To fulfil my obligation as a member of the Perak Advisory Council, I have written an article pointing out 13 ways to improve Perak’s economy.
Item 13. As you know, most people cannot find work in Perak and they have to go to Singapore, Kuala Lumpur and other places to work. To create more job opportunity, the Government should allocate some money to give out soft loan to help start-up companies because they cannot get loan from commercial banks as they do not have adequate immovable collateral.
I suggest the Government invite a few experienced business men to be committee members to select suitable loan applicants.
Based on my own experience, I wish to elaborate the importance of start-up companies and their difficulties in getting bank loan to expand their businesses.
How we founded Mudajaya
Muda River Irrigation Project in Kedah and Perlis 1965
Before the implementation of the irrigation project, Kedah and Perlis could only grow one rice crop per year, relying solely on the North East monsoon rain. To be able to grow 2 crops of rice per year, our Government borrowed USD 100 million from the World Bank to implement the irrigation project which supplied water during the dry weather season.
In 1953 I had a scholarship from JKR to study Civil Engineering in Technical College, presently known as UTM. I qualified in 1957 and I had to work for JKR for 5 years to discharge my scholarship obligation. Between 1962-1967 I worked as consulting Engineer in partnership with Yap Lim Sen my collegemate.
After working for 10 years I could only save Rm 50,000. You might be wondering why I could only save Rm 50,000 after working for 10 years. My pay was only Rm 760 per month as a JKR Engineer.
In 1966 I joint ventured with 3 small time irrigation specialist contractors who could not even speak English, to undertake several contracts in the Muda River Irrigation Project with my Rm 50,000 as my capital contribution. My other 3 partners did not have cash but they had only dragline excavators which were suitable for excavating irrigation canals.
Banks do not accept movable assets as collateral
All banks required immovable assets like houses or land as collateral for loan. The banks would not accept excavators as collateral. Fortunately, Hong Kong and Shanghai Bank (HSBC) had an experienced Manager called Donald Richie who understand our need for more funds to complete my irrigation contracts. After listening and understanding of our construction contracts, he gave adequate loan so that we could complete all our contracts. With Mr Richie’s help, we could complete our contacts with handsome profit. That is why I suggested Item 13 as I mentioned above.
That was how we started our company called Mudajaya.
How we founded Gamuda, IGB and IJM
When Mudajaya had too many contracts, we started another company called Gamuda. At the meantime, my collegemate and I started a property development company which eventually became Ipoh Garden Bhd.(IGB) which was listed in KLSE.
IGB bought Mudajaya and another construction company called Jurutama. We combined all the 3 companies known as IJM Corporation which was listed. IJM has grown over the years and currently, it has a market capitalisation of about Rm 12 billion.
Conclusion: As I mentioned above without Mr Don Richie’s giving us loan without immovable assets, we could have founded Mudajaya, Gamuda IGB and IJM Corporation. All these companies have created thousand of jobs and some of our former empoyees started their own companies, thus creating more employment.
Currently, all commercial banks do not give out loan without immovable assets. That is why I proposed our Perak Government set aside some funds to help start-up companies to help them expand their businesses, as a result, creating more employment.