GLOBAL CRISIS AS TURNING POINT FOR HALAL BUSINESS
Posted On May 15, 2009
This presentation on “Global Crisis as Turning Point for Halal Business” was presented at World Halal Forum 2009 on May 5, 2009 at Kuala Lumpur Convention Centre.
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7 Responses to “GLOBAL CRISIS AS TURNING POINT FOR HALAL BUSINESS”
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Dear Muhammad Akhyar,
Thank you for your interest in Business Jihad.
For your information, Johor Corporation (JCorp) was established via State Enactment and started operations as a Statutory Body or Government Agency from August 1, 1970.
As a Statutory Body, (and not a company registered under Companies Act), JCorp can function without any paid-up capital. We started business through loan capital of RM10 million provided by Johor State Government that JCorp had fully paid back in the first two years.
Part of this loan capital was used to purchase a rubber and palm oil plantation at Tebrau, Johor Bahru, that we still substantially own and being developed into Bandar Dato’ Onn.
On the waqf side, so far JCorp had extablished the waqf through transferring into waqf its own portion of PLC shares at net asset value equivalent of RM200 million in August 1997.
Alhamdulillah, JCorp is well on its way towards becoming the first Waqf Corporation for the benefit of the ummah.
Members of the public are welcome to participate, and we are looking forward to the day when tens of thousands will become members. Also, there is always opportunity for Muslims to waqaf shares and equity that they own, especially in listed companies to JCorp and Waqaf An Nur Corporation Bhd.
Salam Jihad and TQ,
Muhammad Ali
Dear Tan Sri,
I am very delighted to read your blog on Business Jihad.
Could you please share with us the beginning story of how JCorp was initially established? Was the paid-up capital provided fully paid by the Johor State? Were there certain individuals who donated their wealth in the form of waqf? How much was the initial paid-up capital? How do you select the companies whose shares were finally purchased by JCorp?
Your reply is highly appreciated.
Salam, Akhyar
Alhamdulillah,
There is still someone in this country who have the courage and determination like you Tan Sri. May Allah bless U all the way.
Somehow, I am wondering whether ‘business jihad’ ideology is also moulded among employees and JCorp staff also?
salam Tan Sri,
My pleasure to have recevied your well deliberated response to my earlier posting.
My short response is that I will share the thoughts with my colleagues and would post to you should there be any further inquiry,salam.
tq.
Syamsul.
Sdr Syamsul,
Following is my detailed reply regarding your comment on the crisis and JCorp’s turnaround. If you and others are interested in getting more details regarding the subject matter, I have also separately posted an article under the title: “Global Crisis, Business Jihad and JCorp’s Turnaround” for your reading pleasure.
To my mind, today’s global crisis that has taken such a severe toll globally had been triggered principally by capitalism’s own excesses, flaws, contradictions and inherent weaknesses. This is not to say that capitalism is all bad, for it has indeed raised the world’s prosperity to historically unprecedented levels. It is only the excesses, divides and moral indifference other than its extreme volatility that had caused tremendous damage and misery.
Fortunately for Malaysia and many other Asian countries an earlier “Asian Crisis” that occurred in 1997 (also triggered by capitalism’s own by-product of greed-driven excesses, albeit regionally), had taught lessons that had simply prepared Malaysia and these Asian countries to better able to face the 2008 crisis. (Of course, if the whole world economic system were to subsequently collapse, that is another story!)
Thus, most Malaysian companies and corporations, Johor Corporation (JCorp) included, are well-equipped to ride through the current crisis. Past high gearing levels, for example, and funding growth through excessive debts and high borrowings are now things of the past. Furthermore, when the worst impact of the Asian crisis hit them in 1997, Malaysia had vigorously acted to put in place strict regulatory framework and institutional reforms that had resulted in greater financial safeguards and corporate disciplines by players in the system. It is noteworthy that Malaysia’s highly successful policy reform formula was uniquely developed in its own mould, after the Mahathir leadership’s courageous and unprecedented rejection of an IMF-World Bank’s off-the-shelf imposed solution.
Thus JCorp, for example, had suffered losses in excess of RM 2 billion over the 1997 crisis, with its survival threatened by debts and long term liabilities in excess of RM 3.6 billion. Alhamdulillah, in spite of all these, JCorp was able to reinvent and renew itself and put in place a Corporate Restructuring Master Plan (CRMP) endorsed by the Malaysian authorities that was instrumental to its amazing turnaround. This new corporate blueprint and road map has now been market-tested for more than a decade, and was instrumental in enabling JCorp to ride through the 1997 crisis, and insya Allah, the current global storm as well.
We at JCorp are all indeed grateful that JCorp was in fact able to more than just turned itself around. More than that, the 1997 crisis had enabled JCorp to grow and expand several of its core, strategic businesses that had contributed significantly to the turnaround and turn them into among market leaders in their respective businesses. Miraculously to some observers, the JCorp Group was even able, in 2006-2007, to seize a new strategic business opportunity by dramatically and successfully acquiring Malaysia’s biggest Foods and Restaurants business (KFC and Pizza hut networks) to further strengthen its corporate presence.
In my view, if there is to be one key success factor to be singled out that had the greatest impact on JCorp’s turnaround, that factor will be JCorp’s Business Jihad ideals! I have therefore outlined in the following paragraphs the strategic link between JCorp’s Business Jihad and the fundamental role that Business Jihad had played in JCorp’s turnaround.
JCorp’s Business Jihad As A Holistic Strategic Response
How was JCorp able to turn the extreme challenges of the crisis situation into entrenching itself as one of Malaysia’s formidable corporate players? How was it able to rebuild corporate capabilities, assets and businesses, and ultimately even seize an unusual opportunity to acquire a business with market leadership position? What was the powerful motivational force harnessed by JCorp to turn itself around against all odds? What was the key success factor that had enabled it to mobilise such fierce will and tenacity from among its people, considering that personal profits and material riches (either in the form of stock options or MBOs or promises of privatised wealth) are not the reward options chosen to motivate and drive its people?
Indeed, no business turnaround exercise can succeed anywhere without the fierce will, tenacity and determination of everyone involved, especially those in leadership positions.
In the conventional capitalist system, turnarounds are usually achieved through an aftermath of Schumpeterian “creative destruction” process. In most instances companies have to go bankrupt, busted and “destroyed’ and assets and businesses acquired by another stronger player before a turnaround can happen.
From another dimension, in the words of capitalist players describing the current global crisis situation, turnaround and end of crisis can only come “after greed has once again replaced fear” as the principal driving force in the market. In other words, according to conventional capitalist wisdom, it is avaricious personal interest to cumulate riches and wealth that must once again rise to drive the capitalist system to turn itself around. Should greed and extreme self interests of the global business and corporate elite be allowed to rejuvenate, to dominate the system and turn its damaging forces on the rest of us all over again?
JCorp’s Business Jihad has obviously been a critical driver in its past turnaround. This same empowering ideal is now forwarded together with the institutional force of the Waqaf Corporation, as an alternative way of doing business in a post-2008 crisis environment. Hopefully Business Jihad can also become JCorp’s initiative to incrementally reform the global economic system and undo the divisive and highly damaging impact caused by the prevailing greed-driven system for a better world.
Many had assumed that JCorp, being a state-owned GLC, may have taken advantage of access to powerful political networks and governmental support and resources. JCorp had indeed benefited tremendously from the institutional infrastructure support that Malaysia had put in place, post-1997, to turn around companies, as extended by the CDRC (Corporate Debt restructuring Committee), Dana Modal, and such. These instruments, however, were not GLC-exclusive, as they had been made available by the Government to assist all companies, private or public.
From my vantage point as JCorp’s CEO, together with leading colleagues who had to bear the brunt of the responsibility for JCorp’s turnaround and renewal, the choice was quite clear. To depend on government bailout means a loss of invaluable corporate autonomy so important to the future of a market-driven enterprise. At the same time, to revert to adopting the conventional capitalist route of a “greed-driven” approach was simply not an option for a corporation operating in an Islamic environment determined to institute system renewal away from capitalist extremes and divides.
After all, as early as in May, 1995, in my first book, “Membujur Lalu … Satu Pengalaman Orang Melayu Dalam Pengurusan,” written to outline the new paths that a Muslim-inspired corporate organisation should take, the concept of a Business Jihad was already introduced and articulated. (See the Conclusion, pages 301-316). When the crisis occurred in July 1997, whilst laying down effective turnaround strategies, JCorp had therefore simply seized the opportunity offered by the crisis to begin the process of translating the Business Jihad ideal and vision into reality.
Thus the Business Jihad ideal was indeed the fundamental key success factor in JCorp’s turnaround from the challenges of the 1997 crisis. It has also provided the foundation for extraordinary corporate resilience and tenacity to see JCorp through the current challenge. In fact the current global crisis is another round of opportunity for JCorp to further articulate and advance its Business Jihad aspirations to reform business and economic system and indeed to renew society in Islamic terms. Because clearly, in the light of JCorp’s experience, Business Jihad, is a powerful ideal whose time has come, to be adopted and adapted to reform and renew our busines-driven and corporate-led economic system into one that can actually translate Islamic aspirations into reality.
To summarise, the following are the strategic considerations why JCorp decided to adopt Business Jihad, and why Business Jihad had been such a key element in its survival and turnaround:-
• Source of empowerment
A Jihad cause, in its traditional context, is a source of abundant energy and empowerment. Indeed, a Jihad call has to be met with selfless, altruistic extraordinary effort that knows no bounds and limitation, with full submission to the will of Allah.
Business Jihad’s Islamic spiritual roots also provide the further advantage of sustaining public trust and winning society’s undivided support for a cause that is easily accepted as common and shared by all.
• Source of Spiritual Energy
A Jihad call is also a call to mobilise and focus spiritual energy. In a business context, in times of crisis when the only certainty about the future is uncertainty itself, it is vital that a corporate team is able to sustain stamina to stay focused and to continue strengthening the bonds and glue that bind everyone together.
Crisis times are also times of turbulence and unpredictability that can be emotionally challenging. It demands and calls for extraordinary courage, confidence and calm clear-headedness and clarity of vision.
In JCorp’s experience Business Jihad had been able to provide all these as well as the all important binding force in times when total effort, selfless dedication and extreme sacrifice are critically needed to survive.
• A holistic solution
Furthermore, underlining the Business Jihad ideal is the higher aspiration to make business serve a noble cause. In other words, in identifying one’s organisation with the Jihad cause, it demands that organisational effort and outcomes must be fully aligned with the long term best interests of the larger society, of nature, and of creation.
Not only must business pursue profits and add economic value. It must also result in enhancing the doing of what is good through high ethical conduct and moral principles.
The conduct of business will always have a powerful impact and influence on the way society behaves and the way life is lived. Thus business, especially big business and corporations, must behave more responsibly and take a caring attitude towards its impact on society, life and human dignity. Business Jihad is about this holistic vision of the role of business.
• Building bridges to address divides
Also fundamental is the avoidance of causing harm to society, diminishing the quality of life by destroying social institutions or creating divides. One of the most extremely negative outcomes of wild, unbridled capitalism has been the harsh marginalisation and disenfranchisement of the larger segment of humanity, especially those left out of the economic mainstream.
There is at present no effective method of bridging gaps and divides and government efforts alone are unable to bridge this widening divide. It is also obvious that tentative CR programs, and even organised charity and philanthropy as practised are not adequately equipped to address the issue.
There is therefore a need to reinvent and reengineer the corporation itself, so that altruistic and caring attributes can be embedded and institutionalised within this powerful wealth-creating machine.
• Business Jihad to Prosper the World
Finally, Business Jihad, though delivered through an institution that is rooted in Islam, is definitely not and cannot be exclusive to Muslims. All of JCorp’s strategic businesses have never been exclusive to Muslims right from the start - in employment terms, in terms of the partnerships established with its suppliers and distributors, and definitely more so in terms of the customers they serve.
More so that it is undertaken through competitive enterprise. Islam teaches that to succeed an enterprise must be led by the most able and competent (irrespective of whether he/she is a Muslim or not), and the fierce competition in the market demands exactly that.
Business Jihad is therefore uncompromising in the pursuit of enterprise whose end result must be economic prosperity for all.
Furthermore, the nature of business with profit and economic value increments as common denominators cannot but make it inclusive and highly integrative. JCorp’s Business Jihad is also about integrating the JCorp enterprise fully into the global business mainstream. In fact its turnaround had facilitated that fuller integration, as well as forcing it to benchmark all its business performance in global terms.
The only difference compared with the conventional extreme capitalism is the substitution of divisive greed and avarice with Business Jihad’s selfless altruism and positive Islamic values. A case in point is its vestment of ownership of enterprise to a waqaf. When fully materealised JCorp’s Corporate Waqaf institutional concept will also be universally convergent. The long term likely outcome would also insya Allah be equity and social justice for all.
In short, Business Jihad has provided the all important motivational force and empowering energy that have seen us through one crisis after another. That is why JCorp has made Business Jihad as our Corporate Mission!
I would be delighted to respond to any further queries you may have.
TQ and Salam Jihad,
M. Ali
Sdr Syamsul,
Thank you for your comment, and in particular your enquiry regarding JCorp’s strategic response in managing the crisis.
Insya Allah, I shall post a full and comprehensive reply over this weekend, as the issue in question is entitled to a detailed and slightly elaborate response.
Salam Jihad,
M Ali.
salam Tan Sri,
I came accross an article written by Chief Economist of Frost & Sullivan yesterday 19th May appeared in Busines Times on-line that a number of big firms including HP, Famos Amos or even GE were ‘born’ during economic crisis. Obviously, these corporations saw crisis truly as opportunities rather than difficulties. Yet it is easy to say.
Your earlier statement that there are quarters among the Muslims esp in Malaysia who are ‘anti-business’ is somewhat hard to differ. To an extent, some of them even ‘hate’ salespersons. I keep reminding myself that the Prophet pbuh was a trader.
Probably you may care to share the ups-and-downs of JCorp in braving thru the crisis. The saying has it; ships are safe at port but that is not what ships are meant for.
Expecting your thoughts,salam.