Saturday, 4 February 2017
IT has been a fun week. Meeting relatives, eating, giving out ang pows, eating, receiving loads of CNY whatsapp greetings, eating and watching CNN and BBC news on Trump. President Trump. Great entertainment on a daily basis.
I was amazed at how a non-politician, a mere property tycoon can totally disrupt a nation, not just any nation but the self-proclaimed leader of the free world, the great United States of America. Having been on the receiving end of political jibes from my American friends for the last 12 months, it was my turn to return the favour with interest. I forwarded them the viral picture of the great leader of North Korea with the message “I no longer the craziest leader”.
It was in jest of course. Political decisions affect businesses, government institutions and citizen rights. Throw in a protectionist trade policy and harsh immigration laws and we have a cauldron of boiling issues that will cause an uproar that divides the nation. Managing a country is way, way tougher than managing a business. It is a thankless job. Unless you enrich yourself along the way.
Just as a businessman without any political experience should not manage a country, full time politicians and their families should not be involved in business. Governments whether at local or at federal level should also stay away from running businesses. Not only does it create an uneven playing field for entrepreneurs and real businesses, it creates opportunities for politicians of ruling parties to participate in businesses thus creating major conflict of interest and widespread corruption.
Even in squeaky clean Singapore, entrepreneurs of SME’s are complaining of uneven playing fields competing against government-linked companies (GLCs). These GLC’s are controlled via the Singapore government’s two sovereign wealth funds, GIC and Temasek Holdings.
With a combined wealth fund value of approximately US$600bil, GIC and Temasek are controlling key industries in corporate Singapore. Tasked with the responsibilities of preserving the nations reserve and wealth, they have now evolved into major fund management companies, spreading their investments all over the world.
Back home, we have Permodalan Nasional Bhd (PNB) and Khazanah Nasional Bhd as our two sovereign wealth funds. PNB was set up in 1978 compared to GIC, which was set up in 1981. PNB was tasked under the New Economic Policy to promote share ownership among the bumiputra.
It has grown to become the largest fund management company in Malaysia with asset under management of approximately RM260bil. This compares with Khazanah’s RM120bil fund size. For comparison sake, PNB via Amanah Saham Nasional manages RM260bil of unit trust versus Public Mutual Funds of approximately RM70bil.
PNB and Khazanah controls most of the key players in major industries from banking, utilities, transportation, properties, plantation etc. In fact, the biggest property developer in Malaysia is PNB via majority ownership of Sime Darby, S P Setia, Island and Peninsular, Petaling Garden etc.
Combined with the Employees Provident Fund’s RM600bil fund size, these funds have tremendous influence on our local stock market, Bursa Malaysia.
Sovereign wealth funds are controlled by the government of the day. The chairman of GIC is Prime Minister Lee Hsein Loong whereas the CEO of Temasek Holdings is Ho Ching, wife of Prime Minister Lee. GIC and Temasek hires top corporate Singaporeans to head their management team and where necessary they source top foreign managers with qualified expertise to manage their companies.
At Khazanah, MD Tan Sri Azman Mokhtar has done a tremendous job in transforming the sovereign fund into strategic investments for national interest. His willingness to hire top foreign managers (never too late) to turnaround the troubled Malaysian Airlines is bearing fruits as we see an improved performance from our national airline.
Over at PNB, the appointment of the dynamic duo of Tan Sri Abdul Wahid Omar as chairman and Datuk Abdul Rahman as CEO and president looks promising as they go about transforming the rather laidback PNB. Armed with years of corporate experience between them, they will transform the GLC companies under their care. I am predicting major corporate shakeups ahead.
With transformed GLC’s being more efficient and under better management in the not too distant future, how will entrepreneurs of SME’s compete with the giants of the industries? Add the family companies of the ruling politicians and the well-connected businessman into the fray and we have a battlefield where they will compromised to share the spoils or the winner takes all. If betting is legal in this country, I will bet on the politician winning this battle. Hands down.
Out of the 500,000 SME’s, maybe the more capable 0.1% (500) will outgrow its SME status to become big corporations in the future. And the lucky 0.001% (5 persons) might just become the next Tan Sri Tony Fernandes or Tan Sri Liew Kee Sin. As for the rest, go find a niche business that no big businesses wants to be in and you will be fine. Or tag along as a supplier to the big boys for the crumbs to fall your way.
The younger entrepreneurs seems to have the right mindset in terms of new business start-ups. Based on a bright idea to disrupt the industry, they build companies of the future to sell to funds flushed with cash. More than often, such high risk investment flops and the young entrepreneur walks away with sufficient capital to fuel his next adventure.
Business books need to be re written to suit current trends. Reason to start-up should not be based on competitive advantages only. Exit options with probable buyers must be established prior to investment. As for political risk, they would need to add the danger of leaders having narcissistic personality disorder to tyranny to corruptible behaviours.
Entrepreneurs and genuine business people are squeezed into economic niches by government and politicians going into business. Maybe it is time for a genuine businessman to manage this country for a change. A businessman Prime Minister?
Calling out for a tycoon who is supposedly worth 10 billion dollars. No government experience required. You just need to be brash, arrogant and have a narcissistic personality disorder. You are just the CEO needed by the country to manage the wide array of businesses owned by the government and we hope you will give the politicians a run for their money.