You Pay Peanuts, You Get Monkeys

By: Anti-Wayang

One of the unqualified success of the Najib govt was his GLC transformation plan which aimed to put the best person available for the job.

This has resulted in big improvements in the profitability and value of our GLCs. For example, the net asset value (minus debts) of Khazanah increased from RM33b to RM115b between 2008 to 2017.

During the same period the market value of MAHB increased from RM1.7b to RM14.5b, Maybank from RM40b to RM110b while TNB increased from RM30b to RM90b. The majority of the other GLCs also saw similar jumps.

The increase in the value of all these GLC companies are at least RM500b and could even approach RM1 trillion.

Since the share-holders of these GLCs are the govt or the funds, the GLCs provided a good dividend stream to the govt and is responsible for the big increases in the wealth of the funds such as ASN/ASB, Tabung Haji and EPF via higher dividends and higher asset values.

As a result, our rakyat’s wealth and savings in the form of our savings in EPF, ASN/ASB, Tabung Haji have also increased via much higher dividends compared to the past.

From 2008 to now, EPF total assets have increased from RM340b to RM850b, Tabung Haji from RM21b to RM73b, PNB from RM120b to RM280b.

Malaysians who had invested in these blue-chip GLCs and have enjoyed the big capital gains and generous dividends over the past year definitely cannot dispute that during Najib’s time, they had benefited.

The Rakyat was getting much richer (and the govt itself with its shares in the GLC) even as our national debt increased from RM300b to RM680b during that period.

All this was the result of the Najib govt’s revamp of the GLCs and putting the top professional managers in place with a big emphasis on KPIs with performance bonuses and market-based salaries to reward them.

“You pay peanuts, you get monkeys” is the saying that the Singapore govt believes in. They pay top dollar for their MPs and their GLC heads.

Unfortunately, our new PH govt wants to do the opposite and cut the GLC management’s salaries.

Mahathir said some GLC heads now make RM7 million per year. He says this is too much.

This figure is almost certain to include bonuses for meeting their targets.

What is wrong with paying a GLC head RM7 million per year if they increase profits by RM1 billion or increase shareholder’s value by RM10 billion for that year?

On top of that, being a director of a listed GLC also carries legal liability. So, who would want to be liable for law-suits or to fines from the government for very little pay?

That is what a top manager can also make (or more) if he jumps to the private sector – or worse, to Singapore with their higher pay.

It is guaranteed that Singapore firms will head-hunt these top talents who are not willing to work for the peanuts that our new govt wants to pay them now.

This move by Mahathir to could their salaries could back-fire on us as the government will lose their top talents to be replaced by mediocre managers who ends up costing us money.

We certainly do not want a situation like in the 1990s during Mahathir’s time where, instead of reaping the rewards from the success of the GLCs, we had to bail out our GLCs using government funds.

Let’s not be penny-wise, pound foolish.

If the GLCs fail to achieve the growth which it did over the past 10 years under Najib due to less than stellar (but cheaper) management, all Malaysians will end up losing hell of a lot more money. -TTKM-

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