Copyright Notice

All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the author, except in the case of brief quotations embodied in critical reviews and certain other non-commercial uses permitted by copyright law. For permission requests, write to the author, at the address below.

Sakmongkol ak 47

Friday 26 November 2010

The big rod on Syabas

Let's just be blunt: The Eurozone's bailout program has failed. It's not solving the underlying causes of the European debt crisis; it might even be making matters worse.
The above is a quote I read on an assessment of what happened in Ireland recently. Ireland is seeking out a bailout from the European Union and IMF.
So let's also be blunt. The government shouldn't be bailing out private businesses even if they are owned by UMNO supporters who went on to form BAPAK. Rozali Ismail is a fat cat happy and contented. Mazlan Aliman is lean and has got that dangerous hungry look.
Syabas or Puncak Niaga does not need an Ireland style rescue. If the government steps in, it should go in IMF style. Bring the big rod and don't be shy using it. Replace Rozali Ismail for instance would be a good initial measure.
The text book strategy, perhaps dished out by people at Khazanah which is essentially Mckinsey-esque through and through so far has been simple: Put up rescue funds, demand reforms in the management and hope those steps rebuild confidence in financial markets that people like Syabas can pay back their giant debts.
This kind of approach is meant first and foremost as a confidence-building measure only, so bondholders could be assured that enough cash was at hand to make them whole, no matter what happened in Selangor or elsewhere for that matter.
Why will this bailout strategy fail? Because investors don't believe it is viable. The strategy is predicated on the notion that the companies receiving bailouts can fix their finances sufficiently enough to restore confidence in their ability to pay their debts. That means Syabas and whoever leads the consortium have to implement steep budget cuts and other austerity measures. Clearly they have been incapable of doing so- they have been spending like wild men, that is why they are facing this problem now. Gentle persuasion is not working.
How about cutting Rozali Ismail's humongous salary first if he stays on? He gets paid over RM 400k a month and he sets up a fund for those who have overpaid to contribute to help out those who can't pay. Why doesn't he volunteer cutting his salary by 50% and give it to the fund? Or give him a golden handshake?
But if we do that (the gentle persuasion or feather teasing method) it will only further depress an already depressed business. Even if UMNO politicians can muster the political will and authority to sustain those policies – and that's a big if -- there's no guarantee they will work to turn the business around. In fact, the bailout-mandated cuts, by suppressing growth, may make it even harder for Syabas and it cohorts to repair their financial position and pay their creditors. So investors don't believe that the bailout programs are ensuring they'll get their money back. That keeps the fear of eventual debt restructurings, in which bondholders share the losses, or even worse, defaults, very much alive.
The instinct of investors under these circumstances is to sell the bonds of weak businesses. Stopping this cycle of fear and crisis won't be easy. Investors have to be convinced that their money is safe as Syabas bonds.
How can we correct the situation? The government moves in to discipline the errand boys. It has to address the problem with more than budget cuts and bailouts. Syabas, and the others all have to get their fiscal deficits under control and stabilize debt levels. What were the causes of overspending n the first place? Huge operating costs? Losses? Corruption of non-water revenue leakages? Blind slashing with a hatchet can't be the sole method.
Make Syabas tackle its debt problem more proactively, not waiting until the edge of the abyss to call the government to step in, but getting ahead of the markets and putting in place reform-based bail outs. How so? Make it mandatory for them to allocate funds into the reserve fund. Clearly this requirement has been violated because perhaps, putting reserve funds has been voluntary. Otherwise, if it has been mandatory all this while, then monitoring it has been lax or some people have been paid to look the other way.
We can't just put up some cash for a bailout and let Syabas go about their business as usual. Putting in bailout money is going to place heavy political pressure. The public is asked to be frugal while our taxed money is directed to helping people like Rozali Ismail.


Anonymous,  26 November 2010 at 08:21  

'The government shouldn't be bailing out private businesses even if they are owned by UMNO supporters who went on to form BAPAK.'

I like but anyone listening, Dato'?

I saw the picture of the BAPAK launch. Ketua Penerangan UMNO was there so it was PROPAGANDA.

You are right about Mazlan Aliman. You forgot to mentioned that he also eats and breathes Felda. I actually googled on these Felda issues before the Hulu Selangor buy-election. The issues that were highlighted in 1998 were the same ones highlighted in Feb 2010. 12 years!!! If BAPAK can at least solve 50% of the woes, maybe TS Rozali who graduated with 3rd class honour law degree (I was told) can be regarded as a late-bloomer.

I can imagine Mazlan Aliman telling the settlers about Rozali's 400K paycheck and how they would drool...

Yes, Rozali is good fodder!


Anonymous,  26 November 2010 at 08:34  

ALL our GLCs are managed by UMNO cronies. The only criteria is their affiliation with UMNO, nothing else. Competence, integrity, responsibility and ability are non issues.
Little wonder billions have been lost by these entities.

OneMalaysian,  26 November 2010 at 10:11  

Dear Sakmongkol

Those who privatize and those who take part in privatization must obviously believe in capitalism - pure and simple. So they must live and die by the sword. Those who bought government assets on sweet heart deals cannot expect to be bailed out when they screw up and things head south. Are these so-called entrepreneurs some sort of sacred cow?

The same goes for bondholders. They are nothing but creditors, albeit having the first call on the assets in the event of a melt down and in a forced liquidation. They must be asked to take a haircut, just as bankers are expected to, and the poor ordinary creditors are forced to.

If the government rushes in to bail these capitalists and bondholders out, it would be creating a dangerous moral hazard. It would be abetting one-way bets. Win, they take all the profits, but lose the cry help. In the end it is the public who are the suckers. If the government condones this sort of behaviour and don’t punish these entrepreneurs by removing them from office, then we the public must punish the government at the polls.

Anonymous,  26 November 2010 at 10:46  


101% with you. By knocking on the government's door to bail the company from it's bond obligation shows that Syabas (Abused should be the better acronym) has failed in it business. That Rozali fella must go...period.

Dire straits

Anonymous,  26 November 2010 at 12:11  

We will get better understanding of what GTP is all about after the G sort out Rozali's mess


Anonymous,  26 November 2010 at 12:26  


I agreed with you absolutely on the bail out of Syabas.

Syabas must be accountable for it's current financial woes.

No bail out else the 'rakyat' will vote the government out in the next GE.

OneMalaysian,  26 November 2010 at 12:28  

Dear Sakmongkol

The Q3 2010 (9 months) profit announcements by MAS and Air Asia yesterday are very instructive about the success or failure of government privatizations. MAS has been around a very long time, so it should have a lot of experience running the business. Air Asia is by comparison a new kid on the block, run by an ex-music industry executive whose previous experience with regards to airlines was sitting in one flying between KL and London where he once worked.

For the 9 months of 2010 Air Asia had revenues of RM2806 million, from which it earned RM750.3 million after tax. MAS, the dinosaur, had revenues of RM9914 million (about 3.5 times more than AA), but earned only RM8.5 million. No typo error here – RM8.5 million! This fantastic achievement despite giving away millions of free tickets yearly so that “Now Everyone Can Fly”.

Mind you, Air Asia bought over a two-plane bankrupt company and build it into what it is today, one of the leading low-cost carriers in the world. Meanwhile, MAS is always a worrisome child of Khazanah. National pride in owning an airline comes at great cost. Is it worth it? But Air Asia has shown that we can have both pride and profits. It is just down to government attitudes with regards to privatization - how they are managed, who they employ (one race or using the best talents), and if they hold out a safety net or don’t. Molly-coddling GLCs means they never grow up. Time to rethink about privatizations, whether it is MAS, Splash or Puncak Niaga.

Anonymous,  26 November 2010 at 14:56  


You hit the nail smack in the middle, well said!

We frugal they enjoy, where got 1Malaysia?? Nothing personal against anyone, but Dato's analysis is spot on!

Anonymous,  26 November 2010 at 17:10  


Nothing wrong with the government bailing out Syabas or Puncak Niaga. This is the crux of the NEP philosophy which is to provide crutches for the UMNO elites and cronies. Mahathir bailed out his cronies openly, so did Badawi. Najib is just following the trend. All in all, it's ok to bail out the well connected private businesses.

Anonymous,  26 November 2010 at 19:39  


You cant compare them both as they have different background. One thing that to be consider is - one owner/enterpreuer driven and the other is tax payer money is involved - no profit more money will be pump in - no worry.

Ariff Sabri 26 November 2010 at 19:56  

one malaysia,
am glad you brought up the case of air asia. i shall be happy to reconcile the mystery between gargantuan profits Aasia earned and its continued refusal to pay up airport charges. why r we lenient on this former music industry guy?

Anonymous,  26 November 2010 at 20:22  

Dato' Hantar Rozali Ismail ni balik ke FELDA Gedangsa untuk belajar semula menoreh getah!!!
Macam mana UMNO bolih percaya kepada manusia macam ini. Bukan nak mengata la Dato' sebab kalau tengok si Rozali ni bercakap langsung tak de umph... Lawyer apa ke jadah nya!!! macam mana rakyat Malaysia yang bukan Melayu tak mengata... ini hasil DEB kot?
Alahai... memalukan DEB sahaja!!! Rozali Ismail lagi... Gedangsa FELDA ku!!!
Bukan nak mengutuk Tok, tak caya Dato' pergi lah interview dia. Once done can you please write in your blog just like what you did to PERKASA Chief Brahim! If you have time la sir or else don't waste your time with this dimwit!!!


Anonymous,  26 November 2010 at 20:24  

In the case of razali, i agree with your McKinsey-esque or EPF style force reform.

But it is not applicable for everything.

That is what consultants and management have to do.

That is to understand and apply different approach and technique for different situation.

Alas ... all they do is using templates to enable them to conserve their brain.

Anonymous,  26 November 2010 at 21:41  

"one malaysia,
am glad you brought up the case of air asia. i shall be happy to reconcile the mystery between gargantuan profits Aasia earned and its continued refusal to pay up airport charges. why r we lenient on this former music industry guy?"

Ha, Ha good point Dato. Eventho the Internet has created a force
towards transparency, the public can still easily be deceived.

Why are they lenient? First it was KJ, now NR.

The truth abt MAS and Air Asia below.

The Plumber

dua sen,  26 November 2010 at 22:03  

Dato, THE BIG ROD should not stop at Syabas (irony of the name, Syabas to the thieves !), it should zoom in on others lopsided PPA (IPP) [ speaking of which how did "Mr No Brainer" aka Mr YES aka YTL get exclusive terrestial broadcast license that no other telco gets ?, bubble toll concessionaires, etc.

YES, get the bloody rod and whack them hard !

SYABAS to Dato !

Anonymous,  27 November 2010 at 16:52  

My solution... stop one race appointments from now on to start of.

Then ensure they declare their assets before taking up the post and upon ending MUST check again their assets plus all their relatives'.

then get them to take oath...appointment is to help company not their own pockets.

and so on.

Anonymous,  27 November 2010 at 19:34  

Dato Sak,
Please continue to whack.

  © Blogger templates Newspaper III by 2008

Back to TOP