Corporate Malaysia history needs Muck

OPTIMISTICALLY CAUTIOUS By ERROL OH

Here are some important reminders of our business history

IT'S clear of late that Malaysia has an awkward relationship with its past. Controversy after controversy have shown that it's hard for us to agree on the facts and interpretation that form a widely accepted version of our history, or indeed, on what separates historical facts from mere stories.

This is troubling. George Santayana was a philosopher, essayist, poet and novelist, but if he is to be universally noted for just one thing, it should perhaps be for the fact that he wrote this: “Those who cannot remember the past are condemned to repeat it.”

Try arguing against that.

What's more worrying is that there's no collective effort by corporate Malaysia to enrich what we know about the pivotal developments in the country's business landscape. Key documents, publications and other forms of information from companies should be aggregated, organised and presented to a broad audience.

In other words, we should have a Museum of Corporate Knowledge. As a bonus, it has an easy-to-remember acronym Muck.

Of course, it ought to have features you would find in any other top-notch museum, such as objects of great significance, dioramas, interactive displays, and narratives.

Considering that corporate Malaysia is well over a century old the Companies Commission of Malaysia's origins go back to the late 19th century a major challenge is to select the people and events that deserve to be showcased in Muck.

And after that task has been completed, there's the equally difficult job of designing exhibits that best tell the story behind each choice. Some suggestions:

The power of no power

The story: Lightning struck a transmission facility on Sept 29, 1992, causing a blackout throughout Peninsular Malaysia. It took 48 hours to fully restore electricity supply. The incident prompted the Government to allow others to enter the business of generating power, until then the monopoly of Tenaga Nasional Bhd (TNB).

This paved the way for the birth of the independent power producers (IPPs).

Six months after the blackout, TNB signed a 21-year power purchase agreement (PPAs) with YTL Corp Bhd. Four more PPAs were inked in 1993. These early PPAs are highly lucrative, to the point that they were regarded as lopsided in favour of the IPPs.

The terms of subsequent PPAs were less generous, but the structure of the IPP programme has proven to be less than ideal because of the strain on TNB. Attempts to renegotiate the first-generation PPAs have failed.

The exhibit: The TNB equipment damaged by the September 1992 lightning strike. This serves to remind us of how an act of God can have far-reaching consequences.



AirAsia's transformation

The story: On Sept 5, 2001, DRB-Hicom Bhd agreed to sell its 99.25% stake in AirAsia Sdn Bhd to Tune Air Sdn Bhd for RM1 cash and the assumption of half of AirAsia's liabilities. Back then, AirAsia was making losses and was weighed downs by debts. The transaction was completed three months later.

Founded by Tan Sri Tony Fernandes, Datuk Kamarudin Meranun, Datuk Aziz Bakar and Datuk Pahamin Ab Rajab, Tune Air relaunched AirAsia as a low-fare carrier. Now listed on Bursa Malaysia, the airline has famously changed the region's aviation and travel industries.

The exhibit: If Tune Air had paid for the acquisition with a RM1 banknote, let's hope somebody has kept it as a souvenir and is willing to donate it to Muck. Framed and displayed prominently, it makes a great symbol of entrepreneurial vision and drive.

Kenmark scandal

The story: Furniture manufacturer Kenmark Industrial Co (M) Bhd announced on May 31, 2010, that its quarterly results were delayed because, among other things, managing director James Hwang had gone missing. At the same time, the company was classified a PN17 stock because of loan default by a subsidiary.

The next day, businessman Datuk Ishak Ismail emerged as a substantial shareholder, and new directors of Kenmark were appointed. It was also around that time that the company released a letter and a press statement purportedly from Hwang, explaining his absence (supposedly due to illness) and promising that he would return to Malaysia. The share price rebounded strongly.

A week later, Ishak started selling his shares and soon ceased to be a substantial shareholder. The stock plunged again and this time, there was no reversal.

Kenmark was delisted on Dec 31, 2010. It appears that Hwang has not come back to Malaysia until today. The Securities Commission (SC) has initiated civil action against Ishak for insider trading and for making false or misleading statements.

The exhibit: Hwang's letter and press statement dated June 2, 2010, that were emailed to Kenmark's independent directors. These were instrumental in convincing people that it wouldn't be long before the company's woes were over.

Transmile fraud

The story: When Transmile Group Bhd was delisted in May last year, it marked the conclusion to a spectacular corporate flop. The air cargo company was once considered a top stock pick, mainly because it was part of Robert Kuok's empire and was poised to grow rapidly in tandem with Asia's trade boom.

The first sign of trouble surfaced in April 2007, when it missed the deadline for submitting its audited 2006 accounts. A special audit commissioned by the board of directors uncovered shocking irregularities. The company's revenue from 2004 to 2006 was overstated by hundreds of millions of ringgit. The audited shareholders' fund as at December 2006 was 55% less than the unaudited figure announced earlier.

Transmile took too long to get out of PN17 status and was booted out by the stock exchange.

In July 2007, the SC charged three Transmile senior executives, including CEO Gan Boon Aun, for abetting the company in making misleading statements. I

n November the same year, two former independent directors and audit committee members were charged for authorising the furnishing of a misleading statement to Bursa Malaysia.

The two ex-independent directors were found guilty in October last year and were jailed and fined. Gan's trial is ongoing.

The exhibit: Altimeter from one of the Transmile planes. The instrument for measuring altitude is a great representation of the ups and downs in the stock market. At its height, the Transmile share price reached RM14.40. It had been trading at less than 10 sen before its suspension and subsequent delisting.

Executive editor Errol Oh believes that when we know our follies may be put on public display, we're likely to be more careful and responsible.

Related post:
Malaysian History & Legend; facts & fallacies; myths, heroes or zeroes? 

Recipe for innovation

Tweet

AirAsia CEO and others give you recipe for innovation

By LIZ LEE lizlee@thestar.com.my

KUALA LUMPUR: What fosters the spirit of innovation? The answers point to an encouraging environment and putting Malaysia into context, there is much to be done at the home, education and corporate levels to create an environment fertile for sowing the seeds of unconventional thinking.

That was the main take-away from the second Merdeka Award Roundtable last week, featuring group chief executive of AirAsia Bhd Tan Sri Tony Fernandes, Malaysian Invention and Design Society president Tan Sri Dr Augustine Ong Soon Hock and Universiti Teknologi Malaysia (UTM) vice-chancellor Prof Datuk Dr Zaini Ujang.

The award was founded by energy companies Petronas, ExxonMobil and Shell in 2007 where award recipients will receive a certificate and RM500,000 cash award for each of five categories.

“(Innovation) is not something you can teach or programme. It is creating a lot of little ecosystems to make sure (the environment is right) and culture does play a part in this,” Fernandes said, kicking off the discussion on “Cultivating a culture of innovation in challenging times.”

 

Sharing ideas: (from left) Zaini, Ong and Fernandes at the second Merdeka Award Roundtable. The discussion was hosted by Astro Awani’s Norina Yahya

Of the education system, Fernandes said the focus on books had overwhelmed the development in other areas that build thought leaders.

“When we look at some of the great leaders, they are all rounded. Our schools have lost a lot by focusing on academics only,” he said.

Fernandes believed that while the Government should foster innovation as well as trust the people and allow ideas, education is the key to take Malaysia to the next level. He opined that bringing back arts, culture and sport would change the way the future generation thinks.



“A successful education system should be about bringing out the best in children and giving them the ability to experiment and try all sorts of things and turn that raw diamond into a polished diamond,” he said.

As a parent, he believed that it was important to “expose the children to as many things as possible and allow them to go where they want.”

At the corporate level, he added that there was also a culture of subordination in Malaysia that hampered creative output: “When you go against the norm in Malaysia, you can be whacked. It's sometimes seen as insubordinate or questionable when you challenge the norm.”

“That's the culture. Malaysians are an innovative lot but sometimes we need to praise innovation by creating the environment,” he said, adding that the success stories of Malaysian innovation were not sung often enough.

“We don't hear enough of the success stories. A lot of our technology came from Malaysians and we need to show that the commercialisation of these ideas have come to fruition,” he said.

During the discussion, Fernandes also revealed that the flat structure in AirAsia's management was the “secret weapon” for its success in the industry. He said that communication flow relied on organisation structure.

“If you have a hierarchical organisation, the people who have ideas are sometimes too scared to speak up. (But) it's all right to give ideas, it's all right to talk,” he said of the potentially stifling hierarchical organisation structures in many Malaysian companies.

“I always say I would rather have 9,000 brains working with me than just 10,” he said, adding on that “if you create an environment where everyone feels equal and there's freedom of expression (among all levels of employees), that provides a very powerful machine.”

However, innovating per se should not be the end goal too.

Ong, who is also a former member of the Merdeka Award Health, Science and Technology Committee, said there needed to be market-driven innovations to encourage worthwhile creations.

“When you have innovation for a market that is not ready for it, that becomes a problem,” he said.

“We should also look at what our country has a niche in. We should concentrate on areas where we already have good industries going on where innovation can bring some results,” he added, saying that foreign areas like nuclear energy may not be an ideal area to innovate since the country had yet to develop its know-how and infrastructure.

In terms of getting academicians engaged with market-centric needs, Zaini said UTM had a professorship scheme with Proton Holdings Bhd where professors were positioned at the company to spur on-the-ground projects with the staff.

“We target to have 100 patents under Proton per year from this industrial PhD,” the former Merdeka Award recipient said, highlighting the university's market-relevant endeavours through the reverse flow of ideas from the market into academia.

The roundtable will be broadcast on Astro Awani in early December.

Friends for all seasons - priceless

Tweet

People who are friends in good and bad times are priceless

Monday Starters - By Soo Ewe Jin

THE MAS-Air Asia alliance remains very much the talk of Corporate Malaysia. In the many analyses so far, the recurring theme seems to be about how erstwhile enemies are going to work together as friends.

My colleague used the Sun Tzu quote, “Keep your friends close, and your enemies closer,” to lead off the cover feature on the deal in StarBizWeek on Aug 13. Somewhere in the story, there is this quote by Tony Fernandes: “You don’t have to be an enemy forever, life is too short.”
Image via Wikipedia
Actually, there is not that much that separates the corporate world and politics as far as alliances are concerned.

In politics, it is said that there are no permanent friends, only permanent interests. Politicians are fond of referring to their adversaries as “strange bedfellows” but will not hesitate to climb into the same bed if it suits their interests.

In the world of high-finance, bitter rivals can easily sleep on in the same bed, so long as it is good for the bottom line.

For some business people, however, friendship is not a word that exists in their vocabulary. Many good friends who go into business together learn the hard way that years of friendship count for nothing once the business issues get into the way.



A friend told me once that he will never hire me, or ask me to be his business partner, simply because he values our friendship too much.

I once met a man at a hospital as he was dying. He told me how he had pursued wealth and success at any cost. If a family member or close friend went against him, he would not spare them any mercy.

“But look at me now. I do not have long to live. But if I recover, I will surely be a different person. I will seek the forgiveness of those I have hurt. I will forgive others. I will give back to society. I will try not to be so nasty to people,” he said.

I was there to bring him a message from a former business partner who was somehow not able to bring himself to see him personally. He told me to tell him that he did not hold anything against him and to wish him well.

Tears came to his eyes. “I wish he would come and tell me this personally. I have done so much harm to him and his business. But he still thinks of me and is concerned for me.” I told him, “I hope and pray that you will both meet up and forgive each other.” They never did. He died one week later.

I was thinking about friendship this past week after a friend posted on his Facebook this simple reflection: “It has been said that everlasting friends go long periods of time without speaking and never question the friendship. These friends pick up like they just spoke yesterday, regardless of how long it has been or how far away they live; they don’t hold grudges. They understand that life is busy and know that you will always love them.”

Whether we want to admit it or not, sheer numbers of acquaintances in itself is no reflection of the number of real friends we have. Just ask anyone previously in a high position who has retired and he will tell you about the sense of “abandonment” that one feels sometimes.

Suddenly, no one is free for lunch or for teh tarik, one such person told me recently.

This is not to say that it is not possible to have real friends within working relationships. But it can only come about if we are genuinely concerned about the person, and not just the title he or she holds.

And the test of that friendship will come when you are going through a difficult journey, and he is there for you.
● Deputy executive editor Soo Ewe Jin is thankful for friends, near and far, new and old, who bring that special touch into his life, through good and bad times.