PRIVATIZATION Privatization in Malaysia, Regulation, rent-seeking and policy failure

Recommendations

Info

Table 6.04 MAS: Leverage ratios and debt, 1990–19971990 1991 1992 1993 1994 1995 1996 1997Long-term debt (RM billion) 1.13 1.23 1.01 3.04 5.52 5.18 5.93 6.12Average LTD 1.60 5.69Debt ratio 0.51 0.48 0.42 0.58 0.73 0.71 0.74 0.69Average debt ratio 0.49 0.71Debt–equity 1.05 0.94 0.74 1.37 2.74 2.46 2.78 2.25Average debt–equity ratio 1.02 2.50Interest (RM million) 119.5 115.0 104.7 103.6 184.4 327.0 429.7 403.1Interest cover (0.29) 1.12 0.37 (1.77) 2.30 0.54 0.38 (1.12)Average interest cover (0.09) (0.07)Cash–interest ratio 2.85 2.87 0.50 8.68 4.85 0.63 0.50 0.68Average cash–interest ratio 4.02 0.60Current assets–interest ratio 36.1 46.2 50.8 86.3 68.4 40.4 33.7 47.8Average cash–interest ratio 54.9 47.6Source: Adapted from Malaysia Airlines (1991–98).Notes: Averages for 1991–93 and 1995–97. Brackets ( ) = negative.Table 6.05 MAS: Liquidity ratios, 1990–19971990 1991 1992 1993 1994 1995 1996 1997Current ratio 0.587 0.631 0.319 0.820 0.774 0.492 0.561 0.559Average current ratio 0.59 0.54Net cash flow (operations) n/a 153.9 379.4 224.2 580.5 865.1 1,517.2 1,118.0Net cash flow (sale of planes) n/a (291.5) 29.7 (319.4) 551.1 863.2 1,516.1 881Average net cash flow (193.7) 1,086.8Source: Adapted from Malaysia Airlines (1991–98).Notes: Averages for 1991–93 and 1995–97. Brackets ( ) = negative.
146 Malaysia Airlinesperformance also declined from −0.006 to −0.036 per cent in comparison toits competitors as average returns on assets 18 declined from 33.7 to 4.0 percent after privatization (Table 6.06).External factorsThe Asian financial crisis in 1997–98 had a big impact on the region’s airlines,with MAS particularly badly affected as its capital requirements were financedmainly in US dollars and Japanese yen because MAS was apparently notallowed to borrow domestically to avoid ‘crowding out’ the Malaysianfinancial market. 19 Around 70 per cent of MAS’s RM10.3 billion in shorttermloans and fixed leases was in US dollars (at the end of September 1997),with nearly US$3 billion in dollar-denominated debt (The Edge, 5 January1998; Asiaweek, 6 March 1998). 20 By May 1998, 81 per cent of MAS’sRM10.6 billion debt was mainly in US dollars with 12 per cent in Japaneseyen (The Edge, 8 June 1998). This high US dollar exposure meant that aRM0.10 change in the exchange rate could have affected MAS by RM40million. A 69.5 per cent fall in profit was attributed to foreign exchange lossesof RM2.1 billion (US$1=RM3.30) in 1997 (The Edge, 5 January 1998).Around 43 per cent of MAS’s total revenue was in ringgit, 14 per cent inUS dollars, and the rest in other currencies. However, while 44 per cent ofexpenses was in ringgit, 28 per cent of expenses was in US dollars, includingdebt servicing and fuel costs. 21 Fuel and oil accounted for 14.4 per cent ofoperating expenses at a time when the ringgit had depreciated 35 per centagainst the dollar (Asiaweek, 6 March 1998) but MAS did not have a fuelhedging policy. This meant that MAS had to struggle to cover interest payments,even without the impact of the crisis, as its debt burden increasedsubstantially. This was evident in the company’s attempts to restructure itsTable 6.06 MAS: Operating profit (loss) as a percentage of operating revenue, 1990–1997 (current US$ million)MAS SIA CathayPacificThaiAsiaaverageWorldaverageMASaverageCompetitoraverage1990 (1.2) 14.2 14.1 17.0 4.1 (0.8)1991 3.6 13.9 16.1 7.2 n/a 2.11992 1.1 10.4 16.2 8.6 3.3 (0.8) (0.07) 10.81993 (4.9) 8.1 9.3 7.9 2.3 1.01994 8.5 12.6 9.8 13.3 4.4 3.41995 3.1 11.7 15.4 12.9 5.4 5.11996 2.7 9.2 13.3 12.1 4.6 4.4 (0.40) 11.21997 (7.0) 9.0 6.5 10.6 4.1 5.6Source: Adapted from ICAO (1992–99); Malaysia Airlines (1991–98), Cathay Pacific Airways(1995–98); Singapore Airlines (1997–2000); Thai Airways (1998–2000).Note: Averages for 1991–93 and 1995–97.
Page 2 and 3:
Privatization in MalaysiaRegulation
Page 4 and 5:
Privatization in MalaysiaRegulation
Page 6:
Dedicated to my parents, Tan Siew S
Page 9 and 10:
viiiContentsProblems 123Conclusion
Page 11 and 12:
xTables6.02 Asia Pacific airlines:
Page 14 and 15:
AbbreviationsAFTAAFTKAPTKARPASEANAS
Page 16 and 17:
LoSLPPJLRTLTALTATLTDLTLMARAMASMBOMC
Page 18 and 19:
1 IntroductionWhy privatize?The deb
Page 20 and 21:
Introduction: why privatize? 3neces
Page 22 and 23:
Introduction: why privatize? 5count
Page 24 and 25:
2 Privatization, rents andrent-seek
Page 26 and 27:
Privatization, rents and rent-seeki
Page 28 and 29:
Page 30 and 31:
Page 32 and 33:
Page 34 and 35:
Page 36 and 37:
Page 38 and 39:
Page 40 and 41:
Page 42 and 43:
Page 44 and 45:
Page 46 and 47:
Page 48 and 49:
Page 50 and 51:
What is needed to make privatizatio
Page 52 and 53:
Page 54 and 55:
Page 56 and 57:
3 Institutional and politicalfailur
Page 58 and 59:
Institutional and political failure
Page 60 and 61:
Page 62 and 63:
Page 64 and 65:
Page 66 and 67:
Page 68 and 69:
Page 70 and 71:
Page 72 and 73:
Page 74 and 75:
Page 76 and 77:
Page 78 and 79:
Page 80 and 81:
Page 82 and 83:
Page 84 and 85:
Page 86 and 87:
Page 88 and 89:
Page 90 and 91:
Page 92 and 93:
Page 94 and 95:
Page 96 and 97:
Malaysia’s national sewerage syst
Page 98 and 99:
Page 100 and 101:
Page 102 and 103:
Table 4.01 IWK: Performance summary
Page 104 and 105:
Page 106 and 107:
Page 108 and 109:
Page 110 and 111:
Page 112 and 113: Malaysia’s national sewerage syst
Page 118 and 119: Table 4.09 IWK: Tariff revisions, 1
Page 124 and 125: Kuala Lumpur Light Rail Transit 107
Page 132 and 133: Table 5.01 Kuala Lumpur LRT: Financ
Page 136 and 137: Table 5.03 Regional urban rail syst
Page 150 and 151: 6 Perverse incentivesMalaysia Airli
Page 152 and 153: Malaysia Airlines 135Both types of
Page 154 and 155: Malaysia Airlines 137The industry i
Page 156 and 157: BackgroundMalaysia Airlines 139The
Page 158 and 159: Malaysia Airlines 141improvements i
Page 160 and 161: Malaysia Airlines 143Table 6.03 Reg
Page 164 and 165: Malaysia Airlines 147debt as early
Page 166 and 167: Malaysia Airlines 149with the Maldi
Page 168 and 169: Malaysia Airlines 151its fleet to a
Page 170 and 171: Malaysia Airlines 15312 November 20
Page 172 and 173: Malaysia Airlines 155state not inte
Page 174 and 175: Malaysia Airlines 157overall indust
Page 176 and 177: Proton 159was technology acquisitio
Page 178 and 179: Proton 161(when Proton’s domestic
Page 180 and 181: Proton 163Late-comer and specific c
Page 182 and 183: Proton 165Motor Company (MMC), in M
Page 184 and 185: PerformanceProton 167Although Proto
Page 186 and 187: Table 7.03 Proton: Profitability, 1
Page 188 and 189: Proton 171be able to develop its ow
Page 190 and 191: Proton 173Table 7.08 Proton: Export
Page 192 and 193: Table 7.09 Proton: Impact of reduct
Page 194 and 195: Proton 1778 May 2004). Overall, Pro
Page 196 and 197: Proton 179DRB-HICOM for RM297 milli
Page 198 and 199: Proton 181to go about it’ and Pro
Page 200 and 201: Proton 183competitiveness needed to
Page 202 and 203: Proton 185Although Proton was finan
Page 204 and 205: Proton 187Proton’s poor performan
Page 206 and 207: Summary and conclusion 189necessita
Page 208 and 209: Summary and conclusion 191appropria
Page 210 and 211: Summary and conclusion 193cost per
Page 212 and 213:
Summary and conclusion 195that it i
Page 214 and 215:
Notes 197directed primarily at the
Page 216 and 217:
Notes 1996 IWK was incorporated as
Page 218 and 219:
Notes 20111 This comprised EPF (20
Page 220 and 221:
Notes 203million new ordinary share
Page 222 and 223:
Notes 20515 Proton’s market share
Page 224 and 225:
References 207Aziz Zariza Ahmad (19
Page 226 and 227:
References 209Chee P.L. and Fong C.
Page 228 and 229:
References 211Felker, G. (1993) ‘
Page 230 and 231:
References 213—— (2002) World A
Page 232 and 233:
References 215Mustapa Mohamed on Ec
Page 234 and 235:
References 217Lum W.K. (1994) ‘Pr
Page 236 and 237:
References 219Payson, W. and Steckl
Page 238 and 239:
References 221—— (2002) (SMRT)
Page 240:
Newspapers, magazines, websites and
Page 243 and 244:
226 IndexBumiputra National Economi
Page 245 and 246:
228 IndexEmployees Provident Fund s
Page 247 and 248:
230 Index99-100, 104; industrial ta
Page 249 and 250:
232 Index41, 50, 65, 71-2, 77, 191;
Page 251:
234 Indextechnology: acquisition an
show all

PRIVATIZATION Privatization in Malaysia, Regulation, rent-seeking and policy failure

Create successful ePaper yourself

Delete template?

Save as template?