when your price is set artificially low by the govt for social purposes, there wont be enough money to expand (or maintain) your business even if you are a monopoly.

even if you're the only char kuey teow seller in malaysia, if the govt sets your price at 1rm per pack when the cost of your ingredients alone is above that, you're maknig losses every day.

the only way is to get huge capex investments in order to increase your scale and get a lower per pack average cost. what ktm should do is to either float on the stock market, or do a large bond sale backed by its assets (or whatever it hasnt turned into collateral yet).

you can just open up a minority position (or even sell non-voting shares - although probably not much demand in that).

in any case, there's a lot of assets and value (as you mentioned, land being one of them) that ktm can unlock to get the funds for capital.

the point of a monopoly is to charge as high a price as you can (actually, to charge as high a price at the same time limiting production, but that's too detailed). when the price is regulated and you CANT charge as much as you want - say, 5 times what it is now - there's really no point being a monopoly now, is it?

dumbfounded no more.

then you kinda lose the point of glcs (or state owned enterprises, in other countries).

it's like this: certain services are intrinsically unprofitable - like postal services, utilities etc - especially in small market and more so in rural areas. the only way to provide these services is to up the price or basically not provide that service at all.

now, if there isnt any glc-loss-making-monopoly running, you'd only see services in the urban areas. not just transport, but also of basics - electiricty, water etc. if i were the owner of tnb, i would never invest the capex to connect the poor rural areas because i'll never earn the money back.

and if i were the owner of tnb, i'd maximise my profits - i'd charge as much as i want for the electricity (actualy as far as mc=mr). you cant pay? too bad. hospitals need electricity? then you better charge your patients more to afford my bills. my responsibility is to my shareholders - and since i'm the owner, that means me.

so then you'll have the people calling for the govt "oh please nationalise tnb and make it state-owned so that we'd get cheap electricity and we'll give you our votes" - and we're back to square one.

This post has been edited by empyreal: Oct 14 2013, 07:43 PM