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Value Creator: Outstanding CEO Of Malaysia - Tan Sri Azman Mokhtar
by Cindy Yeap
Tan Sri Azman Mokhtar, who as a 43-year-old was entrusted with the task of transforming Khazanah Nasional Bhd in 2004, has been called all sorts of names. One was “body snatcher”, for poaching talent at a dizzying pace from multinationals to build the Khazanah team. His stamina for working virtually 24/7, BlackBerry in hand, and use of such phases as “execute or be executed” gave rise to other labels. At Khazanah, work emails came at all hours and even during weekends.
“It’s not so bad now,” laughs Azman, when asked of his work habits. Admittedly, the task at hand then was a mammoth one. Malaysia was just recovering from the 1997/98 Asian financial crisis. And transforming Khazanah was not just about the institution but a collective transformation of 20 government-linked companies (GLCs) across varied industries with individual issues.
“When we started the [GLC Transformation] Programme, we felt it would take about 10 years, and the way I describe it, it is like taking antibiotics — you must stay the course but you also shouldn’t overdo it. While the GLC Transformation Programme has ‘graduated’, we will not close down the programme per se … what this means is that we take off all the formal scaffolding and let the companies, boards and shareholders take responsibility,” he says.
To be sure, while Khazanah is government-owned, Azman insists the institution behaves like a company incorporated under the Companies Act.
“We don’t ask for any favours and we’re proud of that. It’s important to note that while we may be a sovereign wealth fund, we don’t receive any regular injection of funds. We don’t get any special favours from the regulatory side (some regulatory decisions have gone against Khazanah) and I think this is an important point for value creation. While we are technically close to the government, we also maintain an arm’s-length relationship. We strive to create value properly. When you do it properly without undue lobbying or support, I think it will last longer,” says the chartered accountant and financial analyst, who also has an MPhil in development studies from the University of Cambridge.
Azman, who was managing director and co-founder of BinaFikir Sdn Bhd before becoming Khazanah’s managing director, was also previously head of research at Salomon Smith Barney Malaysia and UBS in Malaysia.
Since he took office, Khazanah’s realisable asset value (RAV) has grown an average of 9.7% a year from RM65.3 billion in 2004 to RM150.2 billion as at Dec 31, 2015. About 45% of its RAV is invested abroad.
Khazanah also spearheaded the development of Iskandar Malaysia into the country’s next most important economic region.
To achieve ambitious multidimensional goals, the 10-year GLC Transformation Programme saw the introduction of “multicoloured books”, which outlined various programmes, initiatives and key performance indicators to help GLCs stay on course.
Today, Khazanah’s core investments such as Axiata Group Bhd, CIMB Group Bhd and IHH Healthcare Bhd are regional champions. They are among the G20 companies under the programme that saw their market capitalisation triple to RM386 billion from May 14, 2004, to July 28, 2015 (the last day of the programme), hitting an all-time high of RM431 billion on April 7, 2015. The G20 companies’ total shareholder returns grew 11.1% per annum over the same period.
While graduation was a significant milestone, “it is only a small breather along the way of a lifelong journey of continuous improvement. Like all good graduates, graduation indeed means it is not the end, but just the beginning”, Azman wrote in the programme report card of sorts.
Indeed, work is never done because the bar keeps getting higher and new challenges will emerge.
But having built a stronger and bigger Khazanah over the past 12 years, Azman can afford to sit easier and reap the fruits of having a strong team.
“I am accepting The Edge’s [Billion Ringgit Club’s Value Creator: Outstanding CEO of Malaysia] award together for myself, the senior leadership team and the staff. The senior leadership team members are very good and accomplished as individual professionals with solid backgrounds, and as a team, they complement each other. There’s a good balance, a good mix and diversity. We have a beautiful team. Whatever success that Khazanah has achieved, the CEO is the frontman, but he is supported by a very strong team. I’m very proud of them,” Azman says.
His success formula: “It is about building an institution” rather than individual glory.
“Using football as an analogy, winning a championship one time is not easy, but to win it consistently, that’s even tougher. That’s why it is about the institution. The real test is beyond the incumbent. That’s the real test of an institution. While strong leadership makes an impact, a strong institution makes a lasting impact. Bank Negara and Petronas are good examples,” he says.
“The biggest test for any CEO is: Can you find a successor who can do better than you? You must want this ... like parents who want their children to do better than them. If we’re talking about value creation, the true test is, can we sustain that? The only way is to build a strong institution.”