In 1966, the Harvard Economist Paul Baran together with Paul Sweezy wrote a seminal book titled Monopoly Capital. It became a popular book and a must read for leftist leaning students in the 70s and beyond.
The central thesis of the book is that big capital (capitalists plus pliant states/governments) is constantly driven by a rapacious unquenchable thirst and insatiable appetite to acquire more and more physical assets. In Baran's analysis, Big Capital will acquire physical assets in the form of territories and captive markets where they can charge high prices. They are driven to become the sole supplier of any commodity or service.
How do they do this? The surplus capital they have acquired has turned them into business behemoths which can dictate terms to weak states. Most often states are at their mercy and will often end up as sheepish pro-business supporting casts at ceremonies ululating the triumph of partnerships.
In Malaysia, our local big capital works hand in hand with pliant state governments who sometimes have no choice but to surrender their physical assets. YTL Corporation is starting to behave like big capital in a surreal replay of what Paul Baran wrote. Driven by a rapacious appetite in order to commit the surplus capital it has acquired (read a large war chest) it is now embarking on physically ravaging a particular physical asset that belongs to Pahang. The physical asset which I am referring to is Gunung Senyum, probably a mountain dating back to Neolithic times.
Let us see some background information.
In 2003, the PSKP ( Perbadanan Setiausaha Kerajaan Pahang) or more popularly known as PSK and Pasdec Corporation, signed their remaining 50% equity in Pahang Cement. To those sensitive about Pahang's economic future, whenever mention is made of Pasedc/PKNP and any of the other state owned agencies (SOEs), a reference to them, will of course raise red flags. These are the usual suspects in any business transactions involving sale for a song state owned assets. People of Pahang have by now become accustomed to the business modus operandi of SOEs. In return for the sale, the Pahang government got 36.8 million shares valued at RM3.75 each.
For the business acumen challenged SS at that time and the others involved, this was a tremendous achievement. It was hailed as a new chapter in the cooperation between private and public sector or sometimes euphemistically called 'smart partnership'. Readers must now be alert about all things that are preceded by the term 'smart'. For example the only thing 'smart' about 'smart' buildings is their costs and prices. In reality, it was a triumph in Monopoly Capital.
The immediate effect of this celebrated sale was that YTL Cement which then owned 50% of the issued and paid-up share capital of Pahang Cement, becomes the complete owner of Pahang Cement. We haven't been told yet of the dividends from our equity which we got out of the 38.8 million shares.
In 1995, Pasdec which is nothing but the recipient of state largesse and conferment together with PSK as the bridesmaid entered into a 50:50 JV with YTL Corporation. The JV vehicle was Pahang Cement which was given a piece of limestone mountain at a place called Bukit Sagu. The purpose of this uneven marriage was to build an integrated cement plant touted as a first of its kind in the East Coast state. YTL has already owned a cement plant in Perak.
In the name of business, an integral part of bumi Pahang was given up in order to allow YTL corporation to develop and operate an integrated cement plant. The other effect of the sale of Pahang's equity was to convert the Pahang government into a complete rent seeker. It became, at the stroke of the pen, the most celebrated Ali Baba.
The Pahang MB was reported to have said:-
"Today's signing will mark another milestone for the State Government and Pasdec. Upon completion of the sale of the 50% equity in Pahang Cement to YTL Cement, both the State Government, through PSKP and Pasdec, will have a an equity interest of approximately 20% in YTL Cement. We see this as a strategic investment in a larger listed company with diverse business activities in the manufacture and supply of ordinary Portland cement, ready-mixed concrete and slag cement."
"This investment will also allow the State Government to convert its unlisted securities in Pahang Cement into listed securities in YTL Cement and has the added benefit of providing future dividend streams. The sale of the State Government's investment in Pahang Cement will, upon completion, also provide an immediate realisation of profit on sale of investment."
In other words, the purpose of any JV for that matter was to earn passive returns in the form of dividends and (b) hoping for a windfall, the government, just like any Ahmad and Abu wants to sell its shares to realise immediate profit.
I don't mean to be rude, but if these are the aims, then, the mighty business arm of the government is not distinguishable from any class F contractor.
Tan Sri Francis Yeoh Sock Ping, Managing Director of YTL Cement, poignantly said that Pahang Cement is a testament to the success of public and private sector co-operation, where each party's strengths have been harnessed through intelligent partnership. Ha ha, a variation perhaps, of 'smart' partnership?
He continued: The fruitful collaboration between the Pahang State Government and YTL Cement is now geared to continue into the future as PSKP and Pasdec become substantial shareholders in our Company. We anticipate that our partnership will continue to yield mutual benefits. For our part, YTL Cement remains committed to its long-standing policy of enhancing shareholder value in order to reward shareholders for their investment in our Company."
We of course have another term for this kind of business deal, a term made famous by Paul Baran and Sweezy- Monopoly Capital.
Now, imagine YTL with the state as accomplice, becomes Big Business and Big Capital. Indeed YTL is the epitome of big business. Over the years it has been able to venture into a multitude of businesses leveraging on its own merits and strengths but almost always benefiting from political patronage.
The effect of Pahang government selling its equity to towkay YTL will be to allow YTL aka Big Business and Big Capital sell at high prices while able to compete by cutting costs, advertisement and marketing. From this vantage point, they get economic surpluses which however cannot be absorbed through consumers spending more.
The concentration of the surplus in the hands of the business elite must therefore be geared towards imperialistic and militaristic government tendencies, which is the easiest and surest way to utilise surplus productive capacity. The only difference now, what we then know as imperialistic or even militaristic tendencies are now known as respectable business rationalisation. The only way for big business now to utilise surplus productive capacity is to extend its tentacles to acquire more physical assets.
Hence the next target is GUNUNG SENYUM- harta pusaka dari tok nenek orang Pahang.