Published May 30, 2007

Leading with a firm hand

CapitaLand's no-nonsense CEO Liew Mun Leong tells SIOW LI SEN management should be decisive, not consensual

PRICES of everything from equities to commodities to real estate seem to be rising relentlessly, and a benchmark price set just months ago can look like a bargain today.

So when the chief executive of a property company decides to let a partner share in a deal at cost, it can make some sit up.

CapitaLand announced earlier this month that it had sold a 50 per cent stake in its Gillman Heights project to Hotel Properties Ltd (HPL) and two private funds at cost.

Observers wondered why the property giant didn't take advantage of the current bullish market and get a higher price for the land from HPL. CapitaLand had acquired Gillman Heights for $548 million about three months ago to develop into a residential project.

Explained Liew Mun Leong, CapitaLand's president and chief executive officer: 'Our corporate philosophy is, if you're going to be our partners, we're not going to make money from you. We don't make money from each other, we make money from the market.'

'Then, the partnership can be sustained for other projects,' said Mr Liew, who was picked as the best chief executive for companies with market capitalisation of over $500 million in this year's Singapore Corporate Awards.

Mr Liew, 60, said that land is a raw material for a developer like CapitaLand and to resell it at a higher price within three months is akin to speculation. 'That is not the way we approach a business partner,' he said, adding that CapitaLand had decided early on to develop Gillman Heights with partners, given the size of the project.

HPL's Ong Beng Seng had also not taken such a mercenary approach in their previous joint project, he noted. In 2000, Mr Ong roped in Pidemco Land - then led by Mr Liew - to develop a residential project in London's Canary Wharf, called Canary Riverside. That same year, Pidemco Land acquired DBS Land to form CapitaLand.

The takeover of publicly-listed DBS Land by the government-owned Pidemco Land, described by Mr Liew as 'hostile', was one of corporate Singapore's more interesting deals.

Both Temasek-linked entities had been led by former high-profile senior civil servants. In the case of DBS Land, it was former permanent secretary Han Cheng Fong.

Although the takeover was sold as a merger that brought together two experienced management teams with considerable depth of expertise and knowledge of the local and international property markets, in reality it was more like a clash of titans.

Mr Liew said that not many might have known that after the acquisition, he and Dr Han were asked to compete for leadership in the merged company, by submitting a presentation to show how each would take the company forward. 'It was quite a shock because you acquired the company and suddenly, you could lose the job,' he said.

A committee of independent directors from both DBS Land and Pidemco Land was formed to evaluate who should lead the enlarged CapitaLand with total assets of $18 billion and shareholder funds of $7 billion. It made CapitaLand the largest listed developer in South-east Asia, a position it continues to hold today.

An industry survey was also done to garner opinions of the two men, he said. Some had bet on Dr Han who had higher visibility since he had spent 11 years building up the listed DBS Land. Mr Liew, a civil engineer, had honed his construction and real estate skills through his 22 years as a civil servant which saw him lead a number of infrastructure projects in Singapore including the development of Changi International Airport.

In 1992, he left the public service and joined the L&M Group as chief executive before moving three years later to helm Pidemco Land and Singapore Technologies Properties. The competitive, and some might add, combative, Mr Liew went to town with his presentation and landed the job. Still, there were doubters who wondered how 'an administrator' could do a better job, a label which still rankles.

It was a trying and polarising time, he said. Pidemco Land staffers, who were former civil servants, were more orderly and corporate, while the DBS Land camp had a bolder approach to business. Over the next few years, 80 to 90 per cent of the top DBS Land people left.

Mr Liew is quite clear about the value of former civil servants working in CapitaLand. He continues to hire from the public service. 'Ex-civil servants are people who, during the time they spent in the public service, were conditioned to a high degree of integrity. In fact, they command their price because of their high integrity.'

He does not accept the stereotype of the unimaginative civil servant. If that were true, CapitaLand would not have done so well in the last five years, he said. The group posted net earnings of $1.02 billion last year, almost four times the $280 million in 2002. In Q1 2007, it posted net earnings of $608 million.

Mr Liew points to himself as the prime example of an 'un-civil' servant. In 1992, when he met Ngiam Tong Dow, then permanent secretary at the Ministry of Finance, to say his goodbyes on heading for the private sector, Mr Ngiam observed: 'You've never been in the civil service.'

'In my 22 years, I used to break a lot of rules - and got queried by the auditors,' said Mr Liew. But he hastened to add: 'You don't break rules for your personal agenda.'

He gave an example of what he meant. 'I was an engineer building the Changi Airport and I needed resources, so I made the contractor supply clerical support,' he recalled.

In those days, engineers wasted a lot of time counting the number of bricks that were delivered and the number of workers who reported for duty. It would have been a bureaucratic nightmare to get the extra budget to hire clerks for the work.

Mr Liew made it part of the contract with contractors to supply clerks to the site office. That expanded to providing a Land Rover with a driver, then electronic typewriters when these appeared, and later, the first facsimile machine that was ever plonked in a site office. 'At the end of the day, whatever I did was for efficient work, not for putting things in my pocket or for my personal joy. I jokingly told the auditor, the clerks in the site office - they're ladies - I'm not putting them there to sit on my lap!'

Turning serious, Mr Liew said the hardest part of being CEO is not the business or making deals. 'The hardest part is not business, the most difficult is when you have to fire somebody senior . . . when you think they can't make it.'

It is very difficult to put it across to them because nobody believes they are no good, he said. Such actions are especially hard when there has been no animosity between them. It's not the same as banging the table and firing someone when they've sabotaged the business - which he has done.

'I've learnt to look them in the eye and say, well, we're not going to make it together, in a very matter-of-fact way,' he said. 'That's a very difficult part of the job.'

As for his management style, he believes in being decisive. 'If you come and see me in my room, you will never walk out without a decision. I believe in being consultative and participative, but not consensual,' he said, adding that he does not believe in democracy in management. 'Management is not elected, management is appointed. We are appointed to lead, to deliver certain objectives.'


Market capitalisation of $500 million or more

GOLD: Liew Mun Leong
CEO, CapitaLand Ltd

Market capitalisation of less than $500 million

GOLD: Teh Bong Lim
Managing director, MMI Holdings