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Sakmongkol ak 47

ariff.sabri@gmail.com

Wednesday, 22 December 2010

Here and there.

ONE.
It's comical really. The general big idea is, by teaming up with Sunrise, UEM land will leverage on the latter's expertise in high rise up market condominiums. UEM can build all the other infrastructural edifices; it suddenly becomes dumb when coming to build high rise building. You mean to say, Tong Kooi Ong goes up and mixes the cement himself and lays down brick by brick. So that he becomes a must-have element in the new UEM-Sunrise team?
He engages all the other experts in building them la towkay- architects, contractors, designers etc. the same thing, people with imagination at UEM can do better.
What's the value added actually by taking in Sunrise? Don't tell me, the man heading UEM land coming from Imperial College London can't compete with Tong Kooi Ong? Sunrise hasn't got any substantial land bank anymore except maybe in Johor.
So what's the wisdom behind UEM land buying up Sunrise?
TWO
I am puzzled at the unbounded exuberance of the deputy minister of Transport assuming the role of chief spokesman for the 43 billion MRT project. Isn't this a proposal and project by the private sector to be financed also by them? If so, why does a government man speak on behalf of Gamuda-MMC?
We, the people have a right to get an answer as to why, the EPPs in the ETP which were supposed to be 92% financed by private money are now seeing as though this MRT is a government project? It will at least cost a minimum 43 billion. The government through some department named Prasarana Negara will be the owner and another will supervise the construction. Aren't all these indicate that this project is actually a government project and that Gamuda-MMC which is termed as the PDP is the chosen contractor?
THREE.
This is probably mischievous on my part. But I have been wondering how the government selects winners for the Maal Hijrah icons? What criteria do they use?
Sometimes I am wondering, whether they do this, in the same manner American contractors go out in search of jobbers. Contractors will drive their lorries and pick up any of the Mexicans who have crossed the border as casual workers. The Malays say- tangkap muat.
For example, don't get me wrong ok. The governor of our central bank Zeti Aziz is an accomplished economist. She specializes in Monetary Economics I think, one area in the study of economics which is quite rigorous. But what has she actually done to deserve such an accolade? She has been a good manager, no doubt about that- but in 'peacetime' so to speak.
She wasn't governor during the tumultuous years of our currency crisis. The actual and de facto savior of our economy then was Tun Dr Mahathir. So, if anyone deserves the accolade of Maal HIjrah icon in economics, I would certainly have voted for Dr Mahathir.
No disrespect intended to Tan Sri Zeti.

23 comments:

OneMalaysian,  22 December 2010 at 21:46  

Dear Sakmongkol

Let me give you my 2-sen worth on this 1-2-3.

“So what's the wisdom behind UEM Land buying up Sunrise?” Indeed a good question. It is pure, unadulterated stupidity that only GLC CEO’s (Imperial College or not) can do. Notice that non-Malay property companies don’t rush to buy out Tong or merge with Sunrise. Is SP Setia, Tan & Tan, IGB doing this? But why UEM? The answer is that UEM believes what its financial advisors (some investment banker) tells it, that such a deal will excite the market, that this is a good way to marry a large land bank (UEM) with expertise and track-record (Sunrise). Therefore the merged entity will be larger than the sum of parts. For the premium that UEM is paying for Sunrise, UEM can go out and engage the very best brains in the industry. What is a company really, if not a few good brain-boxes. But then again, good non-Malays might not want to work for a GLC because they think there is a glass ceiling, so even if Tong brings his entire crew in with the merger you can safely bet that they will be gone in 2 years. The UEM CEO may have a high IQ, but he has not demonstrated success in the field of developing high-end condos. He is trying to buy success, but he cannot.

On the MRT project, no one should be surprised that this is a massive collusion between government and MMC-Gamuda. It was MMC-Gamuda’s idea all along to do this project, and they have been planning for 1 year already. They then realised that the risk of RM43 billion is too big to invest in; hence government is left with the baby. It is much smarter to just collect management fees as PDP, and maybe do the tunneling (with V.Os and all) if the price is good, i.e. they have a call option on the project at no cost to them. Why are we so certain that this is all a MMC-Gamuda initiative? Because after announcing giving MMC-Gamuda the job and asked to start work by June 2011, the SPAD (nominally in charge of planning the whole scheme) says it can only finalise the plans in the second half of 2011. So start first, plan later. Something is seriously wrong, and Najib cannot pass the buck to anyone else.

As for Zeti, she deserved the award. She is very well regarded by other central bankers who know a thing or two about central banking. Dr. Mahathir? Let us make a judge his “achievement” via currency control by comparing the no-control actions of Korea, Thailand, Indonesia and the Philippines. All of them suffered currency devaluation as badly as we did, but they did not control their currency. Look at the past 10 years. We have grown at sub-par rates while every one of these countries, except the Philippines (for quite different reasons), out-grew us. Look at Indonesia, they sold off banks and oil palm estates to foreigners to survive, but they are better for it. Dr M protected all the Holy Cows, and they are still under-performing, and are a drag on the overall economy. He did not allow for “creative destruction”. You know the reason why.

George Choo 22 December 2010 at 22:02  

Dear Sak, just to correct you,UEM Land is dealing with Tong Ong Kooi of Sunrise and Not Tong Kok Mau.

The deal with Tong is that UEM Land pay Sunrise shareholder by share. I am very sure the people in UMNO have make a back deal with him in that after the takeover by UEM LAND,Tong will sell some of the UEM Shares and the proceed will go to the UMNO warchest which to be use in the next election.

Under the ETP, the private sector are suppose to come up with 92% of the funding.

SAK, do you think that Gamuda or other big contractors will come up with RM 32 Billion to do the MRT?

The answer is a big NO because they know that in the end the GOVT will have to come up with the money. As the govt is currently BANKRUPT, the only way to raise the RM 36 billion is by issuing GOVT BONDS with a high coupon rate.
Thus,in the end the RAKYAT will have to pay for all this nonsense.

The way I look at it,Gamuda is the TURNKEY CONTRACTOR and the govt is LYING to the RAKYAT by saying that Gamuda is a PDP.

sakmongkol AK47 22 December 2010 at 22:07  

george chooi,

thanks for the correction> tong Kooi Ong. my apologies to Thong Kok Moi

Anonymous,  22 December 2010 at 22:38  

Dato,

The most deserving recipient of the Maal Hijrah award is Ibrahim Ali.

Anonymous,  23 December 2010 at 02:31  

Why is the MRT such an URGENT job?Is it life and death for Greater KL to have an LRT?
Is the macet going to gridlock KL?
Why is a project awaeded before masterplan is approved?
Why is there no connections to Shah Alam despite spending RM 50 bil?Is Shah Alam seen as an area with too many "low income" people thus not deserving of ultra modern public transport?
Why is the government not leveraging already semi developed areas into high growth areas eg> Putrajaya-Bangi-Shah Alam corridor?
Why am I wearing a torn and tattered underwear?

The answer my friend is blowing in THEIR wind

Anonymous,  23 December 2010 at 02:37  

The Sunrise deal is an admission by UEM head honchos that they lack the management skills to be a world class player.

So,first step..kick them out please.Let Mr Tong n his management team take the lead.

If they continue to head the mgmt team the end result will be they will soon frustrate Mr Tong and he will say bye bye.

In terms of potential,UEM Land much better then Sunrise.Simple rule >>an astute businessman never sells his crown jewels.

And have a guess...who is the businessman?

Anonymous,  23 December 2010 at 04:32  

Yeah.

Ibrahim Ali would be drooling and recovering from the heart complex by award him the accolade of getting the Tokoh Maal Hijrah.

- Ikan Tongkol -

Anonymous,  23 December 2010 at 09:33  

Dato.

‘You mean to say, Tong Kooi Ong goes up and mix the cement himself and lays down brick by brick.’

Nicely sum up the management compendium, staring directly in the face of ALL Malay M’sians, whether it’s personal &/or organization.

It’s PLANNNG & ORGANISATION capacity within an entity that counts the success or failure of that entity. Money/connection is only secondary.

& sadly the out-comes of that capability building within the Malay M’sians community r dismay, to say the least.

RM 52B was wasted to ‘capture’ 19% of KLSE’s wealth. Some more on a spurious calculation!

That’s despite the fact that many of the up-&-coming Malay entrepreneurs/CEOs, drawing big fat salaries, r claimed to be highly educated & experience!

Look at the plantation productivity of the GLCs – the comparative figures of the FFB of oil palm vis-à-vis the private sector is telling, despite the bigger size. Not much better too in industrial – what can Tasek cement does that CIMA cant do to up-stage the profit? Banking? It’s a known fact among the peers, that without those Others, CIMB & AMMB would be ranked a distance forth & fifth among the group in equity return, despite their connections within the govt. MBB? Please-lah. Without the govt support, via business transactions & opportunities, MBB would have been gone under when the debacle of the BII exploded. Construction-wise? There r tons & tons of horrible stories that one is too tire to repeat!

cont 2

Anonymous,  23 December 2010 at 09:33  

2of2

Now there r even claimed that GLCs’ assets r bumi trusts!

Either their educations/experiences r been side-laid due to the insistency of business temptations. or their so-claimed expertise/foundation r built like a sand castle.

These chronic showcases constitute a BIG waste of the country’s resources, majority of which is contributed by the hard-working Others. Any wonder we r slipping on the economic ladder?

Make one wonder where is SHAME & that battle cry of Alif BaTa among these people.

‘So what's the wisdom behind UEM land buying up Sunrise?’

Management expertise, man – in short. At the same time those bumi big-shots can claimed credit while playing golf.

Yr question;

‘..the unbounded exuberance of the deputy minister of Transport assuming the role of chief spokesman for the 43 billion MRT project. Isn't this a proposal and project by the private sector to be financed also by them? If so, why does a government man speak on behalf of Gamuda-MMC?’

has only ONE answer. The wayang-kulit in the Perak state govt after the 308. And the Others in that JV knows very well that NO ANY MRT projects in the world can make money in owning it. The money is in building that MRT for the govt only. Comprenhdi?

Anonymous,  23 December 2010 at 14:18  

Putrajaya sets up SPV to fund MRT
December 23, 2010

KUALA LUMPUR, Dec 23 — The Finance Ministry will set up a special purpose vehicle (SPV) to raise funds for the RM36 billion mass rapid transit (MRT) project in the Klang Valley, said the Land Public Transport Commission (SPAD) today.

SPAD CEO Mohd Nur Ismal Kamal however said the method of funding has not been finalised yet.

“There will be a special purpose vehicle under the Ministry of Finance which will be in charge of organising the financing,” said Nur Ismal at a media briefing here today.

“They have not finalised the type of funding. They may issue bonds or use capital market instruments,” he added.

Suddenly pasta yang aku makan terasa sangat masamnya...padan muka aku!!!

Anonymous,  23 December 2010 at 14:28  

Apa nih?Dah kes tipu..Idris Jala dah tipu rakyat Malaysia..
Dulu bising2 kata Government spend only 8% the rest private sector invest???
Why kena ada SPV nak cari RM 36 billion.
Kalau 8 % of 36 bil 3 billion aja??
Or depa expect project cost RM 450 bil ( 8% about RM 36 bil) ke?

ETP,GTP,NEM.EPP etc etc...last2 rakyat juga PAU

Anonymous,  23 December 2010 at 14:47  

One sentence sums it all.
The Malay CEO if not most does not have the DNA to be successful all because of the false security of NEP.

OneMalaysian,  23 December 2010 at 15:00  

Dear Sakmongkol

Anon 9.33 brought up a point about Malay entrepreneurship and management of large public listed companies that needs to be addressed. I hope the comments that I make here would be useful. As part of the NEP the government wants to build up not only Bumi equity but also management expertise and entrepreneurship. Dr M, in 1985-86, declared that he would support and nourish 100 Malay business leaders, and thousands jockeyed to be in that select charmed circle. Almost all, save a few, of these 100 musketeers disappeared into oblivion when the big recession of the 1988/89 hit; many of the survivors went in the financial tsunami of 1997/98.

Now a new cadre has emerged, who are overall stronger and better than the first batch. They run GLCs and some have their own empires, earned through hard work and enterprise – Nazir Razak and the Naza brothers are 2 examples. But still this coterie is nowhere in numbers compared to the vast army of mainly Chinese battle-tested businessmen. Government’s involvement to train and nurture a group of Malays has a history of more than 30 years, and the results for the effort can only be described as dismal. The question is why? It is possible to send 2 equally bright young men - one Malay and one Chinese – to the same top world-class university and both will graduate with the same knowledge and skill-set and both will do equally well in the professions. How come then, that the smart Malays cannot match the smart Chinese in business?

My answer – others may have theirs – is that in business, experience, especially that wrought through years in boom and bust cycles, and going through the mill from the ground up, is the best prescription for success in business. Those who went through this baptism of fire approach, taking considerable risks with their own money, will know the business and industry inside out. They are like generals who had fought through wars, being shot at, wounded and survived. They know how to fight. In other words there are no shortcuts to success. Just as you cannot elevate a 4-star general who has never faced a bullet in battle to command an army – excepting North Korea if you are the Dear Leader’s son – you also cannot make CEOs of people (however bright they might be) who have not gone through the mill of business and taken some big risks with their own money. These CEOs will lack depth; they do not know the business; they do not understand risks. That is why they want to take the shortcut by buying businesses owned by others who had built them up, hoping in the process they can buy experience and knowledge in that particular business. Sorry, this simply won’t work. It is only OK if you are a fund manager and buys tiny stakes in many such companies for an investment portfolio. Upshot: change tack, be patient, get them started on a small scale, get them to take risks with their own money, compete, and hope for the best. Some will do very well; many won’t. That’s the name of the game.

Anonymous,  23 December 2010 at 15:17  

Today the SPAD CEO stated that MRT has a 25 % Economic Internal Rate of Return (EIRR).This new fangled EIRR it seems encompasses all the spin offs & enhanced economic activities generated because of the MRT.

Can someone please explain what this is all about?And how this is computed?To me its a just a of crystal gazing.

With 2 million MRT riders buying a packet of Nasi Lemak,thats 4 million a day or RM 1.4 billion per annum.And of course they need to use toilets,buy Smartphones,rent houses,rent office space,read newspapers,go to spas...its a lot of economic activities,easily RM 10 billion per annum i.e the 25 % EIRR.Wonder what these 2 million pax will do if there is no MRT?stay in kampong and tanam jagung?

But if its so good Jakarta with 16 million today must be a gold mine for MRT projects.They badly need Idris Jala there.

He's ok but please don't ask him to do forecasts...unless you want to lose billions.

Anonymous,  23 December 2010 at 18:22  

["...The actual and de facto savior of our economy then was Tun Dr Mahathir..."]

Wrong Dato!

Salomon & Bros did!

Do they still own Citibank?

Anonymous,  23 December 2010 at 18:44  

Hahaha...Idris Jala forecast again proven hopelessly wrong.
On 4th Dec 2010,Pemandu released a fact sheet..with comprehensive list of common items including teh tarik.He forecast that price will only be up by 1 sen.
3 weeks`later the Association announced a 20 sen increase,
Idris Jala forecast is completely out of bounds..he has been proven to be a hopeless "forecaster".He must resign..

Its dumb to release the 4th Dec fact sheet...and doing theoretical calculations.Pemandu man hours is NOT cheap..its a futile exercise.

So..let Idris Jala be first Minister to get the sack cos of teh tarik.

Hahaha...fitting cos he got a promotion for betting the wrong side of the arse at MAS.

PM..please see the man for what he is.

Anonymous,  23 December 2010 at 19:19  

.From Wenger Khairy's Penumpang blog

Big Bold Ideas - The Sequel
Sept. 25,2010

"A simple back of envelope calculation has shown the project to be non commercial. I just spend about 20 minutes to do my research and I can blow Jala's argument to smithereens. KL MRT will not work unless the average fare is RM 1.5 per trip and even then it can only hope to attract 500k passengers max per day. (I am really stretching the norms here.) Lets assume through magic that this is sufficient to cover Opex i.e. we can match SMRT in terms of efficiency!. The Government will be forced to fund the entire RM 3.6 billion debt service charge and we will bankrupt by 2019 i.e RM 1 trillion in debt."

Click here.

donplaypuks® 23 December 2010 at 20:08  

Like the Maybank $8 billion Indon bank acquisition deal, this UEM-Sunrise deal stinks to high heaven!

In a world where outsourcing is all the rage, UEM, which is majority M'sian Taxpayer owned, having been 100% bailed out with our money, is acting contrary to prevailing market wisdom and financial sense. Why take on the overheads and headaches when you can sub-contract out?

After making Sunrise's major sharholder instant billionaire's, the $64,000 question is - what is the quid pro quo? Every action has an equal and oppsite reaction.

dpp
we are all of 1 Race, the Human Race

Joe Joe,  23 December 2010 at 21:01  

FOUR
A GLC would like to reach out and started a CSR programme by giving out scholarships to students from "good school", with intention of nurturing talents in order to advancing Asia. Two schools identified, both are private schools in Malaysia, one of the school is where the children of the CEO attending, hence considered as "good school". A number of laptops also donated to the schools, schools where the fees alone would costs few months salary to normal Jack and Jane in Malaysia. Noble intention, yes? Funny thing is the candidates are well off they don't even need the scholarships as they are already in the school paid by their parents.

Anonymous,  23 December 2010 at 21:38  

Was there a special audit on the "oil hedging" losses incurred by DSIJ at MAS?We need to understand where he was coming from back then cos now he is hedging our future with bigger numbers.

Masam Manis,  23 December 2010 at 23:03  

Dato Sak,

I have no idea what kind of economy that people are learning nowadays. Almost choke reading the news that government is in the mist of negotiating the MRT ticket rates when the project RM 46 billion is already announced. What happen to business planning, financial planning so on and so forth to ascertain viability?

We can benchmark from the famous london tube as a model if we think we have the capacity. Closer to home we can use our own LRT system whether the new MRT it is still viable. If Wikipedia can be trusted, what has been written it is not every promising for MRT especially when it comes to public fund is concerned

http://en.wikipedia.org/wiki/Syarikat_Prasarana_Negara

Anonymous,  23 December 2010 at 23:19  

Dear Sak,

Very keen observation as usual, mate. Gamuda-MMC got the MRT job the same way they got the SMART project: by hijacking it from a better solution proposed by Jabatan Pengairan dan Saliran. Zeti is just a manager just like any other (just like me) and you don't see me getting any awards.

Anonymous,  24 December 2010 at 09:53  

Idris Jala bashing again?

Bloody ignoramus! Or could it be all these Jala bashers r paid or out-of-BaTa pride’s simpletons?

Could it be that that sense of siege mentality & cultural inferiority again?

Always looking for scapegoat, as long as its not yr own kind?

Hey, many of the stated attributed figures & statements ARE NOT originated by Idris Jala. Like the latest MRT figures from SPAD & those mentioned by the various ‘spokemen’ about the country's economic status. Unless these figures r directly come out from Jala’s mouth, DON’T give him the credit.

In another word, he is ONLY a planner/proposer. The implementation is STILL the najibromah’s baby.

ONLY what najibromah says, goes. OK?

When someone said that his house cat got pregnant because of umno policies, at least there is some linked basis – due to its arrogance.

Where’s Jala’s in this same comparison?

U people r really cave dwellers. Yr good book’s teaching is as good as Sunday Metro reading, no?

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