By Steven Sim, MP for Bukit Mertajam
International media reported that looters have descended to the crash site of MH17 to salvage leftover valuables from the tragic flight.
On the other hand, there are other types of “looters”, the crony capitalists, who are waiting to plunder what is left of MAS as it faced the worst ordeal in its operation history.
While we are rightly concerned about the victims of both MH370 and MH17, we must also be concerned about the proposed privatisation of MAS which will involve billions of Ringgit in national assets and the future of our national carrier as well as its employees.
Undeniable facts: MAS needs to be revamped
It is undeniable that MAS needs to be revamped thoroughly. This is evident in its financial performance – MAS recorded a loss of more than RM443 million in the first quarter of 2014, compared to a loss of RM279 million in the same period the previous year. In 2013, MAS reported a total loss of RM1.17 billion. And the government has on numerous occasions forced to bail out the company.
Even employees of MAS, represented by the MAS Employees’ Union (Maseu) complained of bad management by senior executives of the company and had pressed for the resignation of, among others, the company’s CEO Ahmad Jauhari Yahya.
The Executive Secretary of Maseu, Mohd. Jabbarullah Abdul Kadri in a media report said that, “MAS is losing RM4 million daily despite having an 80% load factor. This means the way it is doing business is not right”.
In fact, former Prime Minister,Dr. Mahathir himself has commented that only privatisation and the withdrawal of Khazanah Nasional Bhd., who is now the majority shareholder, can save MAS. In other words, sell MAS to other private business entities.
Warning: MAS leftovers will be devoured by private profiteers in the name of privatisation
There are already indicators that corporate vultures are now hovering in the sky and crony capitalist looters are waiting to descend unto the national airline carrier to ravage what is left of the company with the excuse of overhauling and rebuilding MAS.
We should not forget, MAS has been privatised before. In the 90s, during the times of Dr. Mahathir as Prime Minister, businessman Tajuddin Ramli was given a loan of RM1.79 billion to purchase a 32% majority share in MAS as part of the larger privatisation policy of Dr. Mahathir. However, the government later has to bailout Tajuddin by buying up his shares with the same price of RM1.79 billion, that is RM8 per share compared to the price of MAS shares at that time, RM3.68 per share.
Proton-AV Augusta scandal may repeat
Privatisation of national assets and companies must be done with the interest of the people in mind. However, under such wounded condition, to sell off MAS to private business entities may cause the government to face situation similar to the 2005 Proton-AV Augusta scandal where Proton sold AV Augusta, which it originally acquired for RM368 million, for only one Euro. Following the sale, Dr. Mahathir himself revealed that two companies, BMW and Harley-Davidson subsequently bought over AV Augusta from the new owner for a total sum of RM800 million.
In other words, we sold off our national assets in a cheap garage sale only to have others pocketing the profit later.
The problem of MAS is bad management
Maseu has accurately diagnosed and explained MAS’ problem; it is not due to low passenger number or whether it is owned by the government or by the private sector. Singapore Airlines, MAS’ peer in the region is under the control of the Singaporean government through Temasek Holdings, yet SIA is able to be profitable.
The problem of MAS is bad management.
Any revamp must involved a thorough corporate restructuring including reassessment of all work contracts especially those of the senior management. The government must not appoint inexperienced officers to run MAS as alleged by Maseu. Political appointment and cronyism must be abolished completely. Any appointments especially to senior management positions, must be made solely on the basis of merits. The performance of the senior management must be reviewed quarterly to maximise the performance of the company.
Another area to be reviewed is the notorious procurement process. For example, MAS was said to have spent about 3% of its annual revenue on procurement, twice the industry standard at 1.5%. An analysis estimated that the difference is a savings of RM200 million a year.
In view of the MH370 and MH17 crisis, the government must not allow the already badly-wounded national airline carrier to be taken advantage off and devoured by corporate vultures seeking to pocket private profit, sell off national assets and may potentially cost jobs in MAS. Restructuring in MAS must begin with its management, the root of its current problem.
*The statement above is part of the speech by Steven Sim, MP for Bukit Mertajam at the special Parliamentary session on the MH17 crisis. The speech was however cut short by the Deputy Speaker who claimed that it is not relevant to the issue at hand.
