That, Kuala Lumpur hopes, would end public recrimination and questioning over the company. Unless the IOUs are taken off the books, the company's very solvency would be in doubt, and a planned privatization out of the question. Perwaja may then have to be closed, and Kuala Lumpur's entire investment in it totally written off. The hope now is for an eventual return to profitability to fetch the government a decent price for the company. No matter how decent, though, it would be nowhere near the billions lost.
Investors are likely to remain wary.
Management and financial problems have dogged Perwaja for much of its 15-year existence. The current woes go back to the company's earlier brush with ruin in 1988, when Eric Chia, a close friend of Prime Minister Mahathir Mohamad, was tasked with turning around the steelmaker. At the time, critics pointed out that Chia lacked experience in the steel sector. By that time, Chia had left. From 1990 to 1992, the company reported profits, but not real ones, according to a senior Perwaja executive.