Robert Kuok's departure from sugar business: A sign of the times?

This transaction may have more stories that will never be told than what is told. Is it a sign of the times?

Why would a solidly run company dispose off a key contributor to the Malaysian arm of its food commodities business? Why sell off it's market dominance in Malaysia? That is so very unlike Robert Kuok.

Kuok isn't called "The Sugar King" for nothing. Well, he's still got his sugar interests outside of Malaysia.

This is a nuanced post because the transaction is nuanced.

PPB Group Bhd, controlled by tycoon Tan Sri Robert Kuok, stands to lose its dominance of the domestic sugar market under a proposal to sell its entire stake in two sugar units and land used for sugar cane cultivation to Federal Land Development Authority (Felda) for RM1.29 billion.

The proposed sale will see PPB exiting the local sugar industry, which had earned founder Kuok his nickname of "Sugar King".

PPB said it will dispose of its entire 36.36 million shares of RM1 each in Malayan Sugar Manufacturing Co Bhd (MSM) to Felda Global Ventures Holdings Sdn Bhd, a wholly-owned unit of Felda.

It is also selling its 50 per cent stake, or six million shares of RM1 each, in Kilang Gula Felda Perlis Sdn Bhd to Felda Global Ventures for RM26.31 million.

Felda Holdings Bhd already holds a 50 per cent stake in the company, which is involved in sugar cane milling and refining of domestic and imported raw sugar.

The group said the disposal of these three assets will help it realise its investments with a substantial gain.

Meanwhile, its 49 per cent-owned associate Grenfell Holdings Sdn Bhd will sell its stake in plantation group and sugar refiner Tradewinds (M) Bhd for RM207.53 million.

Tradewinds is controlled by businessman Tan Sri Syed Mokhtar Al-Bukhary.

According to PPB's 2008 annual report, MSM and Kilang Gula Felda Perlis produced more than 750,000 tonnes of refined sugar, supplying some 60 per cent of the domestic sugar requirements last year.

Its sugar refining and cane plantation business contributed 27 per cent to the group's revenue of RM3.46 billion and 36.5 per cent to its operating profit of RM431.2 million in the fiscal year ended December 31 2008.

This makes the business its second largest contributor, after its grains and feed business.

Outrageous!

This report from the Malaysian Mirror makes me outraged. This is either bureaucratic stupidity or plain subversive racism. And, people wonder why so many Sarawakians are pissed off.

KUCHING - For 17 years, Marina Undau lived a life of a child growing into a young adult.

School, her family and friends were a central part of her existence. She dreamt of doing her parents proud by furthering her education in a university and eventually getting a good job.

SPM came and went, and the 18-year-old science stream student of SMK Simanggang did well, scoring 9As and 1B last year.

But then she had a rude shock.

Not eligible

The education system said she was not eligible to enroll in a matriculation course, a prelude to varsity and a degree. The reason? She was, it seemed, not a bumiputra.

Born to an Iban father and a Chinese mother, Marina’s hope for a smooth climb up academia was dashed. With it went a part of her identity and the drive that made her a top scorer.

In an interview with The Borneo Post at her house in Sri Aman on Wednesday, Marina expressed her feelings in Iban: “Aku amai enda puas ati nadai olih nyambung sekula ngagai universiti (I’m very sad that I can’t pursue my university education).”

Meantime, she has started Form Six in her old school as a workaround solution.

Upset and bewildered

Seated between her parents, Undau Liap and Wong Pick Sing, the disappointment in the teenager was plain to see.

Her elder sister never had a problem getting into a university. Her identity was never questioned and she is at present in her second year at Universiti Sains Malaysia in Penang.

Marina is worried that a similar obstacle she faced after SPM awaits once she completes her STPM.

“If I get good results, what’s next?”

Marina’s father, Undau, would not take no for an answer.

When her application to enter matriculation was rejected, Undau, a civil servant, contacted the Education Ministry’s Matriculation Department in Putrajaya on June 23 and was told that her daughter was not a bumiputra.

Pressing on

Dissatisfied, the father wrote to the ministry on July 1. The reply he received shocked him, and it is bound to challenge the identity of many Sarawakians who are of mixed-parentage.

The ministry said in a reply on July 14 that Undau’s appeal was turned down because “the candidate is categorised as non-bumiputra (father is Iban and mother is Chinese)” based on a definition used by the Student Intake Management Division, Higher Learning Department and Higher Education Ministry.

Their definition is as follows:

• If either parent of a candidate is a Malay who is a Muslim/Orang Asli as defined in Article 160 (2) of the Federal Constitution, the child is considered a bumiputra.

• Sabah – If the father of the candidate is a Malay who is a Muslim/native of Sabah as defined by Article 161A(6)(a) of the Federal Constitution, the child is considered a bumiputra.

• Sarawak – If the father and mother is a native of Sarawak as defined under Article 161A(6)(b) of the Federal Constitution, the child is considered a bumiputra.

Despite the explanation, Undau is still dissatisfied and urged the government to clear up education issues that differentiate bumiputras from non-bumiputras.

He said the 1Malaysia concept would be rather hollow if education today continues to be polarised along such lines

“Why all the differences in the intake of students for higher learning? I am not questioning the Constitution, but what is the meaning of 1Malaysia if things like this happen?”

NRD and Native Court weigh in

The National Registration Department (NRD) headquarters here said it has received a flurry of enquiries about the bumiputra status of late.

An NRD spokesman said that in Sarawak, a person’s race is registered based only on the race of the father.

On whether such a person is automatically accorded bumiputra rights, the spokesman said: “We don’t actually handle that. We look at the race of the father. If the father is Iban, the child is Iban. If the father is Chinese, the child is Chinese. The bumiputra status comes under the Native Court.”

Native Court registrar Ronnie Edward said the bumiputra status was a “birthright” and the Native Court only hear cases where a person who was to be declared a bumiputra although his father was not a native.

He said Marina was not alone in facing this problem.

Edward believes the only way to clear the air is to amend the Federal Constitution.

“Article 161(A) of the Constitution has to be amended. The article says that in Sarawak, both parents have to be ‘exclusively’ a native,” he said.

Institutionalising innovation?

I get the idea of setting up a National Innovation Centre. But I don't get the idea of a chain of innovation centres of excellence to be set up throughout the country.

I really don't get the proposal to set up an iconic innovation centre similar to the Multimedia Super Corridor. The word "iconic" sounds expensive.

Besides, can innovation be institutionalised?

Innovation is about creativity. Creativity is about being inquisitive. Being inquisitive means having a burning desire and having an unquenchable thirst for knowledge and information. This means being a self-starter. This means having the street smarts to look things up oneself and being completely unaware of time and space.

Setting up a Centre is fine. But to be sure, such a Centre should purely be a catalyst to point Malaysians towards trends such as nanotechnology.

Such a Centre should have a substantial focus on whether the school curriculum can be improved and teaching methods improved in order to foster innovative thinking instead of creating automatons.

The spark comes from within, not without
Innovative thinking cannot be institutionalised. It can only be sparked from within each Malaysian. This kind of spark can only come from having a sound and solid education. It does not come from iconic buildings. It certainly won't come from having mini-iconic centres, all of which sounds expensive.

Tax incentives for R&D spending will help to spark innovation
Instead of spending on building an iconic Centre, which really does sound expensive, really, there should be triple and quadruple tax deductions for R&D spending. That's how the Government can foster genuine and meaningful innovation.

It's the education, stupid
And, greater resources should be put into improving the school curriculum instead of wasting money with buku pinjaman untuk semua. Resources should be put into training better teachers. More allocations should be given to the remuneration of teachers so that the best and brightest will want to enter the noble profession. And, the teachers must have the skills to generate the inquisitive spirit and thirst for knowledge. That's where the real spark of innovation starts.

That's the way to foster innovation.

What I'm seeing so far is blah, blah, blah...build iconic centre...spend money on buildings..blah, blah, blah.

Innovation is software, NOT hardware

Just to be sure, it must be understood that innovation is a SOFTWARE item. It's about enhancing the quality of the human resources of Malaysia. Done correctly, the fruits of higher income and value-added can be reaped for generations.

In contrast, building innovation centres is only about HARDWARE. There's only one round of making money from the construction contract and, then, only a small coterie of cronies benefit.

While waiting for Budget 2010...

While waiting for Budget 2010, the one observation that I wish to make is that the very public display of conciliation by the leaders of the MCA is to be commended. Certainly the wounds are still fresh. Yes, cynics may say that they needed a pikestaff up their arses from Najib to get them to display the public conciliation...which, in a figurative sense may have been true. But, it's a start.

The one thing that piques my interest with a curl on my lips is the extract from The Star:

At about 2.30pm, the press were ushered into the 9th floor meeting room.

Ong together with Dr Chua and other central committee members then entered the room and took their seats.

However, the chair next to Ong - meant for deputy president Datuk Seri Liow Tiong Lai - was empty.

Everyone waited for a while but there was still no sign of Liow.

Party secretary-general Datuk Wong Foon Meng then walked in and had a word with Ong.

The two then went out of the room.

About 10 minutes later, Ong came back into the meeting room, followed by Wong, Liow and vice-president Datuk Seri Kong Cho Ha.

As all Malaysians know, reading between the lines is an artform in a nation where leaders and their Press minions have mastered the dark art of saying things without so much saying so. These are gestures, nebulous words and phrases, body language and the like.

So.....is there anything that The Star report is alluding to? Might it be a pointer towards lingering, simmering matters that may fester and putrefy before breaking out as an angry pus-laden sore at some future date?

I'm not sure. As Mrs Pot sang to the Candlestand and the Clock in the Disney animation, Beauty and the Beast, maybe there's something there that wasn't there before (or, some such lyric).

An eBay For Innovation

Here's one crazy crowdsourcing/crowdfunding concept that works as a bulletin board cum research prize. It is a completely merit-based, populist omnibus approach to getting a piece of research put out into the Internet for anyone who is interested to either pose a challenge or, post a solution. The prize money is funded by netizens. The judge is the person who posed the challenge.

If you think this is crazy, you may be correct. But, then again, you may be wrong. Read these swatches from the Forbes piece and think again...

What if you don't have millions of dollars to offer yet have a problem you want solved? A new Web site called ChallengePost aims to fill the gap between the small goals and the lofty ambitions of X Prize Foundation. Started in New York City by 35-year-old former record label owner Brandon Kessler, ChallengePost gives anyone the ability to establish a goal, rally a community around it and raise funds with which to reward winners.
......

But ChallengePost's Kessler is hoping his site will collect a wider range of challenges and prize-linked innovation goals by simplifying and democratizing the process. Anyone can post a challenge directly on the site, and visitors can give their thumbs-up to a cause or pledge money to build up a prize even if they haven't a clue how to solve the problem. Users can also share their activity on the site with friends through social networking sites.

Kessler sees the site as a great marketing vehicle for brands that want to connect with their customers' altruism. A company such as Dell ( DELL - news - people ) or Starbucks ( SBUX - news - people ) could, for example, issue a challenge to come up with ways to reduce their packaging costs. (Neither have signed up with ChallengePost yet.) ChallengePost is working with several companies and already has a deal with ad agency Deutsch Inc.

ChallengePost plans to make money by charging an 8% fee off the amount of any prize solved, and it negotiates separate, flat fees with companies that post or sponsor a challenge. Any intellectual property generated by the solutions is public domain by default, but challengers can retain property rights if they wish. If someone finds an existing solution to a prize-attached challenge, no one gets any money.

Kessler became interested in the idea of building a Web site to aggregate innovation challenges back in 2006, when he caught wind of a project called Windows on a Mac, which sought to reward anyone who could make the Microsoft Windows operating system run on the new Intel-based ( INTC - news - people ) Apple Macintosh computers. The sponsor of the contest ended up raising $14,000 from strangers sending him money through PayPal. The problem was solved in three weeks, months before Apple released its own software to run Windows. That software solution never became a commercial product, but it "showed how much action and involvement a challenge could inspire," says Kessler.

Visit ChallengePost and start thinking out of the box. You might make some money, too. Great innovation, great model to stimulate innovation and, potentially, a great way to make some money.

Lessons from The Damned United

The movie, The Damned United which is the core matter for the preceding post contains some principles that may be extracted for business leadership and, of late and, possibly more importantly, for political leadership.

The protagonist, Brian Clough (played most excellently by Michael Sheen) was an ascerbic and caustic maverick with a gigantic ego. His 44-day saga as manager of the then-English First Division League Champions, Leeds United offers interesting lessons.

First, keep your most loyal man beside you. Clough ditched his long-time deputy, Peter Taylor in a fit of hubris. Taylor is the type of deputy every mercurial leader needs. While Clough went on his visonary exploits, he needed Taylor to put the nuts and bolts together. Taylor was the talent-spotter. Taylor was the one players went to after another tempestous outburst by Clough. Taylor was the man who patched the team together. Every leader needs a deputy like Taylor. Needless to say, without Taylor's soft skills, Clough was quickly left in an alienated position in Leeds United.

Second, build the team spirit. The first time Clough met with the highly-decorated Leeds United team he antagonised them by telling them that they won their trophies by cheating. This is hardly the way to get a team spirit going.

Third, taking over a team or organisation with a successful past track record requires patience. The new leader can never emulate nor imitate his predescessor. But, that does not mean that the new leader should go on an iconoclastic binge of destroying the predescessor's reputation or trivialise his record. Instead, he needs to patiently deconstruct and, then, reconstruct. This is a process that takes time.

Fourth, the leader who ignores the above principles is not lost. He or she can move on to achieve great things again through another club or organisation.

The Damned United

When I was in Form One there was only one football hero for me. It was Norman Hunter. The team was Leeds United. Playing at left-back, Norman Hunter was a certainty to put a snarling stop to any flanking attacks down the left side of the pitch. And, once the ball was won, Hunter used his trusty left foot to lay on inch-perfect passes back to the centre of the pitch. He was my role model. It was 1975. Leeds were still at their peak. In that same year, Leeds reached the European Cup Final playing a dominant match against Bayern Munich. But, in that foggy day, Bayern prevailed. It was a heartbreaking match.

The year before that, 1974, was in many ways a pivotal year. Don Revie, the legendary Leeds manager who had nurtured a Second Division team from 1961 to become League Champions in the 1968/69 season and again in the 1973/74 season with many silverware in a trot was tapped by the English FA to replace Sir Alf Ramsey as England manager. Regrettably, Revie never repeated his success at the international stage, resigning as England manager in 1977 under controversial circumstances to a lucrative stint as manager for the UAE team.

David Peace, wrote a historical fiction about one key episode for Leeds United in 1974. It was about the highly emotional and controversial replacement for Don Revie. That replacement manager was Brian Clough. He was manager of Leeds United for only 44 days. It was a stormy 44 days.

Peace's book was made into a movie called The Damned United.



The movie is about the great friendship and partnership between Brian Clough and Peter Taylor. This great partnership created the great Nottingham Forest team that won back-to-back European Cup victories in the 1980s. But, to me, the movie is a nostalgic period piece that transports me back to the 1970s, when my boyhood footballing hero, Norman Hunter and his team mates, Billy Bremner, John Giles, Paul Madeley, Allan Clarke, Terry Cooper, Jack Charlton, Eddie Gray, Peter Lorimer, Paul Reaney, Trevor Cherry and, later on, Terry Yorath, Gordon McQueen, Joe Jordan, David Harvey, Duncan McKenzie and the rest of them dominated the English First Division.

Norman Hunter pix from here.

The movie also speaks of the terrible animosity between Revie and Clough which begged the question as to why, for the life of me, the Leeds United board determined that Clough was a logical successor to the Don. The following Youtube clip is revealing of the hostility between the two gentlemen. Until today, Leeds United partisans believe that Clough planted himself as a Trojan Horse to sow the seeds of the eventual destruction of the great Revie team.



With the great character actor, Michael Sheen (he was Tony Blair in The Queen), playing the protagonist Clough, and ably supported by a great cast, The Damned United is a must-watch for fans of football and, others.

For me, it is well and truly a nostalgic trip. Proof absolute that the team that now dominates the League One, the old Third Division has the necessary pedigree to bring the historic Elland Road Stadium back to the glory of the English Premier League. It may take a little while longer. But, we'll get there.

Hardcore Leeds United supporters can get a full dose of Leeds United history here.

HAPPY DEEPAVALI

Happy Deepavali Malaysia.

MCA's future

The phrase "MCA's future" may appear to be an oxymoron, but that would be an unkind view and, more importantly, an erroneous view.

Like most BN components, the MCA has great franchise strength. It has a huge warchest through asset-holdings and astutely managed corporates such as The Star media behemoth. The corporate equivalent to the current MCA travails must surely be the saga of KFC Holdings in recent years. In spite of boardroom struggles, the KFC franchise maintained its retail and financial strengths.

pix from here.

The palpable difference must surely be that while KFC maintained and extended it's market share, the MCA's "market share" is shrinking...politically vis-a-vis the wider Chinese Malaysian polity.

But, all is not lost.

The key question is whether the MCA, as with many BN components, can identify a transformational leader who can parlay MCA's structural and franchise strengths into regaining the support of Chinese Malaysians and, the wider Malaysian electorate.

In an ideal world, this should be the key issue that the MCA Central Committee should deliberate on when they meet this Thursday.

But, I suspect and expect that this issue will be deferred to another day. It is a "macro" issue that is secondary to the "micro" issue of leadership jostling.

Ong Tee Keat must resign
On the matter of leadership jostling, what the Central Committee needs to bear in mind is that in the wake of last Saturday's EGM, Ong Tee Keat must resign as party president. No matter how one attempts to spin the outcome, the fact remains that Ong lost the vote of no confidence. The honourable thing to do, if he is a true party loyalist, is to resign. He blew his chance big time. And, so, he has to go.

When he won the presidency, he should have risen above the fray and urged party unity. But, regrettably, he went on a witch-hunt. The pigeons have come home to roost. And, the pigeons are shitting all over him. I'm sorry but this means his time is well and truly up.

Chua Soi Lek must remain out
As for Chua Soi Lek, Saturday's outcome was even more emphatic. He is not reinstated. He is no longer accepted as a party leader. So, he should remain outside the party leadership. He should be content that his son is rising just as his star is waning (pardon the pun).

Beyond the leadership struggle
So, whether it is Liow's turn, Kong's turn, Yen Yen's turn or, even Fong Chan On's turn, who ever ascends to party leadership needs to be a transformational leader.

Get the party to close ranks and let the healing start as soon as possible.

Then and, only then, can MCA get back on track.

Whoever is in charge, MCA needs to change the "C" from Chinese to "Community". MCA needs to re-position itself as a Malaysian political party that cares for the issues faced by all Malaysian communities. Ironically, by expanding it's franchise, MCA will regain its lost lustre.

Malaysian communities, be they Malay, Chinese, Indian, Ceylonese, Kadazan, Dayak or any suku kaum, are fed-up with the communal paradigm. Every racial and ethnic group have become increasingly aware that they are in the same boat, the Malaysian boat. The sooner the MCA gets that, the faster it can recover from the debacle of the 12th General Election and, the faster it will get into jockeying position for the 13th General Elections.

So, yes. It ain't over. It's a chance for a new beginning.

Pakatan Rakyat to register as a coalition

This is one of the best pieces of news that I've heard from the Pakatan Rakyat for some time. By having PKR, PAS and DAP register as a coalition party called Pakatan Rakyat, this motley crew is signalling a sense of deeper purpose than is evident hitherto.

pix from here.

Many Malaysians who had contributed to and, ridden the euphoric waves, post-March 8, 2008 have become jaded by the dysfunctional amalgamation that Pakatan Rakyat is. Even wiser heads within the Pakatan pantheon has become exasperated by the cross-purposes at which issues are dealt with.

So, the formalisation of the Pakatan Rakyat as a coalition is a positive sign. It may not quell the raucousness within the nascent coalition. But, it should go a long way to temper the process in which differing views can be managed and moderated.

For neutrals, the formation of a new coalition augurs well for the orderly democratic transformation that Malaysia's constitutional evolutionary journey is taking us all on. It also signals the greater likelihood of a more stable 2-party system that so typifies advanced economies.

Independent Directors: Bursa Malaysia's screwy thinking

The following extract reveals the blinkered thinking that dogs Malaysian regulators:

STOCK market operator Bursa Malaysia said it will not set a timeframe on how long an independent director can serve a company, but suggests that an annual competency assessment be carried out within the company itself.

"The Malaysian Code on Corporate Governance clearly says that on an annual basis, boards must undertake an assessment of competency, skills and experience. So in that assessment, they need to look at the independence element - is the independent director able to discharge his duty and does he bring an unbias judgement to the board?" said Bursa Malaysia chief regulatory officer Selvarany Rasiah.

Once a company is publicly listed, there is a need to protect minority shareholders who tend to be more focused on their day job than to be spending time tracking stocks. This is the reality. Malaysian minority shareholders are indolent and, have this tendency to wait for manna to fall from the heavens. When things go awry, as they tend to from time to time, they find themselves flailing helplessly in the wind.

Of course, the wise ones among us would respond to this by saying that such small investors and, yes, punters, should keep their money in the bank or, under their mattresses. But that would be missing the point on the matter of corporate governance.

The principle that has dogged regulators in Malaysia and, of course, the world over, is how much statutory or regulatory intervention is required without dampening the free market.

Well, we have witnessed how unfettered regulation has benefitted Wall Street. Perhaps that is a bit dramatic as an example and a tad unfair to compare with the issue of Independent Directors. But, if you care to extract the broad principles, you may find key things that are common to Wall Street unregulated activities and, the issue of leaving the fate of Independent Directors to the boards of Malaysian PLCs.

Independent Directors of Malaysian PLCs are an emasculated lot. Board papers are delivered at the eleventh hour. Board papers are hugely thick with reams of accounting data that are based on assumptions that are printed in size 8 fonts i.e. fine-print.

Independent Directors in Malaysia are invited to the board of Malaysian PLCs at the pleasure of his majesty the man in charge, whoever that might be. Usually it is the imperial dominant shareholder or, the imperious political master or, his eunuch.

So, absent any external regulation such as creating a pool of public directors that are empanelled by the likes of the Shareholder Minority Watchdog Group or, the Malaysian Institute of Corporate Governance or, some such body or group, Bursa Malaysia's stated position on Independent Directors points to 2 principles that tend to be ignored:

First, who will guard the guards themselves? Checks and balances and audits are necessary.

Second, can a person be the best judge of his own cause? If there is a true independent in the board, can the executive members tolerate his or her continued annoying presence? Or, will the recalcitrant independent's tenure not be renewed?

Independent Directors can only be independent if their appointment is externalised.

The guiding rationale and principle must be that once a company is publicly listed in Bursa Malaysia, the public investors and, yes, even punters, deserve protection not just by the auditors who come in each quarter but, also by genuinely independent directors.

The Achilles heel is actually the appointment process. But, it would appear that Bursa Malaysia has preferred to put its head in the sand on this matter.

DAP's alternative Budget 2010

DAP has produced what I believe to be their second alternative budget, the first one being presented last year.

I'm perusing it. There are many interesting proposals that are worthy of consideration for those who are prepared to keep an open mind and refrain from petty polemics.

The DAP Budget 2010 can be read in toto here.

Made in U.S.A. - Coconut water as a health and sports drink

How's this for innovative thinking and marketing? There's a wonderful U.S. company that has taken a drink that Malaysians have enjoyed, like, forever...COCONUT WATER... and, has packaged it as a health and sports drink.

Many of us are aware that coconut water has amazing properties. We know it to be a "cooling drink" when we feel "heaty" which may be translated as a re-hydrating drink. So, dengue patients have been advised to either drink isotonic drinks such as 100-Plus OR coconut water.

In Malaysia, coconut water is widely sold in its natural state...in a coconut! Or, sold in generic plastic bags and bottles.

But, if the coconut and the coconut tree is the proverbial lembu here, look at the American sapi below. Pandainya... As they say, it's all in the packaging.

Original packaging...

pix from here.


American packaging....
pix from here.

Click here to read more about the U.S. company that sells coconut water and learn from its great product positioning and marketing strategy. Now, this is the type of thinking that Malaysians need to acquire.