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Friday, May 29, 2015

1MDB: How do you fix a problem you cannot identify?

Restructuring 1MDB is a good move but does the government even know where the real problems lie?
By TK Chua
According to news reports, a restructuring plan is being proposed for 1Malaysia Development Berhad (1MDB) and the Cabinet will be considering it.
What irony really! 1MDB has been in operations for only a few years but the company is already faced with insurmountable challenges requiring major restructuring. I often wonder whether we set up 1MDB to create value or become a national fiasco. Why is it that everything we touch turns into mud?
It is really something if we can come up with a restructuring plan within such a short time. It means we know the problems and the solutions very well.
But do we?
If solutions can be found so quickly, then why is the company facing endless problems in the first place? At least this is the impression I get when I read the news on 1MDB every day.
Do we really know the problems in 1MDB? If so, can we define them and categorise them? Are the problems due to over leverage; buying overpriced assets; making excessively risky investments; impropriety; incompetence; poor oversight; lack of clear corporate objectives; or a combination of any of the above?
I am sure each of these problems requires a different set of solutions. Some may have no solution at all, like instances of impropriety, corruption and abuse of power. These are political, not managerial problems.
If we are not sure of the problems, how do we come up with a road map to get rid of the problems? On what basis is the Cabinet going to make the decision?
By the way, shouldn’t we be interested to know the identities of those entrusted to draw up the restructuring plan? Do they have vested interests? Are they the ones who created the problems in the first place? Do they know the problems well enough to formulate the solutions? If these solutions are workable, why didn’t they put them in place earlier?
I am only asking the questions on most people’s minds. It would appear that everything is now centred on the restructuring plan but given our history of incompetence coupled with our fleeting attention span, my only hope is that the plan does not degenerate into another crisis we are incapable of surmounting.
The restructuring plan for 1MDB may make the problem worse if we are not careful.
TK Chua is an FMT reader.

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