WEEKLY ISSUE 185 PP 13917/10/2012 (030948) Peninsular Malaysia RM4.80 | Sabah & Sarawak RM5.80 (inclusive of GST) www.focusmalaysia.my JUNE 18-24, 2016 REIT listing to Sabah property market Managing AirAsia make Tiong Nam propped by rising growing public Japan faces asset light 16 commodity prices 36 debt 32 challenges 29 IHH allays concerns on high forex exposure The heatlhcare service provider is confident that its dividend payment will be intact despite its expansion drive. 24 MALAYSIA Adding value or a payback? There were some 500 ex-senior civil servants sitting on the boards of listed companies last year. While some feel the appointments are ‘rewards’ for their services, others think with their vast experience and expertise, they can Perwaja seeks more contribute to the companies. 10-12 time for revamp The company will be asking for another two months to submit its regularisation plan to SC. 14

Protasco taking its time The road maintenance service firm is not in a hurry to monetise its Kajang land. 18

Tan Sri Datuk N Tan Sri Clifford Sadasivan Dr Lin Herbert Pillay See Yan DiGi gains PP18608/03/2016(034439) DRIVEN AND DESIRED JUNE 2016 / ISSUE 4 market share THE EVOLUTION OF THE 911 but stock lags PORSCHE UPS THE ANTE WITH ITS SEVENTH-GENERATION SPORTS CAR Its share price PAGES 06-07 has not moved in tandem with its bigger market share and underperformed Tun Mohammed General (R) Tan Sri Tan Sri Siti Tan Sri the other telcos. 28 Hanif Omar Mohd Ghazali Che Mat Norma Yaakob Razali Ismail 10 FocusM | June 18-24, 2016 June 18-24, 2016 | FocusM 11 LEAD LEAD

Probably, the title of the longest-serv- Ex-government officials details of the business. Ex-civil servants on boards of FBM KLCI companies ing chairman/director by an ex-civil on boards of PLCs “The ‘great and the good of the servant is held by General (R) Tan Sri land’ are often too busy to spend time Directors’ No Company Directors Mohd Ghazali Che Mat who has been Type of sector 2005 2015 needed to do their jobs effectively as 1 Malayan Banking Bhd [Maybank] Tan Sri Datuk Dr Hadenan Jalil [auditor-general of chairman of Boustead Holdings Bhd directors,” suggests Zinkin. “So while National Audit Department] Civil service 511 (81%) 496 (68.2%) perks since December 1990. having them on the board may look like Datuk Dr Tan Tat Wai [consultant of Bank Negara] Diplomatic corps 40 (6.3%) 72 (9.9%) In all fairness, there is also the diverse a seal of approval or a certificate of good ON top of drawing their monthly Datuk R Karunakaran [director-general of Mida] Tall order Judiciary 5 (0.8%) 21 (2.9%) area of expertise that some ex-civil serv- governance to satisfy shareholders, it is pensions, ex-civil servants who 2 Tenaga Nasional Bhd Datuk Nozirah Bahari [deputy secretary-general Politicians 57 (9%) 96 (13.2%) (management), Ministry of Finance] ants can offer their boards, particularly no guarantee.” are privileged to sit on the boards Regulators 18 (2.9%) 42 (5.8%) Tan Sri Siti Norma Yaakob [chief judge of Malaya] those conversant with the law like former Recalling the Enron scandal which of PLCs can expect the following Total 631 727 3 Public Bank Bhd Datuk Seri Lee Kong Lam [head of examination for directors judges Tun Zaki Azmi (Astro Malaysia resulted in the collapse of the Hou- remunerations: department, Bank Negara] Holdings Bhd), Tan Sri Siti Norma Source: Company annual reports ston-based energy company, Zinkin „ Average annual directors’ fees: Lai Wai Keen [general manager (policy and international), Yaakob (Tenaga Nasional Bhd) and Tan lodged with Bursa Malaysia points to the fact that while the Enron RM100,000 to RM250,000* Perbadanan Insurans Deposit Malaysia] „ Tang Wing Chew [Bank Negara Staff Training Centre Sri Foong Cheng Yuen (Ancom Bhd and board was highly qualified, it did not Sitting allowances: RM500 to (principal) and Operational Planning Division (manager)] T is common practice for ex-senior civil servants to be Wah Seong Corporation Bhd). Others nomination committee should review spend time needed to execute its key RM2,000 (average three to four Lai Wan [deputy manager (bank examination and internal include ex-Bank Negara deputy governor suitable candidates for the full board functions properly. hours) per board meeting audit department), Bank Negara] appointed to the boards of listed entities, especially govern- Tan Sri Dr Lin See Yan (Genting Bhd) and to consider,” he tells FocusM. “A wide “Also, when recruiting so-called ‘stars’ „ Committee allowances: RM500 to Cheah Kim Ling [assistant governor (payment systems ment-linked companies (GLCs). Such appointments are often prominent economist Tan Sri Sulaiman search should be conducted and not to the board or the C-suite, the nomina- RM2,000 (average three to four policy), Bank Negara] Mahbob (Telekom Malaysia Bhd). limited to contacts of board members tion committee must remember there hours) per session** 4 IHH Healthcare Bhd Tan Sri Dr Abu Bakar Suleiman seen as “rewards” for their services to the country. But weren’t [director-general of health] Also on the boards are former chief or candidates put forward by a major is no guarantee that the ‘star’ recruit’s Ithey already paid good salaries with perks, gratuity and pension to 5 Sime Darby Bhd Tan Sri Dr Wan Mohd Zahid Mohd Noordin secretaries to the government Tan Sri shareholder.” performance will be repeated in the *A 2013 study by KPMG on the profile [director-general of education] boot? Why then the need for such “rewards” after their retirement? Abdul Halim Ali (IJM Corporation Bhd), A responsible director candi- new environment,” he stresses. This is and pay of non-executive directors Tan Sri Samsudin Osman [chief secretary to the In fact, many of papers being presented,” he tells FocusM. Tan Sri Samsudin Osman (Sime Darby date, according to Yusli, should because: (NED) found that the top 300 listed government] these pensioners “There is a risk board appointments may Bhd) and Tan Sri Mohd Sidek Hassan consider whether the company which „ The nomination committee will not companies in Malaysia paid an aver- Tan Sri Dr Wan Abdul Aziz Wan Abdullah [secretary-general of treasury] end up earning become a source of patronage – helpful (Top Glove Corporation Bhd) and distin- has approached him/her meets his/her know how much of the “star” recruit’s age RM122,000 per annum to their Tan Sri Dr Tommy Bugo @ Hamid Bugo more than they did to the patron but not the company – guished diplomat Tan Sri Razali Ismail own criteria in terms of the board on past performance is the result of the NEDs, an increase of 37% from 2009. [state secretary of Sarawak] as civil servants if which needs the best talent on the board (chairman of Iris Corporation Bhd). which he/she wants to serve based on previous management team working ** Examples include audit commit- Dr Muhamad Fuad Abdullah [electrical engineer, their pensions are to flourish.” Malaysian Institute of Corporate Gov- the perception that it is possible to make with that person and of the support- Public Works Department] tee, nomination and remuneration Datuk Rohana Mahmood [assistant secretary of added to their direc- ernance (MICG) president Datuk Yusli valuable contribution. ing ecosystem surrounding them. committee, risk management com- planning division, Foreign Ministry] tors’ fees and other Business exposure Mohamed Yusoff feels board appoint- “It will not serve the company or its „ Even if the person’s reputation is well Tan Sri Dr Yusof Basiron [director-general of Palm Oil by Cheah Chor Sooi mittee, corporate governance emoluments. From a psychological viewpoint, Zinkin ments should be based on the needs of shareholders well and, ultimately, it may deserved, there is always the problem committee, tender committee, Research Institute of Malaysia] For this article, reckons that ex-civil servants may not a company in terms of work experience, compromise the director’s ability to per- of cultural mismatch and consequent investment committee, etc. 6 Axiata Group Bhd Tan Sri Ghazzali Sheikh Abdul Khalid [ambassador to we decided to concentrate on the 30 FBM appreciate what it takes to create sustain- academic/professional qualifications form his/her fiduciary duties,” reckons “tissue rejection” by senior people in the US in March 1999] Datuk Azzat Kamaludin [administrative and diplomatic KLCI counters. A survey reveals nearly able business value when they first come and diversity issues, together with the Yusli. “Just ‘going along with the crowd’ the company. officer, Foreign Ministry] 500 ex-civil servants on the boards of on board. This may be due to the fact that ability of the candidate to contribute to is not an ideal approach.” „ If the person brings in a team of sup- 7 Petronas Gas Bhd Datuk N Sadasivan NN Pillay [director-general, Mida] listed companies last year (see table). government departments do not have board deliberations. porting management to prevent being (ACI) to keep board composition intact Securing the right pick 8 MISC Bhd Datuk Halipah Esa [director-general, Economic Some say this is mind-boggling given customers in the true sense of the word “The board sabotaged by the existing manage- in view of business and risk environment Planning Unit] that many of these former high-ranking as their clients are citizens who have no should determine Zinkin observes that a mistake that is ment, this may cause deterioration in becoming more complex with technol- Datuk Kalsom Abd Rahman [deputy secretary-general civil servants had no business experience choice but to deal with them. Another the selection sometimes made when recruiting “a morale to the rest of the management ogy, business model disruption and (industry), Ministry of International Trade and Industry] or acumen. But what they have are con- reason is some ex-civil servants had criteria and the star” to the board is to assume the new as their career progression is blocked. other changes constantly reshaping the 9 Genting Bhd Tun Mohammed Hanif Omar nections, and in today’s corporate world never experienced the threats of global director will be able business landscape. [inspector-general of police] Inadequate business knowledge Tan Sri Dr Lin See Yan [deputy governor, Bank Negara] that’s rather helpful. competition. to devote suffi- “Continually assess whether the Tan Sri Foong Cheng Yuen [federal court judge] Just ‘going However, minority shareholders want Among the more prominent directors cient time to MICG’s Yusli argues that while a good board has the right mix of skills, back- 10 Hong Leong Bank Bhd Tan Sri A Razak Ramli [secretary-general, Ministry of along with directors who are competent and not just on our list is Tun Mohammed Hanif master the director may be determined to contrib- grounds, experiences and diversity of International Trade and Industry] to warm their seats. But that does not Omar, the longest serving inspector-gen- the crowd’ is issues of ute, knowledge gaps may appear. This thinking and work effectively as a group,” not an ideal 11 IOI Corporation Bhd Datuk R Karunakaran [director-general, Mida] mean these pensioners are completely eral of police. He may well crack another approach, the indus- issue should be raised with the nomina- stresses the think-tank in its recent 12 Telekom Malaysia Bhd Tan Sri Dr Sulaiman Mahbob [head, National devoid of knowledge. Often, their stints record as the ex-civil servant who has says Yusli try and tion committee during the interview (or publication entitled On the 2016 Board Economic Action Council] as civil servants help them contribute served the longest on the board technical with the chairman), and the willingness Agenda. “When recruiting new directors, Datuk Danapalan TP Vinggrasalam [deputy director of their know-how in their specific areas of of a listed company. He has of the company to provide training/ are we casting a wide net to enhance the National Institute of Public Administration] Datuk Zalekha Hassan [deputy secretary-general expertise. been deputy chairman of exposure/access to relevant knowledge. overall strength and diversity of the mix? (management), Ministry of Finance] Zinkin Ettinger Sdn Bhd managing Genting Bhd and Genting “A company which is serious about Is there a robust onboarding process that Datuk Abdul Rahim Abu Bakar [National Electricity director Datuk John Zinkin, an expert in Malaysia Bhd since 1994. choosing the right directors happily enables new directors to contribute from Board (1979-1989)] corporate governance, strategy, brand- He is also on the board of invests in their education and, ideally, day one?” it asks. 13 Kuala Lumpur Kepong Bhd R M Alias [chairman of Felda] based change and marketing, says there AMMB Holdings Bhd since will have a well-structured orientation Aside from the need to keep board 14 Genting Malaysia Bhd Tun Mohammed Hanif Omar [inspector-general of police] are important caveats to be considered 1994. programme for new directors. A com- composition intact, the KPMG ACI also Tan Sri Alwi Jantan [director-general, Public Services although the experience of ex-civil serv- pany which has a ‘never mind’ attitude, urges boards to bear in mind several Department] Tan Sri Clifford Francis Herbert [secretary-general, ants may be essential if the government Some ex-civil servants probably expects the candidates to points such as deepening the boards’ Ministry of Finance] is an important customer or stakeholder. had never experienced simply toe the line,” cautions Yusli, engagement in strategy and assess the Gen [R] Tan Sri Mohd Zahidi Zainuddin “The appointee may feel there is no the threats of global formerly Bursa Malaysia CEO. continuing validity of assumptions at the [army chief] competition, says need to work hard and spend time to His view runs parallel with the call core of the strategy. It should also make Datuk Koh Hong Sun [director of commercial Zinkin crime, PDRM] master the intricacies of the business and by KPMG’s Audit Committee Institute  Continues next page 15 Hong Leong Financial Group Bhd Lim Tau Kien [federal accountant, Ministry of Finance] 16 YTL Corporation Bhd Datuk Dr Yahya Ismail [director-general, National Livestock Authority] After retiring as executive committee prominent positions, obtained the Barris- 17 Westports Bhd Tan Sri Ismail Adam [director-general, Public Prominent ex-senior civil servants on boards chairman of Khazanah Nasional Bhd in ter-At-Law from Gray’s Inn, London in 1962 Services Department] 2000, Lin continued to serve public inter- and a Certificate in Public International Datuk Abdul Rahim Abu Bakar [National Electricity est as a member of the Prime Minister’s Law from the Council of Legal Education, Board (1979-1989)] General (R) Tan Sri Mohd Ghazali Che Mat, 85 Tun Mohammed Hanif Omar, 77 Tan Sri Razali Ismail, 77 Economic Council Working Group and key London. Apart from Tenaga Nasional, Siti Chan Chu Wei [assistant director, Tourist Development Corporation] The former armed forces chief has been Boustead Holdings The ex-inspector general of police (IGP) was appointed The ex-diplomat was appointed chairman of national committees on higher education Norma also holds directorships in RAM 18 Astro Malaysia Holdings Bhd Tun Zaki Azmi [chief justice] Bhd chairman since December 1990. He served in the armed deputy chairman of Genting Bhd on February 23, 1994. He IRIS Corporation Bhd on May 2002. He is also as well as economic adviser to the Asso- Holdings Bhd and Bank Negara Malaysia. 19 British American Tobacco [M] Bhd Datuk Zainun Aishah Ahmad [director-general, Mida] forces for over 30 years in various capacities, culminating joined the police force in 1959 and was IGP for 20 years executive chairman of Cypark Resources Bhd. ciated Chinese Chambers of Commerce She is also chairman of the Malaysia Datuk Christine Lee Oi Kuan [Attorney-General’s in his appointment as chief of armed before retiring in January 1994. He holds a Bachelor of Arts He served in the diplomatic services for over 35 and Industry Malaysia. He is also director Competition Commission. Chambers (1983-1993)] forces from 1985 to 1987. degree from University of Malaya, Singapore, Bachelor of years till 1998. He held various positions such of Ancom Bhd, Wah Seong Corporation 20 AMMB Holdings Bhd Datuk Azlan Hashim [chief accountant, After his retirement from Law (Honours) from University of Buckingham and Certificate as ambassador to Poland, concurrently the Bhd, Sunway Bhd, and chairman of IGB Malayan Railways] the military in 1987, he was of Legal Practice (Honours) from former East Germany and Czechoslovakia REIT Management Sdn Bhd (manager of Datuk N Sadasivan NN Pillay, 75 Tun Mohammed Hanif Omar [inspector-general of police] Tan Sri Clifford Francis Herbert [secretary-general, appointed chairman of the the Legal Qualifying Board. and Hungary, high commissioner to India, IGB Real Estate Investment Trust). He has been on the board of Petronas Ministry of Finance] Armed Forces Fund Board Hanif is also deputy deputy secretary-general (political affairs) Gas Bhd since August 1995. He began Tan Sri Dr Aris Othman [secretary-general, from February 1988 to Febru- chairman of Genting Malay- and was permanent representative to the his career at the Economic Develop- Ministry of Finance] ary 2007. He is also chairman sia Bhd and sits on the United Nations. Tan Sri Siti Norma Yaakob, 76 ment Board Singapore as an 21 KLCC Property Holdings Bhd Datuk Halipah Esa [director-general, Economic of Boustead Plantations Bhd board of AMMB Holdings She was the first woman to economist/head of division Planning Unit] and sits on the boards Bhd since May 1994. In be appointed chief judge upon graduating with an 22 SapuraKencana Petroleum Bhd Tan Sri Dr Tommy Bugo @ Hamid Bugo [state of UAC Bhd and 1993, he became the first Tan Sri Dr Lin See Yan, 76 of Malaya in 2005 before Economics degree from Uni- secretary Sarawak] Mohamed Rashdi Mohamed Ghazalli [system analyst, Boustead serving public servant to A central banker for 34 years, Lin was retiring in 2007. She versity of Malaya in 1963. In Jabatan Telekom Malaysia] Properties be awarded Malaysia’s appointed Genting Bhd director in Novem- was appointed director 1968, he joined the Malaysian 23 UMW Holdings Bhd Tan Sri Asmat Kamaludin [secretary-general, Ministry Bhd within highest non-royal award ber 2001. He served as deputy governor of of Tenaga Nasional Bhd Industrial Development of International Trade and Industry] the Boust- which carries the Bank Negara Malaysia from 1980 to 1994 in September 2008. Siti Authority (Mida) Tan Sri Hasmah Abdullah [director-general & CEO, ead Group. title Tun. before assuming the post of chairman/ Norma, who served and was appointed Inland Revenue Board] president and CEO of Pacific Bank Group the legal service for  Continues * Names are based on latest annual report of the respective companies filed with Bursa Malaysia from 1994 to 1997. 43 years in various next page Blue – previous civil service posts Source: Company annual reports 2015 12 FocusM | June 18-24, 2016 LEAD

In fact, the Ministry of Finance (MoF), wealth of networks and global views. Aziz emphasises Speaking their which probably has the most number of “The other two pre-requisites of the importance nominee directors on boards, is taking an directors are the ability to comprehend of good chemistry minds at active stance to ensure all its nominees financial language and ensuring that the between are adequately exposed and trained to management’s five-year strategy runs company play more active roles via regular corpo- parallel with the company’s aspirations,” management and board meetings rate directors’ programmes conducted he suggests. the board by MINDA. The MoF has also embarked Since its inception in 2006, MINDA  From previous page on a structured search exercise when has been providing development talent development a strategic priority looking for new directors, says Aziz. programmes to over 1,000 company and reassess the company’s vulnerability “A few may lack understanding of directors ranging from GLCs, the Min- to business interruption and its crisis financial language at board level but istry of Finance Incorporated, readiness. they certainly excel in areas of decision listed companies, private sector making and diplomacy, having had companies, ministries and chari- All-round ex-civil servants previous engagements with foreign table organisations. The Malaysian Directors Academy dignitaries.” Under the recent elevation of (MINDA) executive director Datuk Abdul Aziz also emphasises the existence its function termed as MINDA 2.0, Aziz Bakar says former high-ranking of good chemistry between company the academy is now recognised as senior government servants such as management and the board in that the an institute of directors. Its role will former chief secretaries to the govern- latter must be able to challenge the expand from directors’ training to cover ment or their deputies can add colour management to come out with answers research and advocacy, professional to the boards as they are ever prepared to queries and then support it unwaver- membership, board and director assess- to speak their minds or are able to uphold ingly after that. Management must also ments, and directors sourcing as well as the principles of integrity. be clever enough to tap the directors’ placement.

Tan Sri Foong Cheng Yuen, 70 and Consumer Affairs, and under-secretary (economics) of Prominent Foong was appointed a director of Genting Bhd on Jan the Ministry of Finance. He also headed the secretariat at 18. He graduated from University of London with LLB the National Economic Action Council during the 1997/1998 (Honours) in 1969 and was called to the English Bar by Asian financial crisis. ex-senior civil the Honourable Society of the Inner Temple in 1970. Foong spent 21 years in the judiciary, beginning as judicial commissioner in 1990. Two years later, he was Datuk R Karunakaran, 66 servants on appointed a high court judge. Among the Karu, as he is popularly known, was appointed director of posts he has held were high court judge in IOI Corporation Bhd in January 2011. An economics graduate the criminal court, high court judge in the from University of Malaya, he joined the Malaysian Industrial boards civil court before being appointed court Development Authority (Mida) in August 1972 and served of appeal judge in 2005. He was elevated in various capacities for about 36 years. Karu retired as  From previous page to federal court judge in 2009, a post he Mida director-general in June 2008, a director-general in 1984, a position he held until his retire- held till February 2012. Foong is also position he held for about four years. ment in 1995. a director of One World Group During his service with Mida, he was Sadasivan is also director of APM Automotive Holdings Holdings Bhd. responsible for the promotion and Bhd and Bank Negara Malaysia where he doubles up as coordination of the development of chairman of the risk committee and member of the audit the manufacturing and services committee. Tun Zaki Azmi, 70 sectors. Besides IOI, he is This ex-judge was appointed chairman of Astro Malaysia also chairman of Integrated Holdings Bhd in August 2012. Zaki, who holds a Barris- Logistics Bhd and director of Tan Sri Clifford Francis Herbert, 74 ter-at-Law qualification from the Lincoln’s Inn, UK, joined Malayan Banking Bhd, Bursa The former secretary-general of the Finance Ministry was the judicial and legal services as a magistrate and was later Malaysia Bhd and several appointed to the board of Genting Malaysia Bhd in June transferred to the attorney-general’s chambers where he private companies. 2002. He joined the Public Services Department as an held several positions for 15 years before going into private assistant secretary in the administrative and diplomatic legal practice. He was appointed a judge of the service division in 1964 and later held the Federal Court of Malaysia in 2007 and shortly Tan Sri Hasmah Abdullah, 65 same capacity in the Development thereafter, became president of the Hasmah was appointed to the boards of UMW Holdings Bhd Administration Unit of the Prime Court of Appeal, the second in September 2013 and Panasonic Man- Minister’s Department from highest judicial office. In ufacturing Malaysia Bhd in October 1968 to 1975. From 1975 to October 2008, he was 2013. She had a notable career with his retirement in 1997, he appointed the 12th chief the Inland Revenue Board (IRB) for served in the Ministry of justice, a position he held over 37 years and was former CEO Finance where he rose to the till September 2011. and director-general from October post of secretary-general. He 2006 to January 2011. She pushed was a member of the Secu- for electronic tax assessment and rities Commission from Tan Sri Dr Hamid Bugo, 69 payments, and under her leadership, 1993 to 1994. He was He was appointed director of SapuraKencana Petroleum the IRB recorded the highest appointed to the Bhd in February 2012. Hamid had an illustrious career, amount of tax collections of board of AMMB having served in both the public and private sectors. His RM90.7 bil in 2008. Holdings Bhd in public service stint began in 1971 when he became the April 2004. first general manager of Sarawak’s Land Custody and Development Authority as well as the Tan Sri Mohd Sidek Hassan, 64 state’s permanent secretary of the Ministry He was appointed to the board of Malayan Flour Mills Bhd Tan Sri Abdul Halim Ali, 73 of Resource Planning, and Sarawak’s state in August 2012. He also sits on the board of Top Glove Cor- This long-standing ex-civil servant joined the board of IJM secretary. poration Bhd (since March 2013) and has been chairman of Corporation Bhd in April 2007 and was appointed chairman Hamid is also chairman of Sarawak Con- Petroliam Nasional Bhd (Petronas) since July 1, 2012. in August 2011. He is also chairman of solidated Industries Bhd and sits on the Prior to joining Petronas, Mohd Sidek Malaysia Building Society Bhd and boards of Sapura Resources Bhd and served in the administrative and Sedania Innovator Bhd. Halim Sime Darby Bhd. diplomatic service for 38 years. He started his civil service career with was ambassador to Vietnam, the the Ministry of Foreign Affairs minister counsellor of economic in 1966 where he held various Tan Sri Dr Sulaiman Mahbob, 67 affairs in Washington DC as well positions. In 1996, he was made He was appointed chairman of Telekom Malaysia Bhd in as deputy secretary-general secretary-general of the Ministry January last year. He also sits on the boards and secretary-general in the of Foreign Affairs and was subse- of Felda Global Ventures Holdings Bhd Ministry of International Trade quently appointed chief secretary and Bank Negara Malaysia. Sulaiman and Industry. In September 2006, to the government in 1998. After served the government sector for he was appointed the 12th chief his retirement in 2001, over 38 years in various capacities secretary to the government. He he was Employees including director-general of was also appointed chairman Provident Fund the Economic Planning Unit, of Malaysia Digital Econ- chairman until secretary-general of the then omy Corporation on 2007. Ministry of Domestic Trade May 1.