Anything Wrong With Sime Darby's Acquisition Of E&O?

When you frame a headline like that, the answer is yes. Let's talk about the Mandatory General Offer Rule: it is there to safeguard the interest of minority shareholders. It is also a rule that recognises who is the "controlling shareholder".





When a company tries to skirt just under the radar, it did not do anything illegal. Sometimes its not the appearance alone that must be flawless, the intention must be full of integrity as well.


So, who controlled E&O before Sime Darby bought the 30% stake? Answer: Technically, nobody as no one owns more than 32%. Effectively XYZ, because alone or together in concert, they hold the largest individual stakes and collectively the largest bloc.


So, who controls E&O now after the purchase by Sime Darby? Answer: Technically, nobody as no one owns more than 32%. Effectively, Sime Darby by virtue of being the largest shareholder.


In most listed companies, there are no controlling shareholders, take the top 20 biggest companies in the US. The largest shareholder is usually just holding a few percent. So, how do they decide or prompt the CEO to act in the best manner for the shareholders? They have their board of directors.





In this case, what is the board doing? How can you allow the CEO and two substantial shareholders to sell effectively the largest bloc of shares to one party, and not triggering a MGO? Well, can the board do anything in the first place? Possibly very little. But you can censure the CEO for sure. Can you really say that there was no knowledge among the 3 sellers in selling to Sime Darby, let's see if you can get a proper not guilty verdict from a jury of your peers.


If you argue on good corporate governance, this fails the test just looking at the facts. It might be OK if a substantial shareholder manages to sell their shares to a willing buyer at higher than market price. It really IS NOT OK when one of them is the CEO as well.


It is also galling that Sime Darby, itself fresh from a hurricane of mismanagement, poor corporate governance issues ... would be part of this charade, and had the gall to say its not collusion. Tell me this, if Tajuddin's stake in MAS was just 30% and somebody bought at RM8 (a price never to be seen for the next 15 years) nearly double the prevailing market price - can you see anything wrong with that when there is no MGO.


Minority shareholders are placing their investments and trust in the CEO and the board of E&O to run the company well and collectively benefit as the company grows. Now, it looks like the biggest substantial shareholders together with CEO acted in collusion to sell what is effectively close to a controlling stake, WITHOUT ANY REGARD for minorities' interest.





Most CEOs will tell their shareholders to be patient to get the full reward of holding their shares. Long term investments are largely based on that implied trust. How to be patient when the CEO gets a deal much higher than its 52 week high? So, what would that CEO say now: "eerr, you guys have to be patient a bit longer, I am sure Sime Darby will create more value for you"???!!!

Passing Commentary On Biz Issues

SC & Mudajaya - Is there a better way to do this? The volatility in the share price is so disturbing. SC had to act after getting "the letter". Here, all listed company owners and CEOs would be shuddering, will SC act on any kind of poison letters? It is highly discretionary, if its not, everyone should get the set of rules out in the open.



If I was an unscrupulous trader or someone who wanted to get into a company on the cheap, this might be an excellent way. Say, I like to own a substantial stake cheaply in a good company, e.g. Evergreen or QL Resources ... and I just wrote the poison letter with minimal truth in it. Of course that will make me liable if I was caught. If I wasn't, I could very well collect a substantial amount of shares 30%-40% cheaper and at good volume as well.

Just the fact that SC has said that they are looking into allegations would kill the stock, because people will guess. Is there a better way? How do we justify between claims that are "reasonably truthful" or "reasonably sneaky"? We are already punishing the stock before the jury is back with a verdict. It cannot go higher, it can only go down.

Can we suspend the stock until the investigation is over? That is plausible, but is that OK for a stock to be suspended for an extended period of time? If it takes 2-3 weeks to come back with a finding, maybe that is the lesser evil.



We still do not know what the final outcome will be, but the entire episode gives a lot of room for excessive volatility and possibly even insider trading, by oh so many parties, be it good news, no news, bad news, etc... how do we guard against it?

I am not saying anyone is at fault but we should really try and get to do this in a "better way", I am sure there is a better way, even if it means suspending the stock indefinitely as the alternative is totally unappetizing and discriminatory to genuine investors.

We just cannot let the "bad guys" win at this.


Sime Darby - Sime said on Friday, Aug 6 that it would announce its fourth quarter results on Aug 26. It added that until then, it could not comment on the results of the group "except that we expect the company to report a profit for the year ended June 30, 2010 based on its best estimates".

Just because the rumours has it that you might be losing money, and in the billions ... still does not give the company the right to say that you will report a profit, or am I the only one who thinks that its not OK?

Need To Empower Independent Directors

StarBiz: In what is seen as the first high-profile removal of the head of a government-linked company, Sime Darby Bhd's board of directors has asked its president and group chief executive Datuk Ahmad Zubir Murshid to take a leave of absence prior to the expiry of his contract on Nov 26, 2010.

Sime Darby chairman Tun Musa Hitam said at a press conference yesterday afternoon that Zubir's leaving was in connection with the cost overruns that the group's energy and utilities division had suffered in carrying out projects in Qatar and the Bakun hydro-electric dam.

Datuk Azhar Abdul Hamid, currently head of Sime Darby Plantations, has been appointed as acting group chief executive.

Sime Darby also said it would take a hit of RM964mil in its second half earnings from losses from its energy division.

Primary Purpose

The Board of Directors has primary responsibility for the governance and management of the Company, and fiduciary responsibility for the financial health of the Company.

Responsibilities

In line with the Best Practices of the Malaysian Code of Corporate Governance, the Board of Directors has the following responsibilities: Review and approve the annual corporate plan for the Group, which includes the overall corporate strategy, business development and marketing plan, human resources plan, IT plan, financial plan, budget, regulatory plan and risk management plan Review and approve strategic initiatives including corporate business restructuring or streamlining and strategic alliances Oversee the conduct of the Group's businesses to evaluate whether the businesses are being properly managed Identify principal risks and ensure the implementation of appropriate systems to manage these risks Approval on nomination, selection, compensation and succession policies for the Management Committee members, Board Committee members and Consultative Panel members and the annual manpower budget for the Group, including managing succession planning, appointing, training, fixing the compensation of, and where appropriate replacing senior management Develop and implement an 'investor relations programme' or 'shareholder communications policy' for the Group Review the adequacy and integrity of the Group's internal control systems and management information systems, including systems for compliance with applicable laws, regulations, rules, directives and guidelines (including Listing Requirements, Securities Laws and Companies Act) Review and approve the Financial Statements encompassing annual audited accounts and quarterly reports, dividend policy, credit facilities from financial institutions and guarantees Review and approve the Audit Committee Report and Internal Control Statement for the Annual Report Review and approve the Annual Regulatory Report prepared in accordance with Section 16 of the CMSA Prepare a Corporate Governance Statement on compliance with the Malaysian Code of Corporate Governance for the Annual Report Review and approve investment policies and guidelines for the Company's surplus funds, asset allocation policy and policy on exposure limits on investment with banking institutions Review and approve the capital expenditure, purchase of fixed assets, operating expenditure, variation order and any other matters in accordance with the Authority Limits Document Approval on appointment of external auditors and their related audit fees

I applaud the board of Sime Darby, its a big decision but what is more interesting is that this development is viewed by investors as out-of-the-norm. We should be seeing boards taking more proactive decisions like this. We have had reams of articles and high level meetings on corporate governance, and it would take a misguided person who believe that the majority of board of directors of listed companies on Bursa are truly carrying out their duties, and have teeth. I dare anyone to prove to me otherwise.

All listed companies should do an internal evaluation of the "strength and independence" of their board of directors. As we have many family owned companies on Bursa, many of these boards may still be beholden to the owners of the companies. More importantly, the independent directors may not be as "independent" as the word would suggests.

Do we have a body that oversees the performance of directors, in particular, the independent directors? I think the SC has that role. There are plenty of companies rolling into PN17, and seriously, I think the independent directors could have been more vigilant in many cases. A company does not run itself to the ground overnight. If you look at the the roles and responsibilities stated above, I wonder how many are truly carrying out the tasks properly.

I still think there is plenty of room for improvement. I think especially for those family owned companies in particular. If there is stricter enforcement and regular "request for independent directors to clarify and explain" from SC, I think we will see a tremendous culture change. We need boards to be empowered as they are really supposed to look out for things on behalf of minority shareholders. Confidence in the impartiality of directors is paramount, especially for independent directors.

Need A Few More Great CEOs For GLCs

What's the difference between a good CEO and a great one? In Malaysia there are not many great CEOs for sure. Many of our top companies are still family controlled companies, and generally its very rare to get family members that are also great CEOs. Family owned enterprises are usually started by a great entrepreneur but as you mushroom into a listed company, many have problems in letting go. An entrepreneur may be able to build a business from scratch to earning RM50m profit a year, but as you expand and scale up, you need a professional person with the vision and execution ability to bring the company to the next level. Ask many CEOs, they don't even talk about what is the next level.



If you put it to a vote, Nazir Razak should probably come in as the best CEO Malaysia has seen for the past 20 years. All you have to do is to track where Bumiputra Commerce Bank was at 10 years ago. If you put that side by side with Maybank, Affin, heck even Public Bank ... the trajectory and the path taken was so different.

Its just a coincidence that CIMB is now a Khazanah owned company. Even with the recent GLC transformation programme, we still see a dire lacking in the top honchos when compared to Nazir.

Let's cut to the chase, what makes a great CEO?

1. Integrity: Always do the right thing regardless of sentiment and never compromise your core values. If you cannot build trust and engender confidence with your stakeholders you cannot succeed. No amount of talent can overcome illegal, immoral or otherwise ill-advised actions.

2. Courage / Excellent Decision Making Skills / Decisiveness: As a CEO you will live or die by the quality of the decisions you make. These decisions are like the ship's mast, every bit that you do steers the ship in a certain direction. He/she must also know when to back down and be able to accept it when he realises its a mistake.

3. Ability to Focus: If you cannot focus you cannot perform at the level necessary to remain in the C-suite for very long. The ability to do nothing more than understand, and lock-onto priorities will place you in the top 10% of all executives.

4. Leveraging Experience: Inexperience, a lack of maturity, needing to be the center of attention, not recognizing limitations, a lack of judgment, an inferior knowledge base, or any number of other common mistakes made by rookie CEOs can cause your house of cards to fall. If you don’t have the experience personally, hire it, contract it, but by all means acquire it. Great CEOs surround themselves with tier-one talent and the best advisors money can buy. They don’t make uniformed or ill-advised decisions in a vacuum.

5. Command Presence: Great CEOs possess a strong presence and bearing. They are unflappable individuals that never let you see them sweat (unless of course it serves a purpose). Everything from how they carry themselves to how they speak and dress messages that they are in charge.

6. Embracing Change: Great CEOs have a strong bias to action. They don’t rest upon past accomplishments and are always seeking to improve through change and innovation. In today’s fast paced and competitive environment those CEOs who don’t openly embrace change will often be shown the door prior to the expiration of their initial employment contract.

7. Brand Champions: Great CEOs understand branding at every level. They seek to build not only a dominant corporate brand, but also a strong personal brand. CEOs that are not well branded on a personal basis, or who let their corporate brand fall into decline will not survive.

8. Resourcefulness / Boundless Energy: Great CEOs have a boundless amount of energy. They are positive in their outlook, and their attitude is contagious. A low energy CEO is not motivating, convincing or credible.

9. Business Acumen: Great CEOs have a deep understanding of the business and a strong orientation toward profit. Great CEOs possess what often appears to be a sixth sense or an almost instinctive feel for what the company needs to do to make money and remain competitive.

10. People Acumen: Great CEOs have a nose for talent…They understand how to recruit, develop and deploy talent while focusing on applying the best talent to the best opportunities. They also know when it’s time to make changes and cut losses as needed.

11. Organizational Acumen: Great CEOs know how to engender trust, know when and how to share information, and are expert listeners. They develop strong and positive corporate cultures driven to performance by aligned motivations. They can quickly diagnose whether the organization is performing at full potential, delivering on commitments, and whether the company is changing and growing versus just operating.

12. Curiosity: Great CEOs possess a powerful motivation to increase their knowledge base and to convert their learning into actionable initiatives. They question, challenge, confront and are never accepting of the status quo.

13. Intellectual Capacity: Great CEOs are also great thinkers both at the strategic and tactical level. They are quick on their feet and know how to get to the root of an issue faster than anyone else.

14. Global Mindset: Regardless of the geographical boundaries of the current business model great CEOs think globally. Limited thinking results in limited results. Whether global thinking is applied to capital formation, supply-chain issues, business development, strategic partnering, distribution, or any number of other areas, those CEOs who don’t grasp the importance of thinking globally will not endure. Great CEOs are externally oriented, hungry for knowledge of the world and adept at connecting developments and spotting patterns.

15. Never Quit: Great CEOs refuse to lose…They have an insatiable appetite for accomplishment and results and while they may reengineer or change direction they will never lose sight of the end game.

16. Execution: The decisions and strategy of a CEO will only be as effective if they have the implementation and monitoring skills to execute ideas and follow through. The great CEOs will only recruit managers that has proven themselves time and again in seeing through a project or transmitting a vision into reality effectively.

17. Not Staying Still: Too many CEOs end up just managing their companies in the same pond. Great CEOs will always be aware of the need to move up to the next level. Always be concerned about your business model and platform of activities, building initiatives or recruiting talent to scale up the business.

18. Fair: Too many CEOs are just intent on finding ways to reward themselves. A great CEO will devise ways to reward performers in a big way. Loyalty can only go so far. To build great companies, you need a core team that is well rewarded to see through the long term vision, and be paid well in the process. You cannot build value into the company when talent keeps going out the door - there has to be continuity.

19: Empowering / A Strong BoD: You need to have a fair and strong board of directors and not staffed by cronies. You can have a great CEO but he/she will not be effective if the BoD gets in the way. The BoD is there to oversee not micro manage. Just as a great CEO will be able to empower talented employees to achieve greater heights, so too the BoD must empower the CEO to do his/her job.

20. Foresight: Great CEOs are prepared to create their own luck by cultivating an ability to see opportunities for their company and to make the deals that convert those opportunities into realities. Some things that may seem like amazing foresight are actually the result of the hard work and discipline it takes to constantly look forward to build a successful company. Great CEOs must also constantly develop new products to build and retain a customer base. Foresight is also the ability to hire and retain the right people, looking ahead toward the growth of the company.

Nazir scores brilliantly in almost every category (no, I am not putting myself up for a job at CIMB). If only we have another 4 Nazir Razaks to turn things around faster. Food for thought. If we have another 4 Nazirs, what would he be doing at these 5 GLCs??? I would exclude him from some GLCs because there might be very little he can do there, such as Tenaga or Malaysia Airports. I also would not put him at Maybank as the stegosaurus will take too long and too much work to turn around. I will select the 4 GLCs that I think will benefit the most:

1) UEM World / Iskandar - I think the Nusajaya project started way before the two Singapore IRs. The bloody casinos are up and running and where are we??? Oops, forget about the Middle East partners now, let's look to China and India. Execution, execution, timeline, goalposts, rollout scheduling, ... for every project delays there will be 1,001 excuses, and therein lies our problem, we are always ready with excuses. I think Nusajaya is a brilliant concept, but seriously, I hope its not taking another 10 years to rollout, by that time I think Indonesia may have transformed Batam into another Nusajaya already with a bridge linking up both islands.

2) Proton - It will be a short stay for Nazir at Proton. Just sell the thing to another major car maker that can carry the platform we have and leverage on it. We take a minority stake say 30% and just let the thing run by someone else that have the regional or global marketing, design, distribution and cost efficiencies to run this thing. Close shop.

3) PLUS - As it is, PLUS is already Asia's largest listed expressway owner and toll operator, easily beating out the two listed Chinese firms in HK. Its an under leveraged vehicle. Nazir will come in, start up a "financing unit" within the firm to tap bonds and capital to buy, invest, build new tollways all across Asia. Its all a matter of "funding the thing" properly. Nazir will keep enlarging the portfolio by hiving off profitable tollways into REIT like instruments to free up capital. PLUS will be 3 times the size of what it is now within 3 years. Macquarie Infra here we come.

4) Sime Darby - Nazir will do wonders here. Just break off the plantation unit and rethink the business model. Why are we just in palm oil??? Sell huge plots of land to Sime Property and hive that off as an independent unit as well - I am sure Nazir will buy IJM Land and SP Setia and roll them all into a proper behemoth with a lot of claws and market edge.



p/s photos: Ririn Dwi Aryanti

No, Not Lost In Space ...

Readers of this blog may have been speculating that I might have been abducted by aliens or taken away to Sg Buloh for some "gentle questioning sessions" - ... actually hopped onto a plane and have been in Sydney, still am... do not have access to the internet, so the postings will be infrequent.

Thankfully, there is the monthly asset class returns from The Capital Spectator - gives me something to talk about without too much work.

After a long period of flattish performance, commodities have started a move last month. Though it may sound silly, I think it is VERY EASY for this kind of asset class moves to turn into a wave, go long on CPO. I do think the rumour of Sime Darby selling 10% to China-interest has a high degree of credibility - and of course it is very good for Sime Darby. Though I did not like many of Sime Darby's M&A and subsequent integration plans, it is still the number one plantation company in the world. Many also may not be aware that it has been building very important port facilities and have a few very exciting long term ventures in China already. Let's just say that Sime Darby may be reinventing themselves to latch onto China as the platform for their next growth phase for the next 10 years. Yes, Sime Darby is a BUY now, no time to do a "Why I Like..." but close enough.

Curiously though, there have been more interest in bonds and relates papers last month according to the table. More significantly, the REITs have showed signs of weakness after a spectacular run for the past 3 months. This may indicate that we may have recovered from the lows, now the euphoria is over, some of these REITs are still showing tremendous leverage and debt difficulty.

p/s photos: Jocelyn Lukos

New York Roadshow By JP Morgan

J.P. Morgan's Malaysia Corporate Access Days

November 5-6 (Thu-Fri)

Grand Hyatt New York, 109 East 42nd Street at Grand Central Terminal, New York

• Roundtable discussions, presentations and Q&A sessions with Malaysian government officials and regulators
• 1x1 meetings with participating Malaysian corporates

Senator Tan Sri Amirsham Abdul Aziz, Chairman - National Economic Advisory Council
Dato' Ooi Sang Kuang, Deputy Governor, Bank Negara Malaysia
Dato' Yusli Mohamed Yusoff, CEO, Bursa Malaysia

Participating Corporates

Air Asia (AIRA MK) - Dato Kamarudin Meranun, Group Deputy CEO

Axiata Group (AXIATA MK) - 1. Dato' Sri Jamaludin Ibrahim, President & Chief Executive Officer / 2. Dato’ Yusof Annuar Yaacob, Group Chief Financial Officer

Bursa Malaysia (BURSA MK) - Puan Nadzirah Abd Rashid, CFO

IJM Corporation (IJM MK) - Datuk Krishnan Tan Boon Seng, Chief Executive Officer & Managing Director

Public Bank (PBK MK) - Mr. Leong Kwok Nyem, Chief Operating Officer

Sime Darby (SIME MK) - 1. Azhar bin Abdul Hamid, EVP, Plantation / 2. Mohamad Hishammudin bin Hamdan, Group Head, Strategy & GBD / 3. Shariman Alwani bin Mohamed Nordin, Gp Head, Value Mgt & IR

S P Setia (SPSB MK) - 1. Ms. Wong Sheue Yann, Head, Corporate Services - Group Corporate Services / 2. Mr. Cheong Heng Leong - Manager, Investor Relations - Group Corporate & Finance Division

YTL Corp Berhad (YTL MK) - Tan Sri Dato' Dr Francis Yeoh, Group Managing Director

p/s photo: Chrissie Chau

Decoding PNB's Investment Strategy Ahead

Time to try and decode PNB's investing strategy, as some have voiced concerns over its last few fixed priced funds, and its ability to maintain those returns. Some of the information have been extracted from articles in The Edge.

Four of the 10 PNB funds are known as fixed-price funds where the price per unit is fixed at RM1 regardless of how the market performed. There is a history behind this practice. The first PNB fund, Amanah Saham Nasional, was launched as a fixed-price fund in 1981 but it reverted back to market pricing in 1991 as per the trust deed. Soon after that, Amanah Saham Bumiputera, a fixed-price fund was launched in 1990 for investors not accustomed to market fluctuations. Altogether, there are four such funds by PNB.

Fixed-price funds are practically risk-free as investors get back whatever they put in if or when they redeem their investments. On top of that, you get generous returns of 7% to 8% every year. It is a very good deal indeed but on the other side of the coin, the actual value of the underlying investments is unknown, unlike other unit trust funds where you know the value of your investments at any point in time. The balance sheets of fixed-price funds are not disclosed in their annual reports, and the Securities Commission, the body governing the unit trust industry, grants these funds various exemptions from its guidelines on unit trust funds.

How can a fund keep paying 6%-8% a year in dividend, invested 60%-90% in local equities, and will always have a fixed price of RM1 NAV. You cannot get that anywhere else, can you? Is anybody even a bit curious? PNB is not almighty. What about the 1997-1998 Asian crisis, the Internet meltdown, the 9-11 period, the SARS debacle, and the very recent subprime global meltdown ... surely we all saw that equity prices were hammered for an extended period.

The way PNB would argue is that they do income smoothing, or something along those lines. That in good year, say they get an 11% return, they will keep some of the gains and declare only 7% in dividends. The excess would go into a special performance account to top up future years that they do not have stellar dividends. That sounds alright except that you still did not know the exact real NAV of these funds.

PNB could very well be paying 6%-8% dividend every year on these fixed price funds but the real NAV may be deteriorating below RM1.00, and we don't know because its not known. Should we be concerned if the actual collective real NAV of these fixed priced funds were to be say RM0.97, RM0.93 and RM0.88 for 2006, 2007 and 2008 respectively??? We can only assume that their real NAV is healthy.

In good or bad markets, the funds have consistently returned steady dividends in the high single digit. But the fact is, the returns are lower today than in the 1980s and 1990s when dividends and bonuses were in the double-digit realm (as high as 20% for ASN in 1981). But no one is complaining about the 7% to 8% annual return today considering that investments in the fixed-price funds are essentially risk-free — you get your principal back when you sell your units.

PNB is a unique institution. I can understand how they can generate double digit return in the early years (PNB was established in 1979). Pernas, which had been acquiring public-listed companies under foreign control, was compelled to transfer 13 of its companies, including Sime Darby Bhd and Malaysia Mining Corp Bhd, to PNB at cost. Malayan Banking Bhd was transferred to PNB after Bank Negara Malaysia stepped in to restructure the bank in 1967 following a bank run, which wiped out 40% of its deposit base. PNB also benefited from grants and interest-free loans from the government to facilitate the acquisitions. By 1989, PNB had transferred to ASN sizeable stakes in various listed entities. Similarly, ASB’s assets comprised those transferred from PNB. Furthermore, as a bumiputera institution and one of the biggest institutional investors in town, PNB is said to have been allotted shares in companies en route to listing at attractive prices, given the need to meet the 30% bumiputera shareholding requirement.

In the 90s PNB still had its channels as many big companies got listed, and IPOs generally performed outstandingly during the early 90s bull run. Over the last few yers, these mega IPOs have dried up. PNB will now have to rely on corporate finance and restructuring to generate value to its stable of companies. Hence, arguably, the Sime Darby's mega plantation scheme is the start of many more projects under PNB's auspices. PNB will now have to consolidate its stable of companies, put them into synergistic groupings to create more value. All that is very necessary to continue to support these fixed priced funds that still give 6%-8% dividend income every year and can always be redeemed at RM1.00 par.

So, the scepticism over PNB's ability to maintain these returns is genuine and needed to be asked. As to whether they can do it depends on execution, the advisors they have, and how astute they are at not just managing funds but including appointing the right people to manage the synergies and put the collective resources to work. Sime Darby is still digesting the huge plantation firms acquired. It is imperative that PNB maintain a very high standard of professionalism in its retention of top management executives in running these merged entities. PNB has to minimise the political interference to have political appointees - it has to manage with clear transparency with global best practices as their mantra.

The next big project for PNB has to be its many property companies under its stable. PNB have SP Setia and Mah Sing, and its stakes in these companies have been "rising strategically". In contrast, PNB has accumulated almost 20% in Mah Sing and has direct and indirect interests of close to 32.9% in S P Setia. Another company that PNB has bought a stake in is I-Bhd, where it has 18.1%. Sime Darby Property could be better placed in a property conglomerate as it has the largest landbank in the country. Sime Darby’s landbank in the Klang Valley stretches from the Guthrie Corridor in the north of Selangor, to Putrajaya, Seremban and Port Dickson. The 37,000 acres in its landbank is about as big as Kuala Lumpur and three times the size of Putrajaya.

PNB took Petaling Garden Bhd, Island & Peninsular Bhd and Pelangi Bhd private between 2005 and 2007. The three collectively own 7,200 hectares of land. Apart from land, PNB also has buildings in prime locations that can easily be packaged into a real estate investment fund (REIT). Within its fold is also Syarikat Perumahan Pegawai Kerajaan Sdn Bhd (SPPK), which has a good property development record. Because of its huge landbank, Mah Sing and S P Setia are said to be possible vehicles for PNB to unlock value.

It looks increasingly like PNB want Sime Darby to concentrate on plantations. Hiving off SDP to a merged Mah Sing-SP Setia vehicle would probably yield great value to Sime Darby and ramps up PNB's control in Mah Sing-SP Setia. PNB holds about 53% stake in Sime Darby, which wholly owns Sime Property.

Imagine if PNB injects the three property developers – Island & Peninsular Bhd, Petaling Garden Bhd and Pelangi Bhd – all privatised between 2005 and 2007, as well into the merged SPSetia-Mah Sing vehicle. Its a mega property concern for sure. The good thing is that it can consolidate its landbank in one major masterplan and plan much better strategically. It will be much better capitalised as well to venture into new markets with various "brands" for the right markets.

I doubt very much PNB will take SP Setia or Mah Sing private. Injecting what they have into SP Setia-Mah Sing would make much more sense. The whole shebang would require massive amount of capital for development and venturing into new markets, you wouldn't want to take that onto PNB's balance sheets as we could be talking in billions of ringgit every few years.

Other institutional shareholders of SP Setia include the Employees Provident Fund with 12%, Capital Group of the US also with 12%, and other foreign shareholders which hold another 14% in the company. On June 18, SP Setia announced the appointment of two nominees of PNB – Tan Sri Wan Mohd Zahid Mohd Noordin and Datuk Noor Farida Mohd Ariffin – as its new non-independent and non-executive directors. SP Setia’s two executive directors – Khor Chap Jen and Teow Leong Seng – resigned from their positions on the same day. However, both remain with the company in their existing capacity as executive vice-president in charge of property division (central) and executive vice-president/CEO of international business development respectively.


p/s photo: Maya Karin

Why I Don't Like Sime Darby Now

Sime Darby with the new management, and the merged entity as the biggest plantations company in the world, has stepped into a new era of management. And sad to say, its been a "C-" in the report card.

a) Sime Darby would usually make up the top 5 of any rankings on management. The recent FinanceAsia survey on Best Managed Company, Sime Darby habuk pun tarak... apa macam ni? I mean, for Sime Darby NOT to even make the top 10, something must be very wrong, it cannot be that ALL people are colluding to fuck with you. To be fair, Sime Darby still ranked well in corporate social responsibility and corporate governance sub categories.

Best managed company		Votes
1)	Public Bank	36
2)	CIMB	28
3)	IOI Corp	15
4)	YTL	12
5)	Axiata (TMI)	11
6)	Digi	10
7)	SP Setia	9
8)	Genting	8
9)	Media Prima	7

b) TheLabu Affair & The IJN coup attempt - Analysts and industry executives do not think that Malaysia needs two airports located within 10km of each other. KLIA has some 3,290ha for aeronautical activities, which allows for four satellite buildings to be built around the main terminal. Currently, only one has been built.

The IJN affair was even more unscrupulous, it was so obvious its the land that Sime was eyeing. Sime Darby has lost the plot when it comes to deciding who to go to bed with. It seems that no one is thinking of how Sime Darby will appear to the public and investors - imagine if you are a concert promoter, whether you bring on Amy Grant or go with Amy Winehouse has a lot of differing consequences. It seems that Sime's only concern is that "well, if we get this one, we will make tons of money", "screw what the public thinks", "screw what the fucking masterplan is", "screw what the government is thinking, all is negotiable one la" ... That is the kind of feeling I get, and I am sure many others will be perceiving that way of Sime Darby's new era.

c) Investors will accord a premium if management is consistent, clear, strategically composed and adds value. The new management is simply clumsy (jumping into this and that project with abandon), arrogant (fuck care what people may think, its the "we are so big, who the fuck should we care, even the government must give me face" attitude), unscrupulous (I mean seriously, IJN???... how can you make money WITHOUT patients being charged more than they are NOW???), increasingly heartless (pun intended), callous (look at the grouses by many of the employees of the merged plantation firms), manipulative (re: regurgitate previous grouses by employees), ruthless and predatory Sime Darby.

d) Yes, predatory is the key word, does that suit what Sime Darby is trying to achieve? Just look at the merged plantation units under Sime Darby. The level of discontent among them is still very high. So many capable staff have left the company already. If the staff from the merged entities were treated as equal, if they were respected for their contributions and eased into the overall Sime Darby's culture ... why would they leave, some may leave anyway, but not in the numbers we have seen over the past 12 months. Look at the projects they bidded for, they way they went about it.

Why I don't like Sime Darby has little to do with their fundamentals (well, I wouldn't be buying Sime on fundamentals even now... conglomerates ALWAYS under perform during a recovery stage ... too big, too many fingers in too many pies, uneven recovery, needs huge liqudity to move, etc..). When the soul of a company is tainted, not much good can come out of it, just 'accidents and mishaps' waiting to happen.

Well, there goes my chance to be employed by Sime Darby. If I may pass one word for management and the board to meditate and mull on, its this word: HUMILITY ... think of how the company came about, what made it great, the contributions of the many employees at the many merged units, ...


p/s photos: Zhang Jing Chu

UMW Going For Ramunia Against Sime Darby

Sime Darby will be acquiring Ramunia for RM232m - RM46.2m in cash and the balance in new shares of Sime Darby Engineering. This basically values Ramunia shares at just RM0.35. I would not touch Ramunia shares above RM0.55, you have been warned. The deal will make Sime Darby Engineering the largest fabricator in the country. It will almost double its capacity to 107,000 tonnes, and its yard capacity will be increased from 114 acres to 284 acres. Ramunia on its own is a dying company, but its assets are interesting to a larger and more professionally managed firm. Sime Darby Engineering should be able to increase its book orders almost instantly. Impact positive for Sime Darby but it will be marginal owing to Sime Darby's size. Chance to exit Ramunia with some decent pricing, not to trade or buy and hold.

However UMW has hinted that it might make a competing bid, hence the interest has pushed Ramunia shares to nearly RM0.70. Considering the overall situation, I can only see bidding topping out at RM0.50-0.52. Hence anything above RM0.55 for Ramunia is plain silly. UMW has no problem going for Ramunia as it has a cash hoard of RM1.5bn. If UMW looks likely to be successful, then the upside will be better.

------------------------------------------
STOP PRESS!!!

UMW has since issued a statement to deny this.

Subject : ARTICLE ENTITLED “UMW SET TO CHALLENGE SIME DARBY FOR RAMUNIA”

Announcement Details :


We refer to the above article appearing in The Malaysian Reserve on Wednesday, 6th May 2009, captioned as above, on pages 1 and 4, in particular paragraphs 1 and 3 as follows -

Paragraph 1
“UMW Holdings Bhd will be putting in a bid to acquire Ramunia Holdings Bhd to strengthen its oil and gas business, according to sources.”

Paragraph 3
““Previously, Ramunia was in discussions with UMW but the talks went cold. Now UMW is interested again and they will be submitting their offer in the next few days,” said the source.”

In response to the article, UMW wishes to state that the Company does not intend to submit any bid for the acquisition of Ramunia Holdings Berhad and has no knowledge of the talks referred to above. UMW also confirms that it is not in any form of discussion with any parties in this regard.



This announcement is dated 6th May 2009.


cc - Securities Commission
(Issues & Investment Division)
-------------------------------


p/s photos: Pevita Pearce

Don't Ruin The Goodwill

Dear Tony,

To be fair, let's hear Tony Fernandes side... but after reading what he said, it seems he is intent on bulldozing his way through, regardless of the Masterplan... if there was a Masterplan, why not wait till its revealed. Tony always huff and puff that Malaysians are not supportive of a strong home grown brand such as AirAsia. Contrary to that belief, Tony, I think the majority of Malaysians love AirAsia for the freedom and choice it has created. The fact that it has parlayed and leverage the brand and operations to be a globally well known LCC for the Asia Pacific region is to be lauded. Just because sometimes the public do not like some of the strategic moves, does not mean that we don't like the company. We all know AirAsia has had its "insiders" promoting the company albeit giving AirAsia an advantage somewhat, but thats a given in a place like Malaysia. You still managed to turn the benefits and advantages positively, which is very good. When you are on a good thing, don't push, the line between acceptable greed and arrogance is a very thin line. Just that most of us think that you have crossed that line with the now simply clumsy, arrogant, unscrupulous, increasingly heartless (pun intended), callous, manipulative, clumsy, ruthless and predatory Sime Darby. There is substantial public goodwill with you Tony and AirAsia, much like the goodwill surrounding Obama, so don't fuck it up!

Business Times: Analysts and industry executives do not think that Malaysia needs two airports located within 10km of each other.

The newly approved airport in Labu is just 10km away from Kuala Lumpur International Airport (KLIA) in Sepang.

"The only way for this concept of two airports to succeed, is to have very efficient high-speed transportation, 24/7, between them," said Datuk Seri Tunku Iskandar Tunku Abdullah, Asean Tourism Association (Aseanta) Intra-Asean committee chairman.

"Otherwise, we can say goodbye to being a major aviation hub, and I can imagine the kind of complaints that travellers will have in not being able to inter-connect efficiently. There will be all kinds of new challenges for the inter-modality of passenger transportation," Tunku Iskandar said.

The ideal situation is for just one airport, with separate terminals and satellite buildings, to cater for the volume of air-travellers, he said.

Tunku Iskandar said the situation is bad enough now with the LCCT being a separate terminal and not well-connected to the main terminal at KLIA.

The situation has led to much inefficiency as inbound tour operators need to spread their resources over two terminals, some 20 minutes away from each other.

The KLIA, now in its eleventh year of operations, is under-utilised.

KLIA has some 3,290ha for aeronautical activities, which allows for four satellite buildings to be built around the main terminal.

Currently, only one has been built.

An analyst with a local bank backed brokerage agrees with Tunku Iskandar.

"When you think about the government 10 years ago, telling the public that they needed to develop the KLIA in the back of beyond, because they needed space for four terminals ... and now the government has approved the construction of another airport ... it's just so unbelievable," an analyst with a local bank backed brokerage said.

But AirAsia has not always gotten its way when it comes to government decisions.

It was forced to move out of Subang Airport into KLIA, in an effort to turn it into a hub in 2002. However, Firefly, a subsidiary of Malaysia Airlines, was allowed to operate turboprop planes there some five years down the road.

"We have moved three times in the last seven years. All we want is a place where we can be allowed to grow to our full potential," AirAsia chief executive officer Datuk Seri Tony Fernandes said during a site visit to Labu on Thursday.

He said this will be yet another year the budget carrier will beat all passenger forecasts by analysts, who have lowered projections due to the economic slow down.

It forecasts that it will be able to carry 15.7 million passengers this year.

theedgedaily: The race to secure the new permanent low-cost carrier terminal (LCCT) has started. Malaysia Airports Holdings Bhd (MAHB) has finalised its master plan for a new LCCT near the existing main terminal in Sepang, while AirAsia yesterday came out with more details on its proposed terminal in Labu, Negri Sembilan.

Sources said MAHB would submit its master plan to the government soon. The irony is AirAsia is part of the steering committee that finalised and approved the airport operator’s master plan, according to a source.

“The government and AirAsia are aware of the master plan, which has been finalised and approved by the steering committee. It will be submitted to the government soon,” the source said.

“In the 16 months when the master plan was being worked out, AirAsia, which is part of the steering committee, did not raise any issue on the plan. So why are issues raised outside the meeting now?” the source said.

Transport Minister Datuk Seri Ong Tee Keat said yesterday the government had not made a decision on MAHB’s proposed new LCCT.

Meanwhile, AirAsia group chief executive officer Datuk Seri Tony Fernandes said yesterday the carrier would finalise the funding for its own proposed LCCT, named KLIA East@Labu, by April. The cost of the LCCT, excluding land cost, is estimated at RM1.6 billion.

The budget carrier is partnering Sime Darby Bhd to build the Labu terminal. On Monday, Sime Darby obtained the government’s nod to proceed with the project.

Fernandes also dismissed sceptics who contended that AirAsia would face problems in securing financing for KLIA East@Labu, which may result in MAHB’s proposal being carried out instead. He stressed that the Labu LCCT project “is definitely on”.

He said it was in talks with bankers, infrastructure funds and investors to work out an “optimum funding structure”. AirAsia may partly or fully own KLIA East@Labu, or may even just be a pure operator of the airport without having a stake in the asset, he said, adding that it was open to MAHB taking a stake in the Labu LCCT.

“We certainly do not see any issue in financing it. There are so many options available to us. The final structure has not been finalised yet,” Fernandes said at a media briefing here yesterday. Reporters were also brought to tour Sime Darby’s Labu estate earmarked for the development of the LCCT after the briefing.

The capital of owning 100% of the Labu LCCT is equivalent to buying 12 Airbus A320 aircraft, Fernandes said. “We think it’s better for infrastructure funds and investors to own the asset, and lease it to AirAsia. We will manage it. This is the model we are looking at.”

AirAsia deputy group CEO Kamaruddin Meranun added: “Sime Darby also has not finalised the structure — whether they will be equity holder, or developer, or just sell the land outright.”

Asked if other budget carriers would also be allowed to operate out of KLIA East@Labu, Fernandes said the approval given so far was only for AirAsia to use the LCCT.

The first phase of the development of the Labu LCCT, due to be completed in March 2011, will create a capacity of 30 million passengers per year. The capacity can be further increased to 50 million passengers, depending on AirAsia’s growth.

The existing temporary LCCT in Sepang, which is being expanded, has the capacity to handle 10 million passengers currently. After the expansion, which is scheduled to be completed in March, it can handle 15 million passengers.

Fernandes said AirAsia needed a new LCCT as there would be no more room for expansion at the existing terminal. By 2014, it would see a capacity shortfall of some 12 million passengers at the temporary LCCT. Other budget carriers that operate out of the existing LCCT are AirAsia’s sister airlines Thai AirAsia and Indonesia AirAsia, as well as Tiger Airways and Cebu Pacific.

p/s photo: Jang Jin Young

18 Labu-Labu

Why the rush to approve the Labu LCT? Wee Choo Keong, MP for Wangsa maju, has submitted 18 questions for Some Darby to answer. I have highlihted in bold the more pertinent ones.

http://weechookeong.wordpress.com/

1. Why the hurry to rush through the approval to build KLIA East @ Labu? Has it got anything to do with Abdullah Badawi’s term as the prime minister coming to an end in March 2009?

2. Is the construction of KLIA East @ Labu a purported attempt to shore up and safeguard the political future of a young and ambitious politician?

3. Why build KLIA East @ Labu when KLIA is still grossly under-utilised until today? (KLIA was originally designed to handle 125 million passengers a year but is now only handling about 25 million.)

4. Why build KLIA East @ Labu when the government has already built LCCT in Sepang and spent a total of almost RM244 million for the seeming exclusive use of AirAsia? (The sum includes the RM123.9 million used for its extension and upgrade as recently as 2008 last year.)

5. Why build KLIA East @ Labu when it will be a threat to public safety when its location is dangerously close to busy KLIA and LCCT in Sepang with a straight-line distance of only 10 km between them when ICAO (International Civil Aviation Organisation) strictly recommends that the minimum distance between two airports should be at least 40 km?

6. Why build KLIA East @ Labu when it will be at a much further distance away from the Klang valley where far more passengers will hail from?

7. Why build KLIA East @ Labu at such great cost for the exclusive use of one airline - AirAsia?

8. After the construction of KLIA East @ Labu is completed, will LCCT in Sepang be abandoned?

9. What is the synergy between the businesses of Sime Darby (a GLC) and AirAsia (a private company) that makes good sense for both companies to consider coming together to build KLIA East @ Labu and making a success of it?

10. Sime Darby does not own enough land in Negeri Sembilan for building KLIA East @ Labu which will require about 3,000 acres. So from whom will Sime Darby be buying land? Who are the owners of this land? Are they cronies, family members and/or people who are friendly and personally connected with Sime Darby and AirAsia?

11. If KLIA East @ Labu is apparently a joint-venture between Sime Darby and AirAsia, does AirAsia have the fund for this massive RM1.6 billion project when the company has suffered heavy losses for hedging aero fuel price and has to take delivery of 150 Airbus planes at an average of 1 plane per month?

12. Is it too far-fetched to consider that KLIA East @ Labu is perhaps built to help accommodate the parking need of AirAsia’s Airbus planes as they are delivered?

13. AirAsia sells air tickets in advance as far ahead as 1 to 2 years which is equivalent to deposit-taking. What will happen to this money which belongs to the public in the event AirAsia goes under because of its heavy commitment and undertaking in the construction of KLIA East @ Labu?

14. If AirAsia is purportedly doing well and has the fund to build KLIA East @ Labu, what are the reasons then behind all the foreign investors selling off their shares in AirAsia?

15. What is the reason for EPF to be the biggest investor of AirAsia, a JV partner in the construction of KLIA East @ Labu with Sime Darby, and why does EPF continue to buy shares in AirAsia when its share price continues to dip south?

16. Does Sime Darby and AirAsia have the fund to sustain the maintenance of KLIA East @ Labu when it will cost on average about RM40 million a year to maintain an airport?

17. Is the reason for EPF to be a major shareholder in AirAsia, which has entered into a JV with Sime Darby to build KLIA East @ Labu at great cost, so that when this massive project needs to be bailed out EPF will be there to do so with the rakyat’s money?

18. Even though the construction of KLIA East @ Labu is claimed to be a Privately Funded Investment venture, should the authority throw caution to the wind and compromise on public safety by giving its approval?

photos: JJ

I No Longer Friend Sime Darby

To me, Sime Darby is a big sell. I don't know about you but since the new management has taken over, since they have forced their way to gobble up the other major plantations companies, since they have become the biggest plantation company in the world... bit by bit the DNA of Sime Darby has been evolving, or should I say, disintegrating. The goodwill accumulated through the decades of being a professional company with integrity, and a heart... is now increasingly heartless (pun intended), callous, manipulative, clumsy, ruthless and predatory. Here are the cases which have led me to my opinion:

Read the latest update on the involvement of EPU and the Ministry of Finance on the opposing side on the IJN issue:

http://anotherbrickinwall.blogspot.com/2009/01/newsbreak-mof-disgree-epu-insist-with.html

a) IJN - why oh why, whoever even though up the idea should be shot ... repeatedly... or better still fed with animal fats over a 3 month period and then ask him to wait in line at IJN. The idea is a non-starter. If the idea is to ensure better pay for the medical staff, its a budgeting issue. To see Sime Darby getting involve - hey, how do you pay more to the staff when you also have to extract another new profit stream for Sime Darby? IJN Holdings had RM100 million in its coffers when Datuk Mohd Radzif took over as CEO in September 2003? Under the 9th Malaysia Plan, IJN was given another RM150 million grant by the Government - what is the problem, its not a big sum to sustain IJN by the government, is Sime telling us that they CAN make sure the rates charged will be LOWER under their regime??? Surely Sime Darby is not in this as a CSR project, right!!?? What next Sime? Thinking of privatizing the orphanages, rumah anak yatim piatu, the old folks home, how about the hospices as well... (in the wise words of my Malay teacher "kepala hotak engkau..").

Sourced from SimeDarbyWatch blogsite, the statement signed by the 35 consultants:

19th December 2008

Statement from IJN medical consultants

We read with concern the perceived perception that the medical staff of IJN are demanding higher pay and will leave IJN if these demands are not met.

We feel it is important that these negative perceptions are correctly put into context.

The institution was set up in 1992 as a corporate body directly under the purview of Ministry of Finance. Its board of Directors include representatives from Ministry of Health and MOF to ensure its direction and objectives of providing good quality and affordable medical care to Malaysians from all walks of life are adhered to.

In that respect, IJN has done and continue to do well, both in maintaining its moral as well as financial obligations. The institution has been self-sustaining since its inception (and has been able to pay year end bonuses annually without fail). For 2007and up to end Nov 2008, we have accumulated 285,764 number of outpatients, performed 15,084 cardiac catheterization interventions including angiograms and angioplasties, 6,094 heart and lung surgeries, 7 mechanical hearts and heart and lung transplants surgeries.

As true with any organization of our size, there will be people leaving the organization at various times in order to pursue different career paths. Over the last 7 years of operation, out of a total of 35 consultants, only 7 have left IJN to work either in local or overseas private centres. Therefore, our consultants' annual attrition rate is only 3%, and we have responded consistently over time to promote our home grown talents to fill up the voids accordingly. Currently, 75% of IJN consultants have been in their posts for more than 10 years.

All of us are salaried based on a different payscale than that of the MOH though not at par with the private centres. Periodic review of salary scale is usually undertaken, subject to approval from Ministry of Finance.

As proven from our consultants' attrition rate and longevity in serving this institution, it is logical to surmise that on the whole we are happy with the current scheme and proving it by remaining with IJN. Many of us have served than 10 years, excluding time spent within the MOH Hospitals prior to setting up of IJN.

Whilst we have yet to have a clear picture of the proposed privatization by Sime Darby, we would like to reiterate our commitment to serve IJN in its current form and want to stress that the proposed privatization of IJN must not be seen to be as a response to our demands for better pay. The medical personnel of IJN are not at all involved, directly or otherwise, in the negotiations for the said privatization.

Being responsible employees of IJN, we are not in the position to dictate the outcome of the privatization proposal from Sime Darby to the stakeholders of IJN. However, the perception that the privatization proposal is in response to demands for higher remunerations by its medical staff is misconceived and must be corrected accordingly to safeguard and preserve the trust placed upon us by our patients.

Signed,

1. Sharifah Suraya Syed Mohd Tahir
2. Suhaini Kadiman
3. Nor Azlina Abdul Jalil
4. Ariffin Marzuki Mokhtar
5. Thiru Kumar Namasivayam
6. Mohd Sharif Mohd Shaffie
7. Mohamed Hassan Mohamed Ariff
8. Azhari Rosman
9. Amin Ariff Nuruddin
10. Ahmad Khairddin Mohd Yusof
11. Aiza Aizan Abdul Rahim
12. Mohd Nasir Muda
13. Shaiful Azmi @ Jamauddin Yahaya
14. Balachandaran Kandasamy
15. Azlan Hussin
16. Razali Omar
17. Chew Soon Ping @ David Chew
18. Rosli Mohd Ali
19. Robaayah Zambahari
20. Mohd Azhari Yakub
21. Pau Khew Kong
22. Sivakumar Sivalingam
23. Abdul Rais Sanusi
24. Hew Chee Chin
25. Hamdan Leman
26. Alwi Mohamed Yunus


b) New Low Cost Terminal @ Labu - The new terminal, to be called "KLIA East @ Labu", will be built on a 2,800 hectare site (6,919 acres) in Negeri Sembilan under a private finance initiative, costing RM1.6 billion (US$461 million). Labu is between Nilai and Seremban. The project is to be undertaken jointly by Air Asia and Sime Darby.

Firstly, simple planning will reveal that we need a phase 1, phase 2 and phase 3 for the current LCT to cope with organic growth and demand, not just by AA but other budget carriers... just zone off a piece of land 4-5x the current size and make sure expansion phases do not hinder current operations - why no planning, why the sudden need to have a new second LCT. If we had planned better in the first place, we would not have needed the second one so soon - I do not like to trash the authorities, but please la, this is planning and budgeting 101.

Secondly, why suddenly Sime Darby is roped in? This is not Sime's expertise, especially when there is a more relevant body in Malaysia Airports Holding - what is the under-current, why do we pick and choose and allow ourselves to be lobbied into inefficiences. Apparently, Sime is involved because the new LCT will be an integral part of its proposed development plan for its Negeri Sembilan Vision City ("NSVC"). NSVC is part of the Company's Central Vision Valley ("CVV") property development project spanning Selangor and Negeri Sembilan.

Now, lets hear what Malaysia Airports Holdings Bhd (MAHB) has just said " MAHB implied that it is more logical for the Low Cost Carrier Terminal (LCCT) to be at the Kuala Lumpur International Airport (KLIA)". In a statement today, the airport operator said it is now in a position to undertake the project with its own funds, thanks to the government’s approved restructuring plan. The National Airport Master Plan study, after considering several locations, has identified a site for the permanent LCCT at KLIA, MAHB said. The new LCCT location was selected as it would provide excellent connectivity for both landside and airside transfers for passengers as well as baggage. At least there is a National Airport Master Plan, why the need for so many LCTs, why can't MAHB be allowed to build a really big one next to KLIA, maybe the new LCT can have its own runway as well.

c) Integration Failure - This has to be my biggest gripe about Sime Darby. I have heard enough stories and examples where staffers at Guthrie and Golden Hope are marginalized and maybe penalized, and at the same time employees from the original Sime Darby are protected and at times given preference in terms of supervision and rankings. Failure to integrate such a huge merger is my biggest concern - failure to integrate means failure to reap the synergies, it means failure to see units being consolidated to work as one, it means huge infighting and inefficiencies. I do not see a proper integration team that takes what's best in the merged companies and to get all to know and believe they are all one company. Turf wars and dissensions are very high - don't trust me, just ask ANY Guthrie/ Golden Hope employee... any of them... or ask the more than 100 plantation executives and senior executives who have resigned over the past few months, many leaving for KLK and IOI.

Integrating merged companies is not something all management can do well. The fact that management of Sime Darby is not talking about integration in a major way shows that something is very wrong. There was an Integration Blue Print... I am pretty sure its a powerful power point presentation, and will be just that. It is not an easy task no matter how you cut it, there's years of differing cultures and ways of doing things. It is easy to be dismissive of another unit's SOP. It is easy to rubbish some units thinking and strategy. It is very hard to get all to think as one. It is very hard to get all to feel they belonged to a company that respected their work, their worth and their contribution. It is very hard not to play favoritism.

It is now very hard for me to friend Sime Darby!


p/s photo: Nabila Syakieb