By Khairul Khalid
Raja Shahreen Raja Othman
The proposed state investment arm Darul Ehsan Investment Group (DEIG) will improve the flaws and shortcomings of Menteri Besar Selangor Inc (MBI), says MBI group chief executive officer (CEO) Raja Shahreen Raja Othman.
“MBI was too focused on its social goals, but in terms of value creation, it has not met its objectives and became a passive investor. DEIG is set up as an investment catalyst to generate more revenue for the benefit of the rakyat,” said Raja Shahreen to KINIBIZ.
The CEO, who joined MBI in December 2014, explained that after several months of discussion with boards members, accounting firms and consultants, it was decided that the best way to rationalise MBI’s operations was to create DEIG as a new investment arm.
“The question was do we restructure MBI or create a new entity? It was hard to measure the key performance indices for MBI.
“The functions of MBI didn’t match its objectives. On one hand, you’re supposed to spend, on the other hand, you’re supposed to generate income. We have to detach the two. MBI also has legacy problems,” said Raja Shahreen.
The CEO explained that DEIG is looking at streamlining the 74 companies under MBI and exploring joint ventures (JVs) with the private sector in several economic clusters such as real estate, water, waste management, and telecommunications.
“DEIG will not have the expertise. We will have to JV with partners from the private sectors,” said Raja Shahreen.
When asked how much of MBI’s RM6.3 billion in assets will be parked under DEIG, the CEO said he was not able to answer that yet because it is “a complicated process”.
DEIG was established under the Companies Act 1965 as a private limited company on Dec 4, 2014 and was officially launched in May 2015. It is wholly owned by MBI, which was established under the MBI Act 1994 to restructure all the government-linked companies (GLCs) under MBI.
DEIG is widely seen as the brainchild of Selangor Menteri Besar Azmin Ali who took over the hot seat in September last year from predecessor Abdul Khalid Ibrahim. Currently, the company is still in preliminary stages of setting up and is targeting to start operations in the first quarter of 2016.
The CEO was responding to some of the recent public criticisms on DEIG. It has been slammed by both sides of the political divide, with mounting concerns over accountability for its finances. Raja Shahreen has dismissed these attacks as misperceptions.
“We will be 100% transparent. The accounts for DEIG will be audited by one of the big four (audit firms), consolidated into the MBI group accounts and presented to the state assembly,” said Raja Shahreen.
“In fact, we want to improve the enactment of the MBI to be more responsible to the State Assembly. For example, currently, MBI has a loose governance structure is not obliged to reveal its finances. It is a restructuring process. We want to make it better,” said Raja Shahreen.
Soffan Affendi Aminudin
According to MBI group chief operating officer (COO) Soffan Affendi Aminudin, DEIG welcomes the feedback and criticisms to improve its corporate governance.
“We take it positively. It is good to get feedback on how to improve the governance structure of DEIG. I believe governance structure is a value in itself. We have assured the State Assembly that there are mechanisms in place for accountability and transparency,” said Soffan, who also joined MBI in December 2014.
The COO says that the formation of DEIG was necessary “ to create an optimum capital structure for the company”.
Soffan explains that at this stage “DEIG is a RM2 company and we have not started operations. It is 100% owned by MBI”.
“It is not fair to compare to us to other state investment agencies,” said Soffan. He models the DEIG and MBI structure after other GLC conglomerates such as Permodalan Nasional Bhd and Sime Darby.
Soffan explains that currently DEIG is in planning stages of structuring the company, evaluating competencies and recruiting professionals.
“Talent acquisition is critical. We (DEIG) have zero staff at the moment. MBI is currently sharing resources with DEIG. We (DEIG) are targeting to recruit 10 to 15 investment professionals. The rest of the administration staff will be pooled from MBI,” said Soffan.
You must be logged in to post a comment.