Kopi-O Satu ... Let's Tembak Angin

Sometimes when you have your local coffee at the kopi tiams (or as we now know them as Old Town, Pappa Rich ... hmmm ... there should be a new chain call Very Old Town or even Ancient Town soon, or how about Mommie Dearest, Who's Your Real Daddy Kopi-tiam..). But I digress. Sometimes even you try to engage in coffee shop talk, the topics aren't interesting enough. Here are my views on a couple of business issues which should be sufficient fodder for those lazy afternoons:

- Petronas Bashing:
What were their motives? Its already proven to be one of the best run international companies with Malaysian management. Keeping in mind that the many frivolous projects they threw money at, were not really management's decision to make in the first place. Most were basically stuffed down their throats.

The one quibble some had about Petronas was the philharmonic concert hall - some thinking its frivolous as well. Let me tell you that that was much needed. No major city or capital can do without a world class concert hall. Those who say that it was a snooty thing do not see the bigger picture. Its not just esteem or pride, its how we place the importance of having great/grand concerts with world class acoustics and a brilliant setting. Its not a high brow thing, thats like saying people who send their children to study the piano or violin are wasting their time. Its not a matter of trying to distill the local culture with Western culture, its bringing great artistes to our shores. You try to aspire to global best standards.

Children see, they think its an option. Imagine kids in Medan, there are probably no such concert halls, hence none of the top classical acts get to perform there. The kids are not exposed, they will never aspire to further their boundaries. They are limiting their imagination because they did not see. Kids who saw know its a reality, and they may do something like that if they like it enough or are talented enough. That's why the concert hall is a must.

The other bashing involves asking Petronas to open their accounts. Why is that necessary? Why wasn't Khazanah also asked to the same? Although I agree that Petronas can show more figures, but why were they singled out. Khazanah is a prime example as well. This led me to believe the attacks were more to discredit management and do a "management change of guard". Seriously folks, don't think of tampering with Petronas or try to have ideas on how to "milk or divert" funds to pet projects. Don't do that. Petronas has to remain as "independently and professionally managed" as possible as their annual dividends to the government is what is keeping many things afloat. Don't play with things that cannot afford to go wrong.

- Listing FELDA:
NO! Think of why Felda was set up in the first lace. You cannot be thinking of selling Felda shares to the public now, its reprehensible. Its like the Malay reserve plots of land in Kampung Baru, what do you think about gathering them as one, corporatising them and selling shares to the public and foreign institutions??? It defeats the very essence of the asset and why they were set up in the first place.

Unless you are thinking of disbanding Felda altogether, then SELL 100%, and NEVER set up another Felda thing again. Then you can list. Anything else is just greed over substance.


p/s photos: Linda Onn

Negative Bonuses For Temasek's Staff

To be fair, Temasek does have one of the fairer compensation system among "investing companies". In fact someone should recommend to Obama to adopt Temasek's bonus pool policy in his administration's attempt to revamp pay and bonuses on Wall Street.

The Straits Times: Temasek Holdings' portfolio lost more than S$40 billion in value in the last financial year, said chief executive Ho Ching yesterday. The exact figures for the 12 months to March 31 are not available yet, but the headline number indicates how the company has fared in the financial crisis. Temasek's next annual report, due out next month, will shed more light on the portfolio's performance.

In February, then Senior Minister of State (Finance and Transport) Lim Hwee Hua told Parliament that between March and November last year, Temasek had lost S$58 billion. Its portfolio value fell 31 per cent from S$185 billion to S$127 billion. It is unclear if Temasek managed to recoup any of those losses between November last year and March this year. But analysts say Ms Ho's comments yesterday indicate that even if Temasek did narrow its losses, it may not have been by much.

In a speech to the IPS Corporate Associates Lunch yesterday, Ms Ho said that Temasek had reported an amount of S$40 billion as its annual 'value-at-risk' for its financial year between April last year and March this year. This means there is a 16 per cent probability that the portfolio would drop by S$40 billion in the period, she said, adding: 'Indeed, it had turned out to be so, and more.'

Global stock markets plunged to record lows in early March, but have rallied strongly since. Nomura analysts estimated last month that Temasek had recouped a considerable amount of its losses between November and mid-May. They said the portfolio likely rebounded 13 per cent, or S$16 billion, in that time. But it is possible that most of these gains were made between March and May and will not be seen in the latest annual report.

The entire staff of Temasek Holdings are taking personal financial hits, with annual bonuses likely to be slashed in the wake of the investment firm's losses over the past year. Part of every Temasek employee's bonus goes into a pool that is paid out over a number of years rather than at the end of each year. When Temasek meets its internal performance benchmarks with higher-than-targeted returns, the pool of bonuses to be distributed grows and each employee gets a bigger slice. But when it fails to do so, employees get 'negative bonuses': They get no money from the pool, or the value of the overall pool shrinks. This compensation structure is based on a key principle of having staff 'share in the institution's performance, both for positive and negative results', said chief executive Ho Ching yesterday.

In her speech at the IPS Corporate Associates Lunch, she said: 'We share gains and pains alongside our shareholder. This is in essence having an owner's approach to our business and operations. Temasek came in below its targets last year as well as this year, which means staff get 'negative bonuses. From CEO to office attendants, all our staff were allocated negative bonuses last year, and will be allocated more negative bonuses this year,' said Ms Ho.

If Temasek achieves above-target returns, known as Wealth Added and reported in the annual Temasek Review, it will have gains to share with its staff. 'It is a tough challenge to share negative bonuses...it is even tougher to deliver a positive Wealth Added every year,' she said.

p/s photos: Linda Onn