This article first appeared in The Edge Malaysia Weekly on April 24, 2017 - April 30, 2017
A billionaire who is checking into a hotel asks for a regular room. The front desk clerk tells him, “Sir, your son is staying in our suite, we should give you an upgrade.” The billionaire replies: “He has a very rich father, I don’t.”
Call it an urban myth, but this is one anecdote often told when talking about Tan Sri Tiong Hiew King, the self-made Sarawak timber and media baron ranked by Forbes as Malaysia’s ninth richest man with a fortune of US$2 billion (RM9 billion).
So, just who is Tiong?
Born to a poor family in Sibu, a Foochow town in Sarawak, in 1935, Tiong had to tap rubber when he was young. He started his working life at his uncle's timber company.
Tiong went on to set up Rimbunan Hijau Group in 1975 when he was 40, and over the past four decades, built up an Asian conglomerate with businesses spanning timber exports and processing, media and publishing, oil palm plantations and mills, and oil and gas. The group is also involved in mining, aquaculture, information technology, trading and property development, among others.
Tiong controls four major listed companies on Bursa Malaysia, namely Media Chinese International Ltd (MCIL), Rimbunan Sawit Bhd, Jaya Tiasa Holdings Bhd and Subur Tiasa Holdings Bhd, which have market capitalisations of RM1.06 billion, RM687.97 million, RM1.14 billion and RM252.08 million, respectively.
MCIL, which is dual listed on Bursa Malaysia and the Hong Kong Stock Exchange, controls the four mainstream Chinese daily newspapers in Malaysia — Sin Chew Daily, China Press, Guang Ming Daily and Nanyang Siang Pau.
Rimbunan Hijau controls hundreds of listed and non-listed subsidiaries, among them, RH Petrogas Ltd, a Singapore-listed oil and gas firm.
Geographically, Tiong’s sprawling business empire spans six continents, with operations in Singapore, Indonesia, Cambodia, Hong Kong, Japan, South Korea and the Solomon Islands. Outside Asia, the group has businesses in Australia, Russia, Congo, Brazil, Canada and the US. Tiong also has investments in Qinzhou, Shanghai, Harbin and Guangzhou in China.
According to Forbes, his most valuable asset is New Zealand-based, privately held Oregon Group, with businesses that range from developing housing projects and hotels and harvesting salmon and logs to manufacturing plastic containers.
But it is Rimbunan Hijau that has elevated Tiong’s profile and standing in the Chinese business community in Malaysia and Asia.
Whenever Tiong wears a suit, he invariably uses a green tie — a mark of his pride in Rimbunan Hijau, which, in Mandarin, translates as “forever green” and symbolises perpetual success.
But Tiong is now 82, and there are four things about the future of the group that could be keeping him awake at night, say those who follow him and his businesses closely.
1 Losing his influence in Malaysia
Tiong's wealth may still be growing rapidly, but certain quarters point out that the political influence and power he wielded through his Chinese newspapers in Malaysia have been on the decline in recent years.
MCIL has not moved into the digital space as fast and as effectively as it should have, according to Chang Teck Peng, a doctoral candidate in Communication Studies at Taiwan’s Shih Hsin University.
“At a time when every traditional media group is shifting to the digital and online space, it seems to me that MCIL does not have a clear business direction. For instance, it launched Pocket Times (an online mobile video portal), but not much resources and budget have been given to the production team,” he tells The Edge.
Chang is a former head of Department Media Studies at the local New Era College, now known as New Era University College. He is also the former editor-in-chief of Merdeka Review, a Chinese news portal that has ceased operations.
Rewind 11 years to 2006. When Tiong took control of Nanyang Press Holdings Bhd, which saw him dominating the Chinese media in Peninsular Malaysia, he aspired to become Asia’s Rupert Murdoch.
Murdoch is the Australian-born American media mogul who controls a media empire that includes Fox News and The Wall Street Journal in the US and Sky TV in Britain.
Chang says during the era of former prime minister Tun Mahathir Mohamad, businessmen from China who wanted a foothold in Malaysia would approach local Chinese businessmen for help, particularly those who controlled Chinese media, such as Tiong.
“[When Nanyang Press was up for sale], Tiong saw an opportunity to become an influential corporate figure who could build bridges between China and Malaysia. But today, I think this dream is shattered because MCIL's pace of expansion was too slow, while China, on the other hand, has changed so rapidly over the last 10 years.”
Now, under current Prime Minister Datuk Seri Najib Razak, the Malaysian government can openly enhance government-to-government (G2G) ties with China, as Umno — the backbone of the ruling Barisan Nasional coalition — and the Malay community are no longer averse to investments from China, he explains.
“Today, Chinese nationals can easily bypass Tiong. They don't need a middle man to do business here, so he has lost his political influence. I think this is something beyond his expectations.”
Anbound Research Center (M) Sdn Bhd analyst Fung Vun Ket opines that Tiong’s empire is burdened by the archaic business models of the 20th century.
For instance, timber was a great business that was hard to fail, the print media was still dominating the market in the last century, and managing an oil palm plantation did not require a lot of innovation and creativity, he explains.
“Over the years, these businesses remained fairly stable but did not bring surprises and excitement to the market. Rimbunan Hijau is currently stuck in an awkward situation as none of its companies is registering significant business growth.”
“From time to time, we might see some corporate actions from the four locally listed companies but their business developments are rather conservative,” says Fung, a former assistant business editor at a local Chinese newspaper.
Anbound, which has an office here, is a China-based think tank that focuses primarily on Asean economic policy analysis.
Fung says MCIL’s move to dispose of a 73% stake in One Media Group Ltd — whose publications are read in China, Hong Kong and Taiwan — to Chinese state-owned Qingdao West Coast Holdings International Ltd is an indication that Rimbunan Hijau’s direction moving forward is likely to depend on political developments in China.
Tiong is focused on exploring and developing the China market, and is left with the China-Malaysia Qinzhou Industrial Park (CMQIP) after pulling out of the Malaysia-China Kuantan Industrial Park (MCKIP).
MCKIP and CMQIP are sister parks — the first G2G project between China and Malaysia. CMQIP is being developed by a joint venture between Qinzhou Development (M) Consortium Sdn Bhd and China’s Qinzhou Jingu Investment Co Ltd. Tiong is chairman of Qinzhou Development (M) Consortium, which is led by Rimbunan Hijau and S P Setia Bhd.
2 Legacy of the hostile 2001 takeover of Nanyang Siang Pau
Before the formation of MCIL in 2008, Sin Chew Media published two major Chinese-language newspapers in Malaysia — Sin Chew Daily and Guang Ming Daily — while its then rival Nanyang Press published the other two mainstream Chinese dailies, Nanyang Siang Pau and China Press.
Sin Chew Daily and Nanyang Siang Pau both have a long history.
Sin Chew Daily was founded in 1929 by legendary Burmese Chinese entrepreneurs Aw Boon Par and Aw Boon Haw, also known as the Haw Par Brothers, renowned for their iconic Tiger Balm ointment in Singapore.
Nanyang Siang Pau was set up in 1923 in Singapore by Chinese community leader and philanthropist Tan Kah Kee. Viewed as an establishment paper, it was a favourite with the business community.
Nanyang Press later came under Tan Sri Quek Leng Chan-controlled Hume Industries Bhd, while Tiong owned rival Sin Chew Media.
By the mid-1990s, Sin Chew Daily had overtaken Nanyang Siang Pau as the the country’s leading Chinese newspaper . However, Tiong was worried that China Press, whose circulation was on the rise, would pose a serious threat in the future and thus trained his sights on the publisher, Nanyang Press.
Media observers say Quek was initially reluctant to sell Nanyang Press to Tiong, but under political pressure, the banking tycoon eventually disposed of his 72% stake in the media group to MCA investment arm Huaren Holdings Sdn Bhd for RM230 million, or RM5.50 a share, in May 2001.
The sale caused an uproar and resulted in a mass boycott of the newspaper by the Chinese community.
Five years later, in 2006, Tiong, who was close to the then MCA president Tan Sri Ong Ka Ting, took over Nanyang Press when Huaren sold a 21% stake for RM65 million or RM4.20 per share. This meant that Huaren lost RM1.30 per share from its five-year investment.
Knocking out his competitors has always been part of Tiong’s plan to dominate the local Chinese press, but he probably never expected to see Nanyang Siang Pau in the predicament it is in today.
Its circulation has declined so badly that it no longer submits sales numbers to the Audit Bureau of Circulations. One reason is that the newspaper was revamped and turned into a financial paper that serves a niche market.
“The company [management] believes that Nanyang Siang Pau is a financial paper while Sin Chew Daily focuses on general news, but most readers still do not see much difference between Nanyang Siang Pau, Sin Chew Daily and China Press,” remarks Anbound’s Fung.
In fact, it has come to a point where people are wondering whether Tiong should shut down Nanyang Siang Pau to reduce the financial burden on MCIL.
Nanyang Siang Pau recently sparked a firestorm of protest after it published a cartoon mocking PAS leader Datuk Seri Abdul Hadi Awang and Parliamentary Speaker Tan Sri Pandikar Amin Mulia over the tabling of a Private Member’s Bill. The Home Ministry has issued it a show-cause letter.
Will that be an excuse for Tiong to shut down Nanyang Siang Pau?
It is not as simple as it seems.
“Nanyang Siang Pau has a legacy issue and Tiong is in a dilemma. He cannot just shut it down because he doesn’t want to be the man to be blamed ... bear in mind that this is an almost-100-year-old newspaper set up by Tan Kah Kee, a prominent personality among the overseas Chinese community in Southeast Asia,” says Shih Hsin University’s Chang.
He points out that some Chinese businessmen may have a different mindset: “They don’t just think from a business perspective; they may consider how history will remember them.”
A current affairs commentator says Tiong wants to leave a good name for many generations, and to be remembered as a person who has contributed to the Chinese community.
“Tiong is a very well-respected corporate figure in the Malaysian Chinese community. He cares a lot about the culture. As chief president of The Chinese Language Press Institute, he has always emphasised the importance of the Chinese having a bigger global voice,” he says.
3 Succession problem
Some say a future successor might not have the octogenarian tycoon’s cultural and historical baggage. Perhaps by then, the successor could even consider shutting down Nanyang Siang Pau, or at least do things differently in MCIL. But the problem is that Tiong does not have a clear successor at the moment.
“Tiong is old, and his boldness and determination are not like when he was young. At his age, how can we expect him to drive the company forward and travel frequently between China, Hong Kong and Malaysia?” asks Chang. “He needs a successor, a reliable lieutenant, and MCIL is lacking that.”
He adds that MCIL does not have many professional management personnel as the senior management team has traditionally comprised former editors and journalists, who know how to run a newspaper, but may not be as proficient in running a business.
“In a nutshell, I think Tiong might not be able to achieve the glory days again. To me, the history of MCIL ended in 2008. Ever since his dominance of the Chinese media, everything has been on the decline. The only question left is how low it will go,” Chang says.
A media industry observer says Tiong still attends many events hosted by MCIL and Rimbunan Hijau, showing that his health remains good.
Still, a successor needs to be in place.
Tiong has two sons — Tiong Chiong Ong and Datuk Seri Tiong Chiong Hoo — and two daughters — Datuk Tiong Ing and Tiong Choon — but it is not clear who will take over the leadership of Rimbunan Hijau in the future.
Francis Tiong Kiew Chiong, a distant relative of Tiong, is the current executive director and CEO of MCIL. Tiong’s brother, Datuk Seri Dr Tiong Ik King, also sits on the board as executive director, but youngest daughter Tiong Choon is only a non-executive director.
Meanwhile, Chiong Hoo is deputy chairman of Jaya Tiasa, Chiong Ong is non-executive chairman of Rimbunan Sawit, and elder daughter Tiong Ing is managing director of Subur Tiasa.
4 Locally-listed companies on the decline
In general, MCIL, Rimbunan Sawit, Jaya Tiasa and Subur Tiasa have not been performing well in recent years.
MCIL saw its net profit drop from RM178.6 million in the financial year ended March 31, 2014 (FY2014), to RM122.6 million in FY2015 and RM104 million in FY2016.
On March 6, MCIL and its business partners announced a plan to set up a co-working space, dubbed CO3. For the first phase, the group plans to invest RM5 million. It is another new investment after Pocket Times (a video platform) and LogOn (a premium online marketplace), which have yet to make any significant financial contribution to the group.
Anbound’s Fung says MCIL’s digital efforts, such as online media, e-paper, Pocket Times and LogOn, face stiff competition from many well-established incumbents. They do not have first-mover advantage and it is not easy for them to become market leaders in their respective segments.
“Having said that, MCIL will continue to attract certain investors as it remains a very stable stock with good dividend payout, just like Star Media Group Bhd,” he says.
Rimbunan Sawit slipped into the red with a net loss of RM59.9 million in the financial year ended Dec 31, 2015 (FY2015), compared to a net profit of RM4.8 million in FY2014, due mainly to weak commodity prices coupled with rising operating costs. The planter’s loss widened to RM61.8 million in FY2016, no thanks to a higher tax provision.
Subur Tiasa also slipped into a loss of RM38.3 million in the financial year ended July 31, 2016 (FY2016), against net profit of RM2.6 million in FY2015 and RM38.7 million in FY2014, mainly attributed to lower export sales volume of logs, as well as higher unit production cost for logging operations and manufacturing of timber products.
Over at Jaya Tiasa, the earnings performance of the timber and oil palm operator has been rather lumpy. The group registered a net profit of RM54.2 million in the financial year ended June 30, 2016 (FY2016), compared with RM31.6 million in FY2015, RM53.1 million in FY2014, RM21.1 million in FY2013 and RM168.7 million in FY2012.
It remains to be seen what plans the tycoon has to improve the financial performance of these four companies.
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