Are cracks beginning to form between crony companies and the government? At least this one did not have to make a humiliating public apology. Will other cronies break away?

 
 

So, was Mydin naive, greedy or did he fail to do his homework? The government’s role is to govern, not to act as a business operator. It’s role is not to enrich its cronies.Ameer Ali Mydin, the managing director of popular hypermarket, Mydin Mohamed Sdn Bhd (Mydin), bit off more than he could chew when he agreed to take part in the government’s project called Kedai Rakyat 1Malaysia (KR1M).

KR1M was intended to help Malaysians cope with the rising cost of living. Putrajaya would allocate subsidies in an effort to standardise consumer goods’ prices in KR1M stores.

Despite the millions of ringgits of taxpayer’s money supplied by the government to be the sole operator of KR1M stores, Mydin chalked up losses of over RM100 million.

Its reputation was further tarnished when an irate public claimed that the goods were shoddy and overpriced. Mydin suffered further humiliation, when he was stopped from operating the KR1M shops, in July 2017, by the Home Minister, Zahid Hamidi.

In an interview with BFM, Ameer tried to justify Mydin’s failure with the  claim that he had been naive; but wasn’t he just greedy? Few beleive that Mydin joined KR1M to perform a Corporate Social Responsibiliy (CSR).

Ameer said, “I think the intention was very noble. The government has noble intentions. We also thought naively that since we are the largest local player, we should take this initiative.”

Do your homework first

Was he really naive? Would a seasoned operator like him, not notice the flaw in the government’s move to allocate just one operator of KR1M?

Any businessman knows that competition makes for good business. It keeps a businessman on his toes, or else the customer will take his money elsewhere.

Mydin said that he was shocked by the high cost of goods in Kapit and Belaga, which are located in rurul Sarawak.

How could a successful Mydin not calculate the logistics and cost of transport? He said he wanted “to outreach and open very fast in the outskirts”

Ameer failed to do his homework, and in the end was bitten. With the government’s help, he thought he could wipe out the competition and make a killing.

In 2012, he ignored the criticism of Opposition  politicians that Mydin would be enriched by government subsidies. He also ignored the rakyat’s concern that smaller retail stores would be put out of business by KR1M.

Five years later, Zahid Hamidi, the Home Minister, criticised the KR1M shops because their over-priced goods had low-quality packaging and the distribution was bad.

Cracks in the relationship 

Zahid, said, “They were given a chance. I don’t want to name the company. I myself went to KR1M because I gave them the opportunity to open an outlet with low rental…

“…but it became clear that the prices were more expensive, even though the government had specific allocations for the company to sell at below-market prices.”

An embattled Ameer issued a statement on the day after Zahid’s criticism, and said that his “conscience was clear”. He dismissed the government’s criticisms of the failure of the operations of KR1M. He said, “I shall not comment on any allegations made by the government as it will get us nowhere.”

Accept some truths

The two should realise a few truths. The government’s role is to govern, not to act as a business operator. It’s role is not to enrich its cronies. Any businessman worth his salt, should realise that if he keeps still, he will lose in the long run. If he provides shoddy goods and services, customers will take their money elsewhere.

Ameer foolishly said, “How much money can you lose anyway?” when justifying his reasons for the failed KR1M venture.

As it stands, Ameer/Mydin has lost RM100 million, but gained a tainted reputation and accusations of greed, and trying to fool the rakyat.

The same monopoly can be seen in politics, when a party which has been in operation for decades, becomes complacent and ignores the wishes of the people who put it in power.

 

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