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There are so many speculations on the recent crisis pertaining flight MH370 which could distract and hamper the search and rescue activities currently underway in the South China Seas.
Fortunately, the management of this crisis has been handled very well by Malaysia Airlines and the relevant authorities. With the Department of Civil Aviation taking charge of the search and rescue missions, it is commendable on the part of the agencies involved to remain professional in their duties.
The management of the crisis could have gone either way and it is a mark of true professionalism that Malaysia Airlines so far is on the dot in the proper procedures in handling this serious incident. Below is an article from the Business Insider which could have been taken as a case study on what not to do during an aviation crisis.
Asiana Airlines Needs Serious Help With Crisis Management
As the FAA and NTSB continue to investigate the July 6th accident in which 3 were killed and 182 were injured at San Francisco International Airport (SFO), crisis management experts are scratching their heads at the perplexing response of Asiana Airlines.
Crisis Management protocols
When there is a crisis, the proper procedure is for PR-savvy company representatives to talk with the public through the media to reassure them that everything is being done to investigate the cause and insure the safety of the airline and the wellbeing of its passengers.
The idea is to get ahead of the story and make current and future customers as comfortable as possible in doing business with the Airline. As Korea’s second biggest airline, Asiana needs to make every effort to take care of its passengers and protect its reputation while allaying the fears of the flying public.
Asiana, however, has done the opposite of what crisis management protocols suggest. With the exception of a brief apology to victims and families a day after the crash, Asiana has been largely silent. When CEO Yoon Young-doo arrived at SFO airport 3 days after the accident, he declined to comment. Even more surprising, the airline did not have a trained public relations representative accompany the CEO to address the media either. The following day, six of twelve flight attendants appeared at a news conference, but none of them said a word, and some hid their faces. It appears they don’t know that when you are silent, many in the public think you are hiding something. While lawyers often recommend you don’t talk, marketers know that silence is the opposite of what a company faced with such a crisis should do.
Attempt to silence passengers
What’s even worse is the Airline has instructed passengers not to talk with anyone. On Wednesday, CBS This Morning featured a story about the Xu family who told reporter Carter Evans in an interview he taped on his iPhone that the Airline controlled nearly every aspect of their lives and told them not to speak with the media. In fact, when the reporter arrived at their hotel, airline security tried to prevent him from speaking with the family. Since these efforts to stifle the media appeared on camera on a major news broadcast, they supported what the Xu family was saying and raised further suspicions about Asiana.
Even though the pilots involved in the crash were novices landing and supervising the landing of a Boeing 777 at SFO, they pointed the finger at the automatic speed controls of the plane. According to the head of the NTSB, there are no signs of failure of the automatic speed controls or other automatic flight equipment on the plane that crashed. Such accusations by the pilots do nothing to inspire public confidence – especially since the early evidence points to pilot error as a potential cause of the accident. Also, the fact that this is the first fatal accident involving a Boeing 777, which has a record of being one of the safest planes in the sky, makes the finger-pointing even more suspicious.
While flying is the safest form of travel, it is a risky business for those involved in making and flying the planes. When bad things happen, the best companies can do is to quickly figure out the problem and be forthcoming with customers. What can any business learn from this latest incident involving Asiana Airlines? Employ the fact procedure to protect your reputation.
- Admit the problem, and apologize if necessary (do not “point the finger” at others because it is likely to compromise your credibility).
- Limit the scope (in this case put the incident in perspective and provide data that shows that flying on a Boeing 777 from Asiana is very safe).
- Propose a solution so it will not happen again (if it is found to be the cause, a more rigorous training and pilot supervision program would be the solution).
If implementing the fact procedure is premature
In a case such as this when the cause of the accident is not yet known with certainty, the airline should not be silent as Asiana has been. And, it should not try to control what the passengers say to the media. This just fuels suspicion. It should make it clear to the flying public that it (1) is doing everything in its power to cooperate with the investigation and (2) will continue to do whatever is necessary to insure the safety of its airline and the wellbeing of its passengers.
Since Asiana has proven to be inept in this crisis, and some believe this may be a cultural issue, it should hire US crisis management experts for advice to protect its reputation going forward.
This blog has always been keen and passionate about public transportation for the longest time.
What Malaysia needs is a world class public transportation system which can connect people efficiently, more so in the Klang Valley. The acute problem in traffic, compounded by increasing number of cars have made public transportation one of the key NKRA of Najib’s administration.
As such, the effort to upgrade the public transportation (buses, LRT, MRT, monorail etc) is paramount to alleviate the choking problem faced by the people in the capital city. Time lost by the people stuck in traffic jams costs money and opportunity loss.
Therefore, we find it vital that the public transportation especially the LRT and MRT must be the impetus in attracting the people to use public transportation.
But the news we heard today is both disappointing and alarming. It seems the Malaysian Indian Congress (MIC) is up in arms against the government in providing a better service for the general public.
PETALING JAYA: A LRT extension construction company is unhappy that its contractors were prevented from carrying out their work, by a group of MIC members and parents from Castlefield Tamil School.
Prasarana Negara Berhad (Prasarana) said it is extremely disappointed that efforts to build an LRT Line Extension Project (LEP) have been hindered by reckless actions of these individuals.
They also claimed that the individuals, who had formed a blockade in front of the school yesterday, scuffled with auxiliary policemen from the company, resulting in a senior officer being injured.
This is despite Prasarana obtaining an injunction to enter part of the school compound and informing the school authorities of the planned work to be undertaken.
“This is the third time that we have made effort to enter the site. We have stated repeatedly that we will ensure minimum interruption to the children’s studies while construction of the LEP is underway,” said Prasarana’s group director of the project development division, Zulkifli Md Yusoff.
“We are dedicated to ensuring that the well-being of the schoolchildren and their teachers are not compromised during this period. Apart from enhancing the school’s facilities, we would also ensure the safety of the children and public,” he added.
Yesterday, around 60 MIC Youth members and the parents led by former MIC Youth Chief T Mohan prevented Prasarana’s constructors from entering the school. They also urged Prasarana to sign an agreement before starting the extension work.
No need for school to be relocated
It is learnt the school administration had passed a memorandum to Prasarana for a mutual agreement where it wants the company to provide RM20 million to build a new school on six-acre plot given by Selangor state government.
However, Prasarana stressed that it is going to occupy only 0.47 acres of 2.8 acres of the school compound and upon completion of the project, the five LRT piers will only occupy 20 metres of space.
“It is important for the public to understand that LEP can coexist with the school harmoniously and there is no need for the school to be relocated for this project to commence,” said Zulkifly.
“Moreover, the Education ministry has set a requirement that 100% approval from all parents must be obtained for the relocation. But, a group of 80 parents came out to voice their disagreement,” he added.
“Prasarana will build sound-proof barriers, improve the school’s facilities, including installing air-con units in classrooms and improve the landscape by planting trees and foliage as a gesture of goodwill.
“There are many benefits to consider, the key of which is improved transport convenience for the students and surrounding residents to the greater LRT network in Klang Valley,” he said.
The 17.7km LRT extension of the Ampang line under the National Key Result Area (NKRA) would directly benefit residents in Petaling, Bandar Kinrara, Puchong and Putra Heights.
It is learnt that a 180-metre stretch passes the edge of the Castlefield school, running parallel to the Puchong Damansara Higway (LDP) and the construction of the five pillars.
MIC should be held responsible for this transgression as its unruly members are working against the government’s effort to vitalise the LRT service. Furthermore, it seems the school board of Castlefield are getting more and more greedy when all effort was given by the government to ease any hardship which may be borne by the school (giving airconds, building a hall and school facilities etc) and even throwing away RM20 million of taxpayers money just to build another school!
RM20 million of our money to be used just because of a 0.47 acres of space? The school board must be out of their mind!
God forbid if they would also want to control that RM20 million and pick their own contractors themselves!
On top of that, MIC and the school board are knowingly defying a court order. In a civilised country such as Malaysia, defying a court order will have severe repercussions. Will the leadership of MIC take responsibility over the action of their members?
All this stupidity by working against the public’s wellbeing should stop.
Castlefield Tamil School is not the first school to have a train line adjacent to it and nor will it be the last. In Malaysia, they are many schools which have similar scenario and they pose no problems for the students.
As a matter of fact, according to this report, there are several LRT lines which has been built near schools, such as:
- Sekolah Methodist Wesley, Sentul, KL
- SRJK (T) Appar, Jalan Merpati, KL
- SRJK (C) Chong Kwok, Jalan Merpati, KL
- SK (L) Jalan Batu, KL
The ball is in MIC’s court. Please get a clearer picture from both sides of the affected party. Do not be swayed by petty politics to the detriment of greater good.
As for the greedy school board, enough is enough.
The much awaited Auditor General Report was published recently and the nation is gripped with unearthed stories about mismanagement (again), unrealistic purchases (what’s new?), inefficiencies as well as wastage.
We should really brand the momentous AG announcement as a national transparency day of sorts when discoveries like the ones exposed recently are highlighted for all can see.
What dumbfounded the nation is the fact that these findings are nothing new and had been going on for years but astonishingly, nobody in the audited government agencies learnt anything from past mistakes! Is the AG Report being treated as a insignificant memo by the misbehaving departments? Won’t the junior officers take heed of the mistakes made by their senior management about these gross mismanagement?
Leading the pack for inefficient spending would probably be the Ministry of Education:
The 2012 Auditor-General’s Report has revealed severe mishandling of RM2.051 billion with regard to hiring security contractors for schools between 2010 and 2012.
From poorly prepared contracts to hiring of septuagenarians as security guards, the auditor-general said the management of security services in 35 schools and hostels surveyed was generally unsatisfactory.
The audit, which involved schools in Selangor, Perlis and Sabah, found that the contracts were not uniform and did not state specific requirements set by the Education Ministry.
In some schools, the audit found that contractors had breached the terms of their contracts by hiring security guards who are too old, unfit, dressed inappropriately, ill-equipped and had not been subjected to background checks.
Nineteen of the 35 facilities visited by the audit team did not have anyone guarding the entrances and people were seen entering and exiting freely.
The audit team found that the Education Ministry was not keeping proper tabs on the implementation of the security project and failed to penalise errant contractors.
Now who is the contractor? We would think that those who are manning the tender and the contracts department in the ministry would have been a seasoned disciplinarian by now and is aware that the audit department will be breathing down his/her neck just to ensure that the security contracts are running efficiently. But obviously, we cannot train the civil servants in charge of this important task to be honest and diligent. In the end, payments are duly made without any regard to the delivery of services.
Another governmental arm which wasn’t performing was the police:
The Auditor-General’s 2012 report reveals that the Royal Malaysian Police Force recorded a total of 309 missing items in the form of weapons, handcuffs and cars.
It also reported that the Royal Customs Department wasted a whopping RM600,000 on 7,659 pairs of shoes that were not according to specification and were then badly damaged during prolonged storage.
The items missing from the police force were recorded between 2010 and 2012, resulting in losses amounting to RM1.33 million.
The auditor-general reports that handcuffs topped the list of missing items at 156, followed by 44 weapons and 29 police vehicles.
Although the amount is small, the fact that weapons can be missing from the police force shows that there is a severe lack of controls in the police department and this doesn’t just involve money but it involves public security issue as well. Where did all the weapons go? How could they have lost it? From now onwards, KDN should really look into their SOP because if from 2010 to 2012 we lost 44 weapons, imagine how many had sifted through the cracks in years before that.
Then there is this incinerator project which not many know of:
The National Solid Wastes Management Department (JPSPN) spent RM199 million on incinerators over the last four years, and then found there was no expertise to operate such machines in Malaysia.
All four incinerators at tourist spots in the islands of Langkawi, Pangkor and Tioman and in Cameron Highlands saw construction delays of two to three times their original schedules.
And even after completion, the Auditor-General’s 2012 Report says, three of the incinerators were not operated for 223 to 642 days, all because of the lack of expertise.
A fifth incinerator planned for Labuan was scrapped.
So basically RM200 million was spent on something we don’t really know about. On top of that, it was unused for up to two years because the person in-charge do not know how to find ways to operate it. For two years they presumably tried to find people who can make the incinerator worked, but alas the search was futile. Yes they could find people who can build it, but they couldn’t learn or find people who can operate it. Two years.
Bear in mind all this money wasted came from Budget 2012 which was made in 2011. May we suggest the Treasury to look into the numbers again and prepare a much lower budget for the agencies above for Budget 2014? From the lackdaisical attitude and their cavalier approach towards handling other people’s money, surely they should not hold a lot of money to begin with.
Next is the issue on the police force again:
Between June 2008 and December 2010, the Malaysian police purchased five Beechcraft King Air 350 aircraft for a whopping US$58.25 million (RM175.24 million) for their Air Wing.
The planes were supposed to facilitate the upgrading of the nation’s air security.
However, within less than five years of usage, one of the planes had to be grounded for eight months, between September 2011 and April 2012, while another could not be used between June and November 2012.
Furthermore, out of the five, only three aircraft have been delivered so far.
The project was awarded after direct negotiations with Hawker Pacific Airservices Ltd, through its agent EZ Aviation Sdn Bhd.
5 planes costing RM175 million that means each plane is averaging RM35 million. We could understand if the cost includes maintenance for the next 10 years but if it doesn’t then RM35 million for a twin turboprop aircraft at a base price of USD6 million (according to the plane’s website) is way too much.
But that is not the least of the problem. The fact that two aircrafts have not been delivered until now should ring some alarm bells from the police’s procurement department. But obviously someone was sleeping on the job.
Of course the mother of it all is the fact that some people in RTM thought they could get away with this:
The Broadcasting Department blew its budget spending RM120,210 on clocks and scanners alone, thus overpaying for these items by thousands of times beyond its actual cost.
Despite budgeting RM100 per unit for a clock and RM200 per unit for an A4-sized document scanner, the Auditor-General found that the Broadcasting Department spent RM3,810 per unit for “branded” wall clocks and RM14,670 per unit for the scanners.
In the 2012 AG Report, it found the department bought 20 branded wall clocks and three scanners for national broadcaster RTM’s offices in three states.
The department paid RM76,200 for the clocks, which was 3,810% above its estimated budget, and RM44,010 for the scanners, which was 7,235 times more than its initial budget.
The department also bought five scanners for A3 sized documents at an inflated price of RM20,630 each, 103,150% more than its estimated budget of RM1,000 each.
Although the ministry had explained on the use of those clocks, they were silent on the RM20,000 scanners. Anyone would be hard pressed to explain what kind of nuclear powered scanner they have bought.
Heads of department should really take leaf on how private companies are saving money. They treat their money like their children’s money. We have known so many stingy CEOs, prudent CFOs, very strict tender committees and a well disciplined procurement department. All in small, medium, and large private companies. Do you think the CFOs in YTL, Hong Leong Group, throw money just like that?
We need to look at ourselves and learn the concept of saving money which doesn’t belong to us.
Lastly is the bonus payouts by the GLCs. Although this is not mismanagement per se, but it is worth mentioning.
Seven government-linked companies (GLCs) rewarded its employees with fat bonuses despite recording a combined loss of close to RM2 billion in 2011.
The Auditor-General Report today stated that Syarikat Prasarana Negara, an infrastructure company which had the highest recorded deficit of RM763 million among the group, gave its employees between one-and-a-half and two months bonus each.
The report also found that MIMOS, the country’s research centre, was the most generous of the group, by giving out between two and three months bonus to its employees, despite making a RM4.6 million loss in 2011.
Meanwhile, employees of KTM received the least with the railway operator distributing ex-gratia payments of a half-month’s salary or a minimum of RM500 in the same year. The company made losses of RM103 million.
The other companies which lavished its employees with bonuses despite making losses were Amanah Raya, Jambatan Kedua, Indah Water Konsortium (IWK) and Cyberview.
Now this is a catch 22 situation. The GLCs which provide services to the people are generally working under the pretext of ‘social responsibility’. Obviously they can’t make enough money otherwise the best possible way to increase the profits is to just charge the customers more.
In other words, IWK will just need to increase their rates, Prasarana and KTM just need to increase their fares. Since customers are a bunch of easily annoyed creatures, the costs were never truly borne by the public (Prasarana for instance have not reviewed fares for more than 10 years).
Realistically, GLCs need to reward staff who are performing really well despite the outcome of the financial accounts otherwise these companies will unable to motivate and retain good workers. They will move elsewhere if their contribution are not recognise.
And as mentioned in the tweets of Prasarana’s CEO, Datuk Shahril Mokhtar (the only CEO so far who took to twitter to briefly explain the AG Report findings) – Prasarana’s financial position is automatically handicapped by depreciation and financial costs amounting to RM700 million annually which greatly contributed to the RM763 million loss. Not surprising since Prasarana is an asset and infrastructure based company.
No explanation have come forth from IWK, KTM, MIMOS, Jambatan Kedua etc.
The Treasury however, did issue a brief response:
The treasury said these GLCs were not set up for the sake of making huge profits but to fulfill its social responsibility and nation-building objectives.
Hence, it was up to the Ministry of Finance to determine if these companies had achieved its key performance indicators
Now this is a piece of news that might slightly appease former YB Wee Choo Keong. This ardent scrutineer of Malaysia Airlines have been slightly pacified by the fact that the misadvised share-swap between Air Asia and MAS (in substance, it was actually a takeover of MAS by Tony Fernandes and his cronies) had been reversed exactly a year ago.
Malaysia Airlines Halves Operating Loss in Q1 2013 with 17% Traffic, 14% Revenue Improvement & Positive Cash Balance
Wednesday, 29 May 2013, Kuala Lumpur – National carrier Malaysia Airlines registered a significant improvement in its operations by reducing operating loss by 46% to RM165 million for the first three months ended 31 March 2013 compared with RM307 million in the same quarter in 2012.
The improved performance was delivered in the face of poor economic conditions in which the airline delivered 17% increase in passenger traffic, 14% increase in revenue, and a higher seat load factor of 76.6%. This performance demonstrates that the continued focus to improve revenue and passenger loads is working. For the first quarter of 2013, the Group increased available seat capacity by 11% and increased flight frequencies by 9%.
Malaysia Airlines registered a RM147 million positive cash balance from its operating activities in the first three months of 2013, compared to a negative cash position of RM202 million in the previous corresponding period. This is the third consecutive quarter of positive cash contribution from operating activities.
“Our operating statistics are strong and recording encouraging traction to build up our passenger numbers and growth. These have enabled our Group to generate positive cash balance, and essentially stop the bleeding. However we still have a lot of work to do to align costs to revenue, to increase productivity and efficiency, and improve yields”, said Ahmad Jauhari Yahya, Malaysia Airlines Group Chief Executive Officer.
“The conclusion of the Rights Issue is a milestone for Malaysia Airlines. With the cash injection and capital restructuring, our balance sheet is now on a very strong footing. This gives us wider options to implement a growth strategy for this challenging business environment”, added Ahmad Jauhari.
Malaysia Airlines’ recent Rights Issue exercise to raise RM3.1 billion from shareholders received an over-subscription of 41% valid acceptance and excess applications for the 13.36 billion new shares on offer. The Rights Issue is part of efforts to ‘reset, reboot and rebuild’ Malaysia Airlines which includes redefining business strategies, rebuilding its balance sheet strength to regain and build up its market position.
Traditionally the first half of the year sees weaker performance for airlines. Coupled with increased pressure on yields from intensifying competition and higher costs, Malaysia Airlines group registered a Net Loss after Tax was RM279 million for the first quarter of 2013 compared to a loss of RM172 million previously. This was mainly attributed to an unrealized forex loss of RM21 million in Q1 2013 compared to a forex gain of RM200 million in the previous year. Higher financing costs for its fleet renewal programme also contributed to the overall net loss.
“The continued high jet fuel prices, added capacity in the market and increased competition, put pressure on our yields. The business environment is tough, but Malaysia Airlines is now able to respond faster to changes in the market”, added Ahmad Jauhari.
Malaysia Airlines group revenue for Q1 2013 rose 14% to RM3.55 billion from RM3.11 billion previously. Expenditure for Q1 2013 was RM3.71 billion, 8% higher than the previous corresponding period, mainly attributed to high jet fuel costs, handling and landing costs, flight-related and leasing expenses. Depreciation also rose with the arrival of 6 A380s, 7 A330s and 8 B738s into its fleet over the last 12 months.
Jet fuel prices remained high at an average USD135 per barrel in the first quarter of 2013 compared to USD130 per barrel in the corresponding period last year. The Group’s fuel bill was 37% of total expenditure.
The Group carried 3.6 million passengers in Q1 2013, an improvement of 16% quarter-on-quarter (q-o-q). For the airline itself, passenger revenue was up 11% to RM2.47 billion, however yield decreased 5% to 24.2 sen per RPK.
Externally, the aviation environment saw strong growth in the first quarter of 2013 with both the International Air Transport Association (IATA) and Association of Asia Pacific Airlines (AAPA) reporting improvements in monthly passenger traffic in tandem with better business conditions.
The Asia Pacific region is expected to be the future growth centre of aviation demand, and Malaysia Airlines is well-positioned to tap this future growth. In addition to strengthening its footprint in Asia Pacific with increased frequencies to more business and leisure regional destinations, Malaysia Airlines now offers a wider international network with its membership of oneworld which it joined on 1 February 2013.
Whilst it is still early days to quantify the benefits, the carrier saw interline revenue jump 40% in the period February to March. “We expect interline revenue to increase further as more guests get to know about Malaysia Airlines through oneworld. Joining the alliance is a good platform to widen our reach and brand”, added Ahmad Jauhari.
In other operational matters, On Time Performance (OTP) was maintained at 85.1% for the first quarter of 2013.
Its fleet renewal programme is on-going. By end March 2013, all 6 A380s ordered had been delivered. By flying twice daily Kuala Lumpur-London, and once daily Kuala Lumpur-Paris and Kuala Lumpur-Hong Kong, Malaysia Airlines is optimizing aircraft utilization to average 17 hours daily. This is the said to be the highest, if not one of the highest in the world, A380 aircraft utilization.
It is quite a relief to see our national carrier is showing signs of improvement. Although they are not out of the woods yet, the exponential increase in revenue sees greater hope in cutting down their net loss after tax for the whole 2013. In 2012, they suffered RM433 million in losses while back in 2011, the loss was even higher at RM2.52 billion.
But what is troubling is the non-operating expenditure MAS is incurring such as depreciation, forex losses and financing costs. Stating the obvious, if these items are not managed and streamlined properly, it will eat up the revenue gained in each and every quarter. The only silver lining is the positive cash balance. And even that was helped by the rights issue.
However, this is much better than all the ‘turnaround exercises’ done by previous managements of MAS to window dress its financial statements. Asset unbundling, asset flipping, forex gains, fuel hedge initiative and all other short cuts conjured by the consultants etc.
What MAS needs is a more organic growth. And hopefully its top management can perform their duties that we all can be proud of.
By the way, kudos to MAS for bringing back a stranded mother and her sick child from Vietnam last week. Now that is a humane effort that will be remembered for a long time.
KUALA LUMPUR: Felda Global Ventures Holdings Berhad (FGV), the world’s third largest oil palm plantation operator, posted a 55.9 per cent increase in revenue to RM2.68 billion for its first quarter ended March 31, 2013.
But its profit before zakat and taxation for the quarter declined by 22.2 per cent to RM218.51 million, from RM280.81 million in the corresponding quarter last year.
Net profit dropped by 25.2 per cent to RM167.06 million from RM223.21 million in the same period previously, FGV said in a statement Wednesday.
The company said the decline in profit primarily reflected the effects of lower average crude palm oil (CPO) price realised by the group of RM2,264 per tonne compared with RM3,205 per tonne in 2012.
Malaysian CPO prices have been trading at around RM2,315 per tonne since December 2012 compared with last year’s average of RM3,190 per tonne, which was aggravated by reduced palm products purchases as well as high inventory holdings in the edible oil consuming countries such as India and China, it added.
FGV Group President Datuk Sabri Ahmad said that in line with other plantation companies, FGV’s plantation division had also been adversely impacted.
“However, as an integrated organisation, FGV has the flexibility to utilise cheaper feedstock in the refineries to offset the effect of reduced pricing and at the same time compete with other edible oil producers,” he said.
He added that the palm oil industry was expecting a price correction by the middle of the year, especially during the upcoming fasting month as demand rises.
Sabri said the decline in profit was also attributed to other factors, including higher fair value changes in the land lease agreement liability of RM54.60 million and provision for impairment which amounted to RM13.66 million related to a joint controlled entity.
Sabri said that the government’s decision to launch the B10 biodiesel programme in its effort to stabilise the CPO price was also timely.
“Taking on this opportunity, FGV had entered into an agreement to acquire a biodiesel refinery located in Kuantan, Pahang and expects the plant to be fully operational by mid-2013,” he added.
“With our resilient integrated business model and new businesses developed in the recent years as well as strong asset base, we are reasonably confident that we will overcome the difficult environment, and barring any unforeseen circumstances, we are optimistic of the prospects for the rest of the year,” added Sabri.
There’s nothing much that can be said about FGVH since that industry is at the mercy of global prices. Even Genting Plantations is suffering a dip of their quarterly profits.
PETALING JAYA: Genting Plantations Bhd’s net profit for the first quarter 2013 (1Q13) fell 44% to RM44mil from RM78.7mil a year ago, due to lower palm product selling prices and a RM31mil contribution for charity purposes.
However, its revenue for the quarter has increased 26% to RM343mil from RM272.6mil a year ago, notably due to stronger sales in its property segment. Earnings per share were lower at 5.8 sen versus 10.38 sen a year ago.
“In 1Q13, the group achieved average crude palm oil and palm kernel selling prices of RM2,293mt and RM1,165mt, down 28% and 40% respectively from the corresponding period of 2012,” it said.
Genting said its softer palm product selling prices outweighed the impact of higher crop yields during the quarter, adding that its fresh fruit bunches output had increased 32% year-on-year (yoy) mainly from its Sabah estates, which had recovered from favourable weather and additional planted areas are moving into higher yielding brackets.
On the other note, the firm noted its property division earnings had quadrupled, posting an increase of profit to RM25mil from RM5.9mil a year ago backed by strong demand for properties in Genting Indahpura.
Genting said it would continue to leverage its presence in Johor, particularly in the burgeoning Iskandar Malaysia region.
Yesterday’s news in Cars, Bikes, Trucks gave some hope in one of the most problematic public transportation here in Malaysia, specifically in our capital city, Kuala Lumpur. I even wrote about it a couple of years ago where a few bad apples in the taxi service industry have tarnished the image of this country.
Thus it is encouraging to read the news:
SPAD Plans to Merge Taxi Companies
The merger of taxi companies in Malaysia is on the cards.
According to the chairman of Land Public Transport Commission (SPAD) Tan Sri Syed Hamid Albar, the proposed move to merge the cab companies would only increase the competitiveness of the public transport industry.
“If you remember the financial crisis in the late 90’s when the country was hit by economic downturn, several banks were merged to strengthen the financial institutions. This is the same formula for the taxi industry,” he said at a press conference after hosting meet-the-taxi-driver luncheon session for 500 cabbies at SPAD headquarters in KL Sentral today.
He also added that SPAD would standardize allocation and distribution of individual taxi permits as well as leasing as part of an effort to restructure the industry in the upcoming National Land Public Transport Masterplan.
“There are 45 per cent individual taxi permits out of the 37,000 taxi permits at present in Klang Valley. SPAD is scrutinising the whole range of individual taxi permits to ensure that the standard of service of the taxi drivers will continue to improve,” said Syed Hamid.
Cars, Bikes & Trucks learned that more details of the merger and restructuring of the taxi services would emerge when the government will host another round of meet-the-cabbies session soon.
Syed Hamid also added that since 2011, no new taxi permit was issued by the commission in view of the high number of taxi drivers in the country.
The taxi-to-passenger ratio for Klang Valley cabs is considered as among the highest in the world with 4.8 taxis against 1,000 populations.
This is in contrast New York City’s 13,237 yellow cabs in 2011, a ratio of 1.6 against 1,000 people followed by Hanoi at 2.2 per 1,000 persons, Jakarta at 2.65 per 1,000 populations and London at 2.8 per 1,000 people.
“The commission discovers that sizeable numbers of taxi permits are inactive or dormant. Most of these cases involve individuals, associations and organizations that received the Special Approval Letter (STK) in the past but failed to operate over a period of time,” he said.
In addition, he said, SPAD is currently negotiating with cab operators to standardize the existing hire purchase practice because “there’s a wide range of rental rate, between RM45 to RM15 per day.”
Syed Hamid also said the commission won’t seize the taxi permit without a valid reason and “will only retrieve the dormant permit.”
“If the permit holders do not have the financial capability to purchase a new taxi including insurance, maintenance and so forth, SPAD will try to assist them to obtain loans from financial institutions,” said the commission supremo.
I won’t delve further on to something which is not yet certain but merging taxi companies will surely be a good thing. Actually the best case scenario is to follow the history of RapidKL buses.
Back in the day before RapidKL buses existed, even before the now defunct bus operators of Intrakota and Cityliner plough the routes, there were many bus operators in the Klang Valley. We had Len Seng buses, Len buses, the Selangor Omnibus, Sri Jaya buses etc. We also had the highly dangerous speed demons called Bas Mini Wilayah.
This scenario is very much akin to the current taxi industry where there are too many players and laden with poor service.
What happened to the bus service industry was, Prasarana bought over Intrakota and Cityliner in 2003 (while retaining those two as operators) and they began operating as RapidKL in 2006.
As the result, there are synergy in the efficiency of resources where profitability of the routes increased, better service all around, timeliness has improved and a more manageable supply and demand.
Compare our current bus service to the one we had in the 90s and we can see huge improvement.
Therefore the merger of taxi operators should be something to look forward to. Just from the news report above we can see red flags all over the place. Too many dormant permits, too many taxis (disrupting the supply and demand), problematic hire purchase practice, and 45% of 37,000 permits are individual permit holders. That means, there are possibly 16,650 taxi drivers trying to survive on daily basis with meagre income.
Apart from bad service by some taxi drivers, the industry itself is rife with other problems such as political interference and alleged corruption in giving out taxi permits.
All these have to stop now.
Since the advent of ETP where the government is cultivating greater cooperation and initiative from the private sector, it would be good if there are highly experienced and financially capable companies to back this plan. If there is one flagship (let’s skip the Intrakota and Cityliner busines model) much like RapidKL to operate the whole taxi industry in the city centre, then there will be synergy which will benefit the end users.
Imagine if for example, RapidKL takes over all taxi operating companies and all willing taxi drivers are employed as full time staff. The management can then plan the routes and areas with greater efficiency. There won’t be any overlapping of supply, connectivity of residents in Klang Valley will be maximise. From residential areas where there are no RapidKL buses, there will be taxis to pick up passengers to LRT Stations. Or taxis will only travel the routes where there they will not overlap the LRT or monorail routes. Taxi drivers are paid salary instead of relying on meter fares. Thus decreasing the risk of taxi drivers cheating customers. Disciplinary action can be taken to errand taxi drivers and dealt with more effectively since they are full time staff. Above all, there is no more need to issue taxi permits.
Well this is just a suggestion; from an outsiders’ point of view.
Better connectivity is what is missing in our public transportation industry.
But if RapidKL has too much on its plate then there are other private conglomerates in the automotive industry that can surely operate this kind of business. What is important is the need to standardise and improve the service immediately. Otherwise the whole industry will jeopardise our reputation as one of tourists’ favourite destination.
A reader sent this through the comment section:
Urgent 28th December 2012
Protest Against Secret Ballot Exercise On MAS Cabin Crew & Claim of Recognition By National Union of Flight Attendants Malaysia (NUFAM)
MASEU has been informed or given to understand that NUFAM has been registered and had sought recognition from Malaysia Airlines (MAS) to represent its cabin crew.
MASEU is of the view that it is highly improper or right for recognition to be given by Malaysian Airlines to entertain NUFAM’s claim for recognition due to the following reasons:-
(1) A “general recognition” had long been accorded by MAS to MASEU as a general body to represent its non-executive employees including its cabin crew (i.e. graded staff) since the establishment of MASEU as an in-house union in 1979, after the Airlines Employees’ Union, Peninsular Malaya (AEU), (which represented most of Malaysia Airlines’ employees including those of foreign airlines that operated to Peninsular Malaysia) was deregistered.
(2) Giving recognition to two unions to represent the crew is not in the spirit of good industrial relations and would cause industrial disharmony among the cabin crew who are members of MASEU and members of NUFAM. This will conflict with the objective of the Industrial Relations Act 1967.
(3) MASEU cabin crew are well represented for 33 years in its central Committee since 1979 and currently is represented by four duly elected Cabin Crew. MASEU had successfully concluded Collective Agreement (CA) covering all its graded employees including cabin crew from the time of its establishment including the 2012 CA which MASEU had concluded with MAS on 12.12.2012.
After almost one year, we are puzzled to receive a circular via MH internal mail dated 20th December 2012 from Secretary General of NUFAM to MAS Cabin Crew that NUFAM and MAS have signed a Voting Memorandum of Understanding (MOU) which will allow the National Union of Flight Attendant (i.e. NUFAM) to conduct a secret ballot exercise in MAS and this secret ballot exercise will determine whether NUFAM will be allowed to manage MAS Cabin Crew’s CA.
MASEU protest to the proposed secret ballot exercise and MASEU request that the following action be taken by the Industrial Relations Department:-
a) To permit MAS not to entertain any claim of recognition by NUFAM to representatives cabin crew members on the grounds given above and it is improper for MAS to sign a Voting MOU with NUFAM on 19th December 2012 especially when there is already an existing in-house union i.e. MASEU that governs MAS Cabin Crew’s CA successful for 33 years,
b) To seek the good office of Director General of Trade Union / Minister of Human Resources to direct the NUFAM to amend its constitution to prohibit MAS cabin crew to join NUFAM on the ground that there is IN EXISTENCE an in-house trade union to represent MAS cabin crew, as evident from the Collective Agreements concluded with MAS SINCE 1979 and WHICH had been taken cognizance by the Industrial Court,
c) To advise the Director General of Trade Union to withdraw or cancel the certificate OF registration of NUFAM, under Section 15 (2)(a) of the Trade Unions Act 1959 (Act 262) as MASEU has the largest number of MAS employees as members of MASEU if NUFAM refuses to amend its constitution,
d) To cancel the proposed secret ballot exercise involving MAS Cabin Crew, as by allowing this exercise, would cause a conflict of interests or division of loyalty among MAS Cabin Crew, who are members of MASEU if they are invited to participate in the secret ballot.
e) To advise MAS to revoke the Voting MOU where MAS and NUFAM signed on 19th December 2012 as this contravenes Article 8 of the Collective Agreement (CA) between MAS and MASEU. An extract of Article 8 is reproduced below:-
“Article 8 – UNION RECOGNITION AND SCOPE OF REPRESENTATION
The company recognized the Union as the sole collective negotiating body representing its permanent employees in Peninsular Malaysia referred to in the Employees Classification Table set out in Schedule IV.”
MASEU views this matter seriously as the action of MAS management in signing the Voting MOU is tantamount to inducing MASEU Cabin Crew to refrain or resign to be a member of MASEU and this contravenes Section 5.1. (e) of the Industrial Relations Act 1967 which is reproduced below:-
“SECTION 5 – PROHIBITION ON EMPLOYERS AND THEIR TRADE UNIONS IN RESPECT OF CERTAIN ACTS
5.1. No employer or trade union of employers, and no person acting on behalf of an employer or such trade union shall:-
(e) Induce a person to refrain from becoming or to cease to be a member or officer of a trade union by conferring or offering to confer any advantage on or by procuring or offering to procure any advantage for any person.”
MASEU believe that since the registration of NUFAM was under political pressure, we also believe that the secret ballot exercise is subsequently under political pressure to grant recognition to NUFAM to represent MAS Cabin Crew is an attempt to annihilate sustainability/survival of MASEU. This practice is highly undesirable and bad for fostering good industrial relations.
MASEU object strongly to the stand of the Ministry action and demand the Ministry to act rightly within the legal framework of the Industrial Relations Act 1967 and the Trade Union Act to foster good industrial relations in not only MAS but in the Country.
MASEU further believe if such practice is condoned or continued, it would encourage other categories of MAS graded employees to form another National Union in MAS, which would not be in the interest of MAS and its employees.
MASEU request that DG industrial Relations and DG Trade Union to take immediate action to accede to our request.
The reader further said, - MAS does not want to recognise NUFAM but was forced by DEP MOHR to bear all costs for NUFAM exercising secret ballots inside MAS so NUFAM can recruit MAS cabin crew as members. Current number NUFAM has is 58 only since the inception of nUFAM on 27th January 2012. Dep MOHR is the one responsible for approving NUFAM even though in-house union already existed for mas cabin crew. REPORTS to SPRM on NUFAM President for misused of fund already been lodged.
Why should there be two unions within one company? This matter was also highlighted by The Star here.
Yesterday, we explored the possibility that Rafizi Ramli and Anwar Ibrahim had vested interests in seeing Balfour Beatty – Ingress consortium wins the Ampang LRT extension project.
In one of the paragraphs, it was mentioned that Halcrow was selected to be an independent evaluator of the tender bids eventhough it was shown in records that it had business ties with one of the bidders – Balfour Beatty.
The news in The Star today didn’t come as a surprise. It is self explanatory. One thing for sure, those who leaked the documents could face the law. As for Rafizi, he could have used the Whistleblower Protection Act and save himself from the trouble if all his allegations and exposure were proven to be untrue.
But instead, he chose to do the usual chest thumping, attention seeking, react first – think later kind of drama in order to gain political mileage. Every action has consequences. Unless of course, he and Anwar Ibrahim think they are above the laws. The public would thank them more if they are more sincere and guilt-free in exposing wrongdoings. We have no doubt that there are corruption in this country. But please don’t think everyone is involved in corruption just because you yourselves are doing it too.
Halcrow under probe
MACC checks for any conflict of interest, integrity of evaluation on bids
PETALING JAYA: British engineering company Halcrow is under investigation by the Malaysian Anti-Corruption Commission (MACC) for a potential conflict of interest and on the integrity of the evaluation process of eight bidders for the RM965mil Ampang light rail transit (LRT) job.
Halcrow, which was appointed independent evaluator of the eight bidders for the LRT job, was tasked with assessing the capabilities of the bidders which included a joint venture consortium led by George Kent (M) Bhd and other tenders by joint-venture companies involving companies such as Balfour Beatty.
The police have also started separate investigations into how classified documents were leaked, which has since been used to create a political storm over the award of the contract to the eventually winner of the tender the George Kent-Lion Pacific joint venture.
“The relevant authorities are investigating the matter,” said Syarikat Prasarana Negara Bhd group managing director Datuk Shahril Mokhtar.
Sources said the MACC and the police had interviewed officials in Prasarana on those two separate allegations, the first surrounding Halcrow in its role as an independent evaluator.
MACC director of investigations Datuk Mustafa Ali confirmed the commission was looking into the matter but declined to elaborate.
Halcrow, which was to assess the capabilities of the bidders on behalf of Prasarana, undertook a technical evaluation of all the companies involved in the tenders, including one by the Invensys-Balfour Beatty Rail-Ingress consortium.
The British-based company that provides major consultancy services for infrastructure developments was to have independently evaluated the bid submissions for the Ampang LRT extension and report its findings, had a prior working relationship with Balfour Beatty in a past tender.
A search of both companies revealed that directors and top officials of both Halcrow and Balfour Beatty had positions in joint-venture companies established by both companies to bid for the Hounslow Highways PFI contract in the UK. It did not win that bid.
Balfour Beatty and Halcrow were part of a consortium that won a £35mil (RM169mil) Porthmadog, Tremadog and Minffordd bypass in Wales.
Both companies had also formed a joint-venture company for a project in the Jebel Ali Free Trade Zone.
The relationship between both Halcrow and Balfour Beatty might have given rise to questions whether proper disclosure was made of their relationship prior to the appointment of Halcrow to independently assess the companies bidding for the project.
The scorecard of the companies bidding for the project has since been politicised by PKR’s director of strategy Rafizi Ramli. On July 3, he disclosed details of the Halcrow technical report which was critical of George Kent and questioned the award of the Ampang LRT project to George Kent.
The police are probing how the documents were leaked under the Official Secrets Act and have interviewed Prasarana officials on that matter.
Prasarana has since commented that the leaked details of the Halcrow report did not give the public a full picture of the entire tender and award process.
“Dated selective excerpts have been superseded by new information resulting from the clarifications. They did not do justice by labelling certain activities as interference’ when what were and are being done are due diligence processes by the Government,” Prasarana media manager Azhar Ghazali said in his comment on July 20.
The George Kent-Lion Pacific consortium has refuted allegations it was incapable of delivering on the Ampang LRT extension project.
“We strongly refute the baseless allegations that GKLP-JV (George Kent-Lion Pacific joint venture) failed the full technical and commercial evaluations. There were numerous criteria considered by consultants, the Finance Ministry and by Prasarana,” said George Kent executive director Dr Cheong Thiam Fook in a statement on Aug 2. George Kent is confident it would deliver the system works for the Ampang LRT extension on cost and on time.
We heard so much news about the failed bid of Balfour Beatty consortium for the past few weeks.
Parti Keadilan Rakyat had not been shy in organising weekly press conferences to disseminate information to the ignorant public about the alleged abuses of power and corruption that are plaguing our country. All these apparently are committed and perpetuated by the Umno (not Barisan Nasional) government.
PKR’s ever loyal lackey, Rafizi Ramli has been given the unenviable task of exposing all these alleged corruption which almost always would land him in hot soup. This is due to the fact that all his exposures were either done unethically or the facts he presented were flimsy at best and filled with conjectures or with extrapolation of assumptions.
The latest episode is about the Ampang line LRT extension project which was according to PKR, was initially won by Balfour Beatty consortium. It was reported in his 13th July press conference that Balfour Beatty is the best contractor for this job.
Rafizi has repeatedly accused the prime minister of interfering in the tender bid and granting the multimillion contract to George Kent, which had scored one of the lowest points in the technical and commercial evaluation for the project, but has not shown proof until this week.
This was despite an earlier decision by Putrajaya to award the multi-million ringgit rail project to Balfour Beatty-Invensys Consortium, which Rafizi said was best qualified for the job.
He implies that there is something wrong with the tender process and accused the Prime Minister as intervening the selection process. His main contention was how could George Kent be given the contract and not Balfour although the latter apparently scored higher than the former in the tender evaluation process.
He is astonished that contractors recommended by Syarikat Prasarana were not selected by the Ministry of Finance’s Tender Committee. Furthermore, Rafizi assumed that the selection of contractors can be done at the whims of MOF. This had riled him up and PKR as a political party is not happy with it, to the point of making this an election issue.
Hence they are making so much noise due to the fact that a contractor had lost the contract to a rival company.
But it is equally astonishing that Rafizi and PKR did not even utter a word of protest when in one of the initial rounds of the tender process, Balfour Beatty was rumoured to receive this contract eventhough a South Korean consortium (PDA Consortium) were highly recommended by Prasarana.
An average observer can note that Rafizi had been silent about this issue a few months ago. Especially when his favourite contractor seemingly got the contract. But that changed a few months later.
His first press conference came in late June 2012 when, like a jilted lover, lambasted Prime Minister for snatching the contract right under Balfour’s nose and giving it to George Kent consortium.
Now lets review the point of contention from Rafizi on why George Kent shouldn’t get this contract. He claimed that George Kent had scored one of the lowest points in the technical evaluation process (although initially he said George Kent failed the process). He also claimed that George Kent’s bid were higher than Balfour’s.
Thirdly and this is quite tedious, superficial and superfluous; George Kent has a partner which had made business transactions with one of the business partners in a Scorpene deal more than 10 years ago. A professional consultant that advises the tender process, Halcrow even said that “it is not confident that the George Kent consortium can carry out the project”.
In actual fact, George Kent – Lionpac is one of the 28 companies that submitted their tender documents and pre-qualified for the job. Balfour Beatty – Ingress consortium is another company that had a chance to win this job.
Notwithstanding the points received by the Korean PDA consortium, George Kent received 38.62 out of 70 points on technical. All participants of the tender must meet the passing mark of at least 35 to qualify for the next stage. Notably, Balfour Beatty scored higher. And at this point of time, Geroge Kent was third lowest bidder out of 8 shortlisted.
Ostensibly, George Kent failed the financial aspect (scoring 8.7 out of 30 points) but this was due to late submission of evidences on their financial strength and position. When their cash and funding position was finally evaluated by MOF, George Kent eventually scored higher financially and passed in that aspect. This fact was neglected by Rafizi and PKR and was not included in any of their press conferences.
Therefore, it is unfair to say that George Kent do not deserve this project. In fact, when the project was awarded, George Kent made statements to rebut all the allegations that it is not worthy of such project. In the end, the cost of the project given is even similar to what Balfour was rumoured to bid; at RM956 million.
We all know, and this can be the same in all states, Pakatan or otherwise, that the winner of a tender process is not necessarily the ones that received the highest mark or bidding with the lowest cost.
It is also a moot point to delve into the role of Halcrow in the tender process although it is quite strange to see that the role of giving independent advice on the tender process went to a company which had a lot of business ties with Balfour Beatty. Maybe Halcrow had declared this beforehand and the MOF sees nothing wrong with it. Moot point.
Please note that Prasarana is 100% owned by the MOF and it is only logical that all strategic decisions are made by the shareholder. And selection of contractors fall within the ambit of shareholder’s powers.
Now, what is it about Balfour Beatty which made them receive an utmost support by PKR? The answers could lie in Balfour’s main partner in this consortium – Ingress Corp Bhd.
Ingress’ chairman and chief executive officer is none other than Datuk Rameli Musa. He was Anwar Ibrahim’s schoolmate back in the MCKK days. He is so close to Anwar Ibrahim, he got a grand exoneration and support from the former deputy prime minister against the accusations thrown by Raja Petra back in 2008.
Moreover, Rameli Musa is a fellow trustee in a foundation headed by Anwar Ibrahim. Who knows what other connections he might have. Back during the dizzying heights of Anwar Ibrahim as Deputy Prime Minster, Rameli Musa was vice chairman of Sapura and is reported to be a ‘confidant’ of this glorified heir apparent of Dr Mahathir.
Obviously with all these connections and the fact that the whole of PKR, with Rafizi as the spokesperson of Anwar Ibrahim are busy defending Balfour and wrongly excoriating Najib just because another company was awarded the project, the coincidence of Ingress – Balfour – PKR cannot be denied. Arguably, Anwar Ibrahim’s LRT project could have been key to fund Pakatan Rakyat’s war chest.
We truly want to believe that Rafizi and PKR are being selfless in trying to expose any wrongdoings by the federal government for the sake of the people. We do want to see that Rafizi could at least present a truthful and honest facts devoid of any ulterior political motives. At the very least we would love to see Rafizi win a debate convincingly.
This remains to be seen.
Before we move further, let us look at the issue from other perspective for a bit and go straight to the real issue here.
On top of the pile, is the Prime Minister, Dato’ Sri Najib Tun Razak who is also overseeing Khazanah Nasional by virtue of him being the Minister of Finance as well.
Since he could be either impotent in dealing or maybe oblivious towards Azman Mokhtar’s many, many failures and shady deals, it is high time the Prime Minister takes a serious look into the affairs of his subordinates. Or at the very least, have the temerity to veer Khazanah Nasional into proper direction and whip it into shape.
Before this issue causes Barisan Nasional to lose more votes (who would want a government which do not punish non performance among its top brass and governmental institutions?), the office of the Prime Minister and the Minister of Finance must be seen as stringent in following its own tagline. Unless of course, the word ‘performance’ in “People First, Performance Now” connotes a different meaning altogether.
Because based on blog reports on mismanagement by Khazanah, it is unprecedented that a Managing Director of a GLC couldn’t manage some of the wealth of this country properly and yet be rewarded for his services to this nation.
Take on recent incident recently – the MAS/AirAsia shareswap. Never mind that the deal is so unfair towards MAS, but what is more glaring are the subsequent actions taken by the besieged MAS which defy any logic.
The latest misjudgment is the termination of 8 routes by MAS; among others, to Rome, Dubai, Buenos Aires and Surabaya.
Reason cited is ‘to rationalise unprofitable routes’.
We don’t have to tell the ordinary people on the streets on how difficult it was to get those routes in the first place. With so much money being pumped to market and promote those routes, it is certainly not the best way in dealing with an already competitive industry.
The dip in MAS’ reputation for dropping these routes will eat up their market share, if not already.
Wouldn’t it better if they had focused on passenger mile optimisation whereby apart from operational cost reductions, they must emphasise on selling the premium seats and reduce non-revenue no-shows. In other words, more aggressive marketing and selling! When was the last time you saw MAS advertisement on TV?
First class and business class seats are important yield boosters. As it is, there are not many first class and business class seats in MAS routes. God forbid if they were to drop London or Paris routes in the near future. That would be a catastrophe. But another airlines’ erroneous decision would be another’s gain.
The long haul AirAsia X could take over from these routes all to itself.
Actually if AirAsia is really sincere, they can start selling its tickets to passengers going to routes that MAS flies which AirAsia does not. Like a code sharing system. Meaning, they share the revenue with MAS taking the bigger bulk of it.
MAS abandoning those routes altogether is simply outrageous! To think that MAS does have other code sharing partners to begin with and the fact that MAS and AirAsia own each other’s shares but not having any code sharing venture is ludicrous.
One of the biggest and mind boggling operational cost is the flight catering cost. All know that the sole supplier for passengers’ food on board of MAS flight is LSG Skychef – Brahim Sdn Bhd; a company owned by Tun Abdullah Ahmad Badawi’s brother.
This company was awarded a really long contract to supply on board catering for MAS all the way to 2028! With costs quoted at stratospheric levels, it is bleeding MAS in hundreds of millions on yearly basis. Who is responsible for not looking into this contract and renegotiate a better one?
If they do not have the willpower or enough testosterone to negotiate the prices down, at the very least, the owner of MAS should have terminated this contract for its unfair prices and open another tender to acquire another supplier with more reasonable arrangement.
But they are not doing that. What they did was:
1) advertise in a small English Premier League club
3) letting many experienced staff go
4) allowing Tony Fernandes making a fool of MAS and Khazanah
5) abandon highly sought after routes
Whose fault is it?
Bear in mind, Azman Mokhtar and his partner in crime, Danny Yusof were the ones responsible for the Wide Asset Unbundling (“WAU”) back in 2002 which at that point of time promised everyone to be THE strategy to save MAS.
Fast forward to the future, we know that WAU was a failure. All the double degrees attained from Oxbridge by Danny Yusof or years of experience being a consultant by Azman Mokhtar couldn’t save MAS the first time. What makes them think they can save MAS the second time?
So we are back to square one. In fact, MAS’ position right after the shareswap is even worse than years before the WAU. Now, MAS is in the hands of its competitor – Air Asia.
Even having a Chief Operating Officer in the form of Mohd Zainal Shaari, another consultant, which was brought into Khazanah from PricewaterhouseCoopers can’t seem to save us from further losing money.
The most favourite word of a consultant (and investment banker) is corporate restructuring.
Restructure this and that. Hoping for a synergy of sorts. But restructuring a business on paper via equity transfers are not the only solution to make a business more viable. Any businessmen would know that. But the bosses in Khazanah are not businessmen. Trying to meddle in operations when you have close to zero knowledge about the business is a disaster waiting to happen.
How could Danny Yusof be appointed as the Group Deputy CEO of MAS in charge of operations when he left a trail of failures behind him? He did not do well in Aseambanker (he is not an investment banker); he was in charge of the restructuring of RapidKL of which the Operational Agreement he concocted made RapidKL even worse (he is not a public transport expert); RapidKL had to be restructured again in 2009 before it could sink even deeper.
And now he is trusted to manage MAS’ operations? Is he an aviation expert?
Do you know that MAS has no Chief Financial Officer for the longest time? How could a national carrier operate without a CFO? Not only that, the position of Head of Communication is vacant. No wonder MAS is floundering financially and publicly, its image is not all good.
This is not the first time Khazanah making disastrous decisions. In the first part of this article, it was mentioned that Khazanah lost RM18 billion worth of investments in 2008. They suffered losses when their tuna fishing venture lost RM120 million. In the Parkway Holdings fiasco, they lost RM935 million faster than David Copperfield could say “Hey presto!”.
Rumours are also circling that they are suffering losses in Malaysia Agrifood Corporation Berhad (“MAFC”) – an agriculture venture they cooked up a few years ago.
The mother of all debacle would be the KTM land deal in Tanjung Pagar. After Azman Mokhtar boasted that the deal he pioneered with Singapore was a breakthrough and that the deal is fair and good for Malaysia, he embarrassed Malaysians when Khazanah did not do enough homework and was terribly inefficient in its dealings with Temasek Holdings.
Basically what happened was, under the deal negotiated by Azman, Malaysia will swap the KTM land in Tanjong Pagar for land parcels in affluent Marina South and Ophir-Rochor. The greedy Khazanah probably was swayed with the 60-40 ownership of said land parcels and overlooked a development fee charged by Singapore.
In other words, Malaysians have to pay up to RM1 billion in the form of development fee due to Azman’s sheer inability to negotiate a better position for us. To put it bluntly, Azman successfully negotiated a money losing deal for Malaysia.
Azman Mokhtar had indeed overstayed his position in Khazanah Nasional.
All these string of failures and what did the government do?
They gave Azman Mokhtar a Tan Sri-ship and extended his contract.
People First, Performance Now.
(To be continued)
There is a disturbing news in The Malay Mail today.
Nazri will head Public Transport Commission
KUALA LUMPUR: The soon-to-be-formed Public Transport Commission comes under the responsibility of the Prime Minister.
Minister in the Prime Minister’s Department Datuk Seri Nazri Abdul Aziz (pic) yesterday said this was stated in the Land Transport Bill 2010 and Land Public Transport Commission Bill 2010, approved in Parliament during its last session.
“Both bills state the Prime Minister is responsible. He has informed me I will be in charge of the commission when it is formed.”
His appointment, which Nazri said was conveyed to him by Prime Minister Datuk Seri Najib Tun Razak last year, was fair as he oversees the Commercial Vehicle Licensing Board (CVLB), which will be dissolved once the new commission begins operations on June 1.
Responding to public transport bodies reportedly not in favour of politicians being in charge of the new public transport commission, Nazri said: “Under the Acts, such commissions will always be under a Minister.”
He said public transport operators and nongovernmental organisations which do not wish him to be involved in the new commission should work towards amending the two Acts “They would have to amend the Acts or remove the Prime Minister’s name from the Acts. I have no problem with this. It is a heavy responsibility,” he said, as the new commission would not only take over the responsibilities of the CVLB but also oversee rail transport and tour buses.
The new commission will consolidate the various public transportation departments and authorities.
“When all parties are under one commission, it will be easier to plan,” Nazri said.
As for the public transport operators associations’ suggesting the new commission take on representatives from transport NGOs as well as those with industry experience, Nazri said the commissioners had yet to be selected.
He said the commissioners would be appointed by the Yang di-Pertuan Agong upon the advice of the Prime Minister. The names of the commissioners will be released next month.
Public transport operators had reportedly felt the new commission should function independently of political interferences, similar to the Malaysian Anti-Corruption Commission (MACC).
Deputy Minister in the Prime Minister’s Department Datuk S. K. Devamany had also reportedly said last December that the new commission could fall under his purview.
When contacted yesterday, Devamany said transport operators have no need for concern as the two bills include mechanisms to serve as check and balance to ensure transparency, such as a clear “modus operandi” on planning, monitoring and budgeting.
He said the bills, initially tabled by the Economic Planning Unit of the Prime Minister’s Department, accorded for avenues to address complaints and garner public feedback, including tribunals and forums.
“The commission board is answerable to the Prime Minister’s Department,” said Devamany, adding the move should instead be welcomed.
He suggested discussions with public transport operators to create more understanding on the role of the new commission.
Usage of public transportation among Malaysians, Devamany said, has seen a reduction from 25 per cent to a mere 12 per cent.
“We need to make public transportation cheaper, faster, more comfortable and more timely.”
Why do I find the news above disturbing?
Back in November 2008, I wrote an article about the problems and issues facing the public transportation system here in Malaysia, especially in the Klang Valley.
A particular paragraph read:
The industry need to be revamped as a whole. For a start, there is a need to centralise the governing authority of public transportation under one body. There is an initiative to do this right now. However, a body without the relevant power to deliberate decisions will only be reduced as a token entity in the end. Furthermore, this body must be run by experts; not by politicians whom may be blinded with political expediency.
Let’s deal with the first issue; announcing something which the Prime Minister has not even made public yet.
In a Malay proverb, we call it - “belum duduk, sudah berlunjur”
Simply means, doing something without following proper procedures or doing something prematurely. In other words, you cornered your boss into a difficult decision unnecessarily. There are protocols that need to adhere too. In cases like this, there is a severe lack of class when Nazri tries to pre-empt the Prime Minister’s authority.
Secondly, the Commission, which will be called Suruhanjaya Pengangkutan Awam DiRaja (“SPAD”), has a huge and wide supervisory role for our public transportation system. Nazri claimed that he should be in charge of SPAD by virtue of being the overseer of CVLB. This is quite misleading because CVLB only deals with licensing.
SPAD on the other hand, is a different ballgame altogether. God forbid should he wanted to put Datuk Halimah Mohd Sadique as the Chairman of SPAD. I sincerely think that handling SPAD will be beyond her expertise. And this is not because she is a woman.
We currently have DBKL, the local councils, JPJ, the police force, Puspakom, Transport Ministry, Finance Ministry, CVLB etc (some say up to 14 bodies) governing the public transportation system in the Klang Valley itself. SPAD aims to takeover all the relevant responsibilities from all those individual bodies and merge them under one body.
Like I said earlier, we need experts to run SPAD.
SPAD will have enormous powers i.e., issuing transport licenses, determining public transport routes, budgets, contractors, LRT development etc.
It is certainly not a good governance practice to have politicians to helm SPAD on day to day basis. Naturally, rent seeking politics will permeate within SPAD and the problems plaguing our public transportation system will continue.
I sincerely hope the Prime Minister will think carefully about this particular issue. As what can be read in my previous article about public transportation, the problem is not small. It is costing the government billions of ringgit.
I sure do not want to see it goes down the drain if it is being headed by an underperformer like Nazri.