Monday, December 27, 2010

Pakatan 100-Day Reforms

For Pakatan, ‘100 day’ reforms weapon to counter Najib’s popularity
By Shazwan Mustafa Kamal December 26, 2010

KUALA LUMPUR, Dec 26 — Pakatan Rakyat (PR) is hoping to counter Datuk Seri Najib Razak’s high approval ratings by touting the merits of its “100 day” reform agenda which promise more money for civil servants and repealing repressive laws.

They also intend to utilise the successes of two PR states, Penang and Selangor, as fodder for the counter-offensive campaign against the prime minister’s approval ratings which stood at 69 per cent this month among voters in peninsular Malaysia, slipping slightly from 72 per cent in May.

The Merdeka Centre poll showed that 74 per cent of Malays, 54 per cent of Chinese and 85 per cent of Indians were satisfied with the prime minister’s performance, in a major boost for Najib as he mulls the possibility of snap polls.

“It is important for us to be able to demonstrate to voters that we are able to function as an effective coalition. The only way to do that is for the voters to see substance in our policies,” said DAP National Publicity Secretary Tony Pua, citing the need to highlight successes in Penang and Selangor as an example.

Pua told The Malaysian Insider that Najib’s high ratings as an individual could be “challenged” if PR could convince voters that it could deliver results as a cohesive unit, and just through the actions of a single individual.

“We need to push our reform policies inked out during last week’s convention, and we need to back it up with our successes in the state administration. Penang is doing well, it’s getting investments, corruption-free, people are getting bonuses, its these sort of ideas that need to be carried across the board.

“We also have to continue to chip at the programmes that are being implemented by BN — we have to show voters that Najib’s programmes are not really that different from the BN of the past,” he added, referring to the ruling Barisan Nasional (BN) coalition.

PR’s policy framework, titled the “Pakatan agenda”, is seen as an answer and solution to questions surrounding the opposition’s administrative plans in comparison to BN.

Speculation is rife that a general election will be held as early as next year although BN’s mandate does not expire until May 2013

Among the instant reforms promised by the PR coalition, within the first 100 days of taking over Putrajaya, is acknowledging the role and sacrifices of civil servants by studying the current pay schemes and increasing the incentives for teachers by RM500 a month.

PR leader Datuk Seri Anwar Ibrahim has claimed that a PR federal government could afford to pay for a proposed allowance for teachers — projected to be RM3.2 billion annually — by eliminating the “wastages” of the BN administration.

Other “instant” reforms include the repeal of the Internal Security Act (ISA), abolishing the toll system by instructing Khazanah Berhad, Employees’ Provident Fund (EPF) and other government bodies to take over highway assets from the concessionaires, as well as offering free wireless Internet access to those in urban and semi-urban areas.

“We have already shown that we can govern better than BN on a state level. We just need to make voters aware of the changes that we can bring on a federal level. When PR takes over federal power, there will be differences in terms of financial management of federal funds and the governance of all states,” said DAP Youth Chief (Dapsy) Anthony Loke.

Loke claimed that the most effective way to counter Najib’s popularity was to work with “tangible issues.”

“We have to work with tangle issues, what people are looking forward to. ISA, reform of legislative laws is important but people want change to issues which affect them on a daily basis.

“For urban folks, the political will to restructure the toll system is the best way to go. If we can reduce the toll rate, we can eventually abolish the toll system. That way, we will be able to increase people’s disposable income, and this will sway votes our way,” Loke told The Malaysian Insider.

For the full article, click here

Sunday, December 26, 2010

Tenang - Majority Counts

In Tenang, size of win indicates faith in Najib
By Shazwan Mustafa Kamal December 26, 2010

KUALA LUMPUR, Dec 26 – The upcoming Tenang by-election is shaping up to be a test for voter confidence in Datuk Seri Najib Razak as Prime Minister, and whether he can lead the country under the Barisan Nasional (BN) coalition, says his political foes.

Pakatan Rakyat (PR) leaders have admitted that winning the state seat in the BN stronghold Johor would be “realistically” tough, but they claimed that reducing BN’s majority will affect Najib’s (picture) popularity as PM.

A recent survey by Merdeka Center showed Najib’s approval rating remains high among voters in peninsular Malaysia, dipping only slightly from 72 per cent in May to 69 per cent this month.

The poll showed that 74 per cent of Malays, 54 per cent of Chinese and 85 per cent of Indians were satisfied with the prime minister’s performance, in a major boost for Najib as he mulls an early general election next year.

“To be perfectly honest, winning this seat will tough. Realistically speaking, if we can function as a coalition and make enough inroads in Tenang to deny BN a majority win by say 1,000 votes, it would reflect on Najib’s leadership.

“You have to bear in mind that this is a BN stronghold, so if Najib does not win big here he is in trouble,” said Tony Pua, the DAP’s national publicity secretary.

Pua told The Malaysian Insider that the Tenang seat was “crucial” in ensuring that PR made inroads in Johor, a tradionally Umno area.

Another DAP MP, Anthony Loke said that PR should not be entirely focused on winning Tenang, as the “bigger picture” should be about getting across to voters there.

“If we can win, yes it will be an upset. But what we need to achieve there is to shake the confidence of BN, as well as Najib. Johor remains the only fixed deposit for BN in Peninsular Malaysia,” the party’s Youth Chief (Dapsy) told The Malaysian Insider.

For the full article, click here.

Thursday, December 23, 2010

Pemandu says Teh Tarik Price Up by 1 sen

The proposed 20 sen increase in beverage prices by the Kuala Lumpur & Selangor Coffee Shop Association in 2011 debunks the Prime Minister's claim that the Government's cut in subsidies will have “minimal impact” on households in Malaysia

In July, the Government launched a surprise “5-in-1” price hike programme, raising the prices of RON95 and RON97 petrol, diesel, white sugar and liquified petroluem gas (LPG) including cooking gas cyclinders by at least 2.8% and as much as 15.2%.

Then on 3 December 2010, less than 5 months later, another series of hikes is announced - the price of RON95 will increase by five sen to RM1.90 per litre, diesel by five sen per litre to RM1.80 and liquefied petroleum gas (LPG) by five sen to RM1.90 per kg. Sugar will also cost 20 sen more at RM2.10 per kg.

In fact for white sugar prices, inclusive of a 20 sen hike in January on top of the 25 sen and 20 sen hike in July and December, prices have increased by more than 55% this year alone.

The Prime Minister, Datuk Seri Najib Abdul Razak had in July claimed that the price increases will have “minimal impact” on households in Malaysia. This is further reiterated by the Minister in Prime Minister's Department and CEO of Pemandu, Datuk Seri Idris Jala more recently on 4 December via its Subsidy Rationalisation Factsheet that the 2nd round of price hikes “will result in minimal impact to consumers”.

In July, Pemandu “demonstrated” that the new teh tarik price taking into the impact of subsidy reduction of fuel and upward price adjustment would be around RM1.0155, or an increase of less than 2 sen in full page advertisements across all major mainstream newspapers.

After the December hikes, the new Subsidy Rationalisation Factsheet rationalised that a glass of “teh tarik” and “kopi susu” costing RM1.20 is expected to increase in price by 0.8 sen and hence will not cost more than RM1.21 or a tiny 0.83% hike in prices. (The fact sheet actually says 0.6% increase for “teh tarik” and 0.5% for “kopi susu” – somebody in Pemandu failed their mathematics).

Firstly, there is a clear contradiction in “teh tarik” prices between the fact sheet issued in July which was only RM1.00 as compared to the new base price of RM1.20 in the December fact sheet. The 20% “mysterious” 20% increase in the base price between July and December remains unexplained.

Secondly, and more importantly, Barisan Nasional and Pemandu lives in a parallel imaginary universe of price hikes involving increases of 1.55 sen or even 1 sen. I had issued a statement in July arguing that Pemandu should be “commended” for the audacity to publish such numbers which are at best applicable only in a fictitious and theoretical universe, and at worse, showing the complete lack of understanding of real world market dynamics on the price of goods and services.

And to prove my point, it was reported yesterday in all major Chinese newspapers that the Kuala Lumpur & Selangor Coffee Shop Association has announced the proposal to increase all beverage prices by 20 sen starting 1st January 2011. “Kopi susu” and “teh susu” prices will be increased from RM1.20 to RM1.40 translating to a massive 16.7% increase in prices!

Even the price of everyone's coffee shop favourite “herbal tea” will be increased from RM1.10 to RM1.30 or a hike of more than 18%. And Pemandu had the audacity to claim that “herbal tea” prices will only increase from RM1.00 to RM1.012 or just a 1.2% increase!

In fact, out of the 70 everyday food and drink items listed on the Subsidy Rationalisation fact sheet, no item is expected to increase by more than 1.9% after the most recent round of price hikes!

The Star has also reported on 20th December that evaporated milk and sweetened creamer is also expected to increase by 30 sen next year, after a 5 sen and 10 sen increase in April and October this year, marking an overall increase of up to 20% within a year.

What is perhaps most embarrassing is for the Domestic Trade, Cooperatives and Consumerism Deputy Minister, Datuk Tan Lian Hoe to argue that a 10 sen increase in beverage prices “will be more reasonable”. A 10 sen increase will still result in a 8.3% increase for the price of “teh tarik” and “kopi susu”, 10 times higher than the 0.83% increase claimed by Pemandu. If the BN government even believes in its own policies, Datuk Tan Lian Hoe should openly insist that only a 1 sen increase is justifiable.

The government should instead stop spewing these ridiculous and out-of-these-world hypothetical data which demonstrate at best its sheer incompetence and irrelevance, or worst, its blatant attempts at misleading the rakyat with preposterous falsehoods in order to justify the continued price increases. We are disappointed that the BN government has prioritise its “subsidy rationalisation” efforts on items which will worsen the living conditions for the man-on-the-street, but has not lifted a finger to “rationalise” the more substantial RM8 – 10 billion of subsidies given to independent power producers who are already making billions of ringgit in profits annually despite repeated promises to do so.

The above makes a complete mockery of the Prime Minister's slogan of “people first”, for it demonstrates that the people's interest don't come first under the BN government, but instead the people's subsidies get cut first.

Wednesday, December 22, 2010

Utusan Loses the Plot

Umno-owned Utusan Malaysia has completely lost the plot with its daily extensive attacks against DAP and is the single largest hindrance to national unity

Never before in history has the DAP, a party Utusan Malaysia has previously regarded as irrelevant, become the object of obsession to the Umno-owned newspaper. In the last 3 of 4 days, the DAP made the front page of Utusan Malaysia with headlines like “Muslihat DAP”, “Guan Eng dikecam” and “Umat Islam perlu tolak DAP” on the 18, 20 and 21 December respectively.

Not only did the DAP and its leaders consistently make the frontpage, Utusan dedicated dozens of columns to DAP with titles such as “DAP perkudakan Anwar”, “DAP alat politik negara asing”, “DAP salur matlumat kepada Kuan Yew?”, “DAP gentar dengan 1Malaysia”, “DAP tiru strategi PAP”, “DAP yang sebenarnya memperalatkan 3R”, “DAP amal politik ala aparteid”, “Kebiadapan Guan Eng”, “Guan Eng semakin bersikap perkauman”, “Guan Eng perlu cermin diri” and more.

The above hasn't taken into account the fact that for the past year, Utusan has often granted DAP leaders exclusive frontpage coverage to Karpal Singh, Teo Nie Ching and even myself, for daring to suggest that the housing discount for the wealthy bumiputeras be channelled towards helping the bumiputera poor.

In fact, if one were to conduct a search of “DAP” in Utusan on Google based on the year of publication, 2007 will return 291 results, 2008 - 876 results, 2009 - 12,400 results and 2010 will give a record 29,800 results to date.

It is most laughable when Utusan had to plead to its readers not to boycott the paper due to “political sentiments” (“Pembaca akhbar tidak boleh terikut-ikut tindakan memboikot Utusan Malaysia kerana sentimen politik...”) and blame Pakatan Rakyat for its affected business. Circulation for Utusan has plummeted drastically in recent years from 256,247 in 2004 to 213,445 in 2006 and 169,548 in 2009 or a 33.8% drop in 5 years. Profit before tax for the newspaper group has also plunged from RM21 million to RM7 million over the past 4 years.

It appears that Utusan is attempting to rationalise its loss of readership due to external factors instead of looking inwards at their incessant racial posturing, outright lies and inflammatory headlines such as “Bangkitlah Melayu” as being the main causes. In fact, based on the statistics above, there is a correlation between the rapidly increasing attacks against the DAP and the rapidly declining circulation of the newspaper.

National Union of Journalists (NUJ) president Hata Wahari, who himself is a Utusan journalist had demanded that Utusan Malaysia abolish editorial policies which go against “journalistic ethics” in order to tackle a severe drop in its readership circulation. He claimed that the Malay daily’s reporting was “biased” in nature, saying that positive coverage revolved around Barisan Nasional (BN) while negative reports were specifically reserved for Pakatan Rakyat (PR). He added that Utusan also does not give an opportunity for an accused to answer certain allegations by choosing not to publish it.

Even the Minister in the Prime Minister’s department, Datuk Seri Nazri Aziz had accused Utusan of becoming “racist” in its reporting in September this year.

In fact, Utusan is a proven liar with leading opposition figures, MP for Pokok Sena, Mahfuz Omar and Tenaganita Director, Irene Fernandez, awarded RM120,000 and RM200,000 in damages respectively in defamation suits against the paper. Dozens of other defamation suits are still waiting to be disposed in the courts.

The relentless attacks on the DAP only serves to prove that DAP and Pakatan Rakyat are making major inroads in proving to the people that we are not only competent in governance, we have proven that despite having a DAP chief minister in Penang, Malays and Muslims enjoy greater rights and benefits than under a BN administration. This is due to a more caring government, which is able to fund its welfare policies through more effective and efficient administration, as well as reducing wastage and corruption through open tenders for all government projects.

I had on 1 November 2010 challenged Utusan Malaysia to an open debate on its many allegations against the “racist” DAP. Unfortunately, the editors chose not to defend their allegations with facts and figures in the open but continued to throw baseless, wild and wicked accusations against the DAP. This proves that Utusan's cowardly agenda is to flood its readers with lies and half-truths against the DAP and Pakatan Rakyat for it has no ability or courage to withstand impartial public scrutiny.

The Prime Minister, despite his call for “moderation” in reporting, has failed to reign in his party's newspaper and his 1Malaysia policy will only fail as a result of Utusan's extremist and racist reporting.

Monday, December 20, 2010

How will the MRT be funded?

Datuk Seri Najib Abdul Razak must disclose how the MRT will be financed and why the project is expected to commence before even the urban public transportation plan is ready

We welcome the Prime Minister’s announcement on Saturday which announced that Malaysia’s largest ever infrastructure project, the Mass Rapid Transit (MRT) system, will be tendered openly via 9 project parcels. This is after strong criticisms against the Prime Minister’s initial proposals and admission in October that “there are some contracts that you just cannot tender out”.

The announcement also indicated that the Government will own and finance the project in its entirety. However this raises further questions on how the Government, via Syarikat Prasarana Negara Bhd will be able to bear the entire cost of the project, estimated at RM36 billion before taking into account land costs of an additional RM10 billion.

As of today, Prasarana is already heavily indebted with RM8.5 billion in bonds which it is unable even to service its interest. This has been heavily criticised by the Auditor-General’s report in 2009 for making accumulated losses of RM840 million as of December 2007, in part due to suspicious activities and mismanagement. In the 2011 budget, the Government had to allocate RM2.5 billion of funds to bailout Prasarana-issued bonds which are due in November 2011.

The Prime Minister must come clean with the entire funding process as it will not only affect the Government’s financial position, it will also affect finally the fees to be charged for the MRT commuters when it is ready for use. While Malaysians, particularly those who reside in the Klang Valley look forward to better public transport facilities, they must be made available at an affordable basis without at the same time, become an unsustainable burden for the tax-payers.

For example, last year’s audit report on Prasarana showed that the current average LRT fare of RM1.60 has to be increased to nearly RM9 for the LRT infrastructural costs to be fully recouped within the next 20 years despite the LRTs costing the Federal Government less than RM8 billion, nearly 5 times less than the proposed MRT system.

What is perhaps most worrying is the fact that the Government is rushing headlong into the project without the newly minted Land Public Transport Commission (SPAD) first coming out with the 20-year urban public transport plan for Klang Valley, which is only expected in September next year. The Cabinet has however decided to award the relevant contracts and commence construction works for the MRT in July 2011, even before the holistic public transport plan, which will include buses and other rail systems is finalised!

In fact, SPAD is still unable to declare, as of today, backed by a thorough and professional study that the MRT is the best option for the Klang Valley in the near future, as opposed to cheaper alternatives like buses or even trams based on travel patterns and population statistics.

It is highly misleading for the Prime Minister to espouse the viability of the project by claiming that it will generate gross national income of up to RM4 billion per annum when the interest servicing cost for the project at completion may in itself come up to more than RM2 billion each year.

We call upon the Government to be completely transparent with the entire plan, design and financial impact of the MRT project to convince the rakyat that the MRT routes are optimised based on maximum public benefit, but also that it will not become an unsustainable project which will leave our future tax-payers with billions in debt.

Friday, November 26, 2010

Penang Port to be Privatised?

DAP seeks details on Penang Port takeover
UPDATED @ 05:11:46 PM 24-11-2010By Clara Chooi November 24, 2010

KUALA LUMPUR, Nov 24 — DAP raised questions today over the widely-speculated takeover of the troubled Penang Port by tycoon Tan Sri Syed Mokhtar Al-Bukhary and demanded that the government disclose the full details of the privatisation process.

Petaling Jaya Utara MP Tony Pua pointed out to reporters in Parliament today that the port operations was already fraught with malpractice and irregularities, as underlined in the recent Auditor-General’s 2009 report, and was poised for a probe by the parliamentary Public Accounts Committee (PAC) in about two weeks’ time.

Pointing to a speculative report carried in Singapore’s Business Times on Monday, Pua noted that if the takeover did take place, it would be yet another direct affront to the government’s many promises of transparency and public accountability as underlined under Prime Minister Datuk Seri Najib Razak’s New Economic Model (NEM).

Pua described the move as another privatisation process “ala-Dr Mahathir” and questioned why the government had not conducted an open tender to allow the best bidder to develop the Penang Port.

“What we are disappointed so far with Najib, in terms of his economic policy and his privatisation policies, there has been zero change as government entities are being privatised despite various failures that have been carried out in the 1980s and the 1990s. We have seen failures in the LRT system, the bus system, water companies and unfair contracts with the Independent Power Producers (IPPs). The same way of privatising government entities are continuing... why isn’t there an open tender to see who can best develop the Penang Port? How much investment can they bring to the port, to upgrade it into a world-class port in the region?” he asked.

According to the news report, the government was likely to give the nod to port magnate Syed Mokhtar to take over ownership of Penang Port.

Syed Mokhtar is presently known as the biggest port operator in the country with his flagship company MMC Corporation, and owns two of the country’s busiest ports — Tanjung Pelepas and the Johor Port in Pasir Gudang.

Pua questioned the government’s agreement with Syed Mokhtar in the impending handover and demanded that all details be fully disclosed for public consumption.

“It seems now that all you need to do is know BN before you can get a contract. We do not know the terms and conditions of this privatisation process and we call upon the government to disclose all details. What type of site infrastructures will they have to pay, what kind of guarantee does Syed Mokhtar have to give and also, what type of guarantee the government has to give to Syed Mokhtar,” he said.

He noted that Najib was not sticking to his guns on his promises of transparency and accused the premier of carrying out policies similar to his predecessor in the government, former prime minister Tun Dr Mahathir Mohamad.

“We hope this privattisation will improve the performance of Penang, and not require assistance from the government, in terms of guarantees, letters of support and so on,” he said.

Jelutong MP Jeff Ooi said that the Penang government felt “insulted and shortchanged” that the handover of Penang Port was not being done via open tender.

“The first right of refusal of any form of privatisation should be given to the Penang state government,” he said.

Ooi also called for the suspension of Penang Port chief executive officer Datuk Ahmad Ibni Hajar over reports of malpractices and irregularities in the port operations.

“The Penang government has suffered and contributed a lot through concessions given to the port authority, including the valuable prime land that has been alienated to them... notably, the one that is at the North Butterworth Container Terminal.

“According to the A-G’s report, there were a lot of malpractices here and the failure of the management has contributed to the sorry state of affairs. We want the CEO to be investigated by the CEO and the Malaysian Anti-Corruption Commission,” he said.

He added that Ahmad was also the Umno division chief for Tanjong since 2001 and between 1999 and 2001, he was also appointed the executive chairman of the company.

Penang Port’s board of directors chairman, he added, was Datuk Hilmi Yahya, the former parliamentary secretary in the Finance Ministry and a current state assemblyman in Pahang. Penang Port Sdn Bhd is a wholly government-owned subsidiary under the Finance Ministry.

Tuesday, November 23, 2010

DAP PJ Annual Fund Raising Dinner 2010

We would like to invite you to join us in our 2010 DAP Petaling Jaya Utara Annual Fund Raising Dinner.
Theme: “We Are Malaysian First”
Venue: MBPJ Dewan Sivik
Date: 8 December 2010 (Wednesday)
Time: 7.00pm
The speakers will include:

  • DAP Parliamentary Leader, Lim Kit Siang,
  • MP for Shah Alam Khalid Samad,
  • MP for PJ Utara, Tony Pua,
  • MP for Lembah Pantai, Nurul Izzah Anwar,
  • ADUN for Damansara, Dr Cheah Wing Yin
  • ADUN for Kg Tunku, Lau Weng San.

Halal Chinese food will be served, and the primary language for this dinner will be English and Bahasa Malaysia.

The cost of the dinner will be RM60 per pax or RM600 per table. VIP tables are also available for RM1,500 a table. The funds raised from the dinner will be used for running our service center.

For reservations, please email to dapdamansara (at) or to me directly with your name, contact number, which dinner(s) and number of seats or tables (VIP or normal) required.

For those who are not able to make the dinner, donations are also very much welcome ;-). Cheques should be written to "DAP Damansara Branch" or cash can be deposited at DAP Damansara Maybank account: 5141 9634 2008.

I'd like to thank you in advance for your much needed support!

Wednesday, November 10, 2010

PKFZ: Were OSK Trustees Cheated?

Did the Attorney-General office charge the 3 accused in the PKFZ scandal of cheating OSK Trustees without first establishing that OSK Trustees were cheated?

In December 2009, Engineer Law Jenn Dong, 52, architect Bernard Tan Seng Swee, 49, and Kuala Dimensi chief operating officer Stephen Abok, 52 were accused with dozens of charges of cheating the Port Klang Authority (PKA) by by misleading the authority into believing that the 33kv system to Precinct 2 and Precinct 8, as well as other electrical infrastructure works for the PKFZ had been completed when they knew otherwise, thus deceiving PKA into paying up to RM122.267 milllion to Kuala Dimensi Sdn Bhd (KDSB).

Two days ago, they were offered 24 alternative charges by the prosecution for all their original charges by the Deputy Public Prosecutor. In these alternative charges, they were accused of “deceiving OSK Trustees” instead of cheating PKA, into believing that various 33KV electrical infrastructure works for the PKFZ had been completed in order to collect payment, despite knowing that it was not. These offences were allegedly committed at the OSK Trustees office, Plaza OSK in Ampang, between June 30, 2006 and June 20, 2008. The amount in the payments from OSK Trustees ranged between RM583,000 and RM16.73 million, totalling to RM116.85 million.

However, in a shocking response yesterday, as published in the Financial Daily today, OSK Trustees were “taken by surprise” at these new charges and have denied knowledge that it was “cheated” into releasing millions of ringgits in payments for the PKFZ project. According to the report, “OSK Trustees is said to have been caught unawares given that it had not filed any official complaint with the authorities that it had been “cheated”.

The above raises the key question of whether the Attorney-General's office has done all the necessary investigations and due diligence on the case before initiating these charges. One can only imagine during the trial when an OSK Trustees representative takes the witness stand and when asked if they were cheated, they then declare that they do not think or believe that they were “cheated”. Would not the entire prosecution case collapse?!

Additionally, the prosecution charges of OSK Trustees being “cheated”, and the denial by OSK Trustees of being unaware of being “cheated” has raised the question as to whether the Trustees can now continue to legally make payments to the bondholders. The OSK Trustees have written to reassure bondholders that the funds due this month for principal and coupon redemptions “would be duly paid out on the due dates”.

Given that there is now the real possibility that at least part of these funds received by OSK Trustees were derived from the process of “cheating”, then can the cheated funds be legally utilised to make further payments? And if OSK Trustees proceed to make payments despite now knowing of the seriousness of the potential implications, would they be abetting or become party to the conspiracy by disbursing these funds?

What's more, if the Attorney-General's office is certain that these monies paid to OSK Trustees were derived from cheating, then would it not be proper for the prosecution to apply for the monies to be frozen to ensure recoverability upon a successful prosecution?

As highlighted in the debate on the Attorney-General's pay cut in Parliament yesterday where Pakatan Rakyat leaders have expressed grave concerns over the quality of prosecution which have resulted in multiple corruption charges against junior officials such as former Ampang Municipal Council enforcement director Abdul Kudus Ahmad, as well as against high-profile VIP cases against former Land and Development Minister, Tan Sri Kasitah Gaddam and Perwaja CEO, Tan Sri Eric Chia collapsing into acquitals for all the accused.

We call upon the Attorney-General's office to utilise its best resources to prosecute those deemed guilty of bring the Government into disrepute, especially in this PKFZ “mother of all scandals” which has brought not only billions of losses to Malaysians but is also the epitome of shame and embarrassment in our fight against corruption.

Monday, November 08, 2010

Government Prepares Multi-Billion Ringgit Water Companies Bailout?

The fact that the Federal Government is contemplating a multi-billion ringgit bail out of the privatised water industry in Selangor is repulsive and a sheer abuse of tax-payers' funds

In a November 4 report by the Malaysian Insider, the Minister of Energy, Green Technology and Water, Datuk Seri Peter disclosed that “the federal government may come to the rescue of Selangor water bondholders by undertaking a bond swap if no headway is made soon in stalled water consolidation talks”. He revealed that “swapping existing bonds with triple-A government-backed ones was one option on the table to buy stakeholders more time as state and federal governments try to break the current impasse.”

The multi-billion ringgit move to bail out the Selangor water companies, Puncak Niaga (PNSB) and its subsidiary Syarikat Bekalan Air Selangor (Syabas), Syarikat Pengeluar Air Sungai Selangor (SPLASH) and Konsortium Abass is shocking and repulsive for the Federal Government is once again attempting to use tax-payers' money to rescue its Barisan Nasional cronies who have profited tremendously from the Government's privatisation exercise.

As of today, PNSB, SYABAS, SPLASH and ABASS have net debts of RM1.3 billion, RM2.9 billion, RM1.6 billion and RM640 million respectively, translating into a combined net debt of RM6.4 billion. The move, if carried out will become the clearest example yet of a Barisan Nasional government who will privatise profits to its favourite businessmen, and when the latter face dificulties, socialize their losses to the rakyat.

It should be noted that most of these private water companies, despite their huge liabilities, have been rewarding their shareholders most lucratively by prioritising the payment of dividends over the repayment of their debts. PNSB in 2008 alone made dividend payments of RM500 million while SPLASH paid out a whopping RM578.6 million to their shareholders.

And now, after paying out their substantial cash holdings to enrich the shareholders, much of which were raised from the debt markets, they now want the want the Government to bail them out of their debt and liabilities. What is worse is that the Government is appearing more than willing to participate in this scheme to victimise the man-on-the-street.

Instead, the Government should utilise this opportunity to tell the recalcitrant water concessionaires like PNSB and Syabas who are holding the Selangor water industry to ransom by refusing to cooperate over the industry's consolidation exercise under the state government, in no uncertain terms that there will be no bail out and that they need to play ball in the industry's restructuring exercise.

In addition, the National Water Services Commission (SPAN) has powers under the Water Services Industry Act (WSIA) 2006 Sections 113 and 114 to intervene when a licensee is facing financial difficulty. SPAN has to date refused to intervene particularly in Syabas who has threatened to stop the maintenance of water pipes in the state due to the lack of funds.

And should these companies refuse to “play ball”, then let the bondholders declare an event of default and take over the assets and management of these companies as provided for under the bond agreements.

The Federal Government's admission on the likelihood of a bailout of the water concessionaires smacks of a collusion with BN which clearly prioritises the interest of its cronies over that of the rakyat. Datuk Seri Peter Chin must declare in no uncertain terms that there will be no bail outs of the financially troubled water companies and instead direct them to reach a settlement with the state government over the water industry restructuring exercise.

Should the Federal Government proceed with the mega-bailout at the end of the year by undertaking the existing bonds with triple-A government-backed ones without first resolving the restructuring issue, Pakatan Rakyat will immediately organise a nationwide roadshow to protest against the action and let the rakyat know how the government privatises all the profits, but socialises all the liabilities and losses.

Sunday, November 07, 2010

MCA vs Racists: All Talk No Action

MCA's futile attempts in its call for action against school principals and teachers for racist, insensitive and inappropriate behaviour highlights its complete irrelevance in the Barisan Nasional Government

We would like to commend MCA for being quick to the draw to demand for action and punishment against the recent cases of racist, insensitive and inappropriate behaviour by some of our school principals and teachers.

In August 2010, Datuk Chor Chee Heung who himself is the Minister of Housing and Local Government had called for the school principal in Bukit Selambau who used racist remarks against some non-Muslim students to be “punished to set an example to everyone”.

MCA's spokesperson and deputy publicity chief, Loh Seng Kok has publicly called for the school principal of Kulai's SMK Tunku Abdul Rahman Putra, Siti Inshah Mansor to be “severely disciplined” for making derogatory and racist remarks against Indian and Chinese students just before the Bukit Selambau case.

Similarly, at the end of September, Loh had asked the Public Service Department to take action against the Deputy Director of the National Civic Bureau (BTN), Hamim Husin claiming that “shameful for a public servant employed to train upcoming civil servants to use derogatory, stereotypical terms that offended the Chinese and Indian communities... If necessary, the police should also charge Hamim under the Sedition Act. It is time to put a halt to the arrogance and intolerance of bigots.”

However, despite their concerns raised since August on the racist principals issues in Kulai and Bukit Selambau as well as the BTN Deputy Director, no definitive action appears to have been taken by the Barisan Nasional government. The Minister of Education himself Tan Sri Muhyiddin Yassin abdicated from his responsibility to take action by delegating it to the Public Service Department, claiming that he is “powerless”.

The Speaker of Parliament had rejected a motion by Lim Kit Siang to debate the issue on the issue nearly a month ago claiming that action has already been taken by the Government against the principals.

Until today, Malaysians have not been given a straight answer on the actions taken and punishment meted out to these culprits who are not only poisoning the minds of our young Malaysians, but are among the root cause of national disunity and racial intolerance in the country.

Even last month when the Minister of Education and Deputy Prime Minister announced at the UMNO Annual General Meeting on implementing the compulsory pass policy for History at SPM level, Loh had expressed concern that “distrust can be bred if History textbook contents are incomprehensive but emphasise racial superiority while negating the contributions of other races, or downplaying other worldwide civilisations.”

Hence when Loh Seng Kok once again called yesterday for the Education Ministry to act against a Sarawak primary school for enforcing a halal food policy, it proves that MCA is now officially reduced to trying to meekly voice its views from the outside because it is completely ineffective and marginalised on the inside of the Government.

One could almost be forgiven for forgetting that the MCA is actually the 2nd largest component party of the ruling Barisan Nasional Government. What is perhaps most damaging is the fact Loh seems to have himself forgotten the fact that MCA Youth Chief, Datuk Dr Wee Ka Siong holds the position of a Deputy Minister in the Ministry of Education.

MCA should perhaps stop whining like a kitten which lost its mom and start acting on the above critical issues like it is part of the Government. Instead MCA must answer to the Malaysian public at large as to why it has been rendered completely ineffective and irrelevant in ensuring that proper actions be taken against public servants guilty of creating unrest through racist and insensitive behaviours.

Tuesday, November 02, 2010

Pemandu Defends Government's Anti-Corruption Track Record

Pemandu must stop digging a deeper hole for itself in defending the Government's poor performance against corruption

It is sad and almost comical for the current administration's leading agency to be tripping over itself repeatedly to demonstrate, however insignificantly, that the Government is delivering improvements in its fight against corruption.

In the latest Transparency International (TI) Corruption Perception Index (CPI) calculations, Malaysia’s corruption index score declined to its record lowest levels from 4.5 last year to 4.4 out of 10. At the same time, Malaysia’s ranking still remains the same as last year, at 56 out of 178 countries, the worst in our history after falling from 47th in 2008 and our recent best of 33rd in 2002.

However, in response, Pemandu has responded with an official statement yesterday which essentially stated that while Tl's Index had shown “a slight reduction”, the IMD World Competitiveness Yearbook showed an improvement in index from 5.2 in 2009 to 6.3 in 2010. In addition, the Political and Economic Risk Consultancy's (PERC) Asian Intelligence Newsletter showed in improvement in index from 3.6 in 2009 to 4.6 in 2010 while the World Economic Forum's (WEF) Global Competitiveness Report indicated an improvement in index from 4.5 in 2009 to 4.6 in 2010.

The statement issued by Director of Communications of the Government Transformation Programme (GTP) of Pemandu, Alexander Iskandar Liew added that "if we take an average score of the four surveys, it is clear that Malaysia's index has improved from 4.45 in 2009 to 4.975 in 2010. It is in the context of the above that we in Pemandu are saying that the NKRA's efforts in addressing corruption are on the right track...However, if one were to look at the outcome of the other three surveys on corruption in Malaysia by (those) reputable organisations, then the score clearly shows that there are improvements.”

I almost feel sorry for Pemandu for having come up with such a statement. Firstly, it is a case of picking and choosing only surveys which are favourable towards themselves to highlight.

But more importantly, these surveys have already been taken into consideration by TI's CPI. For Malaysia's index scores, the results from 9 different surveys including the IMD, PERC and WEF's reports have been imputed. Attempting to paint a fake positive picture by averaging the TI score and the 3 other surveys is an obvious case of double counting the favourable surveys.

Hence, Pemandu is either trying to pull a fast one on the rakyat, or perhaps, they should have a refresher course on mathematics and statistics to avoid such embarrassing schoolboy errors in the future.

Pemandu needs to face up to the reality that things have not changed much over the past year despite many superficial attempts to improve transparency and accountability.

Despite the call for public disclosure over the government's privatisation projects in the GTP, such information has not been forthcoming, for example the RM628 million MATRADE Centre project which was awarded without any open tender. Many government-related projects under the ETP are expected to be awarded without any competitive bids, such as the MRT and the high-speed rail projects.

The half-hearted attempts at government procurement transparency via the “MyProcurement Portal” shows up its ineffectiveness. For example, despite having a procurement budget of nearly RM3 billion, only 8 contracts worth RM15.3 million have been published for the Ministry of Rural & Regional Development. Worse, these contracts have been published since April when the portal was launched, without additional updates since!

TI's statement on Malaysia's “achievements” is telling.
Although positive steps have been taken, there have been problems with implementation and lack of confidence-building improvements, indicating insufficient political will to eradicate corruption. For example, there are glaring items of grave concern, such as generally no “big fish” being brought to book, poor progress in identifying and prosecuting culpable persons in the Port Klang Free Zone (PKFZ) fiasco, No Further Action by the Attorney-General against those implicated in judicial appointment tampering (“Lingam tapes”) despite the Royal Commission’s findings and recommendations, the continuing and snowballing practice of awarding mega projects and contracts without open tenders or competitive bidding, and no IPs implemented to date.
It's time for Pemandu to stop attempting to paint a brighter picture on the fight against corruption that it actually is. Instead, it should receive Transparency International's report with an open heart and figure out more effective ways to prevent corruption and help the Government find its political will to fight and punish corruption.

Monday, November 01, 2010

A Challenge for Utusan to Debate

DAP mencabar “Awang Selamat” untuk mengadakan pembahasan terbuka mengenai isu “DAP dan Melayu”

Sekali lagi pihak penyunting dan pemilik Utusan Malaysia menggunakan kolum “Awang Selamat” untuk melontar pelbagai fitnah, pembohongan dan tuduhan liar terhadap parti DAP. Ruang beliau dalam Mingguan Malaysia yang diterbitkan semalam mendesak bahawa

Sesungguhnya DAP adalah parti paling rasis di dunia. Pada Awang, ancaman DAP adalah jauh lebih berbahaya daripada apa-apa ancaman sekalipun yang pernah dihadapi dalam sejarah tanah air. Cuma bentuk penjajahan mereka lebih halus, berselindung atas slogan demokrasi dan tanpa menggunakan senjata. Tetapi implikasinya amat besar. Perlembagaan termasuk kedudukan Islam dan institusi beraja menjadi taruhan, yang akhirnya membawa Malaysia menuju negara republik. Apakah itu yang kita mahu?

Penyerangan Utusan yang dimiliki oleh Umno terhadap DAP kian lama kian ekstrim dan keterlaluan. Penyerangan mereka termasuklah penyerangan terhadap kerajaan Pulau Pinang atas dasar kebajikan, pengambil-alihan tanah untuk membina hub pendidikan, isu penjaja-penjaja dan lain-lain perkara di mana kami dituduh menghalau orang Melayu dari Pulau Pinang. Utusan Malaysia juga telah menyerang bertubi-tubi terhadap pemimpin DAP yang lain termasuklah Ahli Parlimen Serdang, Teo Nie Ching yang difitnah memberikan takzirah dalam surau, dan juga saya sendiri yang dikatakan berniat untuk menghapuskan hak diskaun beli rumah bumiputera.

Demi mengemukakan kebenaran dan keadilan, saya ingin mencabar “Awang Selamat”, yang boleh diwakili oleh sesiapa daripada Utusan Malaysia untuk mengambil bahagian dalam satu perbahasan terbuka mengenai desakan-desakan Utusan dan Umno mengenai “DAP dan Melayu”.

Penyunting dan pemilik Utusan Malaysia tidak sepatutnya menyembunyikan diri mereka yang sebenar di belakang nama pena dan meluahkan pelbagai tuduhan tanpa berasas seperti penembak curi. Kami ingin memberikan peluang terbuka kepada pihak Utusan Malaysia untuk membela pendirian mereka seperti hulubalang kaum yang tulen, dan bukannya bertindak sebagai pengecut apabila menghadapi cabaran.

Kami dari DAP ingin membuktikan bukan sahaja bahawa kami tidak bertindak rasis, kami telah bersama dengan rakan seperjuangan kami di Pakatan Rakyat, menambah baikkan nasib orang Melayu bukan sahaja di Pulau Pinang tetapi juga di negeri lain di mana DAP merupakan sebahagian daripada kerajaan negeri.

Kami ingin membongkarkan bukti-bukti yang kukuh yang menunjukkan sesungguhnya Utusan Malaysia merupakan suratkhabar yang paling rasis di seluruh dunia ancaman Utusan adalah jauh lebih berbahaya daripada apa-apa ancaman sekalipun yang pernah dihadapi dalam sejarah tanah air.

Kami berani kerana benar dan kami berharap supaya pihak Utusan mempunyai keberanian yang mencukupi untuk menghadapi pihak DAP yang dikatakan sebagai musuh utama mereka. Penolakan peluang untuk pembahasan terbuka ini hanya akan menunjukkan bahawa pihak Utusan tidak berintegriti, dan tidak mampu mempertahankan pendirian mereka yang bersifat fitnah dan rasis.

Pembahasan ini boleh dianjurkan oleh mana-mana pihak bebas termasuk Kesatuan Wartawan Nasional (NUJ) ataupun TV3 dan format pembahasan boleh dipersetujui sebelum acara tersebut. Kami sedia menunggu berita baik daripada pihak Utusan Malaysia.

Wednesday, October 27, 2010

Malaysia's TI Corruptiion Perception Index Dips to Record Low

With absolutely nothing to show after more than 15 months after announcing the KPI for the Corruption NKRA, its time for Najib to exercise his promise to wield his whip

In the latest Transparency International (TI) Corruption Perception Index (CPI) calculations, Malaysia’s corruption index score declined to its record lowest levels from 4.5 last year to 4.4 out of 10. At the same time, Malaysia’s ranking still remains the same as last year, at 56 out of 178 countries, the worst in our history after falling from 47th in 2008 and our recent best of 33rd in 2002. This puts us on par with countries like Namibia and Turkey.

What is perhaps most scathing was the remarks in the report where TI believes that the Najib Administration still lacks the political will to stem out corruption and stressed that steps must be taken to tackle problems with implementation.

This is despite the fact that Datuk Seri Najib Abdul Razak has made the fight against Corruption one of the 6 key “National Key Result Areas” (NKRAs) of his administration. More than 15 months ago, he appointed Datuk Seri Nazri Aziz as the “lead minister” for the Corruption NKRA who will be in-charge to ensure the achievement of the set “key performance indicators” (KPI), with the Prime Minister himself assuming the overall reponsibility for the NKRA objectives and attainment of the KPIs.

The Prime Minister promised that he “will be personally and directly involved in reviewing the performance of all the ministers every six months... Should any performance not meet the standard, I, the relevant minister and public officials concerned will remove any obstacle that is impeding their performance.”

The TI CPI is one of the key KPIs of the Corruption NKRA and it is now shown clearly that Najib has failed to instil confidence that his administration is serious against corruption, and has failed to take concrete actions to the damage over the past decade.

The Najib administration has failed to a large extent due to its lack of willingness to prosecute the “big fishes” involved mega-scandals such as the RM12.5 billion PKFZ scandal, where despite the hype which was created where more than a handful of “big names” were expected to be charged following the arrest of Tun Ling Liong Sik in July this year, no one else has been hauled up.

What's more, the administrations unwillingness to fully endorse the recommendations by the “Government Transformation Programme” (GTP) for the Corruption NKRA has exposed the hollowness of Najib's attempted fight against corruption.

For example, the call by the GTP to ban “letters of support” for procurement contracts have been resisted by none other than the Minister in-charge of the Corruption NKRA himself, Datuk Seri Nazri Aziz. There's the half-hearted implementation of the emphasis on open, competitive and transparent tenders for government projects with Najib himself openly reserving some of the largest Economic Transformation Programme (ETP) projects for selected private consortiums such as the MRT for Gamuda-MMC, and the high-speed rail link for YTL.

In addition, the half-hearted attempt at publishing incomplete and sometimes inaccurate data on the MyProcurement Portal only shows up the lack of commitment by the various Ministries to take up the call for transparency and the fight against corruption. For example, despite having a procurement budget of nearly RM3 billion, only 8 contracts worth RM15.3 million have been published. And worse, these contracts have been published since April with the portal was launched, there has been no additional updates since!

It is time for Najib to wield his whip to ensure that the NKRA for Corruption will not become his first and biggest failure in his 18-month administration to date. Without the necessary political will in fighting corruption, there will be little confidence in similar political will to execute all the other necessary reforms to ensure that all the other NKRAs, NEM and ETP goals will be met.

Tuesday, October 26, 2010

"Some Contracts Just Cannot Tender Out"

The Prime Minister fails to grasp the concept of “open tenders” and contradicts himself with exceptions without basis

We welcome the call by the Datuk Seri Najib Abdul Razak who said yesterday that the Government would ensure “big projects” be conducted in an “open and transparent way”.

What was however shocking was the fact that when he was later asked about the biggest project under the ETP, the construction of a RM46 billion MRT system, he immediately contradicted himself claiming “there are some contracts that you just cannot tender out.”

The Prime Minister added that while “some projects” could not be tendered out, it did not mean that projects awarded to a major consortium would see “everything else” down the line skipping the open tender process. The Prime Minister completely misses the point of the Government open tenders! The point is to ensure that the Government gets maximum value at the lowest possible cost. But directly awarding a mega-project to a private consortium which subsequently tenders out the respective works maximizes the profits for the consortium, not the Government.

The question we would like to ask is, while the private consortiums are maximising profits for their shareholders, why isn't the Government maximising value and returns for the Malaysian tax-payers?

Minister in the Prime Minister's Department, Datuk Seri Idris Jala subsequently tarnished his own reputation by defending his boss, claiming that “direct negotiations can lower down prices if you know what you're doing.”

Datuk Seri Idris Jala should perhaps read the scores of scathing comments by Malaysians expressing their disappointment with him on the story in Malaysiakini yesterday. Firstly, it is probably in the rarest of circumstances when non-competitive awards of projects can be at a cheaper cost than competitive awards. Secondly, negotiations can always be carried out after the best bid has been selected from a competitive tender. And thirdly, in Malaysia, the experience is direct negotiations often resulted in higher prices not lower! One only has to refer to the new palace project in Jalan Duta where after direct negotiations, the contract size was increased from RM400 million to RM650 million, which was subsequently incurred additional variation orders raising the overall cost to RM811 million.

Datuk Idris Jala's claim that public goods projects like the MRT could not be brought to tender as they were too exorbitant tobe funded by private companies, citing similar experiences in other countries does not make any sense and isn't at all true.

It is exactly because government funding is required for “public goods projects” like the MRT that open tenders should be held to ensure transparency, accountability and best value for the tax-payers money.

In addition, I do not know which countries Datuk Idris Jala was referring to, but both Singapore and Hong Kong with world class MRT systems competitively tendered out the construction of the projects in 1982 and 1975.

In fact, prior to the commencement of works in 1982, the Singapore government engaged 2 independent transport and urban planning specialists teams to conduct independent studies as part of the Comprehensive Traffic Study in 1981. While in Hong Kong, transportation consultants Freeman, Fox, Wilbur Smith & Associates were appointed to study the transportation system in the city-state in the late 1960s and early 1970s. Unfortunately, in Malaysia, we have chosen to “outsource” independent traffic studies to contractors such as Gamuda-MMC who clearly have a vested interest in securing and execution of the project.

Despite the multiple failures of our mega-privatisation projects in the 1990s especially in the transportation such as the Putra and Star LRT lines, the Monorail system and the attempted conslidation of bus companies, the Government has clearly not learnt their lessons. In the MRT's case, the Gamuda-MMC consortium will be awarded the MRT project not because they possess the best technologies, or because they have the cheapest price, or because they can deliver the highest quality services, but because they were first to present their proposal to the Prime Minister and were able to lead Pemandu by the nose on the entire project from conception to the full project details as outlined in the ETP Book.

Monday, October 25, 2010

History to be Compulsory Pass?

The Deputy Prime Minister's call to make History a compulsory subject for a SPM pass reek of attempts at revisionism and indoctrination of our young Malaysian students

According to Bernama, history will be a must-pass subject in Sijil Pelajaran Malaysia (SPM) examination from 2013 along with the Bahasa Malaysia subject, Deputy Prime Minister Tan Sri Muhyiddin Yassin said. He also said the education ministry would also make improvement to the subject, with emphasis on enhancing the understanding of the Constitution so as to enlighten students about the country’s nation-building process.

The call to make History a compulsory subject came totally out of the blue, and stands in stark contast against the country's past policies to focus on science and mathematics to promote industry as well as to ensure employability.

While we have no objections in principle to making the subject a compulsory pass, we are extremely concerned with the proposal on two aspects.

Firstly, the underlying rationale behind the move appears to be to “teach” students about the constitution, and given the announcement of the measure at a Umno national convention, the focus will naturally be on the Article 153 and other related articles with regards to Malay “rights”. Malaysian students should however, but taught on all aspects of the constitution including the Reid Commission report which was the basis of our constitution when it was drafted.

Will there for example, be an equal emphasis on say, the Article 8 which states that “All persons are equal before the law and entitled to the equal protection of the law” and “Except as expressly authorized by this Constitution, there shall be no discrimination against citizens on the ground only of religion, race, descent, place of birth or gender in any law or in the appointment to any office or employment under a public authority or in the administration of any law relating to the acquisition, holding or disposition of property or the establishing or carrying on of any trade, business, profession, vocation or employment”?

Hence, we fear this new measure is a blatant attempt to indoctrinate our students with a narrow and biased interpretation of our Federal Constitution and our country's founding history. We call upon the Deputy Prime Minister, Tan Sri Muhyiddin Yassin to first convene a independent advisory and review body comprising of representatives from the Bar Council, eminent retired judges as well as renown academics on the History of Malaya.

To quote veteran journalist Zainon Ahmad who wrote last year “the history textbooks for schools should no longer be left to individual authors to decide what to include or emphasise and what to be left out. They must be supervised by a multi-racial panel of experts which must include educationists and historians.”

Secondly, the current teaching of the subject “History” for the various examinations leaves much to be desired. The focus is currently almost entirely based on memorisation and regurgitation of “facts” during examinations and does not at all involve critical thinking, analysis and interpretation.

In the light of the fact that the Ministry intends to improve our student's learning and thinking abilities, the approach used to teach history must first be overhauled before the subject can be made compulsory. Otherwise, “history” will just become a meaningless subject just like the subject “moral studies” today where students just memorises answers word for word to comply with a rigid marking scheme which punishes analytical variants and interpretations. It will only make Malaysian students even more incapable of independent thought.

Hence we call upon the Ministry to resolve these 2 critical issues first and not put the cart before the horse by making the subject compulsory without the necessary critical reforms.

Wednesday, October 20, 2010

More Toll Compensation for PLUS?

As the saying goes, there is no free lunch. The people's joy that there will be a 5 year moratorium on toll-rates was short-lived. UEM has announced that under the current concession agreement, the Government is likely to have to further compensate the toll concessionaire nearly RM5 billion for the freeze in toll rates. This is on top of more than RM800 million in compensation being paid by the Government since the toll freeze in 2008. For example, in the financial year 2009, PLUS Expressways Bhd was due RM813 million in toll compensation.

Based on the concessionaire agreement with the Government, PLUS is allowed to increase toll rates at a fixed 10% every 3 years and the last increase was in 2005, and the rates have been frozen since. A return trip from Kuala Lumpur to Penang would cost RM86.60 today, but will cost RM115.25 or 33.1% more by 2015 if PLUS is allowed to raise the tariffs in full.

In fact, given the circumstances where the Government is fearful of increasing any toll rates due to a potential voter backlash, should the toll rates be frozen all the way till the concession expires, the total compensation that needs to be paid over the next 28 years will amount to a mind-boggling RM64 billion!

It is unfortunate that the Government has chosen to ignore our DAP proposal provided early last year in February, and repeated in our Alternative Budget issued in September 2009 to take over the PLUS concessionaire. At that time, with the price of PLUS Expressways Bhd hovering below RM3.00 per share, we had recommended that the Government make a general offer to take over the shares at RM3.30 per share.

This price would be far lower than the price currently being offered by the UEM-EPF joint venture of RM4.60 per share. Instead of valuing PLUS at RM23 billion, it would have been at RM16.5 billion, saving the Government a potential RM6.5 billion in cost of acquisition.

Based on our proposal last year at RM3.30 per share, the cost of acquisition can be fully paid off within 7 years, financed purely by the profits of PLUS without further increasing toll rates. Hence the concession period can actually be effectively reduced to 7 years and subsequently the PLUS highway can be toll free or a marginal toll rate can be collected for the purposes of maintenance.

However, it is not too late for the Government to launch a takeover offer based on the same price that the UEM-EPF joint venture is offering to ensure that Malaysians get a better deal. At RM4.60 per share, post acquisition, the Government will be able to finance the cost of acquisition in its entirety over a shortened concession period of 14 years, freeze toll rates perpetually without having to pay compensation and allow PLUS to be toll free after that.

The above will be the fair deal that the rakyat will be looking for where the Government the acquisition does not cost the government a single cent as it is self-finance over cash generated during the 15 years concession period, toll rates will be frozen for 14 years and not just 5 years without the Government having to pay a single cent of compensation. What's more, the toll concession period can be reduced by half from 28 to 14 years.

The UEM-EPF acquisition does not bring benefits to the man on the street with the exception of transferring the astronomical profits from the current shareholders to the new shareholders. PLUS Expressways is extremely profitable due to the lobsided concession agreement resulting in PLUS achieving a profit before tax of RM1.62 billion and margin of 51% in 2009. The current acquisition by UEM-EPF is only a case of “robbing Peter to pay Paul” which does not include any restructuring of the concession agreements.

We call upon the Government to seriously considering directly acquiring the PLUS concessionaire in the interest of the rakyat instead of leaving the concession agreement unchanged. It absolutely does not make sense for the government to be compensating an obscene amount of RM5 billion to the concessionaire or possibly even as high as RM64 billion over the entire period, when the cost of directly acquiring PLUS will only be RM23 billion as offered by UEM-EPF. Unless of course, the Government is intent to make Malaysians suffer.

Tuesday, October 19, 2010

Forum: Budget 2011 - Change or Continuity?

Date: 20 Oct 2010 (Wed)
Time: 8pm
Venue: Poolside Cove, Sunway Lagoon Club, No. 3, Jalan Lagoon Timur, Bandar Sunway

  • MP for PJ Utara, Tony Pua
  • Chief Executive of Selangor Economic Advisory Office, Rafizi Ramli
  • MP for Klang, Charles Santiago
  • MP for Kuala Selangor, Dr. Dzulkefly Ahmad
  • Political analyst Dr. Ong Kian Ming

Admission: Free
Enquiries: 019-2865858


Budget 2011: Sabah & Sarawak Marginalised

With a whole series of multi-billion ringgit mega projects headlining Datuk Seri Najib Abdul Razak's Budget 2011 which seeks to be an integral step in “transformation towards a developed and high-income nation”, it has become clear as day that Sabah and Sarawak which became part of Malaysia on 16 September 2010 continues to remain marginalised and will be hard-pressed to significantly benefit from the Federal Government plans.

Purely by reviewing the budget speech by the Prime Minister last Friday and tabulating all the projects which have been listed, West Malaysia is the by far the biggest beneficiary, with our comrades in Sabah and Sarawak the biggest losers.

The value of all the projects cited which are specifically located in West Malaysia amounted to a massive RM109.74 billion and this will include some of the headline projects such as the RM40 billion MRT system for the Klang Valley, the RM26 billion KL International Financial District (KLIFD), an estimated RM10 billion worth of new highways, a RM10 billion mixed property development in Sg Buloh by EPF as well as the RM5 billion controversial 100-storey Warisan Merdeka.

In contrast, projects which are specifically for Sabah and Sarawak amounted to a meagre RM9.55 billion only or only 8.0% of the total value of these projects cited in the latest budget.

Is this continued marginalisation justifiable in the country's pursuit to become a high-income nation when it is Sabah and Sarawak who have contributed among the most to the Federal Government coffers, but who are ironically also at the same time most in need of funding to raise the standards of living of its people.

Over the past 6 years, the Federal Government has been heavily dependent on the income contributed from the oil and gas sector, especially from Petronas which finances the government in the form of income taxes, dividends, export duties as well as royalty payments. These contributions have formed an average of 40% or more than RM60 billion annually of the Federal Government's total income over the past few years. Based on 2007 data, both Sabah and Sarawak contributed 44.5% in terms of crude oil as well as 64.1% of natural gas production in the country, demonstrating the immense contribution from these states to the Federal Government.

At the same time, based on the 9th Malaysia Plan Mid-Term Review, Sabah and Sarawak remains among the poorest in the country. According to the report in 2007, the incidence of poverty in Peninsular Malaysia is 2.3%, while that in Sarawak is nearly double at 4.3%, and in Sabah its nearly 7 times higher at 16%.

Even these figures are highly suspicious and reeks of under-reporting as the state of basic infrastructure development in Sabah and Sarawak is drastically below that of Peninsular Malaysia. Based on 2009 data from the Ministry of Rural and Regional Development, 41% of both East Malaysian states are without rural water coverage, while the figure is only 10% in Peninsular Malaysia. The gap is even bigger for rural electricity coverage, when 23% is not covered in Sabah, 33% not covered in Sarawak but only 0.5% not covered in Peninsular Malaysia.

It is hence nearly impossible that poverty levels in Sabah and Sarawak as only 16% and 4.3% when 41% are without rural water while 23% and 33% are without electricity respectively. It's hard to imagine that it was only in 1970 when Sabah was the 2nd richest state in Malaysia after Selangor (which included Kuala Lumpur then) and today, it is by far the poorest.

What's more, despite constituting more than 60% of the land mass in the country, Sabah and Sarawak combined has only 6,390 km of paved roads while the Peninsula has more than 3 times the length at 21,589 km.

The vast contributions by the 2 East Malaysian states led by BN state governments to the BN-led Federal Government when contrasted against the meagre returns to the people of Sabah and Sarawak. It is not hence completely not surprising that the people of Sabah and Sarawak believe that they have been royally screwed and we have a Commonwealth Games gold medalist who chose to don Sabah colours and not that of Malaysia.

Table: Projects Listed In The Prime Minister's Budget 2011 Speech

Monday, October 18, 2010

Najib Asks For Blind Loyalty To Umno From Civil Service

In the Prime Minister's speech when launching an Umno Club for retired senior government officers at his official residence, Seri Perdana yesterday, Datuk Seri Najib Razak claimed he is baffled that there are civil servants and government pensioners who preferred to support the opposition.

Bernama reported that he said the "civil servants should know better that it is only Umno that can ensure our survival".

Firstly, the Prime Minister is clearly unable to differentiate between loyalty to the Government as opposed to loyalty to a particular political party. While the civil service needs to be loyal to the Government of the day and carry out its policies diligently and professionally, the civil servants are allowed to have their own political ideals and preferences.

With Malaysia seeking to become a develop nation by 2020, the Prime Minister should perhaps start behaving like one for a developed country for countries like Japan, USA, UK, France or Australia are able to switch governments without the loyalty and political affiliation of the civil servants being questioned.

Secondly, Najib's reference to "Umno" as opposed to "Barisan Nasional" clearly shows the party's racial priorities when referring to "our survival" which could only refer to "Malay survival in the context of the civil service being dominated by Malays and Umno being a party exclusively for Malays.

However what was perhaps most damning in Najib's speech was his use of racial rhetoric and falsehoods to incite anger among the Malay civil servants.

"I want to ask who were the ones who questioned Article 153 in the Constitution? Malay privileges; who questioned them?

Who caused the incident of not offering prayers for the well-being of the king? Who wanted Universiti Teknologi Mara to be opened to the non-Malays. Not Umno, but the other side," he said.

Najib asked the questions like a true Perkasa "hulubalang" and gave away his true colours as a Prime Minister who is "Malay first" instead of "Malaysian first" as defined in his own 1Malaysia concept in the Government Transformation Programme (GTP).

It fully explains he lack of willingness to mete out harsh punishments against those who has spewed racist comments over the past few years including Penang's Ahmad Ismail, the teachers who insulted minority races, his own special assistant Nasir Safar as we'll as most recently, the BTN Deputy Director who referred to Indians as "Si Botol".

His speech marks a 180 degree about turn from his call for "moderation" to fight the global extremists at the United Nations three weeks ago. It is also in total contrast from his call for drastic reforms in the New Economic Model such as for affirmative action to be "market-friendly and merit-based" as opposed to being entirely race-based.

Who exactly was Najib referring to who questioned the Article 153 of the Federal Constitution? We would however question those who abuse to articles of the constitution to grant special privileges to political cronies, the already rich and influential.

The accusation of the King's name being replaced by others by the Penang state government in prayers at the mosque has been explained as being completely unfounded. Najib's lie is hence completely unethical and made with ill-intent.

At the same time, Tan Sri Khalid Ibrahim's innocent suggestion of making UiTM a little more multiracial was to encourage greater diversity and exhange of ideas within the university has been taken completely out of context by Najib, Umno and Utusan as threatening Malay rights to frighten the Malays.

Under the spirit of the New Economic Model, the Prime Minister should be open to such ideas to ensure that Malaysia will be able to produce higher quality human capital and become more productive and competitive.

However, Najib has instead succumbed to Perkasa's tactics of stirring race discord with racial rhetoric, proving himself to be like his Deputy Prime Minister, Tan Sri Muhyiddin Yassin, who had proclaimed himself to be "Malay first, Malaysian second". It also explains why Najib has taken extra pains not to criticise Perkasa for their non-stop racist and extremist posturing, despite them causing increased racial tensions and dissatisfaction in the country.

The above will severely jeopardise our goal of achieving the high income status with the Government and Economic Transformation Programme. Malaysian talents overseas will resist returning while foreign and local investors will seek greener pastures elsewhere if unequal opportunities and unbridled race-based policies continue to be practiced.

Sunday, October 17, 2010

Budget 2011: Operating Expenditure Explodes Again

Budget 2011: Disproportionate increase in operating expenditure and a reduction in development expenditure fails to give confidence that Budget 2011 will be able to stimulate the necessary growth to meet our high-income nation objective.

Prior to the announcement of the Budget 2011, the Prime Minister has announced a whole series of measures and projects under the Government (GTP) and Economic Transformation Programmes (ETP) which are designed to take Malaysia to meet our high-income nation objectives by 2020.

It is hence a surprise that in the Budget 2011, the Government has once again fallen back to the same budget formula employed by the former premier Tun Abdullah Ahmad Badawi which had resulted in a budget crisis in 2009/2010 where the deficit hit a high of 7.4% which had required the Government to impose a series of belt-tightening measures to reduce expenditure.

Instead of increasing the allocation for “development expenditure” to invest in the various critical projects under the National Key Result Areas (NKRA), GTP and ETP, it has been reduced by approximately RM5 billion (9.0%) from RM54.0 billion in 2010 to RM49.2 billion for 2011.

On the other hand, the “operating expenditure” of the Government is budgeted to increase by a massive RM10.6 billion or 7% from RM152.2 billion in 2010 to RM162.8 billion. This has yet to take into account the fact that the original operating expenditure for 2010 was only RM138.3 billion. If this original budget figure is used as the benchmark, the 2011 budget for operating expenditure will increase by massive 17.7% or RM24.5 billion.

The question arises as to why does the Government need to increase its operating expenditure by such a large amount when just not too long ago in 2004, the Government's operating budget was only RM80 billion or less than half the budgeted amount for 2011?

When the expenditure for operating expenditure is analysed further, the category of expenditure which is budgeted to increase the most is for “supplies and services”. This will increase from the budgeted RM20.8 billion for 2010 to RM28.2 billion for 2011 or a 35.6%. This “supplies and services” expenditure is also the 2nd largest category at 17.3% of the total operating expenditure.

At the same time, the budget for emoluments remain the largest component of operating expenditure at 28.0% or RM45.6 billion. This figure is also a RM3.4 billion increase from RM42.2 billion budgeted for 2010.

More worryingly, the ratio of operating expenditure to development has continued to increase despite the fact that the budget for 2011 is our highest ever at RM211.9 billion which signals the fact that we are not allocating our resources to the most productive use. Instead of declining, the proportion of budget used for operating expenditure has increased from a low of 68.5% in 2003 to a record high of 76.8% budget for next year, despite a total increase in total expenditure from RM104.7 billion to RM211.9 billion. This is shown in the table below:

Table 2: Government Operating v Development Expenditure (RM billions)

Hence, we call upon the Prime Minister to explain why these worrying trends have not been addressed in the upcoming budget debate.

In order to ensure that Government expenditure is effectively utilised and is best able to generate the high economic multiplier impact for the country, the Government must ensure that its operating expenditure is restrained while the focus must be on development expenditure on projects which will bring high economic benefit for Malaysians throughout the country.

Saturday, October 16, 2010

Budget 2010: Government Failed To Keep Lid on Expenses

The Prime Minister in his speech announced that the Government will be on track to meet the projected budget deficit of 5.6% for the fiscal year 2010 giving the appearance that the Government was able to meet its financial commitment and targets. However, the meeting of the deficit target masks the fact that the Government had in fact substantially overspent its allocated budgets, and was “saved” only by a higher than expected collection of tax revenues.

Last year when the budget for 2010 was announced, the Government promised a commitment to trim operating expenditure to reduce wastage and to generate greater value for money returns with the tax-payers' money.

We had in fact applauded the Government's decision to reduce operating expenditure by a significant 13.7% from RM160.2 billion in 2009 to a budgeted RM138.3 billion. The government's operating expenditure includes salaries and pensions for the civil service, purchase of government assets, supplies and services, rentals, various subsidies, debt repayments, toll compensations and “other” expenditures. A government's “operating expenditure” is not expected to generate high economic multiplier effects, as opposed to “development expenditure”.

However, in the Budget announcement today, it has been announced that the Government's operating expenditure is expected to hit RM152.2 billion, or a massive RM13.9 billion (10.1%) over budget.

This clearly demonstrates the government's inability to impose financial discipline on its expenditure to ensure that the country's financial objectives are met. It is also not the first year the Government has overspent its budget. In fact, the Government has consistently overspent its budget by at least 5% as far back as 2000, with the worst year being in 2008 when the budget was exceeded by 17.2%. This is shown in the table below.

Table 1: Government Operating Expenditure – Budget v Actual (RM billions)

Comparatively, the Government's development expenditure only exceeded it's budget RM51.2 billion by RM2.9 billion, which is acceptable on the basis that the economy had required additional stimulus spending.

Therefore, Datuk Seri Najib Abdul Razak, who is both the Finance and Prime Minister must explain the cause of the continuing and possibly worsening financial indiscipline. The increasingly endemic financial ill-discipline in government departments must be halted to ensure that every cent of the rakyat's money is properly expended in accordance to approved and budgeted limits.

Otherwise, the complete lack of regard to the annual approved budget in parliament over the past 10 years have rendered the budget debate nearly meaningless as whatever allocations approved by the Parliament gets completely ignored, and the actual expenditures are significantly different from the one approved. Datuk Seri Najib Abdul Razak must also at the same time announce specific steps to be taken which will rein in the reckless disregard by the Government departments to ensure that the targets and objectives of the Budget are met, instead of just relying on the age-old rhetoric like “unlocking the real value of government assets” and ““value for money” in its spending without any follow up concrete actions.

Hence, we are fortunate that in 2010, our actual revenues to be collected, RM162.1 billion is significantly higher than the expected RM148.4 billion, or our deficit would have worsened substantially than the projected 5.6%.

Friday, October 15, 2010

EPF To Acquire PLUS: Robbing Peter To Pay Paul?

EPF’s proposed Plus takeover like ‘robbing Peter to pay Paul’, says Pua
By Clara Chooi October 14, 2010

KUALA LUMPUR, Oct 14 — DAP MP Tony Pua has silenced calls for celebration over the Employees Provident Fund’s (EPF) possible acquisition of Plus Expressways Bhd, claiming it would be akin to “robbing Peter to pay Paul”.

The Petaling Jaya Utara MP told a press conference in Parliament that in the first place, the terms of the toll concession itself was unfair and should be reviewed, before any sale was made.

“Everybody is supporting EPF because EPF pays returns to workers. I’m of the view that this will be a case of robbing Peter to pay Paul.

“You are sucking from the people with an unfair toll concession contract, to pay workers. It will be EPF using an unfair contract to pay the people. This is not the way for EPF to generate returns for the people,” he said.

Pua added that if that were the case, then the government should create more highways, create more unfair contracts and allow EPF to manage them so the body could give good returns to the people.

He explained that the toll-road concession contract was unfair for it stipulates that every three years, Plus was allowed to increase its toll rates by 10 per cent.

Failing which, he added, the government would have to compensate them.

“Government compensation to Plus last year was RM850 million. This is a contract that will last until 2038... it is an unfair contract.

“This is a highway that burdens Malaysians, businesses and consumers who use the roads regularly to travel between cities in the peninsular,” he said.

Pua said that Plus makes an annua profit of between RM1.2 billion to RM1.5 billion due to increasing traffic and was a cash cow.

“It has RM2.1 billion of incoming cash every year. They have some of the most lucrative terms for a highway concession,” he said.

A recent report in The Star English daily said that although there are five parties at present bidding for UEM Group Bhd, sources believe that EPF was still a shoo-in to take over Plus.

Two other parties so far – MMC Corp Bhd and Asas Serba Sdn Bhd – besides EPF, have gone public with their respective bids.

Pua said today that since a takeover was impending, Khazanah Nasional Bhd, which owns 100 per cent of UEM, should create an open bidding platform for the sale of Plus.

UEM owns 38.5 per cent of Plus. Khazanah also has a direct stake of 16.7 per cent, which means the government investment arm controls 55.2 per cent of Plus.

At present EPF owns 12.27 per cent of Plus.

“They should put in a target. For example, toll rates must be frozen, toll concession period should be maybe 10 years.

“Do an open bidding to see which party will pay the highest. That way, the government will gain because Khazanah will get the highest price for its assets rather than a direct award,” Pua said.

He also suggested for toll rates to be restructured to ensure they were more acceptable to the people.

“Plus today suspended their shares pending an announcement. We do not know what it is but it could be related to this acquisition.

“if it is, we will be very disappointed because they have not resolved the fact that Plus will continue to be making hefty profits at the expense of commuters. Disproportionate to the cost of construction of the highway,” he said.

When asked if he was against the idea of allowing EPF to acquire Plus, Pua said, “I am against EPF taking over immediately, under the current terms of the concession. Actually, I am against anybody taking over under the current concession terms. You must first restructure the contract terms.”

He reminded that the opposition had proposed how the government could take over the Plus concession so that they could eventually freeze toll rates and be toll-free after seven or eight years.

“This is because the toll money collected would be enough to pay for the acquisition,” he said.

MCA, Pua pointed out, had also supported such a proposal.

“They had a study team and came up with a proposal slightly different from ours but essentially, it is the government taking over and being able to substantially reduce rates.

“None of these proposals have been carried out. So now toll rates remain high or government compensation remains high,” he said.

Thursday, October 14, 2010

Can GLCs Raise RM454 billion Under ETP? II

Pemandu needs to do much better to convince Malaysians that GLCs will be able to stump up RM454 billion for ETP projects

I have on Monday questioned the Prime Minister and Pemandu on how the Malaysian GLCs will be able to raise RM454 billion for ETP projects when the listed GLC companies (excluding banks) have only got a market capitalisation of RM266 billion and shareholder funds of RM140 billion, as well as RM38.6 billion in debt. This is based on 17 largest listed GLCs on Bursa Malaysia including the G-20 companies monitored by the Putrajaya Committee on GLC High Performance (PCG) as well as listed Petronas subsidiaries.

Pemandu had issued a statement yesterday had claimed that my conclusion was flawed because I did not include non-listed GLCs. “Not all GLCs are listed and hence, the non-listed GLCs are not factored into the current market capitalisation. Key GLCs that are privately held today will be taken public over the next 10 years.”

I agree that non-listed GLCs were not included in my calculation because their financial information is not publicly available but the reason why the data from the 17 companies were sufficient is because they already are the largest Malaysian GLCs in this country, hence their being monitored directly by PCG.

However, the only largest unlisted GLCs of note are the Petronas group and the Felda plantation group. Petronas for example, has announced that they will invest approximately RM2 billion per annum over the next three years in domestic exploration, while Felda generated net profits of approximately RM1 billion per annum. The combined net profit for the 17 listed companies is only RM14.1 billion.

Hence even with the inclusion of non-listed GLCs, the Malaysian GLCs will be hard-pressed to invest RM50 billion per annum to meet the RM454 billion target over the next 8-9 years.

Under such circumstances, Pemandu will need to do much more to convince Malaysians that the figures projected are indeed viable, and the best way to so will be to provide a detailed outline of investments by individual GLCs on the 131 projects.

It is certainly not enough for Pemandu to just claim that “the market capitalisation of listed government-linked companies (GLCs) to grow in tandem with Bursa Malaysia’s growth rate” which is expected to be at a compound annual growth rate (CAGR) of 15%, where the Government “expect the market capitalisation of Bursa Malaysia to grow from RM1 trillion in 2010 to RM3.9 trillion by 2020”.

Firstly, Bursa Malaysia can grow very quickly with new sizeble listings such as Petronas, which may in itself nearly double Bursa's market capitalisation but it will not at the same time double the value of existing GLCs. Hence it is a fallacy for Pemandu to expect GLCs to grow at the same rate as Bursa's market capitalisation.

Secondly, the targets are once again set at a level well beyond the norm over the past decades with no explanations provided on the basis of such assumptions. Between 1991 to 2000, the market capitalisation doubled from US$56.7 billion to US$113.1 billion. It then increased further to US$286.2 billion or 153% by 2009. These numbers have yet to take into consideration the fact that the increase in overall market capitalisation is partly due to a 200% increase in the number of companies listed from 321 in 1991 to 959 in 2009. However, Pemandu is now expecting Bursa's market capitalisation to incresase by nearly 290% by the year 2020, well beyond our historical performance.

Pemandu needs to be credited for having spent substantial effort in identifying projects to be undertaken by the country's investors over the next 8-9 years. The effort is substantial and many of these projects have been discussed in depth. However, now that the projects have been identified, it is now important to tie them to the ground and ensure that these projects are digestable by our local companies, especially our GLCs. Otherwise, the risk of other unintended outcomes such as a self-induced debt crisis for the country as a result of a reckless increase in private debt securities, expected from RM270 billion in 2010 to RM880 billion in 2020.

Wednesday, October 13, 2010

4 More New Tolled Highways?

Has the Prime Minister really learnt the lesson on privatisation? Will the proposed 4 new highways expected to be announced in the Budget 2011 by awarded directly without tenders?

The Edge Financial Daily had reported yesterday that 4 new tolled highways have been proposed for the peninsula and are likely to be announced during the Budget 2011 speech on Friday.
“It is understood that PLUS Expressways Bhd would be the concession operator of two of the roads, while Permodalan Nasional Bhd (PNB) wuld run the other two.

The highways to be operated by PLUS are from Sungai Dua to Juru in Penang, and from Kinrara to Damansara in the Klang Valley, while the PNB-operated highways are said to be from Ampang to Cheras and from Damansara to Sg Buloh.”
This piece of news comes as a surprise, first with the Government and Economic Transformation Programmes prioritsing and focusing on public transportation, while secondly, and more importantly, there appears to be no indication at all that these projects are being tendered on a open and competitive basis as promised under the Prime Minister's “New Economic Model (NEM)”.

In fact, one doesn't have to look into the NEM to see that the Prime Minister knows full well the negative impacts of a poorly managed, directly awarded privatisation exercises. Even before the last General Elections in 2008, Datuk Seri Najib Abdul Razak had in his keynote address at the Jeddah Economic Forum (February 2007), outlined the lessons Malaysia has gained from the privatisation exercises since the 1980s.

Firstly, he said that the Government, whenever and wherever possible, should allow for competitive bidding for privatised assets or concessions and ensure that the process is transparent and fair.

He added that even when there is a national agenda of preferential treatment in favour of disadvantaged economic groups, there must be enough competition within this group to ensure that only those with the necessary skills, capabilities and resources are selected.

Secondly, he specifically advised against a "first come first serve" approach. The then deputy prime minister had admitted that “our experience has also shown that by providing exclusivity to one party, this approach has the real potential to escalate the eventual costs and burden to consumers and the taxpayer.”

At the same time, he said that he would be mindful of public concerns over tariff rates and tariff increases. He said that “in designing contracts, we must avoid in-built automatic escalation of tariffs that are not linked to performance and quality of services provided.”

It was an open admission that our Malaysian privatisation policy since the 1980s is a failure in many aspects. The question is, while Datuk Seri Najib has eloquently critiqued our privatisation policies to date to a group of international investors, has he or will he be practicing what he preaches in the “New Economic Model”?

Should the report by The Edge Financial Daily be true, then we fear that the Government has chosen not to exercise its duties in a responsible manner to the rakyat especially when the Government had told the rakyat that we need to tighten our belts and absorb the planned subsidy cuts to help the Government reduce its budget deficits. However, at the same time, the Government is clearly not making its best effort to help the rakyat increase their quality of living and reduce the cost of living by ensuring that toll tariffs are kept to the minimum and imposed only when strictly necessary.

The Prime Minister must explain during his upcoming budget speech if “open tenders” is going to be a cornerstone of his administration, not only for the purchases of “pen and paper”, but more importantly or all the mega-projects being awarded under the guise of “public finance initiatives (PFIs)” or “public-private partnerships (PPP)”.

Tuesday, October 12, 2010

Can GLCs Raise RM454 billion Under ETP?

Najib needs to explain how Government-Linked Companies will be able to stump out RM450 billion in investments over the next 8 years to as “planned” in the Economic Transformation Plan

The Economic Transformation Plan (ETP) launched by Pemandu of the Prime Minister's Department had projected a total investment of US$444 billion or RM1.4 trillion is required for the 131 “transformative” projects to make Malaysia a “high-income” nation by 2020.

Out of the US$444 billion required, 60% is expected to come from the private-private sector, while 32% is expected from the government-private sector or the Government-linked companies (GLCs) and the balance of 8% from the government itself. Based on the above assumptions, the expected investment over the next 8-9 years for our GLCs will be a total of US$142 billion or RM454 billion.

To determine if the ETP has any remote chance of success would require the above investment targets to be realistic and digestable by our GLCs. The pertinent question then is whether our GLCs are able to deliver the expected amount of new investment which averages more than RM50 billion per annum til 2020?

And to determine if the expected spending of RM454 billion or RM50 billion per annum is realistic, we will first have to review the size and potential appetite of these GLCs. Under the Government's Putrajaya Committee which measures, monitors and tracks the performance of our top 20 GLCs (G20) which are the largest Malaysian GLCs expected to take up the total, if not all of the investing burden under the ETP.

I've identified the G20 companies which are listed on Bursa Malaysia and added the Petronas-related companies which are not part of the G20. At the same time I've excluded form the list GLC banks – Maybank, CIMB, BIMB, RHB, Bursa Malaysia, Affin Bank and MBSB which are not expected to invest directly or significantly in the ETP projects but to facilitate or finance them as and when required.

They are all listed on Bursa Malaysia, and their details are as per Table below.
Table 1: Top GLCs Listed on Bursa Malaysia (excl Banks)

The figures are extremely telling. These companies are in no position to be investing RM454 billion over the next 8-9 years. The combined market capitalisation of these GLCs is only RM266 billion, but we are actually expecting them to invest in an amount that is nearly double their current size over the next few years. It is akin to a person attempting to digest food double his weight within a short period of time!

What's more, by reviewing the balance sheets of these 17 largest GLCs, the consolidated debt of all these companies amount to an already sizeable RM38.6 billion. At the same time, the total shareholder funds invested in these companies to date is only RM140 billion.

Any equity or financial analyst will tell you that it will be crazy to expect GLCs to raise additional hundreds of billions of ringgit in debt to fund the RM454 billion worth of ETP projects. Or it will be similarly mad for the GLCs to be seeking to quadruple their shareholder funds by raising more money from shareholders during this period, especially since the Government itself will have to bear the brunt of the fund raising exercise.

The above also doesn't take into account the fact that many of these companies are facing their own set of financial problems such as Sime Darby with its follies in the energy sector, Tenaga which always faces tricky cashflow issues or MAS and Proton which are still struggling with their turnaround plans.

Hence it appears that while the ETP has identified plenty of projects which looks extremely pretty on paper, they are but pies in the sky. The Prime Minister and Pemandu has failed to explain how our GLCs are expected to invest a whopping RM454 billion over the period of time.

Malaysians are excited by what the ETP projects hope to achieve and we all want the country to achieve a high-income nation status. We will however, not achieve these goals if these figures are just plucked from the sky. To ensure and protect the credibility of the Government's plans, the Prime Minister must explain during his speech for the Budget 2011 this coming Friday, on how exactly are we going to find the RM454 billion for our GLCs to invest in the ETP projects, as well as the balance of RM850 billion anticipated from the “private-private” sector.