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Sunday, May 10, 2009

Malaysia to merge Bursa main, second boards. Huh,does it matter?

Truthfully speaking, does that matter?

Merging (Mixing) the boards do not make any difference.I know Bursa is trying to spur trading in KLSE so they can make more money (transaction cost) but investors are much more informed now-thanks to the Internet.

The value of a company STILL depends on the free cash flow (FCF) which it is able to generate in its lifetime. No matter where you list the company (main board,2nd board),how you name the company(Axiata,TMI,UEM,UEMWorld),the growth of the company still depends on its PEOPLE.

One good example which I can relate to is our government department. Government can do all sort of things to increase its popularity:-PM visit to immigration department, PM took KTM,Increase salary for public servants,change to Open Tender,shrink the Cabinet,etc. The element which can affect the efficiency of the government department is the PEOPLE in these departments.No matter what you do,as long you're in government service,you'll be sure that you'll not get FIRED.

Firing people in Malaysia is a TABOO especially when it comes to Malay community which uphold "Semangat Perpaduan". If you fire one of his friend,the whole department will not cooperate with you.So,no high ranked officers dare to "Rock The Boat".The unwritten rule is still,"Sama-sama cari makan.You scratch my back,I scratch yours".That's why I think "ONE MALAYSIA" will remain as a slogan,just like "BERSIH,CEKAP,AMANAH".

It's extremely hard to break the "friend friend" culture in the government department.A good speech by PM Najib without much detail action plan won't work.Most of the high ranked officers in that speech were in for the big "jamuan" anyway.

So,if you think 1st board & 2nd board merging will make the companies more transparent,you're truly a sucker.

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