Sunday, July 24, 2011

AirAsia Moves Corporate HQ from KL to Jakarta

Hantu Laut

I envisaged this would happen and have written here the possibility of Air Asia moving its hub to Singapore.Never crossed my mind it would be Jakarta.

I have also warned that Air Asia has become too big to ignore and our stupid politicians in power and bureaucratic civil servants did exactly that.They even make life difficult for domestic investors let alone foreign investors.Bad policies over the years have driven away FDI and close to a trillion ringgit capital flight by both domestic and foreign investors.

If they have any sense of shame they should either close down MAS or give it to Tony Fernandez to manage.The airline is again losing money.

Big blow for Malaysia and bigger blow for Najib.

Maybe, this government deserves to lose.

Putting regional office in Indonesia is a blow for Prime Minister Najib.

With all the troubles he has had over the last two months, the confirmation Friday that AirAsia, arguably Malaysia’s most vibrant private company, is moving its headquarters out of the country to Indonesia is one more blow.

Tony Fernandes, AirAsia’s group chief executive, confirmed the decision in Tokyo Thursday, saying the move is an effort to upgrade his company’s image as a regional Southeast Asian airline rather than just a Malaysian carrier.

“I don't know whether Najib has been told or not,” said a business associate of Fernandes in Kuala Lumpur. “But why should Tony care? There are solid business reasons for moving to Jakarta.”

Najib has been on a whirlwind trip to foreign capitals to try and mend the country’s image in the wake of a violent police crackdown on peaceful marchers seeking to present a petition to the country’s king on July 9, asking for election reform. In a throwback to the 1980s, Malaysian censors blacked out details of a report about the march carried in The Economist.

That was followed on July 23 with the results of a royal commission of inquiry that concluded that a young aide to an opposition politician had been hounded so badly during a marathon interrogation over office spending that he threw himself out of a window and killed himself.

Then on Friday, immigration officials took William Bourdon, the leader of a team seeking to ferret out the details of a massive scandal involving defense procurement, off a plane in Kuala Lumpur, held him for several hours and ordered him deported via a flight back to Paris.

Fernandes characterized the move of the headquarters as a simple business decision to take advantage of Indonesia’s vastly larger economy and population, which is nearly 10 times that of Malaysia’s, although Malaysian annual per-capita gross domestic product of US$14,700 by purchasing power parity is much higher currently than Indonesia’s at US$4,200. The size of the country, however, meant that the Indonesian economy was estimated by the CIA Factbook for 2010 at US$1.03 trillion against Malaysia’s US$414.4 billion.

AirAsia’s decision to move the headquarters is a serious negative propaganda blow for Najib’s 1Malaysia Plan, an intensive effort to lure foreign direct investment to Malaysia. In September 2010, the Malaysian government announced ambitious plans to mobilize hundreds of billions of dollars in private investment in an effort to move the country out of the so-called middle income trap, and double per capita income to push Malaysia into the ranks of developed nations by 2020.

AirAsia may well be the only Malaysian company besides the state-owned energy giant Petronas to have made an international impact – and Petronas does it by advertising intensively during Formula 1 races and by sponsoring a car – which Fernandes does as well. Launched in 2002 as a regional no-frills carrier with just two planes, AirAsia now flies 93 planes all over Asia. In addition, a long-haul service, AirAsia X, flies to Europe, Japan and Korea. The company earlier ordered 300 Airbus A320neos.to expand its routes across Asia and beyond.

It isn’t just the publicity damage. In the past 10 years, according to a report by the news agency Reuters, private companies invested just RM535 billion (US$172.4 billion), according to official data. Malaysia’s private investment rate of about 10 percent of GDP is among the lowest in Asia and a third of what it was before the 1998 Asian financial crisis. The government, according to Reuters, contributes around half the investment in Malaysia.

In addition, Malaysia has long been plagued by capital flight, which has been generally regarded as an indication of lack of faith in the country on the part of its businessmen, although in Malaysia’s case the bulk may well be from stolen timber leaving the country from Sarawak and Sabah. Nonetheless, the US-based financial watchdog Global Financial Integrity estimated in a 2010 report that as much as RM888 billion (US$298.3 billion at current exchange rates) had left the country between 2000 and 2008. Illicit financial flows generally involve the transfer of money earned through illegal activities such as corruption, transactions involving contraband goods, criminal activities and efforts to shelter wealth from tax authorities.

AirAsia said the move is a bid to take advantage of access to the Asean secretariat, which is based in Jakarta, in advance of an open skies agreement expected to go into effect in 2015 and which is designed to lower barriers for air travel between the region’s capitals. Read more.

15 comments:

Pak Zawi said...

The brain drain isn't at individual level anymore, it is at corporate level as well. Bad omen for Malaysia.

Anonymous said...

Well done, Tony.
After you have milked Malaysians and MAS dry, now you want you to move to Indonesia.

The truth about airline multi billion of wang rakyat below:

http://www.rockybru.com.my/2010/08/why-sia-is-worth-s187-b-and-mas-is.html

FATSO.

Anonymous said...

Dont tell us, when we have warned you. A hindu is always a hindu, he will look to Gandhi not malaysia.

Hantu Laut said...

Anonymous 1.27,

You are a racist and bigot rolled into one, an ignorant moron.Tony Fernandez is a Christian not a Hindu.Not all Indians are Hindu.There many Muslim and Christian Indians and Sri Lankans.

Anonymous said...

Ideally you are Right that Tony should make S'pore AirAsia's HQ.
But he is too boastful and blunt for S'pore Civil Aviation Authority liking; so much so that He knows it is almost impossible for him to be accepted. Whereas Genting's Lim knew how to play the right game with S'pore to secure the 2nd Casino[Intergrated Resort].

But why Jakarta and not Bangkok?

Anyway Credit must be given to Tony for building AirAsia to be the Indisputable Leading Budget Carrier in ASIA. Syabas.

Anonymous said...

kepala butuh kau la hantu laut,
padan muka kau apek mata sepet. Kau sembah la BN tu. Konfem masuk neraka. Bangsat.

SM said...

Bro HL,

Hahahaha...I just saw Anonymouss (1:27PM) comments & your reply!
I guess Anonymous must be a product of our Education System?
Anyway, I'm sure Najib must have been told but could not do anything to stop AirAsia. Tony know's where his braed is buttered. He's not going to piss (pardon my French) Najib off unnecessarily. I'm sure he gave his reason in full to Najib.
However, as far as I'm concerned, although I appreciate what Tony has done with AirAsia, I think he's just another selfish worm. Whenever he got "breaks" from the Malaysian Government he was very happy but the moment, MAS reduces prises he squeslas like a stuck pig!
One of our biggest & most profitable companies moving to Jakarta? I'm sure he could have stayed in KL. He could have "modified" the Jakarta Office to take on more responsibilities AND he could have still kept KL as the official Corporate Office, although maybe with a smaller role!
Shame!

Hantu Laut said...

Pak Zawi,
You are absolutely right.Business can only survive on free market policy which our government failed to understand.Air Asia is a success story and pride of Malaysia.It moving out of the country will erode other investors confidence.

Clandestirie said...

Why would AirAsia choose Singapore? There's no tactical advantage of moving the headquarters there.

Why Jakarta..
1. ASEAN secretariat office is in Jakarta. Closer to the decision maker.
2. The spending power in Indonesia is higher.
Indonesia GDP: 1.03 Trillion
Thailand GDP: 586.9 Billion
Malaysia GDP: 414.4 Billion
Singapore GDP: 291.9 Billion
3. AirAsia business model is low-cost airlines, which mean the user target is low - middle income passenger. Based on population below, which country would be the best target market?:-
Indonesia: 245 Million
Thailand: 66 Million
Malaysia: 28 Million
Singapore: 4 Million
4. Making Jakarta as an HQ will boost confidence of Indonesian people and authority.
5. Indonesian are consist of a lot of island, so aviation can be one of the main public transportation there.

Anonymous said...

here is an update:-

Apparently, Malaysiakini reported wrongly.

http://www.rockybru.com.my/2011/07/airasia-still-here-or-has-it-moved.html

yat said...

read rockybru latest:

http://www.rockybru.com.my/2011/07/airasia-still-here-or-has-it-moved.html

but still we need Pak Cik Tony to clarify...buat if it's not true, malaysiakini memang barua (reserved my comment for that)

Anonymous said...

http://www.thejakartaglobe.com/business/airasia-to-move-base-to-jakarta/454618

Hurmmmmm...

Anonymous said...

Tony denies that AirAsia HQ moves to Jakarta. Of course after a surprising news headlines some people must have called him to repair the damage. Yes AirAsia HQ might be still in Sepang, but it's bigger office for ASEAN will be in JAKARTA!

Anonymous said...

Somebody extremely powerful must have squeezed Tony's ball by such threats as:
1. AA will be denied landing rights in Malaysia. This will result in immediate loss of revenue paralyzing AA's operation and all the 90 planes will be grounded. Planes parking fees will be imposed and with no revenue AA will be dead meat. MAS and Firefly will gladly fill up the void.
2. Refusing to guarantee the purchase of the existing planes or any future purchase especially the 200 on order.
It is as easy as that to pull the rug from under him.
Tony didn't think that far when he blurted out his intention which was reported by the foreign medias including Asia's Sentinel and Jakarta post which was picked up by Malaysiakini.
Is that too hard to figure?

mae1000 said...

For me, it is good for the manageable FDI (small and controllable). Previously, FDI is getting too big until Malaysians look like selling its soul. Currently Malaysia is still swamped by foreigners. It is good temporarily for FDI to goes down, so that the number of foreigners would at least get cut to half. Another good is that the lower FDI may make our economy a little hard, this may drive Chinese and Indians to migrate away to look for money elsewhere. The lesser number of Chinese and Indian in Malaysia would make Malays live more peacefully and stable (have less money but live the way Malays want, not live that is driven by what Chinese and Indian want).