By Xu Wen-shi

According to media report, Malaysia Airlines (MAS) recorded a net loss of RM1.17 billion in 2013, an increase of 171.32 % from previous year due to foreign exchange losses, huge amount of finance cost and depreciation. With the awful result, there is no way that the government can deny MAS’s long term loss is a businessman’s nightmare.

AirAsia group chief executive officer Tan Sri Tony Fernandes had in his twitter ruthlessly savaged the government for subsidising MAS to protect its market share by using tax payers’ money as this is not fair to other airlines. Tony Fernandes’s remark more or less reflects the view of the general public who are exasperated at MAS’s failure to make good.

Civil aviation is an integral part of public transport; in addition, the painful experience of failure in its privatisation effort in the nineties had enabled the government to rationalise its long term subsidising policy on MAS. However, a national enterprise which was under the government’s protective umbrella had been continuously incurring losses. Its management and the government no doubt owe the people (especially the tax payers) an explanation and should give a clear account on it.

George McGovern, a Democrat who contended with Nixon in the US presidency election in 1972, had written an article in New York Times titled “A Politician’s Dream Is a Businessman’s Nightmare”. He admitted in the article that he did not expect to encounter so many difficulties in running a business until he experienced it personally. “I wish I had known more about the hazards and difficulties of such a business. I also wish that during the years I was in public office, I had had this firsthand experience about the difficulties business people face every day. That knowledge would have made me a better U.S. senator and a more understanding presidential contender.” He said.

When the authority implemented certain policies or push forward a certain national enterprises, their intention and motive to benefit the nation and the people could be sincere. However, when there is mismanagement in the enterprise and have to bail out by using the public fund, the so called “Moral Hazard” will emerge, as stated by the 2008 Nobel laureate in economy Paul Krugman.

Whenever there is a case of moral hazard, large amount of public fund was being mobilised to bail out the enterprise concerned and the government would speak out loudly that it had acted in the interest of the nation; the failure of the privatisation of MAS back then was a typical example. When financial crisis hit the United States, US government had injected enormous sum of public fund mounting to astronomical figures to support several big enterprises in the brink of bankruptcy such as AIG which it said were too big to fail.

Such cases are quite frequent; a classic example is the Proton Holdings Berhad, the company was unable to survive on its own ever since its inception 31 years ago. It can only survive under the government’s protection umbrella and at the expense of the public’s interest.

Once the market economy is being distorted, as shown by these few cases, the social costs are innumerable. In market economy only the fittest will survive. Only a few highly sensitive sectors such as health care and defence ought to be taken up by the government, other than that “The government has no business to be in business！”

Guang Min Daily News, February 27, 2014

Original Source: 马航——生意人的梦魘？