By LIM SUE GOAN
Translated by SOONG PHUI JEE
Sin Chew Daily
Coincidentally, two major state-owned enterprises are facing losses. Malaysian Airlines (MAS) suffered a large net loss of RM2.52 billion for 2011 due to rising international fuel prices, while national car maker Proton Holdings Bhd suffered a net loss of RM88.2 million for its third quarter due to the decrease in sales.
They are heavily government assisted enterprises. However, they are still suffering from large losses even so many efforts have been made to assist them. It is now the time to deepen reforms.
The financial relation between MAS and the government used to be chaotic. In 2000, MAS was facing great losses and the government bought back its shares from its then-chairperson Tajudin Ramli, at RM8 per share instead of the market value of RM3.68. The moved was described as a rescue operation.
However, MAS was still unable to fly high. In August 2005, MAS submitted a ghastly performance and recorded losses of more than RM280 million for a single quarter, and RM1.26 billion for three quarters. It was also said to have purchased two paintings worth RM1.55 million to decorate the chairman's office. In December of the same year, the then insignificant Datuk Seri Idris Jala was assigned to serve as MAS' chief executive officer and managing director. He and his management team sold the MAS building in exchange for RM2 billion of cash. He turned losses into gains after two years and was later appointed a Minister in the Prime Minister’s Department.
The warrant exchange between MAS and AirAsia does not seem to help much. Instead, it has harmed consumer interests. For example, MAS low-cost carrier Firefly cancelled its routes to Sabah and Sarawak to benefit AirAsia. It is also obvious that the cancellations of AirAsia X's routes to Mumbai, New Delhi, Paris and London are meant to help MAS.
The government has also repeatedly provided assistance to Proton. Proton bought the MV Agusta in 2006 for RM368 million and later sold it for only one euro (RM4.5) to an unknown company in Italy - Gevi SpA. The MV Agusta was a motorbike manufacturer and there was no way for Proton to cooperate with it.
In 2008, Harley Davidson of the United States bought the MV Agusta at RM352 million, enabling Gevi SpA to earn more than RM300 million.
And now, Bank Negara has tightened the conditions for car loans. It is expected that the sales of Proton cars will continue to drop. Proton has also been affected by the British Lotus' operating losses of RM167 million. Its cash has been hollowed out by Lotus. I wonder what is Proton's management team thinking as it still refuses to sell Lotus even after facing losses for 15 years, since it was bought in 1996.
The massive losses are closely related to absurd decision-making. Today, former Prime Minister Tun Dr Mahathir Mohamad is accused of being responsible for RM100 billion in losses and the alternative coalition has called on the Prime Minister to immediately set up an independent commission to investigate the allegations.
World Bank President Robert Zoellick recently suggested that Chinese state-owned enterprises enjoying a monopoly status should return wealth to the people.
We do not expect Malaysian state-owned enterprises to return wealth to the people, but just hope that they can regain their nerves and no longer dependent on the government.
Government departments have implemented the Key Performance Indicator (KPI) system. Salaries of state-owned enterprise management staff should be in proportion to their performance. They should not enjoy increment and bonus when the enterprise is facing losses.
State-owned enterprises will continue to suffer from losses if accountability system is not implemented.