, m.kumar, loshana k.shagar


JJPTR’s Johnson Lee arrested

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GEORGE TOWN: Police have picked up JJ Poor To Rich (JJPTR) founder Johnson Lee (pic) and two of his right-hand men in Petaling Jaya at around 4.30 on Tuesday morning.

Police are expected to release a statement on their arrest soon.

Previously, Bukit Aman Commercial Crime Investigation Department (CCID) director Comm Datuk Acryl Sani Abdullah Sani said JJPTR have collected investments of up to RM1.7bil up until now.

Comm Acryl said in a statement last week that following investigations on JJPTR, Bukit Aman’s Anti-Money Laundering squad, CCID, Bank Negara, the Companies Commission of Malaysia, Inland Revenue Department, National Revenue Recovery Enforcement Team and Cyber Security raided eight different locations in Penang.

He said that said the eight locations, several offices and residential units, were believed to be used as offices of the syndicate’s operations.

Comm Acryl Sani said following the raid, 15 workers and four investors have been held for documentation process and questioning.

He added that all of them are aged between 23 and 40.

It is learnt that of the 15 workers held 13 are women while three of the four investors are also women.

All of those held are locals.

“Also seized were seven computers and laptops, cash counting machines, hundreds of JJPTR company documents, televisions, CCTV cameras and RM3,300 cash,” he said in the statement.

Comm Acryl Sani said that action to freeze accounts belonging to JJPTR were also being carried out under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001.

Source: The Star by  farik zolkeplitan sin chow

Johnson and two others remanded

KLANG: JJ Poor To Rich (JJPTR) founder Johnson Lee and two of his key lieutenants have been remanded for three days.

The three men were brought by police to the court complex where magistrate Nik Nur Amalina Mat Zaidan granted yesterday the remand order until Thursday.

The men were led away about 20 minutes later.

Lawyer G. Jaya Prem said his clients were being investigated for one case of fraud.

“It is one report, of Section 420 of the Penal Code, on a sum of RM56,400. The funny thing is: this money went to a company which is not even under the name of my clients,” he said.

Lee and his assistants were picked up by police in Petaling Jaya at about 4.30am yesterday.

Previously, Bukit Aman Commercial Crime Investigation Department (CCID) director Comm Datuk Acryl Sani Abdullah Sani said JJPTR had collected investments of up to RM1.7bil until now.

He said in a statement last week that following investigations on JJPTR, Bukit Aman’s Anti-Money Laundering squad, CCID, Bank Negara, the Companies Commission of Malaysia, Inland Revenue Department, National Revenue Recovery Enforcement Team and Cyber Security raided eight different locations in Penang.

Comm Acryl Sani said following the raid, 15 workers and four investors were held for documentation process and questioning.

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Angry & frustrated investors lodged report, tell off staffs trying to buy time!


Angry investors who lodged a police report at the Pekan Kinrara station. Waiting for answers:

His first investment scheme failed with losses estimated at between RM400mil and RM1.7bil but JJPTR founder Johnson Lee has brazenly come up with a new one offering even higher returns of 35% a month and with a car, motorcycles and smartphones thrown in as lucky draw prizes. Many of his investors still have faith in him but those in another scheme, Change Your Life, are in a quandary. They now have to choose between getting lower returns or changing to ‘life points’ – and waiting.

Show me the money: Investors making enquiries at Icon City in Bukit Tengah, Bukit Mertajam. The money scam issue has got many who have parted with their savings feeling anxious

 

JJPTR offers ‘better’ plan

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http://www.thestar.com.my/news/nation/2017/05/03/jjptr-offers-better-plan-founder-promises-higher-returns-but-stays-mum-on-refunds/

After the spectacular collapse of his previous financial scheme, purportedly because of a hacked account, controversial scheme operator Johnson Lee has rolled out a new plan, claiming to offer even better returns.

While JJPTR’s earlier scheme – which ended with RM500mil missing from the company’s account – offered returns of 20% a month, this new one offers 35%.

On top of that, it offers special lucky draws with a new car, motorcycles and smartphones as prizes.

What the company did not say in the shining glossary of the new plan is how Lee plans to address the US$400mil (RM1.73bil) losses he claims the company has incurred.

The new scheme also does not explain how he plans to repay those who lost their money to the earlier scheme.

The one-and-a-half minute video Lee uploaded shows that the new plan is based on a “split mechanism” and has three rounds.

The initial investment in US dollars is “split” or doubled in each round. Half of it is re-invested in the scheme and rolls over to the next round.

Each round lasts 10 days and investors are allowed to convert their earnings back to ringgit after three rounds.

Anyone who invests US$1,000 (RM4,331) is expected to receive US$450 (RM1,949) in each round, making it a return of US$1,350 (RM5,847) by the end of round three.

Under the proposed new scheme, investors will also be rewarded with JJ Points, which can be used in exchange for goods via its shopping platform JJ Mart.

The new scheme was announced by the 28-year-old Lee last Tuesday after news broke that his company had gone bust.

The company did not say when the new plan would start.

Attempts to contact Lee were futile and the number listed on the JJPTR Facebook page is already out of service.

A visit to the company’s offices in Penang showed that investors were no longer lining up for answers.

Instead, the staff, who preferred not to be photographed, were seen sitting at empty counters.

Penang-based JJPTR, or Jie Jiu Pu Tong Ren in Mandarin (salvation for the common people), came under the spotlight when investors complained that they did not get their scheduled payment last month.

JJPTR, JJ Poor to Rich and JJ Global Network are among the entities listed as unauthorised companies under Bank Negara Malaysia’s Financial Consumer Alert.

Records from the Companies Commission of Malaysia showed that JJ Global Network was a “RM2 company” owned by Lee and his former girlfriend Tan Kai Lee, 24. Each hold a single share.

Lee’s father Thean Chye, 58, and Tan are also directors of another company called JJ Global Network Holdings Bhd.

Thean Chye, who was an assistant professor at Southern University College in Johor, resigned on Wednesday after the JJPTR losses came to light.

Source: The Star/ANN

Investor tells off staff after failing to get refund 

 

Business as usual: Employees explaining the refund process and new scheme to investors at the JJPTR main office in Perak Road, Penang.

GEORGE TOWN: An investor, frustrated over not getting a promised refund on his stake, told off several female employees at the main JJPTR office in Perak Road.

The man, in his 40s, was heard having an exchange of words with the staff after being told that it may take “a few more days” before he could get his money.

He told them Johnson Lee, the founder of JJPTR, had said that the money was refunded to JJ2 scheme investors some days ago.

“But until today, I haven’t got my money back.

“I just want to know if the refund has been made or are you in the midst of processing the refund?

“If he has not started the refund, just be honest with the investors.”

He insisted on getting a firm date on when he would get back his money but the employees replied that they would need at least five working days.

He then demanded their names but they refused him.

“You don’t even dare give me your names. If I want to lodge a report, I won’t be able to provide the police with details.

“And don’t tell me you need days for a bank transfer. It only takes hours,” he said.

As he left the office, several journalists approached him for comment but were turned down.

“I don’t want to talk to reporters. You are all just causing trouble for us. I can get things done on my own,” he said.

JJPTR, or Jie Jiu Pu Tong Ren (“salvation for the common people” in Mandarin), is a Penang-based company that came under the spotlight when its investors complained that they did not get their scheduled profits last month.

According to online and media reports, the investors stand to lose RM500mil. They reportedly number in the tens of thousands, comprising Malaysians and foreigners from Canada, the United States and China.

Lee, who has blamed the loss on hackers, put the figure at US$400mil (RM1.75bil) in a widely-circulated video clip.

JJPTR, JJ Poor to Rich and JJ Global Network are listed as unauthorised companies by Bank Negara Malay­sia.

Source: The Star/ANN

JJPTR just trying to buy time, says ‘scam buster’ 

 

“Scam buster” Afyan Mat Rawi has ridiculed JJPTR’s new plan, calling it “unsustainable” and nothing but a forex scheme to placate angry investors.

Once a victim of an investment scam himself, the 37-year-old financial adviser said investors should stay away from the scheme, which he described as “illogical”.

“The investors are angry right now, and JJPTR is trying to pacify them by introducing this new plan.

“A 35% return at the end of the three rounds (one month) is illogical. Where would the company find all the money to reinvest?

“The new plan is just a way for them to buy time,” Afyan said.

He said any investment scheme promising returns of more than 15% in a year will ultimately collapse.

“No legitimate scheme will guarantee an annual return of more than 15%. Any scheme claiming to do otherwise has to be a scam.

“Like most other pyramid schemes, the (JJPTR) forex scheme will collapse when there is no entry of new investors.”

Afyan said that despite getting flak from investors after allegedly losing RM500mil due to its accounts being hacked, it was still “possible” for JJPTR to entice old and new investors to subscribe to the new plan, which promises higher returns and special lucky draws.

“Some investors may leave, because they no longer see hope but those in the “top tier” will continue finding new victims as they’ve already invested so much.

“Unfortunately, there will still be people who believe in them,” he related.

Commenting on a video of founder Johnson Lee announcing the new plan via JJPTR Malaysia’s Facebook page, Afyan said the laws in Malaysia were not harsh enough to serve as deterrent for so-called “scammers”.

He claimed that the only person to have been severely punished for operating an illegal investment scheme was Pak Man Telo, or Othman Hamzah, who was jailed and banished to Terengganu from Perak in the early 1990s.

Othman reportedly enticed 50,000 people to invest in his getrich-quick scheme, commonly known as the Pak Man Telo scheme, and managed to rake in RM90mil before being arrested, tried and sent to prison for two years. He died in Terengganu a few years later.

Ever since then, Afyan claimed, convicted scammers have been getting away easy.

“At most, scammers will be arrested and remanded. But you don’t hear about them serving time in prison. They’ve already made millions, billions, in profits.

“A penalty of a few thousand ringgit is nothing to them,” he said.

Afyan, who lost RM300 to a getrich-quick scheme while he was a university student in 2003, worked in Islamic insurance and financial planning after graduating.

He created a Facebook page in 2008 to share information on questionable investment opportunities, earning him the nickname “scam buster”.

He claims to have uncovered about 50 dubious companies so far.

Source: The Star/ANN

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