Story about MAS too

And here is another.
Air KL, Air KK and Air K
Marc Lim
Dec 28, 05 7:31pm



I agree with the sentiments of the writer who suggests MAS be wound up instead of the government bailing it out with taxpayers' money.

If the government wants MAS to carry on, then apart from selling MAS headquarters building, MAS should become an all wide-bodied fleet concentrating on international routes. Another airline - maybe known as Air KL for planes based at Kuala Lumpur International Airport and Air KK and Air K for planes based in Kota Kinabalu and Kuching respectively, could fly the narrow-bodied fleet.

This three-hub airline Air KL/Air KK/Air K should be operated as a all narrow-bodied jet fleet so all propeller aircraft currently in MAS' fleet would be sold and not transferred to this new airline. The new airline should not be expected to do 'national service' in flying propeller aircraft on unprofitable routes.

Fares on this proposed Air KL/Air KK/Air K could be priced at 10 percent to 25 percent above Air Asia's fares. But like Air Asia, this regional airline would only have economy class seats. There would be no first class nor business class for this new regional airline. Basically it should be operated much in the same way that Air Asia operates.

Air KL/Air K/Air K could also use Singapore Changi International Airport's new low-cost carrier terminal for flights arriving in Singapore.

There should be new routes, e.g. Kota Bahru-Singapore, Kota Bahru-Bangkok, Kuantan-Singapore, Sibu-Singapore, Miri-Singapore, Sandakan-Singapore, Labuan-Singapore and Singapore-Bandar Seri Begawan.

Importantly, Air KL/Air KK/Air K should not be a subsidiary of MAS. It should operate as a totally separate airline where pilots, cabin crew and ground staff of each airline would be on a separate payrolls and have different uniforms.

Air KL/Air KK/Air K should have separate check-in counters from MAS at all airports. Both airlines could have separate stock listings on the Kuala Lumpur Stock Exchange. Finally, the government should allow up to 49 percent foreign ownership of MAS and Air KL/Air KK/Air K.

Apart from carving out this new regional airline from MAS, an airport ground handling unit and an engineering unit should also be carved out from MAS and operated as separate non-subsidiary companies.

Story about MAS

Here is a response about my call for MAS to be wind up.

MAS should start afresh as new company
Teropong Negara
Dec 27, 05 5:14pm




I share the sentiments expressed by Noor Yahaya Hamzah and fully support his views that the present MAS be liquidated and a new company be set up to take over where it left. The new company should start afresh with a new business model that reflects current practices in the airline industry with a cost structure and quality of service that is competitive.

The issue of this new airline gathering a store house of irrelevant "corporate treasures", retaining expensive overheads and carrying on its shoulder a group of people that looks more like an emperor and his extravagant team of palace guards and advisers should not repeat. I wonder how we could ever rescue a company that is so remote and irrelevant from the present management practices of other airlines that are out to do their best to maximise shareholder value in such a challenging industry.

Yes in the past we have seen no less then Bank Negara being made a substantial shareholder of MAS with its governor being appointed to the board. It was clear to everybody that it was a disguised bailout of the past. Going forward we do not like to see the like of either Bank Negara or Petronas to have anything to do with the new national airline. It should be made to stand on its own as an efficient and competitive airline that is renowned for its management practices and customer service.

Major revamp needed at MAS

Title: Major revamp needed at MAS.
In response to my letter stating about winding up MAS and starting a new airline, a colleague wrote this;
Restructuring plans for MAS will be out in February next year, so I think we can wait for another month to see if the plans make business sense. MAS MD gave one presentation to the senators club yesterday simply to brief the senators on his plans. Personally, I thought giving presentation to senators was a waste of time as senators are not known to be experts in running the business; otherwise they would not become senators! But I think it was just a PR thing considering senators don’t have anything else to do these days.

In the mean time, this is what I will do immediately:
1. Suspend the current Chairman over the serious allegation of mismanagement and miss-spending. Appoint independent audit team to investigate this allegation, and if found to be true, lodge a police report.

2. Terminate all of the current board of directors. Appoint new independent directors and those who do not have any business dealing with MAS to replace these directors. Azman Yahaya was reported to have business dealing through his Symphone House. I will recommend the appointment of XXXXX as one of the new independent directors.

3. Review the current human capital requirements. Terminate those who are inefficient, those whose positions are not required or overlapping.

4. Review all current outsourcing contracts and existing contractual obligations.

5. Create competitive business. Split the operations of MAS into domestic and international. MAS proper should focus on international routes and domestic operations should be run by another subsidiary to be headed by another person who understands airlines business. Consider no-frills operations so that MAS can face Air Asia head on or possibly should consider shares swap with Air Asia.

MAS’ shares were traded around RM2.8 this morning. Tajuddin Ramli sold his shares for RM8 few years ago.
In my opinion his advice makes sense. Top managers were hired to steer the company toward profitability, makes decision in the best interest of the shareholders, customers and the staff as well as the country. The board of directors is there to make sure the managers do their job and prevent agency failure. Low cost carrier model for domestic operation makes sense. Air New Zealand, Qantas and Singapore Airlines also set up LCC in competition to budget airline in their market. Having LCC as subsidiary in domestic and immediate local market has the advantage of feeding MAS’s more lucrative long haul operation. Travelers wouldn’t mind going without meals and extra leg space for short distance travel. Cheap fares will tempt travelers who usually don’t travel by air. Current form of operation for international routes emphasizing on comfort and convenience would be a winning formula. I would also like to see MAS promoting more overseas holiday destinations to Malaysian market; perhaps team up with Malaysian owned hotels overseas, if possible.

MAS, let's start afresh

Title: MAS, let’s start afresh.

Reading the latest media report on MAS, I feel sad, angry and not happy all at the same time. If all the losses incurred through circumstances that is beyond management control, I would still be able to accept it. What rile me up is that if the “poison pen letter” even has a shred of truth in it, then the top management has a lot to answer for. Although I am not a direct shareholder in MAS, I still feel the top management has failed their fiduciary duty to act the best interest of its shareholders, Malaysian Government, and the rakyat, beside those who hold MAS shares.
Strange thing that the “khabar angin” start to turn into reality.
The Prime Minister had said a week ago that the government would lend money to MAS, so that it can continue flying but I start to have my reservations. Would the RM3billions be worth spending/lending?
Why do I say that it might not worth pouring another RM3billions?
For a start, how much does it cost to start up an airline afresh? Did Air Asia started up with that much capital? It would probably pointless to compare, because of the different market they operate and the size of the airline.
If we let MAS go bankrupt;
• We could quickly hold license auction to operate a national airline, be it named Air Malaysia (or some other name) and the winner should be a locally domiciled company with the best management team and good sized capital base.
• We could save that RM3billions that we intend to lend to MAS and use it for some other worthy projects like housing for the poor or flood mitigation program in northern states.
• Reading the poison pen letter, it seems the consultants and top managers are drawing high salaries, they could simply be fired, with minimal cost.
• The creditor might get 10sen in a dollar and the shareholders get nothing, but the new airline would start afresh without the burden of past debts. The new airline might also be able to hire new staff and workers at lower salaries as well. Overall, the new airline would be more efficient.
Or, the government could let some other company takeover MAS. Sell Government shareholding in MAS to the highest bidder. Let the new management run the airline to make profit. Let them remove the unprofitable routes if they want to, maybe some other small airline could service those routes profitably with less subsidy. How much MAS shares at KLSE today?

Loose monetary policy, stretched consumption

Goldman warns of fault lines in M'sian economy
Loose monetary policy, stretched consumption cited

By S JAYASANKARAN in italics
Business Times
My comment as below.

THE Malaysian economy appears robust but 'fault lines are beginning to appear', investment giant Goldman Sachs has warned. Among the cracks: stretched consumption, disappointing private investment and a loose monetary policy.
Stretched consumption: The economic growh has not tranlate into increased income for ordinary Malaysian lately. With prospect for more wages nil, Malaysian are holding back on committing themselves on big ticket consumer items. It is also true that economic growth has not benefit the lower income group. Their wage bargaining power diminished with the number of foreign labour in the country. Ask any factory worker, cleaner and general labourer, how much they are getting monthly, the answer would still be RM300-$500, or not far from that range. Even though we were as proud as a cockerel trumpeting high economic growth, the benefit of this growth has not “trickled down” (a phrase used by Rafidah Aziz a few years ago to support government action awarding lucrative contracts to well connected individuals and helping create a few rich Malaysians, she said this would have the trickle down effect).
Dissapointing private investment: After a few years of loose monetary policy, almost all profitable investment has already been made. Investor would not commit more money without being sure of making reasonable return on their investment. They would rather invest overseas in countries with higher prospect of growth.
Loose monetary policy: This policy is contributing to economic growth for the past few years, but now has started to contribute to higher inflation, undoing the gain of the past few years. This is also resulted in negative gain for fixed deposit investor. With intervention rate of 3%, and inflation rate of 3.5%, you are losing money parking your cash in the bank. This is also the reason why our foreign reserves starting go down for the past month. Hot money has started to flow out.

In a report issued on Friday last week, Goldman Sachs echoes many of the sentiments privately expressed by Malaysian businessmen, who say the economic numbers don't translate to real wage or employment growth.Companies are repatriating their cash overseas to earn higher return rather than investing in more capital in Malaysia. Some Malaysian companies have gone global, investing in low wage high growth countries, like China and India. In business sense, at current situation, the economy has reached its full potential. In the four quadrant of business cycle we have reach the cash cow section. Its time to milk the cow. If we don’t change and improve our infrastructure to increase our efficiency, the road ahead is difficult indeed; we are on the road to decline.

Indeed, the disinterest shrouding the Malaysian economy has spread to the markets, with the Kuala Lumpur stock exchange recording one of the worst performances in Asia this year.The stockmarket is like a crystal ball, where we can gaze into the future. If the stock market is declining, you would be sure that one year down the road the economy would be declining into recession.Current stock price is the total value of its future dividends discounted at current market return. Which imply that stock price would go down if either interest rate goes up and/or future dividend go down. How much does interest rate go up lately? Only 30 basis point.

The Goldman Sachs report notes that the multiplier effects of rising capital expenditure by companies in Malaysia appear to be absent. 'A lack of business expansion will constrain employment and wage growth which is needed to sustain the string consumption trends,' it says.

Indeed, the report questions whether the consumption boom that has fuelled the economy for five straight years will peter out. Malaysian household debt levels 'look dangerously high' relative to per capita income on an international basis, it notes.

Malaysia's ratio of debt to gross domestic product is close to 50 per cent - an increase of 20 percentage points over 10 years. On a per capita basis that's slightly ahead of Taiwan and equivalent to Japan and the UK.
His is basically saying that prices are expected to fall in the near future as the economy move into low growth mode. Currently supply of goods (housing, capital equipment consumer goods and big ticket items) has met demand. There are signs of oversupply in certain markets like housing and passenger car market. If you scour newspaper rental housing section and house for sale section, we would notice that both prices on offer have come down significantly fron a year ago. The same can be said of car prices. Second hand car prices are lower than a year ago.

The report also warns that the debt levels do not include lending by non-banks - hire purchase companies, pawnshops and money lenders.

Malaysia's household debt level is 'quite out of sync with its level of per capita income', according to Goldman Sachs.
We are all stretched financially. No prospect of increasing income, so we concentrate on paying off debt.

The report also says Malaysia's balance of payment surplus has turned into a deficit, which in October it estimated to be around RM17 billion (S$7.6 billion) on the capital account.

The reason: impatience with the ringgit's non-appreciation leading to hot money getting out of ringgit assets.

The report warns that outflows could increase as locals join the exodus with the lifting of capital controls for Malaysians. These considerations, it says, 'have been accentuated by a growing sense that the policy leadership lacks vision'.

Goldman Sachs says that, left to market forces, the ringgit would have depreciated to 3.84 to the greenback, compared with its current slight appreciation to 3,78.

It says that if the market tests the 3.80 barrier, 'the process is unlikely to be positive for asset prices'.

Goldman Sachs asserts that the central bank's monetary policy is too loose, noting that Malaysian inter-bank rates 'are even lower than Singapore now'. It predicts that the central bank will raise its overnight policy rate, but only by 30 basis points.BNM has no choice, if they increase the interest rate higher than 30 basis point, quite a number of Malaysian companies will report higher losses (or lower profit) for the next quarter, due to higher provision of interest payment. This in turn will have a severe negative effect on the stockmarket and overall asset prices. Pushing the economy further and sooner into recession. The tactic of increasing interest rate by a little bit is similar to holding off recession at bay – at the cost of higher inflation. They are hoping that higher inflation will keep the economy revving in the short term.

A Story for my Mother

A Story for my Mother.
About 10 or 8 years ago, I enjoyed stories written by a Red Crescent worker about her life experiences working for Red Crescent/Cross in countries like Sri Lanka, Nepal and Bosnia. The stories were published in The Star under the column called “Story for My Mother”.
Here is a story for my mother.
I went to an English Training Centre for immigrants to help Ahmad, A Somali, do a spreadsheet assignment on the computer. Ahmad didn’t have a computer at home, but he could use one at the English centre. While I was there, Ahmad introduced me to Jan van Houten who worked part time at the centre. She asked me if I came from Indonesia. No, from Malaysia I said, but all my grandparents were from Indonesia. At the time, both my late grandmothers were still alive.
“So is my late grandmother!” she said.
Jan is a Dutch, lived in Holland since she was a kid, but was born in Suriname. I wasn’t that surprised, her body frame tells me that she is a Malay stock, but her hair is dark and curly, and her eyes are wide open, not like Malay eyes. She told me that her late grandmother was from Western Java, grandfather a native Arawak of Suriname and her father a Dutchman. Coincidentally I read about Suriname in National Geographic the previous week.
She told me her grandmother sailed out of Batavia (Dutch colonial name for Jakarta, or Betawi) in 1925 when she was 17. By definition her grandmother was an indentured labourer, shipped to Suriname to work on sugar plantations of the Dutch colony. By all account, she was treated a little bit better than slaves.
When she boarded ship bound for South America, money was handed over to her parents and the recruitment agent in Batavia. From then on she was bonded to her Dutch employer for the next 10 years. She was marked with number on her hand with hot iron, much like cattle branding by cattle farmers in the Australian outback. The ship took 2 months to arrive in Suriname, with stopovers for provisions in Colombo and Cape Town. Her mother was born in dry season, with no water for washing.
After Suriname’s independence in 1970’s, the family migrated to Holland and settled there. Jan used to talk to her grandmother, and her grandmother told her stories about Java where she came from. In mid 1990’s Jan made a pilgrimage to Java to trace back her roots. She went to her grandmother’s village outside Jakarta.
She showed me the Javanese batik that she bought in Jakarta, which reminded her of her late grandmother. “You have to find out where you came from, and trace back your roots, otherwise you won’t be able to move forward,” she said.
Whenever I went to the English Centre, I made a point of visiting her, because I also have a few friends who was learning English at that time. She liked socialising and helping people of different nationalities. She understand very well the daily life of a Muslim, the halal requirement et al. She was learning to cook food Indonesian style years ago, the nasi goreng, bami goreng and krupuk. But when I saw those names on packets of Dutch food, I had no doubt where those foods get the influence, Indonesia.
Yes I grew up on tempeh, tahu, nasi goreng and sayur lodeh. It still is my favourite food.