PEST analysis on NSTP-Utusan merger

On 29 November 2006, The Star reported that THE New Straits Times Press (M) Bhd (NSTP) is planning to acquire Utusan Melayu (M) Bhd to forge a strong alliance between its Berita Harian and Utusan Malaysia. AmInvestment Group and BNP Paribas have been appointed to structure the deal.

On Friday, 1 December 2006, New Straits Times Press (Malaysia) Bhd and Utusan Melayu (Malaysia) Bhd announced the suspension until Monday ahead of a potential merger.

On 2 December 2006, The Star reported that merger deal has been sent back to the drawing board hours after Umno president Datuk Seri Abdullah Ahmad Badawi called for the tradition and histories of the newspapers to be maintained after UMNO supreme council meeting.

On 4 December 2006, The star reported that In a joint statement to Bursa Malaysia Monday, the newspaper publishers said the companies' board of directors had been "exploring ways to enhance the value of both groups via a possible merger." "Utusan and NSTP intend to continue to explore and discuss this matter further and have entered into a non-disclosure agreement to govern the period of discussion," the companies said. An immediate announcement shall be made to the exchange should a final agreement materialise, they added.

Today. The Star reported that NSTP, Utusan shares down on profit-taking

Lets examine the Political, Economic, Social and Technology (PEST analysis) on this merger:

Political and Social

Politically, several UMNO supreme council members voiced their concern over the deal and also the long connection between the party and Utusan Malaysia in. One of the main concerns was the independency of Utusan Malaysia as the Malays shared strong sentiment for the oldest Malay newspaper in the country.They told the meeting they feared that any merger which could affect the identity of the Malay daily would backfire on the party, although Umno would continue to control it.

EONCap Securities head of research Pong Teng Siew in an interview by The Star said that the merger could face resistance from investment and fund managers as well as from some press factions, as investment managers would prefer more stocks to work with instead of a single large entity, and certain sections of the media could consider the status quo as something sentimental''.

Even the non-bumiputra group also concern about the merger and said that this might curtail press freedom.

For me, I feel the meger do more good that harm to Malaysia politically and socially. Utusan Malaysia and Berita Harian, two different independent Malay newspaper compete with each other in playing up sensitive and sentimental issue to gain their respective market shares. This is no good politically and socially to promote harmony and cooperation within difference race in Malaysia. By merging the two entity under one shareholder, they need not use such technique to compete with each other. They only compete with PAS control Harakah and I feel this is better politically and socially.

Even during reformasi. Party Keadilan Rakyat call for reader to read Harakah and they boycott of both newspaper(Utusan and Berita Harian). Thus, it is wrong to say that the merger will curtail press freedom. There is no difference whether you buy Utusan or Berita Harian as both newspaper are head by people loyal to UMNO. By merging the two entity, we get less sensitive and sentimental report and it is better politically and socially for Malaysia.

Economic Analysis

EONCap Securities head of research Pong Teng Siew said the merger could face resistance from investment and fund managers as investment managers would prefer more stocks to work with instead of a single large entity. Thus, it is better to keep Utusan Malaysia listing status. Keeping Utusan listing status by injecting Berita Harian to Utusan Malaysia would allow investor to invest in NSTP, an English newspaperr company; Utusan Malaysia, a Malay newspaper company and the concern of UMNO supreme council of the oldest Malay newspaper might be close has been taken care off. The merger would get Economic of Scale in economic term.

The only concern is worker might become complacent as they do not have close competitors now even they is still Harakah around.

Technology

Unlike chinese language. Which face higher technology problem on input data into computer and printing machine. Malay language, which used alphabet like English, face less problem in developing input and printing technology. The merger has less impact technologically.

Update: The Edge: Cross fire

A kadir Jasin: Implikasi Penggabungan NST-Utusan

Utusan, NSTP surge on possible merger news

TechnoratiTag: Business Commentary competitive Economics Economy Malaysia Opinion finance Shares Stock Market klse Media Newspaper

Tan Sri Chua exit Road Builder Holdings Bhd (RBH)

Tan Sri Chua Hock Chin, in a notice filed to Bursa Malaysia, announced that he had resigned as director and executive vice-chairman of RBH after selling 68 million RBH shares at RM3 each on Tuesday. He still holds 41 shares in RBH.

The former Penang Chung Ling High School student graduated with a Bachelor of Science (Civil Engineering) degree from Queen's University of Belfast, N. Ireland, and Doctor of Philosophy in Business Administration from Wisconsin International University, US.

Chua joined the Public Works Department in 1973 before pursuing his career in the private sector.

From traffic controller to billionaire

Sub-contractor of RBH still remember Tan Sri Chua early day with Public Works Department where he gave direction to their lorry movement. It took only short period of time for a traffic controller to become a billionaire. Thanks to the contruction of North-South Expressway. Other beneficiaries of NSE include Gamuda.

Damanjaya

Rumours in the market said his first breakthrough come when he land his first contract....contruction of a road in Pahang state. The project earn him a bitumen factory call Damanjaya Manufacturing & Trading Sdn Bhd. The company has been disposed off to ACP Industries Bhd (ACPI) and now call ACP-DMT Sdn Bhd. ACPI now under MTD group whereas Tan Sri Chus still used holding company Damanjaya Sdn Bhd to hold his shares in Road Builder Holdings Bhd.

the 56-year old founder of RBH has left a legacy of building up RBH into one of the country's largest construction groups. Chua, who founded Road Builder (M) Sdn Bhd in 1985, took the company public in 1993. Today, RBH has diversified into property development, toll roads and ports, and has a market capitalisation of RM1.4bil.

PROJEK PENYELENGGARAAN LEBUHRAYA BERHAD (PROPEL BHD)

Chua founded Propel Bhd in 1988 and has listed the company on Main Board of KLSE. He, however, has disposed off the company to UEM Group.

Pati Sdn Bhd

Road Builder Holdings Bhd has disposed off it 50% associated Pati Sdn Bhd to UEM Builders Bhd after Asia financial crisis.

Good Exist Strategy

From the record above. Tan Sri Chua usually exit a company in good timing. Company he disposed off usually fail to growth after he exit.

Update: The Star Bizweek:The stage is set
Wave of consolidation
What lies ahead?

The Edge : Mr Road Builder calls it a day
Construction sector poised for first M&A
IJM to enter picture later
IJM in M&A to drive growth


Beauty Biotech: Road Builder and Hybrid rice cultivation in Malaysia


TechnoratiTag: Business Commentary competitive Economics Economy Malaysia Opinion finance Shares Stock Market klse

Maybank Securities report on Automotive Industries

Last week, Maybank Securities issue a report on Automotive Industries stating that "national segment of Commercial vehicle saw a sharp increase of 72.6%. We believe this is due to strong sales in national multi-purpose vehicles (MPV), especially by Naza-Kia which launched a very aggressive promotional drive in July 2006..........Compared with July 2006, TIV increased 7.4% to 47,189 units in August 2006. The higher month-on-month (m-o-m) volume was mainly due to higher national commercial vehicle sales, which rose a drastic 130.4%. This is again likely caused by the aggressive promotion by Naza-Kia on their MPVs."

Previously, Naza grow has threaten Proton's sales and this cause Tengku Mahalee, CEO of Proton at that point of time to complaint it to Proton's adviser Ex-Prime Minister Tun Dr Mahathir. Mahathir then create the controversial National Car Status issue.This is the different between an employee of GLC and entrepreneur . An employee of GLC complaint and seek government intervention whereas entrepreneur find ways to grow their company.

Note: This is part of the reply to comment by reader Bigjoe99

Related Post: Proton, nurture Malaysia's brand or bumiputra entrepreneur
Proton, nurture Malaysia's brand or bumiputra entrepreneur 2

TechnoratiTag: Business Commentary competitive Economics Economy Malaysia Opinion finance Shares Stock Market klse

Proton would not benefit from General Motor (GM)

Last Saturday, The Star's Bizweek reported that industry sources say that US-based auto giant General Motors Corp may be interested to take up to 35% of equity in Proton Holdings, and may make an offer as early as next week to state controlled investment arm Khazanah Nasional Bhd.

General Motors is among the largest companies in the world in terms of market capitalisation. It has under its belt marques such as Chevrolet, Vauxhall, Opel, Holden, GMC and Pontiac.

“It could be that General Motors may look to Malaysia to be main assembly plant for passenger vehicles while, its operations in Thailand focuses on pick up trucks and commercial vehicles. It could be some form of break down.

“Malaysia is after all the largest passenger car market in Southeast Asia, while Thailand is a haven for pickup trucks and the like,” an industry observer laments.

At present, General Motors has a presence in Thailand, via General Motors (Thailand) Ltd, which operates a manufacturing plant in Rayong, which exports vehicles as well. Among the marques built in Thailand include Chevrolet, Holden, Opel, Subaru and Vauxhall among others. The Chevrolet Zafira is among the models built in Thailand and exported.

Possible alliance with DRB-Hicom

There is speculation that conglomerate DRB Hicom may be partnering General Motors in its venture to take over the helm of Proton Holdings.

Details are however unclear, as officials of DRB Hicom are keeping information close to their chests. It was previously reported that tycoon Syed Mokhtar, who controls 15.8% of DRB Hicom, was looking at taking over Proton Holdings with a foreign strategic partner.

South Korea Experience

The most successful automobile company in South Korea Hyundai aim to chart it own direction in global automobile industry. Although Hyundai dispose off 12% shares to Mitsubishi group in 1979 (Like Proton). Hyundai remain relatively independent on it global market strategy. Similarly, another South Korea automobile company Kia disposed off 20% shares to Ford, Mazda and Itochu but this does not restricted Kia brand strategy in global market.

Pioneer in South Korea automobile industry Daewoo, however, restricted by General Motor global brand strategy. Daewoo, frustrated by General Motor restriction have to buy back shares hold by General Motor in 1992. However, Daewoo have difficulties un catching up Hyundai and Kia in Daewoo. Daewoo take over Ssanyong during Asia financial crisis but become insolvent after one year. General Motor has take over back Daewoo eventually.

looking at experience of Daewoo. General Motor clearly not an ideal partner for Proton unless GM never restrict the country which Proton intend to penetrate.

TechnoratiTag: Business Commentary competitive Economics Economy Malaysia Opinion finance Shares Stock Market klse

Proton, nurture Malaysia's brand or bumiputra entrepreneur 2

When I first comment on this issue on 17th July 2006. I do not aware of any plan by any entrepreneur attempted to acquire Proton.

Latest issue of The Edge reported that two recent proposals to "rescue" the national car company has been received by government.

The first was submitted by the Naza Group last year and recently, DRB-Hicom Bhd submitted a second proposal. And there is another proposals submitted by Sime Darby last year. The Edge reported that Sime Darby CEO Ahmad Zubir Murshid admitted that a proposal was submitted to the government "a long time ago".

Sime Darby, however, is a Government Link Company (GLC)...not entrepreneurs driven company. Sime Darby is a dealer and assembler of Ford in Malaysia, like Hyundai in South Korea before joint venture with Mitsubishi Motor.

DRB-Hicom, control by Tan Sri Syed Mokhtar in mid-2005 show a floundering performance, stated Leela Barrock, a journalist with The Edge. "These are just not car people," says an analyst. DRB itself may have had some history in automotive industry but Syed Mokhtar does not, write Leela Barrock. Having said that, it must be noted that DRB itself is a company that need saving. More interestingly, in its automotive segment, DRB actually posted loss of RM12.27million for 1QFY2007, compare to a profit of RM28.35 million in previous corresponding period.

PaulTan.org : Naza, DRB-Hicom to buy Proton?
南洋商报: 多元重工业纳莎建议购普腾股权 赛莫达再斗纳西慕汀
Business Times : Proton firms on talk of stake tussle

In another commentary: "Should entrepreneurs get Proton?". The Edge's Leela Barrock analyze the two Tan Sri. The she write: Nasimuddin has his Korea Kia connections, which could be used to roll out vast numbers of Korean lookalikes with Korean technology-no, not an exciting prospect for the poor Malaysian driver who would be "graduating" from a Proton to a Kia.

Later, she stated it was Mahathir who want Proton to start spawning more models against advise that a car company needs critical economies of scale. The late Tan Sri Yahaya Ahmad agreed to fulfill Mahathir's dream of multiple Protons and thus was rewarded with the national car company in the late 1990s.

He blame the late Yahaya acquired British car company without board approval, launch Tiara, a badly received car with an ancient Citroen engine. Systems and processes that are required for the healthy management of a company were done away with to fan the fires of entrepreneurial zeal.. And it was Yahaya who turned the screws on parts suppliers, which may have led to an erosion of quality.

The conclusion, she stated that entrepreneurial fervour has not worked for Proton.....against what I have suggested.

Actually, Yahaya was rewarded with a Bank (Eon Bank), a transport company (Intra-Kota) lead to group become too diversified. I find Syed Mokhtar group has some similarity with the empire of late Yahaya. Thus,, causing recent loss of DRB-Hicom Bhd. And there is a deal between the government (Mahathir) and entrepreneur (Late Yahaya) like Tajuddin Ramli, causing the failure.

Naza, however, is more focus than the above two. Although Nasimuddin have other non-automotive business like hotel and taxi company.

At the moment, there is only a few automotive company in the world run by government. Any successful one?

星洲日報: 分析員：售股權給納莎和多元資源無助解決普騰問題

Update:No proposals to buy Proton stake

TechnoratiTag: Business Commentary competitive Economics Economy Malaysia Opinion finance Shares Stock Market klse

My comment Budget 2007-1

Thank you Fashion Asia for waiting for my comment.

Beneficiaries

The main beneficiaries sector is Banking and Islamic Financial Sector:

To encourage banks to expand overseas and establish a regional presence, the Government has proposed that Malaysian-owned banks be given tax exemption for five years on income received from their new branches or remittances from subsidiaries overseas, operating within the three-year period, from the year of assessment 2007.

This would encourage local banks to explore and increase their presence in new and competitive regional and global markets.

Currently, Maybank has a large branch network overseas especially in Singapore. Public Bank Bhd has aggressively expanding overseas like Vietnam and China and has a subsidiary in Hong Kong. Bumiputra-Commerce Bank, however, expand via Merger & Acquisition, apparently, this unable to benefit from the tax break. Hong Leong Bank recently has obtain approval to open branch and representative office in Vietnam and China respectively.

Other than that, government also announced 6 measure to boost Islamic finance. This encouraging foreign players to set up their Islamic financial base in Malaysia and local banks to venture abroad with their Islamic banking expertise. Currently, Public Bank Berhad has the largest Islamic finance function in Malaysia.

Updated link: Towards a global Islamic financial hub


UMNO Assembly Budget

Generally, Budget move from traditional October to September ahead of UMNO assembly was seen as an UMNO Assembly budget. With announcement of bonus to civil servant plus project announced for small bumiputra contractor in construction industry has been expected.

Updated link : Potential winners (large and small- to medium players )for projects under the 9MP
Sector woes likely to end

Towards 70 million population policy

70 million population policy was announced by Tun Dr Mahathir. However, Budget 2007 indicated that Pak Lah never abandon the policy. Government removal of the examination fees for the UPSR, PMR, SPM and STPM will be a great help to big family with large number of children. Childcare centre will be establishing in all government department. This is a great relief for working mother and promote 70 million population policy

Promote entrepreneurship

Reduction in Corporate Tax to 27% in 2007 and 26% in 2008 promote setting up of company or entrepreneurship. This is because Personal Income Tax still at 28% at highest rate while company with profit less than RM500,000 tax at 20% while Profit more than RM500,000 tax at 27%. Thus, its time high remuneration employee, sole proprietor or partnership for from a limited company if your income exist RM500,000 and you pay tax more than 20%.

TechnoratiTag:klse Business Commentary competitive Economics Economy finance Malaysia News and politics Opinion Politik Shares Social Stock Market

Blog on Budget 2007

Last year. A blogger Rational Thinking complaint that there is too few comment on Budget 2006 among Malaysian blogger. This year, in less than 24 hours after Budget 2007. I find at least 4 comment on Budget 2007:

THE MALAYSIAN Budget 2007 Highlights
Lim Kit Siang 2007 Budget (2) - Two disappointments
PRESENT POINT POWER MALAYSIA 2007 EXPANSIONARY BUDGET BOOSTS BUSINESS; Lower CORPORATE TAX; No EXAM FEES; HELP UNEMPLOYED GRADS; UP CIGARETTES & LIQUOR
MageP's Lab Friendly Budget

Watch out for my comment tomorrow


Update:
无聊小站:生物科技业者免税十年
Malaysia Students:National Examination Fees Abolished from 2007 onwards
small and medium thoughts: Oil Income allows for expansionary Budget
Beauty Biotech: Budget 2007 on Biotechnology, Halal Food and Agriculture

TechnoratiTag:klse Business Commentary competitive Economics Economy finance Malaysia News and politics Opinion Politik Shares Social Stock Market

My blog rank as one of the top 25 Ugly Singaporean blog

Recently, when I check my technocrati ranking. I found that my blog has been list as one of top 25 Most Ugly Singporean Blog. Celebrity blogger Xia Xue rank No 3.

My blog list they because I have write a comment on an article by Seah Chiang Nee, a columnist at The Star base in Singapore.

I was confused as I am not a Singaporean.

The blogger eventually clarified in his comment column that "Apology for not being clear, the list of links are some common blogs about other bloggers complaining about ugly Singaporean behaviours. I guess by complaining about ugly Singaporeans behaviours, we can give them the benefit of the doubt that they dont do the same..."

TechnoratiTag: Business Commentary Malaysia SingaporeOpinion News and politics Social

Missing Link of IMP3

The Third Industrial Master Plan (IMP3) will be driven by 10 strategic thrusts. One of the strategy is : Positioning services as a major source of growth. A major focus is to make Malaysia a regional centre for selected services, which include business and professional services, integrated logistic services, construction, education and training, health and tourism.


Industrial Plan Vs Services Master Plan

This is the third Industry Master Plan, but it look like a Services Industry Master Plan as a greater emphasis is place on service sector. During the IMP3 period, the services sector will be the largest provider of employment, at 52.2% by 2010, while the manufacturing sector will only
account for 30%. The services sector is one of the pivots in the Third Industrial Master Plan (IMP3) During the plan period, the non-government services sector is projected to grow at 7.5% per annum while construction services, at 5.7%. The manufacturing sector however, would only growing at 5.6% annually during the IMP3 period and contributing 28.5% to the economy in 2020.

To achieve the growth targets, the IMP3 has formulated a set of comprehensive strategies and policy measures, as well as identified several sub-sectors for further development. They are business and professional services, distributive trade services, construction services, education and training, healthcare and tourism.

Several policy measures will also be implemented to give the sector a boost. They include:

• 
  The formulation of a Distributive Trade Master Plan, which will contain strategies to promote foreign direct investments (FDIs) and cross-border trade as well as upgrade the activities of the domestic services providers;
• 
  Matrade, together with the Ministry of Entrepreneur and Cooperative Development and the Malaysian Franchise Association, will support the growth and expansion of franchising. This is given that fact that home-grown franchise businesses have the potential to expand overseas; and
• 
  In construction, the CIDB (Construction Industry Development Board) will continue to be the integrated centre for the registration and renewal of licences to contractors. To improve performance, a comprehensive performance rating system will be introduced to cover key areas, such as safety and quality.

The report said major services sub-sectors targeted for greater development and export promotion include:

· Business and professional services
· Tourism
· Education and training
· ICT and multimedia services
· Health services, and
· Construction.

Missing Link

After I have repeat so many time. Did you realize what is the missing link?

Entertainment and Culture Industry

Remember how Japan indgiant giany Sony, Venture out from it traditional hardware E&E industry to Sony Music and later merge a Hollywood base picture company. It act was follow by rival Matsushita Panasonic later. Matsushita Panashoweverhowevr dispose off it Hollywood business later. Sony, however, appointed a CEO from Hollywood recently, become the first hardware company head by a person from entertainment industry and first US citizen to head a Japan corporation (Nissen CEO is French).

In US, industrial giant GeElectricletric(GE) also acquired a television network company when headed by Jack Welch.

South Korea drama like Winter Sonata has boost the tourism sector and sales of Samsung handphone.

In Malaysia, when young Malaysian was crazy on never ending TV reality show and the fact that Singapore TV reality show has successfully penetrate Malaysia market. I don't understand why IMP3 has left out such an important industry.

While bumiputra might generally weak in Science and Maths. They are , however, talented in entertainment and culture industry.

Financial Service Industry

While US based General Electric (GE) has venture out in financial service to provide finance on it aircraft business initially and has acquired non-performing loan in Thailand during Asia financial crisis. GE has become a financial giant under Jack Welch,

In Japan, Sony has form a Sony Bank. In South Korea, conglomerate control credit card business. I don't understand why IMP2 has left out this industry! Maybe it classified under Business and Professional Service? or it has been cover under Financial Sector Master plan announced by Bank Negara earlier?

Retail and Distribution

Japan FDI in Malaysia initially comprises manufacturing sector like Matsushita Panasonic, Toshiba. It is the retail giant that came to Malaysia eventually: Like Yoahan initially and now Jusco Aeon.

Other Europe retail giant including Makro, Carrefour, Tesco etc.

Wal Mart become the largest company in US. Marks & Spencer do not own any factory, but it able to shift it manufacturing to any country that able to produce goods at lowest price.

Direct Selling Company like Amway,Avon, Mary Kay make a mark in the distribution chain and Internet distribution company like Amazon also gaining influence. When manufacturing FDI flow to low cost China. It is those who control distribution that get the highest margin.

Again, I never see retaidistributionbution on IMP3. Maybe it cover under Distributive Trade Master Plan above.

Malaysian hypermarket group Giant has been disposed off to Hong Kong base British control company. Malaysian more prefer to shop in Jusco Aeon rather than it own Parkson. Pakson however has first mover advantage in China.

ICT and multimedia service

Government should disclose statistic on it success of ICT and multimedia service under IMP2 and Multimedia Super Corridor (MSC). Government has provide grant for manufacturing company to implement ERP system under MSC and IMP2. What is the response?

Surprisingly, government never provide such grant to service sector like hotel and tourism and construction and property development company. However, the industry has successfully nurture a Malaysia home grow ERP company in that sector...Mesdaq listed IFCA.

TechnoratiTag:Business Commentary Economics Economy Malaysia Opinion Shares Stock Market klse

UEM shares had surged 190% & 360% respectively

UEM World shares had jumped 190% year-to-date, while UEM Builders surged more than 360% in the same period. Opus’ share price, on the other hand, gained 44% and CIMA improved some 74%. Reported The Star today.

I have feature UEM on 7 March 2006 and 15 March 2006 respectively.

The shares of several companies under the UEM group, however, received mixed interest yesterday after the group was awarded the concession to build, manage, operate and maintain the second Penang Bridge.

Parent company, UEM World Bhd’s share price fell 2 sen to RM1.62 while subsidiary UEM Builders Bhd’s share price rose 4 sen, or 3.3%, to RM1.25.

Opus International Group plc gained 2.5 sen to 88 sen, but Cement Industries of Malaysia Bhd’s (CIMA) lost 2 sen to RM2.30.

TA Securities said in a report the second Penang Bridge project might have spin-off effects on other contractors, hence other potential beneficiaries of the project “may prevail some time later.”

Remember to rotate between the two company.

TechnoratiTag:Business Commentary Economics Economy Malaysia Opinion Shares Stock Market klse

Target costing for Proton and other GLC

This is Part 7 on automobile industry. Part 1

Automobile industry invented a lot of management theory. The most famous is "Just-In-Time" management theory by Toyota in Japan. In order for this theory to be implemented effectively. We have to implement "Total Quality Management", "Supply Chain Management" (SCM) and may be "Enterprise Resources Management"(ERP). However, the pioneer should be mass production line invented by Ford which practice by most factory in the world until recently. When the computer has been invented and utilized in factory management. Customization can be done in low cost manner.

However, for Proton to survive. We have to borrow management theory from other industry.

Traditional costing and pricing told us we have to add cost plus margin to price our product. Apparently, this is what Proton and other Government Link Company(GLC) has been practice. Usually GLC like Tenaga, Pos Malaysia and even PLUS would said:

" Price has to increase because we have not increase the price for ......years."
" Price has to increase because we are still lowest in Asia and in the World"
"Price has to increase because raw material like petrol has increase"

Only Telekom Malaysia Bhd or more specifically TM does not used such tactic because it has to compete with Maxis and DiGi. Actually, price has decrease over time because of competition. However, monopoly business like broardband remain high and not popular in Malaysia because of lack of competition.

Sony founder Akio Morita when develop Walkman. Find that his invention is too costly to manufacturer and unaffordable to public. Thus he set a Target Price that reasonably affordable by public and try numerous ways to manufacture the product at that cost. Eventually, he find this can be done and Walkman become affordable to general public. Then he used such technique to drive the cost of other company product down to compete with Matsushita or Panasonic. This become the whole company practice and Sony overtake Matsushita or Panasonic become a leading electrical company in Japan.

Now, Target Costing become a management theory that have to be study by accounting student. Actually this is also how Ford invented it Mass Production Line to drive automobile cost down.

I feel Proton and all other GLC lack of such culture. Numereous way has been implement to drive cost down with the government help by raising tax for other imported cars. A few decade has pass but Proton still unable to drive cost low.

While other company like computer manufacturer like Dell and Mobile Phone manufacturer able to drive the price of computer abd handphone become lower and lower. Malaysia GLC alway try to increase their price.

I have ask a counter staff at Pos Malaysia Bhd why the postage charges become so high and the reply I get is "Did you pay higher price for your petrol? That is what we used to deliver your mail". Eventually, I found out that the particular staff have charge me wrongly. The actual postage should be lower. She just try to charge me higher to drive the company turnover higher so that she able to get higher bonus at the end of the year or she might get better price for her stock option. What an unethical act.

The point is, Malaysia's GLC do not have culture for Target Costing .

TechnoratiTag: Business Commentary competitive Economics Economy Malaysia Opinion finance Shares Stock Market klse

Perodua Kancil not a National car

Perusahaan Otomobil Kedua Sdn Bhd (Perodua) has cemented its position as the market leader for passenger car sales, overtaking Proton Holdings Bhd, by capturing a 42.4% market share in the first half of the year (1H06).

Perodua Auto Corporation, the 49%-owned manufacturing arm of Perusahaan Otomobil Kedua Sdn Bhd (Perodua) and whose other shareholders are Daihatsu Motor Co Ltd (41%) and Mitsui & Co Ltd (10%). Although Perodua still the largest shareholder, but Japanese collectively control 51% of Perodua Auto Corporation. Malaysian merely control 49% of the company. Can this call a National car?

Perodua Auto Corporation was established as a result of a restructuring exercise in 2001 to enhance its overall competitiveness for the post Asean Free Trade Area (Afta) era.

While Tun Mahathir and Tengku Mahalee claim Naza Kia should not be grant a National car status. As Naza used imported parts rather than source from Malaysia supplier. I personally feel that Naza more qualified to be claim as a National car than Perodua.

Thus, next time you buy a Kancil. You might not be support our national car as Malaysian merely control 49% of the company.

Rumours said that Proton appointed ex-Perodua executive Syed Zainal Abidin Syed Mohamed Tahir as it new Managing Director because of it ability to secure Japanese as Perodua's partners.

It is yet to be seen whether Syed Zainal Abidin Syed Mohamed Tahir would let go 51% of Proton again to foreigner?

TechnoratiTag: Business Commentary competitive Economics Economy Malaysia Opinion finance Shares Stock Market klse

Why Proton never penetrate US market?

When Honda enter automobile industry in Japan. Japan market has been dominated by Toyota and Nissen and Honda has difficulties to penetrate Japan's market.

When face difficulties in it home country. Honda then try to penetrate US market by setting up a factory there. Honda, the smallest automobile company in Japan then, become the first Japan's automobile company that set up factory and successfully penetrate US market. Then Toyota and other company in Japan also follow Honda foot step by setting up factory there.

After successfully penetrate US market. Then Honda able to slowly gain market share in it home country...Japan.

South Korea's Hyundai become competitive also because the company able to penetrate US market to compete with General Motor, Ford, Toyota and Honda there.

Malaysia's Proton has enter UK and Australia market. But they never enter US market.

US, a country that promote free trade via World Trade Organisation (WTO) apparently protect import of automobile to the country unless we set up a factory there, like what Honda, Toyota and Hyundai did.

It is not sure why Proton never enter US market. It market shares in UK also has been deteriorated.

There is a rumour in the market that Proton try to get Mitsubishi to become it technical partner. Actually, Mitsubishi financial position is far more severe than Proton and the company is up for sell. Proton should team up with Petronas or other financially strong company to acquired the whole company rather than request Mitsubishi to become technical partner. When we become a shareholder, we gain their technical knowledge like Lotus did to Proton.

If Proton unable to swallow the whole Mitsubishi. At least should acquired their plant in US, if any to try to penetrate US market. I don't think any automobile company able to survive without successfully enter US market.

Update: Proton's can of worms
'Board kept in the dark'
RM4 bil spent on R&D
EON faces reality
Proton: Tighter systems in place




TechnoratiTag: Business Commentary competitive Economics Economy Malaysia Opinion finance Shares Stock Market klse

Would you buy Toyota Camry, Honda Accord or Proton Chancellor?

After I have received first and second email from my reader. On Monday, I received a third email from another reader regarding automobile industry excerpt as follow:

From: saam <saam0212@gmail.com>
Date: Jul 17, 2006 8:42 AM
Subject: competitive of proton
To: CompetitiveMalaysia@gmail.com
Hi, I have read about your blog. I want to know more about proton. Like what kind of competitive is proton facing now? Like if you are a buyer, would u prefer to buy proton car. Like would u buy Proton Chancellor? As the price is almost the same with the Toyota Camry and Honda Accord. In what aspects you will take into considerations? Recently I am doing a research about Proton Company. So I would like to gather more information about Proton. Thanks.
First, I like to answer a question from Colin on whether I would buy Proton with the share price dropped so low by now?

What I can said is even the most conservative successful investor like Warren Buffet would do turnaround investment where he would try to invest in company in nearly bankrupt but going to turnaround. Warren Buffet invested in American Express, a credit card company when the company shares price drop to it bottom.

However, Bottom Fish is a risky investment as it is difficult to know where is the bottom. Timing is very important. For me, I do not have plan to buy Proton in near future as I do not know the new CEO well. I feel investment in company equivalent to investment in a company CEO. If government let Idris Jala to head Proton rather then MAS. I might be consider as he has the track record of turnaround a company.

On whether I would buy Proton, Toyota or Honda. I think I would buy South Korea brand if I want to own a car. Either Hyundai or Kia. My first car was Proton Saga. My second car, Proton Wira was provided by my company. I never own any car since my company provided a motor vehicle to me. The point is, I have give enough support to Proton.

Japan has move a lot of factory from Malaysia to China. I feel this trend unlikely to reverse in near future. Thus, Why support Japanese, as they contribute less and less to out country. I feel Asia depend too much on Japan and their Prime Minister frequently insult China, Chinese and Asean. I feel we need to have another balancing power. I would buy South Korea brand like Samsung rather than Sony. Hyundai rather then Toyota. I watch Korea movie/drama rather than Japan movie/drama.

Another reason is security. Malaysia crime rate and car theft was high. If you buy a popular brand like Proton, Toyota and Honda. You are risk of being theft but if you buy a less popular brand like Hyundai or Kia. Chances are you are less likely to be target by car thieve.

Of course, if you want to do research. You cannot take my opinion as I always take a less popular alternative.

Link: BenQ,Siemens Vs Proton , Mitsubishi
Link: Automobile industries in new economy

ZoomClouds

TechnoratiTag: Business Commentary competitive Economics Economy Malaysia Opinion finance Shares Stock Market klse

Proton, nurture Malaysia's brand or bumiputra entrepreneur

Proton, initially founded by the government, has become one of the leading brand in Malaysia at one point of time. If you ask foreigner which brand they can think of like Sony and Toyota with Japan, Samsung with South Korea. People will think of MAS and Proton as a brand they can remember about Malaysia. Especially at a time when Proton was doing well in UK. However, Sales of Proton in UK has deteriorated.

After some time, government shift it policy to nurture bumiputra entrepreneur. Proton, and its holding company fall in the hand of late Tan Sri Yahaya Ahmad. However, sudden demise of Tan Sri Yahaya Ahmad cause government effort back to square one. Beside, DRB-Hicom group lead by late Tan Sri Yahaya Ahmad has over gear themselves and over diversified into too many area including transport(IntraKota), Banking and Finance etc. When Asian financial crisis hit the country. The company has to dispose off IntraKota and Proton back to government.

AP policy, which aim at nurture bumiputra entrepreneur successfully nurture another automobile entrepreneur.....NAZA group's Tan Sri S.M. Nasimuddin Amin. Tan Sri S.M. Nasimuddin Amin, unlike three other AP King, has his own company NAZA and has make his company into a large business entity.

After sudden demise of late Tan Sri Yahaya Ahmad. There was no visible bumiputra automobile entrepreneur in Malaysia until NAZA was granted national car status.

However, when government has two goal.....National car brand and nurture bumiputra automobile entrepreneur. When Proton was head by late Tan Sri Yahaya Ahmad where two goal was heading in same direction and lead by same person. It still look okay as there is goal congruence. However, when Proton, a Government Link Company (GLC) head by Executive reported to government and another national car NAZA head by a bumiputra entrepreneur. The two goal was in conflict that lead to conflict between present Prime Minister and Ex-Prime Minister.

Solution

The solution should match the two goal together or what we said "Goal Congruence" in management theory. That is to let bumiputra entrepreneur to lead Proton rather than Proton remain as GLC. When entrepreneur spend their own money invest in a company. They have to try their best to run the company. If not, they will lose all their own money. Of course, the government should not bail out the company when the company fail, nor should government enter into a deal with bumiputra entrepreneur like what disclose by Tajuddin Ramli. All buy and sell should done in a willing buyer willing seller free market basis.

When Tun Daim become Finance Minister. He, an ex-businessman nurture a lot of bumiputra entrepreneur. However, those bumiputra entrepreneur was not an entrepreneur or do not run their own business previously. They all are ex-employee of Peremba when Tun Daim head the company. They all are good employee with good qualification. However, if you look at other community like chinese. High qualification good employee might not be successful businessman. Successful businessman might be a school drop out like Bill Gates.

Present Second Finance Minister Tan Sri Nor Mohamed Yakcop policy was different from Tun Daim. As an ex-central banker, he like to run a large group of GLC and like to nurture young executive to run the company. It look like he emulate Singapore style where government lead the economic, rather then Hong Kong style where entrepreneur that lead the economic. However, unlike entrepreneur, the only solution for those Nor Mohamed's executive is price increase, which lead to present high inflation environment.

I feel Hong Kong style more suitable to nurture bumiputra entrepreneur. Further, GLC was classified as share control by non-bumiputra. Only when a company control by bumiputra enterpreneur, not GLC, was classified as share control by bumiputra. Thus, to place Proton under bumiputra entrepreneur would significantly increase bumiputra percentage to achieve New Economic Policy 30% target.

NAZA group's Tan Sri S.M. Nasimuddin Amin. Unlike ex-employee of Peremba, he is a successful entrepreneur himself. Beside not many bumiputra have financial muscle to swallow a large company like Proton. The important point is, he know in and out of automobile industry. This is one of the reason when Ford agree to joint venture with Hyundai's founder.

Integrity

In AP controversial. Ex-Prime Minister Tun Dr Mahathir alleged International Trade Minister Rafidah deceiving him to award national car status to NAZA. It is not sure Tan Sri S.M. Nasimuddin Amin involve or not or only Rafidah was involved. However, Tun Dr Mahathir later attend a function organized by NAZA indicated that he was not involved.

Then, there is allegation of people under declared tax under AP system. It is not sure the allegation was against NAZA or other group. No prosecution was done eventually. Even if he involve in under declaration of tax. Government can purnish him by make him to acquire Proton stake at high price.

Petroleum money

Howard Huges(Aviator), successfully venture into aviation industry or airplane manufacturing because he has fund from profit of an oil and gas company he inheritance from his late father. South Korea LG group and Samsung group successfully enter into highly competitive electrical home appliances market because government award them petroleum refinery license. Another South Korea group SK Group also used profit from their oil and gas industry to venture into telecommunication industry.Like our Ananda Krishnan's Maxis.

Malaysia Petronas, has at one point of time hold share in Proton. However, Petronas has dispose off the shares eventually. Petronas still sponsor R&D of F1 engine. This means there is two team doing R&D in car engine, Petronas and Proton-Lotus. Should government rationalize the two unit?

I feel government should let bumiputra entrepreneur to run Proton. Government can award petroleum refinery license to that particular entrepreneur to finance him to compete in the industry.

Alternatively, if Proton remain a GLC. Government should let it place under Petronas. Or more specifically, both Petronas F1 engine R&D unit and Proton should inject into MISC, which has shipyard like Hyundai and Mitsubishi to form a Mitshibishi in Malaysia.

On Saturday, Edaran Automobile Nasional Dealers Association of Malaysia said there were 800,000 cars for sale in the market, 250,000 more than usual, making it difficult for national car dealers to remain in business.

Thus, Proton and government should act fast to find a solution. However, I opposed merger between Proton Edar and EON as this become monopoly and does not benefit to consumer.

Link: Automobile industries in new economy


TechnoratiTag: Business Commentary competitive Economics Economy Malaysia Opinion finance Shares Stock Market klse

US automobile Company Vs Japan automobile company

As Colin's email was not specific. I have send an email reply to him to ask him to be more specific. I received an email reply as follow:

Hello Peter,

Glad to receive your reply. I have been going through some of the papers regarding issues related to the car industry. One most important aspect i believe, is the government's priority to protect Proton even after the implementation of AFTA (ref:http://paultan.org/archives/2006/06/19/thailand-malaysia-non-compliant-under-afta/);also there are quite a number of vendors and sub-vendors of parts and accessories segment in Malaysia, most of them are "products" of Proton project. What do you think the government going to do with the Proton and the vendors? What can Proton possibly can do? Would you buy Proton with the share price dropped so low by now?

On the other note, Toyota seems to be able to capitalise on the tariff in AFTA, by constantly transporting parts and cars to and fro thailand and malaysia... maybe you can tell me more abt Toyota strategy in ASEAN countries?

Many thanks,

Please take your time...

Colin.

I used to mentioned that China is potential US of Asia while Japan is German in Asia. However, in term of automobile industry. I have difficulties to compare and benchmark China's automobile industry with US automobile industry. Similarly, it is difficult to compare Japan automobile industry with German automobile industry.

However, I find it perfectly fit to compare Japan automobile industry with US automobile industry.

General Motor Vs Toyota

General Motor used to be the largest automobile company in US and the world. However, Toyota has overtake Ford to become the world second largest automobile company in the world and largest in Asia. Recently, Toyota has overtake General Motor in a few indicator. Toyota executive closely benchmark their company against General Motor and expected to overtake General Motor to become the world largest automobile company in 5 years.

However, unlike Honda, Toyota never reveal it Afta plan to public.

In Malaysia, to be expose to Toyota. UMW is the company to be invested. Being the largest automobile company in Asia. This is a company you unable to miss in your automobile portfolio. UMW gain substantially in 1993 super bull run. Thus, this is a counter you unable to miss if you believe stock market will begin it bull run again after recent world cup.

Ford Vs Honda

Ford and Honda, both company name after their founder's name in their respective country. Honda has a comprehensive Afta plan in Asia. Where it plant in Malacca, Malaysia, manufacture some parts to be use by their plant in Thailand, Indonesia and Philippine. Similarly some model of cars also solely manufacture in Malaysia and then export to other Asean country and vice-versa.

In Malaysia, it is not easy to have exposure in Honda. As 51% of the controlling stake of Honda Malaysia held by Japan's holding company with the balance 49 share between Oriental Holding and DRB-Hicom Group.

Daimler Chrysler Vs Nissan

Chrysler, the weakest automobile manufacturer in America has merged with German's Daimler to form Daimler Chryler. Similarly, Nissan, after a huge loss with prolong recession in Japan, has merged with French's Renault.

Nissan Malaysia is the only automobile brand fully control by non-bumiputra.

South Korea catching up

South Korea companies, after electronic giant Samsung's profit over take Japan's Sony. It automotive company Hyundai has benchmark against Japan's Toyota. It is yet to be see whether Hyundai able to over take it Japan counter part. In Malaysia, Hyundai brand has slowly gain popularity while another brand Hyundai acquired after Asia financial crisis Kia also gaining popularity in Malaysia.

Malaysian really like Kia Spectra as it look like German's BMW. While Korea's SSangyong is license from German's Mercedes.

China

China market was dominate by German's Volkswagen.

Positioning of Malaysia

Malaysia manufacturing industry is threaten by China's low cost factory. This is just like Europe country a decade ago which threaten by Japanese lower cost manufacturer. Thus, we need to learn from European country....how they compete with Japanese low cost factory a decade ago.

I used to benchmark China against US, German against Japan, French against Korea.

The only European country that have automobile industries that available for Malaysia to benchmark is Italy, Sweden and Belgium.

Belgium is a headquarters of European Union as the country speak English, French, and German. German do not like to have EU meeting in French or UK. French also do not want to attend EU meeting in German or UK. But the three country willing to come to Belgium.Malaysia, have three major race which make it a perfect Belgium of Asia.

While Thailand is like Italy in term of travel industry where their capital are flood by water. However, in automobile industry. Thailand is like Belgium, without it own brand of automobile company. Malaysia, like Italy has it own brand Proton and Fiat respectively.

Malaysia's furniture industry also like Italy's furniture industry, both within top 10 furniture export country but Thailand was unlike Italy in this industry. Malaysia's furniture industry has a lot to learn from their counter part in Italy in term of design. Similarly, Malaysia's automobile industry can learn a lot from Italy's automobile company in term of design. Malaysia
automobile industry can collaborate with furniture industry to attract design expert from Italy after a lot of factory in Italy theaten by China low cost manufacturer.

While Proton has dispose off Italy's Augusta. Proton can always recruit it designer back when the company close down. Meanwhile, Proton Lotus can benchmark against Italy Ferrari while Proton can benchmark against Fiat robot manufacturing plant.

Another European country that have their own automobile brand is Swedish's Volvo. Volvo used to be more superior brand compare to Italy's Fiat. Volvo used to be considered a up market brand after German's Mercedes and BMW. Volvo, however, have strong trucks manufacturing capability. Thus, Malaysia can target trucks manufacturing rather then passenger car manufacturing. However, Malaysia neighbor, Thailand has strong trucks manufacturing capability despite do not have it own brand.

India TATA group also ha upper hand in branded trucks and bus manufacturing technology. Please note that up market brand like Mercedes also have strong trucks and bus manufacturing technology. Thus, Proton can enter trucks and bus manufacturing business to acquired technology in this area. Once it has acquired technology in trucks manufacturing. It can leveraged on this technology to enter up market manufacturing. Majority(90%) of the container haulage are Volvo brand. Malaysia has loss a lot of foreign currency to import the haulage trucks. Malaysia can save a lot foreign currency if Proton enter this market segment.

Most important thing, Malaysia should learn from Italy and Swedish company. How the company compete with low cost Japanese brand in 1980an to compete with South Korea and Chinese low cost brand.

Link: BenQ,Siemens Vs Proton , Mitsubishi

Update: Nissan to start talks with General Motors over possible alliance
Nissan, Renault and GM explore tie-up

TechnoratiTag: Business Commentary competitive Economics Economy Malaysia Opinion finance Shares Stock Market klse

Low margin of Malaysia auto parts business

I have received an email two weeks ago from one of my reader. Excerpt as follow:

From: Fong Pan <fongkai1980@yahoo.com>> >
Date: Jun 21, 2006 3:20 PM> >
Subject: questions abt car industry> >
To: CompetitiveMalaysia@gmail.com> >> >
Hello Peter,
I have been your blog reader and recently I have to do some writing on car industry in Malaysia. Can you please offer me some knowledge abt the car industry. And it seems like auto parts vendors and manufacturers have also absorbed huge chunk of profit.

Thank you,

Colin.

I have been busy for the past two week and I only able to reply now. Sorry for late reply. Current issue of The Edge has make an analysis on local automobile industry. Get a copy for update.

Meanwhile, my next few post on this blog will comprises reply to Colin (Fong Pan) beginning with the issue I most familiar with.

Auto parts vendors consider low margin business in Malaysia. Despite Proton continue to claim it substantial cost are cause by it social obligation to give contract to Malaysia auto parts manufacturer.

At one point of time. Proton ex-CEO Tengku Mahalee said Malaysian chinese should support Proton and high import tax impose on imported cars to protect Proton market shares in Malaysia, if not, a lot of proton auto parts supplier would have to close down and a lot of it own by Malaysian chinese.

The statement by a CEO of a Government Link Company(GLC) indicate that most GLC's CEO view that Malaysian chinese are racist. They would support protectionist import tax if he mentioned that a lot of Proton supplier comprises chinese.

In actual fact. Chinese is not racist. While chinese will protest if Proton required all auto parts vendors must be 100% own by bumiputra as this is unfair and racist policy. Malaysian chinese would not care if they given a fair opportunity to supply to Proton but the vendor forces to close down due to it own uncompetitiveness. Malaysia chinese would not seek government protection base on the reason that some auto manufacturer comprises Malaysian chinese. It is the job of trade organisation like Auto Parts Manufacturer Association of Malaysia, if any but not the whole chinese community. CEO of GLC should spend time to increase their respective competitiveness of the company rather than play up racist issue like politician.

AIC diversification

veteran bumiputra auto parts vendors to Proton, Datuk Haji Sarip bin Hamid who own a few public listed company including AIC Corporation Bhd, Jotech Holdings Bhd. Started as auto parts vendor to Proton, AIC Corporation Bhd' s AIC stand for Autoindustries Corporation. However, Datuk Haji Sarip realize that margin become lower and lower when Proton demand it supplier to lower their cost. Thus, he diversified to more lucrative semiconductor manufacturing. Now, other than non-bumiputra control MPI, Unisem, Globetronics etc. Datuk Haji Sarip's AIC Corporation is the only bumiputra semiconductor manufacturer in Malaysia. Its later diversification to TFT-LCD manufacturing make him now the only TFT-LCD public listed manufacturer in Malaysia.

Datuk Haji Sarip is one of the bumiputra entrepreneur that I respect. He does not relied on contract from GLC like Proton, but he get contract from Multinational Corporation (MNC) base on his own competitiveness. However, I feel government never give him much help like other crony. He prefer to make donation to the poor rather than make political donation. Maybe this is the reason he never get help from the government.

Ingress invest in Thailand

Another bumiputra manufacturer Ingress Corporation Berhad set up factory in Thailand, Detroit of Asean, and Indonesia. The venture, however, yet to reflected on profit in financial statement.

Delloyd diversified into plantation

Another auto parts manufacturer Delloyd Venture Berhad, which control by non-bumiputra, has venture into oil palm plantation. Delloyd Venture also announced that it explore the opportunity to become an OEM handphone manufacturer.

All the above bumiputra and non-bumiputra companies prove that auto parts business is low margin business where it player try to diversified into other industries.

The most competitive auto parts manufacuturer in Malaysia

In my opinion, I feel the most competitive auto parts manufacturer in Malaysia is New Hoong Fatt Holdings Berhad. New Hoong Fatt's cash flow, grow are impressive compare to other parts manufacturer.

Link:The Edge: Slowing to a standstill
Shakeout among used car dealers
How the main auto players measure up




Update: Components factory lays off 270 staff
Two-hour notice company rapped

TechnoratiTag: Business Commentary competitive Economics Economy Malaysia Opinion finance Shares Stock Market klse

IOI Group: Unilever of Malaysia?

Mitsubishi used to be the largest conglomerate in Japan. Samsung, used to be the largest conglomerate in South Korea. Whereas, Jardin Matheson used to be the largest conglomerate in Hong Kong.

Jardin Matheson control Cycle & Carriage, which own Mercedes franchise in Malaysia. Jardin Metheson also control Dairy Farm, a company that take over Giant hypermaket in Malaysia. Jardin Matheson also control Guardian pharmacy in Malaysia.

Jardin Matheson used to be deemed as a company control by colonial British's family. Chinese richest family in Hong Kong, Li Ka Shin has take over another conglomerate Whampoa ( Now Whampoa-Hutchinson) Whampoa operate one the most busiest port in the world, whereas Hutchinson dominated telco market in Hong Kong, like Ananda Krishnan's Maxis in Malaysia. Li Ka Shin also operate Watson pharmacy in Malaysia

Malaysia government also take over a conglomerate from British colonial. Malaysia government take over Sime Darby. Sime Darby used to be a proxy to Malaysia economic.

IOI Group, initially compete with Sime Darby's Sime UEP Properties Bhd via IOI Properties. Later, IOI group also venture into plantation. However, unlike Sime Darby, IOI Group do not have Automobile division like Sime Darby.

However, market capitalization of IOI Properties overtake Sime UEP Properties. IOI Group also have the largest market capitalization among all the plantation company. Eventually, IOI Group market capitalization over take Sime Darby even IOI Group do not have Motor and heavy equipment division. IOI Group's oleo-chemical division is one of the top 5 market capitalization company in Industrial counter on Bursa Malaysia.

In Malaysia, the other plantation group that also operate a motor and heavy equipment division is Hap Seng consolidated Bhd. The company is being demerge from Malaysia Mosaic Bhd which has smaller market capitalization. The demerger has make IOI Group difficult to swallow the company as it has larger market capitalization.

The increase in market capitalization of IOI Group has lead to it controlling shareholder, Tan Sri Lee Shin Cheng over take Quek Leng Chan and Lim Goh Tong in Malaysia's richest 40 ranking by Forbes Asia. Please be reminded that Quek Leng Chan is second generation of tycoon, which mean he inherited a substantial portion of his wealth from his father and his uncle whereas Lim Goh Tong involve in lucrative gaming industry. Tan Sri Lee Shin Cheng was not on the top ten list few years ago!

Tan Sri Lee Shin Cheng come from a poor family. He has to sell ais-cream during his school day to make end meet. He also never involve in sin industry(gaming industry). This achievement is really not easy.

Malaysia manufacturing industry is threaten by China's low cost factory. This is just like Europe country a decade ago which threaten by Japanese lower cost manufacturer. Thus, we need to learn from European country....how they compete with Japanese low cost factory a decade ago.

I used to benchmark Malaysia with Netherlands. One of the largest Netherlands company is Unilever Group. IOI Group, which has take over a few specialty oil and fats company in Netherlands and plantation land in Malaysia, clearly is a potential Unilever in Malaysia.

After Hong Leong disposal of OYL. Which have manufacturing plant overseas. The only Malaysia multinational company that have LARGE operation oversea only left IOI Group and YTL Corporation Bhd. IOI Group has announced venture into biodiesel recently.

IOI Group start with Lee Shin Cheng acquired an industrial gas company Industrial Oxygen Incorprated(IOI). He later injected his property company Lam Soon Huat(Now IOI Properties Bhd) into the company. This is similar with Tan Sri Datuk Lau Ban Tin's BIG's Industries Bhd.

It is not sure how many percentage of BIG Indsutries Bhd shares control by Tan Sri Lau Ban Tin now. Anybody who abl to control BIG Industries Bhd able to emulate Tan Sri Lee Shin Cheng step in creating wealth in one generation.

TechnoratiTag: Business Commentary competitive Economics Economy Malaysia Opinion finance Shares Stock Market klse biodisel

Nanyang increase cover price to RM1.30 today

Contrary to market rumor. Only one news paper increase it cover price. Nanyang increase it cover price from RM1.20 to RM1.30. As Oriental Daily has increase their cover price from RM1.20 to RM1.30 not too long ago. There would be no longer any chinese newspaper daily that cost RM1.20 effective today.

Nanyang circulation might be deteriorated as those who buy Nanyang because it is RM0.10 cheaper per day will shift back to Sin Chew and Oriental Daily. Sin Chew Daily is the biggest gainer in these price change.

Hopefully, this is not a tactic of Tan Sri Tiong attempt to close down Nanyang by decreasing it circulation like what he did to one of the Sarawak base chinese daily that he take over previously.

TechnoratiTag: Business Commentary competitive Economics Economy Malaysia Opinion finance SharesMedia Stock Market klse

Courtesy ranking and competitiveness of service industry

The Reader Digest survey that rank Malaysia or Kuala Lumpur as the third worst city in terms of courteousness has cause much debate recently.

Some said it is restricted to Kuala Lumpur, not whole Malaysia. Obviously, life in Kuala Lumpur and other part of Malaysia are different. In Kuala Lumpur, if you unable to aggressive while driving. You will deemed uncompetitive to live in Kuala Lumpur. A lot of people who came from our own Kampung would find people in Kuala Lumpur is uncourteous. I personally also find Kuala Lumpur people uncourteous but when I go back to my home town. Those who work in my home town would find my behavior uncourteous even some people in Kuala Lumpur would feel my behavior incompetitive to live in Kuala Lumpur.


Lets look at the comparison with Singapore to see whether the poll reasonable or not.

Reader Digest conducted 3 test. We have same ranking on dropping paper test (20th) which I feel is reasonable.

We rank higher (25th) than Singapore (33rd) on Holding door test. Which I think also reasonable. Majority of Malaysia would agreed with me.

However, in purchasing test, Kuala Lumpur(32nd) ranked substantially lower than Singapore(22nd), 45% vs 70%.

If you been to Singapore before and buy something from Singapore retailer. You will always greed with "Thank You". You would really feel customer is king. But you would not feel that in Malaysia. I have such feeling long time ago. But I really in doubts, as Singapore, as a develop country should be less courteous than Malaysia. Now my feeling has been proven correct by Reader Digest survey.

Once, I even hear a person call up to a radio "Call In" show mentioning that she is a retail assistant. She said on air that the people she most dislike is her customer who spend little but act like a big boss. I think this is the attitude of majority of Malaysian. Only you able to buy the whole shop you will be entertain courteously.

I have discuss this with my boss as I am still young when I went to Singapore at that point of time. My superior told me that Singapore is a service society. Their service industry is world class standard. Their airline, port service, hotel services, retail services is good while Malaysia just transform to Manufacturing economy from agriculture economy. Thus, that is the different.

Now, Malaysia manufacturing industry has been threaten by China low cost counterpart. Malaysia has been slowly transform to service economy like Singapore. We slowly gain competitiveness in traveling and education industry. Which we attract business from China big spender. Our Port of Tanjung Pelepas has give some uneasiness to Singapore Port Authority. Our low cost carrier Air Asia slowly gain competitiveness even our Malaysia Airline (MAS) still unable to compete with Singapore SIA. Our Parkson has invaded China Market.

However, we still have a lot to do in term of customer services. Our banking services. Which is worst than civil services after Pak Lah become Prime Minister. A cosmetic company in Taiwan has engaged a human resources consultant who train SIA staff to train their beauty consultant. Would any Malaysia company do that or would our MAS do that? Malaysian really has to improve their courtesy to compete in service industry if all our factory slowly move to China. Complained on loss of money in banking industry and on loss of item while traveling via our airport cannot be left unattended. Lets correct and improve our courtesy to improve our ranking in next poll and indirectly improve our competitiveness in our service industry

TechnoratiTag: Business Commentary competitive Economics Economy Malaysia Opinion Social

Newspaper will raised their cover price on 1 July

A rumours has been in the market for quite some time is major chinese newspaper in Malaysia will raised their cover price to RM1.50 from 1 July 2006.

Sin Chew Daily together with China Press will lead the increase. It is not sure Oriental Daily and Nanyang will followed or not.

Reader unable to log in the current price unless you willing pay in advance of one year subscription to Oriental Daily in major 7-11 outlet. Monthly subscriber to Oriental Daily have to pay the increased price after 1st July 2006. Thus, reader have to pay a substantial upfront to log in the price or you are subjected to the price increase.

This is second price increase after the market has been dominated by one group.

It is not sure whether English newspaper and newspaper in Bahasa Malaysia will do the same or not.

Link: Stock Market Hot Tips
Update: Nanyang increase cover price to RM1.30 today

TechnoratiTag: Business Commentary competitive Economics Economy Malaysia Opinion finance SharesMedia Stock Market klse