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

Thursday 25 August 2011

The sad story of MAS.

Were these the reasons to disembowel MAS in the first place? (1) MAS suffers leadership problem.(2) it can’t handle rising fuel costs. (2) MAS is caught in the traditionally weakest business period. 

Are we being led to believe that these 3 what? Parameters? variables? are only unique to MAS?

Then perhaps MAS should look for alternative fuels since it is suggestive that ONLY MAS operates on expensive fuels, other airlines are and do not. Two, find ways to make the business period nontraditional. Replace leadership at all levels.

Its leadership they say. You mean, under the layer upon layer of MAS in-house talent, you can’t find people who may have been sidelined or ignored but who understand what MAS is, but because of 1001 reasons cannot be elevated to fix MAS? Instead you think you can trust some people who have RM 57 billion payables to help put MAS back on track?  This order for Air Bus by AA was perhaps the kiss of life that saved Airbus from bankruptcy.

The whole deal between MAS-AA raises uneasiness all around for it suggest that at the very base, MAS’s miserable existence gave an opportunity and excuse for some people to make money. That when the dust clears, we will become aware that all this is a corporate game by rich and powerful people for the benefit of the same rich and powerful people.

Why should the fate of MAS (we are not bothered with the future of AA since it’s in capable hands) be decided by 3-4 corporate chieftains- banker, rival airline owner and chief of our sovereign fund? Who yielded the responsibility of caring for a national asset to a few chosen individuals? Why was this assignment to decide the fate of a nationally owned asset not be publicly announced in the first place?

Since everyone accepts that MAS MUST be placed on an even keel, a cabinet level working committee should have been duly formed to fix MAS. Or the cabinet decides at that time, to empower the MOT to fix  the MAS problem. Unless of course the MOT is full of imbeciles who never inspire our government to allow it do anything. With an unenviable record like the PKFZ deal, MOT was never in the radar when the government was looking for ways to fix MAS.

MAS is a national strategic asset that requires leadership and a workable and profitable business plan. MAS is the responsibility of the government in the first and all place. We didn’t see the MOF or Ministry of Transport people or a cabinet endorsed team assigned to fix MAS. Instead, this government has acted irresponsibly by asking or agreeing to have the problem of MAS being sorted out by special interest groups. That’s what they are really- AA, Khazanah and CIMB as the match maker, are special interest groups.

We are being indoctrinated and de-sensitize into believing that the MAS-AA deal is a purely rational business deal, handled on its pure merits. We looked around, identified MAS’s problems, we come to the conclusion that its leadership problem.

Who were that we? We are the banker, the head of sovereign fund and the interested rival.

Surely, when the deal was inked, those people in Khazanah, AA and CIMB already knew of the coming 2nd quarter financials of MAS. For the miserable losses, cumulative at .769 billion, the outgoing MAS CEO was given 11 million shares? and who is the smart-alec of a minister who says the shares cant be sold after 10 months by the holder? suppose the outgoing CEO of MAS does indeed sell after the moratorium, will the minister order this person to be arrested or what? if his future actions are seen to be unpatriotic, then the same judgment applies to those who are currently cannibalizing MAS. Further he’s saved from ignominy and inglorious anonymity by being exiled into the inner recesses of the establishment that is now single handedly running the business of Malaysia- khazanah.

So we are treated to another round of CYA rationalization- MAS recently announced a net loss of RM527 million for the second quarter of 2011.

Due to what we may ask? Due to higher fuel costs and (be) anyway, you can almost imagine the MAS people through its corporate communications people say, this 2nd quarter is traditionally our weakest business period.

So it seems MAS is the only airlines in this world facing increasingly expensive fuel costs and it must have switched from using some other unknown cheaper fuels before.  Other airlines ALL faced the same fuel costs and if we want to use that excuse, can we explain why Air Asia the now flavor of the month poster boy, achieved exceedingly good results while operating on the same expensive fuel costs?  Is AA using cheaper kerosene?

This would suggest AA is better as managing fuel pricing, managing routes, extracting the best. In other words, profits are operationally driven rather than being dependent on known parameters such as knowable fuel costs and fuel cost trends.

And what does, this is MAS traditionally weakest period mean? If it’s already known as traditionally weakest period, why weren’t MAS’s efforts concentrated on unbundling that tradition?

Every time, people talk about MAS- they would always refer to Tajudin’s sale of MAS shares at RM 8 and so on. You mean after successive leadership changes after Tajudin, MAS is still plagued with Tajudin’s legacy. You get the feeling that the sad Tajudin stewardship of MAS will always be used as an excuse to explain MAS’s sorry state.

Then we would be better off explaining MAS’s dismal record as being due to its existence in the first place. That in the end, the absolute remedy is to dismantle MAS completely and let a new national airline come into existence on a clean slate. Let’s start all over again by de-existing MAS.

Instead, we took the easy way out. We know, MAS is facing leadership problem. But we are not looking at the problem with long term objectives for the country as a whole. We want to reduce everything to the bottom line and therefore justify our thinking by pointing out that the whole exercise is but a business decision. We are super quick furthermore to identify that only one person can save MAS.

In an attempt to bolster the fortunes of the flag carrier, state asset manager Khazanah Nasional Berhad swapped 20.5 per cent of MAS stock for a 10 per cent stake in Asia’s biggest budget carrier AirAsia on August 9. The swap enabled AirAsia bosses Tan Sri Tony Fernandes and his partner Datuk Seri Kamaruddin Meranun to sit on the MAS board and will ostensibly help turn it around.

It’s conveniently explained isn’t it?

The airline’s aggressive and consistent cost-control measures also yielded positive results, with a two per cent reduction in non-fuel-related expenses for 2Q 2011 compared to the same quarter for 2010,” the airline said in a statement.

Sorry we are not going to be bedazzled by this CYA phrase. Have you terminated the contract of the caterer then? What proportion is this business in the non-fuel expense category? What about the gargantuan salaries of the executives? You lose money but you still pay humongous salaries?


Sunday 21 August 2011

Where has Malay Nationalism gone to?

It is moving away from immovable UMNO.

The doleful and almost pleading wish of UMNO people generally is for all the nightmares affecting their political future will go away. As a self-reassuring measure, they tell themselves, things will be all right. The people will come back to UMNO because UMNO fights for Malays. So, UMNO leaders everywhere say, things will be ok. Zahid Hamidi says, UMNO will win back the Malay ground and it will do so overwhelmingly.

Where is UMNO’s main appeal? It appeals to the Malay ground that adopts the cruder form of Malay nationalism, the sledgehammer variety so enthusiastically expounded by organizations like Perkasa. But that variety of base and crude nationalism is dying. The new generation of Malay voters adopt different values and have different expectations.

You can see what form of nationalism they subscribed to- making out the case that Bersih march for example was masterminded by Malaysian Indians out to topple the Malay government. They thought that would turn the Malay ground xenophobic until they discovered the majority of the marchers were Malays.  You get disappointed that you can no longer reduce the issue to a simple Malay- non Malay clash.

What’s the other important thing to the Malays? Their religion- comes the answer. So UMNO leaders came out accusing homely Ambiga as a threat to Islam. Still no go as that would assume the Malay faith in their religion is so fragile that even the appearance of Ambiga who is probably remotely interested in another person’s religious denomination, is sufficient to shake the religious fiber of the Malay ground. Still no one buys that argument as it died out as quickly as it was raised.  

Hmm, let’s try communism, that godless creed. The Malay’s hatred for communism seemed to be a possible source to limit empathy from the Malay ground. So pictures of Shamsiah Fakeh a member of the Malay communist regiment of the 1940s were resurrected and given prominence. The idea was to say that Bersih marchers were communism inspired.

The feeble attempt was non impactful because the attempted association with communism goes against mainstream logic; no one country in the world is sticking around communism. Even China has gone free market. Why would a band of marchers, marched in the cause of communism?

Face it. UMNO can’t appeal any longer to the cruder form of xenophobic nationalism or group pride.

Let’s ask calmly, where has Malay nationalism migrated to? The answer to me is it hasn’t migrated anywhere. But Malay nationalism has mutated into the finer form of nationalism which finds expression in variegated forms of universal causes. Example. The abhorrence for corruption is one reconstituted form of the previously crude form of nationalism. Revulsion towards other races has tuned to a more universal revulsion for corruption for example. Because corruption cuts across and affects the interest no longer of distinct groups, but the whole country. It undermines the moral fiber of the whole nation.

Wasn’t the principal idea of the original nationalism was to inculcate one’s love for the country and one’s love for the country finds expression in a more universal desire to protect the country’s interest as a whole? The crude form of nationalism which is essentially irrational chauvinism exist as an insignificant subset to the wider and more universal nationalism. It exists among the inhabitants of the lunatic underworld.

Revulsion towards economic thievery and corporate pillaging is another example. The Malays despise their own kind for doing a sting on the country with equal vehemence as if economic con jobs are inflicted on them. I have in mind of course the lightning fast deal between MAS and Air Asia. I am left with the bitter after thought that all these so called Malay corporate chieftains should be sent to reeducation schools to be taught the meaning of nationalism. Where is that sense of overriding concern to put things right as a matter of probity and correctness without doing corporate shenanigans to profit from the man-made miseries of MAS?

MAS belongs to the nation as a whole, the pride of Malaysians. Appreciation of that alone is sufficient to preclude it being treated as a pawn in an elaborate corporate board game. More disturbing and unsettling, is the more malignant inference that the government is playing along with the game the business elite plays.

Therefore if UMNO continues to peddle the cruder form of nationalism, while the Malay ground has shifted forward, how will UMNO justify its relevance? UMNO will go the Goklkar and LDP way not because some prominent bloggers will be masterminding cyber-attacks on its leaders. UMNO will be rendered irrelevant because it refuses to change its ideological format. You need to reformat or even reboot your,  raison d'ĂȘtre


Saturday 20 August 2011

The MAS turnaround was real debate

The MAS Turnaround was real

You people better sit up and listen. All those talks about Idris Jala not actually turning around MAS are all cock and bull. He did. You people are just envious. You don’t think an unknown person from the Kelabit tribe can do the job. Hey man- he has the credentials. He worked with one the seven sisters.
These are probably the sniggering gestures the author had when finishing the last sentences of this article.
The author who worked with Jala during those impactful years reminded me of one African student in one of our seminars on economics in our post graduate class. He proudly informed the class that the main export of my country is labour and showed the class his biceps on the mention of the word labour. When our professor asked how he knows that, meaning he wants the student to elaborate and expand his statement by way of facts and figures- the student answered; No need for that- I know, I am from there. Our professor responded. In that case, we can’t debate your statement further.
You know, that is just it. The import of the author in this Mas turnaround was real article is similar. He knows. So that’s it.
Hello, in the name of intellectual honesty, we don’t have any problems in acknowledging what’s real from what is apparent. If Jala has done a good job, all credits are due to him. But the last sentence by the author in this article appears to reveal the true intention of the article- paint Jala as a larger than life figure. Would anyone, with an above average intelligence, given the terms of reference as that given to Jala, do the same thing and gotten all those achievements?
That should be our starting point. This nauseating myth building is just that- nauseating and reveals intellectual shallowness.
In order to evaluate what Jala has done, we need to have some reference point and comparison. How do you distinguish Jala? By giving out the facts and numbers comes the answer- as done by the author. Indeed they looked worthy and credible.
What made it possible for Jala to achieve those figures? He was given an electronic sledgehammer while those who came before him only had a small hand held hammer.
All the previous people who went in before Jala including the now infamous Tajudin Ramli, were not:- (1) allowed to meddle with routes because Malaysia needs those to advertise herself. (2) Can’t retrench the people in MAS (3) can’t sell assets. (4) MAS is also doing national corporate social responsibility. Plus many more constraints.
The most immediate question to ask, were there any additional facilitating factors that were available to Jala that were not given to previous lumberjacks assigned to the MAS jungle? Was Jala in fact given effectively a carte blanche whereas the previous people assigned to do it, was sent blindfolded with hands tied behind their backs. Of course it didn’t help matters when the person or person sent there, have personal wealth building agenda.
I just want to say to the gentleman who e mailed this article by Rashid Khan( not sure whether this Rashid was once a legal executive in Shell- I remember one fellow by this name who was with Shell in the late 80s) to hold on to his gloating smile. The jury is still out there. The scarcity of responses to the Rashid Khan article should not in any way be taken as inferring, his article is the gospel truth and should end the controversy.
If the setting up of Firefly was a sensible business sense and was credited with shoring up MAS’s operational profitability, its impending ‘eviction’ from the game must be prevented at all cost, by any means necessary, shouldn’t it? This issue whether Jala did right or stupid is just like the author said- a sub topic.  
Let’s see that after I post the Rashid Khan article in full. The article( minus all the slideshows):-
In the wake of the MAS-AirAsia share swap story that swept Malaysians into a multi-dimensional arguments and views by the politicians and uninformed public, one of the sub-topics that created doubts amongst Malaysians was the previous turnaround effort in MAS.
I was the fortunate few that served MAS during Idris’s tenure and here I am drafting this article to correct the perception that the MAS turnaround was not a mere charade as claimed by certain quarters. General phenomenon of short attention span by Malaysians has propelled this article to serve its objective as a refresher. The facts presented here are not new, most of which was shared to various internal and external stakeholders (including public at large).
Unlike the Peremba boys, Idris Jala was not a familiar household name to many Malaysians when Khazanah first made the announcement as the new CEO of Malaysia Airlines at the end of 2005. Against the backdrop of growing competition and bad management post-Mahathir era, politicians on both divides jumped whilst the cynics redefined the word MAS for Mati Anak Sarawak. Public and investor confidence was at its lowest after the post Wide Asset Unbundling (WAU) financial engineering exercise which was not designed to solve the operational problems. This took place before Idris came to the office. Coupled with Tan Sri Tajudin Ramli’s legacy issues and growing competition by regional carriers and low cost carriers, public was anxious to what this underdog from a small Kelabit tribe in Bario was capable off. Backed by 23 years of turnaround experience in Shell London, Shell Sri Lanka and Shell Malaysia, Idris took the MAS office with a storm.
Idris launched two distinct strategies during his tenure, i.e the Business Turnaround Plan 1 (BTP1) and Business Transformation Plan 2 (BTP2) which consist detailed, step by step process on what the company needed to do in order to stay afloat. The BTP1 and BTP2 can be downloaded from MAS website.
BTP1 was launched to turn around the company from a loss of RM 1.2 billion in 2005. At that time MAS was faced by two issue; cash crisis and profit crisis. In 2005, MAS has only RM 600 m cash reserve that can last the company only less than 3 months. MAS management took a pragmatic approach to anchor all key business activities on the P&L (i.e things which moved the bottom-line).

The BTP1 is a 3 year programme focused on revenue enhancement and cost reduction. Before 2005, MAS producing losses in the tune of RM 260 million to RM 836 million. After 1.5 years BTP1 was launched, profit has seen a record high, RM851 million.
I would like to focus on the revenue and cost figures to show evidence in operational improvements (and not one-off gain, fancy accounting exercise, or mere fluke!)
For revenue, from the MAS Annual Report the revenue increased from RM 13.4 b (2006) RM 15.2 b (2007), RM 15.5 b (2008) through various revenue enhancement initiatives. That includes Route Profitability & Rationalization, Yield Enhancement exercise, Network rationalization, etc. See chart below.


Total Revenue
Total Expenditure

Operating Profit

Shareholders' Funds

Seat Factor

The highest revenue achievement by MAS in 60 year highstory was in 2008, at RM 15.5 bilion. If you break it down further, the one of gain selling of assets such as the MAS building, Four Seasons, etc are insignificant compared to the operating revenue that the company was generating through a series of drastic measures like route profitability analysis, increasing yield, network rationalization and many others.
MAS realized the Revenue per Available Seat Kilometre (RASK) at 4 USD cents was lower compared to the national carriers like SIA Cathay Thai are operating between 5 to 9 USD cents. At the same time, alot of routes were not profitable. Hence, route profitability exercise was done to cut / stop the routes which are not profitable. A classic example was the Langkawi-London, KL-Kuching-Perth and KL-Manchester. Even AirAsia doesn’t want to fly to Manchester although the air rights was available to them.
The key revenue lever is to increase yield (i.e profit per seat), expressed in Revenue per Available Seat Kilometre (RASK). As you can see from the chart below RASK improved by 45% during Idris’s tenure. This is REAL OPERATIONAL IMPROVEMENT and NOT mere fluke as claimed by Anwar and many others!
In optimizing the operating cost, more than RM 2 billion was saved between 2006 – 2009 through a series of cost initiatives. From fuel management, salary freeze, manpower optimization, process improvements, engineering breakthrough projects, and many others. At the time data was available, 2009 was the highest cost saving target that MAS could ask for. This is not mere charade as claimed by many, it requires hard work and dedication from MAS employees to make this a reality.

Many sceptics during that period were worried that the cost reduction initiatives will impact the level of customer service in MAS. In fact a quick look at the number of awards received by MAS between 2006 – 2008/2009 (during Idris’s tenure) revealed that the highest number of awards (i.e 21) was achieved in 2008. 5-Star Airline award by Skytrax and The best cabin crew award were the common annual accolades received by MAS during Idris’s tenure.
BTP2 was launched to transform MAS into a 5-star value carrier. The impetus of change was driven by global and regional competition. At that time, the growing threat of Air Asia and the new order of airplanes from regional airlines have propelled MAS to transform its business model. It was a do or die situation.
 BTP2 clearly projected best case scenario of RM 1.5b profit by 2012 and worst case scenario of RM 650-1b loss by 2012 if the company do not execute a list of projects (i.e Revenue Enhancement Project, Cost Reduction Programmes, Procurement Revamp, Network & Plan, MAS Campaign, Project Delta and many more.
MAS laid out a clear roadmap in BTP2 expressed in the chart below. It shows the MAS needs to grow profitability by taking clear 5 step process.
The first step is to maintain 5 star service. During Idris’s tenure, 490 customer service improvements carried out was a strong evidence that the commitment was real.  
Second step was to reduce cost. That is why MAS tracks the cost savings (direct and indirect) on a yearly basis. This is where Project Delta was introduced to reduce cost at various operational departments such as Airport Operations, Flight Operations, In Flight Services and many more.
After cost is reduced to an acceptable level, only then you can introduce the third step, i.e to offer competitive pricing. This is where MAS introduced the Everyday Low Fares that shocked Air Asia, MH Value Fairs and many other products. This will in turn get more passengers and revenue.
And the final step is to grow the network, i.e to introduce new routes based on demand. The chart below was showed many times to the public and MAS internal staff.
It is evident that the roadmap of the BTP2 was clearly laid out for the management to follow (see Chart below). It contains sustainable improvements that need to be executed in logical stages (i.e MTM- Making the Most, GNB – Gaining New Business, BNG – Breaking New Ground). The success of BTP2 lies on effective execution. Sustainable improvements (i.e processes, system) can be yield positive results if the initiatives are managed and deadlines are adhered to.
A classic example of the BTP2 roadmap action was setting up Firefly (under the Gaining New Business) to capitalize the turbo prop operations via Subang for the convenience of the Klang valley population.
The BTP2 is not a fluke. BTP2 was not a “wahyu” from God. It is a compilation of a well thought process by the management based on the economic and aviation landscape.

The famous quote “Melayu Mudah Lupa” by Tun Mahathir should be rewritten as “Malaysians Mudah Lupa”. However Google search engine never failed to refresh our memories.
The glory days of MAS turnaround witnessed numerous financial analyst reports being published and loads of commendations from international airline organizations. Lets not forget the MAS share price was historic high during Idris’s tenure. MAS turnaround story was even featured as MBA case study by Harvard University. It was a classic Jack Welch story that can be replicated by many leaders out there.
No success can be achieved without relentless support of 19,000+ MAS employees who have been dedicated and committed during Idris’s tenure. The turnaround effort was real. The turnaround effort was due to blood, sweat and tears of MAS people.
Although more data can be presented to showcase the operational improvements in MAS during Idris’s leadership, there is one key ingredient that made the difference. It was not the BTP1 or BTP2, but it was the man himself.


Thursday 18 August 2011

winnable candidates; high quality government and high standards of governance

These talks about looking for winnable candidates is fast becoming into a self-righteous smug- as though mentioning it somehow distinguish the speakers from the rest and therefore, solves the actual and real problem- the search for winnable candidates is designed for what purpose?

It is first of all necessary to frame the question right- the search for winnable candidates is for what purpose- the answer that springs to mind, seems to be, search for winnable candidates is to create a winnable political party that can make this government a winnable government and therefore a winnable country. Just what are winnable candidates?
It can only mean one thing. It’s a search for leadership material which is committed to a plan into making this government into a good government with good governance. Surely this must be the foundation of a leadership committed to transforming the country. Barely what?- 2 years into his premiership, already the PM is hailed as the father of Transformation? What has been transformed other that a copious amount of announcements that don’t seem to subside, we haven’t seen transformation yet in the fundamentals- the leadership material for example.

The transformation must begin with the search for leadership material to achieve a quality of government with equally high standard of governance. It must never be the search of winnable candidates as in the artful party operative who can work the crowd into ecstasy or emotional convulsions. We have these duds running around by the dozen- those who prey upon ethnic insecurities and emotions and those who prey open the religiosity of the masses. These are never nor can ever be winnable candidates.

The search for winnable candidates must be part of the overall strategy- positioning of leadership committed to a plan to make a high quality government with high quality governance. Hence it must necessarily involve first, the search for the ablest and most dedicated and committed to the cause of the country.

I am gratified to hear one of the latest statements by the PM who says, We want WHOEVER rules this country to be elected according to the true wishes of the people,” he told a large crowd gathered for a buka puasa function at Pangsapuri Seri Perantau, an 11-block row of low-cost flats built by the Selangor State Development Corporation (PKNS).

The MCA announces also its plan to look for winnable candidates- although that announcement by the MCA president sounds like saying out loud of plans to phase out recalcitrant rivals in the party? As early as last year, the UMNO president spoke of the same desire to filed winnable candidates. If he goes to the UMNO ground, every incumbent ketua bahagian and sitting office bearers say, their areas are winnable provided it is they who stand as candidates.

Unless you come out with clear guidelines what the criteria of winnable candidates, the phrase just becomes an excuse for so many things by so many people not to work on the most important thing in our politics- finding the ablest and most dedicated to make this government, any government a high quality one with high quality governance.


Monday 15 August 2011

A morning session with The Oracle of Syed Putera-Final Part

I am not finished yet with the MAS-AA Saga. But I shall leave the issue for now as I go through the various financial reports from several research firms. I must thank these people for e mailing me. I will have to relearn some of the basics in Corporate Finance as I have forgotten the meaning. But I shall be back.

Just a bit before we move on. The whole deal involving AA-MAS reminds me of the carving out of spheres of influence between the superpowers of 18 and 19th century. The English got Malay peninsula, The Dutch got the East indies. They signed a treaty. In a very similar way, this government of ours, allowed the airline industry to be carved out between what they currently assessed as the poster boys.  Well, at least they see one as a poster boy- Tony F. One corporate luminary says he gest high when he sees people being able to fly from LCCT.  He doesn't see that at KLIA.

MAS will be assigned to compete in the premium sector while AirAsia is effectively given the monopoly to do the LCC. What about Firefly?We haven’t heard a spokesman from this outfit being given a fair airing have we?  I am sure they will have a thing to say.Why ask Firefly to compete with Silk Air and not offer LCC services? you are leaving the space for AA only.

I have also written about the role of CIMB in this deal. I have cited its record in the deals involving Synergy Drive and the split between Telekom Malaysia and Axiata. In this MAS-AA I am told, CIMB played the role of match maker simpliciter. That is its claim, the public may choose to adopt a different view because its difficult for the public to accept that CIMB, the merit driven, results focused bank does something for altruistic reasons.

As I said, we shall leave the issue for a moment. We shall come back later.

Now, for my final installment of my one morning with the Oracle.

How many states does TDZ indicate can BN remain comfortable I asked? This is a dreaded question admittedly because what Tun Daim said in the past has proven to be prescient. Everyone wants Tun Daim to say something optimistic.

But the Oracle says, his friend remains pessimistic. He can only say, among the states where BN can say its comfortable are Johore, Melaka and Pahang. Even in Pahang, a few parliamentary seats will slip out of BN’s grasps as with a few more state seats.  The Oracle was quick to add, what Daim said was about the level of comfort; BN could still win in other states but will find the going elsewhere turbulent and arduous.

But overall, Daim believes Pahang will remain under BN. Why does he mention Pahang in particular, I asked.

Because Tun daim knows you are from Pahang and  he knows you would want to know what’s to become of Pahang.

But didn’t Tun Daim write a very optimistic and encouraging article in Utusan Malaysia  a few months ago? I asked.

Yes, said the Oracle. I did discuss that article with Tun Daim and didn’t I also show you the transcript of that article to you the last time?

You did, said I. you will observe said the Oracle- that Tun Daim wrote the article with so many caveats and qualifications. BN and especially UMNO can win if they do this and that. Its leaders must go to the ground, walkabouts in Subang, in Petaling Steet and in Kg Pandan are not sufficient; people can see through the superficiality and forced smiles and staged walkabouts. Yes people feel good at that time at seeing the PM and his entourage, but after that what – after they are brought back to the realities of thinking about what’s happening in this country.

The oracle mentioned of TUn Daim’s exhortations to the 2 top leaders of BN to go meet up with the cawangan people. Meeting with Ketua Bahagians can be a misleading source of information, they will tell of everything good they have done with a view of getting reelected. You need to go down to the basics-listen to the views in the raw. If possible exclude the ketua bahagians.
But they haven’t done this. The PM is busy with his overseas trip. The DPM will not move lest whatever actions he takes will be misconstrued as upstaging the boss. That can cause some internal upheavals in UMNO.

And you also will notice that UMNO and BN have lost its influence on the younger generation. 80% of the younger voters are not going to vote for the BN.

Tell me honestly- do you think UMNO can win the battles in cyberspace? Just look at the articles being spewed by the UMNO cyber troopers. Some of them are stuck with the idea that the PM of Malaysia is still Dr Mahathir and so their articles will be tailored to suit the positions taken by Dr Mahathir. You watch- Dr Mahathir hasn’t spoken his true mind about the Najib administration. Once he does that, and one reason for him not doing so is the restraint counseled by Daim on Mahathir, all hell will break loose.

The majority are spewing hate articles all the time with the expletives and vitriol. Can these engage the fence sitters; those independent minded would be voters? You have to discuss issues and offer analytical discourses.

You may think these fence sitters and undecided have different political agenda from the rest of the population such as the rural folks. In the end, you may be surprised they actually share more similarities- they want good governance, they detest and abhor corruption, they hate the carving out of this country between business cronies, they want a better future for this country. The only difference, the liberal or the fence sitters are more articulate and possessed of audacity in thinking. They won’t be shy to speak their mind and translate their thoughts into votes.

Overall Daim is pessimistic about the future of BN and by extension, if am liberty to translate the body language of The Oracle, the enigmatic Daim isn’t enthusiastic either about the political fortunes of the PM. And I was sure; I heard the same disconcerting vibrations from Dr Mahathir himself.

Look at the government. We have a PM who has a penchant for announcing big ideas. Some of them are not even ready for public consumption. Even Daim the consummate businessman, has difficulties in understanding them. 

The government is reacting most of the time instead of thinking through its actions. That shows you don’t have plans for the country. How do you tackle urban poverty for example? List out your plans so that people can see you are thinking about it. How do you want to tackle corruption?
There’s one final criticism I hear through the Oracle. The present administration has the largest cabinet with the largest number of unelected leaders. Maybe, tongue in cheek- Daim asked me to ask you to write; for completeness sake, maybe you could write telling the PM to appoint Chua Soi Lek as a full minister. Then he will be surrounded by all the leaders of component parties who are UNELECTED. That’s rakyat di dahulukan for you.


Saturday 13 August 2011

New Age Collectivism

Deconstructing the MAS-AA deal.
Once again, the government is on track to creating monopolies in almost anything. The government is not for free market. It wants exclusive rights.  It is behaving exactly like what the NEP hawks demand- legislate rights. This government is careless on its responsibility to take care of our assets. It fritters them away. It wants quick fixes.
For the government, the quick fix is to create monopolies. Let’s not compete destructively. We have a monopoly, we give you one. We are both powerful, so let’s gang up and corner the market. We think we can compete in the full service airline market. Give you the low cost carrier market. After all, we all ARE for free market what.
Hayek warned us of this hypocrisy when he wrote in his The Road to Serfdom- many of those who profess the most individualistic objectives support collectivist means without recognizing the contradiction. What Hayek didn’t know is, it’s now called Comprehensive Collaborative Framework.
Let’s deconstruct the whole MAS- AA comprehensive collaborative framework.  Because it’s a framework only, it allows for future modifications and adjustments. I take it, this means, it’s not yet definitive and conclusive. That is good. We can still plug and play.
MAS is in the pits, its share price are down. It’s making losses. Azmil says sorry. The MAS personnel are not happy.
The main shareholder khazanah cracks its head. Khazanah , the assemblage of finance and accounting brainboxes sit down and think how to save MAS.  How man. Surely, we the best of the best can provide a solution. We sent azmil, he can’t do it. We sent idris jala, from the land of underachievers, but he who was fast-tracked because of the bumi policy from that land, also couldn’t make it. Azmil continues to blame the rising price of fuel as the chief culprit gnawing at MAS’s bottom line. We are almost led into believing that only MAS faces the rising price of fuel, other airlines run on water or on air. We are also almost led to believe that, facing the rising price of fuel is a new experience for MAS- in all its long years of its miserable existence, the MAS planes ran on water.
We need to ask the following:-
How was it possible for the government though Khazanah with the assemblage of gunslingers there able to persuade AA with profits in record time, more dynamic, with beautiful but unsmiling flight attendants, agree to swap shares?
Why would the people at AA go along with the persuasion?
How come CIMB acts as the common advisor or broker? I am reminded of the story told by an accountant friend; even the pharaoh during the time of Moses had only one broker- Haman. Haman only brokered for Pharaoh and not for Moses. Even Haman was principled in that he advised only one client- pharaoh. CIMB the modern Haman advised both pharaoh and Moses. Or I am also reminded of the P Ramlee’s Ali Baba 40 thieves. They don’t rob on Saturdays and Sundays. Those are public holidays. Ramlee’s 40 thieves are a disciplined lot. The present day thieves loot every day. Public holidays included! Nang Buti Nang, Kui buti kui. Orang bukan orang, hantu bukan hantu!
How was Khazanah able to persuade? I don’t think its bully tactics. TF can’t be cowed into accepting something that is not profitable to him. He has clashed with the government on many issues- ownership over the name of F1 team, aerobridge, moving hq to elsewhere. He fights and challenges the government on every score- MAS has Tun Abdullah, he now has Abdullah’s nemesis- Mahathir. You dickheads at the gomen can’t do anything to me lah esse. Unless TF and AA see they can profit from these.
That’s one, which we shall try to explore.
Two, what is the interest of Khazanah in doing this? Let’s accept the main rationale being making attempts to re organize, re structure or otherwise disembowel MAS to cut off the tumor that’s been causing diarrhea all this time , leaving stinking stool all over the place.
Why is Khazanah not focusing on finding the management talent to get MAS up and about?
Instead it goes for the easy way- technically sidestepping what is actually a cartel to corner the market for all those who want to fly. They call it comprehensive collaborative framework
In an earlier article, I said through this share swap, where the government owns more of AA, AA acquires an almost new national identity. Now it can vote get rights on landing and flight routes.  Not unlike those pendatang haram getting ICs and getting rights to vote.
So for AA, having Khazanah as its substantial shareholder is a strategic move. It frees up management resources as now its management’s time can  focus on other regional JVs like Japan instead of having to fight in its own territory. Let’s lay waste foreign land.
AirAsia opted for the share swap instead of a placement by Khazanah in order to remain invested in the airline business, as well as a quicker way as compared to Khazanah building a position in the open market.  Come- we short cut your intention to buy shares in the open market. Let’s talk and maybe we can get a win-win situation. Lutolongguaguatolonglu la,
As a result, given a strategic investor in the form of Khazanah - political lobbying and fighting for routes and infrastructure has disappeared. As one research outfit says- there’s nothing wrong with a "you scratch my back, I scratch yours" arrangement, as long as both parties "get their itch satisfied equally".
Can I supply you those bamboo back scratchers for those hard to reach itching areas?
So what profit can AA extract once Khazanah play ball?  Well, immediately I think, those problems connected to its airport-related battles such as the use of aerobridges at the new LCCT, being forced to move from Kota Kinabalu International or even trying to get the name changed from KLIA2 to LCCT2, will now likely be a significantly less arduous task than before. AAX (AirAsiaX) will likely be reapplying for the much fought for Sydney route, something that management is more confident now of getting.
AA and TF must have asked and demand for a clear product offering by MAS and AirAsia – in other words, you MAS get out from the low cost carrier market. Give us the monopoly ad you know what you must do next, don’t you. Remove Firefly.
AA’s demand for clear product segmentation effectively removes MAS and AirAsia from destructive competition. Ayo- why don’t we share lah, you get some, I get some. Poor Firefly will be realigned as a regional full-service carrier, conceding more yields to AirAsia. Those FAs who left AA to join FF, will now find themselves back under the whip lashing AA supervisors. The clear mandate given by Khazanah for AirAsia to be the only low-cost carrier in Malaysia should allow it space to consolidate a grip on the low-cost market.
In other words AA has the MONOPOLY. Did Khazanah agree that in future, it will ask the government never to issue airline licenses to any upstart? Only AA is allowed to. Does it also mean that other companies can’t collaborate with locals in setting up another low cost carrier?


  © Blogger templates Newspaper III by 2008

Back to TOP