Thursday, 8 March 2012

Raking Muck, Part 3 & 4

David Webb continued with his series "Raking Muck", Part 3 and Part 4.

In the latter one the following text, describing the situation in Hong Kong:

"Regulatory note: the "Independent Financial Adviser" system in the Listing Rules and Takeovers Code is a waste of shareholders' money and gives investors false comfort. However bad a company's proposal is, the company will almost always be able to find an "IFA of last resort" to say that the proposal is fair and reasonable, and investors may then be misled into voting in favour. When investors do vote a proposal down, it is usually against the advice of the IFA. The system is a gravy train for shoddy IFAs. It would be better to scrap the requirement for an IFA, and require the company to justify its proposal on its own, taking whatever advice it wants to prepare the circular. If the company can't convince shareholders of the merits, then it risks being voted down.An alternative would be a jury-pool system where IFAs are randomly assigned to deals by the regulator. Pricing for the work could be determined by an annual tendering exercise. A firm would only qualify for the next year's jury pool if investors had actually agreed with the firm's recommendations by passing or rejecting proposals at least (say) 80% of the time. We proposed a similar such system in 2001."

It all sounds very similar compared to the situation in Malaysia. Independent advice in Malaysia is also not worth the paper it is written on. It actually often does more damage than it does good: it costs time (the delay to write the report) and money (paid for by the shareholders), and can be used as an excuse by Government Linked Funds to vote in favour, regardless how bad the deal is.


  1. Good morning. Any comment on minimum wage rate of Malaysia? I found it is ridiculous that it was set at RM 1k. There are tons of jobs doesn't worth that much. Besides that I think the minimum wage rate should be set according to cities. The living cost is much lower compared to the urban like KL and JB.

    On the other had what I foresee is ultrahigh inflation will come. Current middle class group will be whacked by inflation and soon they will become low income group. As we all well aware of the bosses will all out to exploit the consumers and workers in order for them to maximize their profit.

  2. I am actually very much in favour, in combination with limiting foreign workers. In my home country (Netherlands) the minimum wages for adults are more than RM 5,000 per month! And that works great, since productivity is so high. I would like to start with say RM 600 or 800 and increase gradually, every year say RM 50 to 100 extra until a certain level is reached. I only read negative stories about the effects (inflation, less competitive etc), but I think there is a huge positive story, the increased consumer spending by these lower incomes who then will receive minimum wages.

    Decreasing number of foreign workers and increasing minimum wages will force Malaysia to be much more productive, exactly what is needed.

    I am definetely not an expert in this, but feel very strong about this.