The sale of Esso Malaysia by ExxonMobil to San Miguel of the Philippines is a done deal. But it was not completed before economic nationalists sounded the alarm. They feared foreigners would seize control of strategic assets within the country while seemingly ignorant of the fact that ExxonMobil is a US-based multinational corporation in the first place.
The more discerning economic nationalists hoped, demanded and appealed to ExxonMobil to sell all of its shares to the locally-based Lembaga Tabung Angkatan Tentera (LTAT).
Luckily, the jockeying was to no avail. Why luckily? Here is a question for consideration: Were these economic nationalists interested in the welfare of Malaysians?
I would say no.
This is a pertinent question given that LTAT already owns Boustead, which in turn operates petrol retailer BHPetrol. To have LTAT controlling Esso Malaysia would likely reduce considerable competitive force within the industry, if there were any to start with. More importantly, it would turn back the clock on any effort at introducing competition in an industry already stifled by government regulation and effective monopoly.
The LTAT path advocated by economic nationalists in Barisan Nasional, Pakatan Rakyat and whoever else would reduce competitive pressure in the area, and it would also exacerbate the already adverse relationship that exists between the government and businesses.
With the government already involved in various industries, what ensures that the government has the interest of actual individual Malaysians in mind instead of the profits of various government-linked companies — or in the latest case of the economic nationalists’ wet dream, the profits of LTAT and its companies?
This is an organization that is already mired in a controversy revolving around opaque military procurement which is closely related to yet another case of conflict of interest. How is it not a conflict of interest when LTAT is the major beneficiary of various military contracts while at the same time being a retirement fund for armed forces of Malaysia? And let us pretend that unlike the experience of Indonesia and Egypt, a military with direct or indirect business interest is an ingredient for the creation of a healthy civilian government.
Real business concerns run mostly on a profit motive. It cannot afford to entertain nationalistic sentiment. If it does entertain nationalism, then it typically seeks to manipulate such sentiment to its own advantage. Proton is one such case: save Proton, buy Malaysia. Or Malaysian Airlines: save MAS, fly Malaysia.
It is not a phenomenon unique to Malaysia of course. In the United States, General Motors and Ford have from time to time brandished their American credentials to American consumers. Many businesses in the past have also employed economic nationalism to justify protectionism in these business favors.
Zooming back to Malaysia, economic nationalism takes the extra step of merging business interest with government interest, thus making the issue of conflict of interest two-fold: government protecting its profits rather the interest of its citizens, and businesses manipulating government powers to advance business interests at the expense of citizens. It is a symbiotic relationship between government and business that turns the very components of a free society into parasites, living on taxpayers’ sweat.
Such perverse incentives cannot be good for the welfare of Malaysians in general.
For these two reasons, the sale of Esso Malaysia to San Miguel should be celebrated.