The Edge Malaysia
Three things that happened recently do not answer the above question, but can help in providing some ideas.
The first was a jail term and fine for the promoters of a company known as Profitable Plots in Singapore. They were marketing affordable landbank in Canada, endorsed by former world-class footballers in television advertisements during Premier League games.
Buyers were attracted by the view that rising land values would give them a windfall profit. They were given records and certificates, and no amount of investment was too small. No interest was given though, as they were told that the real money was in future sales.
Sadly, it was a Madoff-like Ponzi scheme. Millions of dollars were lost all over the region.
The second newsworthy report was Permodalan Nasional Bhd’s proposed idea to merge its listed and unlisted property companies under a larger CapitaLand Singapore-type company. The suggested companies included I&P Group Sdn Bhd, Sime Darby Property Bhd and S P Setia Bhd.
All the brands have a credible position in the consumer marketplace. Each of the CEOs have performed admirably. If I remember my history correctly, PNB was also tasked with increasing the number of bumiputera CEOs in the country.
Merging them into one company does not make sense as you may undermine their respective reputation and track record, and create leadership issues. Furthermore, by reducing the number of companies, there will be less places for bumiputera talent to train in, which is not in the national interest.
The à la CapitaLand model is also unnecessary. Singapore needed its property companies to go out of the country as the local market is too small. We do not have that problem and the number of second and third-tier developers in the country gives you a clear indication that niche developers in small neighbourhoods can also thrive with cheaper overheads.
Let me give you an example of how a, PNB company created talent in the early days.
In the 1970s, I&P was known as Island & Peninsular Bhd — a medium second- tier listed developer in Penang. It was owned by Ban Hin Lee Bank Bhd, which in turn was taken over by PNB. The Island & Peninsular CEO who took it to new heights was Raja Azwa Raja Ahmad, the former chief financial officer of AIA who left the latter after 15 years to answer the call for more bumiputera involvement in real estate. Thanks to his tutelage and training, today we have people such as Tan Sri Mohd Bakke Salleh, Datuk Abdul Wahab Maskan, Datin Seri Rosmah Mansor and Mahadzir Azizan, all of whom benefitted from his years of experience in an American company and his leadership, and they went on to lead great companies.
Raja Azwa moved the company from its Penang base to Kuala Lumpur and bought landbank in areas now known as Wangsa Maju and Bandar Kinrara, against good competition and despite resistance from his then Civil Service Board. Today, I&P is a Tier 1 company with great landbank.
Dynamic CEOs are created, not born. The more opportunities there are, the better and larger the pool of these CEOs. Tun Mahathir Mohamad understood that and created colleges to ensure more Malay children had a college education. While it did the trick initially, the quality of education over the years has fallen due to poor teacher training. That is being addressed today.
A merger of all these brands and the resultant upheaval is, in my humble opinion, not necessary. Just dump the non-performing assets into one of those companies and let them put best practice into play. And create new CEOs.
The third issue arises from the concern about China’s investment in Iskandar Malaysia via well-funded, experienced Chinese developers, which even specialise in creating new landbank out of thin air or water. The Chinese are savvy investors. As the CEO of Country Garden said, “Malaysia is in our scope as the country is stable and there is a large local population that is multilingual and finance is available.” He added that “We are here for the long haul and our brand of affordable and luxury homes will sell well locally and internationally.”
Certainly, looking at the amount of pre-planning, quick turnaround and landscaping that they have done, they have put a lot of pressure on our local developers to catch up. Their presence in Iskandar gives the area an international outlook. The more the news media reports about other countries investing in Johor, the more people will want to migrate there to work. Already there is migration of people looking for work from Kelantan, Terengganu and Pahang to Iskandar.
There is a need to find housing for them. Workers’ housing is a growing dilemma in Iskandar. But the secret to Iskandar’s immediate future is to push for even more investment. One possible route is to establish a “Dubai-style” Investment Centre to make it easy for international investors to come to Iskandar to work, live and invest. The current system is opaque, with many agencies involved. The Singapore Economic Development Board is another good example.
But is there an oversupply in Iskandar? If there is, how do we address it? Are there insufficient people to fill the homes under construction? Maybe we have overlooked another potential investor in our midst.
The recent boat tragedies involving migrant workers, legal and illegal, elicited a response from a newspaper in Indonesia that these tragedies will happen as there are four million legal Indonesians and 2.5 million illegal immigrants from the country working in Malaysia. That set me thinking — how many countries are represented here?
An official from the Bangladesh embassy said there were 800,000 of its citizens here legally and maybe another 200,000 illegally. Add to that the Nigerians in “colleges”, Iranians, Pakistanis, Egyptians, Thais, Vietnamese and thousands of Nepalese in the security sector, and more to come as maids. I believe we do not have a problem finding buyers or even tenants for our properties.
Quick math is useful.
Officially, we have 30 million Malaysians and they are divided into five million in Sabah and Sarawak and 25 million in Peninsular Malaysia.
The major migration platform for all foreigners is Peninsular Malaysia since there are more urban cities here and, like London, Malaysian city streets, according to illegal immigrants, are paved with gold.
If the migrants are included, the number of people here could be eight million, give or take a million — this is a guess as no one knows for sure. The funds earned by agencies and runners in bringing them in, legally and illegally, runs into the billions. The eight million represent a 32% increase in our local population density. Many of them are beginning to marry local Malaysians to get a blue card. So we may see a rise in our legal population, both by birth and naturalisation, and Malaysia’s cultural diversity may change. How many countries could have a fifth column in Malaysia?
But make no mistake, first-generation migrants will also require housing, transport and jobs, and their cultural beliefs and habits could be at odds with Malaysians’ initially, but we are very good at adapting other cultures as our own. Shisha pipes and quat are two practices new to us but quickly adopted by Malaysians as their own with new flavours.
Will there be a property overhang in Iskandar? It depends on so many imponderables and where you are viewing the numbers from.
The lovely thing about our beloved country is that we have endless possibilities.
