Malaysia Today - Your Source of Independent News
Malaysia Today - Your Source of Independent News |
| The journey in life is never a straight line (PART 5) Posted: 28 Nov 2012 09:56 PM PST
I had never tendered for fishing nets before so I was not too clear of the costing. I sought the advise of a friend who gave me the previous year's prices and asked me to drop my bid 7% below that price so that we can be the cheapest bidder. That was the most screwed up advice I ever received, as I would soon learn. NO HOLDS BARRED Raja Petra Kamarudin Most Malays are Ali Baba businessmen, said Chia Kim Peong a.k.a. Ah Piow. The Chinese use the Malays to get business. You, however, are a Baba Ali businessman. It is the other way around. You use the Chinese to do business. And you do all the work while I just sit back and collect my dividends. Ah Piow probably found that very amusing. That quip was triggered by an episode involving the fishing net business that I started. I tried to get supplies from the Fusan fishing net manufacturer in Port Kelang but they told me that Nam Lee was their sole distributor. I tried to meet up with Nam Lee but they refused to see me. They told me they were not interested in my business because they already had more than enough business to handle. I spoke to Ah Piow who told me that he knows the Nam Lee people very well. He asked me to meet him at their office and he brought me in to meet the Managing Director although we had no prior appointment. I tried many times to meet them but failed and Ah Piow can just walk in unannounced. Clearly contacts are the key to business success. Nam Lee agreed to supply me the fishing nets on condition that Ah Piow guaranteed my company's debts. Ah Piow told me not to make him 'lose face'. 'Face' is everything to the Chinese so I have to make good my debts to Nam Lee. Once I had learned the ins and outs of the fishing net business I participated in my first public tender. The tender was for RM12 million and seven companies participated. Amongst the seven were Pernas and Nam Lee plus companies owned by Bank Pertanian and Shamelin, an Umno-linked company founded by Tan Sri Sanusi Junid, the one-time Agriculture Minister. I had never tendered for fishing nets before so I was not too clear of the costing. I sought the advise of a friend who gave me the previous year's prices and asked me to drop my bid 7% below that price so that we can be the cheapest bidder. That was the most screwed up advice I ever received, as I would soon learn. The buyer called the seven of us for a meeting and I was informed that our prices were 30% below everyone else. They said I had clearly made a mistake so they were giving me the opportunity to withdraw, leaving the remaining six in the race. The RM12 million contract would then be divided six ways, around RM2 million per bidder. I refused to withdraw and insisted that we remain in the race. I noticed the others around the table, who had been in this game a number of years, whisper and snigger. I was furious. There was no way I was going to withdraw and 'lose face'. I was going to stay and fight even if I lost my pants. And if they were right that I had made a mistake then I stand to lose quite a bit of money. But then this is about 'face', not money. Because our price was 30% lower than all the rest, they had no choice but to give us the entire contract. The rest got nothing. With variation orders and a two-year extension, the RM12 million contract became RM20 million. As luck would have it, Korea, which had many fishing net factories (unlike Malaysia which had only one) saw an oversupply situation when the market for fishing nets coincidentally took a dive. Fishing nets have a short shelf life so they needed to dispose off these nets as fast as possible. So now many factories in Korea were scrambling and were trying to dump their nets at fire sale prices. The Koreans came to see me to try and get me to buy from them. They told me that based on normal pricing I was going to lose money big time because I had made a mistake in my pricing. However, they were prepared to supply me and would allow me to make 2.5% over the contract price. I told the Koreans that their price was not attractive enough and that I could get the nets cheaper elsewhere. They told me that that would be impossible because nowhere in the world could I get nets at that kind of pricing. I told them in that case they should sit back and watch me do it. They went off after telling me they will remain in Kuala Lumpur in case I change my mind because they were still interested in doing business with me. I never called them back. In the meantime, the clock was ticking. I was supposed to supply the nets within 60 days and now 30 days had passed. If I can't get my hands on the supply I would default and the contract would be cancelled plus I would lose the performance bond of RM600,000. Five days later, the Koreans called again and said they agree to my terms. They will give me 30% and supply all my requirements. But they will require a Letter of Credit. I told them, "No Letter of Credit." They were the ones chasing me, not me chasing them. If they want me to buy from them then they will have to give me 60 days credit. The deal was sealed and I made my first delivery after requesting a 30-day extension for the first delivery and then 60 days delivery thereafter. Fusan and Nam Lee were taught a lesson of their lives. Pernas, which had about RM500,000 in unsold stocks had to write off their fishing nets because the rats and cockroaches had eaten all the nets in their store (nets are perishable items when left in the store). My satisfaction was not in making around RM5 million on that three-year contract that eventually totalled RM20 million. It was in teaching the 'big boys' a lesson to not snigger at me during a meeting as if I did not know what I was doing. Well, actually I did not know what I was doing. It was just luck and a game of poker with the Koreans that prevented me from losing my pants, yet again. Needless to say, I never tried that stunt again. TO BE CONTINUED |
| The journey in life is never a straight line (PART 4) Posted: 28 Nov 2012 03:28 PM PST
This was no longer about making money. We were already making plenty of money -- Johan's turnover was in the hundreds of millions a year and our business interests were spread out in all the continents of this world. This was about which of the Taikos can become the Taipan. It was a game of prestige. I suppose at that time we felt immortal and lost focus of the objectives of doing business. NO HOLDS BARRED Raja Petra Kamarudin They say a drowning man surfaces only three times. On the third time he goes down he stays down for good. He will never surface again. He will die. It is now 1991. I was already 17 years in business and had survived two economic recessions and had fought off two bankruptcies. Therefore I could afford only one more collapse before I go down for good and never rise again. The first crisis I faced was in 1975, merely a few months after I started my business back in 1974. And that story is as follows. My business partner, Zulkifly Mohd Nor, an ex-Pernas officer, had cleaned out our bank account and had absconded with the company's money. This could only be done with the collaboration of the branch manager of Bank Rakyat Kuala Terengganu. I confronted the bank manager, Ghazi, and he confirmed he had released all the payments for the sales of the Yanmar engines that we had made to the fishermen. The arrangement was: Bank Rakyat would finance our buyers and would pay us for the cost of the engines. The money was supposed to have been paid directly to the company. However, instead of paying the money into the company's bank account, it had all been diverted to Zulkifly's personal bank account. I spoke to Michael Toh Hong Hooi, the manager of Chong Lee Leong Seng, our Yanmar supplier, and told him that the money was all gone. Zulkifly had 'kebas' the money and there was nothing left. I only had a few hundred Ringgit in my pocket, and that was all. Chong Lee Leong Seng can choose to sue us and get us declared bankrupt or they can allow us to 'live' and I will ensure that all the money will eventually be paid back in full. I would also need them to continue giving us credit so that we can continue to trade. Michael Toh agreed to create two trading accounts for us. 'Account A' would be the old unpaid debt while 'Account B' would be the new credit line that Chong Lee Leong Seng would extend to us. 'Account B' would have a RM30,000 limit with a 90-day credit period. Once we reach 90 days, or we reach the RM30,000 limit, we would have to pay up before more supplies can be made. But each time we paid for 'Account B' we would also have to pay for part of 'Account A'. In time, it was hoped, 'Account A' would be fully settled. One more condition that Michael Toh imposed on us was that I would have to take a Chinese partner and give him 30% of the company. This Chinese businessman would offer Chong Lee Leong Seng the 'comfort' of continuing to do business with us. I was introduced to this Chinese businessman, a man named Chia Kim Peong from Sabak Bernam. Chia gave me RM10,000 as working capital and he guaranteed the RM30,000 credit line from Chong Lee Leong Seng. I would have to 'roll' with this RM10,000 and the RM30,000 credit line from Chong Lee Leong Seng. When Chia cashed out his 30% interest in my company in 1985, he made about RM300,000 on the RM10,000 he gave me in 1975, not a bad return for just ten years. With this new 'lease of life' in 1975, it took me three years of hard work to rise again. I practically lived in my car with my daughter, my only child then, Raja Suraya, sleeping in the back seat of the car as I drove from Kelantan to Johor to Kedah to market my Yanmar engines. In 1975, we did only RM300,000 in sales. By 1976 and 1977, we touched RM1 million a year. In 1978, our sales touched RM6 million. And in 1979 and 1980 we did about RM10 million a year in sales. It took me three years to make our first million. That was in 1978. They say the first million is the most difficult to make. Once you have made your first million then the second million is easier. That is quite true. It took me only two years to make our second million and by 1980 we had RM3 million in cash reserves and had done roughly RM30 million in sales over those five years or so. We were now Chong Lee Leong Seng's number one Yanmar dealer. It was now time to go big time. And 'big time' to us then was, of course, to 'go public'. Public listed companies was the measure of a person's success and a status symbol back in 1980. Michael Toh introduced me to his uncle, Tan Kay Hock (now a 'Tan Sri') -- yes, the man currently in the middle of the George Kent (M) Bhd/Ampang LRT controversy -- who was about to take over a dormant public listed company, Johan Tin (now called Johan Holdings Berhad). I invested heavily in Johan, mainly through bank borrowings (and the main reason for my RM20 million debts which I wrote about earlier in parts 2 and 3 of this series). From a 'bankrupt' in 1975 to a millionaire in 1980 and a multi-millionaire in 1985 -- I thought nothing was going to stop me. The sky was the limit. I was now in the ranks of the corporate chiefs like Tan Sri Ibrahim (Promet), Vincent Tan (Berjaya), and so on. We were all 'racing' to see whose shares could go the highest. Promet's and Johan's shares had both exceeded RM10 per share but Promet's shares were RM0.20 ahead of Johan's. This was no longer about making money. We were already making plenty of money -- Johan's turnover was in the hundreds of millions a year and our business interests were spread out in all the continents of this world. This was about which of the Taikos can become the Taipan. It was a game of prestige. I suppose at that time we felt immortal and lost focus of the objectives of doing business. And we would soon learn that we would pay a heavy price for that arrogance. In 1985, the recession hit us, followed by the 1987 stock market collapse. What I had made over the last ten years was lost in a mere couple of months. Our RM10 shares dived to less than RM0.50. I was saddled with RM20 million in debts but with shares that could not even cover half that amount. I had no choice but to bail out and embark upon a 'fire sale' -- as related in parts 2 and 3 of this series. So there you are. I was now, again, broke, and would have to start from the bottom all over again. The dream of becoming the Taipan had now turned into a nightmare. But how do I bounce back with the economy and my personal finances in tatters? I found out that many companies were still listing their shares but there were no takers. No one wanted to invest in the stock market. Everyone was still licking his/her wounds from the last disaster and it appeared like full recovery may take some years yet. One company, Hexza Corporation Berhad, was facing this same dilemma. They had issued a few million shares, which the Ministry of Trade and Industry was holding on to but with no investors wanting to pick them up. I approached the Ministry to enquire into these shares and they told me that they could let me have ten million shares at RM0.65 per share if I wanted them. The Ministry was happy to get rid of these shares that no one wanted. I told them I only wanted a million shares and they told to come back with a bank draft for RM650,000. I went home and told my wife, Marina, about the offer. She phoned her stockbroker who told her that Hexza was trading at RM0.95 per share. She said it was a good deal and that we should pick up those shares. But let's not be too greedy, Marina said. Let's pick up just one million shares, in case. Marina dug into her cookie jar and pulled out RM150,000. So we were still short of RM500,000. I went to Kwong Yik Bank and they agreed to give me a loan of RM500,000 -- if we hand over the RM150,000 to the bank and ask the Ministry to issue the shares in the name of Kwong Yik Nominees. We completed the transaction over the next few days and then lodged the one million Hexza Corporation Berhad shares with the bank. I then told Marina to do what she wanted with them. By the time Marina unloaded the shares a few months later, the shares had climbed to more than RM2 per share. After paying back the bank the RM500,000 we owed them, we managed to walk away with about RM1.5 million in cash. It was time to reinvest this money and make that RM1.5 million grow to RM15 million. TO BE CONTINUED |
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