Summary Report of PricewaterhouseCooper on Pempena Companies

Overview of Pempena

In 2005, Pempena established a business plan for 2005-2009 to implement the following key activities:

(i) Equity participation in tourism related industries
(ii) Implementation of activities under the Shopping Malaysia Secretariat
(iii) Placement of funds in the money market and unit trusts.

There were 14 key areas of new businesses indentified by Pempena for implementation.

Pempena planned to invest a total of RM49.8m over the period of its business plan (ie 2005 – 2009) representing equity and profit sharing arrangements.

As at June 2008, Pempena has invested a total of RM54.4m via equity participation in and advances made to the Investee Companies.

High level financial performance review

Out of the 24 Investee Companies:

(i) 6 Investee Companies do not any financial information
(ii) 3 Investee Companies have partial financial information.

Most of the 24 Investee Companies have not been recording operational profits over the last 3 years with the exception of:

(i) Malaysia Travel Business Sdn Bhd (“MTB”)
(ii) Max Airplay Sdn Bhd (‘FlyFM’)
(iii) Malaysian Restaurant Londan Ltd (“Awana Chelsea”)
(iv) Bistro & Theatre Restaurant Sdn Bhd (“Saloma Theatre Restaurant”)

Only 4 Investee Companies have positive shareholders’ funds as at June 2008. They are:

(i) Malaysia My Destination Sdn Bhd (“My Destination”)
(ii) Dalamasa Sdn Bhd (“Dalamasa”)
(iii) SDCorp Communication (M) Sdn Bhd (“SD Corp”)
(iv) Nathena LIFZ (M) Sdn Bhd (Nathena)

Review of investment process

• Based on our review of Pempena’s documents, we have not seen any documented policy and procedure governing Pempena’s investing activities.

• Our review shows that there is a lack of:

(i) Investment analysis setting out consideration of how long would Pempena hold on to its investment and how Pempena would potentially exit from its investment
(ii) Critical assessment of the background, credentials and relevant experience of the respective Investee Companies’ business partners, financial projections and strategic business plans.
(iii) Considerations of tourism related initiatives or KPIs for most of its Investee Companies.
(iv) Documentation which clearly outlines the procedures for operational and financial review of investments, roles, and responsibilities for representation on Investee Companies BODs.

• Pempena’s investment process could be enhanced if there is a clearly defined investment policy and procedure on:

(i) Investment approach
– Determining the approach in setting the tone for the oversight of its investments

(ii) Investment targets
– Setting of financial, tourism and/or operational KPIs for its investment via a structured plan

(iii) Investment governance
– Setting out requirements for management and monitoring of investee companies based on their shareholding structure and ability to influence decision making.

• Pempena’s investment monitoring mechanism (in respect of the 14 Investee Companies) is primarily focused on historical performance through:

(i) Review of monthly management reports (without commentary).
(ii) Weekly management meetings chaired by Pempena’s CEO to discuss the current business activities undertaken by the Investee Companies
(iii) Representation in Investee Companies’ BOD
(iv) Periodic reporting of Investee Companies’ performance and activities to Pempena’s BOD by Pempena’s Corporate Service Department.

• Based on the existing monitoring mechanism as represented by management of Pempena, we have not seen any documentation which clearly outlines the:

(i) Procedures for operational and financial review of investments
(ii) Roles and responsibilities for representation on Investee Companies BOD
(iii) Requirement for complete and timely information from Investee Companies

Proposed way forward

• In view that Pempena’s primary objectives of investing in the 14 Investee Companies are focused on creating “tourism value” and there is expectation by Pempena that these investments would be able to generate financial returns, the following key considerations and criteria were used in the development of strategic options for the 14 Investee Companies:

    Key considerations –

    1) Tourism objective
    (Criteria) Achievement of Pempena’s key tourism objectives in investing in the 14 Investee Companies

    2) Financial returns
    (Criteria i) Achievement of predetermined financial targets for the Investee Companies
    (Criteria ii) Investee Companies’ financial performance trend todate
    (Criteria iii) Investee Companies financial prospects moving forward

    3) Adequacy of working capital
    (Criteria) Sufficient funds to sustain operations

    4) Ability of business partner to manage operations
    (Criteria) Experience and capability of business partners in dealing with management and operational issues.

• Out of the 14 Investee Companies, the proposed way forward is to retain and enhance 7 Investee Companies which is as follows:

(i) MTB
(ii) Virtual Malaysia Sdn Bhd (“Virtual Malaysia”)
(iii) Lambaian Maya/Max Airplay
(iv) SD Corp
(v) Malaysia Restaurant Beijing Limited (“Awana Beijing”)
(vi) Pempena Executive Taxi Service Sdn Bhd (“PETS”)
(vii) Sky Vans Sdn Bhd (“Sky Vans”)

• It is also proposed that pempena exit from the following investments:

(i) Malaysia Tourism Executive Sdn Bhd (“Matex”)
(ii) Sri Kebaya Restaurant Sdn Bhd (“Sri Kebaya”)
(iii) Malaysia Restaurant Hyderabad Limited (“Awana Hyderabad”)
(iv) Dalamasa
(v) Nathena

• Should Pempena exit its investments from the 5 companies, the immediate impact to Pempena’s profit and loss is estimated to be a loss of approximately RM20 million

• Awana Chelsea has been proposed to be maintained as is whilst My Destination will be liquidated.

(Lim Kit Siang’s media conference in Parliament on Tuesday, 18.11.98)

  1. #1 by max2811 on Tuesday, 18 November 2008 - 12:57 pm

    All UMNO/BN ministers treat their ministries’ investments as their personal piggy bank. Don’t forget the ‘Sports Excellence Centre’ in London. Real female crook.

  2. #2 by Godfather on Tuesday, 18 November 2008 - 1:31 pm


    As part of Visit Malaysia Year 2007, which was mysteriously carried into 2008, companies that were deemed to promote Malaysia were eligible for a government grant of up to RM 5 million.

    So if I were to have opened a batik shop in Dar Es Salaam in 2007, I would be foolish not to apply for the grant from the Ministry of Trade and the Ministry of Tourism. You need to ask for a list of all those individuals and companies who benefitted from these grants.

    I am also curious if the famous nasi kandar restaurant in Perth jointly owned by Badawi’s brother and a chinaman from Melaka benefitted from this grant prior to it closing down in mysterious circumstances.

  3. #3 by k1980 on Tuesday, 18 November 2008 - 2:07 pm

    In the same way as the dowager empress cixi brought down the Manchu Dynasty(1644-1911), so will the dowager minister azaline bring down umno

  4. #4 by All For The Road on Tuesday, 18 November 2008 - 2:33 pm

    The primary objective of going into business is to make money and profits. Any businessman will tell you that. If business is not doing well, making losses and not getting the anticipated profits all the time, then the logical solution is to CLOSE SHOP for good. So it goes to Pempena! Why so difficult about that?

  5. #5 by OrangRojak on Tuesday, 18 November 2008 - 3:01 pm

    I’m hoping that Visit Malaysia Year will be extended until 2013 at least. My wife is planning to open Cafe Malaysia in the UK that year, and we’d like a grant. All are welcome to attend the opening party. If we get sufficient sponsorship, it will be followed shortly by the closing party, to be re-opened soon after as Cafe UN Basket Case, followed quickly after by a Halal nightclub called “The Base”, which will open during the day as a Somali shipping agent. We’re thinking of starting a chain, actually, so if you have any ideas, please include a rough outline of how little we have to do to be eligible for untraceable funding.

  6. #6 by madmix on Tuesday, 18 November 2008 - 3:19 pm

    Why should a tourism ministry open restaurants? Leave that to the private sector. Why should they run taxi services? isn’t there enough taxis in Malaysia? They should just sell off the profitable companies and close all others and close down the den of thieves called Pempena.

  7. #7 by ktteokt on Tuesday, 18 November 2008 - 5:29 pm

    Trust some non-business brains to do BIG business and this is what you get! They are simply not business-minded! They think that doing business is like just saying “I want profit” and presto! money comes! These people are living in a fairy tale. Wake up, man! This is the real world! Don’t expect miracles.

    Whilst the ants are working very, very hard under stressful conditions, the grasshoppers are taking it super easy. Just wish the cold, cold winter comes soon so that the grasshopper will perish!

  8. #8 by ktteokt on Tuesday, 18 November 2008 - 5:32 pm

    madmix, don’t be surprised if Pampena one day operates a mortuary. Its excuse would be it is needed for tourists who die during an itinerary!

  9. #9 by taiking on Tuesday, 18 November 2008 - 6:13 pm

    Someone here said doing business is all about making money. How true. But here, we have some idiots doing business with taxpayers’ money as capital and without any business details or accountability.

    A genuine businessman who uses his own money would naturally put in an extra ounce of effort into the business. And what about the businessman who is given money to operate business? If he is made to account and is expected to provide details then he would be under some pressure to deliver results as far as his ability permits. If he need not provide any details at all, then would he exercise the same level of diligence? Of course, umnoputras would answer yes to this. Only umnoputras believe that (1) they have all the rights in the world to use taxpayers’ money as their own and (2) monies they make, if any, are theirs to keep and monies they lose would be taxpayers’ loss.

    They belong to the meritless league with a mega appetite for power and wealth. Its not possible to drive sense into their heads. It would be plain useless even if sense can be driven into their heads for they have neither the heart nor the muscle to act accordingly.

  10. #10 by Godfather on Tuesday, 18 November 2008 - 9:14 pm

    What do you expect when they realise that they have only 4 years to steal as much as they can ?

  11. #11 by rubini on Wednesday, 19 November 2008 - 1:36 am

    The objectives of ministry is to develop the tourism revenue of the nation by formulation tourisim policies,

    1) Promoting Malaysia as destination / events overseas in overseas countries.
    2) Spot potential areas for development for tourism
    3) Indentify & Develop tourist industries with other Ministries & in conjunction with Local Municipalities.
    4) Cordinate efforts with private sector outside Malaysia.
    5) Provide incentive for INBOUND tour operators both foreign & domestic including businesses that involve in tourism.
    6) Create Value added tourism with neigboring countries.

    Why get involve in running of private enterprises instead creating policies that encourage private/public investment?

    Really corrupted to the core!

  12. #12 by One4All4One on Wednesday, 19 November 2008 - 9:41 pm

    Accountability, Viability, Integrity, Feasibility, Sense, Sensibility,
    Honesty, Responsibility, Sustainability, Practicality, Ability, etc., etc. are not in their vocabulary.

    What can you expect.

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