The Parallel Economy
Last week, we heard news that Robert Kuok, the richest Malaysian has sold his business interests in 2 sugar manufacturing and cultivating companies. He is selling to FELDA Global Ventures SB, which is wholly owned by FELDA. The price was said to be RM1.29 billion. Robert Kuok is selling his 36.36 million shares in Malayan Sugar Manufacturing Co Bhd (MSM) and also selling 6 million shares in Kilang Gula FELDA Perlis SB also to FGV for RM26.31 million. That makes FELDA the biggest sugar manufacturer and supplier. Robert Kuok is also selling his 49% interests in Grenfell Holdings SB to Tradewinds which is controlled by Tan Sri Syed Moktar Al Bukhary. The sale of RK's business interests in sugar has raised some discomfiture and uneasiness. FELDA is seen as a Malay dominated GLC and Tan Sri Syed Mokhtar is a Bumiputera tycoon of Arab descent. It is spooking many other Chinese business interests into believing they may be next in line for takeovers or forced to sell their interests. RK and his business advisers must have done their arithmetic. The selling price incorporates a premium that reflects maybe 15 years advanced profits. Imagine with this cash pile, he reinvests in China where he has extensive business interests. He may be able to get better returns there. We are waiting for more revelations about this business deal. At the moment, we are interested in erasing the uneasiness which accompanied the sale. I am saying this uneasiness is largely unfounded. There may be justifiable reasons for the sale and purchase and that RK's exit from the sugar business need not be generalized into a thinking that the government, is going after Chinese business interests. Just as a point of debate, why should the Chinese business people be uneasy? They have had monopolies in many businesses for a long time that were not subject to Malay envy. Robert Kuok for example enjoyed a monopoly over sugar business for maybe more than 50 years without raising uneasiness and insecurity in Malay minds. There is no cause for worries. The Chinese are a resilient lot who can overcome any 'administrative' and corporate actions which a Malay dominated government can muster. They are basically untouched by economic regulations. I have been in Kuala Lumpur for almost a month visiting and observing the Chinese economy practiced in places like Old Klang Road and Balakong. I have come away concluding that the Malaysian Chinese is actually operating a parallel economy more vibrant than the official national economy. Those people behind Pearl Point, Wisma Shun Li and the ubiquitous manufacturing and trading establishments in Old Klang Road and Balakong are never in need of government assistance. They have the best form of independence which is beyond the comprehension of the shrillest and bellicose of Malay voices – FINANCIAL AND ECONOMIC INDEPENDENCE. What they value most is de -regulation. As long as they are permitted to do whatever they want to economically, the economic future of the Chinese lies in fact, in their own hands. Furthermore, 'permissibility' is a buyable commodity even from the hands of recalcitrant Malay nationalists. Unfortunately, that cannot be said of the Malay economy which so far can only substantially exists in the form of GLCs.
5 comments:
Majority of consumer of sugar in Malaysia are Malay anyway with their teh tarik , kuih etc all the way from breakfast to their supper snacks.
Never heard Malay has any ill feeling toward Kouks family even many getting diabetes from their sugar consumption.Anyway in JB , Kouk family members generally are humble lot.I chatted with him once in Four Seasons cafe in Singapore after he greeted me from other table after hearing me answering my phone in Malay.
I am not sure if I heard of fear of the buyout but that old man is not that dump or weak to be strangled in business or forced around.To dispose shares here and quickly expand at his playground in China with large sum of cash capital at these bad times to keep buying resources at low price are more reasonable reason.
Jamal JB
RK is persuaded to sell out because he cannot get price increases....which are coming next year since the beneficiaries are a GLC and a Crony. As usual joe public gets screwed.
The Chinese businesses are flourishing in the areas of Kl you mention because these are literally free trade zones ....no licenses, no taxes, no EPF or Socso because the Malay government officers cannot even begin to understand these businesses, let alone enforce regulations or tax them!
jo
Sugar has been a controlled item for far too long. I can only assume that once this business falls into the UMNO's cronies hand, the control will be lifted. The rakyat is always the loser, at any turn.
I believe this is more of a business decision than anything else, what with sugar being a controlled item in this country, whereas cost of raw material( which is mostly imported)is not. When higher cost of production cannot be passed down to consumers, how can the company make profit?Commodity prices is expected to continue to go up. Dont forget RK is a shrewd businessman. Moreover, some politicians has politicised the sugar shortage issue, it is only logical to sell off the business ( with 15 yrs profit ?)
and invest in something else.
Dato Sak
Your point on the "parallel economy " is well taken though not many seemed have caught this.
the chinese have in fact been running a parallel economy for a long time since they have their institutions for funding etc. the bureacracy is tolerated and money is used to buy or smoothen the business processes and asset holdings. In the the Ali -Baba style of business practices under the old 30% Bumi equity suited them well and they exploited it to the full. So whats new? The tax payers money has also gone to fund Chinese development since the govt funds Chinese schools even though they do not need any funding, given their capacity to raise funds from their community.
The parallel economy is so well entrenched that it is one of the major "blocks" to nation building. the problem is exacerbated by the Govt's denial of this issue since the BN style of govt is along racial lines. the only way to resolve this matter is not allow political parties along racila lines and only allow political parties which have a national agenda and a national mix. How else to integrate?
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