By 2020 the government hopes to have boosted productivity; increased local autonomy and accountability; transformed industrial strategy to focus on innovatio; and encouraged private sector buy-in by rolling back its own presence in certain areas (state-owned enterprises, or government linked companies, play a significant role in the Malaysian economy). Alongside this, and similar to many other administrations, it has embarked on a fiscal consolidation programme to reduce its deficit – aiming for a balanced budget by, again, 2020.
That's only three years away, as Tan Sri Abdul Wahid Omar points out. If things progress at their current pace, then the economic model will be a success. Which is why the cabinet is again looking to the future. “There is a national initiative to get feedback from the population – the younger generation in particular – asking them to decide what form they want Malaysia to take in the year 2050,” explains Wahid. “We then need to work backwards to determine what it will take for us to get there.”
There’s a reason why Wahid is so invested in this strategy; why he knows so much about the government’s objectives. Until June 2016 he was a minister in the prime minister’s Economic Planning Unit, which is responsible for driving Malaysia’s economic growth. And today he is group chairman of Permodalan Nasional Berhad (PNB) – Malaysia’s largest fund management company, which Wahid describes as “a national institution with some 12.9 million unit holders” – and one of those private sector organisations helping to spearhead growth by creating jobs.
Wahid also has good reason to support the inclusiveness component of the New Economic Model. As the ninth of 11 children, the wealth he’s helping others create and manage today – PNB's mission is to promote share ownership in the corporate sector among the Bumiputera (son of the soil) ethnic group – seemed beyond reach to him as a boy. But not impossible. Although he says life was hard when he was young, a good education was seen as the best way for a family to get out of poverty “so we all studied hard to get a good education to pursue a good career”, he says. “When I was small, I was given this impression that accountants make a lot of money. Because I was good at numbers I was encouraged to take up accountancy, and I wasn’t wrong!” he says.
Wahid trained in Kuala Lumpur (his family didn’t have the connections required back then to secure a training agreement in London, although he later took his professional accountancy qualification in the UK) and when KPMG offered him a job he didn’t hesitate – he had been looking to start his career in what was then one of the Big Eight firms. His accountancy training was the stepping stone he needed to make the move into corporate finance, where he got a job at an investment bank, Bumiputra Merchant Bankers. He used his new accountancy skills immediately: “Financial management, financial modelling, credit analysis, financial reporting analysis... In that sector you directly apply your knowledge," he says. By 37 he’d been given a CFO role (at Telekom Malaysia) and he’s been working his way through the ranks ever since, with CEO, MD, chairman, minister and group chairman roles under his belt.
His first job as CEO at UEM Group, a large infrastructure business in Malaysia and former client from his investment banking days, was something of a baptism of fire. Analysts will tell you the business was “troubled” before Wahid was brought in by its owner Khazanah Nasional Berhad, the sovereign wealth fund. It wasn’t by the time he’d finished with it. So what was the problem, and how did a, let’s face it, pretty inexperienced accountant turn the company around?
By addressing the debt problems, says Wahid simply: “This very large infrastructure company had some 11 listed companies under its wing, they had been growing very fast during the economic boom of the 1990s, much of which was funded by debt. At its peak, the group had accumulated some MYR30bn (£5.4bn) of debt and at that point in time the cost of borrowing was about 8% per annum. That's a lot of debt burden for any company to shoulder," he explains. So he and his team put together a plan to float the most profitable part of the business – the north/south highway concession – on Bursa Malaysia to realise some value and pay down the debt.
The plan worked – the UEM Group paid down its debts from MYR30bn to a “more sustainable” MYR16bn. “Together with some other improvements, the team was able to restore the financial position of the group and within two and a half years it was generating a profit. Effectively, Khazanah doubled their money in three years,” says Wahid, proudly.
That first leadership experience sticks with him because it not only sealed his reputation as a successful troubleshooter, it also helped him realise he liked the thrill and answerability of a corporate turnaround role. “It was stressful and enjoyable. If we had delayed our plan the group would have succumbed under the huge debt burden. We restructured the debts, renegotiated a concession agreement to make it more palatable for a listed company, completed the listing process, all within 10 months. It was stressful but we had a great team; everyone wanted it to work. If you work hard and you're able to achieve a good outcome then it makes the journey very sweet,” he says.
His success there was instrumental in his return to Telekom Malaysia in 2004, this time as group CEO. His mandate was, again, transformation, but this time on a more sweeping scale as part of a larger, regional programme of repurposing government link companies, explains Wahid. Although the business had been listed for more than 14 years, it was not as competitive as a large public listed telecommunications company should be, so he was tasked with transforming not just the management structure, systems, processes and products but also the culture. Never an easy task. With the benefit of hindsight, he’s sanguine about it now. He says he relied on the “basic skills” you need to run a business, but admits there was a lot to learn.
We decided to take a different approach. Not do the same amount of business with fewer staff but grow the business so everyone is productive. (Tan Sri Abdul Wahid Omar)
In an essay for the Malaysian government’s Voices – Reflections on a Transformation Journey project, he wrote: “Culturally, we removed the traditional morning and afternoon tea breaks normally associated with the public sector and implemented five-day weeks with extended working hours normally associated with the private sector. Many people thought removing tea breaks was an impossible task back then but the staff and union officials appreciated the need for cultural change. We improved customer service and revamped our outlets backed by better trained staff, more efficient processes, upgraded IT systems, competitive products and a more pleasant environment.” The transformation was complete.
He was headhunted yet again, this time by Maybank, which he joined as CEO in May 2008. Timing, as they say, is everything. I wonder how his remit changed after he accepted a job back in the financial services market shortly after the financial crisis had hit? As Wahid tells it, the crisis was just another challenge to add to his transformation list. “I was approached mid-2007 so circumstances had changed a lot by the time I joined; Lehmann Brothers collapsed and the sub-prime issues had come out. When I joined my challenges were to see through three major acquisitions (of An Binh Bank in Vietnam, Bank International Indonesia and MCB Bank in Pakistan); improve the fundamental performance of Maybank and then make sure the bank was able to withstand the financial crisis in what had become a very difficult environment.”
Back in his comfort zone, or at least his preferred zone, Wahid’s primary focus was to restore the bank as market leader. As he explains, although it was still the largest bank in Malaysia, it had been growing much more slowly than its major competitors, Public Bank, CIMB and RHB – at 5% per annum compared to their 20%. If the trend were to continue, Wahid and his team reckoned Maybank would be relegated to number three within two years. A performance improvement programme was drawn up.
Knowing what we do by now about his troubleshooting prowess, it’s no surprise to learn Maybank continues to be Malaysia’s largest bank. The plan was a success, but not without its challenges: “If you have been market leader for a good 10 years it’s natural for people in that organisation to become complacent. So the first step we took was helping the employees realise we were not doing as well as we were supposed to and our market-leading position was at risk. The idea was to put the organisation [47,000 staff] on a burning platform so people realised how pressing it was. Having secured their buy-in we identified 30 initiatives to improve performance.”
These ranged from stimulating sales and improving IT to working on customer service and process. What it didn’t mean was losing headcount, despite the consultants suggesting the business was overstaffed by 1,000 employees. That Wahid didn’t take their advice reveals the courage of his convictions. “We decided to take a different approach,” he explains. “Not do the same amount of business with fewer staff but grow the business so everyone is productive. If you have the option to grow the business to a level you can justify the staff you have, then pursue that option. Within 18 months the business had grown so fast there was no need to retrench staff. We were very happy Maybank was able to grow and outrun its competitors within 18 months, that it was back on profitable track and its market cap was restored... Maybank became the most valuable company listed on Bursa Malaysia.”
Wahid is a calm but assured leader. Indeed, in the Voices essay he writes: “A good leader must be a visionary; articulate, authentic, engaging and have unquestionable integrity. You don’t have to be the typical loud corporate leader to be effective.” When he says people are not numbers, he means it. “They truly are talent for your organisation,” he explains. “It’s very important you take into account their feelings. If you are able to motivate them and guide them to execute the right strategies then I think they will perform a lot better.”
No wonder he was sought out by the prime minister in 2013 to join his cabinet. Describing the invitation as “totally unexpected” – he hadn't thought of leaving Maybank – Wahid says the PM was looking for someone with a private sector perspective to “give the government courage” to instigate its various economic development plans for the medium and long term, including reducing its deficit. He didn’t hesitate to accept, genuinely humbled by the proposition: “I was given a scholarship to pursue my education so I felt indebted to the country and felt it was time to give back to society,” he explains. “It was a privilege and an honour to be invited to join the highest decision-making body in the country and made a full cabinet minister without having run for election,” he adds ruefully. “And I believe in the New Economic Model that was articulated back in 2010. I felt if I were to join the cabinet I could help implement and realise this aspiration.”
So what’s his assessment of Malaysia's prospects, armed as he is with three years of experience at the heart of government and now back in the private sector and passionately exploring how PNB might generate competitive, sustainable returns to its unit holders? He doesn't feel the reputation of Malaysia's government linked companies have been adversely affected by the 1MDB scandal, for a start: “There's a big difference between 1MDB and GLCs,” he says. “Companies like Maybank, Sime Darby, CIMB, Telekom Malaysia, they’re major public listed companies with the highest standards of corporate governance. 1MDB is the exception rather than the norm.”
And outside of the financial services sector, as Malaysia’s economy grows, he is optimistic about sectors including healthcare, technology, and more traditional segments such as agriculture, manufacturing and energy. “It’s a very small country, only 31 million people and a GDP of about $300bn. But if you look at the larger ASEAN economy, with 600 million people and almost $3trn in GDP, then I believe there’s a big future for all of us together,” he says. Where certain sectors have skills shortages, he adds, there are initiatives to lure expats back. But Wahid isn’t concerned about a brain drain. His view is that people should seek out opportunities around the world and then hopefully come back, one day, to help their country grow. And that’s the kind of guy he is.