Goodbye Goh Joon Hai, a True Friend in the Accountancy Profession

As I was preparing to wrap another year, I received a message from a friend about the passing on of Goh Joon Hai, a senior accountant who I have a lot of respect. Although I had not been hearing from him for a long time, he was instrumental in providing me with the insights and guidance in discharging my responsibilities in the leadership of the Malaysian Institute of Accountants (MIA).

When I was voted into the MIA Council in 2000, I was assigned the responsibility to chair the Public Practice Committee (PPC), a committee which was tasked to look into matters related to public accounting practitioners in Malaysia. As a young rookie, it was certainly a heavy task. Furthermore, some of the heavyweights from the previous committees were still there, including Goh Joon Hai.

While I was adapting to the dynamics of the committee, Goh Joon Hai provided me with counsel and explanations about the histories or principles behind the many policies and practices of MIA with respect to public practitioners. Sometimes, he would be disagreeing with my views, albeit in very professional and fatherly ways. That sort of interactions hastened my progress in chairing this committee, which had the reputation of being the toughest in MIA.

As the chairman of the PPC, I was also involved in trade negotiations which were ongoing at many levels those days. These negotiations were very important to accounting practitioners in Malaysia as they involved market openings and recognition of qualifications for market access in various markets of the trading partners of Malaysia.

Goh Joon Hai helped me to understand the mechanics of trade negotiations and the various commitments made by Malaysia at the World Trade Organisation, Asean and a number of bilateral and multilateral negotiations which we were involved in. We travelled together to attend meetings of regional and global accounting bodies. During the free time at those meetings we became closer and I learned a lot from his past experiences which he shared.

No many people realise that Goh Joon Hai was among the first set of lectures in University of Malaya who taught the pioneer students in the Advance Diploma in Accounting programme which later allowed them to be members of the MIA. Goh Joon Hai was sent to Canada to understand the concept of the professional programme offered by the Canadian Institute of Chartered Accountants, a body which he is a member of. This is a significant milestone in the history of the development of the accountancy profession in Malaysia.

While we celebrate the progress of the accountancy profession in Malaysia as it is today, we should not forget the contributions of those many accountants in building the profession over the years. Goh Joon Hai is certainly one of those who had given his best contribution and for that we thank him from the bottom of our hearts.

As far as I am concern, Goh Joon Hai was one of the accountants who held tight to his professional values and personal principles. We wouldn't mind to lose out to maintain what he believed.

Goodbye Mr. Goh. I will always remember you as one of the friends who helped me to be who I am today.

Jakarta Car Free Day, A Showcase of Diversity

Every Sunday is a car free day in Jakarta, the capital of Indonesia. Jalan Sudirman, which is one of the busiest street in the city is closed for traffic. Thousands of Jakartarians will be flocking to enjoy the morning either to jog, walk or just to watch others. An event where the diversity of the city is showcased. 

Even the street vendors have their place along the long street. We can have choices of everything from food, cloth, books, toys and many other stuff which are offered to the city folks.

There are also people doing performance for donation. Some appear in superhero suits, the defenders of Jakarta, I suppose. Perhaps, that is the reason by Jakarta folks came our in drove, together with their families to enjoy the weekend together.

The Car Free Day is an event which I look forward to whenever I visit the city. It helps me to clock my steps, enjoy the crowd and snap photos for my social media postings. Sometimes I will try something for breakfast although I prefer a more orderly dining in the outlets nearby.

With such a diverse population it makes we wonder how people can’t appreciate diversity and the need to live in harmony with each other. I am sure there are many things which we may differ in terms of understandings and views but given such reality in cities like Jakarta, there is no way we can force our views on others.

As we are crossing into another new year, let’s make understanding and accommodating our differences as one of our key strengths.

Time To Celebrate Or Reflect?

Any anniversary is associated with happiness. This can be true for birthdays, wedding anniversaries or even for friendship. Even the anniversary of death is celebrated by some people in our society.

Why should we be happy for any anniversary as it is only the completion of the earth orbiting the sun. Whether what happen to our lives, marriages or friendships, the natural routine will continue. 

To be happy or not over any anniversary should be about how far things had moved in the right direction. Have our life improved? What are the state of our marriages now compared to the past years? Have our friendships became better? These questions are not easily answered unless we reflect on them and have clear comparisons between the past and present. Have we achieved all targets set or some of them remained out of reach? What standards should be use to gauge success?

When it comes to a country, the measures to be used in such assessment would be more challenging to select. On quality of life, who should be the benchmark, those living in Bangsar and Sri Hartamas or those living at PPRT flats? On the state of Islam, do we use the Shariah Index conceptualised by JAKIM or we measure the losses incurred by public institutions governed by Muslims as our measure of progress or otherwise? In terms of culture, fairness and justice, do we use collective values based on logic or we stick to religious prescription?

Perhaps this is the reason why celebration of independence in many countries come with public holidays. Citizens will have time to reflect whether there are reasons to be happy and celebrate or their nations had rolled backwards. However, many countries organise fireworks and entertainment at the eve of independence days. Certainly those who frequent these celebrations would go home late, have a long and deep sleep and have little time to reflect. For those who are not sleeping in the morning, there would be further events showcasing assets bought using public funds. These assets are like castles, nice to see but they are never our homes, deceiving.

Hence, it would be much easier to assess out own contributions towards nation building and giving meaning to independence. How much of our efforts contributed to the well being of the society at large? It would be unfortunate if our individual wealths based on the transgressions occurring at public institutions. Do we belong to the group which are demanding and pressuring without much efforts beyond that?

I would like to wish all Malaysians happy Merdeka and please use the long weekend to reflect on what we had achieved and what more to be done to make this country a better place for everyone.

Discourse on the Integrity of Public Institutions

Within a week I had the opportunity to share my views and thoughts on governance and integrity at 3 different events.

I was invited by the People and Family Development Board (LPPKN) to discuss about governance of public institutions. I shared the elements of corporate governance including board effectiveness, the check and balance mechanisms and effective communication. I related those elements to public sector situations where finance outcomes may not necessarily be the only focus.

On of the key messages for LPPKN's board and management was that none of them are too small or insignificant to contribute towards governance excellence. Each of them have important roles to play to achieve their mission in making Malaysian families to enjoy the growth and prosperity of the nation and uphold values which will make Malaysia a great country.

I was also invited to be a panellist at the first public event between the Menteri Besar of Kedah and the state civil service. During the event, Dato' Seri Mukhriz Mahathir admitted that as the head of government, his accountability is not only to the state by he would also be assessed by Allah during the Day of Judgment. His message was clear, everyone must be honest in discharging their responsibilities to the citizens of Kedah.

After his speech, a discourse on Public Sector Integrity took place. In addition to myself, Tan Sri Ambrin Buang, the former Auditor General and Tan Sri Zabidi, the former Director General of Public Service Department shared their thoughts and experience in how public service could be strengthened and efficiency enhanced. 

Tan Sri Ambrin encouraged the civil servants to continue to explore opportunities for improvements and not to wait for the Auditor General department to point out where their weaknesses are before acting on those weaknesses. Tan Sri Zabidi, on the other hand, reminded civil servants regarding the oath they had made to serve the public without fear and favour. He also encouraged civil servants to be innovative in servicing the rakyat.

The thrust of my discussion was the importance of placing the right persons at boards and senior management of public institutions. They would be setting the tone which would be reflected by the tune of the dance of middle management and the tap of the feet of others on the ground. Effective system of check and balance would be critical in ensuring people's mandate are upheld and civil service remained on track in performing their duties. I also reminded them that governance and integrity is part of the Islamic tradition and demonstrated by Abu Bakr and Omar, the first 2 caliphs after Prophet Muhammad who extended the concepts taught by the Prophet. 

Dato' Seri Mukhriz, his Exco members, senior civil servants and all other participents then took the oath of integrity to reinforce their commitments to serve citizens honestly and with integrity.

The third event of a live interview on Astro Awani on governance and enhancing integrity of the public sector. I was interviewed together with Tian Chua, the Vice-President of People Justice Party (PKR). 

One of the issues that was focused on was on debts, guarantees and obligations of the Federal government. This topic became hot after the new Prime Minister disclosed that the Federal government debts had breached the RM 1 trillion mark. My view was that no one disputed the existence of those liabilities but the debate at the moment is on their classification. The Federal government adopted a modified cash accounting system where assets and liabilities are not brought on balance sheet like the system used in the private sector. Hence, the health of the economy is appraised based on other data and information including the ratio of our debts to the GDP. Some people use international practices in defining the relevant debts while others use the ultimate obligor who will settle those debts and obligations to support their point of views.

I suggested that a portal is set up as a depository of all audited financial statement of public institutions at the federal, state and local government levels. This will allow the public to obtain official information regarding financial performance and positions of those institutions and able to have discourse with better information and understanding. This will also force public institutions to be more responsible for their financial management and ensure financial statements are well kept and prepared on time and are audited promptly as well. This platform is not expensive but the impact could be huge.

Again, a shared about the need to place people with competency and who have conscience at the board and as leaders of public institutions. They must also be committed to do the right thing. Public institutions must also be independent and able to make decisions on their own to ensure the interests of citizens are protected. 

In conclusion, I reminded citizens that their duties towards the country in a democratic system do not end only when the general election is over. They must continue to follow developments in the country and voice their views when necessary. This is a collective responsibility and should be shouldered by everyone. This is the reason by government must be transparent and allow the media to share important information. This could be used by the citizens to discharge their duty, as expected in a democracy.

A Meaningful Birthday

Our birthdays is fixed. However, events which occur on our birthday can make it more meaningful as well.

The 14th general election was held on 9th May 2018, on my 53rd birthday. As citizens, me and my family members voted in a number of constituencies; Gombak, Wangsa Maju and Kajang.

When the results started to trickle in that evening, a different trend started to emerge compared to last elections. Eventually, around 4.30am on 10 May 2018, the Election Commission officially announced that Pakatan Harapan, led by the former Prime Minister, Tun Dr. Mahathir Mohamad, managed to secure a simple majority in the Malaysian Parliament.

The focus then was on the appointment of the Prime Minister. Although the former Prime Minister, Dato Sri Najib Abdul Razak, acknowledged the results in his press conference in the morning, he did not concede and congratulate the opposite side.

After some drama, eventually Tun Dr. Mahathir was sworn in as the 7th Prime Minister around 10pm on the 10th of May.

For those who had decide to choose a fresh set of people to lead the country, they would be waiting for Pakatan Harapan to fulfil its election promises. Certainly not all of those promises would be fulfil in the short term but the people would expect the 100 day promises to be delivered just as promised, within 100 days.

A nation is not only built by those in leadership and administration but citizens, like you and me, have our roles to play. We can't just wait for whatever that we wish to happen, we have to make it happen through our efforts and contributions.

While what happened on my birthday this year was not planned, my birthday this year was certainly very meaningful.

Songkran in Hua Hin

I am having a short break with few friends in Hua Hin, around 3 hours drive to the south from Bangkok. 

Our main mission is to play golf at a number of internationally acclaimed golf courses here. One of them is Black Mountain, one of the best golf courses in the region.

Somehow, we are here in the middle of Songkran, the Thai New Year. This is celebrated by spraying and pouring water to others, with the intention to have a good time. No offence intended.

One should be prepared to be wet and should not be offended when got sprayed or poured with water.

In Hua Hin, which is also a tourist centre, many tourists participated in the celebration by wearing flowery clothes and spraying and pouring water to others, just like the Thais. While we thought it would be great to join, the thought of wearing wet clothes deterred us from joining the fun.

Hua Hin is also located by the sea and the shore is another attraction for people here. While the sand is not as white as with other beaches, many people fo there to relex and have food sold along the beaches. Plenty of seafood for them to choose from.

For Muslims, there are a number of places where halal food is sold including at a stall near the railway station. The operator is from Tak Bai, which is located at the border with Kelantan.

It is a great location to watch sun raise and when I was there this morning, there were already many people with their cameras to capture the beautiful scenery.

With another day to go, Hua Hin is certainly a great place to visit, especially for golfers and food hunters.

Walking In The Middle of Jalan Sudirman

I did it again. I was able to walk in the middle of Jalan Sudirman, one of the busiest roads in Jakarta together with thousands of others. No, we were not demonstrating but today was their “car free day” when the busy road was closed so that people could do their things along the busy street.

What was started as a commitment to ensure the air in the city to remain liveable, the car free day has allowed citizens to be involved in healthy lifestyle activities and business. While the Jakartarians walk, jog, ride and do all other stuff, some others can take the opportunity to open small stalls along the road to sell stuffs as well.

This morning, a huge crowd turned up and the whole of Jalan Sudirman was turned into a huge lifestyle centre. I could observe government departments, commercial entities and charitable organisations having all sort of activities with their people and the public such as aerobics, walkabout, product demonstrations and singing. Everyone seemed to have enjoyed themselves.

The takeway is very simple, citizens need spaces to enjoy. After all, cities are built for them to live, not just for commercial organisatiions to build buildings everywhere, making huge profits but denying citizens their rights to a good living.

There is somewhat a similar concept in Kuala Lumpur but it is done once a month only and to cater mainly for cyclists. There is also no funfair like activities such as the one in Jakarta. 

Perhaps the difference is the Mayor of Jakarta was elected by its citizens whereas the Mayor of Kuala Lumpur was appointed by a minister who himself was not elected by Kuala Lumpur people. Hence, both mayors have different bosses and priorities. 

Those in public offices must understand why they their chairs were created in the first place, to serve the public. Once this is forgoten, their conducts and behaviours may not be consistent with their real bosses, the people.

Jakartarians seem to be a bit more lucky, if the car free day is used as a barometer to gauge public policies.

Are We Not In a Developed City

It was my first encounter with people who are helping street kids to have meaningful life within the buzzing Kuala Lumpur, the capital of Malaysia which is the proud of all Malaysians. I attended a forum at Buku Jalanan Chow Kit, a centre where street kids can have access to basic education and able to experience descent living, even for a short while.

There was a forum entitled "Orang Miskin Dilarang Pandai" or "Poors are not allowed to be smart". The panellists were Dr Muhammad Khalid, an avid social scientist who had been doing research on inequality and Dr Madeline Berma who had been assisting policymakers on poverty.

Dr Muhammad shared his findings on the urban poor. According to him, they work more hours than others and do not have big family. The median number of their children is two. This rebuts the accusation that urban poors are lazy and come from large families.

Dr Madeline encouraged the public to take this issue seriously and do whatever that they could to help the children who are victim of circumstances. Instead of relying on government which may have limited resources, volunteers could find ways to help and donors could provide the necessary funding.

After the forum I noticed there were a number of familiar faces, including one from the accountancy profession. We agreed that the accountancy profession could play its part in this area. I would surely try to persuade many more friends to be involved with street kids issues.

Are Corporations Taking Their Citizenship Roles Seriously

The news regarding how personal data from Facebook was abused by Cambridge Analytica is just another example of how much our lives are affected by the conducts of corporations. Not only corporations like Facebook profited from the data provided to them by the millions of their users worldwide for free, it had failed to honour its obligations with regards to how those personal data and the privacy of their users were managed.

In the last number of years, the issue of how much these global corporations pay their fair portion of taxation was also raised and debated in many jurisdictions. Given the breadth of their operations across many geographical locations, they were able to structure their business arrangements in ways leading them to pay close to nothing. Legally, these corporations claimed that they had complied with the relevant taxation laws in all jurisdictions. However, when a average middle class person is subjected to a higher tax rate than corporations which made billions of dollars in profits, something is just not right.

Corporate conducts had also affected the environment, culture and lives of people around them. These are well documented in many countless cases globally. The Deepwater Horizon oil spill in the Gulf of Mexico was one disaster which resulted in severe damages to marine and wildlife habitats as well as the fishing and tourism industry in the affected areas. The Volkswagen scandal where emission test results were changed is another example of how much safety of people were risked in the pursuit of profits. Even corporate collapsed, mostly due to scandals and misadventures, had resulted in many employees being retrenched and lost their livelihood.

Limited corporations are the preferred structure used in many parts of the world for business. Apart from their ability to own assets, to sue and be sued in their own rights and having perpetual life, the separation of liability between their owners and the corporations is an important factor which makes the corporate structure an ideal way of risk taking. However, different from natural persons who actions and conducts are determined by their hearts, minds and souls, the conducts of corporations are influenced by many people - shareholders, directors and employees. Hence, the collective values, wants and ideals of these people, determined in complex legal and moral arrangements eventually shape the behaviours of corporations in dealing with their customers, suppliers, financiers, regulators and other stakeholders.

If a person who is a citizen of a country is expected to observe laws and behave in ways which benefit the society at large, should corporations carry the same responsibility of being good corporate citizens? While the answer appears to be obvious, why corporations, especially the larger ones ended up to be at the wrong side of the scale due to their conducts and behaviours?

As corporations are set up as means of creating value to their shareholders, maximisation of profits seems to be the normal order. Directors are pressured by shareholders to deliver more profits and dividends while investors and fund managers on the other hand demand corporations to provide ever-optimistic business outlook so that their share prices remain high. Senior management’s remuneration and bonuses are linked to performance, mainly profits. These various pressure points and conflicts in one way or another are pushing corporate interests away from the interests of the societies around them.

There are a number of efforts out there to bring good governance and corporate citizenship issues into board rooms and general meetings. Integrated reporting is one of them. In preparing integrated reports, corporations are required to define their value propositions and how they are achieved. The impact of their conducts on the stakeholders around them would need to be clearly articulated. It would be interesting to observe how much of the disclosure reported in integrated reports stimulate debates around good corporate citizenship.

Regulators in the financial services industry are also requiring financial institutions to re-design their remuneration structure so that excessive risk-taking is not encouraged. The issue of corporate culture is also under scrutiny. How much of that would change for the better would be something which we need to monitor.

The above observations are not meant to deny the benefits brought by corporations to our societies. Through their wealth creation activities, much progress had been achieved and shared across. However, as more corporations are becoming dominant in more aspects of our life, the need for them to be good corporate citizens is becoming more critical. 

This article was published in the Malaysian Reserve on 23 March 2018

Lies, Damn Lies and Statistics

No. I am not writing about anyone who lied. In fact this is to recap some points which I picked up during the presentation by Tan Sri Lin See Yan on his views of our economy. It was an event for FIDE directors, those who sit on boards of financial institutions in Malaysia.

Of course Tan Sri Lin doesn't need further introduction as he is known to be the former Deputy Governor of Bank Negara and a Harvard graduate. His service records, contributions to the country and his efforts in sharing his thoughts were all captured in his presentation that morning. He appeared very casual but his intellectual observations were very sharp.

In analysing our economic data, he arranged them in a particular time series and theme on which he formed his views. For me, Tan Sri Lin managed to capture our challenges on a single slide.

Amongst his observations were:

There is a disconnect between our GDP numbers and the reality faced by citizens on the street. This is simply because our GDP is an aggregate number and only by disaggregating that, we could see a better picture of our realities. He our CPI index as an example where, according to him, does not capture the differences in geography, urban and rural.

Our growth is mainly through consumption and the investment component had been shrinking over time. This increases household debts and could pose challenges to future growth as citizens could not carry more debts. They can't be expected to consume beyond their means.

The manufacturing sector is also weakening and the growth in the past few years were generated by the construction sector. The shift into Industry 4.0 kind of economic activities would also pose a danger if we do not have the ability to move up the value chain.

Tan Sri Lin also raised the issue of Government-Link Companies (GLCs) crowding out private enterprises. While this topic had been debated a lot before, he pointed to the fact that 75% of the value of Bursa Malaysia are from these GLCs.

While he was not conclusive, Tan Sri Lin also pointed towards the risk of having growth without the corresponding employment growth. Although new types of work would be created, this requires quick adjustments to our education system, which has problems on its own. The low-cost labour model which many companies are adopting would lead many of them towards problems in the future.

One quotable quote that he made was:

"We know the problems, we know the solutions and we also know that they would not be implemented".

Whether that summarises our real problem - not recognising that we have problems and not having the political will to solve them - is for everyone to decide for themselves.

According to him, we are performing below our potentials and this is reflected in the value of Ringgit, which according to Tan Sri Lin should be much higher. He produced data which suggested that the value of Ringgit at present is not much better compared to the days where our economy was only based on tin, rubber and agriculture products. We have nor benefitted from the modernisation of our economy, something that we have to acknowledge.

True to the label as an honest intellectual, Tan Sri Lin provided policy proposals to address our present and future challenges. However, as what was quoted earlier, do we have the desire to do things differently or we will only change when there is a burning platform?

Why Entrepreneurs Should Worry About Governance

Corporate governance, in the present form, was introduced in Malaysia after the Asian financial crisis in the late 90's with the publication of the first Code on Corporate Governance (CG Code) by the Securities Commission in year 2000. 

This CG Code, which was revised a number of time over the years, was enforced through the Listing Requirements of Bursa Malaysia. Given the needs of the time and the consequences if the governance practices of our listed companies were not up to mark, the focus of the code was for larger structures with significant external shareholdings. 

Although the outcomes of good corporate governance would improve any organisations, for profits or otherwise, big or small, the principles, best practices and other recommendations in the CG Code are more practical to be implemented by larger business organisations. What about small and medium enterprises (SME)? Should entrepreneurs start to worry about governance and leadership when their businesses grow into bigger companies?

Corporate governance is defined as "The process and structure used to direct and manage the business and affairs of the company towards business prosperity and corporate accountability with the ultimate objective of realising long-term shareholder value, while taking into account the interest of other stakeholders". There are a number of concepts which are important to all businesses, irrespective of their size - "process and structure", "direct and manage" and "long-term shareholder value" amongst the few.

SMEs have many structures and processes; they require to be directed and managed; and more importantly, entrepreneurs normally are their major shareholders. Hence, if the outcomes of good corporate governance create long-term shareholders value, their entrepreneurs who are their major shareholders would benefit if their businesses have good corporate governance practices.

One of the major challenges for good corporate governance to be implemented by SMEs is the way governance are discussed in the public space. The focus had always been on the structures such as committees and various controls and assurance activities. All of these appear to be too overwhelming for entrepreneurs to relate to their smaller SMEs. The distinction between governance, leadership and management are also not clear. Hence, entrepreneurs tend to focus more of the management aspects since that would bring them profits and neglect governance and leadership part of business simply because they are too complex to be understood.

It is suggested here that when the three key concepts; governance, leadership and management are discussed with entrepreneurs, their interests (being the major shareholders) should be the focal point. Governance should be sold as the mechanism for them to protect their profit generating machines and whether they like it or not, they have leadership roles to play in their respective businesses.

My recent session on governance and leadership for SMEs. Entrepreneurs are not only keen but they also indicated their challenges in enhancing governance and leadership in their enterprises

Rather than worrying too much on the structures, entrepreneurs need to be encourages to focus on the principles of governance and be creative in getting the outcomes. For example, instead of having independent directors, they could create an advisory structure where independent people could advise them on governance, leadership and management issues faced by SMEs. This will avoid those advisers from being exposed to business and conduct risks of SMEs.

A lot more need to be done to enable good corporate governance be adopted in the SME sector. This require responsible leadership by the entrepreneurs themselves. Good governance should result in effective management and more sustainable enterprises. At the end, entrepreneurs should be also to see and benefits the most, since they are the owners and assume the highest risks of ownership.

Growth Without Employment?

I was fortunate to be invited by the Securities Commission to attend the World Capital Markets Symposium 2018 last week. The theme for this series was Renaissance of Capitalism: Markets for Growth. 

The Prime Minister giving his keynote address

Two speakers really provided me with the contexts and the big picture of what aregoing on in the world. They are Fareed Zakaria, the CNN's presenter which hosts  GPS and Yanis Varoufakis, the former Greek Finance Minister. They displayed their intellectualism by galvanising observations, historical events and providing their projection of the future, which interestingly appear to coincide with each other.

It is not difficult to figure out why capitalism is being questioned, hence why the theme was chosen. Globally, the world is still recovering from the 2008 financial crisis, in one way or another. Even as the Wall Street is seeing record highs again, interest rates in the United States are still not normalised yet. Quantitive easing is still the order of the day in Europe while Japan is still having an extra accommodative monetary policy.

Similar to his last appearance, Fareed walked the audience through the history of world trade, globalisation and the information revolution. The world, according to Fareed, is at the point which provides the best to mankind based on all metrics. Yet, he agreed that everyone are not comfortable with something. Brexit and the election of Donald Trump are two examples of how the majority of the population in those places expressed their dissatisfaction against the ruling class.

Fareed Zakaria delivering his views

According to Fareed, there is a revolt against what he termed as "professionals",  the group of people who made it through the education system and had been able to enjoy prosperity, accumulated wealth and been defining success for the rest who are mainly blue collar workers. Why? Because the growth driven by technological advancement had somehow not resulted in the growth of employment. The link between globalisation, trade and employment had been broken with business models where technology is the centre and displacing human with robots are the way forward.

While Yanis was supposed to share with the audience his experience in dealing with Greece's failure to meet its debts obligations, he went back to the 1940's to explain the rationale behind the Bretton Woods agreement which was considered an important milestone in the whole chain of events many years later.

Yanis Varoufakis being interviewed on stage by Riz Khan

After the Second World War, America was in a surplus situation in terms of capital and manufacturing capabilities. It needed to convert factories from producing was equipment to merchandise goods. In order to "recycle the surplus" from the US to deficit countries like Europe and Japan, the Bretton Woods agreement was designed to enable the Americans to be in the driving seat. Reference to the gold standards was just a tool of convenience, so that capital can be transferred to the deficit countries in form of debts to finance the imports of goods from the US.

In the early 70s, the US itself started to suffer from deficit and the Bretton Woods agreement was making it difficult for them to play their original role. It was then determined by the Americans that it does not matter whether the US was deficit or not, their position would be maintained if the US remains as the driver of the recycling of the deficit through Wall Street and the US Dollar. Hence, Bretton Woods was dissolved for the benefit of the Americans.

The facilitate this new way of cycling deficit, labour cost in the US had to be reduced. Hence, as a trade off, American workers were promised that their investment in property and houses would be the way to assure comfortable retirements. Hence, the American housing bubble was started. Therefore, the 2008 financial crisis where house prices melted was a breach of that understanding made many years ago. Suddenly, many worker found their retirement saving in the form of house value disappeared.

At the same time, the technology revolution has created a situation where growth has been decoupled from employment. As an example, Yanis cited an Adidas factory servicing the whole Northern America markets needs only 800 knowledge-based workers instead of 8,000 people which included blue collar workers. It was mentioned that only 25% of Americans have college degrees, hence their future in the jobless growth-era would be bleak. This opened the door for people who believe in protectionism such as Donald Trump to take centre stage and able to promote policies which resonate with the feelings of these marginalised workers.

When Greece joined the monetary union, its public and private debts were very low. Hence, Greece became the primary target for surplus countries like Germany to provide debt capital to Greeks so that they could consume products and services from those countries. According to Yanis, the bailout offered to Greece was to safe banks from Germany and France from collapsing if their loans were defaulted by Greece borrowers. 

Fareed provided the same analysis. Trump's simplistic explanation to the Americans that "Your jobs are stolen by the Mexicans, your factories stolen by the Chinese and your security stolen by the Muslims" makes sense to many Americans who life were affected by the status quo. Hence, movements against the proponents of democracy and globalisation sparked the fire of revolt against the "upper-class" people globally.

While Fareed did suggest that the world need to resolve job provision in the era of technology where machines and robots would be able to replace low level activities, he did not go into specifics. Yanis, on the other hand, made it very clear that the world need a new order. He even suggested some sort of social dividends to be paid out by social media companies which are making huge profits from social interactions, without paying anything to their members. He also predicts that the society would eventually impose similar standards on social media companies like what had been imposed on financial institutions once the impact of social media companies on the society is better understood.

While we would continue our endeavour to develop and apply technology to many more facets of our lives, the issue of job creation would be critical to maintain prosperity to as many people as possible. We are already observing the implications and the worse are yet to manifest themselves. A new order where prosperity is better shared would need to be worked out. How? No one knows!

Boardroom Effectiveness - Personal Performance or Group Performance?

Board of directors as a whole are expected to be effective. Given that boards are collection of people, the question of whether effectiveness comes from individual performance or collective performance could arise. Let us consider some factors which could influence board effectiveness.

Board composition

Like any other team structure, the composition of the board is critical. Who sits around the table, what skills and values do they bring and whether collectively they have what it takes to bring the company forward successfully are pertinent questions.

Unlike a soccer team where a manager would determine the composition of the team based on his philosophy of playing, the composition of boards is determined by the nomination committees consisting of existing board members themselves. To a certain extend, there would be challenges in shaping compositions of the future if some of the committee members would nee to be excluded. Tough job!

Having agreed on the composition is just one part of the story. Convincing the right candidates to join would be the other part. Sometimes, the reputation of the controlling shareholders or the company as a whole may determine whether competent and qualified people are keen to join or otherwise.

Board dynamics

A soccer team full of stars would not necessarily win competitions. It all depends on how well the team members play together in accordance with the strategy of the coach and the strength of the opponents.

Similarly, in boardrooms, how the members interact and work together would also influence their effectiveness as a whole. Are there enough candour where people are free to share their thoughts and views or are there prima-donnas who are keeping the airtime only to themselves?

How the board eventually arrive at their decisions would be influenced by the dynamics. In some cases, decisions are not made until everyone has given their views, no issue with this. In some other cases, few individuals in boardrooms could be the decision makers, especially when the rests are merely seat warmers and would follow the flow of the deliberations. Would this be fair to the companies they serve?

To a certain extend, the ways chairmen of boards allow the meeting to flow would have impacts on board dynamics. Some chairs are firm with a particular way of deliberations while there could be chairmen who let meetings find their own causes.

Staying the cause

Directors are expected to be honest and act in the best interests of the companies they serve. Achieving this could be influence by many factors;  strategy adopted, quality of management; situation of the industry; strength of competition, economic conditions naming the few. 

Hence, boards have to be clear of the way forward, oversee management, ensuring proper check and balance mechanisms are in place, guide management in dealing with market dynamics and competition and more importantly, setting the tone on values and culture would eventually lead them to the fulfilment of their duties and responsibilities.

Both aspects must be there

Looking at the above issues as a whole, both personal performance and group performance are important. Each board members has to bring value to the table. At the same time, their collective performance would also matter as in most cases, boards would be judged based on the decisions made in the cause moving their companies forward and provide returns to shareholders and investors.

MRSM - The Early Chapters #2

Cikgu Wan Nasihah Wan Abdullah joined as a teacher of MRSM Kota Bharu in 1974, a year after the junior science college was established. She did her first degree in Science at Aligarh university in India and later went to Columbia university in the United States for her Masters in Education.

She lived the ethos of MRSM in nurturing students from different backgrounds. In fact she loved to deal with the naughty ones as she took that as a challenge to turn them around. She even went to study the backgrounds of these students  including who their parents were to have better understanding of why the behaved in such a manner. 

In dealing with the many kind characters and behaviours, she demonstrated firmness, although she was soft in her heart. The students responded positively and many became committed to be better. Based on her recollection, a number of students were on the verge of being expelled but she did not agree and supported them until they changed their behaviours due to her counselling and encouragements.

During her service in MRSM Kota Bharu, her uncle Ustaz Redzuan Ahmad taught us Islamic studies. Later, her untie, Ustazah Naimah joined the college for a while before being transferred to Kuantan.

She declined a number of promotion opportunities as she loved the students at the college although she eventually became the principal of MRSM Pasir Tumbuh after serving MRSM Kota Bharu for 15 years. Later, a year before her retirement, she became the principal of MRSM Kota Bharu, to complete her illustrious career in the place where she started.

Wan Nasihah taught me biology in form four and one of the topics which attracted my attention was the concept of ecosystem. Interestingly, when I became the Executive Chairman of the Audit Oversight Board, I applied the concept to enhance audit quality in Malaysia.

Today, many of her "naughty" students are successful professionals. Many of them serve as doctors at Universiti Sains Malaysia hospital, where Cikgu Wan Nasihah sometimes went for medical treatments. They students repaid her kindness with first class treatments, the least they could do for someone who stood for them when they need her the most.