Stay away from business, please! — Lim Sue Goan

JUNE 2 — Despite the facts that there are many failing GLCs and incidents of government bailout, many still have no idea what is company management, business responsibilities and national resources.

Take the MAS restructuring for instance, this is a commercial decision and no government resources must be utilized to assist retrenched workers

However, Umno’s MP for Titiwangsa Johari Abdul Ghani has urged the government to take out RM236 billion set aside for 11^th Malaysia Plan in advance to help the retrenched workers.

This RM236 billion is supposed to be invested over the next five years, and is closely related to the future of this country and her people. How can we not tell the differences between public and private, and abuse the money on some GLCs or individuals?

Layoff is a common practice to cut down operating cost. The company involved must act in accordance with the law to provide reasonable compensations so that the retrenched employees can have the means to look for other jobs. Retrenchment is not the end of the world and there is no need for the government to offer a hand.

Perhaps retrenchment in a GLC is not that common because we have the government to “protect” them.

Retrenchment is nevertheless very common in the private sector. For example, CIMB has offered a mutual separation scheme for its employees as a way to save the company up to RM600 million in operating cost every year.

Malaysia airline indeed needs a slimming exercise as the 20,000-strong workforce is too heavy a burden for the flagging carrier.

Consequently expenses must be cut and modus operandi changed so that the airline can take to the skies once again.

The government is itself strapped for cash now and it can no longer pump in the money to salvage MAS. The airline company must stand on its own feet.

Even though Khazanah has appointed Christoph Mueller to take over as the CEO of MAS  New Co, the company’s RM6 billion could still intervened by politics, making it hard for the airline to really rise again.

As a matter of fact, the country has already pumped in tens of billions of ringgit to bail out MAS over the years. The problem is not just about mismanagement but also malpractices. For example, the catering company was set up by the relatives of MAS senior management. A nasi lemak set meal is quoted an eye-popping RM120.

Many are still unrepentant in the face of MAS’ predicament today. Mueller has revealed that the airline provides some 180 types of allowances for its staff, including bicycle allowances.

MAS has itself to blame for its own destiny. To be honest, the government has been excessively generous in the past, not taking any action against the erring managers.

MAS’ problem tells us that the government should stay away from business or taking part in any commercial plan, especially in a country that lacks transparency and good governance.

1Malaysia Development Bhd (1MDB)  is yet another classical example.

If the government really wants to involve itself in business, then it should only hire capable people while drawing a clear line between itself and business. Professional managers know what are the best decisions for their companies and will act impartially.

The worst thing is that the government provides the incentives and appoints own people to sit on the board but refrains from taking remedial actions when something goes wrong with the company, sinking it deeper into the pit of despair.

I guess that 1MDB was set up by the Treasury to help the government earn more money. However, the government carries with it too much a political burden while the company management has been overly ambitious, acquiring strategic land bank in the capital and independent power producer at exorbitant prices. This has caused its debts to swell beyond control.

Perhaps the company’s directors thought they had the government to back them, so they just ignored all the business risks.

The damage has been done to 1MDB’s image even though it has forwarded a restructuring programme. Under prevailing economic conditions, it will be very difficult for the company to service its debts, including RM2.5 billion in bank interests every year.

Malaysia Airlines has to sell its headquarters building and aircraft to stay afloat, and 1MDB is very likely to adopt the same strategy. Unfortunately, the authorities still fail to see the root causes of the problem, for not pursuing those who should be held accountable.

Our political leaders have not picked up some valuable lessons from failed commercial projects in the past such as Perwaja Steel and PKFZ. This time, the debacle could as well develop into a political crisis.

Finally, the government has to pay a very hefty price for its own misdeed.

* This is the personal opinion of the writer and does not necessarily represent the view of the Malay Mail Online.