Aim for the skies, by playing to our strengths

 

I’ve written recently about the woes of Malaysia Airlines and of course of my solution – sell off the airline!

I’ve been an aviation buff all my life. I’ve even worked in aviation, albeit driving a desk rather than doing anything useful such as turning a wrench or flying an aircraft or serving passengers. I was in management.

I’ve nothing against Malaysia Airlines. What I’m against, in principle, is a government competing against its own citizens in business.

At a more practical level, such businesses also tend to fail or at least underperform. There have been literally thousands of them in the country, and we know their collective track record isn’t good.

On top of these are the growing number of other businesses owned by statutory bodies such as Mara and lately, the religious authorities, also funded by the tax-payers and controlled, and often mismanaged, by basically the same political elite.

Too important to fail

Many of these businesses are in effect 

too important to fail

, so we’ll just keep pouring public money – subsidies, grants, preferential loans or forgiveness of their debt, often through fancy financial engineering – to keep them afloat.

We’ll also push revenues their way, often by tying the hands of their private sector competitors, whether Malaysian or foreign. Think of the old Proton and the billions we lost trying to sustain it.

Such businesses live in a highly political environment, beholden to powerful figures in the shadowy nexus of politics and business who get to make the rules and profit from them at the same time.

Most of these businesses are also part of Malaysia’s affirmative action programmes, such as the New Economic Policy. Since 1970 these businesses have proliferated in almost every sector.

But unfortunately, they perpetuate the Malay insecurity about competing on a level playing field, about not having a crutch and not getting preferential treatment. You get addicted to these, and unscrupulous leaders can exploit it easily.

And then there’s corruption blighting these businesses. But that’s a familiar story, best left for another day.

Setting govt policy

So there. Government shouldn’t be in business. What it should do instead is set the strategic framework and create the appropriate laws, policies and enforcement.

This should lead to an attractive environment for foreign investment. Whatever we do we must balance the need to create jobs and grow the economy against the potential damage that can be inflicted by the often larger and more predatory foreign businesses.

Is it wrong for such businesses to come to Malaysia to make money and then send it home? Of course not, as long as they follow the rules. After all we also have Petronas and Maybank and others doing business abroad and sending money back home.

So, while we want to be open and welcoming to outsiders, we must also ensure our own interests are protected. Which brings us back to the Malaysia Airlines case.

While we can argue – as I have – that the entry of foreign aviation services firms is good for Malaysia, and that Malaysia Airlines must buck up and fight for its own survival, there’s more to it than that.

Taking on Singapore

Tony Fernandes, the founder and controlling shareholder (and admittedly, the brand) of low-cost airline group AirAsia, recently challenged the SIA-related business on its actions that affected Malaysia Airlines, and presumably AirAsia itself.

Whatever its impact, obviously AirAsia is coping with it better. But Tony does have a reason to be unhappy with our neighbours down south.

Here’s a painful truth. Singapore is not worried about many of its Malaysian business equivalents – be they airlines or banks or telcos or ports or whatever. They think theirs are superior and more successful than ours.

And generally, they’re right, except in one area – low-cost airlines.

Here our Malaysian pride – AirAsia – is a juggernaut. It’s the largest in Asia and one of the largest in the world. Covid notwithstanding, the AirAsia group has done well in managing their huge growth and the occasional stumbles.

Protectionism

What Tony is sore about is that he’s not been allowed to set up an AirAsia airline in Singapore. That would’ve worked out very well, having such a strategic base in Singapore to serve Asia and onward to Europe, Australia and Africa too.

Why do you think Singapore didn’t allow this to happen? Why do you think in the past AirAsia was not allowed to use the newly-opened low-cost terminals in Changi but had to use the more expensive Terminal 1 instead?

Similarly, why do you think they didn’t allow AirAsia to bus passengers into and out of Singapore from Senai airport in Johor?

The reason is protectionism. While Singapore thinks its corporate blue-chips can handle their Malaysian counterparts, they don’t think they can handle the scrappy AirAsia.

Malaysia’s strengths

What’s interesting is that many of the strengths that made AirAsia great are also Malaysia’s strengths – the entrepreneurial spirit, the ability to thrive in chaos, the devil-may-care courage to explore uncharted territories, etc.

If we exploit these strengths fully, there are many more AirAsia-like businesses that will come out of Malaysia.

Actually, the same may be said of Indonesia and their low-cost counterpart – Lion Air. We have more to be worried about from Lion Air then we do about any airline from Singapore.

This reminds me of a story from a few years ago. A bunch of Malaysians were negotiating with a bunch of Singaporeans about doing something together. The Singaporean decided to pull out because they needed 

x

 to happen, or else it’s no deal.

The Malaysians, while also desiring 

x

, were more like ‘if we don’t have 

x

, then don’t have 

x

 lor…’ and went ahead alone and successfully did it without 

x

.

Culture of disruption

That’s the Malaysian spirit. Singapore, meanwhile, still hasn’t cracked the low-cost airline puzzle. While they have the right culture to make corporations such as SIA great, we crazy Malaysians have the culture to make disruptive start-ups such as AirAsia soar.

It’s the correct question to ask now: what did our side ask from the Singaporeans in return for them coming over to do business and exploit the many advantages here, including some of the best aviation professionals in the region?

We cannot just take whatever is shoved down our throat. We must insist their claims about level playing fields are honoured.

Local champions

In the hysteria of both trying to protect as well as condemn Malaysia Airlines, we forget that our best bet to dominate the region in the civil aviation business is AirAsia.

For all its weaknesses – and there are many – AirAsia has added greatly to the nation’s economy and wellbeing. While they received some help from the government, they have been hampered even more by the government’s desire to protect Malaysia Airlines and other government -controlled aviation businesses.

While we need to attract foreign investment, we must also take care of our own interests. In opening up our markets to foreign competitors, we must also insist they don’t destroy the markets for locals, and that they’re similarly open with their markets too.

And we mustn’t forget local champions with the Malaysia Boleh attitude, who have proven they can fly high and far and wide, and are scary to many outside of Malaysia. Some help will get them to go a long way. - FMT

The views expressed are those of the writer and do not necessarily reflect those of MMKtT