By KINIBIZ
In the third part of the series, Daim Zainuddin gives his opinion on Putrajaya’s financial management and why prime minister Najib Abdul Razak should not be finance minister. Daim also explains his sell-down in ICB Financial Holdings AG and comments on the Malaysian property market, which he thinks is seeing “ridiculous” prices these days.
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Najib Abdul Razak should not hold both the prime minister position and the finance ministry portfolio at the same time, said former finance minister Daim Zainuddin.
Saying this burden would be too heavy, Daim told KiniBiz in an exclusive interview that managing both would be unfair for Najib given the importance of the finance ministry.
In addition, Daim shed further light on why he is paring down his interests in global banking chain ICB Financial Holdings AG as well as why he delisted the bank from London’s Alternative Investment Market (AIM) in 2012.
As for the property market, Daim opined that current prices are “ridiculous”, adding that the developers must not “be greedy at the expense of the nation”.
“The nation must come first,” said Daim to KiniBiz.
Here are excerpts from the interview.
The Daim Interview Part 3 – Putrajaya’s financial management and the property market
What are your thoughts on Putrajaya’s financial management and the way 1MDB (1Malaysia Development Bhd) is operated?
This is a sensitive question. Some don’t like people to comment. Some take criticism as opposing. I think there should be space for all. We must accept constructive criticisms. It means we want the government to do well and succeed. Having said that, I think the government has a weak economic team.PM is very busy running the country. A full Minister of Finance should manage this portfolio. It is a big and important ministry. It is too much for PM to handle both, not fair to him. This is my point of view.
It was reported that you have been winding down your interests in ICB. Why?
I’m old already (laughing). I offered ICB to local banks, but they’re not interested. And Africa is too far, probably too wild (chuckling).
I think ― my own view lah — the next continent is going to be Africa. During Dr Mahathir’s term as prime minister he was very aggressive about Africa and Malaysia was well-known in Africa. Before the crisis a lot of Malaysian companies were there.
But after the financial crisis everyone suffered, leaving I think only Petronas and me and probably a few logging companies. Of course now everybody is in Africa — America has gone back, the French are back, the Chinese of course huge, huge in investment. And even the Indians are there. I think we have been left out.
But I suppose this depends on government policy, if the government of the day thinks the private sector should go in then the private sector will invest there.
People sometimes forget that for a whole decade I was not Minister of Finance between my first and second stint. I got licence in 1994. Robert Tan was the shareholder but sold out later.
What were the reasons behind ICB Banking Group’s privatisation and delisting from the London stock exchange? What was the purpose of the unsecured loan (RM24.11 million) extended by ICB to you before the privatisation?
As part of the listing exercise done in 2007, my shareholding in ICB Senegal (‘the Bank’) was to be transferred to ICBFGH (ICB Financial Group Holdings) (‘the holding company’) in return for shares in the holding company. However, the central bank of Senegal did not accept this as the holding company was not a “regulated financial institution”.
Therefore the shares remained in my name and was to hold it in trust for the holding company until the holding company could qualify as a regulated financial institution.
In 2010, the Bank required an increase in capital but I did not want to take up this increase in capital. The holding company provided a shareholder’s loan to me for this purpose, i.e. to increase share capital of the Bank.
And I will hold the shares on behalf of ICBFGH, until ICBFGH is able to hold the shares in its name.
A shareholder’s loan agreement was signed between the parties and approved by the board of directors. All this is documented in the board minutes of the company and in the accounts.
Once the sale of shares in the bank is completed (expected in mid-March 2014) I would receive the proceeds of the sale, less the amount of the shareholder’s loan.
I wanted to sell. It was better to delist so that the market does not have to react.
There is some kind of talk in the market that you are positioning yourself for a big return in Malaysia.
No, I am not (laughing). I’m too old already, too old already. That should be the next generation.
Some names that have been linked to you in the past are also seen to be liquidating some of their holdings.
They run their own businesses. You ask them.
Do you have any knowledge of their plans?
No, I have not seen them for a long time. They do their own business and they decide in which direction they want to take the business. I travel a lot and so am not here most of the time.
Do your associates like Halim (Saad) still call you for advice these days?
They don’t ask for advice. I mean they’re not young anymore, they have plenty of experience and are probably better than me (now).
What are the businesses that you are involved in now?
Nothing much.
So apart from ICB, what else have you been doing in terms of business?
In terms of business? I have always been interested in the two sectors that I do, one is banking, and the other one of course is property.
Do you still have banking interests?
I have sold most of them except Laos, Albania and Bangladesh. In Indonesia I’ve sold a bit but the rules there are quite complicated. I wouldn’t say they keep changing the rules, but (laughing) they will adjust things accordingly.
Bangladesh would be ICB Islamic Bank?
Yes, that’s correct. I was invited by the government to go and save the bank, but governments keep changing (smiling).
What about property?
Property, I’ve always been investing ― all over the world.
Any locations in particular?
I won’t tell you (laughs)…you can go (find out) (still laughing)
What would be the value of your holdings all over the world?
I don’t know, I bought them when they were cheap (laughing). I bought them during recession in those countries.
Would it be true to say that you are worth a few billion ringgit now?
No.
More than that?
(chuckling) I’ve given away most anyway…it all goes to charity. If I still have (any), also all go to charity.
So what do you think about Malaysian properties? There talk of a bubble coming, but then again some say there’s no bubble.
There are always two points of view. But I think, to put it this way: Malaysians cannot afford to buy.
If you look around, I think we probably have the most number of developers in the world. Everybody wants to go into property development and everybody there (in that sector) makes a lot of money. Very rarely you get a developer that goes bankrupt. (When that happens) that’s because I think they miscalculate and they borrow too much, and then they’ve got to be rescued.
But you see the mistake was to remove the property gains tax. I think the government didn’t really study why there was RPGT. That (tax) was to avoid speculation. I think somebody must have advised the government and said that it (RPGT) doesn’t matter, let the price go up and we make more in stamp duty (fees) until such time that Malaysians can’t afford.
And you can’t compare (our property market) with Singapore and Hong Kong. They don’t have land (laughs) and their per capita income is much higher, so you can’t be comparing (to them).
It’s ridiculous that prices of property goes up to RM3,000 per square feet (psf), it doesn’t make sense. At Jalan Ampang now it’s RM2,000 psf so half an acre becomes what, RM40 million? (That space is) just one house only. So it doesn’t make sense.
And I think the government was a bit slow in responding to this. The average Malaysian especially the young ones can’t afford (to buy properties).
Do you think there’s a property bubble?
I don’t want to make predictions but I think there will be a slowdown. And the government should monitor this very closely because anything that happens to the property market is going to affect the economy, especially the banks. That’s what happened in Japan, in Taiwan, in America, in Spain. You can see this kind of thing.
Just hypothethically, if you were in cabinet today…
(quickly countering) I’m not (laughs).
…if you were in position today to do something about the property market, what would you do?
We used to have this problem and I used to call up all the developers. I said look, I know what you’re doing. I said I know what sort of profit you are making. I said I won’t take action against you but you go back and think seriously before I do anything.
Because, I mean, you must not really be greedy at the expense of the nation. The nation must come first.
So that’s property. What about the stock market, your thoughts?
I think they’re (foreigners) leaving now. They’re taking out the money and everybody is going back to America (chuckles). And I think also that for the time being, a bit is going back to Europe.
But now that the currency (ringgit) is weak, some will come back (smiles). But last year and the beginning of this year, there was a lot of outflow.
After such a long career in politics and business, do you have any regrets, looking back now?
What’s there to regret? Nothing. Alhamdulillah (praise God).
Was there anything that you would have liked to do differently if you could?
Of course in life, you look back, there are (always) one or two things you want to do differently, but…
Anything in particular?
No, I mean I can’t think of anything in particular at present. But alhamdulillah, God has given me His blessing. So what’s there to complain (about)? Nothing to complain about.
So if you could go back to the 1980s you would not do anything differently?
I wouldn’t. I mean, I worked hard, I made a lot of sacrifices. There was a mission in life to prove that Bumiputeras can succeed in business. And probably very few have succeeded the way I have succeeded both in business and politics.
Were your appointments as finance minister both in 1984 and 1998 related to the fact that there were financial crises ongoing then (1980s recession and 1998 Asian Financial Crisis).
In 1984, Musa (Hitam, then deputy prime minister) was not happy if Tengku Razaleigh continued as Minister of Finance. So I was brought in. In 1998 it was the financial crisis. I was already the executive director of NEAC (National Economic Action Council). We came up with the action plan to revive the economy and PM wanted me to implement it.
Yesterday: “No fallour with Dr Mahathir”
Tomorrow: Daim: I am not funding BN
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