It’s time to audit and rationalize Malaysia’s GLC portfolio
Khazanah Nasional Bhd makes another massive loss with the sale of KidZania Singapore
The strategic portfolio management of Khazanah Nasional Bhd, a sovereign fund, must be thoroughly questioned, over the breath and diversity of its portfolio and ability to management it well.
Khazanah has an investment portfolio of RM 122.5 billion, spread across Malaysia (66.3%), China (10.1%), Asia (10.6%), the Middle East (3.1%), and North America (9.9%). These investments are spread across energy, banking and finance, healthcare, industrials, information technology, media, real estate, telecommunications, and utilities.
These include many household brand names which include Astro, Axiatia, TM, Time, Farm Fresh, DRM, Bank Muamalat, CIMB, IHH Healthcare, Regen, CIMA, UEM, Malaysian Airlines, Malaysia Airports, PLUS, Iskandar Investment, Southern Marina, Sunway Iskandar, Cenergi, and Tenaga Nasional.
Over the last day, it has been reported that Khazanah had sold off a Singaporean asset KidZania, a children’s theme park, launched back in 2016, costing RM 165.53 million, for a paltry RM 379,398.
Claiming that the loss is only a trivial part of the sovereign fund’s massive portfolio, does lessen the incompetence, of something that could have been avoided.
The theme park had closed due to the Covid-19 pandemic, but was already making massive losses, partly due to very poor management. These losses accumulated to RM 2863 million, and there were also RM 184.17 million owed to the creditors of KidZania.
Khazanah had long sold off its KidZania Malaysian operations in 2021. According to The Vibes report, Khazanah had already pumped RM 200 million into the loss making venture.
This is one example of the poor and incompetent management of Malaysia’s GLCs. Most mishaps, losses, incompetence, and corrupt practices never reach public attention. They go hidden.
There are always risks in portfolio management, particularly large and diverse portfolios. MBA graduates would have learnt not to stray too far away from the knitting, a term coined by Tom Peters and Robert H. Waterman in their management classic in Search of Excellence. Maybe there were away from class on that day, or were born after 1982. All the board of Khazanah directors should have read the book.
There needs to be a total and thorough audit and rationalization of Malaysia’s GLCs. Those GLCs that are making losses should be sold off, or disassembled, or just shutdown. Those GLCs in markets already served by private enterprise should also be sold off. Investment portfolios should be streamlined, eliminating non-strategic investments.
If the board of Khazanah wants an amusement park, best they do it by themselves privately, rather than cost the Malaysian taxpayer million of Ringgit.
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Who are the people runing Khazana? They must be the most incompetent bums to have managed and lost money for the country. They should be sacked!!
GLCs are the rewards for loyal supporters of the PM. It is a permanent feature of Malaysian politics. They are sources of income for the ruling party. So whatever they do is acceptable. That’s why they are so inefficient, kleptocracy and corruption are rife but no one will be held accountable. The first thing a PM does on coming to office is to decide who to run the GLCs. It was the MO and will be the MO forever.