Sunday, September 18, 2011

The Questionable Deal

I was at Management House in Jalan Ampang this morning for the MIMKL Toastmasters meeting. It was great to see Philip Wong (fellow Toastmaster from KL Advanced Toastmasters Club) making a rare appearance as the Toastmaster-of-the-Day. As for me, I took on the role of the Table Topics Evaluator because Selaine couldn’t make it at the very last minute. This meeting scored an 8 out of a 10 because the conduct of the meeting and the quality of the speeches generally met my expectations.

National investment firm Khazanah brokered a surprise deal on August 09, 2011 where they will swap 20 percent of their MAS stake for 10 percent of AirAsia. Details are still sketchy but if I read the public statements correctly, they’re hoping that Tony Fernandes can use his so-called Midas touch to turn around the loss-making national carrier. Does this mean that Idris Jala failed in his job when he helmed MAS? Doesn’t this seem like Tony Fernandes has hit the jackpot because he surrenders a 10 percent stake of his heavily-indebted budget carrier for 20 percent stake of the ailing national carrier, knowing full well that the government will not allow MAS to go under?

I wonder, who is bailing out who? Sure, MAS is bleeding profusely but AirAsia is not exactly in the pinkest of health either. If you can recall the latter owed airport taxes to the tune of more than RM125 million since their inception until 2010. And Malaysia Airports, which is also part of Khazanah’s portfolio, gave a generous discount of some 30 percent to AirAsia when the former should have demanded for full payment with interests. After all, the latter’s passengers did pay airport taxes, didn't they? But now, AirAsia has been made out to look like a white knight for MAS. Something is not right, I daresay.

Anyway, from this deal, a monopoly will emerge, As PAS research department head Dzulkefly Ahmad said “Monopolies are the single largest stumbling block in the process to reform the Malaysian economy”. He added that monopolies are distortions that concentrate the wealth of the economy into the hands of a chosen few. Because of the lack of fair competition, monopolies see little need to improve the quality of their products or services.

Dzulkefly pointed out existing ‘monopolies’, such as Media Prima’s stranglehold on the terrestrial electronic media, Telekom Malaysia’s grasp on the Malaysian Internet ‘backbone’ infrastructure and similar monopolies over sugar, rice and flour have been given to BN ‘cronies’.

I know that we won’t hear the last of this MAS-AirAsia debate. Too many questions and no satisfactory answers.

No comments: