Total: 734 Words
Maminco Scandal
Summary
Malaysia's tin industry was once second leading in the world as it paid a great contribution to the national economy. It produced a numerous thousands of tones, or 31% of world output and there were forty thousand over people were employed in this industry. During the tenure of Dr. Mahathir Mohamad, tin industry was pushed to the corner and the market price has dropped. In 1981, Maminco Sdn Bhd which only cost RM2 was set up and was used to raise tin prices in London Metal Exchange with loans from Bank Bumiputera Bank and to buy tin future contracts secretly. Following years, Maminco Sdn Bhd was unable to retain tin price after they pushed the price up successfully and so it collapsed (The WTF Report, n.d.). Many workers have lost their jobs due to mines were no longer operate. Eventually, the company owned the bank approximately 1.6 billion.
After the incident of RM 2 Company, instead of admitting that it was their mistakes, the government developed another company called Mukawasa Sdn Bhd (The WTF Report, n.d.). This company was set up to create new shares, and sell it at market prices to cover the losses of Maminco (Jeubelie, 2015). Lastly, Dr. Mahathir admitted that these companies were set up to cover the government’s losses from Maminco scandal and to repay the loan to the bank in 1986 (Jeubelie, 2015).
Options
In my opinion, Maminco affairs had brought huge impact to the society. Not to mention this incident had caused over forty thousand workers became unemployed but also showed their poor crisis management skills. The company did not figure another way to raise tin price but they formed a RM 2 company, Maminco Sdn Bhd by borrowing loans from Bank Bumiputera Malaysia. At the end of the day, Maminco Sdn Bhd did not help them to repay the loans from the bank but increased the debts up to 1.6 billion.
Moreover, the company should also at least take the responsibility to handle the livelihood of unemployed workers. Not only that, the government should give out the same amount of compensation to all unemployed workers for two months, where the compensation will be the total amount of their two months’ salary. Then, they should introduce or assign each of the employees to get a job in order for them to handle their livelihood well. The usage of compensation will be using for emergency use since they lost their job and did not get a new job yet.
During the tenure of the Dr. Mahathir Mohamad, cow market happened to tin industry.
From this incident, it is not difficult to see that the operation and management of the company and the government were poor. When they set up a RM 2 company to buy their future contracts but most importantly, it’s to bring up tin price artificially to cover the losses and to repay the bank. However, once the US released their stockpile of tin, Malaysia’s government was unable to retain the market and then it collapsed. In the other hand, this incident also proved that the government was not prepared enough to against external influences.
Who to blame?
Maminco scandal was implicated between tin industry, Malaysia’s government and US’s government. Malaysia was second-leading tin industry in the world but since Dr. Mahathir Mohamad became PM, Maminco affair occurred and brought huge impact to the society and the people.
From Malaysia point of view, they will definitely blame US’s government because of their counter-attacked that lead them to the position where they were standing. From US’s government point of view, they did what was good for their country, as mentioned above; they released its strategic stockpile to break down Malaysia’s tin price market. This also means that they had successfully defeated one of their strong enemies. From the employee's’ point of views, they would blame both side as their political conflict had brought negative effect to them and affected them to lose their job.
Based on moral opinion, the government did not protect the country’s business and the ideal income well, which brought huge impact to the society. In the other hand, based on business view, they were trying to use their tricks to solve the crisis that occurred but it failed. In conclusion, it is difficult to judge who to blame. They should try to prevent the same incident happen in the future by using the same tricks.
References:
Jeubelie, F. (2015). A flashback to the 80s Maminco scandal. [Online]. Available at: http://www.malaysiakini.com/letters/292287. [Accessed 17 Apr 2017].
The WTF Report. (n.d.). Past Scandals – The Maminco-Makuwasa Affair. [Online]. Available at: https://wtfreport.wordpress.com/2011/12/10/past-scandals-the-maminco-makuwasa-affair/. [Accessed 17 Apr 2017].
