Malaysia's Wasted Decade 2004-2014

Excerpt #5 (Last):  Two Black Swans and Many More Dark Crows

            Already one component of the toxic triad – Abdullah Badawi – is gone and no longer heaping his share of trash upon the nation. As for UMNO, despite being the largest party and a ruling one at the federal level for over the past half a century, it never gets a foothold in Sarawak. Of the nine states in the peninsula, UMNO is permanently wiped off in Penang, Kelantan, and Selangor. If the federal territory of Putrajaya and Kuala Lumpur were also a state, UMNO would be wiped out there too. At one time it was also out in Perak, Kedah, and Trengganu.

            That leaves only Najib. My earlier prediction of his premature ending as prime minister notwithstanding (see “Priority of Packaging Over Performance’” page 119), he is now secure at the top of the UMNO rubbish heap. To be the unchallenged skipper of the Titanic is no job security; it could very well undermine your well-being.

            I am always amazed at the ability of one person to initiate transformational changes. Often those individuals are the ones we least expect. There is no rhyme or reason for such individuals to emerge except that they somehow appear at the right time and place, with all the right people to help him or her do the right thing in the right manner; in short, the confluence of all the elements and the alignment of all the stars.

            In the 1990s Indonesia was threatened to be ripped apart by its bewildering centrifugal forces. Today it celebrates its peaceful democratic transition with a new and promising leader in Joko Widodo. Further east, who would have predicted back in the 1970s that a diminutive, uninspiring and uncharismatic Deng Xiaoping would dismantle the handiwork of the colossal but destructive Mao Zedong?

            Further east across the Yellow Sea, in the 1950s the South Koreans depended entirely on the spending of the hundreds of thousands of American GIs stationed there. Then came General Park; today Samsung, Hyundai and LG are global household brand names.

            At the same time I do not underestimate the ability of one idiot to wreck untold damage upon a nation while its citizens stand by and let it happen. Nearby there was Indonesia’s Sukarno, further away Zimbabwe’s Mugabe, and in the not-too-distant past, Iraq’s Saddam.

            Thus I do not underestimate Najib Razak to do likewise to the great nation of Malaysia if Malaysians let him. I hope they would not.

            Malaysia suffered through two horrific man-made disasters in the span of just a few months in 2014. The disappearance of Malaysia Airlines Flight MH370 over the South China Sea remains a mystery to this day. While we know what happened to Flight MH17, the question remains of why a MAS plane? After all, a Singapore Airlines jet had earlier flown a similar route while an Air India one was only a few kilometers away.

            When a “black swan” (rare, unpredictable) event occurs, it is natural for people to look beyond the realm of the rational for an explanation. This is not an affliction of only the uninformed and poorly educated. In part this reflects the universal recognition that there is a greater power governing us all that we have as yet to fully comprehend.

            When 9-11 struck, many religious leaders insensitive to the pain of the victims’ relatives and friends called it divine retribution for America’s tolerance of homosexual ways; likewise when Katrina broke the levees of New Orleans.

            At the other end of the world, when the Asian tsunami hit northern Sumatra at Christmas 2004, the iconic image that was seared into everyone’s memory was of the lone mosque standing forlornly and unscathed amidst the sea of destruction around it.

            Those with even an inkling of science knew that the tsunami was caused by a shift in the earth’s tectonic plates deep in the floor of the Pacific Ocean off the coast of Sumatra. That knowledge has profound consequences; it led to the creation of ocean sensors that could detect those earth and giant wave movements well ahead to warn those that may be affected. Along the coast of Japan and western North and South America there are already early warning systems and clearly marked evacuation routes. Indonesia did not have them then.

            The science-challenged Indonesian peasants saw things differently. To them, the lone standing mosque was Allah sending them a message. The peace treaty that ended the generations-long civil war in Aceh was signed soon after. Their metaphysical interpretation of events too had a fruitful consequence.

            Before we dismiss or belittle the Indonesians’ belief, there is still the question of why the tectonic shift had to occur there and at that particular time and not at some remote uninhabited part of the Pacific. That defies science, at least as we know it. Modern science offers only probabilities.

            So when Malaysia suffered through two eerily similar “black swan” tragedies in the two passenger-jet crashes, it was not a surprise that many looked for some explanations beyond science. To be sure, a plane disappearing or crashing is not a black swan event, but MH370 disappeared without leaving any trace, incredulous in this day of round-the-clock ubiquitous satellite surveillance. That tragedy still baffles the experts. As for the ill-fated MH17, while we all knew what happened (it was shot down), still the question remains why a MAS plane was the unfortunate victim.

            When an obscure village alim says that the calamities were caused by MAS serving alcohol, he can rightly be scoffed at and be ridiculed. By that theory Emirate Airlines would have been a top casualty. However, when thoughtful commentators like Kadir Jasin, the former editor-in-chief of The New Straits Times, and Zaid Ibrahim, a former cabinet minister and successful corporate lawyer, alluded to bala or divine retribution, then we are compelled to pause and reflect. This is especially so when their views resonated with the general public.

            In reality, many had taken figurative pot shots at MAS in the past. Stated differently, long before these two black swans, the airline had had many dark crows. MAS would long ago have been grounded, and many times too, had it not been for the government coming in with expensive rescue bailouts.

            Profitable units of the airline, like catering and maintenance, had been siphoned off to UMNO cronies, and then MAS was forced to buy back those services at inflated prices, converting what were once revenue-producing units into revenue-draining ones. On another front, instead of pampering its customers, MAS was pampering its employees, from ramp handlers to top executives. They all happily hogged the company’s trough at the customers’ expense, and with taxpayers ultimately paying the bill.

            While other airlines were getting substantial discounts for their new planes and passing those savings back to their companies, MAS was paying full retail price, with the discounts going into the pockets of crony middle men “consultants” in cahoots with top executives. Then there was that “brilliant” idea of selling its headquarters in a prime Kuala Lumpur location and then renting space back from its new owner. It’s akin to selling your house and then paying rent to the new owner, adding another expense. This was what Pan Am Airlines did in 1970. We all know what happened to that company.

            Then there was that wonderful scheme of financial engineering scheme dubbed WAU (Widespread Asset Unbundling) where MAS sold its planes and then leased them back. Again it was like selling its headquarters. Not owning your own planes is a smart and effective strategy for a start-up airline; it conserves capital that could be diverted to expanding its market. It is however a dumb move for an established company to do so as that would only add another layer of costs. The only ones wowed by that WAU scheme were the new owners of the planes and the investment bankers who arranged the deal. That deal was also a cute play on words as “wau” is Malay for kite, the airline’s logo.

            If MAS shares serve as a metaphor for Malaysia, then what happens to MAS the company mirrors what happens to Malaysia the country. Previously reliable services like power and water that were provided by competent public entities are now privatized, sold at heavily discounted prices to favored political cronies. These ersatz capitalists, pseudo entrepreneurs, and rent seekers came out like bandits, but the pipes often run dry, and when they do flow, the water is not fit to drink. Likewise with electrical supplies; they are erratic and with ever escalating prices.

            The government cannot forever protect MAS from the reality of an increasingly competitive world. The price for bailouts keeps escalating and is no longer sustainable. For MAS, the skid was greased by the entry of Air Asia at one end, which cannibalized MAS on the domestic and regional front, and Singapore and other Asian airlines like Cathay Pacific that chipped away at MAS’s long-haul destinations.

            The first black swan, MH370 disappearance, exposed the incompetence of Malaysian leaders on the world stage. Malaysians of course have been fully aware of this for a long time. These leaders could not handle even simple queries from journalists and the public. The astute political cartoonist Zunar captured well the bumbling Najib. His biting cartoon depicting a “Too Weak” Najib “Two Weeks” after MH370 was carried by The Washington Post.

            Like MAS, Malaysians too have been exposed to the reality of a highly competitive globalized world. They now realize that the “education” they had received at local institutions has been nothing more than indoctrination. Their low English proficiency and abysmal communicating skills and critical thinking faculties do not serve them well in the new marketplace.

            I hope Malaysian leaders would heed the wisdom of Zaid Ibrahim and Kadir Jassin, that is, treat the two black swan events as the Indonesians treated their black swan of the Asian tsunami. Keep the Malaysian house pure and in good order, free of what displeases Allah, not to please Him but to please Malaysians.

            If Najib and others in UMNO fail to heed this message, then Malaysians are duty bound to remove them and give others the privilege to lead the nation