Airlines System Berhad (Malaysia Airlines) also known as MAS are national air
carrier of Malaysia and a major airline operating flights from Kuala Lumpur
International Airport (KLIA) to destinations throughout Asia. Malaysia Airlines also offers other services
such as airline cargo service, aircraft maintenance, repair and overhaul
service for over 100 customers around the world. MAS was founded in 1937 and registered as
Malayan Airways Limited. The head
quarter of Malaysia Airlines is located at Sultan Abdul Aziz Shah Airport.
public in 1985, listed in Kuala Lumpur Stock Exchange and do not profitable
since 2001 because they are facing an intense competition with other low-cost
air carrier such as Air Asia Berhad.
in 2014, MAS has faced two major disasters which is the lost of two aircraft
because of unusual circumstances. The
disasters is the missing of Flight MH370
that disappeared while flying from Kuala Lumpur to Beijing and within four
months another aircraft which is Flight MH17 from Amsterdam to Kuala Lumpur was
shot down while flying over eastern Ukraine.
The stock’s price of Malaysian Airlines has been unstable since 2005
on 2014, because of the long term losses and these two major disasters, the
Malaysian government’s sovereign wealth fund which is Khazanah Nasional Berhad announced
its intention to renationalize the Malaysia airline by purchase remaining
ownership from minority shareholders and de-listing the airlines from Kuala
Lumpur Stock Exchange (being privatized).
Malaysia Airline System Berhad will be privatised as part of a
restructuring plan to maintain the airline in business after its two plane
disasters this year.
After the privatization, MAS has increased its profits for
consecutive three years. They are also
increased their frequency to Tokyo with six weekly flights including one
non-stop service and introduced more jet services along its domestic
routes. The impressive growth is stated
due to an overall increase in capacity available arising from the increase in
frequency on existing routes and additional new routes. The privatization also give a opportunity to
MAS in developing tourism such as working closely with the Tourist Development
Corporation and international agencies to introduce Malaysia as a major South
East Asian tourist destination. From
privatization, MAS successfully gain higher income and used the money to build
flight kitchens. Indirectly, the higher
income and gain from MAS eventually will improve the economics of the
government by tax payment from the Malaysia Airlines and the improvement in the
Unfortunately, there are certain cases that have failed in their
privatisation such as Proton. Perusahaan
Otomobil Nasional Berhad or also known as Proton Holding Berhad founded in May
1983, which it is a Malaysia corporation that active in automobile design, manufacturing,
distribution and sales. Proton was originally
owned majority by HICOM and remaining held by Mitsubishi group members. Proton has been privatized in 2012 by the
take over and controlled of DRB-HICOM which is the listed company. Proton is the Malaysia’s biggest car maker
and gives big incentive to economic growth in Malaysia. However, in 2006, Proton
showed a big loss due to several of problems and become worse after the
increasing in competition such as Perodua.
Proton also faced a problem of insufficient new car model because they
are low in creativity and innovative in designing the car. The reason of Proton to go for privatized
because the government has increased the import duty for other cars and car
parts to encourage people to buy Proton.
This will make the consumers suffered because of the higher prices to
purchase the cars. Therefore, by making
the Proton privatized, they are giving the lowest prices to the consumers and
increased the tariff in buying the cars of Proton.
However, after privatization, Proton still received substantial
support and intervention from the government.
This is because Proton had to secure the technology and increase its
production capacity to achieve high economies scale but the company remained
inefficient because they continuing to rely on government protection. They still need subsidies from government to
cover up their high capital costs and large externalities that beyond the
capacity of private sector to bear it. Proton
continued depends on the protection from government to maintain their profitability
and finally have improvements in its production capacity, exports and
technology. However, they still failed
to meets its own targets because of the constrained from government
objectives. The failures in
privatization also because of the government are unable to remove the protection
and exposed Proton directly to the greater competition.
As the conclusion for this case study, the privatization has
brings a lot of advantages and disadvantages to the company and also government. There are so many government agencies other
than MAS such as Telekom Malaysia Sdn Bhd (TM), Tenaga Nasional Bhd (TNB) and
POS Malaysia has been privatized and has resulted in the increment of their
services and increased the economics of government. All of the privatized company until now shows
the well manage and performance. This
privatization also increases the economics of government as a whole. As for the failure privatized company, the
failure usually was happened to the companies that have a high capital costs
which relied on sufficient operating revenue and/or subsidies. This failure also occurred due to the
relationship between the government and companies remained unchanged because of
the governments continued to show their interests and intervene in the decision
of privatized companies.