In Malaysia, bailouts are old hat

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NOV 20 — If there's any consolation for enduring the post-Mahathir era hangover, it is that bailouts seem to be a thing of the past. Or are they?

The looming bankruptcy of America's Big Three car makers is a reminder of a time when Malaysia was littered with mega projects that bled red ink and cronyism begat bailout after bailout amid the Asian financial crisis.

Even national car maker Proton Bhd is in much better shape today than, say, three years ago when Datuk Syed Zainal Abidin Tahir first took over. It has slowly but steadily improved — albeit helped by burdensome tariffs slapped on other makes — and is producing cars that Malaysians don't actually mind buying.

Malaysia Airlines too has cut the fat and turned around, despite the difficult operating conditions brought on by the high fuel prices earlier this year.

So it's comforting to have to think quite hard to identify a likely candidate for a bailout today.

It's not to say that Malaysian companies are not struggling with large debt burdens, or suffering from sliding revenues. Air Asia, for instance, has debts of more than RM5 billion, which is four times more than its cash and deposits.

It's not to say government business or hard-to-get licences have not been awarded to favoured firms or businessmen.

It's just that the country's top leaders do not have that rock-hard determination to have their own way that former Prime Minister Tun Mahathir Mohamad did.

Due to his decisions to save his pet projects from the impact of the Asian financial crisis, most of the companies bailed out 10 years ago are now safe in the care of government investment arm Khazanah, chief among them are what used to be Tan Sri Halim Saad's Renong-UEM group and its crown jewel the North-South Expressway toll concession.

Of course, Khazanah has made its own investments, such as the one in wafer-maker Silterra Malaysia Sdn Bhd, which lost RM2.5 billion between 2005 and 2007.

Other projects have been nationalised, such as the greater Klang Valley transport system, which includes the Light Rail Transit system. And, oh, Petronas's shipping arm MISC Bhd bought vessels from Mirzan Mahathir's Konsortium Perkapalan, which was then floundering under RM1.5 billion in debt.

Of course, it would have been preferable to have just let debt-laden, lumbering uncompetitive companies fail, but it's not really the Mahathir way.

Perhaps that's why he has demanded that the policies of Prime Minister Datuk Seri Abdullah Badawi end with his exit in March. And through his blog chedet.com, he has been advocating the return to his mega-project ways, to keep the economy afloat in the approaching storm triggered by the global financial crisis. He is still trying to get his own way even now.

Fiscal spending in a bad slowdown or recession is always welcome. Unfortunately for Malaysians, much of the wealth that could have financed such spending has been either frittered away or tied up in the bailouts of the past.

So while his words are music to the ears of those who would keep Umno's system of patronage, the rest of the country hopes Khazanah doesn't one day need to be bailed out.