Malaysia’s super rich — old, diversified and Chinese

 

Forbes’ recently released annual list of the top-50 super-rich in Malaysia came with many of the same names we have seen for decades.

My name did not appear and some other high profile names are also strangely absent.

Perhaps their assets and incomes have not been declared in court but it may be that although the absentees are rich in Malaysian terms they are not so rich in global terms.

Centenarian Robert Kuok is the richest Malaysian but ranks only 176 in the world for example, and most of the others do not even make it onto the world list.

This gives the impression of stagnation and no real sense of a shift in the way wealth is created and accumulated.

Around 86% of the list are Chinese who account for 87% of the total net worth.

Although there are many reasons for this, genetics is not necessarily one of them. Entrepreneurial success is poorly correlated with ethnicity, as millions of low-income people in China will testify.

One explanation in Malaysia is that the New Economic Policy (NEP) and Bumiputera affirmative action policies have pushed the Chinese community towards entrepreneurial activity.

The absence of government support has worked to their benefit, reducing dependency and spurring independence and enterprise.

Another factor in wealth accumulation is how old the super-rich are and how long it took them to make the money. Around 58% of those on the list are older than 70 and 86% of them are past 60.

The average age when they started their business was around 30 years old but was younger for those who started before the launch of the NEP in the 1970s.

It also took decades to become wealthy. The average company is around 46 years old and 81% started before the period of liberalisation in the 1990s.

When it comes to where the money is made, the traditional, mainstay sectors of manufacturing, finance and investment, food and beverage, real estate, construction and engineering account for 47% of net worth.

Wealth accumulated through diversified industries accounts for 34% of net worth. Diversification is often a defence against expropriation.

Other sectors account for less than 20% with telecoms at 6% but technology less than 1%.

One of the biggest gainers this year are Francis Yeoh and his family. Their shares in YTL have grown following successful technology investments including the recent partnership with a US technology giant to build AI infrastructure and a data centre in Johor.

The list is also made up of a large number of people who have inherited the wealth of their families.

For the younger generation, more than a third inherited their wealth and among those below 60 the majority have inherited rather than created their wealth.

More than half of the list is wealth accumulated within families and this raises issues of leadership succession for many companies.

This is often noted as a cultural trend particular to wealthy Asian families but it is not unique to Asians.

Family businesses were common in Europe before the devastation of the Second World War and in the US family businesses are still very common.

Apparently there is a Chinese belief that a family’s fortune lasts only three generations: The first makes the wealth, second consolidates and the third squanders it.

In reality many family fortunes hardly make it from the founder to the grandchildren.

This is a common, welcome and unenviable feature of capitalism. Often fortunes go more quickly than they come and new billionaires arise to replace the super-rich who are here today but gone tomorrow. - FMT

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.