Old dogs and old tricks

A repeat of the collapse of the biggest GLCs during the Asian financial crisis must be avoided at all cost

graphic by MZUKRI

ALL CEOs, MDs and CFOs are having more sleepless nights, a few additional nightmares and rising muscle spasms. Their bed partner is the balance sheet, and income and cashflow statements on those slanky iPads or notebooks.

Companies’ net worth is plummeting. Cash reserves are evaporating faster than an ice cube in a hot oven. Incomes are falling like the burning Hindenburg.

Heads are scrutinising every line of their spreadsheets from the big-ticket items to the cost of the toilet paper. Simple answers and resolutions are scarce.

Betting on a winning four-digit number feels easier now than predicting when businesses can return to normalcy.

Already, head of companies are making hard choices, decisions they never think they will have to make in their lifetime.

Large or small, companies are falling. Genting Malaysia Bhd, for the first time in its history, is embarking on a group-wide pay cut exercise. Genting Highlands’ “Kota Keriangan” (City of Joy) now seems like “a city of sadness”.

A few hotels have shuttered and more will follow suit. Retail businesses will be next in a crisis-hit country. Malaysia’s tourism sector may not return to its heights ever.

Since the Movement Control Order (MCO) imposition on March 18, many businesses have come to a squeaking halt, incomes have dried up like a well in the desert and demands have plummeted.

Prime Minister Tan Sri Muhyiddin Yassin on Saturday evening said the country’s economy is losing RM2.5 billion a day due to the MCO.

He defended the government’s move to cocoon millions of people and shutter businesses to protect the people’s wellbeing.

Very few people can question the rationale behind lockdown, the efforts to stop the spread of the virus and the sacrifices of hundreds of thousands of frontliners.

But worries have heightened that once the dust settles after this near apocalyptic episode in human history, there will be little left of the economy to go back to.

Over the 41-day period of the current MCO, the country’s economic activities’ losses have reached a staggering RM107.5 billion by best estimates.

The actual losses would be higher when all companies and subsectors are combined.

Any reservations that Malaysia will be in recession have been buried under tonnes of cement after China’s economy contracted 6.8%, a historic quarterly drop for the world’s second-largest economy, and South Korea’s shrank 1.4%, the worst drop since 2008 during the first-quarter reporting season.

It is a difficult period. It is even more crucial now for the government to appoint the most suitable candidates to lead government-linked companies (GLCs), strategic agencies and authorities during this crisis-hit period. A repeat of the collapse of the biggest GLCs during the Asian financial crisis must be avoided at all cost. Companies need strong leadership to steer them out of these stormy waters.

Very few, even the government, can deny how grave the situation has become. Being an “MP” with the only exposure to financial statements and a “555 notebook” (“Buku tiga lima”) that jots down how the party distributes money during election or being the loudest in Parliament does not make one fit and proper to lead these agencies.

There is an English saying you can’t teach an old dog new tricks.


Mohamad Azlan Jaafar is the editor- in-chief of The Malaysian Reserve.