Wednesday, June 11, 2014

UPDATED: Sultan of Johor's Business Empire every Johorean should know

The political-economy of the monarchy

by Azly Rahman
 
 
The issue of the limits of political involvement of the Malaysian monarchy is at centre stage. I believe exciting debates are going on in the country, pertaining to the future of the nature of government evolving as the citizens become more learned of issues affecting their identity in the modern state.

As an educator I am interested in the ‘teachable moment’ of it; especially for Malaysian universities advancing towards world-classism and the nurturing of critical sensibility.

I want to suggest this and share a rational of doing so based on a method of studying the political-economy of the monarchy.

The task for Malaysian universities

Because we are now in the age of transparency and accountability, and that people are to be informed with facts rather than emotions, and that at subsequent general elections the voters need to make informed decision based on the awareness of the world they live in and the political reality they are in, and because the issue of land ownerships, control, and losing control is of interest, I urge the public be made aware of who owns states such as Johor and especially the Iskandar region.

Political-economy as a hybrid discipline linking the relationship between politics and economics is crucial to be used as a framework of understanding who owns what in such states. The idea of finding out the interlocking directorate-ship and the network of controlling interests and to share the findings with the people (using simple terms and better still graphic representations even a 10-year-old can understand) is needed.

Scholars such as Lim Mah Hui, KS Jomo, and Edmund Terence Gomez have done this kind of study in the past (see for example Lim Mah Hui’s study of the ownership of Malaysia’s 100 largest corporations).

I urge think-tanks, NGOs, research units of political parties on any side engage in providing the rakyat/people with such information so that we know who owns what and in what relationship these ownerships manifest themselves and which foreign companies own which property and whose land or even reserved land get sold by who and how much the cost of these properties are.

Most importantly one can then know what are the human consequences of these developments and in what way do they benefit the rakyat.

Here are possible task for universities, especially for the Economics Faculties.

1) Research on the businesses owned by each Royal Household/Palaces; companies they own and their foreign partnership;

2) Research on the businesses owned by the political parties, be they from the Barisan Nasional or Pakatan Rakyat and who sits on the board of directorateship of companies;

3) Publicise the remuneration figures of those who heads government-linked companies so as to ascertain the extent of rewards for political patronage;

4) Research on the funding sources of all organisations; be they local or international NGOs;

5) Research on the funding sources of the media companies.

These are some of the topics that should be explored and the findings made public so as to have a more informed society whose members will vote based on an understanding of political economy in issues-based elections rather than one typically emotions-based.

I hope the relevant university faculties are going to take up the challenge of this intense way of looking at the interplay between power, knowledge and economics in a hypermodern society such as Malaysia.

Political economy through WS Rendra

Some time ago, during my undergraduate days, I wrote an analysis of the great Indonesian poet WS Rendra’s play Kisah Perjuangan Suku Naga or The Struggle of the Naga Tribe, Below is an excerpt from the essay available here in full.

Through Rendra’s essay on his creative process, his poems lamenting the theme of human dispossession in an industrialized society, and plays he translated and authored prior to the writing of The Struggle, one can find the prevalence of Marxist themes in the playwright’s work.

Most remarkable is the universality of Rendra’s analysis for the study of underdeveloped societies; poverty is a structural problem when viewed within a larger historical and dialectical materialistic context.

What is political-economy and how useful will it be to study the Malaysian monarchy?

Political economy is a discipline for studying how a particular society organises the distribution of its economic surplus for the benefit of its members.

It goes beyond orthodox economics in that not only the means of economic distribution is analysed; rather, it also recognises that power relations are embedded within these practices. In addition to that, political economy also looks at how human values are altered or stagnated in the process of development.


Historians of political-economy Charles KWilber and Kenneth Jameson, in an essay which analyses the various paradigms of economic development which have dominated the theoretical writings of scholars on development, stated that the political economist is concerned with the enhancement of human values in the “active”, - i.e. human beings as subjects of development - rather than the “passive” sense - i.e. as objects of development - within the overall process of economic growth.

Political economists differ with orthodox economists in their view of what constitutes the means and end in development, in that, traditional economists look on people’s values as means. Since the goal is growth, if people’s values have to change in order to get growth, then society must effect that change.

But for political economist, one goal is to enhance people’s core values. Development becomes the means, not the end, for the end is to enhance what people value. Development or growth is desirable only if it is consistent with people’s deepest values.


Political economy sees the inextricable link between politics and economics; whichever group controls the economic resources and surplus controls the development process. External and internal loci of control over the surplus are crucial topics explored by this form of Marxist analysis.

With regard to the external control, for example if the economy of a particular developing country is controlled by outside forces - international agencies such as the World Bank, International Monetary Fund, transnational business or banking corporations, etc - political economists would argue that the development policies pursued by that country would be influenced by policies made by those international agencies. In addition, the external forces would collaborate with the internal forces.


As such, an alliance is forged; there would be a First World-Third World dependency based upon collaborations between the foreign political-economic elites with those with political and economic powers in the developing country. Within this context, development means the unequal relationship between the developed and the developing country.

Technology, investments, capital, technical skills, and services from the former to the latter in effect not only create a dependency relationship based upon unequal exchanges but also ensure that the primary beneficiaries from such a structural arrangement would ultimately be the political and economic elite for both camps, international capitalists and their ‘friends’, the native comprador-bourgeoisie.

Writers such as Paul Baran, Andre Gunder Frank, and Bill Warren have dwelled on the dependency notion of development in their analyses of the under development of Latin America in particular and the Third World in general.WS Rendra’s The Struggle, albeit dramatically framed after the wayang, is primarily based upon such a framework.


The excerpt from my early writings above I hope have shed some light on the need to look at the issues, individuals, and institutions that make up the system of constitutional monarchy and how a deeper understanding of control of wealth and resources is needed.

Malaysian universities ought to encourage students to explore these fertile areas of research, so as to make citizens understand not just our nature as economic beings about how power comes into play.

Will the universities take up the challenge?



SULTAN OF JOHOR'S BUSINESS EMPIRE
Story by
Malaysiakini
Johor Sultan Issue in story image Final

Has Sultan Ibrahim of Johor’s succession of big money deals over the last six months caused the tide of public opinion to turn against Johor’s royal palace? KiniBiz examines the roots of the public backlash in a three-part series.
________________________________________________________________________
 
A quiet storm has been growing over the Sultan Ibrahim Ismail’s increased commercial dealings and business interests.
 
It looks to have come to a head with strong public and political opposition to Johor’s new Housing and Real Property Board Bill that was initiated to give the Sultan of Johor sweeping executive powers in the property industry. KiniBiz will examine that issue further tomorrow.
 
Many observers cite the Sultan’s sale of 116-acres of prime land in Johor Bahru last December to China developers Guangzhou R&F last year as a major turning point.
 
 
BN upset with royal housing bill too 01
 
 
The deal pocketed the Sultan RM4.5 billion. Although scant details have been released, unconfirmed sources told KiniBiz that much of it is prime land in the Johor Bahru (JB) city centre and seafront designated as development zones in the Iskandar region.
 
Sources also told KiniBiz that the land was alienated to the Sultan of Johor by the state government for a lot less than the sale price. KiniBiz has not been able to verify this independently.
It is not known whether the Sultan has any stake in the mixed developments to be undertaken on this land bank.
 
The China angle
 
The special economic zone of Iskandar has been buzzing with big Chinese mainland developers such as Country Garden constructing projects on a massive scale that has dwarfed other local developments.
 
The Sultan’s RM4.5 billion land sale to China developers clearly ruffled some feathers, not least among local developers who are worried that the local market could be swamped with units made by China developers and cause a property glut.
 
Ironically, only last July Iskandar Investment Bhd or IIB announced that it was limiting the sale of land in Iskandar through a “controlled release” strategy.
 
The move was deemed necessary because Iskandar “is still a re latively small and fragile region” and to “allow investors to make money”, said IIB president and CEO Syed Mohamed Ibrahim then.
 
There were also concerns that selling prime state land to China was a politically insensitive move. Nevertheless, there was little vocal opposition at the time when the RM4.5 billion land sale was announced, although there were grumblings on the ground.
 
Fear factor
 
The Sultan of Johor is often treated with a mixture of respect, awe and even fear especially among Johorians. Open criticism of the Sultan is seen as social taboo. Local professionals and businessmen keep their lips pursed for fear of repercussions.
 
“Yes, there definitely is a fear factor,” said a local Johor businessman who did not want to be named.
Things could slowly be changing with the furore over the housing bill.
 
“With all due respect, he (the Sultan) shouldn’t be involved in business. This is the first Sultan known to Malaysians to sell land to China. And it is prime city land. It is unprecedented. Even the previous late Sultan Iskandar (Sultan Ibrahim’s father whom the Iskandar region was named after) did not engage in such public business dealings,” said a practicing lawyer in Johor who spoke on condition of anonymity.
 
In theory, the RM4.5 billion land sale to Guangzhou R&F alone could place Sultan Ibrahim among the richest men in Malaysia.
 
Vincent Tan Chee Yioun
Vincent Tan
Business dealings
 
Based on the latest Forbes Malaysia’s 50 richest list, the Sultan of Johor would rank just behind Vincent Tan (a businessman that the Sultan has been closely linked to) who is at number 10 on the list with an estimated net worth of just over RM5 billion (US$ 1.6 billion).
 
The Sultan could have slipped quietly into the background after the mammoth land sale, but subsequently he made several other eye-catching moves in the corporate world. He has been acquiring shares in other existing businesses in deals worth more than RM600 million.
After the RM4.5 billion land sale, the Sultan of Johor bought a 15% stake in MOL AccessPortal (MOL) for RM396 million and 20% stake in Berjaya Times Square Sdn Bhd (BTS) for RM250 million.
 
Interestingly, both companies that the Sultan of Johor bought stakes in are linked to Batu Pahat-born Tan who is chairman of Berjaya Group and owner of Cardiff City football club.
 
Most recently, the Sultan of Johor made waves again, this time in the energy sector.
A consortium of SIPP (SIPP) Energy Sdn Bhd, YTL Power International Bhd and Tenaga Nasional Bhd (TNB) was conditionally awarded the development of Project 4A, a new 1,000 megawatt (MW)–1,400MW combined cycle plant in Johor.
 
The project is reported worth approximately RM6 billion, according to a CIMB report.
The Sultan of Johor owns a 51% stake in SIPP with the balance shareholding split between two company directors — Daing A Malek Daing A Rahman (24.5%) and Anuar Ahmed (24.5%).
 
Sultan of Johor's recent business deals 100614 updated
 
With such high-profile business acquisitions, many have questioned whether it is appropriate for a sitting ruler to be so conspicuously involved in the business world.
 
Legal implications
 
“The constitution says that they (the royals) should be ceremonial bodies and above politics. They get a lot of remuneration and grants from the state government. These are all from public funds. They don’t need to be in business. It is also not right for a Sultan to be in competition with the rakyat for businesses. How can they compete? It is the Malay “adat” not to go against the Sultan, ” said the Johor lawyer to KiniBiz.
 
The lawyer is also concerned that the Sultan’s various business dealings could expose himself to potential lawsuits.
 
“If the Sultan is involved in companies and business entities, he is liable to be sued in court if anything goes wrong. That could tarnish the royal family’s image and bring the country into disrepute,” said the lawyer.
 
This is not the first time that the Sultan of Johor has been linked with prominent local businessmen. Previously, he was heavily linked with Lim Kang Hoo, majority stakeholder of Ekovest and Iskandar Waterfront Holdings (IWH).
 
Lim Kang Hoo
Lim Kang Hoo
 
Property tycoon Lim is ranked number 19 in the latest Forbes Malaysia’s 50 richest list with an estimated net worth of over RM3 billion (US$ 975 million).
 
During the 1997 financial crisis, Lim took over RM200 million debts of state investment agency Kumpulan Prasarana Johor (KPRJ) in return for land reclamation rights. With the value of land skyrocketing in Iskandar in recent years, so has Lim’s fortunes.
 
IWH is a public-private partnership between the state of Johor and Lim, with KPRJ having a 40% stake. Lim holds the balance 60% through his vehicle Credence Resources Sdn Bhd (CRSB). Lim is also executive chairman of public-listed property company Tebrau Teguh.
 
Lim owns vast tracts of land in JB’s waterfront especially in Danga Bay. Last April, Shanghai-based developer Greenland Group paid RM600 million to IWH for 13 acres of land in Danga Bay. IWH and Greenland will be in a joint venture (JV) for a mixed development worth a gross development value (GDV) of RM2.2 billion.
 
Previously, IWH sold 58 acres of land to Country Garden for RM900 million to develop its Danga Bay project that includes 9,000 units of high-end condominiums units and commercial development with a RM18 billion GDV.
 
IWH is also planning an initial public offering (IPO) later this year that could be worth up to $300 million (RM960 million).
 
Sultan of Johor confirmed that billionaire Lim is his business partner in a 2012 interview with a few local bloggers, including Ahirudin Attan (or Rocky as he is more popularly known as).
 
During the interview, the Sultan also angrily dismissed allegations that he is a “30% man” based on rumours that he was asking for a cut of major business dealings in the state. The Sultan explained that the “30% is for the state”, according to the 2012 interview.
 
Chinese companies have been investing huge sums of money and contributing to Iskandar’s growth substantially.
 
Iskandar Tebrau Coast small
 
Feeding China’s love for property, land
 
Major Chinese developers in Iskandar include Country Garden, Guangzhou R&F, Agile Property Holdings and Greenland Group that have invested a combined US$6 billion (RM20 billion).
In 2013, Chinese institutional and retail investors poured US$1.9 billion (RM6 billion) into Malaysia properties.
 
However, there has also been growing unease with the increasing Chinese ownership and presence in vast tracts of waterfront land in JB.
 
“Technically, it could compromise the security of the nation and is not in the best national interest. The Chinese have bought land all along Danga Bay up to Tanjong Pelepas. They are developing all sorts of projects without any restrictions such as the bumiputera quota that are imposed on local developers,” said the Johor lawyer.
 
The cocktail of big business, land, politics, royalty and foreign ownership could be a political time bomb for Johor. Both sides of the political divide are already up in arms over the Sultan of Johor’s potential involvement in state administration via the Housing and Real Property Board Bill.
Major developments and investments in the southern state such as Iskandar and Pengerang could be placed in delicate positions in light of these recent developments in Johor.
 
Tomorrow: Is the Sultan of Johor rewriting the rules?

1 comment:

Anonymous said...

In many African countries the President, Finance Minister and Governor of Central open foreign accounts in the name of the country and operate it. Loans in US dollars are placed in that account and then drawn from time to time to beat the constant devaluation of the currency. It is indeed a good scheme and reflects how African countries have developed all these years. And mind you all is legal.

VideoBar

This content is not yet available over encrypted connections.

VideoBar

This content is not yet available over encrypted connections.

VideoBar

This content is not yet available over encrypted connections.

VideoBar

This content is not yet available over encrypted connections.

VideoBar

This content is not yet available over encrypted connections.

VideoBar

This content is not yet available over encrypted connections.

VideoBar

This content is not yet available over encrypted connections.

VideoBar

This content is not yet available over encrypted connections.

VideoBar

This content is not yet available over encrypted connections.

VideoBar

This content is not yet available over encrypted connections.

VideoBar

This content is not yet available over encrypted connections.

VideoBar

This content is not yet available over encrypted connections.

VideoBar

This content is not yet available over encrypted connections.

VideoBar

This content is not yet available over encrypted connections.

VideoBar

This content is not yet available over encrypted connections.

VideoBar

This content is not yet available over encrypted connections.

VideoBar

This content is not yet available over encrypted connections.

VideoBar

This content is not yet available over encrypted connections.

VideoBar

This content is not yet available over encrypted connections.

VideoBar

This content is not yet available over encrypted connections.

VideoBar

This content is not yet available over encrypted connections.

VideoBar

This content is not yet available over encrypted connections.