Investors are putting their money into Thailand, Indonesia and Singapore rather than Malaysia
'Malaysia, truly Asia.'' So goes this country's ubiquitous marketing campaign. Just try turning on a television in Asia without seeing actress Michelle Yeoh's smiling face drumming up interest in her homeland.
It's served this nation of 25 million well. As I told friends and family I was traveling to Malaysia, just about everyone reflexively replied: 'Because it's truly Asia.'' If marketing is a game of infiltrating consumers' psyches, Yeoh's ads have done that, and then some.
Too bad the campaign has been less effective with investors. Market aficionados may come this way for holidays but few are bringing investment capital with them, opting instead to put it in Thailand, Indonesia, Singapore and elsewhere in the region. The phenomenon has much to do with stubborn doubts about Malaysia's corporate governance. But it's also about bad public relations.
Kuala Lumpur might be better off putting Yusof Abu Othman in its TV ads. Granted, the head of Malaysia's Minority Shareholder Watchdog Group isn't a household name like Yeoh. Nor does the 50-year-old boast Yeoh's come-hither looks. Yet he has disarming characteristics of his own: a disdain for Malaysia's system of corporate governance and the courage to raise hell over it.
'The government talks a good game of improving corporate governance, but that's the problem, it talks a lot but does little,'' explains Kuala Lumpur-based Othman, a former stockbroker turned shareholder activist.
Othman makes a good point. Meeting Malaysian regulators and government officials, one gets lots of spin. The basic argument is that the country's corporate system is now cleaner than you'll find virtually everywhere else, including the US. You'll also hear lots about regulators cracking down on dodgy practices with fines and arrests.
Yet it's important to separate the market rules put in place since the 1997-1998 Asian crisis and their implementation. It's the latter point, acting on the rules, where Kuala Lumpur falls short. 'There are plenty of good intentions here, but I think we should take our cues from Nike, just do it,'' Othman says.
Shareholder activism is an uphill climb anywhere but that is especially true in Asia. One Malaysian investor told me Othman is anti-capitalist. But nothing could be further from the truth. Asia's markets need more people like Othman.
By shining a bright spotlight on dodgy business practices, Othman hopes to remove what might be called the 'Malaysian discount', a phenomenon whereby international markets undervalue companies here. True, Malaysian stocks aren't as cheap as those in neighbouring economies. But given the nation's 4%-plus annual economic growth rate and its political stability, stocks should be up more than 5% in 2003.
In Thailand, for example, stocks are up almost 25% this year in dollar terms. Indonesian equities are up 19%, while Philippine shares are up more than 22%. That Malaysian shares aren't up more has everything to do with investors' concerns about shareholder value.
Even with the progress made since the crisis, many investors believe Malaysia lacks transparency and adequate corporate governance. If companies do more to clean up their practices, Othman believes their market capitalisation will increase, making them, and investors, wealthier. In this way, he's anything but anti-capitalist.
'This is all about money,'' Othman says. 'Everybody wants to make more and Malaysian companies have the capacity to do so.'
Gall and persistence are Othman's weapons. He attends shareholder meetings and asks tough questions of CEOs. He embarrasses them in the media with evidence of misdeeds, a courageous thing to do here in Malaysia.
Late last year, for example, he helped grill executives involved in the Maruichi Malaysia Steel Tube saga. The Malaysian cold-rolled steel company canceled plans to acquire a 32.5% stake in a shipping company following protests by minority shareholders.
The plan raised concerns Maruichi was trampling on small investors after state-run Employees Provident Fund and Japan's Nissho Iwai Corp, which owned a combined 14% stake in the steelmaker, protested Maruichi had sidestepped their scrutiny and approval.
Malaysia's markets need more of this kind of ground-up activism if they're going to thrive. It would help with its global PR problems, attracting more investment at a time when China is getting most of it.
Michelle Yeoh is an excellent spokesperson for Malaysia. Perhaps it's time to give the Othmans of the world some airtime as well. Malaysia's markets would be well-served. Investors, too.
Bloomberg newsroom, Tokyo
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