PRIME Minister Anwar Ibrahim has said the government had no choice but to take over the troubled Boustead Naval Shipyard Sdn Bhd (BNS) to complete the littoral combat ship (LCS) project.

This is not the first time the government played its role in bailing out government-linked companies.

Many years back, the government was committed to bailing out Malaysia Airlines Bhd because of its national interest factor, where some RM20 billion was injected.

Just last year, Ismail Sabri Yaakob’s government was facing a dilemma over Sapura Energy’s bailout.

Over time, the government has continuously used taxpayer’s money to bail out companies that have shown an insolvent state.

The government intervention in these companies has shown that they can be save. The advantage of it is, to ensure its survival under the tough economic condition, and to avoid a complete collapse of the financial system in its overall market.

Nonetheless, this sort of “saving from the big fall” will encourage a higher transaction, because when things go wrong, there is the government to fall back on.

Thus, the government must thoughtfully plan its move if it is serious about bailing out BNS to continue the LCS project.

Here are a few things the government should look into:

a) The bailout period should be short to medium term;

b) Enrol in a corporate governance restructuring programme;

c) Key performance management practices;

d) Place a temporary relief of the director’s responsibilities; and

e) Pre-insolvency moratorium (apply with caution).

It is not wrong for the government to help BNS, but at the same time, it cannot sustain such a company only by injecting funds and not resolving the core issue.

We must acknowledge that the current state of the company is due to poor corporate management and corruption practices, thus viable and solid solutions need to be addressed.

Well, the LCS saga is to be continued once again! – May 28, 2023.

* Matilda George reads The Malaysian Insight.

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.