Wednesday, July 28, 2010

Scrapping UPSR & PMR: Fait Accompli?

[My earlier statements on Examinations: "Scrapping UPSR & PMR A Good Move?" and "Academic Studies Support Retaining Examinations"]

Pua says government seems to have decided to scrap UPSR, PMR
By Boo Su-LynJuly 27, 2010

PUTRAJAYA, July 27 — The Education Ministry seems to have already decided to scrap the UPSR and PMR examinations though talks with stakeholders are still ongoing, said Petaling Jaya Utara MP Tony Pua today.

Malaysia Examination Board director Datuk Dr Salbiah Ismail had presented a proposal today on a replacement for the two public examinations.

“This showed that the ministry is taking active steps to work out a replacement for the exams,” Pua told reporters today after finishing his five-minute presentation at the second roundtable dialogue on the issue of scrapping UPSR and PMR.

“The position by the ministry seems that they are going to do it,” added Pua.

Salbiah’s proposal included creating an internal school assessment system and a guided methodology on how to conduct assessments up to the Form Five SPM level, as well as implementing “psychometric tests” on students’ emotions and character, said Pua.

Education Director-General Tan Sri Alimuddin Mohd Dom said last week that a report on the roundtable discussions would be submitted to the Education Minister by the end of August.

The ministry’s first official roundtable discussion took place on July 19, and was attended by over 120 educators, district education officers and teachers’ unions representatives.

Pua also expressed surprise when about 20 speakers at today’s roundtable discussion seemed to reject the scrapping of UPSR and PMR, contrary to past media reports showing that most parties generally supported the abolishment of the public examinations.

The National Union of the Teaching Profession (NUTP), the Sarawak Teachers’ Union, the West Malaysia Malay Teachers’ Union, and education academics reportedly favoured replacing the two public examinations with school-based assessments.

“Hardly anyone voiced direct support of [scrapping] UPSR and PMR,” said Pua, adding that about 20 out of the 40 scheduled representatives had spoken before him.

Pua noted that representatives from the Barisan Nasional (BN) parties like Umno Youth, MCA, MIC and Gerakan voiced reservations against abolishing the two public examinations.

The DAP is also against scrapping the UPSR and PMR examinations and claimed yesterday that students performed better when subjected to public examinations as shown by international research.

“They (academics) had reservations too,” said Pua, adding that representatives from universities like the Selangor Industry University (Unisel) and the Sultan Idris University of Education, as well as former civil servants of the education ministry were present at today’s dialogue.

“A lot of their reservations were expressed on the ability of teachers to cope in a non-standardised environment,” he added.

The Petaling Jaya Utara MP also said academics were concerned that a school-based assessment system may be prone to abuse as headmasters and teachers could manipulate student scores.

Tuesday, July 27, 2010

Net Foreign Investment Outflow Is No "Blip"

Pua tells Nazir to study report on FDI

PETALING JAYA, July 27: DAP economist Tony Pua has responded to CIMB chief Nazir Razak's claim that the plunge in foreign investment was not necessarily negative, saying Nazir should look into details provided by the UN's Foreign Investment Report (WIR) 2010 before giving his judgement on the country’s performance.

“Nazir should study this chart; (it) tells you that net negative investment flow is not 1-off but a clear-cut trend,” said Pua in a message on Twitter.

He was responding to media report quoting the top banker as saying it was not necessarily a bad thing to have lower net investment flow for the country, and urged that the 2009 plunge in Malaysia’s foreign direct investment be studied carefully before jumping to conclusions.

Nazir’s optimism was not shared by Pua, who said the data clearly showed that the trend of both local and foreign investors existing Malaysia for overseas was unmistakable as the country had been suffering from a steady outflow of FDI over the past decade based on the chart.

Pua, however, said Nazir was probably only responding to a question.

“To be fair, Nazir probably didn't see the full data. Bernama just asks him off the cuff,” wrote Pua, who is also the Petaling Jaya Utara member of parliament.

Referring to the chart, Pua pointed out that not only foreign investors had been unwilling to invest in Malaysia, both local investors and foreign investors have a total lack of confidence in the ability of the country's economy to generate an attractive return for their investments.

This contributed to a decline in FDI from US$2.56 billion in 2004 and US$1.09 billion (2005), to a net negative US$0.02 billion (2006), negative US$2.7 billion (2007) and negative US$7.67 billion in 2008.

“The figures show clearly that there is money to be invested, they are just not investing in Malaysia. The investors now see improved and better opportunities in the region and abroad even during the times of crisis,” he said.

Pua also warned that if there were no necessary and critical changes to the Government's economic policies, the economy would continue to drift and shunned by local and foreign investors, while neighbouring countries would steadily improve their economies beyond the nation’s reach.

Monday, July 26, 2010

Foreign Direct Investments: What Happened to Malaysia?

The recent release of World Investment Report (WIR) 2010 by United Nations Conference of Trade and Development (UNCTAD) provided a picture that is nothing short of grim and ugly for the Malaysian economy especially in its attractiveness as a local and foreign investment destination. While the headline 81% drop in foreign direct investment (FDI) from US$7.32 billion to US$1.38 billion can be brushed of as a 'blip' due to a global financial and economic crisis in 2008-2009, a more in-depth study reveals that it was certainly not a one-off.

Our country's leadership should instead heed the loud alarm bells the data presented to prevent our economy from drifting aimless to a point of no return. The UNCTAD WIR 2010 data revealed five firsts for Malaysia:

1. For the first time ever in history, Malaysia attracted less investment than the Philippines.

Malaysia has lost out to Thailand in FDI for the very first time in 1998 while Indonesia exceeded us recently for the first time in 2005. Vietnam on the other hand, beat us in FDI for the very first time the year before, in 2008. While we have come to accept Thailand, Vietnam and even Indonesia as having gained competitiveness against Malaysia in recent years, we are suffering ignominy of attracting lower FDI compared to the Philippines for the first time ever in history. The Philippines attracted US$1.95 billion in FDI compared to Malaysia's US$1.38 billion.

Among Southeast Asian nations, we are now only attracting more FDI than Cambodia, Myanmar, Brunei, Laos and Timor-Leste. And for the first time ever, what was previously unimaginable that we may one day be compared to countries such as Cambodia and Myanmar is now a real possibility.

2. Compared to the previous year 2008, Malaysia suffered by far the biggest decline of FDI in Southeast Asia

The global financial crisis has resulted in sharp declines in FDI for many countries in this region, especially given the region's reliance on investments from the United States and Europe. However, the Government cannot use the excuse of the crisis as the reason for the precipitous drop in FDI as we have performed the worst compared to all other countries big and small in the region.

While many of our regional competitiors suffered declines in FDI last year, none of them came close to what we experience. Thailand, Vietnam and Indonesia's FDI declined by 30.4%, 44.1% and 44.7% respectively, those figures are by far healthier when compared to Malaysia's 81.1% drop. This was despite the fact that Thailand was facing a year-long political upheaval while Vietnam was mired in a currency crisis.

On the other hand, Singapore, Brunei, Philippines and Myanmar still managed to register positive growth although for Singapore, the bulk of its decline in FDI was registered in 2008 which accentuated its improvement in FDI in 2009.

3. Malaysia was the only country in Southeast Asia to have register a net negative Foreign Direct Investment Flow

The WIR 2010 presented data for both the amount of FDI a country receives as well as the amount of FDI which originates from a country that was invested overseas. Out of all the countries in the region in 2009, Malaysia was the only country where our outflow of FDI amounting to US$8.04 billion is substantially greater than the FDI of US$1.38 billion received. All the other countries in the region had a net positive FDI flow in 2009.

4.For the first time ever, cumulative Outward FDI Stock exceeded cumulative FDI Inward Stock

For the first time ever the amount of foreign direct investment flowing out of Malaysia accumulated over time amounting to US$75.62 billion, or the “Outward FDI Stock” has exceeded our cumulative foreign direct investment coming into the country, which amounted to US$74.64 billion.

The trend of both local and foreign investors voting with their feet to seek greener pastures overseas is unmistakable when we look at the fact that Malaysia has been suffering from increased trend of FDI outflow over the past decade, as show in the chart above.

The above chart shows clearly that not only are foreign investors unwilling to invest in Malaysia, our own local investors as well as foreign investors who are already in the country have a total lack of confidence in the ability of our economy to generate an attractive return to their investments. Our net FDI flows have declined from US$2.56 billion in 2004 and US$1.09 billion (2005), to a net negative US$0.02 billion (2006), negative US$2.7 billion (2007) and negative US$7.67 billion in 2008.

The figures show clearly that there is money to be invested, they are just not investing in Malayisa. The investors now see improved and better opportunities in the region and abroad even during the times of crisis.

5. Barring a “blip” in 2001 when we attracted only US$0.55 billion in FDI, this is the first time we've attracted less than US$2 billion in FDI over the past 20 years

Looking at the FDI data over the past 20 years, Malaysia has shown an inability to grow its FDI while our neighbours are generally trending upwards in their ability to attract FDI. This is a reflection of our stagnating competitiveness while our neighbours continue to consistently increase theirs.

Finally, when we compare ourselves against our regional peers, it is a picture of increasing bleakness. Despite outperforming Thailand consistent in the 1990s and before, the last time we exceeded them in FDI was back in the year 2000, which means they have already beaten us for 9 consecutive years.

While Indonesia beat us once in 2005, they've now repeated the feat 2 years in a row in 2008 and 2009. ASEAN rising star, Vietnam has also done the same by attracting more FDI compared to Malaysia over 2008-2009. This is shown in the comparative chart below.

What New Economic Model?

While the proposed “New Economic Model” (NEM) by the Prime Minister Datuk Seri Najib Abdul Razak has correctly identified some of the fundamental problems with our economy which has led to our fall from grace, as well as proposing some key measures to restructure our economy, he has repeatedly backtracked from the NEM and shown little political appetite to implement the critical policies which will lead to improvements and greater competitiveness in our economy.

Datuk Seri Najib has since described and relegated the NEM to merely a “trial balloon” and backtracked from his commitment that affirmative action will be implemented by needs and not by race by reinstating the 30% bumiputera quota target in the 10th Malaysia Plan. The recent spate of privatisation projects have also not seen any political will on the part of the Government to implement open, transparent and competitive tenders, including the RM628 million construction of Malaysia's largest exhibition and convention centre, the development of the 3,000 acres of prime land in Sungai Buloh as well as the proposed major redevelopment of the old Sungai Besi airport into the KL Financial Centre.

Even the highly anticipated RM46 billion Mass Rapid Transit (MRT) project for the Klang Valley looks all but awarded to a Gamuda-MMC consortium without any open competitive tenders.

What is worse, despite Datuk Seri Najib's repeatedly insisted that the era where “the government knows best” is over, his administration continues to crowd out private investments by direct awarding mega-projects to government-linked entities such as the Sg Buloh land to an Employee Provident Fund joint venture with the Government or the Sg Besi airport redevelopment to the 1Malaysia Development Fund.

Without these necessary and critical changes to the Government's economic policies, the Malaysian economy will only continue to drift away from the radar of both local and foreign investors as our Ministers continue to indulge in their daydream of glory and success, while our neighbours will steadily and consistently improve their economies beyond our reach.

Sunday, July 25, 2010

Nik Ali: "An Exemplary Officer"

Najib's defence of Nik Ali smacks not only of double standards, it's a signal for senior government officials to continue to refuse cooperation with Pakatan led state governments

Both the Prime Minister Datuk Seri Najib Abdul Razak and the Deputy Prime Minister Tan Sri Muhyiddin Yassin have jumped into the fray in the Penang Pakatan Rakyat government's battle against “little Napoleons” in the civil service by choosing to defend the “little Napoleons” and ignoring their outright transgressions.

Tan Sri Muhyiddin has claimed that the Cabinet finds nothing wrong in the actions of Penang state development officer Nik Ali Mat Yunos who has not only demonstrated open defiance against the state government but has also demonstrated his political impartiality by conducting press conferences under the auspices of Umno.

In Miri, Prime Minister Datuk Seri Najib Razak said the cabinet regretted and found unacceptable the action taken by Lim in degrading the honour of a federal officer, but failed to highlight the fact that it was Nik Ali who first publicly called the Chief Minister Lim Guan Eng “biadap” or insolent.

In fact, Tan Sri Muhyiddin went to the extent to call Nik Ali “an exemplary officer” and saw “no case of insubordination”. Similarly, the Chief Secretary to the Government has reiterated that “no action will be taken against Nik Ali”.

The above prejudicial comments by both the PM and DPM demonstrate clearly that the Barisan Nasional federal government is using the civil service “little Napoleons” to make life difficult for the Pakatan Rakyat state governments to serve their own political interests.

The actions of the PM, DPM and the Chief Secretary sets a dangerous precedent as they serve as an endorsement of recalcitrance by these “little Napoleons” as well as clear encouragement for them to commit such acts towards the Pakatan Rakyat-led state governments.

The Barisan Nasional (BN) leaders are unable to accept the situation where a government founded on “competency, accountability and transparency” will outstrip the performance of BN and have instead chosen to inculcate “little Napoleons” in the civil service to sabotage state policies which serves to benefit the rakyat.

Datuk Seri Najib has also clearly went against his own mantra of “people first, performance now” whereby it is clear in this case that despite Nik Ali's non-performance, he received sky-high praises from the top leaders of the BN government for playing politics with the Pakatan Rakyat leaders. Instead of choosing people first, and rewarding civil servants who serve the interest of the rakyat, the BN government is now focused on getting an impartial civil service to serve BN's own political interest.

The Pakatan Rakyat state governments have no beef with the Malaysian civil service and we have worked well with many top civil servants who have given outstanding performance in the delivery of our policies. However, the Pakatan governments will not tolerate the presence of “little Napoleons” whose only roles are to serve their own personal interest as well as that of Umno and BN.

The continued presence of and encouragement given to these “little Napoleons” will only result in continued leakages, corruption and inefficiency in the government delivery mechanism, and will turn away precious local and foreign investors who will see no practical changes with the Government despite the implementation of the “New Economic Model”.

Saturday, July 24, 2010

Umno Cronies Pocket Hurt

Umno offensives against the Selangor state government caused by Umno cronies who could no longer line their pockets

The Umno Selangor leaders such as Datuk Seri Dr Mohd Khir Toyo and Datuk Noh Omar who are trying to outdo each other in maligning the Selangor state administration over some of its key policies. Even the Deputy Prime Minister, Tan Sri Muhyiddin Yassin has put his foot in, accusing the state of mismanagement especially with regards to the issue of sand mining and the provision of water services in Selangor.

Their motivations cannot be clearer when one doesn't see any Umno leader berating Datuk Abdul Ghani Othman's Johor administration where the worst cases of illegal sand-mining and sand-smuggling occurs despite the fact that these issues have been widely highlighted by the media.

What is more, Tan Sri Muhyiddin Yassin had the cheek to tick off Selangor Menteri Besar, Tan Sri Khalid Ibrahim over his determination maintain water tariffs and improve the quality of water services in the latter's dispute with SYABAS, a subsidiary of Umno-linked Puncak Niaga Holdings Bhd. This is despite the fact that his the Deputy Prime Minister's own home state of Johor had suffered the highest water tariffs in the entire country post-water privatisation, while at the same time having to endure severe water shortages rationing in major townships such as Kluang and Batu Pahat as recent as months ago.

The reasons for the above are crystal clear. The determination of the state government to reduce patronage and corruption, maximize government revenue and to improve the quality of public services without increasing the financial burden of the rakyat is hurting the pockets of the Umno cronies in Selangor who are used to the ways of Barisan Nasional.

The Selangor state government vehicle, Kumpulan Semesta Sdn Bhd (KSSB) today manage the issuance of permits for sand-mining in the state. For every sand mine, genuine operators obtain their permits via open tenders or requests for quotations where direct negotiations are no longer entertained. As such, “Ali-baba” licensees under the previous regime who reaped easy profits by securing the permits via patronage and subsequently subcontracting the actual mining work for quick and easy profits are no longer viable as they'll either be disqualified or outbidded by genuine operators. This has obviously attracted a fair and vocal share of detractors who are critical of KSSB as the new system is now more competitive and transparent.

In addition, more stringent processes and enforcement has resulted in lower leakages via under-declaration of sand mined, and consequently increased the revenues of the state government by leaps and bounds. In fact the total royalty and profits before taxation accrued to both the state and its subsidiary, KSSB have increased from RM4.39 million in 2007 under BN to RM8.17 million or by 86.1% in 2008, under Pakatan Rakyat's 9 months of administration. This increased further to RM13.76 million or a phenomemal 213% in 2009. For the first half of 2010 alone, the state has already collected RM15.3 million or on track towards achieving 500% increase for the full-year. See Chart 1 below for details.

Chart 1: Royalties collected by Selangor for sand-mining 2005-2010

The figures speak for themselves, which are a result of a competent, accountable and transparent state administration. The rising income has been used to finance the state government's welfare schemes for the people.

Similarly for the water issues harped by Tan Sri Muhyiddin Yassin and more recently by Datuk Noh Omar, Tan Sri Khalid Ibrahim has remained steadfast in refusing to cow to the arm-twisting tactics of Umno-linked Puncak Niaga Holdings Bhd, backed by the Umno-led Federal Government. The latter entities have sought to substantially and unreasonably increase water tariffs by up to 37% for Selangor consumers and have to date refused to accept the state's proposal to consolidate the water industry which will result not only in lower tariffs but also better quality services. Instead they chose to attack the state administration of mismanagement of water resources just because the state offers 20m3 of water for free monthly to assist to poor and needy in the state.

The Deputy Prime Minister, Selangor Deputy Liaison Chief, Datuk Noh Omar and Selangor Opposition Leader, Datuk Seri Mohd Khir Toyo are clearly acting as the angry voice of the Umno cronies in an attempt to destabilise the state government and take revenge for Pakatan Rakyat policies which put the welfare of the rakyat first.

Tan Sri Muhyiddin should instead tell the party's cronies that they could no longer expect free lunches and easy money, but instead get rid of their “subsidy mentality” of expecting handouts from the Government. After all, if the rakyat are expected to stomach the multiple price hikes due to subsidy cuts, then surely the Umno cronies who have profited lucratively all these years can perhaps learn to be competitive for once.

Saturday, July 17, 2010

Koh Tsu Koon Lives in Parallel Dimension?

The Government yesterday 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%. In fact for white sugar prices, inclusive of a 20 sen hike in January on top of the current 25 sen hike, prices have increased by more than 31% this year alone.

It is hence shocking to hear the Prime Minister, Datuk Seri Najib Abdul Razak, supported by the Performance & Management Delivery Unit (Pemandu) claim in their subsidy rationalisation fact sheet that the price increases will have “minimal impact” on households in Malaysia.

In the fact sheet, it's “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.

The impact on other popular items such as roti canai was stated as being 0.24 sen per piece, 0.6 sen for rice, 6.3 sen for meat per kg and 1.05 sen for mee goreng.

Pemandu under the chairmanship of the Minister in Prime Minister's Department Senator Tan Sri Koh Tsu Koon must be living in a parallel universe for having 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.

I challenge Tan Sri Koh Tsu Koon to find me a mamak stall in Malaysia which will increase the price of teh tarik by a mere 1.55 sen or the price of roti canai by a minute 0.24 sen in the entire country to prove the “minimal impact” of the latest round of 5-in-1 price increase.

Even anecdotal evidence of the previous price hikes have clearly demonstrated that prices will increase by a percentage much larger than the theoretical impact of the price hikes because of an real-world imperfect market. What's more, when the prices of fuel actually decreased subsequently, the inflated prices never returned to its previous levels.

The government should instead stop spewing these ridiculous and out-of-these-world hypothetical data but instead demonstrate how the Government will not only seek to trim the subsidies which affects the rakyat directly, but also the wasteful expenditure and subsidies to crony companies as well as clamping down on corruption which will have a much larger impact on government finances.

A People "Suffer" First Government?

The Prime Minister must prove to the rakyat that the “people first” slogan is not about increasing taxes and price, while reducing subsidies to the people first.

We would like to express our complete disappointment with the unequal actions taken by the Barisan Nasional government for prioritising the subsidies to the rakyat as the first expenditure to be cut as a result of fiscal deficits caused by the government's irresponsible and wasteful expenditures over the past decade.

We agree that some of the subsidies to the rakyat needs to be rationalised to ensure that the poor and needy receive a greater proportion of the benefits than the wealthy. However, the above should not be used as an excuse to victimise the people first without first taking concrete and visible actions to cut subsidies to large politically-connected companies or bloated expenditures for price-inflated projects.

The Prime Minister claims that even after the latest subsidy cuts, the government will still spend RM7.82 billion for fuel and food subsidies. However he fails to highlight the fact that Petronas will continue to provide subsidies to Tenaga Nasional (TNB), the independent power producers (IPPs) and the industrial sector, which was RM18.9 billion for its financial year ending March 2010.

Out of this amount, more than 40% or nearly RM8 billion goes to the IPPs. Unfortunately, most of the subsidies to the IPPs do not translate into lower prices of electricity for the users due to the unequal and unfair agreements which TNB was forced to sign with the IPPs. TNB has to not only purchase electricity from IPPs at prices much higher than what it could produce on its own, but it has also to pay for the total capacity of these IPPs, regardless of whether there is a demand or otherwise. Hence, there is an excess capacity as high as 50% today which is completely which has resulted in heavy subsidies for the IPPs, high prices of electricity for the users and massive profits for the IPPs.

The question to the government is, given the financial constraints that the government is facing, why isn't the government targetting the fat cats which are lynching off the tax-payers' hard-earned monies first, before attacking the livelihood of ordinary Malaysians?

The Government has also failed in other means to save money for the rakyat by continuing the practice of direct negotiations for large-scale privatisation contracts which often results in substantially higher prices and higher risk of project failure or further increases in cost. For example, the Government awarded the contract to build Malaysia's largest exhibition and convention centre at the cost of RM628 million to Naza TTDI Sdn Bhd without any tender, open or closed. The government has also awarded a 20-year, interest-free, unsecured and back-loaded RM320 loan to Syarikat Bekalan Air Selangor (SYABAS), a private company which will cost tax-payers more than RM250 million in interest.

The Government's lack of political will to tackle corporate subsidies and opaque procurement processes to politically-connected companies demonstrate without a doubt that it is failing to live up to the Prime Minister's slogan on “people first”, but has instead made the people the first to suffer from the Government's transgressions, incompetence and a serious lack of accountability.

Muhyiddin Must Explain RM240m 'Fishy' Bond Deal

Explain 'fishy' bond deal, Muhyiddin told
S Pathmawathy
Jul 15, 10 3:16pm

Opposition parliamentarian Tony Pua demanded an explanation from Deputy Prime Minister Muhyiddn Yassin on a government-supported bond that purportedly defaulted on payments.

Pua was referring to a report in The Edge Financial Daily today on a RM240 million government letter of support-backed bond issued by Malaysian International Tuna Port Sdn Bhd (MITP) that has landed in the courts for defaulting on payments last year.

The Batu Maung port was to be developed into a fully integrated fisheries port specialising in tuna by 2008; and Pua, who is the Petaling Jaya Utara MP, asked Muhyiddin whether he had approved the “fishy deal”.

“This is exactly like PKFZ (Port Klang Free Zone). The contractor comes in to get the concession agreement from the government, no money to finance, go to the bank, the bank doesn't want to lend and then appears a letter of support from somebody in the government to the bank to say that don't worry, the government backs this project, you can go ahead and lend money for this project.

“And now, the bond defaults. Multiple lawsuits. The question then, is the government going to pay for the bondholders? Who was the minister then? Muhyiddin Yassin (left).

“So the question to Muhyiddin is, did you approve this project? Did you approve this fishy deal? A RM240 million bond was issued, but now cannot pay, so who is responsible?” Pua demanded.

The business newspaper had reported that the Agriculture and Agro-Based Industries Ministry which was then under Muhyiddin had issued a letter of support through its statutory body the Fisheries Development Authority of Malaysia (LKIM), that LKIM would ensure MITP is in a position to meet its obligations to repay the bond.

According to Pua, MITP is 60 percent owned by a private company, Blindforce Sdn Bhd, and 40 percent by LKIM.

The letter of support acknowledged by the ministry's deputy secretary-general (development) Mohd Mokhtar Ismail and dated Oct 2, 2006 to OSK Trustees Berhad stated:

“MITP has to incur borrowings in order to implement this important national project. By virtue of this, we confirm the viability of MITP, including its ability to incur borrowings and repay which is critical to ensure the successful implementation and completion of the project as envisaged by the government through the concession agreement (for a 32-year period) dated Dec 16, 2004.”

MITP's Bai' Bithaman Islamic Securities (BAIS) facility of up to RM240 million for a tenure of 10 years was assigned a long-term debt rating of A+ID by Malaysian Rating Corporation Bhd (MARC) based on a letter of support issued by the ministry.

Quoting a statement by MARC, Pua said that their valuation of the bond when it was first released was that “this bond has been given an A+ rating incorporating a strong reliance on government support for the highly visible tuna port privatisation project based on a letter of support issued by the Agriculture and Agro-based Industries Ministry to back the rated obligations”.

Rating agencies 'not responsible for the accreditation'

Therefore, he urged Muhyiddin to take on his “ministerial responsibility” and hoped that the ministry officials will not be blamed for the acknowledgement.

“We believe this project would not have gotten through without the minister's complete involvement and knowledge. At this point in time, thankfully not the entire bond has been disbursed, only RM85 million has been disbursed.

“It's one of those hare-brained schemes LKIM comes up with now and then. (Before it was the) tiger prawn project in Langkawi (and) now (it) is tuna. I don't know what other projects they have in the books,” Pua (right) said mockingly.

He added that rating agencies are not responsible for the accreditation, as if they do not approve the letter of support it is akin to saying that the government is not credible.

“If there are too many letters around, maybe rating agencies will start doing that because they'll say this government (is not effective) whatever letters they issue cannot be regarded as honourable.”

Reiterating that this case was similar to PKFZ, Pua said that the “wording” of the letter of support issued to MITP is “stronger than that of the PKFZ letters”.

“I mean, just for a quick note, they always say in the last paragraphs, just like the PKFZ letters, 'this letter is strictly limited to points raised in 2a, 2a and there is no express or implied guarantee with regards to the borrowings of MITP'. If there's no guarantee then why would you write it in such a way?” he asked.

Citing attorney-general Abdul Gani Patail's statement on the PKFZ case, Pua said “if there is no guarantee then why write it in such a way, when you write it in such a way then the government must honour its obligations”.

“So we call for a complete stop to this sort of nonsense letters especially when it is written for a company with zero financial history, it is not backed by one of those super big public listed companies who are starting a new project. It's a brand new company backed by unknown investors,” said Pua.

Thursday, July 15, 2010

1st Year Anniversary: Justice for Beng Hock

Muhyiddin: People Will Accept Tariff Hikes

DPM Tan Sri Muhyiddin's Yassin is so completely out of touch with the Rakyat, making a complete mockery of the Prime Minister's call for a “people first, peformance now” government.

In responding to the various criticisms levelled at the Deputy Prime Minister on Monday by Pakatan Rakyat leaders with regards to his warning that “a water crisis is on the way” and the Selangor Government “will become bankrupt”, Tan Sri Muhyiddin has shown a complete lack of empathy for the man on the street, and instead cares only for the survival and profits of BN crony companies.

Tan Sri Muhyiddin claimed that "It is not an issue of cronyism ... If the (concessionaire) faces losses and closes down, you and I will not get water supply," resulting in Selangor, Putrajaya and Kuala Lumpur having to face “a severe water crisis”.

The Deputy Prime Minister has got his priority mixed up. If a private company like Syabas who is given and accepted a lucrative concession is unable to manage its finances and fails to deliver the services required under the concession agreement, then all the government will have to do is to find another party who can fulfil these services without burdening the rakyat with steep tariff increases. Both Gamuda as well as the Selangor state government have offered the better alternatives, but are completely shunned by the Federal Government. Tan Sri Muhyiddin is instead trying to protect the interest of Syabas.

What was most shocking was the Deputy Prime Minister's dismissive attitude towards the plight of the ordinary rakyat when he said he does not think that “consumers will protest if there is a substantial increase in water tariff, if this comes with clean water supply.” It is the Federal Government who has signed the concession contract with Syabas which allowed the company to raise tariffs by 37% in 2008, 25% in 2011, 15% in 2014 and 10% every subsequent 3 years.

The population in Selangor and Kuala Lumpur is already burdened with high and increasing cost of living coupled with stagnating income and yet, the DPM has the cheek to say that he does not think the consumers will protest substantial increases in water tariffs!

Tan Sri Muhyiddin instead continued to insist that Selangor's policy of giving 20m3 of free water per month to each household is the main cause of the state's water problems. He has obviously been ill-advised for the state is paying for the free water is financed by the profits derived from the state investment agency Kumpulan Darul Ehsan Bhd (KDEB)'s minority stakes in some of the state's water companies.

What was most telling was the Deputy Prime Minister's nonchalance over the fact that in his home state of Johor, where he was the Menteri Besar til 1995, has the highest water rates in the whole country post-privatisation.

The average water rates in water-rich Johor is 90sen and RM2.93sen per cubic metre for domestic and industrial consumption respectively, as opposed to 31sen and 94sen in water-scarce Penang. Despite that, major townships such as Kluang and Batu Pahat faced severe water shortage issues earlier this year.

His response was a most arrogant dismissive “the people of Johor did not complain”. Instead he continued to harp on the fact that the cost of water production in Selangor is rising and it is unfair to penalise the companies by not allowing the increase in water tariffs.

The rakyat of Selangor and Kuala Lumpur has suffered enough, a “people first, performance now” government would look for a solution which will reduce the burden to the rakyat, and appoint a company which is able to meet the quality targets. The Selangor government's water industry consolidation proposal does that, but the Federal government has instead chosen to ignore it to protect the interest of Umno cronies.

Wednesday, July 14, 2010

IRB to act against KDSB?

IRB to act against KDSB over tax arrears
By Clara Chooi July 14, 2010

KUALA LUMPUR, July 14 —The Finance Ministry announced today that the Inland Revenue Board (IRB) was taking “appropriate action according to the provisions in the law” against turnkey contractor Kuala Dimensi Sdn Bhd for failing to settle RM328.4 million in taxes.
Deputy Finance Minister Datuk Dr Awang Adek Hussin told Parliament today that the IRB had no provisionary powers under the Income Tax Act 1967 to confiscate assets or cash from KDSB, the key contractor in the controversial Port Klang Free Zone (PKFZ) project.

“However, the IRB is taking appropriate action according to the provisions in existing laws,” he said in his response to an adjournment speech by Tony Pua (DAP-PJ Utara) this evening.

In his speech, Pua questioned IRB’s apparent lackadaisical and carefree attitude towards KDSB by allowing it owe such a high amount in backdated taxes over the past 13 years.

“The IRB’s attitude has led to a lack of public confidence towards the government. It looks as if the government is partial towards companies owned by influential tycoons. Meanwhile, the common man who works hard to support his family is punished quickly by the IRB to prevent him from evading taxes.

“We hope that the IRB will take stern action quickly to collect these tax arrears from KDSB, including taking court action,” he said.

KDSB is owned by Bintulu MP and Barisan Nasional backbenchers club chairman Datuk Seri Tiong King Sing.

Pua further questioned why the board had not exercised its powers under the Income Tax Act 1967 to collect the tax arrears before any appeal or dispute was made.

“Why did the IRB not seek court intervention to confiscate the cash and assets of the KDSB, worth as much as RM932 billion, to settle the arrears?” asked Pua.

He pointed out that KDSB should be bound by Section 103A(2) of the act, which stipulates that “tax payable under an assessment for a year of assessment shall be due and payable on the due date whether or not that company appeals against the assessment”.

“This means that whatever the assessment made by the IRB should be paid by the individual or the company although the said party plans to appeal or dispute the amount quoted,” Pua asserted.

He said that on July 23, the IRB had produced a letter to the Port Klang Authority, ordering it to stop payment to bondholders in the troubled PKFZ project.

The IRB had then invoked the law to compel the PKA to act as a collecting agent and remit the RM328.4 million owed in outstanding taxes.

“But after an appeal was made by the PKA following protests from the bondholders, the IRB had on June 30, retracted its orders to the PKA.

“According to the KDSB chief executive officer Datuk Faisal Abdullah, the outstanding taxes in question came from came from accounts in the years 1997 and 1998.

“The KDSB further disputed the amount quoted by the IRB,” said Pua.

In his response, Awang Adek explained that KDSB had submitted its tax returned for the years 1996 until 2006.

“In the years 1996 and 1999, the KDSB was subjected to income tax, which it settled in full. For the other years, KDSB was not taxed as it reported high losses.

“For the assessment year of 2000, which is the waiver year, however, KDSB reported unusually high profits and the IRB found there were discrepancies in the information it was furnished. Due to this, the IRB initiated an investigation on the firm on Nov 1, 2007,” he said.

He added that the investigation showed that KDSB had under-reported its revenue and made unlawful expense claims under the act.

“However, the KDSB disputed our findings and failed to provide documents to prove its claims,” he said.

Awang Adek said that on June 18 this year, the IRB produced an additional assessment of taxes under Section 91 of the act, which amounted to RM328.4 million.

“Since this issue was brought up in 2010, the issue of the tax arrears for the past 13 years does not arise,” he said.

No To "Support Letters"

BN Backbenchers objection to eliminating the influence of “support letters” demonstrate the complete lack of political will to fight corruption and abuse of power

The fight against corruption is touted as one of the Prime Minister Datuk Seri Najib Abdul Razak's 6 National Key Result Areas (NKRA) and Pemandu under the leadership of Datuk Idris Jala has been tasked to ensure its success.

Hence under the “Government Transformation Programme” (GTP) produced by Pemandu, it has called for reducing the influence of “support letters” from politicians, and other influential figures on the civil service with the objective of “reducing leakages” from government procurement. This move has also the support of the Malaysia Anti-Corruption Commission. It says in the GTP document:
...Often, these interventions do not necessarily originate from politicians themselves, but from vested individuals who use the support letters as leverage to negotiate with the Government.
...Initially, we will issue a directive to the civil service that support letters and other associated forms of lobbying should not interfere with or circumvent our processes. The second phase will focus on issuing a directive to eliminate the practice of support letters. In addition, the Ministry of Finance (MOF) will follow up both directives with treasury circulars to all agencies and ministries to reject the content, and any associated recommendations and instructions, within support letters.
Datuk Idris Jala repeated his objective at the Second Annual Corporate Governance Summit 2010 last week by insisting that, “the recommendation letters [well-known figures, such as ministers and members of parliament] should not put undue pressure to bypass the policy of procurement.”

But now, we have BN backbenchers, and even the very Minister in-charge of the Anti-Corruption NKRA, Datuk Seri Nazri Aziz challenging this very principle.

A BN MP was quoted saying “How are the MPs going to help their constituents when they come about and ask for help, requests for getting into universities? Naturally they are frustrated and they want to help their constituents.”

Datuk Seri Nazri Aziz added “I’m in charge of the NKRA (National Key Results Areas) and I have gone through this. We have concluded that this is wrong... MACC and Idris are wrong (on this matter),” said Nazri.

The law minister told The Malaysian Insider that the practice of MPs using recommendation letters to help expedite matters for their constituents was an “age old” practice and insisted that it needed to be retained.

This is where it shows the complete lack of political will by Barisan Nasional to change, and to fight corruption, one of the biggest ills plaguing the country today.

Datuk Idris Jala and Pemandu did not call for the elimination of letters of appeal in support of constituents who are possibly in need of help and assistance from the government. Very clearly, he was calling for the stop in the practice by BN MPs and leaders who issue “support letters” rampantly for politically connected contractors to secure lucrative contracts with the government, from the local, state and federal government.

Such letters create leakages and wastages in our government expenditure as our civil servants are put in the uncomfortable position of having to “please” the big shot, despite it possibly not being in the best interest of the Government,. Such a practice also encourages corruption and political kickbacks for the politicians and Ministers who issue such letters as the letters are worth more than its weight in gold.

We have even seen how such letters, such as the one written by the former Minister of Transport, Tan Sri Chan Kong Choy whose letters of support to Kuala Dimensi Sdn Bhd (KDSB), owned by Barisan Nasional backbenchers' chairman Datuk Seri Tiong King Sing resulted in the Government having to bear the burden of guaranteeing the RM3.6 billion of loans issued to KDSB.

The DAP fully supports Pemandu's call for the letters of support to be eliminated and to quote Datuk Seri Idris Jala, “if the letter says 'please consider', then, it should be taken as 'please consider' and not as a must.” In fact, we would like to go further in calling upon the government to immediately stop the practice of any letters of support for procurement contracts to demonstrate the Government's commitment to its war against corruption, failing which all the beautiful text written in the GTP are just purely rhetoric proving that the Barisan Nasional has no ability to change.

Monday, July 12, 2010

Syabas: Muhyiddin to the Rescue!

DPM Muhyiddin should drop the pretense of supporting UMNO crony, Syabas who is facing major financial troubles, by blaming the Selangor state government

The Deputy Prime Minister Tan Sri Muhyiddin Yassin yesterday warned that “a water crisis is on the way” and because the Pakatan Rakyat state government offered free water to the rakyat, “they are running into a huge deficit, a huge debt”.

Tan Sri Muhyiddin went further to slam Selangor Menteri Besar of “ill-management” claiming that Tan Sri Khalid Ibrahim “does not know about managing the state government. If there are no resources to fund the payment to the water concessionaires, Selangor will become bankrupt.”

Tan Sri Muhyiddin's outburst is clearly a ill-disguised attempt at supporting and protecting Syabas, who together with its parent company, Puncak Niaga Holdings Bhd is facing serious financial problems, including bonds amounting to more than RM6 billion and outstanding debts to water treatment plants amounting to hundreds of millions.

The Deputy Prime Minister obviously got his fact wrong for the “free water” is financed almost totally from profits arising from its minority interest in the water companies such as SPLASH and ABASS via the state's wholly-owned subsidiary Kumpulan Darul Ehsan Bhd (KDEB).

The Selangor state government, despite the “free water” subsidy of RM120 million per annum has been able to maintain a balanced budget because the government was able to save its money through its prudence, as well as the reduction of corruption. Hence unlike the Federal Government who is mired in huge deficits, the Selangor state is in no danger of bankruptcy.

We should instead ask the Deputy Prime Minister, why did the Barisan Nasional Federal Government, together with the then BN Selangor Government sign such an unfair privatisation agreement with Syabas, allowing them to increase water tariffs at ridiculous rates of 37% in 2008, 25% in 2011, 15% in 2014 and 10% every subsequent 3 years from then onwards? Why did BN sign an agreement which sought only to enrich Umno cronies, and impoverish the rakyat?

Despite the fact that Syabas had breached various terms of the concession agreement, if not for the fact that Pakatan Rakyat won in the last general elections, the company would have enjoyed substantial increase in tariff rates, reaping lucrative profits as a result.

The Federal Government instead of looking after the interest of the rakyat, has chosen to provide Syabas with a RM320 million 20-year back-loaded unsecured interest free loan which will in turn cost the Government at least RM240 million in interest payments to banks and bondholders. We'd like to ask Muhyiddin why is the Federal Government using the tax-payers' monies to bail-out and subsidise a private company?

While Syabas is clearly in trouble, the Selangor government has offered to acquire and consolidate the water industry in the state which will result in lower water prices while maintaining the free water policy, the Federal Government has chosen instead to oppose the exercise. Instead, the Federal Government chooses to maintain support to Syabas and Puncak Niaga to control the state's water industry, for no reason other than to help the BN cronies.

What's completely laughable was Tan Sri Muhyiddin's attempt to demonstrate his experience with water management, “the costs of maintaining the processing of water is too high. I was the Johor Mentri Besar once, I know how much it can cost, up to RM20 million a year (during my time).”

Unfortunately, his legacy in Johor resulted in the privatisation of the water company and today, Johor has one of the highest, if not the highest water tariff rates in Malaysia! The Deputy Prime Minister must be so proud.

We call upon the BN government to allow and support the Selangor government's initiative to consolidate the industry under the state, which will not only save Syabas from its agony, eliminate the need for the Federal Government to give interest free loans and most importantly allow the people of Selangor and Kuala Lumpur to enjoy improved water services at lower prices.

Sunday, July 11, 2010

SPR Selangor Should Stop Giving Excuses!

I had on 16 June issued a complaint to the press that the appointed assistant registrars to carry out voter registration exercises by the party are facing a lot of difficulties in obtaining the official voter registration forms from the Selangor EC office.

The matter came to a head in early June where some of our assistant registrars had to leave the EC office empty-handed, due to the lack of forms. Even when they were able to obtain forms, there were limited to a 50 to a maximum of 100 forms, which becomes a major hassle for some of our active registrars who may register more than 200-300 new voters a week.

They were informed by the SPR officials that there was a “shortage” of forms as they have allocated only 1,000 forms for all political parties for the month of June. We had found this to be extremely unreasonable, as our counterparts in many of the other states do not face any of these problems.

Last week, Bernama reported that the Selangor election director Dzulkifli Ab Rahman said from January to June this year, 11,150 voter registration forms had been given to the DAP.

"However, the DAP has only returned 8,733 forms (78.3 per cent) which means 2,417 forms (21.7 per cent) are still with the party," he said in a statement today. “The statistics clearly show that there was no shortage in form distribution to the DAP for the first six months of the year,” he added.

The statistics is highly misleading because even if accurate:

  1. We have a total of 22 assistant registrars in Selangor, and 2,417 forms averages to less than 110 forms per registrar. It is more than reasonable to expect these registrars to have blank forms in hand at any point of time to conduct voter registration programmes, or possess completed forms which have yet to be submitted to EC.
  2. The Selangor Election Director fails to take into consideration spoilt forms as there is going to be a significant percentage of forms which were completed wrongly and hence will not be returned to the EC.
  3. Most critically, he has failed to consider the fact that most of our registrars would conduct stringent checks on each completed form to ensure that they were really “new voters” and not voters who are already registered. This has ensured that submissions by the DAP assistant registrars has the lowest reject rates among all political parties at only 8%. Forms which were completed during a registration campaign, but was subsequently found to have been filled by an already registered voter would also not be returned to the EC.

Therefore based on the above reasons, the Selangor Election Director's argument that DAP has abundant forms in its possession is completely inaccurate.

Dzulkifli has however failed to answer additional questions which were posed to the Selangor EC earlier.

  1. Why was it that some of our assistant registrars were not given new forms earlier in June, especially before we made our complaint public? Why must the EC restrict the number of forms which can be given to the assistant registrars at any one time to not more than 100, even if a major campaign is being organised by the party to register new voters? Why should these forms be restricted when there is no room for abuse, and that they are to be given free in the first place?
  2. Why is it that despite having submitted names to replace some of our inactive assistant registrars since the end of 2009, they have still not been replaced in order to ensure that there are more active assistant registrars to register more than 780,000 yet-to-be registered voters in Selangor?
  3. Why is it that despite having indicated to use in January this year that the Selangor SPR will appoint more political party assistant registrars, up to 2 for every state constituency, there has been no further development over the past 6 months?

The Selangor EC should stop giving excuses on its attempt to create inconveniences for assistant registrars from political parties from Pakatan Rakyat. Instead, its officers should go all out to assist our registrars to ensure that as many Malaysians as possible, regardless of race, creed or political affiliation gets registered to exercise their constitutional right to vote.

The efforts of political parties to register voters given the EC and the Government's refusal to automatically register voters must instead be appreciated and given all the necessary encouragement as we are doing the work on behalf of the Election Commission.

Saturday, July 10, 2010

Optimistic Growth or Slow Down?

Come clean on economy, Pua urges government
UPDATED @ 01:51:55 PM 07-07-2010By Boo Su-Lyn July 07, 2010

KUALA LUMPUR, July 7 — DAP national publicity secretary Tony Pua demanded today an honest assessment of the economy after the prime minister suggested the possibility of slower growth in the second half of the year.

“For the past three months, the Malaysian government has been singing praises about the Malaysian economy... what happened now?” asked Pua today.

“We want the prime minister (Datuk Seri Najib Razak) and his ministers to come up with an honest assessment of the country’s economy,” he said in Parliament today.

Minister in the Prime Minister’s Department Tan Sri Nor Mohamed Yakcop had also said yesterday that Malaysia’s economic performance was “not so well” in the second quarter, but insisted the country was not headed for a double-dip recession.

Malaysia’s economy grew by an impressive 10.1 per cent in the first quarter of this year, marking two straight quarters of growth following three consecutive quarters of serious contraction last year.

Despite signs that the United States is set to join Europe on the economic slow lane, Nor Mohamed had argued that Malaysia remained on track towards meeting its annual growth target of six per cent.

“The government must come up with an honest assessment on where we are... and how to mitigate the slowdown,” Pua told reporters today.

Pua, also the Petaling Jaya Utara MP, cited signs of the economic slowdown such as analysts from the US cutting growth rate forecasts while banks in China were selling loans.

“We must not deceive ourselves,” said Pua.

Najib had said yesterday that despite the uncertainty in the external sector, the Malaysian economy remains resilient.

To sustain the growth momentum, Najib had said the government will ensure the implementation and close monitoring of all measures outlined in the 10MP.

The Najib adminstration has been trying to introduce economic reforms and spending cuts but has been faced with stiff public opposition.

Najib has also been trying to lift Malaysia’s profile as a destination for foreign investment to help the country achieve an average GDP growth of at least six per cent per annum over the next five years.

Malaysia’s FDI rates have fallen faster than other regional players like Singapore and China, and at the same time capital outflows have dampened private domestic investments. Net portfolio and direct investment outflows had reached US$61 billion (RM197 billion) in 2008 and 2009 according to official data.

The government will allocate between RM90 billion and RM91 billion for expenditure in the first two years of the 10MP Najib’s government has set among the key challenges of the 10MP the stimulation of the private sector investments to grow at 12.8 per cent annually or RM115 billion.

It was reported that the country may not be able to achieve the six per cent GDP growth target if the 12.8 per cent growth is not achieved within five years.

Najib has said that it was important for Malaysia to have a robust domestic demand to spur and balance the economy.

He has also added that while the global economic environment had improved, there are downside risks to the recovery, including the sovereign debt crisis in Europe and the slow recovery in the United States.

Is The NEM Dead?

Is the “New Economic Model” still a live document, or on life-support or already dead and buried by the Prime Minister, according to the wishes of Perkasa?

The “New Economic Model” was meant to be the underlying economic platform for Datuk Seri Najib Abdul Razak to mark a departure and transformation of economic policies from the mistakes of the past. However, the new model's path has been strewn with various hurdles which has resulted in last minute alterations and repeated postponements.

Originally, the model was to be revealed at the end of 2009 but was delayed to February, and subsequently, only Part I of the NEM was unveiled on 30 March 2010. The Prime Minister had then announced that Part II will only be released after further consultations, together with the 10th Malaysia Plan.

The 10th Malaysia Plan has already been unveiled a month ago on the 10th of June, debated and passed in Parliament without any signs of Part II. It was hinted that Part II will finally be released in the 3rd quarter of this year. The question now is, will there still be a Part II?

It is now speculated that the Part II of the much-vaunted New Economic Model will never see the light of day, in any substantive form despite the fact that it was meant to contain more details and specific policies than the Part I's high-level introduction.

Was the death-knell to the New Economic Model sounded when Perkasa, supported by various UMNO leaders mounted a vigourous campaign against the Prime Minister, culminating in the May 30th Malay Consultative Council (MPM) congress? At the Congress, Perkasa Chief Datuk Ibrahim Ali told Datuk Seri Najib bluntly in the face that “Malays have rejected the New Economic Model” and hinted at a “vote of no-confidence” towards Prime Minister by the Congress.

The Prime Minister had then backtracked on the NEM, by clarifying that the NEM “has yet to be finalised”, and now we are not sure if it ever will be.

Much to the delight of Perkasa, the 10th Malaysia Plan retained the controversial 30% bumiputera targets for equity, land and property as well as professional jobs, in direct contravention of the NEM which planned to “implement transparent and market-friendly affirmative action programmes
focussed on building capacity and capability of low-income households and small businesses, instead of imposing conditions to meet specific quotas or targets”.

Datuk Seri Najib had on 15 June claimed he had never proposed for the Bumiputera equity target to be dropped saying that “it was a misunderstanding”.

In fact, during the Prime Minister's inaugural speech on the 30 March to local and foreign investors on the NEM, he had clearly stated that “this approach will mean greater support for the Bumiputera, a greater support based on needs, not race.”

The U-turn by Datuk Seri Najib has invited criticisms from even his own brother, Datuk Seri Nazir Razak who is the CEO of CIMB Bank who had called for a review of the old New Economic Policy (NEP), adding that the policy has been unfair to the majority of Malays.

He said “the time has come for the government to protect the interest of the majority of the Malays and not just selected few”, which has been the case under the NEP where a 30% bumiputera target was set.

Unfortunately, it appears that the dice has been cast and Malaysians who had been waiting anxiously for the announcement of the transformative “New Economic Model” where the Part II is still mysteriously missing, will be waiting in vain. Perkasa and other vested interest groups have thrown a mighty spanner into the works, ensuring a double-quick retreat by the “reformist” Prime Minister.

We still hope that a meaningful and substantive NEM Part II can still see the light of day, one that is based on merit and needs, and not on race. We call upon Datuk Seri Najib to bravely make another U-turn, this time to charge forward and sieze the day to protect the future economic interest of all Malaysians.

Tuesday, July 06, 2010

Petronas: The Government's Piggy Bank

The Government must stop treating Petronas as its own piggy bank to break according to its whims and fancies and jeopardising the company's future productivity and profitability

Headlines of major newspapers had on last Friday, 2nd July announced that the profits of Petronas Malaysia dropped 24.5% to RM67.3 billion in its financial year 2010, and its financial contibutions to the Government had declined RM16.4 billion to RM57.6 billion. It was also announced that Petronas had maintained a dividend of RM30 billion to the Government, the same amount as in 2009, despite the sharp decline in profits.

The new Petronas CEO Shamsul Azhar Abbas pointed out that profit after distribution of dividends amounted to RM10.3 billion, a drop of 52.2 per cent from the previous year, and warning that “the dividend payouts could constrain the group’s growth plans as significant re-investment is necessary to generate future revenues.”

This theme was repeated in the Petronas media release on its full year results for 2010 where it stated that “going forward, the Group faces significant and growing challenges in an increasingly difficult industry environment. Existing domestic acreages are maturing, with both reserves and production set to decline unless more investments are ploughed into increasing recoverability from existing oil and gas fields...”

The situation is even more dire when we review the data of how much money the government has been milking from Petronas and the resulting impact on the Group over the past 6 years as shown in Table 1 and Chart 1 below:

Table 1: Utilisation of Petronas Profits 2005-2010

Source: Petronas

The figures clearly demonstrates that the amount of profits left for Petronas re-investment has dropped from a high of 42.5% in 2005 to a record low of 13.5% in 2010.

Similarly the dividend payout ratio has reached 74% in 2010 compared to 57% in 2009 and “is substantially higher than was typically the case in previous years” as disclosed by Petronas. In 2005, the dividends to the government was only RM9.1 billion, before it was increased to RM13 billion (2006), RM20 billion (2007), RM24 billion (2008) and RM30 billion (2009). The company clearly cannot afford to maintain sky-high dividends for the Government despite the sharp drop in profits.

The dividend payable by Petronas, as per any other company must be dictated by the needs of the company and not by the wants of the shareholders, in this case the Malaysian government. Given that Petronas is in need of substantial investment in capital expenditure to “increasing recoverability from existing oil & gas fields”, a greater proportion of profits should be retained by the company to invest and ensure higher profits in the future. A company should only have a high dividend payout ratio when it no longer has utilisation of the profits to generate additional future profits, which is clearly not the case for the capital intensive oil & gas industry.

Chart 1: Decline of Petronas Profits Retained for Reinvestment

The Malaysian government should not use Petronas like a piggy bank which can be broken at any point in time to top up the coffers of the federal treasury according to its whims and fancies. The lack of funds for reinvestment will only in turn severely impede Petronas' ability to secure future revenue, reducing its long-term productivity, profitability as well as efficiency.

Instead, we call upon the Prime Minister to protect Petronas like a golden goose to ensure that it will continue to be able to provide increasing and sustainable revenues to Malaysians over the medium to long term by:

legislating that Petronas retain at least 50% of its profits for future reinvestments.

ensuring that the windfall revenue are only invested in economically productive and necessary sectors such as human capital, renewable energy and green technology.

legislating that at least 20% of these contributions should be “saved” in a National Stimulus Fund for use during economically challenging times if economic growth exceeds 3% per annum.

Monday, July 05, 2010

Chinese Forum "2019: Malaysia Faces Bankruptcy?"

Will Malaysia face the threat of bankruptcy in 2019? What will be the impact, implications and consequences of such a threat, especially in the Malaysian political landscape?

The DAP is organising a Mandarin forum on "2019: Malaysia Faces Bankruptcy?" in conjuction with my very own book launching ceremony.

The speakers of the forum are:

  • Dr Ong Kian Ming, Political Analyst
  • Jamaluddin Ibrahim, 988 Radio Deejay & Political Commentator
  • Tony Pua, DAP National Publicity Secretary

with a special opening address by DAP Parliamentary Opposition Leader, Lim Kit Siang

Date: 7/7/2010 (Wed)
Time: 8pm
Venue: Selangor Chinese Assembly Hall, KL

Admission is free!

(My English book is on the way, once I find sufficient time to sit down and complete it ;-))

Saturday, July 03, 2010

PAC To Probe Felda

Pakatan wants PAC probe into Felda’s low funds
By Clara Chooi July 02, 2010

KUALA LUMPUR, July 2 — Pakatan Rakyat (PR) will push for a Public Accounts Committee (PAC) probe into Felda’s controversial finances, hoping to prove allegations that the government had mishandled the authority’s dwindling funds.

The move appears to be the latest attempt by the coalition to shore up its support from rural Malay voters living in Felda settlements, which have always been seen as an impenetrable Barisan Nasional fortress.

Petaling Jaya Utara MP Tony Pua confirmed with The Malaysian Insider that he would personally raise the matter when the committee sits for its meeting next week.

“I am confident that the other members of the committee will agree to begin investigations into the issue. It is of national interest,” he said when contacted yesterday.

Pua, who is also a PAC member, said there were many questions raised over Felda’s low cash reserves that needed to be answered.

“I am sure the other members will agree that the PAC should put this matter on its list of priorities. The issue has been discussed and argued over by so many parties. It is time to put those arguments to rest,” he said.

When contacted, PAC chairman Datuk Seri Azmi Khalid told The Malaysian Insider that if the issue were to be raised in the meeting, the committee members would decide on whether to present it as a part of its agenda.

“We will give fair consideration and if the members feel this is an issue of national interest, we will initiate a probe into it,” he said.

For the complete article, read it on The Malaysian Insider here.

KDSB 13 Years Never Pay Oustanding Taxes, Can Ah?

Pua wants IRB to seize KDSB assets
By Asrul Hadi Abdullah Sani June 30, 2010

KUALA LUMPUR, June 30 — Petaling Jaya Utara MP Tony Pua today suggested the Inland Revenue Board (IRB) should seize assets of Kuala Dimensi Sdn Bhd (KDSB) to pay off its debt.
It was reported that KDSB’s outstanding taxes to the Inland Revenue Board (IRB) amounting to RM328.4 million was from 1997 to 1998.

KDSB CEO Datuk Faisal Abdullah has refuted the allegations and said that the amount owed to IRB was “ridiculous.”

But Pua said that KDSB has the assets to ease the outstanding taxes based on Companies Commission of Malaysia’s (SSM) key financial information of the company.

“There are more assets in there for IRB to demand from KDSB. So legally they can enforce and even seize assets if required to pay for the debt. IRB didn’t even have to go to PKA to claim the outstanding debt. There is enough assets in KDSB that IRB can go and collect. I think that IRB should immediately do that,” he told reporters during a press conference in parliament.

The DAP publicity chief added that if IRB is not able to seize the assets from KDSB then it should charge the company.

“The directors are 100 per cent responsible for the taxes payable by the company. 13 years, not a single action done by them and I don’t accept the excuse by Kuala Dimensi that they are disputing the amount. It is the responsibility of the company to go solve it out and settle the dispute,” he said.

According to the document, KDSB’s assets for 2007 was worth RM971.7 million while it was RM932.6 million in 2008.

Pua questioned why the company was allowed to operate for 14 years without paying any taxes.

“Why is the company allowed to not pay its taxes? Whether the amount is disputed or otherwise for 13 years and the amount is not small. We know that the IRB is very efficient in taking taxes to ensure that every company pay their taxes. Why were they allowed to continue for 13 year without paying their taxes?

“This company is owned by Barisan Nasional Backbencher president and MP for Bintulu Datuk Seri Tiong King Sing. He is a director and shareholder of the company. Does it mean that a prominent member of Barisan Nasional is allowed to get away from paying taxes from so long before IRB finally says that they are going to collect through PKA,” he said.