Fasten Seat Belts!

When Tajudin drops phrases like "tough job" and "long day," he isn't exaggerating. As executive chairman of Malaysia Airlines, he is trying to wrench a stodgy, state-owned money-loser into a top international-class carrier -- with a country of 21 million critics constantly on his back complaining (rightfully) about everything from flight delays to thin sandwiches. If newspaper headlines, letters columns and remarks from lower-echelon politicians are anything to go by, Malaysia Airlines is probably among the least popular institutions in the country.

And Tajudin's challenges don't end there. When the ambitious entrepreneur is not in the MAS hot seat, he is keeping an eye on his sprawling business empire, which includes Technology Resources Industries (TRI), the largest cellular phone operator in Southeast Asia. TRI's struggle has been to remain buoyant in an increasingly liberalized sector since it lost its national monopoly about three years ago. No wonder Tajudin spends so much time shaking people's hands.

If he is worried, Tajudin doesn't show it. Throughout (or despite) it all, he maintains his infectious smile and dapper style. How does he do it? Part of the answer is that he is an entrepreneur with an appetite for risk and what seems like 20/20 longterm vision. Only seven years ago, when he was just one of many budding Malay entrepreneurs, Tajudin told me about his "3 T" grand plan: Telecommunications, Technology and Transportation. In a decade, he said, "these three industries will be the key. Eventually there will be convergence between them and anyone who has exposure in all three businesses will be a formidable player."

At the time, Tajudin was such a small-time operator that I left the 3 T's reference out of a story I was writing. Even as his empire grew, I remained skeptical, though Tajudin never failed to bring up the 3 T's topic in subsequent interviews. A Singapore-based investment banker recalls similar sentiments after meeting Tajudin in 1991. "I thought his ideas were too big," the Frenchman says. Now he regrets he did not cultivate better ties with Tajudin: "I should have given him the benefit of the doubt."

To be sure, Tajudin has had major help along the way. He is one of a group of bumiputra (literally, sons of the soil) entrepreneurs -- most of them in their 40s and 50s -- who have been handpicked by Prime Minister Mahathir Mohamad and his pal and adviser Daim Zainuddin. As part of Malaysia's 27-year-old New Economic Policy -- a national social-engineering program to boost Malay corporate ownership -- Mahathir and Daim have concentrated on creating a class of Malay millionaires who could trickle wealth down to the masses as they climb the Asian business ladder.

That has meant not only picking winners but also helping them in every way possible. Some of the richest Malays today owe much of their success to Mahathir and Daim. Interestingly, many of them worked with, or were associates of, Daim in the early 1980s. That is when he ran the Fleet Group, then the business arm of the dominant United Malays National Organization (UMNO), and Peremba, a division of the government's Urban Development Authority (UDA). The list of Daim's disciples reads like a who's who of Malaysian business. Among them are Azmi Wan Hamzah, head of property-based Land & General, Halim Saad, who controls the Renong group, Malaysia's leading infrastructure conglomerate, and Rashid Hussain, a top Malaysian stock broker and banker. All three are in their mid to late 40s. Daim says he regularly hosts lunches for the select entrepreneurs and other associates "so that they can mingle and learn from one another."

After Daim, Tajudin is perhaps the most prominent of the lunch bunch. The son of a rice farmer from Kedah state -- who is more comfortable in Italian designer suits than traditional baju Melayu -- comes across as a nice, genial fellow; someone you would expect to be a bean counter rather than a flashy, high-profile entrepreneur. "You might say he is a pragmatic visionary," says a Kuala Lumpur businessman who has known Tajudin for years. Another of his fans is the unassuming, bespectacled Daim, who usually dons a batik shirt and wears slippers in his spartan office. "What strikes me about Tajudin is his perseverance; he has a sense of commitment and he's not afraid to take bold decisions," says Daim, who occasionally plays squash and badminton with him. "Considering the challenges that he has faced, Tajudin has actually done very well in the past few years."

But others who know him say he has been too aggressive in his attempt to turn the airline around. Tajudin's efforts to push people to the limit, raise productivity and reduce waste in a bloated former state enterprise have not won him many friends. "He's ruffled a few feathers, made a few enemies," says another KL-based businessman. "And in a society like ours there are always knives out for people like that." An aviation analyst of a British brokerage house says when Tajudin took over Malaysia Airlines, "he raised a lot of expectations. He spoke the language: cost-cutting, productivity, global ambitions. The problem has been the implementation of that vision. In a conservative culture like Malaysia's, he has been seen to be too abrasive."

No one expected it to be easy. Until 10 years ago, Malaysia Airlines was known as Malaysian Airlines System or MAS (that's still the name of the legal entity that controls the flag-carrier). MAS service was so poor that wags said the acronym meant Mana Ada Sistem, Bahasa Malaysia for, Where is the system? The listed airline was still shaky three years ago when Tajudin acquired a controlling stake from its owners, Bank Negara, Malaysia's central bank.

Those three years have been turbulent. With Tajudin in the pilot seat, the airline expanded at breakneck speed -- faster than any other major airline in the region -- in terms of routes, revenues and passengers. In that time, capacity has doubled, while staff, management and customers have been scurrying to keep pace. The unions, accustomed to a more laid-back management style, have complained bitterly about being overworked and underpaid. Meanwhile over at TRI, a profit plunge in 1995 (thanks in part to $19.5 million of write-offs) and the departure of top executives, including company president Rosli Man, kept Tajudin from devoting his full attention to MAS. Commentators have been quoted as saying Tajudin had "spread himself too thinly" and could not run two huge organizations.

The rumor mill continues to churn. One recent bit of gossip had it that either Mahathir, Deputy Prime Minister Anwar Ibrahim, or both, were not happy with Tajudin and were forcing him to sell the airline to oil-trader-turned-media baron T. Ananda Krishnan, a friend of the PM. Another rumor said that Tajudin's personal finances were in such a mess that bankers were forcing him to choose between the airline or the cellular company or they would snatch away both.

In late January, Mahathir came out with an unprecedented defense of Tajudin and Malaysia Airlines. The government had "full confidence" in Tajudin, Mahathir said. In a recent interview I asked Anwar about Tajudin. "He's a competent person," Anwar says, "and I don't think anybody in the government has a problem with him." Still Anwar stressed that MAS is "a national airline and there are some grievances about service and staff that need to be addressed."

In several wide-ranging interviews with Tajudin, I raise these leadership issues. "If people want to spread rumors, let them do it," he tells me as he sips tea in the airline's Golden Lounge at Subang. "The rumors don't bother me." He has taken a corner seat in a room busy with First Class customers and, like a politician, occasionally acknowledges acquaintances as they pass. "I am with MAS and TRI for the long haul," he says. "I'm under no pressure to sell my stakes in these companies."

On the contrary, Tajudin says, he is looking at ways to increase his ownership in MAS from 29% to at least 33%, perhaps even up to 51%. He then changes the discussion's direction by saying MAS will soon rival the best in the region -- notably Singapore Airlines and Cathay Pacific. "If we are just a good Malaysian airline or a good regional airline, we would become irrelevant," Tajudin says. "In this business you have to be a big, meaningful player and to do that you have to think globally."

Not an easy task. Tajudin admits that he has not always found it easy coping with all the pressures of running his high-profile enterprises. "You rush from place to place and you get stressed out," he says. His solution: "When I'm in a car that is stuck in a traffic jam I try to meditate. When I'm on the plane I try to catch up on sleep." Finding time for his family is another priority, Tajudin says. He, his wife Farida Abdullah and their four children (aged 16 to 23) are a close-knit group, though the three eldest are studying in London. "When the kids are back home I make it a point to take time off from work to spend time with them." Since he travels to London nearly once a month, he gets a chance to catch up with the kids. "I'd like to think I'm a good father," he says. Tajudin himself comes from a large family: he has three brothers and two sisters. His youngest brother, Boestamam Ramli, is an accountant who runs the private family company Kauthar (see chart, page 52).

Tajudin says his newfound wealth has not spoiled him. "I always used to dress well," he says. "Even when I was at university, the biggest part of my expense was clothes." Now that he controls MAS, Tajudin says he rarely uses his private Gulfstream jet. As for his $12 million yacht, currently under repair in France, he says: "I can hardly go anywhere to take my mind off airlines, routes and business. The yacht allows me to go to places where I can't even think of business. In the middle of the ocean you don't even see planes flying over your head." Tajudin also enjoys gardening at home and owns Malaysia's largest durian plantation -- with 2,400 trees -- in Rawang, less than an hour's drive from KL.

The entrepreneur with the world vision outgrew his hometown at age 12. That was when he was sent to continue schooling in the Kedah state capital, Alor Star, where his aunt lived. After graduating from the University of Malaya in KL, where he studied economics and business, he worked briefly as an officer in the Ministry of Commerce and Industry (now the Ministry of International Trade and Industry). Soon after starting work, an uncle introduced him to the minister, Khir Johari. His advice, Tajudin recalls, was to get out of his cushy post and join the private sector. That led to a succession of jobs, including stints at the then-British-owned Dunlop tire company, and Amanah Chase, a joint venture bank with Chase Manhattan.

But it was as head of UDA Merchant Bank that Tajudin met the man who changed his life: Daim, then a lawyer, urban planner and head of Peremba. Tajudin recalls that he got close to him because he thought he could sell his services to Daim's private companies, which were beginning to expand. By the beginning of 1983, a year and a half before Daim first became minister of finance, the two men had a combined majority stake in a listed bicycle maker, Raleigh Berhad. Daim and Tajudin sold out after Daim became finance minister. Daim denies rumors that he may still be Tajudin's business partner. "I did have some shares in TRI, which I sold at a profit," he says.

In the late 1980s, Tajudin bought and started a few small companies until 1989, when he gained control of Roxy from the family of Tun H.S. Lee, a former finance minister. Roxy, which Tajudin renamed Technology Resources Industries, became the basis of the empire that Tajudin controls today. TRI was able to grow spectacularly, thanks largely to the monopoly it held on cellular phones in Malaysia, which lasted until early 1994. Today, there are five cellular companies and the competition is cutthroat.

TRI is holding its own. It recently announced a net profit of $74 million for 1996 representing an increase of 100% over the previous year. "We now have 900,000 customers and we are adding over 20,000 a month to our cellular service," says Wan Aishah Hamid, TRI's executive vice president. She admits the company has had a bumpy ride recently, but adds that TRI's subscriber base has grown from zero in only nine years. "Every fast-growing organization goes through problems like we have had," she says. Last year, Deutsche Telekom bought a 21% stake in TRI, which offers the company expertise in fixed-line telephony.

There is one venture that Tajudin does not like to talk about. In 1993, he invested $38 million in Rimsat, a company that leased key orbital slots for satellites above Asia-Pacific skies from Tongasat, a venture formed by a group of U.S. entrepreneurs. Tajudin is now suing other Rimsat directors as well as directors of Tongasat, including a Tonga princess, for fraud in U.S. courts. Tajudin says the investment in Rimsat is all but lost, but the episode has taught him a lesson: Be wary of deals that look too good to be true.

Malaysia Airlines certainly does not fall into this category. To gain a 32% stake in MAS, Tajudin took out a $700 million personal loan, the biggest in Malaysian history, through Malaysian Helicopters Services Berhad, a former company in the TRI group. He bought the shares at RM8 ($3) each when the market price was just over RM5 ($2). The share price has languished and is still just above RM5 per share. Can he still service his huge debts? "I have no problems," Tajudin says. "At one stage I had personal debts of over RM2 billion [$800 million]. Now it's down to RM1 billion or so and falling." Tajudin says his personal loans are covered by his shares, which are pledged as collateral. He adds that his loans have not been rescheduled and he has never defaulted, nor is he about to default. "I was a banker for a long time so I understand these things."

Uncharacteristically, Tajudin says he wants to consolidate for a few years before moving into new frontiers. His name, though, has been mentioned as the main bidder for Malaysia Airports Berhad, the company that owns and operates the country's airports. At the moment, the on-again, off-again deal is off. But on the MAS front, Tajudin is certainly not holding expansion back. The airline, with a current fleet of 99 aircraft (including a new long-haul Boeing 777-200 introduced on the airline's 50th anniversary on April 2), plans to expand its international network of 80 destinations.

From now until 2001, MAS will take delivery of 14 more Boeing 777s and 10 747-400s, with an option to buy more. The company has already signed up as the first customer for Boeing's ultra-long-range 777-200X, ordering 15 aircraft for $2.1 billion. With Kuala Lumpur and Washington negotiating an open-skies agreement, MAS wants planes that can fly nonstop from Kuala Lumpur to Chicago and New York.

"MAS has one of the biggest fleets in the region and they have as many routes as anyone else," says Viktor Shvets, regional aviation analyst for Deutsche Morgan Grenfell in Hong Kong. "It is up there among the biggest airlines in Asia." MAS is also one of a handful in Asia that is making money, and its prospects will improve once the $3.7 billion Kuala Lumpur International Airport in Sepang opens in January.

For years the airline has been hobbled because its principal home is the aging one-runway Subang. Built over 30 years ago to cater to 250,000 passengers a year, it now handles 13 million. Despite two makeshift terminals, the airport has not been able to cope. "I bet you can't show me a great airline based at a lousy airport," says Jean-Louis Morisot, regional transportation analyst for Goldman Sachs in Singapore. "The new airport will be the best thing MAS will have going for it." On March 29, MAS announced a $1.35 billion capital-raising exercise to fund the airline's huge fleet expansion and facilities at the new airport. Analysts generally cheered.

But not everyone is a fan of Tajudin and MAS. As another Singapore-based analyst says: "In Malaysia there are two types of visionaries. Those who believe they can really move forward by taking a leaf out of Singapore's book and those who have delusions of grandeur and just aim high to look good. I haven't made up my mind where I'd put Tajudin." Another analyst in Singapore, Morgan Stanley Asia's Lim Chin Yong, says MAS is "an airline that's grown too big too fast."

But the strategy has won two big admirers: James Strong, the CEO of Qantas, and Rod Eddington of Ansett Australia. Eddington who until last year headed Hong Kong's Cathay Pacific, has told his executives that MAS is giving Cathay a run for its money. Another admirer is Richard Branson of Virgin Atlantic Airways, which has a code-sharing deal with MAS. Branson has reportedly said his company can learn a thing or two about growth from the airline.

Morisot says the longterm outlook for carriers like Malaysia Airlines looks fine. Asia is expected to account for more than 50% of international air-passenger traffic by about 2010, up from about 35% now. "A bet on MAS is like a bet on Malaysia's future directions," the Goldman Sachs analyst says. MAS is one of the cheapest stocks in its sector in Southeast Asia, he says, with nowhere to go but up. "Malaysia has a much faster growing outbound market, with 20 million people compared to just 3 million in Singapore and 6 million in Hong Kong," Morisot says.

But Malaysia Airlines will need to think bigger still if it wants to compete with the globe's mega-carriers. Tajudin's solution: strategic alliances. His Malaysian Helicopters owns stakes in Cambodian carrier Royal Air Cambodge and Air Maldives. Now he is interested in buying half of Ansett, either from Air New Zealand or Rupert Murdoch's News Corp. He has also looked at Air Lanka and Middle East Airlines of Lebanon. "These are deals that may or may not happen," says Morisot, "but it shows this guy is a serious player who is thinking ahead."

Far ahead. His next challenge, he says, is to tap into the opportunities that Mahathir's Multimedia Super Corridor will provide. As a first step, information technology experts from MAS and TRI have been meeting to see how they can work together. At the moment, for example, they are working on smart cards and ticketless travel technologies. "You can't run a business looking at today's environment or tomorrow's," Tajudin says. "You've got to have a vision and look ahead five, 10, 20 years from now." And don't forget the 3 T's.