Thursday, April 29, 2010

Help Our Sibu Campaign!

Dear Friends,

The 10th by-election is over at Hulu Selangor and it is most unfortunate that we suffered a setback amidst the millions of ringgit poured in by the BN government.

Nevertheless, our struggle for a Malaysian's Malaysia is now shifted to Sibu Sarawak and we at DAP will lead the challenge. We expect the BN in Sarawak will pour even more resources into maintaining their grip in this by-election.

Despite that we at DAP still believe we can make a difference and a clear statement that Malaysians from both East and West want and deserve a change.

We are appealing to ALL MALAYSIANS to donate generously to fund our effort in Sibu Sarawak. Your funds will be used for the following:
  1. Printing campaign materials
  2. Securing transportation
  3. Organizing road shows, talks, ceramahs
  4. Hiring of AV / PA system
  5. Other expenses in connection to help our team
We ask you to consider donating RM500 or more for this effort including asking your friends and relatives who believe in our good cause to do likewise.  All amounts are however small, much welcome.

You can also donate online by way of Credit Card, Maybank2U, CIMBClicks etc. Please check for more details here @

Alternatively, cheques can be written to "DAP MALAYSIA" and all donations for DAP can be banked into our Party’s account at any Public Bank branches with reference to our account No. 306 382 8309.

Or you can send cheque to: DAP MALAYSIA
No. 24 Jalan 20/9, 46300Petaling Jaya, Selangor

Your love for the nation will definitely make a difference.


MINDEF Twists & Turns over RM8b AWV Purchase

The Ministry of Defence must not twist and turn when explaining the RM8 billion order for 257 8x8 armoured-wheeled vehicles

We have on 22nd April issued a statement in Parliament asking the Minister of Defence to explain the purchase of 257 8x8 Armoured-Wheeled Vehicles (AWV) or Armoured Perosnnel Carriers (APC) for the astronomical amount of RM8 billion. The amount is shocking as each of these non-combat vehicle is priced at a ridiculous RM31.1 million.

Even the top-of-the-range AWVs built by one of the best military vehicle and equipment manufacturer in the world, General Dynamics Land Systems-Canada, LAV III cost US$3.04 million or only RM9.9 million each.

What's more, even the best-in-class main battle tank, as opposed to just an armoured carrier, produced in the United States, M1 Abrams M1A2 deployed extensively in Iraq, Kuwait, Saudi Arabia and Australia cost only US$6.1 million or approximately RM19.8 million!

The Ministry had only yesterday, more than a week after our statement, issued a denial claiming no price has been fixed, and our earlier statement “tidak tepat”.

We call upon the Minister to come clean with the information on the contents of the letter of intent issued to Defense Technologies Sdn Bhd (Deftech), a wholly owned subsidiary of DRB Hicom Bhd, and answer the following questions directly:

1.Was the figure of RM8 billion quoted in the letter of intent issued to Deftech? If not, why did Datuk Seri Dr Ahmad Zahid Hamidi, the defense minister announce the RM8 billion figure while witnessing the signing of agreements worth RM10.4 billion? In fact the full breakdown of cost of each contract was given to the press and published in full in the New Straits Times on 21st April? How can the Minister announce RM8 billion at the 12th Defence Services Asia but the Corporate Communications Unit then deny it a week later? Was the Minister also making statements which are “tidak tepat”?

What is most incredulous is Datuk Seri Zahid's statement publised in the NST on 22nd April which claimed that the “RM10.4b defence deals will help us save costs”.

2.Why did the Ministry of Defence award the letter of intent, with or without the RM8 billion figure to acquire 257 units of the 8x8 AWVs when a prototype of the vehicle will not be ready until 2012? The chairman of Deftech, Datuk Seri Mohd Khamil Jamil told the press that "We have an order for 257 8x8 AWV units but right now, we are going to come up with the prototypes meant for testing purposes by the army before we develop the whole range of armoured vehicles."

3.Will the Ministry agree that purchasing the AWVs at RM31 million each is completely unacceptable, and is more than 300% the price of a top-of-the-range AMV like LAV III? Therefore any purchase of AMVs should not be priced more than RM9 million? In fact AMVs produced by some of the other world renown military vehicles specialists like Swiss MoWAG GmbH costs only RM4 million each. The rakyat deserves a guarantee from the Minister that any purchase will not exceed acceptable limits based on market prices.

We find the Ministry's assurance that “Kementerian Pertahanan sentiasa berhati-hati dalam setiap rancangan pembelian aset kerana ia melibatkan kos perbelanjaan yang besar” completely not credible given the experience over the past decade.

For example, the Defense Ministry had awarded a botched RM24 billion contract to PSC Naval Dockyards to build 27 offshore naval vehicles. The contract was severely criticised by the Auditor General. For the contract to deliver the first 6 boats, the original RM5.35 billion contract ballooned to RM6.75 billion by January 2007. The auditor also reported that the ministry had paid out Rm4.26 billion to PSC up to December 2006 although only Rm2.87 billion of work had been done, an overpayment of RM1.39 billion, or 48%. In addition, Malaysia’s cabinet waived late penalties amounting to RM214 million. The Auditor General also found that 14 “progress payments” amounting to RM943 million were made despite the fact that there were no payment vouchers or relevant documents dealing with the payments…”

We also question the Defense Ministry's purchase of 2 submarines for the cost of RM3.4 billion which had involved an astronomical RM500 million in commissions to a “logistics and support” company belonging to Abdul Razak Baginda, a well-known associate of the then Defence Minister, Datuk Seri Najib Abdul Razak.

We want the Minister of Defence to come clean with the proposed acquisition of the 257 AMVs and do not attempt to hide the details of the transaction with wishy-washy explanations which does not hold water.

Tuesday, April 27, 2010

2010 DAP Intership Programme

The DAP "Know An MP" Youth Programme for the year 2010 is now open for application. The DAP Malaysia will be offering 10 places of attachment nationwide to various top national leaders, Member of Parliament and State Assemblymen (ADUN) in Malaysia.

What is this programme about?

Selected candidates will be matched based on compatibility to a Member of Parliament or State Assemblyman (ADUN). The candidate will attach on a full-time basis to the MP/ADUN and actively participate in their daily work.

During the programme, candidates will have the opportunity to:

  • Assist and contribute to the work of the MP/ADUN
  • Gain first-hand experience and insight of being a national leader
  • Attend parliamentary sessions or state assembly sessions
  • Organize and participate in press conferences, discussions, political events etc.

As part of the programme, candidates are required to:

  • Submit a 300-word essay documenting their experience and insight gained
  • Contribute a 1000-word proposal on how to improve the office of an MP/ADUN or the operation of DAP Malaysia; OR a research topic of choice on a current issue for MP/ADUN debate during parliamentary or state assembly session
  • Initiate and organize a community event to engage sociopolitical awareness

Selection Criteria:

  • Youths between age 18-30 (students, fresh grads or young working adults)
  • Full-time attachment
  • Selection based on assessment of academic results and experience


  • Closing date of application: 25th May 2010
  • Start date of programme: Anytime after 20th June 2010
  • Successful candidates will be informed via email

Application procedures:

Email resume / curriculum vitae (CV) and cover letter expressing interest to daprocket(at)rocketmail(dot)com

Include in your application the following:

  • Preferred location (ie. which state/city in Malaysia)
  • Preferred duration of your attachment
  • MP/ADUN of preference

For enquiries, kindly email daprocket(at)rocketmail(dot)com

Thursday, April 22, 2010

RM8 billion for 257 Armoured Personnel Carriers

We would like to state upfront that we are disgusted by the most recent transaction by the Ministry of Defence to award the purchase of 257 8x8 Armoured-Wheeled Vehicles for the astronomical amount of RM8 billion. The amount is shocking as each of these non-combat vehicle is priced at a ridiculous RM31.1 million.

The transaction first defies believe due to the price the Ministry of Defence will be paying to DRM Hicom wholly owned subsidiary, Defense Technologies Sdn Bhd (Deftech).

The Portugese Army bought 353 Pandur II 8x8 armoured vehicles for the amount of EUR364 million (RM1.56 billion), or an average of EUR1.03 million or only RM4.41 million each!

The latest version of Piranha III 8x8 armoured-wheeled vehicle developed by the Swiss MOWAG GmBH cost only US$1.2 million, or RM3.9 million.

In 2009, the U.S. Army has awarded a USD$2.2 billion contract to General Dynamics Land Systems-Canada, one of the best military vehicle and equipment manufacturer in the world, for 724 Light Armored Vehicles (LAV) or equivalent of US$3.04 million or only RM9.9 million each, meant for Saudi Arabia!

Even the best-in-class main battle tank produced in the United States, M1 Abrams M1A2 deployed extensively in Iraq, Kuwait, Saudi Arabia and Australia cost only US$6.1 million or approximately RM19.8 million!

Despite the price-tag, Deftech admits that they are only at the stage of developing a prototype.

"We have an order for 257 8x8 AWV units but right now, we are going to come up with the prototypes meant for testing purposes by the army before we develop the whole range of armoured vehicles," Deftech chairman Datuk Seri Mohd Khamil Jamil said at a press conference during the 12th Defence Services Asia 2010 exhibition on Tuesday 20 April 2010.

The second reason why the above transaction disgusts us is the fact that the Barisan Nasional Government is clearly missing the woods for the trees in the entire financial management of the country. At the same time when the Ministry of Finance has issued strict treasury circulars for all Ministries to reduce their operational expenditure by as much as 20% which has resulted in no food on weekends in boarding schools, restricted the use of classrooms due to the need to conserve electricity, the Ministry commits to a purchase that completely mocks the attempt by the Government to be thrifty.

What is worse, it makes a complete mockery of the Government's excuse to implement new tax schemes such as the Goods & Services Tax (GST) which will only raise RM1.3 billion, when the Government splurge an astronomical RM8 billion just to purchase armoured-wheeled vehicles.

The Prime Minister, Datuk Seri Najib Abdul Razak has proudly announced that the Government has the necessary political will to pursue the New Economic Model by eradicating rent-seeking and patronage, to promote competition. What we see here is continuing abuse and mismanagement by the Ministry of Defence which has been plagued by repeated scandals and failures over the past few years, such as the RM6.75 billion purchase of naval patrol boats from crony company, PSC-Naval Dockyard, the RM3.4 billion purchase of 2 submarines with a RM500 million “commission”, and more recently a laughable RM2.7 million purchase of ladies leather shoes for female civil servants.

We hope the Ministry of Defence will now inform us that this is another decimal point error in the contract value. Otherwise, we call upon the Government to review and cancel the above award which is a complete wastage of the Government's limited resources, and more importantly for the Government to demonstrate its commitment to transparent procurement process which will curb wild excesses of the past.

Thursday, April 15, 2010

Water Deal Hangs As Ministry Pussyfoots

On 12th April 2010, Gamuda Bhd has again made a revised offer to acquire all water concessions in Selangor via its 40% associate, Syarikat Pengeluar Air Sungai Selangor Bhd (SPLASH) to comply with the requirement that all water assets will be owned by federal agency, Pengurusan Aset Air Berhad (PAAB), and leased back at a rate of 6% per annum. This will include an offer to acquire all concessions for RM10.75 billion.

The Selangor state government had made a combined offer of RM9.2 billion to acquire all water concessionaires in June last year, which was accepted by two of the concessionaires, SPLASH and ABASS, but was rejected by SYABAS and Puncak Niaga Sdn Bhd (PNSB).

The Federal Government, via PAAB has previously in March 2010 made an “informal” offer to acquire all assets from the water concessionaires for the amount of RM10.3 billion. Under the proposed scheme, the Federal Government has been adamant that the control over the overall water industry remains with the Puncak Niaga group despite protests from the state government. However, this offer is effectively dead after it was rejected by ABASS and SPLASH as the offer made to them was lower than that offered by the State Government, despite the higher combined price. This effectively means that the government made a substantially higher offer to acquire the assets of both SYABAS and PNSB.

Despite the substantially higher offer made last month to SYABAS and PNSB, the companies have shown a care less attitude having missed the offer deadline of April 6th, two weeks ago.

We call upon the Minister of Energy, Water and Green Technology Datuk Peter Chin to quickly decide on the best deal in the interest of the people of Selangor and Kuala Lumpur, and exercise his powers vested in him under the Water Services Industry Act (WSIA). The Section 114 of WSIA, if invoked gives the Minister the power to force water players to hand over the assets in the name of “national interest”.

The offer by Gamuda is the best in terms of the valuation of to water concessionaires, being the highest offer on the table. Despite that they have promised to freeze water tarriff increase in the first year and increase only between 2-3% annually for subsequent years.

The proposal by the Federal Government is the worst possible outcome for the consumers as it will mean an immediate increase of more than 10% increase in tarriffs in the first year, and more in the subsequent years under the scheme where Syabas and PNSB are put in control.

However, the deal by the Selangor state government is the best there is for the rakyat as we have affirmed no tarriff increases for a foreseeable future. This can be easily achieved due to
  1. the lower proposed leasing cost by the state government from PAAB of approximately 5%, compared to Gamuda's cost of 6%.
  2. the lower cost of acquiring all assets of water concessionaires of RM9.2 billion, or even in the case of RM10.3 billion as offered by the Federal Government (which the state is now requesting)
  3. the fact that the state government seeks not to maximise profits, but instead to maximise returns to the rakyat. Gamuda has confirmed that under their offer, they are still able to make equity returns in excess of 10% per annum.
There is without a doubt that the Selangor State Government's offer to restructure the water industry is fair to all water concessionaires, and is the best possible outcome for the rakyat in terms of lowest tariff rates and best service levels.

Therefore the decision of Datuk Peter Chin where “rakyat didahulukan”, must be that of fully backing the offer by the Selangor state government. We are disappointed that the Minister is pandering to cronies and vested interest parties who are after an extension of patronage and rent-seeking exercise which occurred in the late 1990s when the water industry was privatised, particularly to the Puncak Niaga group.

Any decision less than exercising the powers of the Minister to further the interest of the rakyat will make a mockery of the call by the Prime Minister to “not tolerate rent-seeking and patronage” under the proposed New Economic Model.

Wednesday, April 14, 2010

NEM: Anti-Competitive Circulars

Datuk Seri Najib Abdul Razak must first get his own Finance Ministry to join the New Economic Model (NEM) transformation, or the NEM will be doomed to fail

Among the various strategic reform initiatives proposed by the New Economic Model announced by Datuk Seri Najib Abdul Razak is to “re-energise the private sector to drive growth” and to “create a competitive domestic economy” while at the same time implement “transparent and market-friendly affirmative action”.

While there are plenty of reforms needed to achieve the above goals, the biggest single impediment to achieve the noble goals of the NEM is none other than the Finance Ministry helmed by Datuk Seri Najib Abdul Razak himself.

For the past decade the Ministry of Finance has issued “Treasury Contract Circulars” which clearly specifies panel contractors which all Ministries, state governments, statutory bodies and local authorities must employ for purchase of specific goods and services.

As an example, I had revealed yesterday an extraordinary contract whereby the Ministry of Defence is disclosed as having purchased RM27.5 million worth of ladies leather shoes from Syarikat Visi Footwear Sdn Bhd in the MyProcurement Portal. At the same time, I've also been made aware that Visi Footwear is one of the only 3 companies nationwide which forms the panel of companies who can supply leather shoes to the Government as dictated in the Treasury Contract Circulars dated 29 Nov 2006 and 3 Jun 2008. The other 2 companies are Pearl Crown Trading and Maranocorp Industries Sdn Bhd.

It is almost laughable that the circular had stated that the panel was to “mewujudkan satu persaingan positif dalam perniagaan semasa”, when it in effect do the very opposite by entrenching rent-seeking and patronage, and promoting oligopolistic collusion which results in higher prices at the expense of the tax-payers.

It is beyond comprehension why the Finance Ministry has to come up with such a specific circular on “qualified companies” on items as specific as “kasut/but kulit dan barangan lain yang diperbuat daripada kulit”, and there is no justifiable and transparent rationale as to how these companies are chosen.

A further check with the Treasury portal ( revealed that there are hundreds of similar circulars in force for very specific products ranging from seminar bags made from PVC or canvas, metal beds, lubricants, wood furniture, metal furniture, cloth furniture, mattresses and pillows, instant coffee powder 500g, flavoured cordials, chilli sauce, envelopes, spices and many more.

The above shows in no uncertain terms that the Finance Ministry has intentionally or otherwise, created oligopolies (寡头垄断) controlling all forms of supplies to the Government enriching a selected few. Those who benefited are companies like Maranocorp whose factory is located in Bangunan UMNO Maran, Pahang.

The government is the single largest consumer of the Malaysian economy accounting for RM95.1 billion or 21.7% of total consumption in 2009. It is also single largest investor in the country with its investment spend of RM82.1 billion or 55.5% of total investment in 2009.

Hence by creating high barriers of entry into the government's procurement sector, the Finance Ministry is in fact directly dampening our private sector from investing locally and retarding the competitiveness of our domestic economy. These are the objectives of 2 of the strategic reform initiatives of the NEM.

The Finance Ministry cannot even qualify these circulars a type of “market-friendly affirmative action” acceptable under the NEM for they are completely not transparent as there are no information at all as to how these companies are selected to become “panel” suppliers, and such rigid listings are definitely not “market-friendly”.

We call upon Datuk Seri Najib Abdul Razak, who is both the Finance and Prime Minister to immediately cancel these anti-competitive “treasury contract circulars” for they will stifle entrepreneurship in the private sector, creating inefficient and fat oligopolies, and serves to breed rent-seeking and patronage, benefit only a selected few. This continued practice by the Finance Ministry will only ensure that the NEM will become another well-intended document branded as a failure and buried in the sands of time.

Tuesday, April 13, 2010

MyProcurement: RM27m Shoe Purchase?

The Prime Minister needs to start getting serious about his promise of transparency before his MyProcurement portal the butt of jokes by the men on the street

Over the past week I've already highlighted via the media the various serious short-comings of the MyProcurement portal, launched by the Prime Minister, Datuk Seri Najib Abdul Razak about 2 weeks ago. The short-comings include data which are inaccurate, incomplete and has very little details – such as no details of tender specifications, dates of tender and award, quantities, number of competitive bids and other relevant details.

What caught the public's attention was at least 2 projects whose contract sum were keyed in wrongly, resulting in wildly inflated figures. The first was a RM6.5 million project which was wrongly quoted as RM6.5 billion for the Ministry of Defence to purchase food rations, while the other was a RM7.8 million project which was wrongly quoted as RM77.8 million for a project to build a hostel for 200 students in Terengganu.

One would have thought that by now, the Government would have learnt its lesson and comb through the entire site for other errorneous data, and ensure that all new data entered would be properly checked for irregularities.

However, just last Thursday 8 Apr, the Minister of Domestic Trade and Consumer Affairs had uploaded its first and only contract to the portal. While it's questionable why the Ministry has only awarded 1 contract since June 2009, what was shocking was that the contract issued was to Business Information Technology Sdn Bhd for a sum of RM3.6 billion for a project to “menaiktaraf perkhidmatan keselamatan ict kementerian perdagangan dalam negeri, koperasi dan kepenggunaan”.

If this is really another “decimal point error” as we suspect, then it only shows that the Government is really not serious about this whole “MyProcurement portal” thing, and it is really set up for show, rather than to ensure transparency, and eliminate rent-seeking and patronage. At the rate which we are going, how many more “billion” ringgit projects are going to be “exposed” in the portal?

The Minister of Defense must explain incredible shoe purchase

The most special discovery on the MyProcurement portal that takes the cake must however, be this peculiar contract. The Ministry of Defence awarded a contract amounting to RM27.5 million to Syarikat Visi Footwear Sdn Bhd to “membekal dan menghantar kasut kulit wanita untuk kakitangan awam Kementerian Pertahanan”.

We know that the First Lady aims to make Malaysia the “Shoe Capital of the East”, but surely, a RM27.5 million purchase of ladies' footwear for civilian staff is not the way to achieve the goal?

We'd like to call upon the Minister of Defence to explain this incredible shopping spree for ladies' shoes for his ministry.

Thank contributions by the public scrutinising the MyProcurement portal

I'd like to also take this opportunity to thank all “little birds” who have shared the load of perusing and analysing the MyProcurement portal who have peppered me with plenty of leads since last week. I've received all sorts of information via emails, Facebook and even Twitter.

I call upon all civic minded Malaysians to continue perusing and analysing the data within the MyProcurement portal as (and if) it gets updated to ensure that there is increased transparency in Government procurement, and ultimately, to reduce and eliminate rent-seeking, patronage and the associated corruption deeply entrenched within the system.

Keep my colleagues and myself updated on all the suspicious deals whether via email, Facebook, Twitter or other conventional means, and we'll do our part to ensure that we get to the bottom of things.

Sunday, April 11, 2010

MyProcurement: Rent-Seeking & Patronage Galore

As reported by The Malaysian Insider on Tuesday, 6 April 2010 “Prime Minister Datuk Seri Najib Razak claimed in Singapore on Tuesday night that he has put his political career on the line by committing to purging rent-seeking and patronage politics in Malaysia’s economy. He said this is because those who benefit from these practices are powerful and politically connected, and he hinted that they could even exert their influence in Umno, the party of which he is president.”

Since the Prime Minister has readily admitted that there are strong resistance to his plan to wipe out rent-seeking and patronage in Umno, to the extent that Umno itself has been infiltrated with rent-seekers, we would like to take up the Prime Minister to his call for “inclusiveness” under his New Economic Model to include us in the battle against rent-seeking and patronage.

Given that the Malaysian Anti Corruption Commission has not been performing up to expectations in the battle against corruption, we would like to raise several instances which deserves further investigation by the relevant authorities based on information published on the MyProcurement portal.

  1. Yesterday I highlighted the case of a contract to build a 200-room hostel at the cost of RM78 million which has since been “corrected” by the Minister in parliament as costing RM7.8 million due to another typo error. This contract was awarded to a company, Rafa Sepakat Sdn Bhd based in Terengganu. They've also been awarded another contract worth RM5.7 million to build a “bangunan pejabat agama daerah Marang dan lain-lain kerja yang berkaitan”. A check with other sources revealed another contract worth RM39.9 million to build an affordable housing project awarded by the Terengganu state government to the company.

    A simple check on the company revealed certain interesting information. This company is a new company established only in December 2007 with no revenues in its books as at 31st December 2008. Hence a company with absolutely no track record has been awarded with RM534 million worth of contracts all within the last 6 months. More interestingly, the main 66% shareholder and director of the company, Abdul Rahman bin Abdul Ghani turns 23 years old later this month. Without prejudice to the entrepreneurial talent of En Abdul Rahman who set up the company before he turned 21, the above information surely deserves further investigation by the relevant authorities.
  2. The Ministry of Education awarded a total of 76 contracts for 76 boarding schools in Pahang for the supply of cooked food amounting to a total of RM123.5 million, with prices ranging from a low of RM420,000 to RM3.91 million each. Most of these contracts are also awarded to individuals and not companies.

    While we have not been provided with quantities and the number of students at each school, the largest various between the cost to supply cooked food to these hostels certainly deserve greater scrutiny. A random check of one of the contract receipients, Rafidah binti Halib who was awarded a RM1.4 million contract to supply to SMK Maran is also at the same time a committee member of Wanita Umno, Bahagian Maran.
  3. The Royal Malaysian Police has also awarded 2 interesting contracts, one to purchase “OKI printer ribbon and toner catridges” for RM25.4 million and another to purchase “ink and toner catridges for Canon printers” for RM12.9 million. The amounts works out to approximate RM400 spent for each policeman on the use of OKI and Canon ribbon and toner catridges. However, without additional details on the quantities supplied we are unable to make any further conclusions except to note that a 20% mark up in pricing would mean nearly RM8 million in leakages just for these 2 contracts.
  4. The Ministry of Defence has also awarded a RM82.8 million contract to supply “body vest protection (level III)” to KDI Garment Sdn Bhd. While the amount is large, we are not able to make informed judgements if this contract value is fair or whether there's another decimal point error involved.

    Of more interest however, KDI Garment is a company whose last filed accounts with the Registrar of Companies was dated July 2006, with a revenue of RM1.75 million and a profit of only RM1,607. Should such a company be awarded a contract that is nearly 50 times its last known revenue?

Even with the meagre information which is currently available on the MyProcurement portal which is current inaccurate, incomplete and has very little details – such as no details of tender specifications, dates of tender and award, quantities, number of competitive bids and other relevant details, we have been able to detect various discrepancies and highlight potential “rent-seeking” and “patronage” deals.

We call upon the Prime Minister to let us join hands with him to wipe out rent-seeking and patronage in the Government's procurement system by providing us with full details of procurement contracts for each and every ministry. Better still, if he can make available the list of key office holders at UMNO branches and division levels to us, then we will be able to immediately shortlist all pontential contracts which have been awarded on the basis of “rent-seeking and patronage”.

In line if the Datuk Seri Najib's “performance now” motto, we will deliver this list of suspected rent-seeking and patronage contracts within a period of 14 days after the information has been made available to us.

We are and have always been committed to eradicating rent-seeking and patronage from Malaysia and we hope that the Prime Minister will be equally committed to the cause to put aside partisan interest on matters of such national importance.

Saturday, April 10, 2010

MyProcurement: Not At All Transparent

I had earlier issued a statement questioning the data integrity in the newly launched “MyProcurement Portal” which lists all contracts awarded by the various Ministries and government departments.

I highlighted the fact that there were 38 awards amounting to RM182 million which did not have company names and/or numbers as well as a dubious award of RM6.47 billion for food supplies to the army.

The Chief Executive Officer of PEMANDU, Datuk Seri Idris Jala who's in-charge of the government's transformation programme had on national radio BFM89.9 insisted that all data in the portal are accurate despite being questioned repeatedly by the interviewer.

However, he was proven wrong almost immediately when the Ministry of Defence corrected the contract value amount by 3 decimal places, from RM6.47 billion to RM6.47 million, as updated on the MyProcurement portal.

If it had been the only mistake in the portal, it may be excused. However, it will most certainly not be anywhere near the last.

There is another contract worth RM77,920,599.20 which has already been highlighted in The Malaysian Insider, “cadangan membina dan menyiapkan asrama untuk 100 lelaki dan 100 perempuan di smk kuala jenederis, hulu tetengganu, terengganu” which was awarded to Rafa Sepakat Sdn Bhd. In Hulu Terengganu, it will actually cheaper to buy a RM380,000 luxury bungalow for each of the 200 students!

Is this another data error? It is certainly not the responsibility of a Member of Parliament to scrutinise every contract to second-guess if the contract amount is accurate or contains “data error” or over-priced. It is the responsibility of the project officials to ensure that every piece of information in the MyProcurement portal, a milestone proudly launched by the Prime Minister himself be completely credible with its information. If a cursory scan of the portal has immediately thrown up so many errors, surely there are plenty more hidden within the system.

Not only is the data inaccurate, and information lacking – no details of tender specifications, dates of tender and award, quantities, number of competitive bids and other relevant details, the contracts published in the system is not even complete!

1.Only 16 ministries out of 26 ministries have any contracts posted on the portal. 10 Ministries – Transport, 'Energy, Green Technology & Water', Plantation Industries & Commodities, Natural Resources & Environment, Agriculture, Domestic Trade & Consumer Affairs, Housing & Local Government, 'Women, Family & Community Development' and Foreign Affairs have not made public any contracts which have been awarded by the Ministry.

2.But even for the Ministry's with published contracts, they are by no means complete!

a)The Ministry of Rural and Regional Development has a budget of RM2.64 billion for purchase of goods, services and assets in 2009, but only RM15.3 million has been disclosed for expenditure since June 2009. That accounts for less than 0.6% of all purchases.

b)The Prime Minister's Department itself has a budget of RM11.2 billion for purchases of goods, services and assets in 2009, but the total value of contracts disclosed since 2009 is only RM174.8 million, or 1.5% of the total expenditure.

c)Possibly only the Ministry of Works could be commended to have made any effort towards disclosing contract details for the entire budget for purchasing goods, services and assets for 2009 was RM3.31 billion, while the total value of contracts published was RM3.78 billion. However, given the the published figures were only for contracts awarded from June 2009, it raises the obvious question as to whether the are more “decimal place” errors in the system.

I've even been made to understand that certain Ministries have objected vehemently to publishing information on certain types of contracts, for reasons possibly best explained by the Prime Minister himself.

By not being transparent and not publishing all contracts which have been awarded by the Government, it will be impossible for Malaysians to determine if the Government has been fair and judicious in the award of its contracts. On the other hand, the failure to publish complete details of all contracts will only lead to increased suspicion that the Government has plenty to hide, and has no political will to wipe out wastages, inefficiencies and corruption associated with rent-seeking and patronage.

If by publishing such inaccurate, insufficient and incomplete amount of contracts and data, the Government hopes to convince intelligent Malaysians that it has successfully transformed itself to be open and transparent, then it is sadly mistaken.

We call upon the Minister in-charge of the Government Transformation Programme, Tan Sri Koh Tsu Koon to save the Government from further embarrassment by taking down the portal immediately and re-launch it at a later date only after cleaning up the data with a fine-tooth comb and including all contracts awarded by all Ministries in the system. Otherwise, it makes a complete mockery of the Prime Minister's promise of “performance now” to all Malaysians.

Friday, April 09, 2010

EPF/MRCB Insider Trading?

The Prime Minister, Datuk Seri Najib Abdul Razak had on 30 March announced the joint venture by the Government with the Employees Provident Fund (EPF) to develop a 3,000 acres piece of land belonging to the federal government. It was subsequently speculated in the financial press that Malaysian Resources Corporation Bhd (MRCB) will be appointed by the joint venture as the master developer for the project.

I had on 31st March 2010 issued a statement questioning the project was being awarded to MRCB when it had problems with its recent fund raising exercise where “EPF had to buy up 171.4 million shares at RM1.12 each worth RM192 million which were not taken up.” This information was quoted from a Business Times report dated 4 March 2010 which had mentioned that “EPF exercised its rights to buy 171.47 million rights shares not taken up”.

MRCB has since corrected this information as reported in The Financial Daily yesterday, that “its rights issue exercise was a success” where there was actually 74.9% oversubscription of the rights to new shares.

This correction does not however answer the question as to why MRCB will be awarded the project directly without any form of open tender by the Government, in order to ensure the best design and development proposal to deliver the maximum value for the Government and EPF.

The clarification by MRCB however, raises the additional question of transparency and good corporate governance in the rights issue exercise.

At the point of the rights issue on 4 December 2009, EPF had a 30.6% stake in MRCB.

Since the rights issue was oversubscribed by 1.74 times as disclosed, EPF should have at best maintained its percentage ownership of MRCB with a 30.6% allocation of rights issued.

However, EPF was for one reason or another, allocated disproportionately a higher percentage of rights issued (171.47 million of 455.39 million, or or 37.7% of the rights issued), which had resulted in EPF owning 33.78% of MRCB.

Under the takeover rules, once an investor has more than 33 per cent of a listed company, it must make an offer to buy the remaining shares. Hence, EPF was “forced” to make a general offer to purchase all shares of MRCB at the price of RM1.50 per share on 4 Mar 2010.

EPF had in fact continued to actively purchase shares from the open market since and has increased their stake in MRCB to approximately 41.5% as of 29 March 2010.

It is hence clear now that the rights issue had been an exercise intended and engineered to allow EPF to increase its stakes in MRCB, including via the general offer which was made.

While the above may have appeared “above board” under normal circumstances, the fact that the Prime Minister announced the 3,000 acres mega-development joint venture project with EPF which is touted to appoint MRCB as the master developer on the 30 March 2010 throws up the very obvious question of insider trading on the part of EPF in the entire exercise above.

Bursa Malaysia defines “insider trading” as the purchase or sale of a companies shares effected by a person with knowledge of relevant but non-public material information regarding that company. The insider is in a position to make massive gains by selling or buying shares before information that might affect the share price of the company's shares is made public.

In fact, after the Prime Minister's announcement, the share price of MRCB spiked immediately from RM1.50 (29 Mar) to RM1.59 (30 Mar), RM1.65 (31 Mar) and RM1.69 (5 Apr) or a 12.7% gain to date. The most recent HwangDBS equity report dated 5 Apr 2010 on MRCB had upped its 12-month target price from RM1.80 to RM2.25, quoting the project as “the most lucrative land deal”.

It would be completely ridiculous for EPF to make any claims that it had no prior knowledge of the 3,000 acre joint venture project announced by the Prime Minister. Discussions on the above joint venture must have been concluded well before 30 March, for the “rumours” of the project being awarded to EPF and MRCB has been circulating in the financial circles since the end of 2009.

The fact that EPF and MRCB had engineered the exercise to enable EPF to acquire substantial additional stakes in the latter prior to the public announcement of the projects raises the suspicion of illegal insider trading and market manipulation to the disadvantage of other public investors.

We call upon the Securities Commission to investigate the above transactions without fear or favour to determine if the guilty parties should be prosecuted and criminal sanctions imposed under the Capital Markets & Services Act (CMSA) 2007 where one is punishable by imprisonment not exceeding 10 years or a fine not less than RM1 million. Civil suits may also be filed by persons who suffered losses caused by insider trading under the CMSA.

The failure of Securities Commission to investigate the above transactions will seriously jeopardise our efforts on promoting confidence and trust in Malaysia's capital market, and on helping the market to function efficiently based on adherence to internationally-benchmarked principles of corporate governance.

Thursday, April 08, 2010

MyProcurement: A Joke?

The MyProcurement Portal was launched by the Prime Minister, Datuk Seri Najib Abdul Razak with much fanfare last week. He said that “the move is to boost transparency and to prevent any corrupt practices in the awarding of projects and procurement.”

The new MACC chief commissioner Datuk Abu Kassim Mohamed was quick to add that “this is one of the things that the MACC has sanctioned and I believe it is a step towards increasing transparency in the Government’s acquisitions.”

I'm not sure if Datuk Abu Kassim did his homework, but a quick study of the MyProcurement portal will certainly leave one with plenty to be desired, for based information available often leads to more questions than answers.

Firstly, there is a question of data integrity within the MyProcurement portal and what steps are being taken to verify the information posted on the site. If the information on the portal is to be taken seriously, then surely the information posted must be accurate to ensure a high degree of integrity.

A quick check revealed that the largest contract awarded since June 2009 last year was for the amount of RM6.47 billion awarded to Syarikat Era Frozen Sdn Bhd by the Ministry of Defence. More curiously, the huge contract was for the supply of “rangsum segar” (a type of army food), which could have bought the Ministry 4 more submarines!. While the value of contract for food items would certainly raise eyebrows, I'd like to believe that there are some decimal point errors involved.

Furthermore, there are at least 38 awards amounting to RM182 million where there was no company name or company number provided. The question is how many other errors are there in the data? Hence without accurate and credible information, the MyProcurement portal will be of little use to the public.

Secondly, there is a clear lack of data available to make informed judgements with regards to a particular contract award. For example, a tender to supply and deliver “vest body protection (level III)” for the armed forces was awarded for RM82.8 million. The most basic question to ask, before any judgement can be even made is, what is the quantity requested. Without the quantity, one would not be able to know per unit price. In fact, the MyProcurement portal do not even provide basic useful information such as the date of tender, date of award, number of participants.

In Singapore, the Government e-procurement portal ( publishes not only all the above information, it even provides detailed information on the tender request with relevant attachments, a schedule of all competitive bids and the details of the successful bid. We hope that the Government will keep its promise of greater transparency and use the Singapore's GeBiz portal as a yardstick to measure our own achievements.

Finally and most disappointingly, Datuk Seri Najib Abdul Razak disclosed that contracts which have been awarded via direct negotiations will not be published in the Myprocurement portal. When queried by a reporter, he had sheepishly responded that “It will not because... very limited, because it is a security-related exercise.”

The biggest problems of the government's procurement system is the award of directly negotiated contracts for these contracts have are often awarded via patronage to rent-seekers, resulting in not only wastage and corruption, but also substandard and even failed projects.

The most recent example is that of the Shah Alam Hospital project which is now in deep after the project was awarded to Sunshine Fleet Sdn Bhd, a perfect example of an “Ali-Baba” contractor who subsequently subcontracted the entire project to subcontractors. The project which is already delayed will face further set backs as the current subcontractor, GMH Healthcare is now in a serious legal dispute with the main-contractor. This project was originally budgeted for RM300 million to be awarded via an open tender, but was in the end awarded via direct negotiations for a much higher RM482 million.

The Prime Minister has promised in his speech on the New Economic Model that “we can no longer tolerate practices that support the behaviour of rent seeking and patronage which have long tarnished the altruistic aims of the New Economic Policy.”

His “Government Transformation Plan” (GTP) Roadmap has also stated that “people in both public and private sectors are particularly sceptical of unnecessary projects, award decisions that are not made public or sufficiently justified, project delays, contract variations and concealment of substandard work.” The roadmap has called for all procurement contracts to be disclosed publicly, without making an exception for directly negotiated contracts quoting case studies from Singapore and South Korea.

Therefore Datuk Seri Najib's response towards publishing information of contracts which have been awarded without any tenders that they will not be made publicly available is most disappointing, and raises strong doubts as to whether he has the political will to carry out the necessary reforms to wipe out rent-seeking and patronage which is so entrenched in our government procurement system.

Wednesday, April 07, 2010

NEM: EPF Taking Excessive Risks?

The EPF must not take unnecessary risks which will jeopardise the hard-earned savings of 12 million ordinary Malaysians

The investment philosophy of the Employees Provident Fund (EPF) as stated on its website includes “prudence in carrying the duty to protect EPF members from the risk of investment loss” as well as the “priority of the EPF funds as a social security fund (not individual investment fund).”

The recent announcement of EPF's increasing investment role in the Prime Minsiter's “New Economic Model” (NEM) speech has raised increasing concerns over the increasing risk the EPF will be taking going forward.

It was announced by the Prime Minister, and confirmed by the EPF chairman that the Fund will be allowed to increase its overseas investments to 10% of its fund size over the next one or two years.

Datuk Seri Najib also declared that “the Government of Malaysia and the EPF will form a joint-venture to promote the development of 3,000 acres of land in Sungei Buloh into a new hub for the Klang Valley” leading to “over RM5 billion of new investments being made”.

While we do not wish to prejudge merits of the above measures, the recent actions by EPF in the investment scene and the recent announcements has raised eyebrows and concerns that the sizable pool of funds in EPF is either being made used of by the Government, resulting in higher and unnecessary risks.

As it is EPF equities investments has increased from RM46.9 billion in 2005 to RM93.9 billion in 2009. This represents a significant increase in allocation to equity from 18.0% to 26.5%. At the same time, EPF's fund allocation to the safest of instruments, the Malaysian Government Securities (MGS) has declined significantly from 39.2% to 27.5% over the same period.

The increase in equity investments is in part due to the takeover of Rashid Hussein Berhad and RHB Capital in 2007 which had cost EPF a whopping RM11 billion. Despite having recovered RM3.9 billion through the disposal of 25% of RHB Capital to Abu Dhabi Commercial Bank in 2008, the EPF has been unable to fulfil its promise to reduce its ownership to 45% by June 2009. Today, it still owns 56.2% as of today, and its share price is languishing at RM5.67, 21% below its intended sale price of RM7.20.

The EPF has also become somewhat like a buyer of the last resort for the Government's equity stakes in Government Linked Companies (GLCs). For example, as Khazanah needed to divest itself of its huge stake in Tenaga Nasional Berhad, 50 million of its shares were sold to EPF on the pretext of “increasing market liquidity” where in essence, there would have been no impact as it's a transfer from one government entity to another government-related one, except in this case, the EPF is funded by Malaysian workers. This transaction itself have cost EPF RM405 million.

In addition, the EPF has become a net buyer of PLUS Expressways while Khazanah is at the same time a net seller.

What is also notable, is the fact that EPF's “loans” portfolio has increased significantly over this period as well, increasing from RM94.36 billion (36.3%) in 2005 to RM145.75 billion (41.2%) in 2009. In part, this is related to a series of loans mandated by the Government such as a RM5 billion loan by EPF to ValueCap to invest in the stock market, as well as up to RM10 billion to Khazanah Nasional for the 2009 economic stimulus plan.

Now, with the joint venture proposal with the Malaysian government to develop the 3,000 acres of prime land in Sg Buloh, it appears as if the EPF will be over-stretching its limits as it will have little or no competency as a mega-property developer.

The EPF must not forget its primary role to protect the savings and retirement funds of ordinary Malaysians and as such its investments must by nature be conservative and income-based. The attempts over the past few years in increasing the risk undertaken will pose major challenges in the event of slow economic growth or further economic turmoil. In addition, the shift by EPF from being a passive portfolio investor to an active major shareholders in diverse industries such as banks and property development will without the necessary competencies will only result in sub-optimal investment returns or possibly losses requiring future government bailouts.

We call upon the EPF and the Government to maintain its core principles of good governance and prudence in the EPF, and not treat the RM360 billion in the Fund as easy pickings for the Government.

Tuesday, April 06, 2010

NEM: Favoured Deals Continue

The New Economic Model (NEM) announced by the Prime Minister, Datuk Seri Najib Abdul Razak has promised transparency and competition as its cornerstone.

He had announced that “to promote higher levels of economic investment, expansion and growth, several parcels of land in... Kuala Lumpur have been identified to be tendered out and developed by the private sector.”

However, at the same time, he announced that the “Government of Malaysia and the EPF will form a joint-venture to promote the development of 3,000 acres of land in Sungei Buloh into a new hub for the Klang Valley.”

Now it has been speculated that the project will be given to Malaysia Resoruces Corporation Berhad (MRCB), which will be appointed the master developer.

If it is true that MRCB will indeed be appointed the master developer of the mega 3,000 acres piece of prime land in Sungai Bulah, then it will run in direct opposite of what the Prime Minister had promised in the NEM. The joint venture with EPF and the appointment of MRCB raises the following questions:

  1. On what basis is EPF appointed as the joint venture developer for the 3,000 acres of land?
  2. On what basis is MRCB appointed as the master developer for the project?
  3. Why has there not been any open tenders for the project?
 When Singapore wanted to build two integrated resorts in Marina Bay and Sentosa with gross development value of S$4 to 6 billion each, they had called for an international bid to attract the best ideas and proposals. An initial 19 bids were received before about 5 proposals were shortlisted for each of the projects. A ministerial committee headed by senior ministers was set up to review the proposals in detail before they were finally awarded to Las Vegas Sands and Genting International.

The question is why is the Government favouring MRCB which itself was facing financial difficulties without any open bidding or proposals from the Malaysian or even international business community for a project which the Prime Minister has estimated will cost up to RM5 billion to develop.

Like the direct award of the proposed Malaysia's largest exhibition and convention centre by Matrade to Naza TTDI without any open tenders, the Government has once again shown that it is unwilling to let go of its policy to award sweetheart deals to crony companies without any transparency. This runs smack in the face of Datuk Seri Najib Abdul Razak's promise that “we can no longer tolerate practices that support the behavior of rent-seeking and patronage, which have long tarnished the altruistic aims of the New Economic Policy,” in his speech yesterday on the NEM.

Monday, April 05, 2010

Koh Tsu Koon Unable To Answer If He's "Malaysian First"

The President of Gerakan, a party known to be the "conscience of Barisan Nasional" was put under severe test in parliament last week. He was asked by DAP Parliamentary Opposition leader if he is a "Malaysian first" or a "Chinese first", in relation to the definition set out in the 1Malaysia Government Transformation Programme Roadmap, a project headed by Tan Sri Koh Tsu Koon himself.

Unfortunately, what is seemingly a straightforward question appears to be a most difficult one for Koh Tsu Koon as he was warned by the speaker twice from answering something different from what the previous Umno minister, Datuk Seri Nazri had answered in parliament while defending the Deputy Prime Minister, Tan Sri Muhyiddin Yassin who had declared that he was "Malay first, Malaysian second".

Watch the 5 minutes video to see it for yourself.

Thursday, April 01, 2010

Initial Comments on New Economic Model

The New Economic Model (NEM) reads like continuity, short on the much needed “transformation”

The much anticipated “New Economic Model” (NEM) which has been much touted as the key pillar for change by the Prime Minister, Datuk Seri Najib Abdul Razak has been announced this morning.

Unfortunately, with all the hype created prior to the announcement, interested Malaysians and foreign investors are set up for disappointment. This cannot be clearer than the report yesterday by Reuters, which said
“According to a draft of the plans seen by Reuters, there are no firm measures to be announced, just a raft of ambitions for growth and to re-orient the Malaysian economy to high-value services and to boost domestic investment and consumption...

Najib himself has promoted the NEM as a completely "new model" although many of the proposals such as shifting to an income based view of poverty from a race-based one have been around for years and were in the 9th Malaysia Plan.

Expectations that Najib will deliver a raft of privatisations that could cut the budget deficit are also likely wide off the mark.”
The report by Reuters could not have been more accurate. The language and content of the NEM have been couched in the same fashion. Among the most tangible plans highlighted in his speech were on the 8 Strategic Reform Initiatives which focused on “Re-energising the private sector to lead growth; Developing a quality workforce and reducing dependency on foreign labour; Creating a competitive domestic economy; Strengthening the public sector; Putting in place transparent and market friendly affirmative action; Building knowledge base infrastructure; Enhancing the sources of growth; and Ensuring sustainability of growth”

How different is the above and the bulk of his speech from the economic policy announcements by BN in the past?

In Tun Dr Mahathir Mohamad's last Budget speech 2004, he said
“We must persevere and stand up to face these challenges. We must enhance our sovereign competitive edge to enable us to compete with global players in the international market. This can only be achieved through increasing productivity, reducing the cost of doing business, acquiring technology and be more innovative. Efforts to improve the effectiveness of the public sector delivery system have contributed towards the efficient implementation of Government development policies and strategies. In addition, measures must be taken to effect a shift in the mindset of Malaysians to enable us to become more competitive.”
In Tun Abdullah Badawi's inaugural Budget 2005, he said
“In order to achieve greater success, there must be a transformation in the way we do things and we need to refocus on key strategic areas. The outdated work systems and legislation need to be revamped and a positive culture inculcated to improve competitiveness and position Malaysia to be at par with the developed countries.

“Moving forward, the Government intends to accelerate the transition towards a higher value-added economy. Priority will be given to developing products in new areas of growth. In this regard, domestic investments will be promoted while foreign investments will continue to be emphasised in selected and strategic economic sectors.”
And in Tun Abdullah Badawi's 9th Malaysian Plan 2006, he highlighted the need “to move the economy up the value chain”
“The Ninth Plan period will see changes in the structure and improved performance of the economy with every economic sector achieving higher value added and total factor productivity. New growth areas will gain in strength. Private sector investment will surpass the public sector in spearheading economic growth. The economy will become more centred on human capital, particularly with increasing competition from globalisation and progressive market liberalisation. Increasing the Value Added of Manufacturing, Services and Agriculture...
Clearly from the above, the NEM announcement today by the Prime Minister is less of a much-needed transformation, but more of a “continuity” to past policies.

The Prime Minister has chosen to break the announcement of NEM into 2 parts, the first today, and the “details” only in June. It is disappointing that the Prime Minister has only chosen to make a high-level policy announcement, after 1 year in power, when such a policy announcement which is short on specifics could have been made more than 6 months ago.

The market is expecting market-changing measures to reform and transform Malaysia's economy. The Prime Minister's speech today certainly failed to deliver the goods.

We welcome the Prime Minister's admission of rampant “rent-seeking” and “patronage” in the existing administration and his call to stamp out such practices. But the devil will be in the details, and if the lofty goals are not followed through with tough new policies on open tenders and transparency, then the NEM will fail to achieve its goals as per its predecessors, the National Vision Policy, the National Development Plan which were heirs to the New Economic Policy.

Muhyiddin's 1Malaysia Joke

I won't make any comments, but feel free to make your on judgements on this matter.

The Prime Minister, Datuk Seri Najib Abdul Razak has launched the 1Malaysia Government Transformation Programme (GTP) Roadmap with big fanfare. In fact, he spent RM2.7 million just launching this Roadmap, which you can download here (286 pages).

Inside this roadmap, the concept of 1Malaysia is actually defined very clearly. In fact, it's repeated twice on page 11 and page 69 of the document (English version), or page 16 and page 76 of the Bahasa Malaysia version.
The goal of 1Malaysia is to make Malaysia more vibrant, more productive and more competitive – and ultimately a greater nation: a nation where, it is hoped, every Malaysian perceives himself or herself as Malaysian first, and by race, religion, geographical region or socio-economic background second...
I could not agree and share the above goals more for I certainly see myself as Malaysian first, and Chinese second. Religion, geography and class don't even come into the picture.

DAP Parliamentary Leader, Lim Kit Siang posed the simple question to the Deputy Prime Minister, Tan Sri Muhyiddin Yassin, if he supports the Prime Minister's 1Malaysia as defined above. The response is below as quoted from the Malaysiakini report:
"I am Malay first, but being Malay doesn't mean I am not Malaysian," said Deputy Prime Minister Muhyiddin Yassin. He was responding to DAP leader Lim Kit Siang's challenge earlier today for him to state whether he is a Malay or a Malaysian first.

"He doesn't understand (what) the meaning of the concept of 1Malaysia is all about," Muhyiddin told a press conference in the Parliament lobby this afternoon.

"How can I say I'm Malaysian first and Malay second? All the Malays will shun me... and it's not proper," he said.
Who understands 1Malaysia, and who doesn't? What are the implications? Who's being taken for a ride? Hmmm....