MAY 29 — I refer to the statement made by Prime Minister Datuk Seri Anwar Ibrahim that the government must take over the troubled Boustead Naval Shipyard Sdn Bhd (BNS) in order to complete the Littoral Combat Ship (LCS) project.

This is not the first time the government is stepping in to bailout government-linked companies. Many years back, the government was committed to bailing out Malaysia Airlines Berhad because of its national interest factor, where some RM20 billion were injected.

Just last year Ismail Sabri’s government faced a dilemma over Sapura Energy’s bailout.

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

The government bailout policy is one of the government’s direct intervention policies. The financially distressed company will be assisted by the government from going bankrupt.

The government intervention in these companies has shown that they can be saved. The advantage of it is to ensure its survival under 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 bailout if they are serious about taking over BNS to continue with the LCS project. Here are a few things that the government should look into:

(a) The bailout period should be on a short- to medium-term

(b) Enrol the company 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, they 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.

So, another GLC is to be bailed out!

* This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.