Khazanah and PNB who invested RM27 million and RM20 million respectively in 2018, reportedly said the loss from the sale of Fashion Valet shares was minimal compared to the overall revenue generated by Khazanah and PNB in the relevant year.
In 2021, the then President and Group Chief Executive of PNB, when asked about PNB’s paper loss in
Sapura Energy whom it invested more than RM2.6 billion in 2018, he reportedly said quote and unquote –
“I do wish to highlight that it is actually a very small investment. At current market price, it is actually less than 1% of PNB’s total assets under management, which stood at RM337 billion at end-October 2021.
Such a callous and cavalier response would have this CEO shown the doors at any other international fund.
Instead, he was appointed as the CEO of EPF where he remained until today.
As regularly spoken by the ordinary rakyat, mediocrity is rewarded in Malaysia.
So long you are connected to the political elites and well heeled, you will be `recycled’ into another high paying and high power job with one of those GLCs and agencies.
Delivering high returns is not a priority.
At least from these CEOs.
Since then, the share price has plummeted further.
Fast forward, today@5 Nov 2024, Sapura Energy is trading at around 3 sen.
A 70% decrease in its value.
Parallel wise, PNB’s investment decreased by a further 70% from its already insignificant value in Dec 2021.
Even though PNB itself is not worried, should the ordinary rakyat be concerned and worried as those are tax payers monies?
As its then President said, RM2.6 billion is a very small sum compared to the total assets that PNB managed.
Both Khazanah and PNB conveniently forgot that the general accumulation of assets in both funds belongs to the ordinary rakyat and not the political elites and the powerful in this country.
Maybe it is time that the Ministry of Finance should assume overall responsibility for managing both funds and have the final say in the strategic asset allocation, both benchmarks and risk limits and monitors and evaluates operation management in both funds.
To show that its handling of these funds is transparent with proper governance structure, the Ministry of Finance reports to Parliament on all important matters relating to both funds and publishes all the advice it receives from external consultants in an annual white paper.
Performance, risk, and costs are reported to Parliament on a half yearly basis.
The focus of these reports to Parliament should be on the contribution to value added in the operational management of these funds.
The end result of this would be that both funds will have a transparent governance structure and a mechanism integrated with the country’s fiscal policy that could help the country and your present administration in achieving sustainable financial and macroeconomic growth and stability.
Khazanah especially, appears to have a habit of investing and pumping funds into its loss-making businesses.
DRB Hicom and Silterra are 2 of the most significant investments it made and exited at great loss.
But after spending billions of tax payers monies on them with both still failed, they can no longer give the excuse and blame the previous PM for initially hoisting both failed projects on them.
Instead of collaborating and developing the medicinal value of Tongkat Ali with local entrepreneurs to enhance its commercial reach in this country, Khazanah have been keeping the intellectual rights and the patent on Tongkat Ali usage tightly held and instead shared ownership of the rights in partnership with MIT thus limiting or restricting the commercial reach and value of Tongkat Ali, a herb that is synonymous with this country and used for centuries by domestic traditional medicine healer, from reaching its potential domestically.
KIdzania and the venture into the movie studio in Johor was a total failure.
All were invested with huge sums and exited with sums not even enough to pay for the total monthly emoluments for the management in Khazanah.
The common excuse given for all the exits is that the investments had reached the end of its targeted holding period and a new party who could help guide the company to a new growth trajectory.
Both funds were set up to manage assets towards sustainable multigenerational returns for the country.
If the investments were in line with Putrajaya’s call for government-linked investment companies to support high-potential Bumiputera firms involved in the new economy i.e the digital economy, the funds should have a longer holding period.
Not a targeted holding period as like the PE funds outside.
Period.
All these poorly chosen investments came with high political prestige but vague or low economic return, often to the detriment of investment in general education, health, and other social capital that is crucial to deliver sound and sustainable economic growth for the country.
It’s obvious that the dismal performance in these funds is associated with weak government institutions, rent-seeking activities, and increased corruption as governance weakens.
If both funds were to support high potential Bumiputra firms, start by supporting all the local SMEs in this country.
As of June 2023, there were 1.15 million small and medium-sized enterprises (SMEs) in Malaysia.
SMEs are a key part of the Malaysian economy, accounting for over 97% of the country's businesses and 38.2% of its GDP.
According to Employment Hero's SME Sentiments Report released in Jan 2024, which polled 540 business leaders across Malaysian SMEs in November-December 2023, the top three biggest opportunities for Malaysia's SMEs in 2024 comprise digital transformation, artificial intelligence and automation (32%), global expansion and e-commerce (31%), and employee education and training (28%).
The SMEs are the backbone of this country’s economy.
Do not miss the opportunity.
SMEs are the biggest employers in this country and if they are not helped, they cannot create jobs, lift people from poverty, empower women, or innovate solutions for the climate crisis.
Both funds should refrain from investing into the new digital economy.
Their management does not have the depth nor the capacity to understand the new economy which moved and changes at lightning speed.
They depends entirely on external advisors and consultants in creating their own understandings.
Don’t go chasing shadows in trying to show off that they are in tuned with new developments in the world.
Support and take care of your backbone.
The new economy also needs the support of the SMEs in their business and without them, businesses in the digital world would also have issues growing.
And the last few billion ringgit listings on Bursa Malaysia are the likes of 99 Speedmart, Mr DIY, MyNews, all of which are purveyors of the traditional business and nothing of the new economy.
As the PM with a reform agenda, you are now well positioned and placed reform both funds by building more robust strategies for managing both funds in a manner that supports broad and durable economic development.
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