Seeds of MAS woes planted by Malaysia Inc, say observers

By admin-s Last updated May 21, 2014

(MM) – Malaysia Airline System Bhd’s (MAS) chronic financial problems are the result of flawed implementation of the Malaysia Incorporated policy in the 1980s, according to observers.

DAP’s Kluang MP Liew Chin Tong said MAS — and by extension taxpayers — have suffered from what he described as former Prime Minister Tun Dr Mahathir Mohamed’s misguided attempts at privatising public enterprises, costing the country billions of ringgit in the process.

Liew said the airline’s decline began when Dr Mahathir brokered a privatisation deal that saw Tan Sri Tajuddin Ramli take out a RM1.79 billion loan in 1994 to buy a 32 per cent majority stake in MAS.

“In a big way, this was one of the key components along with the ‘Look East’ policy, Perwaja Steel, Proton and Plus Highway that made Malaysia Inc, and now all the problems are coming home to roost after 20 years,” the former Penang Institute chief told the Malay Mail Online when contacted.

Malaysia Inc, introduced by Dr Mahathir in 1983, hinged on privatisation in the government’s bid to cut bureaucracy and form closer working relationships between the public and private sectors.

Tajudin, a former MAS executive chairman, was badly affected by the 1997 Asian Financial Crisis and ended up selling his stake in the ailing airline to the government for RM1.79 billion — or RM8 a share — the same he paid in 2001; the company’s closing share price at the time was RM3.68.

But the flag carrier’s problems did not end there. In the years since, MAS has undergone three business turnarounds at an estimated cost of nearly RM20 billion to the government.

The results? A share price that fell to 15 sen on Monday, the lowest since the 1997-98 crisis, on the back of a Wall Street Journal report that portrayed Prime Minister Datuk Seri Najib Razak as saying it may be too late to rescue the airline from bankruptcy.

“I think Khazanah cannot run from its responsibilities. All this concern about quarterly reports and the politicisation of MAS’s quarterly reports… the whole company is more interested in creative accounting instead of the overall health of the company,” Liew said.

Still, MAS’s dire performance under Khazanah is not an isolated case, as one aviation analyst points out.

Mohsin Aziz, who is attached with the Maybank Investment Bank, said that postal services firm POS Malaysia and national carmaker Proton, both former Khazanah wards, only improved on their performance after both were sold to DRB-Hicom.

“What Khazanah did in the past has not worked, so this time around they have to try to solve the problem in a different way. Whether you want to say it’s a failure or it didn’t work, either way it’s not too far from each other,” he said when contacted.

Mohsin and Barisan Nasional’s Pulai MP Datuk Nur Jazlan Mohamed both proposed that the government seriously consider offloading its stake in MAS and finding a capable private investor to take over the airline’s operations.