Tuesday, January 31, 2012

West Coast Expressway: 134% Increase in Cost?!

The Prime Minister must justify how the cost of the West Coast Expressway (WCE) increased by 134% from RM3.015 billion to RM7.07 billion while its concession period also nearly doubled extended from 33 to 60 years

In Kumpulan Europlus (KEURO) Bhd’s announcement made to Bursa Malaysia on 25 May 2007, “the Board of Directors of KEURO wishes to announce that Konsortium LPB Sdn Bhd (“KLPB”), a subsidiary of the Company has on 25 May, 2007 entered into a Concession Agreement (“CA”) with Government of Malaysia for the construction of 215.8 KM West Coast Expressway (“WCE”) which will connect North South Expressway at Taiping in the North and to Banting in the South leading to Kuala Lumpur International Airport.”

The announcement further added that “the total Development Cost of WCE is RM3.015 billion”.

Hence it has come as a complete shock that after more than 4 years of delays and renegotiation between KEURO and the Federal government, the Development Cost of WCE has increased by 134.5% to RM7.07 billion as announced by the company last week.  Even more staggering was the fact that the concession period has been extended from 33 to 60 years.

The increase in cost and extension of the concession period comes together with new additional benefits where the Government will grant WCE a RM2.24 billion soft loan at 4% interest and an interest subsidy, of up to 3% from commercial loans for a period of 22 years.  As per the original concession term, the land acquisition cost amounting to RM980 million will also be borne by the Government.

One of the possible contributory reasons to the sharp increase in cost could be the extension in length of the highway from 216km announced in 2007 to 316km in 2012, an increase of 100km.   While the 100km or 46% increase in length cannot fully justify a 134% increase in cost, the more perplexing question is perhaps, how did the expressway suddenly increase by 100km between the townships of Taiping and Banting?

The BN Federal Government needs major improvements in negotiating its mega-project contracts.  Last month in December, it was announced by Boustead Naval Shipyard that they have received a letter of award from the Ministry of Defence to construct 6 second generation patrol vessels (SGPVs) for the amount of RM9 billion.  This was despite the fact that the Minister of Defence had himself stated in Parliament that the ceiling cost for the ships would be RM6 billion just 9 months before in March last year.

It seems that the more the Government negotiates, the higher the contract value and the more favourable the contract terms will be for the contracting business entities.

The Prime Minister must explain the above glaring discrepancies to demonstrate that he is truly transparent and accountable to the public.  Najib has embarked on a Government and Economic Transformation agenda since ascending the premiership nearly 3 years ago and yet today, Malaysians are still witnessing unbelievably lucrative concessions being awarded to the politically-connected and cronies of BN politicians.

Najib has also reneged on his promise to be a “people first” government.  The above highway privatisation deal not only uses tax-payer’s funds to provide financing for its construction, the same tax-payers and their grandchildren will have to pay for the next 60 years for the use the expressway.  This deal proves that no “transformation” has taken place, and the financial interest of political cronies outweighs the needs of the ordinary Malaysians.

Monday, January 30, 2012

Sweet Subsidies for Who?

The Star published on its front page news yesterday with the headline “Sweet Subsidies”.  It reported that the Domestic Trade, Cooperatives and Consumerism Minister, Dato’ Seri lsmail Sabri Yaakob said that the government has increased subsidies from 20 sen to 54 sen per kilogramme of sugar in order to maintain the price of sugar at RM2.30 because the “global price of sugar is skyrocketing”.

One would almost feel deeply moved by the Minister’s kindness when he said “world prices have increased but we have decided not to raise the price here… We are doing what we can to reduce the people's burden.”

The price of sugar was last increased by 20 sen in May 2011 to RM2.30 per kilogramme.  However it has increased from RM1.45 since January 2010 when translated to a 58.6% increase in the price of sugar within just 18 months as part of the government’s subsidy reduction exercise.

What is extremely intriguing however, was that global sugar prices over the past 6 months since the last price hike in May 2011 had in fact declined significantly, and not the purported “skyrocket”.

In fact, after hitting a peak of US$29.47 per hundred pounds in July 2011, the price of sugar has fallen consistently every month – US$28.88 (August), US$26.64 (September), US$26.30 (October), US$24.52 (November) to US$23.42 (December) per hundred pounds.  This meant that global sugar prices traded on the Sugar, Free Market, Coffee Sugar and Cocoa Exchange (CSCE) has fallen by 20.5% since July last year.

Even after taking into account the fact that the Malaysian Ringgit has depreciated against the US Dollar by 7% between July 2011 and December 2011, the global price of sugar would still have declined by 13.5% in Ringgit terms.

Therefore by maintaining sugar prices at RM2.30, the Government should in actual fact have to subsidise less, and not more, as proudly boasted by Datuk Seri Ismail Sabri.  What is more perplexing is the fact that our subsidy had to increase by 170% to cope with the non-existent “skyrocketing” global price of sugar.

Today, 99% of Malaysia’s raw sugar requirements are imported.  However the sugar market is monopolised by only 2 refineries – Malayan Sugar Manufacturing Holdings (MSM Holdings) and Tradewinds Corporation Bhd.  These companies import Malaysia’s raw sugar requirements.  MSM Holdings is a 71% subsidiary of FELDA-related entities while Tradewinds is 43% controlled by Tan Sri Syed Mokhtar Al-Bukhary with another 20% owned by FELDA Global Ventures Holdings Sdn Bhd.

The question then is - whether the 170% increase in sugar subsidy or approximately RM198 million a year payable to MSM Holdings and Tradewinds, is in fact a thinly disguised attempt to fatten the profits of these two politically-connected companies?

The Minister must hence clarify why there was a need to increase subsidies when the global sugar price is falling while at the same time explain who are the real beneficiaries from the extra RM198 million of supposed “subsidy”.

Sunday, January 29, 2012

RM7 billion New Highway Concession for Who?

DAP rakes Putrajaya over RM7b highway deal
By Debra Chong January 28, 2012

KUALA LUMPUR, Jan 28 — The DAP has blasted the Najib administration for awarding a lucrative RM7 billion highway deal, to be tolled for a record 60 years, to a company known principally for making and selling granular and powder-activated carbon.

Public-listed Kumpulan Europlus Bhd (KEuro) told Bursa Malaysia late on Thursday it had also won a RM2.24 billion government soft loan and a three per cent interest subsidy on commercial loans for a period of 22 years, on top of Putrajaya paying RM980 million in land acquisition cost to join Banting in south Selangor a total 316km to Taiping in north Perak.

Industry observers have described the new highway project as the closest alternative to the congested North-South Expressway.

“This deal reeks of cronyism and this does not bode well for Najib’s transformation programme,” the opposition party lawmaker Tony Pua (picture) told The Malaysian Insider, speaking of Prime Minister Datuk Seri Najib Razak's New Economic Model (NEM) to make the country a high-income nation by 2020.

The PM has been seeking to burnish his credentials as a reformer and so spur Malaysia’s growth as a global an investment hub.

In the filing to Bursa Malaysia, KEuro disclosed that its subsidiary, West Coast Expressway Sdn Bhd (WCE), has received an approval letter dated the same day from the federal government to build and operate the Banting-Taiping highway for the next 60 years estimated to cost RM7.07 billion.
It said the 224km of the highway will be tolled compared to 92km that will be toll-free.

The public-listed company also disclosed receiving a RM2.24 billion government soft loan starting from next year and an interest subsidy of only three per cent on commercial loans for a period of 22 years to build the highway apart from the government bearing the estimated RM980 million in land acquisition cost for the highway project.

“This is shocking! Why [did they get] such good terms?” Pua asked.

“Taxpayers are being doubly abused. First, they will have to pay for the construction of the road and then will be asked to pay for the use of the road,” he said.

The DAP publicity chief pointed out that KEuro’s president and chief executive Tan Sri Chan Ah Chye was also onboard the controversial housing developer Talam Corporation Bhd, and that both companies had fallen into debt in the past.

“Despite that, it has continued to win support from the Najib administration and got a sweetheart deal in order to see through the project,” Pua said.

“Why is the government giving it to him [Chan]?” he asked, noting that Chan owns a controlling 27.58 per cent in KEuro, with the second major shareholder at 22.7 per cent going to multi-industry giant IJM Corporation Bhd.

Pua said that KEuro had made only RM15 million in revenue and RM5 million in profit in the first nine months of last year after racking up RM24.1 million in losses on revenue of RM20.5 million in 2010.

“Now they are awarded a highway that is expected to cost RM7.07 billion to build. It’s a property developer with records of abandoned housing projects. It has no experience in building highways that I can recall,” Pua said, clarifying that IJM has, but not KEuro.

“Here we are in Pakatan Rakyat putting in our common policy framework to restructure and remove tolls while the BN government is putting on their agenda privatisation policies that impose additional tolls on ordinary Malaysians and prioritise their cronies.”

Pua urged the government to call off its deal with KEuro, which he said had yet to be signed; and to open the project to competitive tender so that the public will not be burdened by tolls for 60 years.

“It’s the longest [toll concession] ever, longer than with PLUS,” the Petaling Jaya Utara MP said.
Pua, who is among the opposition Pakatan Rakyat (PR) bloc’s economic experts, related that the West Coast highway project had been mooted and first approved during the administration of Tun Dr Mahathir Mohamad — Najib’s mentor — but had stalled in the late 1990s.

“Because of the Asian economic crisis, Europlus could not raise the money to build the highway,” he said.

He added: “It’s an old deal that should have been terminated when Europlus first failed to build the highway.”

KEuro is described as an investment holding company in stock exchange records and its businesses are organised into three divisions, namely manufacturing and trading of industrial products, construction, and leasing, management services and investment holding.

Najib Should Check His Own Reflection First

The Prime Minister appears particularly shaken by the promises made by Pakatan Rakyat to improve the livelihood of ordinary Malaysians by restructuring and renegotiating unfair contracts the BN government has signed with its cronies which has enabled the latter to make billions of ringgit in profits every year at the expense of the rakyat.

Dato' Seri Najib Razak went to the extent of accusing the moves by Pakatan Rakyat, which will include abolishing and reviewing highway tolls, as "short-term" measures which are "recipe for economic disaster".

Before making such wild and unfounded allegations, the Prime Minister should perhaps do better to first look into his own reflection in the mirror, especially in the manner which the wealth of the country has been pillaged by BN leaders and its crony businessmen.

As admitted by none other than his own Minister in the Prime Minister's Department, Datuk Idris Jala, should existing economic policies continue, Malaysia will become a bankrupt nation by 2019.  How is it that a country which is overflowing with natural resources, ranging from tin to rubber, from palm oil or crude oil, and from timber to gold, can risk becoming "bankrupt" is beyond belief.  The only reason for this bankruptcy risk is none other than the 50 years of economic management by the BN government.

Malaysia's federal government debt-GDP ratio has increased to 53%, particularly in the recent years. We have accumulated RM462 billion of debt as a result of 14 consecutive years of budget deficits.

What is more alarming, Global Financial Integrity, a watchdog based in the United States revealed that Malaysia lost RM150 billion in illicit outflows in 2009, and has accumulated more than RM1 trillion since 2000.  And yet despite the expose, Dato' Seri Najib Razak has failed to address the issue beyond "setting up a committee" to look into the matter.

Instead the Prime Minister chose to criticise the policy position of Pakatan Rakyat to restructure and where possible completely abolish toll in an exercise which will only benefit ordinary Malaysians burdened with higher cost of living. A Pakatan Rakyat government will not only restructure just highway tolls, we will also restructure all existing unfair privatisation agreements such as the Independent Power Producers, water concession companies and other unfair privatisation contracts.

Najib has chosen not to implement fair policies for its tax-payers but instead to protect the astronomical profits of its corrupt leaders and politically-connected cronies.  The PLUS highway for example was built at the cost of only RM6.9 billion but it makes PLUS net profit of more than RM1.3 billion in 2011 alone.  Despite the sky-high earnings which will only increase annually due to more cars on the road and higher toll rates, the BN government has extended the concession period of the highway toll to the year 2038, or another 27 years of merciless profits at the expense of ordinary Malaysians.

It is under the "capable" economic management of BN leaders that today, we are embroiled in billions of ringgit of financial scandals in projects such as the RM12.5 billion Port Klang Free Zone, the new RM3.9 billion "low-cost" airport, the RM9 billion acquisition of naval patrol vessels or the now infamous RM330 million "cows and condos" quagmire.

The Pakatan Rakyat governments have ruled Penang, Selangor and other states for more than 3 years now. We have proven that not only can we govern despite the lack of experience, we can administer the states better than BN did over the past 50 years.  We have successfully reduced corruption and improved efficiency, resulting in record financial reserves levels, lower debts and institutionalised welfare benefits for the man-on-the-street.

We have proven that our policies do not destroy the economy but have made Selangor and Penang the top investment destination for foreign investors.

It is BN, if given the opportunity to continue ruling the country which will continue to impoverish the rakyat to enrich the cronies with vested interest via lucrative contracts and privatisation concessions.

Friday, January 27, 2012

Khairy should Get Out from the Racial Mindset

I read with bemusement and disappointment not for the first time, MP for Rembau, Khairy Jamaluddin asking DAP to declare its number of Malay members to prove our 'multiracial' credentials.

It is unfortunate that Khairy is not able to rid himself of the UMNO paradigm of race-based ideology and politics. The DAP has never denied the fact that Malays form a small proportion of our membership base, and this "weakness" has been exploited by BN politicians stuck in the racial mindset to the hilt to frighten the Malay community into submission.

Khairy and his fellow BN leaders subcribes to the quota-based "multi-racial" definition where it can only be multi-racial if 70% of scholarships are awarded to Malays or if 30% of corporate wealth is in the hands of bumiputeras (excluding Government ownership).

The DAP's political ideology is based on social justice, democracy, freedom and equal opportunity and not based on race.  Hence we are multi-racial because we do not ban membership based on the colour of one's skin, unlike the key BN parties of UMNO, MCA and MIC.  The DAP accept all Malaysians, regardless of race, religion or geography as members, as long as they believe in our struggles and subscribe to our political ideals.

There is no question that we face the uphill task of convincing the Malay community to join our struggles over the past decades, especially in the light of UMNO's use of racial arguments to fan sentiments, attract and retain members. However, our leaders have never been dismayed by the uphill battle and have no intention of sacrificing our ideals by doing a "Perkasa", just to attract more Malay members.  The means will not justify the ends.

Instead we believe that over time, the principles of social justice, freedom, democracy and equal opportunity will emerge victorious against race-supremacist ideologies.  Increasingly, we can see greater dissatisfaction among the Malay community of UMNO's antics of hiding corruption, cronyism and abuse of power under the guise of the New Economic Policy. We are happy that there are an increasing number of leaders and activists in the Malay community who have joined DAP recently because they believe in our cause.

The numbers will only increase once the Malay community, and Malaysians at large see past the lies printed in BN-owned mainstream media, and understand that the DAP causes will benefit all Malaysians, regardless of race, religion and geography.  Hopefully Khairy, of all people, will be able to rid himself of his preoccupation with race by then.

Thursday, January 26, 2012

"Global Movement of Moderates" - A Political Scam?

Najib’s attempt to promote the “Global Movement of Moderates” is nothing but a political scam if he can’t even reign in extremist Perkasa, comprising mainly of Umno members

Dato’ Seri Najib Abdul Razak has been pushing his international agenda of “The Global Movement of Moderates” (GMM) and most recently delivered a keynote address at the inaugural “International Conference on the Global Movement of Moderates” (ICGMM) last week.

In his forward message in the conference's programme book, Najib said, “the time has come for moderates of all countries, of all religions to take back the centre, to reclaim the agenda for peace and pragmatism, and to marginalise the extremists.”

Let me state upfront that the DAP fully support and concur with Najib’s statement for “all religions to take back the centre” and “to marginalise the extremists”. It is a position that DAP Secretary-General, Lim Guan Eng has preached in his address at our 2010 party convention where he called for a “Middle Malaysia”.

He had stated clearly that “in DAP’s Middle Malaysia we prefer co-operation not conflict, consultation instead of confrontation and an inclusive shared society rather than an exclusive separate society.”

However, while Najib had sought to portray himself as a leading moderate, he has failed, intentionally or otherwise, to practise what he preaches by providing fertile ground for racism and religious extremism to prosper in Malaysia through UMNO-supported vehicles such as Perkasa.

The fact that Perkasa has with growing intensity over the past few months sought to increase religious friction between Muslims and Christians with inflammatory and unfounded statements, published in the UMNO-owned mainstream media proves that Najib is either hopeless or devious in the fight against extremism.

The latest statement by Perkasa secretary-general that “The faith of Islam, of Muslims is under siege in Selangor... Perkasa is concerned of a more aggressive Christianisation attempt, especially with Khalid [Ibrahim] in charge of the exco portfolio for Islam,” seeks to fan the anti-Christian sentiments in the country.

It was only 2 years ago when Malaysia suffered the worst cases of arson and attempted arsons on churches throughout Malaysia and the freedom provided to Perkasa and its ilk to do its worst will not lead to any peaceful outcome.

Dato’ Seri Najib, as the Prime Minister of the country, and a self-proclaimed “Voice of Moderation” has failed to even once admonish Perkasa, the UMNO members involved or the party’s mouth-piece Utusan Malaysia for promoting racial hatred and stirring religious intolerance and extremism.  On the contrary, Najib has more than once, made policy U-turns to placate Ibrahim Ali, the Perkasa supremo.

Without sincerity and political will from the top leadership, Perkasa has the tacit approval to do its worse in the light of the upcoming general elections to sow fear into the hearts of the Malay-Muslim community in order to protect the vote bank for UMNO.

The game that UMNO and Perkasa are playing, regardless of the outcome of the next general election, is a highly dangerous one which may forever tarnish Malaysia’s reputation as a moderate country.  It will leave Najib in history as the Prime Minister who failed moderation.

Sunday, January 22, 2012

So It's 6 Littoral Combat Ships, Or Not?

The Ministry of Defence has been touting its latest acquisition of 6 second generation patrol vessels (SGPVs) as the purchase of the latest and most advanced "littoral combat ships" (LCS). It is also the justification for the ships to cost a total of RM6 billion, which was subsequently adjusted upwards to RM9 billion.

However after our clarification meeting between Pakatan Rakyat Members of Parliament - Saifuddin Nasution, Dzulkefli Ahmad and myself with the Minister of Defence, Dato' Seri Zahid Hamidi and his officials, we have confirmed that we are not acquiring Littoral Combat Ships.

The Government has been justifying the cost of acquisition of the 6 ships by comparing against the United States LCS programme which cost between RM1.5 billion to RM2.5 billion per ship to claim that we are buying on the cheap at only RM1.5 billion per ship.

The LCS is a specific ship built by the United States (US) Navy and no other countries. The US current has only 2 LCS in service with orders for additional ships still under construction.

According to Naval-Technology.com, the LCS is "a fast, highly manoeuverable, networked surface combat ship, which is a specialised variant of the family of US future surface combat ships... Both [ships] achieve sprint speeds of over 40knots and long-range transit distances of over 3,500 miles."

The Wikipedia entry notes that the LCS are able to "add the capabilities of a small assault transport with a flight deck and hangar large enough to base two SH-60 Seahawk helicopters, the capability to recover and launch small boats from a stern ramp, and enough cargo volume and payload to deliver a small assault force with armoured fighting vehicles to a roll-on/roll-off port facility."

The reputable Defense Industry Daily also confirmed the LCS are "115 – 127 meters in length and 2,800 – 3,100 tons of displacement" and are differentiated from typical frigates by "their shallow water design and employment."

However, the Ministry of Defence has confirmed during our dialogue that the top speed for our SGPVs is only 28 knots and not 40-45 knots of the standard LCS. In addition, our ships will be shorter at 105 meters and does not have the long-range transit reach of 3,500 miles. Earlier announcements by Mindef have also confirmed that the ships will have a 2,500 tons of displacement, carry only an Eurocopter 725 each and does not have the capability to launch and recover small boats.

In fact the announcement by Mindef contractor Boustead Naval Shipyards on Bursa Malaysia last month and our meeting confirmed that we will be acquiring "Gowind Class Corvettes" from scandal-tainted French shipbuilder DCNS. It will certainly be a stretch of any military experts' imagination to equate our purchase of these SPGV Corvettes to the state of the art LCS.

We would like to once again thank Mindef for holding the dialogue with us 2 days ago for this information could not have been confirmed otherwise.

We would now like to call upon Mindef to "call a spade a spade" and stop the attempt to disguise our acquisition with fancy names to justify their substantial cost. The Gowind-class corvettes are not ships to be belittled and are powerful in their own ways which may serve the needs oe Malaysian Navy, but they are not by means the equivalent of LCS as trumpeted by the Minister and Government.

Saturday, January 21, 2012

6 Second Generation Patrol Vessels: RM6 billion or RM9 billion?

The Pakatan Rakyat Member of Parliaments – Dr Dzulkefly Ahmad, Saifuddin Nasution and myself would like to thank the Ministry of Defence for making arrangements to provide clarifications to us over the recent procurement controversies yesterday.

One of the key issues which required urgent clarification was the disparity between the originally stated RM6 billion to acquire 6 SGPVs, first highlighted in February 2011 which was subsequently increased to RM9 billion in December 2011.

Below is a chronology of events and statements made:

  • On February 5th 2011, Bernama reported that “the government has agreed to allocate RM6 bil to build six second generation patrol vessels for the Royal Malaysian Navy, Defence Minister Datuk Seri Dr Ahmad Zahid Hamidi said Saturday” in an article entitled “RM6 bil approved for 6 patrol vessels”. It was mentioned that Boustead Naval Shipyard will be awarded the contract to build the ships.
  • On 12 February 2011, the New Straits Times also reported that the Royal Malaysian Navy Chief, Admiral Tan Sri Abdul Aziz Jaafar said that “the RM6 billion package deal for six second-generation offshore patrol vessels is considered reasonable… the cost included weapon-system installation, radar technology and other sophisticated equipment to enhance the armed forces' firepower.”
  • On 8th March 2011 in Parliament, Dato’ Seri Zahid Hamidi had further clarified that “pada masa ini pihak kerajaan masih belum memuktamadkan harga. Sejumlah RM6 bilion telah diperuntukkan sebagai siling dalam Rancangan Malaysia Kesepuluh dan sebahagian akan melimpah ke Rancangan Malaysia Kesebelas dan mungkin hingga ke Rancangan Malaysia Kedua Belas.” (pg 6). He repeated the same on 21 March 2011 in Parliament (pg 52).
  • On 16th December 2011, Boustead Holdings Bhd has announced on Bursa Malaysia that its subsidiary Boustead Naval Shipyard Sdn Bhd has received the “letter of award to undertake the construction of the ships” from Ministry of Defence Malaysia “to design, construct, equip, install, commission, integrate, test and trials, and deliver six LCS” for the new ceiling price of RM 9.0 billion.

At the meeting yesterday, the Secretary-General of Defence Ministry, Dato’ Seri Ismail Ahmad “clarified” the apparent increase in the cost:

  • Firstly, Dato’ Seri Ismail claimed that the announcement made by Boustead Holdings Bhd refers to a “letter of intent” and the agreement has not been finalised. However this contradicts the statement made by Boustead to the stock exchange which clearly stated that it is a “letter of award”.
  • Secondly, Dato’ Seri Ismail claimed that the Defence Minister’s reply in parliament was perhaps wrongly interpreted. What the Minister apparently meant was that RM6 billion was just for the 10th Malaysia plan and did not include the RM3 billion budgeted in the 11th Malaysia Plan. Therefore the price was RM9 billion for the 6 ships all along, and never RM6 billion.

Malaysians can now make their own judgement as to whether the explanation given by the Defence Ministry is acceptable or even credible.

I had asked during the meeting that if the actual purchase price or original budget was to be RM9 billion, then why did the Defence Minister announce on 5th February 2011 that it was RM6 billion to acquire 6 ships?

I further added, if it was indeed RM9 billion and not RM6 billion all this while, why was it that it took more than 9 months for the “correct” RM9 billion figure to be exposed via the Boustead announcement?

No further clarification was given by the Defence Ministry or the Minister besides insisting that it was all along a RM9 billion acquisition.

The above controversy provides one of the clearest instances why it is imperative for the Parliamentary Oversight Committee on Defence Expenditure, modelled after the United States House Oversight Subcommittee on National Security, Homeland Defense and Foreign Operations which looks after defence policies as well as the US Defense Budget Appropriation Committees which review and approve detailed defence expenditure.

The setting up of such a committee with access to all the necessary and relevant documents will ensure that no one will be left with any doubt over whether it was RM9 billion all along or whether there was a massive increase in price from RM6 billion.

Friday, January 20, 2012

Pakatan Rakyat MPs to meet Zahid

Pakatan Rakyat Member of Parliaments, Saifuddin Nasution, Dr Dzulkefli Ahmad and myself will meet with Dato’ Seri Zahid Hamidi tomorrow 19th January 20112 (Thursday) at 3 pm at the Ministry of Defence after receiving his invitation to discuss the recent controversies with regards to defence procurement.

Among the issues which we will raise with the Minister is the contract signed by the Ministry of Defence with Boustead Naval Shipyards “to design, construct, equip, install, commission, integrate, test and trials, and deliver six Littoral Combatant Ships (Frigate Class)” for the amount of RM9 billion last month.

The RM9 billion contract was signed despite the Minister of Defence having told the Parliament twice in March last year that the ceiling price set for the acquisition of these ships was set at RM6 billion. This represents a huge increase of RM3 billion or 50% of the original budget.

Malaysians are even more concerned when Boustead announced that the ships will be built by scandal-ridden French warships manufacturer, DCNS. While the ship-building history and capabilities of DCNS are not in doubt – DCNS has been found guilty of bribing government officials in Taiwan and has been fined by the Courts €630 million (approximately RM2.5 billion).

The Taiwanese government has continued its litigation against DCNS by filing another NT$ 3.0 billion (RM310 million) in additional compensation from DCNS, above and beyond the sum above, for prohibited commissions and kickbacks at the International Court of Arbitration.

Malaysians are of course well aware of the €115 million (~RM500 million) paid to Perimekar Sdn Bhd for “coordination and support services” in the Malaysia’s purchase of 2 Scorpene submarines from DCNS which cost €1.34 billion (~RM6.5 billion). Perimekar was owned by the Prime Minister and the then Defence Minister Dato’ Seri Najib Razak’s close associate, Abdul Razak Baginda. It was also a newly set up company with no prior experience in providing defence support and coordination services.

The Ministry of Defence must also provide clarity over the RM7.55 billion purchase of 257 armoured personnel carriers at RM29.4 million each. It has been publicised widely that Deftech Sdn Bhd, a subsidiary of DRB-Hicom Bhd owned by Tan Sri Syed Mokhtar Al Bukhary which was awarded the contract, has purchased the “base system” from Turkish defence company, FNSS Defence Systems for approximately US$559 million (~RM1.7 billion).

The Minister must provide transparency over the above procurement, especially since it was conducted without any open tender. The Government must provide details of equipment and services which makes the difference between the acquisition cost of RM7.55 billion relative to the “base system” of only RM1.7 billion.

Most importantly, given the size, specialisation and sensitivity of defence procurement, we would like to repeat our call for the Malaysian government to set up the Parliamentary Oversight Committee on Defence Procurement modelled after the United States House Oversight Subcommittee on National Security, Homeland Defense and Foreign Operations which looks after defence policies as well as the US Defense Budget Appropriation Committees which review and approve detailed defence expenditure.

The set up of the Parliamentary Oversight Committee on Defence Procurement will lead to greater accountability and transparency to ensure that the rakyat’s wealth will not be frittered away, especially in the light of the warning by Datuk Idris Jala that Malaysia might be bankrupt by 2019 if Government expenditure is not curtailed.

Wednesday, January 18, 2012

Najib More Concerned About KR1M Profits

I read with both amusement and consternation the Prime Minister’s statement on Bernama yesterday that “the ridicule and criticism hurled by the opposition at the 1Malaysia Shops (KR1M) has helped to raise sales at the outlets.”

Dato’ Seri Najib Razak even goaded the opposition to make more criticisms, “I would like to encourage them (the opposition) to carry on with their criticism” when visiting his own constituency of Pekan where KR1M has been opened for a month.

It is hence clear that the Prime Minister is not the least bothered about the health and welfare of ordinary Malaysians, not even that of his own constituents.

The criticisms coming from Pakatan Rakyat on KR1M is regardless of whether the store sales go up or down. The criticisms are made on the issue of whether the Government’s subsidies are being used to profit particular businessmen, whether consumers are being fleeced or their health compromised.

The Minister of Health, Dato’ Seri Liow Tiong Lai has confirmed that the 1Malaysia Fresh Milk, which was sold significantly cheaper by KR1M compared to other retail stores, was contaminated with the Escherichia coli (E.coli) bacteria which is the cause of food poisoning and occasional deaths.

The Ministry of Health has also confirmed that the 1Malaysia Growing Up Milk Powder for children 1 year old and above contained excessive amount of Vitamin A, more than double the limit set by Institute of Medicine (IOM) for children 3 years old and below. Excessive doses of vitamin A may cause Hypervitaminosis A, resulting in damaged liver, asthma, skin discoloration, hair loss and other effects.

In addition, at least 2 products – oyster sauce and sweetened creamer - were confirmed to have breached health and safety regulations per the Food Regulations Act 1985. What is more, no less than 5 products were labelled wrongly, including inferior products being sold as superior goods.

Selected comparison of prices of 1Malaysia products against their counterparts in other hypermarkets has also shown that there’s little difference in prices, and certainly a far cry from the 30% to 50% cheaper claim by KR1M. This is despite a RM40 million subsidy given by the Government to Mydin to open these shops.

Yet, despite all of the above, Dato’ Seri Najib Razak has chosen not only to waive any punitive actions against KR1M for breaking so many laws, but instead decided cosy up to KR1M and its private owners. He did not even attempt to admonish KR1M owners for the above transgressions.

There can be no other conclusion from the above but to say that the Prime Minister isn’t interested in whether it is the rakyat or the businessman who is profiting from the RM40 million subsidy; that he doesn’t care if KR1M sold products which were unhealthy or of inferior quality; and that Dato’ Seri Najib Razak is only interested in KR1M making lots of sales and profits for its private shareholders.

Thursday, January 05, 2012

KLIA 2: Did Malaysia Airports Mislead the Government?

The top management of Malaysia Airports Holdings Bhd (MAHB) must be held accountable for withholding crucial information on cost in the decision to shift site of the new low cost terminal, KLIA2 to the Government

On 14th December 2011, I had a press conference to explain the key reasons why the cost of the new “low cost terminal” KLIA2 had increased drastically from the originally estimated RM1.7 billion in 2007 to RM3.9 billion last year.

The underlying reason was the shift of the airport from the originally proposed northern site (KLIA North) to the current western site (KLIA West) which is under construction. The shift of the site has caused the cost of construction to bloat because KLIA West was already identified as unsuitable for the construction of an airport due to it being a peat swamp. This is increased the cost by at least RM1.2 billion.

In addition, the shift to KLIA West has resulted in the need for a 3rd runway costing RM270 million as well as a 2nd control tower costing an estimated RM300 million, which would not have been required had the new low-cost terminal be built in KLIA North.

MAHB made the briefest of response to my allegations on the same day, by claiming that I had referred to the old master plan which was no longer valid. MAHB said that the “National Airport Master Plan (NAMP) 2008 has super-ceded by the KLIA Master Plan (1992).”

The answer begs the question because my allegation is exactly that the NAMP’s decision to shift KLIA2 to the new site from the original site, KLIA North recommended in the 1992 KL International Airport Master Plan had caused the drastic increase in the cost.

In fact based on MAHB’s own presentation to the Finance Ministry as late as 6th July 2007, MAHB had reconfirmed that the KLIA North was the best option available to build the new KLIA2. MAHB had argued that the advantages of KLIA North include:

  • Efficient operations since the aprons are well connected to either Runway 1 or 2.
  • Ample land available for future expansion
  • Good access to the area via the perimeter highway
  • Proposed site complement KLIA as an Integrated Hub for low cost carriers and legacy airlines
  • And it complies to KLIA Master Plan 
MAHB also presented a 3-phase expansion programme where the new low cost terminal at KLIA North will be able to meet the increase in passenger traffic from 15 million to 25 million to 45 million per annum.

However, in a separate presentation to Finance, Home and Transport Ministry officials on 15 April 2008 on the NAMP, the MAHB made a 360-degree turn by recommending KLIA West as the new site for the new low-cost terminal. Based on the presentation documents and the minutes of the meeting, MAHB has failed to highlight the fact that the new KLIA2 will cost substantially more due to reasons already identified in the 1992 KLIA Master Plan.

The 1992 Master Plan had clearly stated that “the western part of the site mainly comprises saturated marine clays with an overlay of peat material… The combination of the drainage problems and the type of material means that the western part of the site has poor bearing qualities and is not suitable for airport construction without undertaking significant engineering measures to improve load bearing capacity… Even after these measures have been undertaken there is likely to be some settlement of the ground and the area should be allowed to consolidate for a period prior to being used for airport construction.”

Hence despite knowing full well that the KLIA West is unsuitable for airport construction and will incur substantially higher cost, MAHB has intentionally chosen not to disclose this crucial information to the relevant Ministry officials. This has resulted in the lack of objections to the shift of the new low-cost terminal to KLIA West. As a result, MAHB which is a 54% subsidiary of Khazanah Bhd, has caused the cost of KLIA2 to bloat by more than RM2 billion at the expense of the taxpayers.

The MAHB top management must be held fully accountable for the unacceptable increase in cost especially in the light of their being economical with the truth on the cost of construction with the Government. They must explain why is it that within a few months from July 2007 to March 2008, the “best” site for the new KLIA2 can be suddenly shifted from KLIA North to KLIA West.

Dato’ Seri Kong Cho Ha, as the responsible Minister in-charge must ensure that heads must roll for the RM3.9 billion KLIA2 fiasco. The Minister to date has failed to make even a single comment on the issue, which clearly demonstrates that he is shirking his responsibility to look after the public interest.

Wednesday, January 04, 2012

Zahid Must Stop The Desperate Lies

Dato’ Seri Zahid Hamidi must stop the scurrilous allegations that I am a “tool” for a foreign country in repeated attempts to deflect his Ministry’s lack of transparency and accountability

Chinese newspapers carried the story that Dato’ Seri Zahid Hamidi has accused me of being a “tool to a former professor who has become a professor in a foreign country” on 2nd January 2012. He has added that “the foreign country is the puppet-master of a particular party in Malaysia”. He has even claimed that he has documentary proof to validate what he has said.

I have obtained the full transcript of the comments made by the Defence Minister on 1st January, and the relevant accusation is as follows:
“Saya fikir Tony Pua ni adalah seorang yang menjadi alat saja seorang bekas professor yang telah menjadi professor di university di luar negara, dan negara itu memang menjadi dalang kepada sebuah parti di negara ini. Saya fikir asal politik di Malaysia biar dibentuk oleh ahli-ahli politik Malaysia. Jangan pernah menjadi dalang daripada mana-mana negara . Saya tidak menuduh tapi saya ada dokumen-dokumen dan bukti-bukti untuk mengesahkan apa yang saya katakana ini.”
The is the second time the Defence Minister had implied that I am a foreign agent. In March 2011, Dato’ Seri Zahid Hamidi was reported in Utusan Malaysia to have said:
“Dia [Tony Pua] dulu ditangkap di Singapura, dibawa ke mahkamah, tetapi sebab hubungan dia mungkin baik dengan pejabat tertentu di sana, beliau dilepaskan (dan) tidak dapat jadi ahli Parlimen (di sana)”
As I’ve responded last year, I’ve never even been fined for jay-walking in Singapore, what more being arrested and charged in the court of law in the island city.

All these scurrilous accusations arose as a result of the continued pressure placed on the Defence Ministry to be transparent with its military equipment purchases, especially in the light of a poor assessment by Transparency International (TI). The TI scored Malaysia at only 4.5 points out of a maximum of 12, or only 37.5%, well below the failure mark. This was the score given in the inaugural “Transparency of Defence Budgets Report” launched on 19 November 2011.

Director of the International Defence and Security Program for TI in United Kingdom, Mark Pyman, who launched the report in Subang Jaya said “Malaysia ranked far below other countries (for this), where the budget lacked details and no audits were undertaken of the secret programmes.”

Malaysia is ranked alongside Afghanistan, Rwanda, Georgia and Azerbaijan in the report, well below other countries such as Bangladesh, Indonesia and Papua New Guinea. The results of the research indicate that approximately 14 per cent of the countries under review in this study scored high and these are primarily developed countries with strong democratic systems in place.

Treason as accused by the Defence Minister is a crime of the highest order in Malaysia and is punishable by death. The accusation by Dato’ Seri Zahid Hamidi is as serious as it is outrageous, and such contemptuous behaviour is completely unbecoming of a Minister.

Given the severity of the allegations that I am compromising the nation’s security, I challenge Dato’ Seri Zahid Hamidi to come up with the so-called “documentary proof” that I am a “tool” of a professor in a foreign university and charge me accordingly. However, if the Minister fails to furnish the proof, then he should immediately withdraw the remarks and make a public apology for making such unfounded statements.

It appears that Dato’ Seri Zahid Hamidi does not realise that he is being fed with fictitious stories from his chief intelligence officer, Papagomo – who had recently enjoyed the unrivalled privilege of sailing in the country’s first submarine. Papagomo is also the source of the scurrilous allegations against Penang Chief Minister Lim Guan Eng’s son recently who was wrong victimised as having sexually assaulted a female student in his school.

It is extremely worrying that the country’s Defence Minister is relying the country’s intelligence from a blogger who is an obsessive liar without any morals and ethics. In fact all Malaysians should be terribly concerned that our Defence Minister who wields great powers, can be so gullibly compromised by a writer of unbelievable and outlandish fiction.

Tuesday, January 03, 2012

Zahid Unfit To Be Minister (II)

Dato’ Seri Zahid Hamidi displays the worst traits of a minister who is arrogant, ignorant and shockingly forgetful.

I read with great surprise that Dato’ Seri Zahid Hamidi has once again reiterated his “invite” to me to meet him with regards to the cost increase over the acquisition of 6 naval patrol vessels from RM6 billion to RM9 billion. I feel extremely honoured because this is the third invite in 4 days!

His first invite made via the press was on 29th December, followed by another on 31st, and another yesterday, on the 1st January of the new year – all of which were published in Bernama. He need not have made so many invites, he had me at “hello”. I had immediately after reading his first invite, publicly responded that Pakatan Rakyat MPs, Nurul Izzah Anwar, Dr Dzulkefli Ahmad and myself are more than happy to take up his offer of clarifications on 30th December.

Unfortunately, despite his eagerness to meet me, our Defence Minister appears to be very poorly informed and does not read the news. So, I repeat again here, that we accept the invite from the Minister to offer clarifications and look forward to his honourable office to make the necessary arrangements for our visit.

What was however more shocking was his claim that I’ve never dared to face him over the controversial acquisitions even in parliament, and insinuated that I was a coward for raising the issue only during political ceramahs.

He said “when I answered his question in Parliament, [Tony Pua] was not present to hear my reply, but continued to harp on the matter in political ceramah. He is brave only before the opposition crowd but chicken out when asked for a face-to-face meeting.”

The above is utter and complete nonsense as I was present in Parliament and even debated heatedly and extensively with him when he was replying in Parliament on these issues twice in March 2011!

When he was responding to the question from Segambut MP Lim Lip Eng on the 8th March 2011, I was there and chastised the Minister for un-ministerial behaviour for asking my colleague to “go back to kindergarten”. (Hansard pg 5 – 9 http://www.parlimen.gov.my/files/hindex/pdf/DR-08032011.pdf)

In a more extensive subsequent debate on 21 March, when the Minister was directly reply to my questions raised in parliament, he had even threatened to sue me for defamation. I had stood my ground and debated extensively with the Minister over the procurement of 6 naval patrol vessels and 257 armoured personnel vehicles. (Hansard pg 34 - 54 http://www.parlimen.gov.my/

Hence Dato’ Seri Zahid Hamidi’s allegations that I was not present in Parliament exposed just how forgetful and absent-minded he is. Even worse, it shows that our Defence Minister does not check his facts before making statements.

Given his absent-mindedness, I would further like to remind the Minister that he had twice in Parliament in March last year confirmed that the price for the 6 patrol vessels have not been finalised and a budget ceiling of RM6 billion has been set.

On 8th March 2011 in Parliament, Dato’ Seri Zahid Hamidi had said “pada masa ini pihak kerajaan masih belum memuktamadkan harga. Sejumlah RM6 bilion telah diperuntukkan sebagai siling dalam
Rancangan Malaysia Kesepuluh dan sebahagian akan melimpah ke Rancangan Malaysia Kesebelas dan mungkin hingga ke Rancangan Malaysia Kedua Belas.” (pg 6). He repeated the same on 21 March 2011 in Parliament (pg 52).

However, the Defence Minister now has the cheek to say in his latest statement to Bernama that “the cost of procuring assets for the national defence inventory will not exceed the ceiling set by the government”, when it has increased by 50% from RM6 billion to RM9 billion in less than a year!

All of the above points to the fact that we have a clueless defence minister who is arrogant, forgetful, ill-informed and ignorant. The manner in which budgets are so easily exceeded will only increasing the likelihood of realising Dato Idris Jala’s greatest fear, that Malaysia may be bankrupt by 2019.