When it comes to motorcycles, many people probably remember the late Tan Sri Loh Boon Siew. He was the first to be given the distributorship for Honda motorcycles in the early 1960s. The tycoon’s rags-to-riches story is one of the better known ones in the country, particularly in Penang.

A migrant from China’s Fujian province before World War II, Loh worked as an apprentice car mechanic when he was young. To supplement his income, he worked as a rickshaw puller. Although it was tough, he did not quit his apprenticeship because he wanted to learn a skill.

When the opportunity to bring the Japanese-made motorcycle brand, Honda, into the country came, Loh seized it quickly. His skills as a mechanic came in handy.

As the story goes, Loh was on vacation in Osaka, Japan, when a Japanese youth rode past him on a motorcycle. Being an ex-mechanic, Loh could instinctively tell from its purring sound that the bike had a good engine. He then went in search of the Honda factory to obtain the agency rights for the motorcycle in Malaysia.

The first order that Loh placed was for 12 units of the Honda Cub, which he sold to his friends on hire purchase. The distributorship of the Honda motorcycle gave birth to Boon Siew Sdn Bhd, which now holds a 52.9% controlling stake in Oriental Holdings Bhd — the flagship of the Loh family business.

As the demand for Honda motorcycles grew (they were fondly referred to as kapcai locally), Loh set up an assembly plant in 1968 in Permatang Pauh, Penang, under Kah Motor Co Sdn Bhd. The rest, as they say, is history.

When Loh died in February 1995 at the age of 78, the distribution of motorcycles was only a small part of his business empire. Oriental Holdings had already grown into a conglomerate with a strong presence in car distribution, property development, hotel management, plantations and plastic manufacturing.

Loh was survived by a son, Loh Kar Bee, four daughters — Loh Ean, Loh Cheng Yean, Loh Poh Yen, Loh Gim Ean — and grandchildren.

Loh had groomed his second son Kah Kheng as his successor but he was found murdered in 1987.

Datuk Robert Wong Lum Kong, the husband of Loh’s eldest daughter Ean, took over Kah Kheng’s position as managing director of Oriental Holdings after the latter’s death.

Loh’s second daughter Cheng Yean was appointed chairman of Oriental Holdings about two months after her father’s death.

“My father had told family members after my brother’s (Kah Kheng) death that I should be made chairman to succeed him. Even though what he said was not in writing, our family is aware of the matter,” she told the press in March 1995.

Both Cheng Yean and Wong are still holding their positions.  

News of Loh’s demise lifted the share price of Oriental Holdings to limit-up. The stock shot up to RM14.90 from RM3.40 as speculation was rife that Oriental Holdings would be a takeover target after the death of its founder and that would help unlock the value of the group’s assets.

It is said Loh had put in place an intricate cross shareholding structure in his business empire to prevent a possible split by his heirs.

Listed on the local bourse in 1964, Oriental Holdings is among the oldest listed local entities on Bursa Malaysia. The auto business used to be the profit centre for Oriental Holdings, which was perceived as the proxy to the non-national car segment. But not today.

A change in the Honda car distributorship rights in Malaysia in 2001 resulted in the profit contribution from the auto division shrinking. Indeed, plantations is now the group’s major profit earner, generating about 42% of the pre-tax profit for FY10 ended Dec 31 compared with RM27.6 million or 7.2% for the auto division.

Ten years ago, Oriental Holdings had to surrender its sole distributorship of Honda cars and form a joint venture with DRB-Hicom Bhd and Honda Motor Co Ltd of Japan. Oriental Holdings holds 15% stake in the joint venture, while DRB-Hicom and Honda Motor own 36% and 49% respectively. The group’s distribution arm, Kah Motors, continues to retail Honda vehicles in Malaysia and is the exclusive distributor of Honda vehicles in Brunei and Singapore.

Today, Oriental Holdings is more a plantation company than an auto group. Its planted area of about 38,000ha is almost the size of IJM Plantations Bhd’s plantations.

Thanks to strong crude palm oil prices, the group has accumulated a large cash pile of over RM2.69 billion. Excluding its borrowings, Oriental Holdings has net cash of RM2.21 billion.  

In the latest annual report, Cheng Yean said the group will continue to explore opportunities to expand its plantation assets.

It has been 16 years since Loh’s business empire passed on to his heirs. Oriental Holdings has survived two major financial crises — the 1997/98 Asian financial crisis and the US credit crunch in 2008. The group has lost its sole distributorship of Honda cars in Malaysia — Asean’s biggest passenger car market. Despite that, the second generation has managed to preserve the company’s strong fundamentals.

Even so, age is catching up with Loh’s children. Most of them are in their late 60s. It will be interesting to see how they will map out a succession plan to sustain Loh’s business legacy.

This article appeared in The Edge Financial Daily, August 26, 2011.