YTL Corporation's Francis Yeoh
The Man Who Brings Water to Bath
One of Asia's 25 most powerful entrepreneurs, he controls electricity transmission in South Australia and water services in southwest England. But what's on his mind right now is some down-home cooking...
The Man Who Brings Water to BathBy Monique Hou
From CommonWealth Magazine (vol. 517 )
It's around lunchtime in the narrow corridors of Lot 10 Hutong, the "heritage food village" in the basement of Kuala Lumpur's upscale Lot 10 Mall. A man in his early fifties with a distinctly Chinese face is bent over his plate, his suit jacket hung over the back of the restaurant chair. He is eating a dish of dark, soy sauce-soaked char kway teow – a popular Malaysian take on fried rice noodles – which set him back the equivalent of NT$100.
"You don't have black bean soy sauce like this one in Taiwan," the man says in Minnan, the language known as "Taiwanese" that originated in China's Fujian Province and is widely spoken by ethnic Chinese throughout Southeast Asia.
The noodle eater is billionaire Francis Yeoh, managing director of YTL Corporation, a highly profitable conglomerate spanning energy companies, luxury hotels, shopping malls and a 4G mobile network.
On Oct. 21, 2011, Yeoh took a private plane to visit the Taiwanese offshore island of Jinmen (also known as Quemoy) from which the Yeoh clan hails. After stepping off the aircraft, he knelt down to kiss the soil of his ancestral homeland.
Yeoh conceived of Lot 10 Hutong – which features the signature dishes of local eateries that have been around for at least two generations – with the culinary preferences of his parents in mind. He wanted them to have easy access to their favorite dishes and snacks such as prawn noodles, char kway teow, and roti, the South Asian grilled flatbread."All four generations in our family eat these. The younger generation has stopped eating these dishes. I really fear they could vanish one day," he remarks.
Jinmen Island is the native land of Yeoh's grandparents. The dormitory, library and auditorium at National Quemoy University were all donated by the Yeoh clan. But in other parts of Taiwan, few people know about the clan's influence and largesse.
In terms of revenue, YTL Corporation is Malaysia's largest ethnic Chinese business. As the largest private infrastructure company and public utility business in Asia, YTL Corporation counts among only a handful of Malaysian multinationals. The conglomerate earns 85 percent of its revenue and profits overseas.
YTL group companies provide electricity to the entire state of South Australia, generate one third of Singapore's electricity, and supply 1.2 million households in the southwest of England with water and wastewater services.
Malaysia's Largest Ethnic Chinese Business
Also part of the YTL empire are two power plants in Malaysia, luxury hotels in France, Japan and other parts of Asia, two upscale department stores on Singapore's Orchard Road, the luxury retail malls Starhill Gallery and Lot 10 Mall, two five-star hotels and two holiday resorts in Kuala Lumpur.
Yeoh was the only entrepreneur in the entourage of Malaysian prime minister Najib Razak when he addressed the World Economic Forum in Davos, Switzerland in late January.
Less than a month later, on Feb. 19, Najib and Singapore prime minister Lee Hsien Loong announced plans for a high-speed rail link between Singapore and Malaysia to be built under a BOT public-private partnership. The new rail link, expected to be operational by 2020, will shorten train travel time for the 315-kilometer distance between Kuala Lumpur and Singapore from six hours now to just 90 minutes, making daily commutes between the two metropolises possible.
In announcing the project at a joint news conference, Najib said: "It will change the way we do business, the way we look at each other, the way we interact." Getting the costly train link back on the drawing board (it was shelved during the Asian financial crisis) was the handiwork of Francis Yeoh, who began to lobby the two governments, raise funds and plan the project seven years ago.
Yeoh is not a newcomer to railway transport. YTL holds a 50-percent stake in two train services linking KL International Airport and the city's central station, and it operates the Eastern & Oriental Express luxury train, which services routes linking Singapore, Malaysia, Thailand and Laos.
The furniture and interior decoration of Yeoh's office in the YTL Headquarters are very British. Visibly relaxed Yeoh sits on an English sofa with his left leg crossed under the right knee, drinking English tea, as he takes time out for an exclusive interview with CommonWealth Magazine. Yeoh was born in 1954, the year of the horse in the Chinese zodiac, which explains the ubiquitous presence of horse figurines in his office.
He charms the interviewer with his witty humor and chats animatedly and eloquently, freely sprinkling his fluent British English with Malay, Mandarin and Minnan expressions.
Forbes magazine lists Francis Yeoh's father Yeoh Tiong Lay as Malaysia's seventh richest man, worth US$2.8 billion, making him a member of the global billionaires' club. Fortune magazine ranked the son as one of Asia's 25 most powerful business personalities.
Yeoh's father, Yeoh Tiong Lay, founded YTL in 1955 as a construction firm. Before Francis took over in 1988, YTL Corporation only contracted small projects such as repairing military camps and building government projects such as armories, schools and clinics.
Under the stewardship of Francis, who has a civil engineering degree from Britain, YTL expanded over the last 25 years into a multinational cross-industry enterprise with seven listed companies and 12 million customers around the globe. The conglomerate is now active on three continents and boasts annual revenue in excess of NT$300 billion. Aside from the Kuala Lumpur stock exchange, stock market listings of YTL or one of its affiliates include Frankfurt, Tokyo, New York and Singapore.
While the rest of the world has caught "China fever," Yeoh has kept a cool head, and remains wary of investing in the utilities industry there.
"Why can't we do it in China? I cannot do it in India yet, nor Vietnam or Indonesia, but I can do it in Singapore, Britain and Australia where the regulatory framework is very transparent. Why am I in Australia, Singapore, and Britain in utilities? Because they have a regulatory framework, there is no black box, no corruption. Business is clear. Malaysia's regulatory framework is not as mature as that of Singapore or Britain or Australia," Yeoh states frankly.
It's not that Yeoh has not toyed with the idea of making it big in China. In the early 1990s he tried to tap the China market, like other entrepreneurs at the time, filled with enthusiasm over the huge opportunities there.
He signed an exclusive agreement with local government officials in Jiangxi Province for the construction of a power plant. However, not much later he found out that similar agreements had been inked with six other competitors. "They don't understand that regulations and contracts are inviolable," he comments.
Yeoh is generally known to be a prudent investor with a long-term outlook.
"What led to the economic disaster?" he muses. "The whole world, including the legal system, government, people, couldn't stop their short-term thinking. It was too good, too profitable, and nobody wanted to question it."
Yeoh's aversion to what he calls "short-termism" becomes apparent in his investment strategy. YTL buys up companies during economic downtimes and favors public utility concessions that guarantee stable returns over a long period. As a result, YTL's compound annual growth rate before taxes has averaged an astounding 55 percent for the past 15 years.
"If you invested in me US$1 million, today it'd be worth US$150 million. That's not too many years. In 30 years you have 150 times profit," Yeoh says.
Yet in the financial markets, the prevailing focus is on dividends and short-term gain, and his company's stocks remain unfashionable.
"Nobody likes to buy my stuff," he concedes. "They like to hear Enron stories. 'What's the next quarter?'"
American energy company Enron's once soaring profitability came derailed by an accounting scandal, and ultimately bankruptcy, in 2001.
Yeoh is also well aware of the importance of good service.
"I got 12 million customers in the world," he says. "I am not a politician. Politicians got five years to do something. I don't have. Because if my service is no good, my 12 million customers will become zero tomorrow."
A devout Christian, Yeoh suggests that business people think long term for the sake of bettering people's lives. "If you are given the privilege of being president of a company, you can make a difference," he says.
Yeoh's war chest is filled with cash in the order of NT$100 billion and he frankly admits that he eagerly awaits the next financial crisis to go on his next buying spree. He believes the bubble needs to burst to bring investors to their senses and restore discipline in the markets. The YTL business empire always expands when others are hit by crisis.
Thriving Amid Crises
In 1992 when Malaysia suffered a major blackout, Yeoh convinced the government to privatize the country's power industry. Subsequently, YTL was awarded the country's first independent power producer (IPP) license.
During the Asian financial crisis in 1997, Yeoh bought up several luxury department stores in Singapore and Kuala Lumpur at bargain prices. He also acquired PowerSeraya Ltd. from Singapore's state-owned investment firm Temasek Holdings. Now called YTL PowerSeraya, it supplies one third of the city state's power needs. In 2000, Yeoh bought a stake in ElectraNet Pty. Ltd., which owns and operates the power transmission grid for the state of South Australia under a 200-year concession.
He is also proud of having shown up Japanese competitors in the construction business.
"Japanese people at that time were competing against us. They lost to us all the time. 'How can a Japanese company lose to a local Malaysian company?'" Yeoh recalls triumphantly.
YTL had introduced slip forming systems which allow pouring concrete round-the-clock by continuously sliding the formwork vertically or horizontally. "We worked 24 hours. We scared them. They woke up the other day and the building was taller by two stories. Because we can do 24 feet in one night"
But YTL, then virtually unknown in the West, truly moved onto the international stage with a takeover bid in 2002.
Beating out formidable rivals such as Hong Kong property magnate Li Ka-shing and the Royal Bank of Scotland, YTL bought Wessex Water, a water and sewage services company in southwest England, from Enron's water utility company Azurix.
Britain's Daily Telegraph commented on the unexpected deal with the irreverent headline "Who the Hell are YTL?"
An opera lover, Yeoh came up with an ingenious idea for showing his clout and winning local customers' trust: He flew the world-known "Three Tenors" – Placido Domingo, Jose Carreras and Luciano Pavarotti – to Bath in England for a free concert. The ensuing flood of thank-you letters showed that public misgivings had been dispelled.
A world in crisis is the best hunting grounds. When his prey is starving, Francis Yeoh is most likely to pounce on the market. Amid the current global economic downturn, Yeoh, sitting on hundreds of millions of cash on hand, is widely expected to go on another hunt for easy prey.
Translated from the Chinese by Susanne Ganz
Water: Wessex Water, British regional water and sewage treatment business
Electricity: ElectraNet, electricity transmission company for South Australia
YTL PowerSeraya, Singapore-based energy company
Two power plants in Malaysia
Transport: Eastern & Oriental Express luxury train, KLIA Ekspress and KLIA Transit railway services linking Kuala Lumpur central station with KL International Airport and the Low Cost Carrier Terminal
Department stores and shopping malls: seven locations in Kuala Lumpur, Singapore, Chengdu and Australia
Luxury hotels and resorts: 17 locations in France, China, Japan, Malaysia, Indonesia and Thailand including The Ritz-Carlton in Kuala Lumpur