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Desa Cattle is now the pride of Sabah
Published on: Saturday, November 19, 2016

By Datuk John Lo
FOR years, the standard and accepted perception of a GLC [Government Linked Company] run business is one of bad management, losses year in year out and raked with corruption.

For those who still hold such a view, please change it now. I say this because most of Sabah’s GLCs have been turned around and made profitable in recent years under the Musa administration. I have the pleasant experience of witnessing the change of management style when I visited Desa Cattle on 7th November with some friends from Myanmar and Australia.

I was a director of KPD many years ago. Desa Cattle then was under the management of some Australians.

Though there were little cleanliness issues, it was bleeding financially all the time, as was true with most other GLCs then.

As my foreign friends and I were on the way up to Kundasang, I could not help being imbued with some trepidations, not knowing what to expect as I have not visited Desa Cattle for more than 15 years.

On approaching, I could see there are more buildings. On arrival, the Desa Cattle that I have known has been transformed beyond my imagination, a refreshing surprise and as a Sabahan, a sense of pride swelled in me to show off Desa Cattle to my visiting friends!

Desa Cattle 2016 is a lot more than the milk production centre that I knew. It now offers several other dairy products, from a variety of cheeses including tasty brie’ [my favourite], to ice cream and yogurt. On offer to visitors were also cakes and pizzas! The fresh milk was as good as any in the best milk producing country. The Desa Cattle management has succeeded to combine dairy business and tourism very well.

I have seen and met tourists of 6 nationalities, most of whom were with their families. There were quite a few tour buses too! Desa Cattle is better than a few dairy farms that I have seen in New Zealand and Australia.

Now we have a better one to visit at our door step!

Layout for the entire place is efficient and tourist-friendly with clear directional signage [rare in Sabah].

Visitors and their families could stroll around at ease as safety measures have been thoughtfully laid out.

Apart from fresh milk and good food, there were two highlights, feeding calves and milking of the cattle.

Sheer joys to watch children with feeding bottles for the young calves, stroking them lovingly! What a sign to behold!

A friend said to me that Desa Cattle was in a bad shape 9 years ago. Only a few days ago, a veteran vet told me that Desa Cattle is now as well managed as any top-class cattle farm in Australia or NZ.

Seeing Desa Cattle that I used to know and the Desa Cattle of 2016, I must congratulate the management for the transformation of Desa Cattle into a vibrant place and a source of joy and pride for Sabahans.

Equally important is that a profitable Desa Cattle also contribute to the overall tourism industry.

I could imagine the management’s thinking when planning for its grand design – ‘If the Australians can do, we can do it better!’

Desa Cattle is a good case study on how a GLC should not be run when it was losing money in the past and how a GLC should be run profitably like now.

Being a GLC, political considerations and politicians are inherent important factors. The pivoting point is simply this, will these two factors become a millstone around the GLC’s neck or a plus factor for its success.

In the case of Desa Cattle, like other GLCs in Sabah, we have seen these 2 factors transiting and transforming from years and years of being huge financial liabilities to profitability in last 10 years under Musa.

The reasons are worth examining. The success story of Desa Cattle is worthy of emulation.

The bad old days of losses and mismanagement did not just happen, just the same as the transformation to profitability could not happen on its own.

In the day of losses, it could be observed clearly there was a high degree of indifference and negligence at the highest political level resulting in mismanagement by the Board of Directors and top management.

In many cases, money allocated for these GLCs by government had disappeared without accountability.

To some politicians whose conscience was in short supply, they treated the GLCs like their personal bank accounts.

Reflective on the very bad shape the many GLCs were in, the State Government in the past had been forced to provide allocations in the State Budget to cover up their losses. Total amount must have exceeded several billion Ringgit.

There was no effort to rein in the wasteful perennial losses.

Not anymore. Nowadays, the GLCs under Musa have become a different breed of corporate animals, Desa being a good example, that can contribute several hundred million Ringgit to the annual budget from their dividends to the State Government. Looking at the performance of GLCs of the Federal Government and other states, there are far too many of them which are underperforming like those Sabah GLCs in the past. If the PM wants a true and genuine transformation, he needs not look farther than the performance of Sabah GLCs in the last 10 years.

Let’s look more closely on the reasons behind the success of Desa Cattle and Sabah’s other GLCs.

Like I have said, it is no accident that their past failures and now their success can happen like simply falling from heaven.

To let these GLCs fail is the easiest way out. All that it takes is for the top political leadership to let the politically appointed Chairman, Board of Directors and management “run amok”, without setting goals, standards of accountability and profitability expectations.

In many cases, corruption was rampant. Added to this is the fact that some past chief minsters had failed to take notice and/or take preventive actions on numerous shortcomings of these GLCs and continued to provide budget allocations to cover their losses.

Appointments of Chairmanship and Board Directors were plum political rewards for political henchmen.

The situation became so bad that these losses became an accepted norm.

It does not need brain or courage to let these GLCs lose millions. After all, it is public money.

But GLCs can be profitable as has been proven in recent years and can be major economic boosters if there is political will, genuine desire and good quality political leadership.

The next challenge is selection of Chairmen, Board Directors, professional managers, set goals and standards of accountability. Knowing past bad track records, it takes strong leadership and lots of courage to put the Chairmen and Directors of GLCs on a short lease and tell them in no uncertain term that “enough is enough” no more indiscriminate losses, self-interest and corruptions. Give them “must make profit or else” ultimatum.

Once all these are in place, profit will be assured and/or axiomatic, subject to unforeseen inclement circumstances.

Then the management, without political interference and/or conflict of interest pressure from the Board, can truly focus on running the business professionally, concentrating on producing profit, fighting competition, producing innovative ideas and above all, think of ‘out of the box’ solutions.

This is the success story of the GLCs in Singapore. Same goes with Desa Cattle and other successful GLCs in Sabah in the last 10 years.

What has often been unnoticed and under-appreciated is that well managed, profitable GLCs are excellent catalysts for strengthening, value add to other industries and sectors of the economy.

Desa Cattle is an excellent case in point. Having attained profitability and then using its accumulated profits, Desa Cattle has diversified its revenue base and expanded its facilities to cater for tourists successfully.

Tourism, in turn, is a great economic multiplier, generating employment, giving business to transporters, tour operators, tour guides, food and beverages, souvenirs makers, airlines and hotels.

Go and visit Desa Cattle with your family. Seeing is believing.

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