Saturday July 21, 2012
Your 10 questions for Othman Omar
PKNS general manager answers...
Can and should PKNS ever operate as a profit entity given its social and welfare commitments to the state, and how can it strive for a balance?
Chua Bing Guan, Malacca
It can and should. By generating more profits, PKNS can sustainably contribute to more social projects, channel subsidies for our affordable and low-cost projects, and more corporate social responsibility activities can be carried out. Heavy subsidies are required for our low-cost and affordable home projects such as the ones in Bukit Botak and Bangi. Each unit is given a subsidy of around RM100,000. We are building 11,000 more affordable and low-cost homes in the next five to seven years. That’s nearly RM1.1bil in subsidies. As a master developer that has built many townships such as Shah Alam (9,000 acres), Kota Damansara (4,000 acres), Petaling Jaya (6,000 acres) and Bangi (7,000 acres), we also provide the main infrastructure including interchanges, roads, water reticulation and sewerage systems. The cost of infrastructure is around RM1bil to RM1.5bil per township. So how do we balance this? This is why PKNS is now moving towards high end projects. We have to be profit-driven to channel this back to the five million Selangorians who are our stakeholders.
You have been in the job for over three years. What are your achievements and disappointments during that time? Zed Zawawi, Subang Jaya
When I took over in 2009, the first thing I did was to conduct an internal and external branding audit. More than 70% (of our stakeholders) perceived PKNS as corrupt, slow and inefficient. We were labelled as a low-cost developer. It was our wake-up call. Since then, we have put in place a proper delivery system and enhanced corporate governance. We went on to win several awards and accolades. In 2011, PKNS’s profit before tax was a record RM420mil (before audit) and currently we are at zero gearing, which means we have paid off all our loans.
Of course, there were some disappointments, or shall I say setbacks. When I came on board, I realised that 99% of PKNS’s strategic land bank was already developed. There were only pockets of strategic areas that I could work with. With our zero land bank strategy which included urban regeneration and reverse privatisation, we have managed to turn this around to benefit us. The results were impressive as we attained RM10bil in gross development value (GDV) from this new strategy.
Apart from property, PKNS has other programmes such as entrepreneurship development. What segment after property development does PKNS have high hopes for and why? Johnny Lee, Puchong
The first is the hospitality business. We have been successful with De Palma Hotels which is the first syariah compliant hotel chain in Malaysia. We also have Shah Alam Convention Center, Bangi Golf Resort and Sri Selangor Public Golf Course among others. We are keen to work with more branded hotels to add value to our new developments in the Klang Valley that have an estimated GDV of RM14bil and is expected to increase to RM20bil by year end. The new hospitality business model will provide the branding and premium required to increase the value of these projects by 15%-20%. We are currently in talks with several parties to form a successful partnership in this area.
Environmental management is another area. PKNS, through our wholly-owned subsidiary Worldwide Holdings Bhd, manages sanitary and inert landfill concessions in Selangor. We have successfully carried out post-closure treatment to our Air Hitam landfill in Puchong. The site is generating 2MW of electricity. We also have stakes in Genting Sanyen, an independent power station.
Selangor is the most industrialised state in the country. What qualitative aspects of industrialisation is PKNS striving to contribute beyond just the ringgit and sen side of the business? Rajveer Singh, KL
PKNS strives to provide a perfect balance between work, live and play. Most of our townships are integrated with industrial developments, higher learning institutions and lifestyle amenities. PKNS is also going into urban regeneration projects. Another qualitative aspect that has and will always be PKNS’s focus is human capital development. We have created many successful entrepreneurs through programmes such as Permata for school children, Graduate Entrepreneurship Program (Grow) and Phaser-PKNS.
Property development seems to be the main income driver of PKNS. Shouldn’t PKNS look towards creating other avenues of growth other than what the private sector seems more than capable of doing instead of becoming another conduit towards property development? Ghafar, Shah Alam
Property development has been our core business for the past 48 years. It is through the profits derived from this segment that we have been able to channel back to develop low-cost and affordable home projects. PKNS does not compete with the private sector.
Affordable housing seems to be the focus these days. What is PKNS doing towards granting the Malaysian dream to those who are finding it difficult to buy a house and why is PKNS getting into high end property when every developer is looking at the same market? Ibrahim Zahid, Ipoh
PKNS has targeted to develop 20,000 affordable homes with enhanced facilities within the next five to seven years in various townships. Mid-2011 saw the launch of the first prototype home in Bangi priced between RM65,000 and RM99,000. We started the planning process in 2011 and we have started work on these projects last year (Bangi –124 units, expected completion by end of 2012, Selayang Mutiara –1,422 units, expected completion by Q3 2012 and Seri Temenggong – 400 units, tender closed and expected to commence construction soon).
We would require at least RM1.5bil for subsidies alone in the next five-seven years to build affordable homes. In order to build more affordable homes, we venture into high end projects from which the profits will be channelled back into this category of housing.
Up to 85% of our products are priced below RM500k and 55% are priced below RM200k. Most of our homes are below the current market price.
Why did you return to Malaysia after spending so many years abroad and how have you implemented what you have learnt abroad to change things at PKNS in the short time you have been in the job? Christine Wong, Klang
Malaysia is my home and coming back was the best decision I have made. I am indeed fortunate to have been given the opportunity to serve the people of Selangor. It has given me the chance to make a difference. Working abroad has made me realised that we Malaysians are as good as or even better than our foreign counterparts. But yes, there are certain aspects of which we can further improve on including the work culture such as enhanced corporate governance, integrity, delivery systems, branding and marketing as well as the convergence of social media in business. When we look at branding, for example, it is a big thing in global companies. Internal branding is equally as important as external brand values. Those who work with an organisation should uphold the same values that the brand projects. If one fails to do so, then the brand promise will not be delivered.
Financially, how has PKNS ensure minimum wastage and maximum efficiency in the way things are run in the state agency? Ravi Menon, Selangor
In 2011, our audited group profit was RM409mil from which 85% were operational profits. This was indeed the highest profit recorded for PKNS. Our initiatives to improve corporate governance and transparency improve our image and help to deliver the bottom-line. In 2010, we saved RM115mil from our open tenders, e-sebutharga and value engineering, and we have saved RM100mil from the same in 2011. At company level, PKNS is at zero gearing with an excess cash of over RM300mil. At group level, our gearing is almost negligible.
PKNS has courted controversy in recent times such as your salary and bonuses. How does it feel being exposed to the politics of the job and how has politics influenced the job you have managed to do? Mohd Redzuan, Kuala Lumpur
I was actually sad and disappointed when the issue of my salary and bonus was politicised. There were many more pertinent issues that should have been addressed in the Dewan. As government servants, we have to be apolitical and serve the government of the day. Many may not be aware that our board representation is balanced – having two representatives from the Finance Ministry, one from the Economic Planning Unit and state excos among others. As the general manager of PKNS, I was tasked to create social and economic growth for the people of Selangor and that will not change.
Will the pursuit of higher profits be at the expense of the well-being of people given plans to develop a well-known playing field in Kelana Jaya? Eric Wong, Petaling Jaya
Our intention was to create a Sports City. The proposed development would have included a state-of-the-art sports complex, a much larger football field and a performing arts centre among others. All of these would have been open to the public, unlike the current field which is for private use as it is a private institutional land. Additionally, the revenue generated from the development of the area would eventually be channelled back to the people of Selangor. However, the development proposal has courted some controversies. On the unauthorised amendments to RTPJ 2, PKNS also wants a thorough investigation by MBPJ and the Selangor State Appeals Board. Those found to have amended and tampered with the local plan should be brought to book as this is a serious offence. We hope justice will be served as PKNS has been paying millions of ringgit in quit rent at commercial rate since 1998. We have left this matter to the State Appeals Board to decide.