Saturday, May 29, 2010

Can the BP Chief Executive Survive?

Idris Jala has certainly woke Malaysians up! I don't think even the dead will be resting in peace! But his clarion call to cancel subsidies will not be heeded unless we look at the big picture of how this swelling national debt came about in the first place.

Already, I am hearing murmurs of discontent. Even The Malaysian Insider yesterday drew our attention to Malaysian economists expressing disquiet over this subsidy issue. As I have said, it’s not just subsidies, but other concerns that need to be effectively addressed: odious corruption, cavalier government spending, ruinous government inefficiencies, crippling cronyism.

Former Finance Ministry deputy secretary-general Dr Ramon Navaratnam said “It will be a big mistake if the subsidy issue is regarded in isolation of overall planning and management of economic policies and management”. He called for a review of the whole structure of the economy and not look the reduction of subsidies in a piecemeal manner.

RAM Holdings chief economist Dr Yeah Kim Leng came out to say that subsidy cuts will only work if government implements them as part of comprehensive fiscal reforms to ensure efficient and effective government spending. “[There will be] a substantial reduction in our outlay if the government can exercise more prudence and less wasteful... spending,” he said. “That has to be included as part of these subsidy reforms”. He argued that if subsidy cuts were implemented outside of broader fiscal reforms a “big portion” of the public will believe the government administration had prioritized wrongly.

Lee Heng Guie, chief economist for CIMB Investment Bank, also said spending reforms are needed if the government intends to manage public expectations. “Tackling subsidy alone is not good enough... What we require is greater openness in the government expenditure program including plugging leakages in expenditure,” he reiterated. “Expenditure leakages (are) a progressive problem that has an impact on the overall economy”.

And he offered us a good suggestion too. He said the government has to be “holistic” in tackling debt and suggested the government implement a more broad-based consumption tax as part of revenue reform.

I don't want to be smug about this, but I know this would happen sooner or later. But isn't it weird that it is a non-politician in government, Idris Jala, who raised this bankruptcy issue? Where is Koh Tsu Koon? Or Ahmad Husni? Muhyiddin is infuriatingly silent. Najib made some small noises, but that's about it. Let's hope Idris won't be the fall guy! Hahahaha, that would be really funny!

I am reproducing today’s story taken from UK’s The Independent:



When the 'Today' program presenter Evan Davis picked up the line to a Florida-based oceanographer yesterday, he only wanted to get the latest on the environmental effects of the oil gushing into the Gulf of Mexico. But in an astonishing display of public contempt for one of the energy industry's biggest players, his interviewee stunned Davis with his own line of enquiry.

"Listen, now that I have a knowledgeable British person on the line, could you just clear something up for me?" Professor Ian MacDonald asked. "This Tiny Hayward person, this head of BP, is he a lord or a duke or a knight? My knowledge of aristocracy is pretty vague".

MacDonald went on to suggest that "Tiny" must be "very important" because of his "astonishing" attempts to play down the true scale of the spill and its effect on the Louisiana coastline. "So where does he sit in your firmament, Lord Tiny Hayward?" MacDonald asked.

The exchange, and MacDonald's willful mispronunciation of Hayward's name (he persisted with “Tiny" even after a shocked Davis put him right), revealed the growing volume of scorn being poured on a man suddenly cast as US enemy No 1 – the boss of an oil giant that stands accused of complacency in the face of ecological disaster.

The Gulf of Mexico crisis began on 20 April when the Deepwater Horizon oil rig, operated for BP by a contractor, suffered a catastrophic blowout that killed 11 men. The accident has since led to a spill that may go down as the worst in history.

Corporate crises don't come much worse than that facing BP after this titanic oil spill, and now everybody’s asking the question, Can BP chief executive Anthony Hayward survive? Your guess is as good as mine.

Image credit: The Huffington Post: Louisiana Oil Spill 2010 Photos

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