Zetrix was not created through the sale of a state-owned enterprise, nor can its current financial difficulties be attributed to a single government policy. But its original business model represents a familiar Malaysian arrangement: a private concessionaire collecting transaction-based revenue from services citizens previously obtained directly from the state.
The government has acknowledged that the company, which operates collection services across multiple areas of public administration, including the renewal of road tax and licences, owes the Road Transports Department over RM314 million in unpaid collections from May 19 to Sep 30.
The company is also facing a serious challenge under its RM2 billion sukuk programme after a breach of a shareholder-related covenant triggered a dissolution event. Zetrix has said immediate repayment of the full outstanding amount is not required and that all scheduled payments have been made. It is continuing discussions with sukukholders and the trustee over the next steps.
That is what makes the financial crisis ripping through the company more than just a stock market rout. It goes to the durability of the economic model that has long blurred the boundaries between public service, private profit and political power.
A FLAWED MODEL?
Backed by abundant credit and a booming stock market in the early 1990s, the transfer of public services – including toll road concessions, national sewerage networks, the national airline, power generation installations and other public services – into private hands became the cornerstone of Dr Mahathir’s industrialisation agenda.
At its best, privatisation mobilised private capital, accelerated the construction of roads and power plants and introduced managerial disciplines that government departments often struggle with. At its worst, it became a patronage-driven model that blended business and politics, with the state remaining exposed in the event of failure.
