Thursday 28 Mar 2024
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This article first appeared in The Edge Malaysia Weekly on May 15, 2017 - May 21, 2017

IT has been about two years since Darul Ehsan Investment Group (DEIG) was established as Selangor’s strategic investment vehicle but it has remained nothing more than a shell company.

“Two years on, thanks to the public, we are talking about it needing to have proper governance, proper structure ... so we are focusing on that,” Selangor’s Menteri Besar Inc (MBI) CEO Raja Shahreen Raja Othman tells The Edge.

“As at today, nothing has started. Nothing. We are putting our focus back on corporate governance, looking at the board members, looking at who should be there. This is to make sure that once we start, all the necessary infrastructure is ready.”

DEIG is one of MBI’s many subsidiaries. There is a massive web of companies under MBI that are held by several key subsidiaries, such as Permodalan Negeri Selangor Bhd (PNSB), Kumpulan Darul Ehsan Bhd (KDEB), Kumpulan Perangsang Selangor Bhd (KPSB) and Kumpulan Hartanah Selangor Bhd (KHSB).

According to Raja Shahreen, MBI is reviewing the structure of its group of companies to extract the most out of its profitable units while continuing to support state development through the non-cash-generating units.

“This continuous review allows us to align our focus with two domains and ensure that we meet the state’s ‘membangun bangsa, memakmur negeri’ agenda. With the restructuring that is now taking place, we will make sure that redundancy is eliminated before DEIG undertakes any business activity,” he explains.

Back in 2015, the plan was for DEIG to hold 12 consolidated groups of companies as subsidiaries with MBI being the ultimate parent company. At the time, MBI had already started studying the impact of transferring assets from subsidiaries to DEIG, including issues like taxation and group structure.

The 12 groups of companies were identified as Kumpulan Semesta Sdn Bhd, PNSB, Communication Corp Sdn Bhd, Invest Selangor Bhd, KDEB, Rantaian Mesra Sdn Bhd, Yayasan Warisan Anak Selangor Sdn Bhd, Yayasan Dar Al Qard Al Hasan Selangor Sdn Bhd, Bukit Beruntung Golf and Country Resort Sdn Bhd, Pendidikan Industri YS Sdn Bhd, Tourism Selangor Sdn Bhd and MSNS Holdings Sdn Bhd.

These entities were to have their own sectors, such as construction, mining, water, education, property and waste management.

However, Raja Shahreen was unable to say when the restructuring would be completed. “Let the state decide. Because we have to bring it to JP-ABAS (Jawatankuasa Pilihan Agensi-Badan Berkanun dan Badan Syarikat) to deliberate … Perhaps at the time (2015), we were too hasty. We thought we could get things organised quickly.”

According to him, existing subsidiaries like KDEB, PNSB and KHSB are currently functioning as investment vehicles. “That’s already three companies just involved in properties. So there is no point in consolidating them into one if you’re talking about transparency or accountability.”

He adds that these companies already have their focus areas and specialise in different niches of property development. “They may be under a different holding company but they could focus on properties. They could focus on certain areas. For example, PKNS’ objective is to build affordable housing. I’ve got KHSB making rumah mampu milik. If you are KDEB, you focus on apartments and stuff like that … You’ve got different companies, specialising in different areas. So, we can do it that way, you see. It doesn’t need to be all under one group.

“There are many ways of getting it done. By moving them into one, you incur more cost. You become more inefficient.”

But with or without DEIG, MBI has already started to look at how best to make its existing subsidiaries sweat harder. “Rather than wearing too many hats, let’s focus on those that bring in the money. That was the intention for DEIG but since it is not there, we can put it aside for awhile and focus on what we can do first,” says Raja Shahreen.

He adds that the focus now is to be a smart state by 2025. The Smart Selangor initiative plans to leverage the Internet of Things solutions to improve its citizens’ quality of life. “There is a Smart Selangor delivery unit. This was set up to look at how we could turn Selangor into a smart state.”

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