Wednesday, October 27, 2010

Malaysia's TI Corruptiion Perception Index Dips to Record Low

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

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

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

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

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

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

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

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

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

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

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

Tuesday, October 26, 2010

"Some Contracts Just Cannot Tender Out"

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

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

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

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

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

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

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

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

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

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

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

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

Monday, October 25, 2010

History to be Compulsory Pass?

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

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

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

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

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

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

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

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

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

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

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

Wednesday, October 20, 2010

More Toll Compensation for PLUS?

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

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

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

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

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

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

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

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

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

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

Tuesday, October 19, 2010

Forum: Budget 2011 - Change or Continuity?

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

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

Admission: Free
Enquiries: 019-2865858


Budget 2011: Sabah & Sarawak Marginalised

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

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

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

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

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

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

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

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

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

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

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

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

Monday, October 18, 2010

Najib Asks For Blind Loyalty To Umno From Civil Service

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Sunday, October 17, 2010

Budget 2011: Operating Expenditure Explodes Again

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

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

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

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

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

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

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

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

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

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

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

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

Saturday, October 16, 2010

Budget 2010: Government Failed To Keep Lid on Expenses

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

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

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

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

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

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

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

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

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

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

Friday, October 15, 2010

EPF To Acquire PLUS: Robbing Peter To Pay Paul?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

At present EPF owns 12.27 per cent of Plus.

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

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

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

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

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

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

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

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

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

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

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

Thursday, October 14, 2010

Can GLCs Raise RM454 billion Under ETP? II

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

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

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

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

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

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

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

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

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

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

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

Wednesday, October 13, 2010

4 More New Tolled Highways?

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

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

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

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

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

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

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

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

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

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

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

Tuesday, October 12, 2010

Can GLCs Raise RM454 billion Under ETP?

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

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

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

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

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

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

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

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

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

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

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

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

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

Sunday, October 10, 2010

Where is Batu Sapi?

P185 Batu Sapi constituency is adjacent to Sandakan bordering Libaran and the (in)famous Kinabatangan.  For the first time, I noticed how gigantic the Kinabatangan parliamentary constituency is, an estimate will be that it's nearly the size of Johor!

Oh, and one more little factoid, Sepilok is in Batu Sapi constituency, so we can visit the orang utans ;-)

And another little piece of trivia - "Sapi" means "cow" in Indonesian, and Batu Sapi means, literally, just that - "cow rock". And it looks like this:

Ah, at least we now know where the place got its name ;-)

1MDB Accounts Should Be Made Public

The Prime Minister should stop the teasing with the claim of a RM425million profit for 1MDB Fund. Instead if it has done so well, the Government should flaunt it.

The Prime Minister, Datuk Seri Najib Abdul Razak announced that he was extremely pleased that 1MDB RM5 billion fund has returned a net profit of RM425 million for its first financial year ending March 2010.

While we are pleased to that the fund has managed to generate a “return” of 8.5%, the “profit” only gives us a piece of the puzzle. Any accountant worth his salt will tell you that evaluating the performance of a company based purely on a “profit” figure without footnotes, details and context is as good buying a pretty looking car, without evaluating its engines.

For the past 2 consecutive parliamentary sessions in March and June this year, I have submitted questions to the Prime Minister to obtain an update on the investments and performance of 1MDB, including its financial performance such as assets, liabilities etc.

“Tony Pua meminta Perdana Menteri menyatakan prestasi dan kedudukan syarikat 1Malaysia Development Berhad (1MDB) sejak ianya ditubuh, termasuklah pelaburan yang telah dibuat, dan nilai 'current assets', 'return on equity' dan 'total assets'.”
 However, in both circumstances, my question wasn't given a proper answer on the pretext that 1MDB has only been set up and the performance and financial data are not ready.

I have once again submitted a similar question on 1MDB for the current session commencing next week and the Prime Minister has no excuse but to release the full details of the investment performance of 1MDB since he has willingly teased us with the profit made by the fund.

For example, Malaysians will be interested to know if the profits of 1MDB is derived from its various investments made to date, or is it purely a profit arising from the injection of assets into 1MDB by the Government. For example, it has been reported in The Star on May 19th that the Government will be transferring the prized land in Sungai Besi, currently the base for the Royal Malaysian Air Force to 1MDB and that this will “basically be a left hand, right hand transfer”.

This means that 1MDB would have gotten this piece of land for “free” from the Government. The question then is, did 1MDB regard the receipt of this piece of land in its accounts as “earnings”, and if so, how much is this piece of land valued at? Hypothetically, if it was valued at RM1 billion, then without this “grant” from the Government, 1MDB would have then made a loss of RM575 million and not a profit.

There is no way for us to know if the above or other hypothetical scenarios are accurate or otherwise, unless the Prime Minister walks the talk about the results “underscoring 1MDB's corporate governance” and make public the full accounts of 1MDB. If Najib is indeed pleased with 1MDB's performance, then there should be absolutely nothing to hide.

In fact, the Prime Minister should not have to wait for the turn for my question to be raised, which could be more than a month away, but immediately make available the full accounts and annual report of 1MDB to be downloaded from the 1MDB website, or at the very least, be available on our respective seats in Parliament when the new session starts on Monday.

As the English idiom goes, “if you've got it, flaunt it”. Don't just tease us with a RM425 million profit, show us the real thing.

Thursday, October 07, 2010

Trip to Melbourne

You might have watched the video excerpt of my little speech at the University of Melbourne forum organised by the Malaysia Australia Students Council Association (MASCA) of Victoria. Here's someone else who blogged on the event. ;-)

Are we there yet?
C K Chin

I attended the Malaysian Aspiration Programme (MAP) organised by MASCA Victoria yesterday. The fact that Tony Pua was among the speakers (the other two being Tunku Zain Al’Abidin Muhriz, prince of Negeri Sembilan, and Assoc. Prof Abdul Razak Ahmad, a professor from UM) gave me the motivation to attend the event.

So it was important Tony Pua did not disappoint. I can see why this Oxford PPE-ist is making such rapid progress in his political career. He was earnest in his arguments and backed them all up with simple logic and mathematics. I was really impressed with the way he summoned the audience to read up about the newly-proposed ETP. He criticised it (he is from the opposition), but showed great bi-partisanship to acknowledge the idea, if not the feasibility, of the ETP. Questions to him were returned with answers that were critical, structured, and most of the time with humour and wit - a reflection of his PPE education.

The prince, Tunku Zain, was for me, a surprise bonus to the forum. I am not surprised by his privileged education background (Alice Smith, Marlborough College, LSE), but more so with his achievements at such a young age. He worked in the House of Lords in the UK, in the UN in New York, and is now the chairman of IDEAS, a think tank in Malaysia. Again, he demonstrated what a difference education can make of a person. He spoke with a confidence and a sense of credibility that we lack as youths. He criticised the government over issues regarding concerts and alcohol. It is encouraging to see this influential Malay youth talking with common sense.

The same cannot be said of Assoc Prof Abdul Razak though. Although he attempts to distance himself with the old-thinkers, his examples of himself being supportive of change were poor and acted more as excuses rather than reasons. Although he was in general denouncing the NEP policies, he still maintained that a compromise should be struck between Malays and non-Malays. Why can’t we just have an NEP that helps the poor, no matter what race? This may not be his fault. This just shows the difficulty of taking the issue of race out of the equation. However, I acknowledge his intentions of having change in Malaysia, and his rejections of the old ways.

All in all, the event was a good injection of encouragement and inspiration. If the speakers represent the general makeup of our society, we may not be far from a true 1Malaysia. Yet, the general trait of the three speakers - an accountable politician, an inspiring youth leader and a pragmatic educator - is that they are all extremely well-educated, a fact that cannot be applied to the general public of Malaysia. Therefore, education plays an important role, if not the key role, of us reaching our goal to be a successful nation.

Finally, the conversation between an immigrant from Malaysia who currently lives here and Tony Pua struck me most.

“I have been here for 24 years. Back in Malaysia, there is no acknowledgment of my value to the country. Now that I am settled here, the government is asking me to go back. Shouldn’t we be asking what the country can do for us, rather than what we can do for the country?”

In which Tony replied, “I see Malaysia as my home. So when it has termites, or when its roof is leaking, or when it is in need of repainting, I make sure I’m the one who gets rid of the termites, that I repair the leak, that i coat the place with new paint.”

I cannot agree more.

Will ETP Bring Transformation?

The “New Economic Model” and “Economic Transformation Programme” will fail if Government assets and projects continue to be awarded without open competitive tenders

In the midst of strong “New Economic Model (NEM)” and “Economic Transformation Programme (ETP)” rhetoric by the Government, there is a worrying trend that mega-projects under the guise of “private finance initiatives” or “public-private partnerships” as well as privatisation of government assets will be awarded directly without any form of open or competitive tenders.

The Deputy Prime Minister admitted that the Cabinet is mulling over the RM50 billion proposal by a little-known company, Asas Serba whose only claim to fame is its connection to Tan Sri Halim Saad, a well-known proxy for those in power when he led the now defunct Renong Bhd. The proposal was to take over all highway concessions in Malaysia. It should have been rejected outright for it was proposed completely without basis, merit and it was completely unsolicited.

More recently, MMC Berhad, owned by another beneficiary of many privatisation projects in Malaysia in the 1990s, Tan Sri Syed Mokhtar Al-Bukhary has confirmed that it has submitted a bid to acquire UEM Group Bhd from Khazanah Nasional for the amount of RM15.6 billion. UEM have substantial stakes in 8 public listed companies, and is prized for its 38.5% ownership of PLUS Expressways Bhd, 28.7% of Time dotCom Bhd, 32.0% of Faber Group Bhd and 77.1% of UEM Land Bhd. It also owns the Penang Bridge Sdn Bhd as well as Cement Industries Malaysia Bhd. As at the end of 2009, the net assets of UEM Group Bhd amounted to RM12.3 billion.

At the same time, the government is weighing the award of Malaysia's largest infrastructure project to date, that is the Greater KL Mass Rapid Transit (MRT) system which is expected to cost up to RM46 billion with a Gamuda Bhd and MMC Bhd joint venture being touted as the “winners” of the project. In fact Gamuda has already told equity analysts that it is 80% certain of being awarded the bulk of the project, and this would be because they are the only commercial party who have been in consultation with the Government as well as Pemandu to develop the entire plan for the project. Similarly, YTL Corporation Bhd is expected to “win” the project to develop the high-speed train service between Kuala Lumpur and Singapore due to its involvement with Pemandu at the “laboratory” stage of the ETP.

These developments are of great concern because they have failed to demonstrate that the government is committed to competition and transparency in order to achieve the highest quality outcome at the lowest possible cost to the government. Should the Government decide to “dispose” of UEM Group Bhd, then bids must be solicited from all investors to ensure that the Government receives the highest possible value for its assets. At the same time, are Gamuda, MMC and YTL the only parties who are able to deliver MRTs or high-speed trains in this country?

The Prime Minister had in his speech espousing the NEM had emphasized that “competition should be promoted to allow dynamic and efficient markets”. He had admitted that it “is imperative to set the economy right – to remove distortions, barriers and impediments that hinder our economy from progressing up the value chain and to promote healthy competition. Implementing these policies is a pre-condition to successfully tapping new sources of growth.”

Hence should the Government decides to proceed with any of the above projects or privatisation of assets without any form of open competition, it will not only reflect the fact that the NEM is nothing but rhetoric, and it has no sincerity in wanting to promote “dynamic and efficient markets” or isn't serious about “tapping new sources of growth”.

What's more, Datuk Seri Najib Abdul Razak had emphasized that “we can no longer tolerate practices that support the behavior of rent-seeking and patronage”, calling for “inclusiveness, where all Malaysians contribute and benefit from economic growth”. The direct and opaque award of these contracts to these connected parties flies in the face of the Prime Minister's call for “inclusiveness” and to eradicate “rent-seeking and patronage”.

Datuk Seri Najib Abdul Razak must ensure and reiterate in the upcoming 2011 Budget announcement that all government projects, large and small as well as all government owned assets which are to be privatised will be tendered openly and competitively instead of being awarded on a directly negotiated basis which will only perpetuate the “behaviour of rent-seeking and patronage” in his government ending all hopes of a successful economic transformation through the much-touted NEM.

Wednesday, October 06, 2010

Students Free To "Talk Politics"?

Well, one would wish.

The Higher Education Minister is being extremely economical with the truth on claiming that students are “not completely barred from politics”

Bernama has reported the Higher Education Minister, Datuk Seri Mohamed Khaled Nordin's comment in Penang that “students of higher learning institutions are not completely barred from politics... He said they could hear ceramah (political talks) or talk about politics but were not allowed to be actively involved in political campaigning.”

Khaled's explanation on the scope of the University and University Colleges Act (UUCA) is economical with the truth at best and at worst, a gross misrepresentation of the Act which was amended in 2009 under his leadership. More importantly, what he has said is certainly not practised by the Malaysian universities in letter or in spirit.

The Amended UUCA 2009 clearly forbids students and academics from making comments and statements deemed to support or sympathize with any political parties, hence they are certainly not allowed to “talk about politics” as claimed by the Minister. The Act's Clause 15(5) clearly states that
“Tiada seorang pun pelajar Universiti dan tiada pertubuhan, badan atau kumpulan pelajar Universiti yang ditubuhkan oleh, di bawah atau mengikut Perlembagaan, boleh menyatakan atau melakukan apa-apa jua yang boleh semunasabahnya ditafsirkan sebagai menyatakan sokongan kepada atau simpati dengan atau bangkangan terhadap— (a) mana-mana parti politik, sama ada di dalam atau di luar Malaysia”
In fact, the only time when students and academics are allowed to discuss “politics” is strictly limited to academic seminars or symposiums as defined under Clause 15(6), and even then only if these events are organised by those approved by the Minister.

Despite the above, the Malaysian universities have been practising censorship and restricting the rights of the Malaysian students at a level beyond what is even prescribed in the Amended UUCA 2009, with the tacit approval from the Ministry of Higher Education. The examples are too many:

1. In April this year, 4 students who were studying political science (for goodness' sake!) were “caught” by Universiti Kebangsaan Malaysia (UKM) authorities, who clearly had nothing better to do, in Hulu Selangor despite their being there to observe the political process in the by-elections and are charged for “allegedly showing support, sympathy or opposition towards political parties in Malaysia”.

2. In October 2009, 6 Universiti Malaya (UM) students were charged for inviting opposition politicians to be judges in a debate competition, in particular Teresa Kok, MP for Seputeh. This was despite the fact that no political speeches were being made and Barisan Nasional politicians – Wong Nai Chee, former MCA MP for Kota Melaka, was also taking part as a judge.

3. More recently, I've had two invitations to speak, one in Universiti Malaya and another in Multimedia University which was subsequently withdrawn, after being rejected by the University authorities despite the fact that BN politicians were invited at the same time and that I wasn't there conduct political campaigns.

Hence the Higher Education Minister needs to be more truthful with his claims that students are “free” to listen to ceramahs and talk politics when in actual fact, these activities are either forbidden in the Amended UUCA he had initiated or banned altogether by the universities in total abuse or disregard to the Act.

The Minister should stop pretending that what is limited by the UUCA is limited to just joining political parties or “actively campaign” when in reality the Act prevents any mature association or enlightened discussion on politics in Malaysia, unless when it favours the ruling Barisan Nasional.

We call upon the Higher Education Minister to honestly and sincerely work towards greater academic freedom by abolishing, or at the very least completely revamping the University and University Colleges Act to make it relevant for Malaysians today, and ensure that creativity, critical thinking and analytical skills deemed largely missing from our university graduates can be given room to be cultivated.

Tuesday, October 05, 2010

Trip to Sydney

Malaysia ’s future comes to Sydney
Monday, 04 October 2010 admin-s

By William de Cruz

They came to sell the future, a ‘new’ country. And by the time Malaysian Opposition MPs Tony Pua and Jeff Ooi left the Delima dinner on 23 September 2010 in Sydney, they surely knew the movement for change had also captured the New South Wales capital city in its wake.
For the likes of SABM (Saya Anak Bangsa Malaysia) and the “diaspora” (thanks, Jeff) of Malaysia's ever-growing Opposition, Sydney is a bit late coming to the party. That’s partly because Adelaide and Penang are sister cities, and the former has attracted a strong presence from leaders of the Democratic Action Party, which has Penang as its base and peninsular stronghold. Melbourne was an earlier start, and stranger things have happened.

Nevertheless, Malaysians (PRs in Australia who still hold Malaysian passports), former kampungites who are now Aussie citizens, well wishers and supporters - 75 in all - had gathered to welcome the MPs, add a new twist to “Malaysia boleh” and send them back to the zeitgeist, hopefully heartened that help is also to be found in Australia.

The audience heard how corruption has festered and flourished for so long that an overseas unwillingness to participate in the Malaysian economy has led to foreign direct investment crashing by 81 per cent in 2009, sandwiching the nation between Laos (just behind) and the Philippines in the FDI rankings.

We don't know to laugh or cry because Mahathir Mohamed's New Economic Policy has been replaced by Najib Razak's New Economic Model; Penang will not be part of a High-Speed Broadband network worth tens of billions; challenging the Constitution is threatening the rights of Malays.

We are told of the failures and fantasies of a former minister of education who has launched a MR500 billion-plus program to stimulate the economy and transform Malaysia - in some countries it would be referred to as nothing short of pork-barrelling.

We suspended disbelief to know UMNO Youth and an increasingly Malay-supremacist Perkasa are using police reports to stymie the Opposition, so if Pua talks about the need to “suspend unnecessary subsidies”, he is instead accused of working to “deny Bumiputera rights”.

And we nodded our heads (side-ways) to be reminded of how the Malaysian media continues to hold the truth a distant second to political expediency.

The murder only got a passing mention - such is the litany of malfeasance.

Tony Fernandez should be grateful for the several plugs his low-cost carrier was given at Delima, with Ooi regularly reminding his fellow Malaysians that they only need jump on an AirAsia flight to return home and vote at the next elections to fully claim their role in change.

But Pua and Ooi also heard about tapping the fountain of votes that must be in the hands of Malaysians who left a beloved homeland, tired and beaten by a system of economic, cultural and religious apartheid. These migrants live without the auspices of a High Commission or Consulate that will encourage the postal vote. In fact, the last time this writer asked, the HC in Canberra very helpfully replied: “Balik undi, lah!”

Pua told us of his own brush with a “postal vote” - a bullet in an envelope mailed to his Petaling Jaya Utara office.

Ooi spoke of a shadow cabinet, which is also to say there is every confidence now that the next election may cost the ruling coalition much more than that two-thirds majority.

There was talk of a future with Nurul.

The new guard is already on the ground running, and Pua and Ooi are among the leaders of the pack - young, unbeaten, determined, engaging, frank and with faith enough to know that you can move that mount, you just have to learn to live with kicking around a few stones for a while.

Before the night moved into full swing, co-organiser John Khoo told us exactly how much was raised per dinner seat. He didn’t look very pleased - more had been collected from 55 diners at an earlier SABM fund-raiser this year. An empty wine chiller was immediately passed around and more moolah rolled in.

Amid the addresses by Pua and Ooi as well as a testy but invigorating Q&A session, raffles and an auction were conducted to raise more cash.

But money was not the measure of success that night, when an informal coalition of people with a connection to Malaysia brought the MPs to a bunch of people hungry for hope.

The DAP duo reached into the pockets of patriots, which is not about supporting any particular government, and there were rich pickings.

It was not the money, but a future was bought.

Later, Khoo was happy to confess: “I am an Australian citizen, but Malaysia will always be my country of birth, and I want to be part of the history that will bring change to Malaysia .”

It used to be said that if change were to come to pass in Malaysia, then it would have to come at the hands of the Malay race which hold the power as the MCA and MIC support an artifice of racial harmony and integration.

That night in Sydney, there was an assurance that change today is firmly in the hands of all Malaysians.

More than 50 years since, ‘merdeka’ may be just around the corner.

Trip to Adelaide

Pictures courtesy of Jonah Sia

I spoke to some 50-60 Malaysians in Adelaide when I was there on the 19th September and Hussein Hamid has written a report on his blog post. It was my first stop in Australia, a good meeting, a good start to link up to Malaysians down under ;-)

Tony Pua in Adelaide Hussein Hamid

Why is it that that which is supposes to unite us ends up dividing us? I was at a meet on Sunday where Tony Pua, Member of Parliament for Petaling Jaya Utara, was in Adelaide to meet with Malaysian. Any Malaysians! Not only Chinese, not only DAP members not only Pakatan Rakyat supporters …it was just “Tea with Tony Pua @ Adelaide” …no Yang Berhormat…just Tony Pua.

First roadblock: One smart aleck asked me why should the meet be at a place call The Chapel? No need to guess what race the smart aleck was - is not a Chapel “A building used by Christians, members of other religions, and sometimes interfaith communities, as a place of fellowship and worship” …Jesus Christ I thought to myself, it is just a place to meet with Tony! I do not even know if Tony is a Christian and I do not care! Suffice to say that I know that guy will not be turning up at the meet.

It was a good crowd. Standing room only and I was the only traitor…errr I mean Malay around. I came late but my white hair and age persuaded someone to give up his seat for me. Thankfully I sat down. Tony was already in full flight and as he talked my eyes swept across the sixty odd crowds. Chinese, Chinese, Chinese…about two Mat Salleh and I think one Indian. Some came with their family and a number of students too were present. A good crowd eager to listen to what this messenger from KL has got to tell them of home.

As Tony talked a few words caught my ears…APC (Armoured Personal Carriers) that cost over Ringgit 30 million each, FDI, that Petronas provided our nation with about 40% of its income, 1 Malaysia, Muhyiddin and his “I am a Malay first” comment…all the usual suspect.

It was not a taklimat (an information presentation – very formal – for those that do not understand Malay!)…he was talking to us and telling us what could be better for our country, how it could be better and it had better be better or we would be in trouble! I thought it ended too soon after he took questions from the crowd but then we continued talking with him and with each other over tea.

What should have been an opportunity for Malaysian to meet with each other and to listen to someone from Malaysia talk about things in KL became for some Malaysian, another reason to shun the Chinese and the DAP for being a racist “for chinese only” political organization. No Malays came to listen, to question or debate with Tony on what he had to say and on what they perceive DAP was or was not doing. Why?

Why is it that that which is supposes to unite us end up dividing us? The reality is that the same thing will most probably be happening in Melbourne and Sydney where Tony is next due to visit. I hope some one there will tell me that this is not so.

I think this young articulate politician is our future. He was not embarrass to tell us that in DAP and Pakatan Rakyat there is a lack of good capable people to strengthen the organization and to help them to govern in the states they control.

After listening to him I understood why Pakatan Rakyat did not have a shadow cabinet – because there is no provision in our constitution to recognize a shadow cabinet what more to provide money for its working. And of course as Tony pointed out Pakatan Rakyat simply do not have the resources to look into this effectively for now. Such refreshing admission from him augers well for the future of our country when Pakatan Rakyat is call into service. Even now, as he emphasized, the royalties earned from sand in Selangor alone has increased to RM$15 million from the RM$4 million during the time of Khir Toyo of the Palatial Palace fame!

All too soon it ended. In my over thirty years in Australia I must confess that this is the first time I have attended any meet, get together or functions with any other Malaysians. Methinks I will be going to another one when Lim Guan Eng comes over at the end of this month!

Thank you Tony for taking the trouble to meet with us and to my new Malaysian Chinese Friends…thank you for making me feel welcome at a “racist DAP get together held in a Chapel!”

One regret. I would have taken more images of the meet but refrained from doing so lest Tony or anyone else thinks I am from the Special Branch!

Monday, October 04, 2010

UMNO Elected Reps Pay Check Also From "Dubious Sources"

All Umno Elected Representatives nationwide should immediately return all their salaries to the Government as they come from non-halal sources

The recent controversy created by Umno politicians over the welfare funds given to old folks and the poor in Pulau Pinang, that it was derived from non-halal sources such as gambling, shows that they are willing to be the biggest hypocrites in order to maintain their grip on power.

Firstly, the state government has clearly denied that such funds were used for distribution to Muslims, which means that these Umno politicians are lying through their teeth to gain political mileage.

Secondly and more importantly, their attempt to distinguish halal and non-halal revenue for Penang smacks of ultimate hypocrisy as the Federal Government headed by Umno, the Finance Minister who is also Umno President, Datuk Seri Najib Abdul Razak are the parties responsible for legalised gambling in this country. Furthermore, had it not been for the opposition by Pakatan Rakyat, Najib would not have withdrawn the sports betting license awarded to Tan Sri Vincent Tan.

What's more, the Finance Ministry has responded in Parliament to MP for Rasah, Anthony Loke on 9 Jun 2010 that the Government does not in any way differentiate the tax it receives from different revenue sources, be they from halal or non-halal activities.

"Untuk makluman Yang Berhormat, buat masa ini, hasil daripada aktiviti perjudian adalah dikategorikan sebagai hasil cukai kepada Kerajaan... Bagi semua hasil daripada bayaran cukai ia akan dimasukkan ke dalam Akaun Hasil Disatukan sama seperti semua hasil Kerajaan yang lain dan digunakan untuk tujuan belanja mengurus dan pembangunan negara."

This means that all tax revenue collected are deposited into a single Consolidated Fund.

Hence, by virtue of the same argument Umno is using in Penang, all Umno elected representatives should immediately return all their parliamentary and state assembly allowances to the Government as the revenue source is even more dubious than in Penang!

Penang state opposition leader, Datuk Azahar obviously could tell the difference when he claimed that "Umno assemblymen need not return their allowances as the state government’s income was from tax revenue." He's obviously ignorant of the fact, intentionally or otherwise, that taxes are paid to the federal government which are then redistributed back to the respective states as grants and loans.

The irresponsible actions of these Umno leaders who have raised these religious issues to create fear in the hearts of Muslims purely for political expediency has only resulted in another own goal for themselves making them look completely stupid and foolish. It is Umno who approves all gambling licenses in the country, and it is the Umno Federal Government who uses tax revenue, regardless of source, to pay for all government expenses, including allowances of elected representatives and salaries of Ministers and civil servants.

These Umno leaders should not only return their allowances back to the Government, they should also demand that for future infrastructure projects such as highways built by the Federal Government, there should be lanes designated for Muslims and non-Muslims based on the proportionate breakdown of source of revenue used to build the roads.

All right thinking Malaysians should of course reject these ridiculous thoughts by Umno leaders to ensure that Malaysia don't become even more divided than it already is today.

Saturday, October 02, 2010

ETP: Success or Failure Depends on Najib

ETP projects all in Idris’ ‘dream’, say analysts and politicians
By Shazwan Mustafa Kamal and Boo-Su Lyn October 01, 2010

KUALA LUMPUR, Oct 1— Datuk Seri Idris Jala’s insistence that the Economic Transformation Programme’s (ETP) mega projects will spur growth towards Vision 2020 has not completely convinced analysts and politicians.

They are doubtful as to whether the government’s ETP, which promises a heavy commitment from the private sector, would be able to transform Malaysia towards a high-income economy by the year 2020.


Surprisingly, DAP national publicity secretary Tony Pua praised Idris over his role in the ETP, saying the Cabinet minister had done his job.

“He is not your typical BN man where you are just looking at largesse,” Pua told The Malaysian Insider.

“Idris Jala has done his part, which was to find areas for Malaysia to grow. Now, it’s for the prime minister to commit to the necessary reforms to take the country forward and to achieve the goals stated in the ETP,” Pua said.

The Petaling Jaya Utara MP dismissed the need for the government to fill in the details of the ETP, but stressed instead that its main role was to explain why the private sector should invest in the planned projects.

“The ETP is not going to be detailed because we are not going to be a government-driven economy. The underlying question that needs to be addressed is really why should people invest,” said Pua.

He pointed out that Datuk Seri Najib Razak had to convince the private sector by addressing concerns on a lack of institutional reforms, perceived unfair treatment based on affirmative action policies, and a civil bloated service.

Pua, however, expressed doubt about Najib’s support of Idris’ various economic proposals such as the earlier Government Transformation Programme.

“From what I can tell he is not getting full support from the prime minister. The problem isn’t so much what the Idris team is doing, but the Cabinet as a whole led by the prime minister that is unwilling to take the proposals full-blown,” he said.

Currently in Malaysia, only 28 per cent of the total workforce is employed in the high-skill job bracket, reflecting the low level of educational attainment among a large segment of the workforce.

Dr M's "Spend, Spend, Spend" Policy Will Bankrupt Us

Dr M’s wealth prescription will bankrupt Malaysia, say analysts, politicians
By Boo Su-Lyn October 01, 2010

KUALA LUMPUR, Oct 1 — Tun Dr Mahathir Mohamad’s prescription of growth and wealth to avoid race relations problems plaguing Malaysia will bankrupt the nation if followed by Datuk Seri Najib Razak, analysts and Pakatan Rakyat (PR) leaders said.

They pointed out that the former premier’s own advice had failed during his administration which showed a trend of declining race relations amid ballooning government expenditure.

“Najib will be crazy to follow Dr Mahathir’s prescription for it’ll only bankrupt the country and worsen race relations, especially when the root causes of deteriorating race relations are not first addressed,” DAP national publicity secretary Tony Pua told The Malaysian Insider.

“Race relations were getting worse by the day between 2005 and 2009 despite record government expenditure and budget, and a record-breaking number of projects,” he said.

Dr Mahathir said on Wednesday he had formulated the Bangsa Malaysia concept under his Vision 2020 plan based on the premise that thriving economic growth would ease race relations.

Pua, however, pointed out that after Dr Mahathir’s administration, the government budget had expanded from RM128 billion in 2004 to a hefty RM200 billion last year.

“Yet race relations had been increasingly worse in those past five years compared to the years before,” said the Petaling Jaya Utara MP, citing incidents of Umno leaders waving the keris, a traditional Malay dagger, during annual general meetings.

In 2005, then-Umno Youth chief Datuk Seri Hishammuddin Hussein sparked an uproar when he wielded the keris at the party annual general meeting, which was criticised as a symbol of Malay supremacy.

Recently, there has been a spike in racial tension, such as the incident of two school principals accused of uttering racial slurs, the furore surrounding a Chinese MP’s visit to a surau, and a National Civics Bureau (BTN) senior official who allegedly referred to the Chinese and Indian communities as “si mata sepet” and “si botol” at a closed-door Puteri Umno function on Monday.


Pua dismissed the former Umno president’s spending strategy to ease racial tension as “unsustainable” and irresponsible.

“Looking forward, it’s unsustainable. The country does not have the money to keep spending the way Dr Mahathir wants us to spend,” he said, pointing out that the national debt had increased from 40 per cent of the GDP to 52 per cent today at RM363 billion.

“We cannot keep spending irresponsibly,” stressed Pua.

The lawmaker pointed out that the abuse of affirmative action policies was the underlying factor of race relations problems, but not a stagnant economy as claimed by Dr Mahathir.

“It is NEP (New Economic Policy) abuses — the ‘bastardisation’ as described by Nazir Razak — where they benefited a minority few,” said Pua, referring to CIMB group CEO Datuk Seri Nazir Razak who is Najib’s younger brother.

Recently, Nazir had lambasted the policy for being “bastardised” over the decades since its inception in 1971 for deviating from its goal of eradicating poverty.

For the full article, click here.

Friday, October 01, 2010

UMNO's DAP "Anti-Islam" Tirade Continues

DAP to take legal action against Umno over ceramah
By Asrul Hadi Abdullah Sani September 30, 2010

PETALING JAYA, Sept 30 — The DAP said today that it will take legal action against Umno over the Malay ruling party’s plan to hold a ceramah tomorrow in Terengganu on the DAP being anti-Islam.

Petaling Jaya Utara DAP MP Tony Pua said the ceramah was part of Umno’s strategy to frighten the Malay community into voting for Barisan Nasional.

“There will be a ceramah headlined ‘DAP anti-Islam’ by Umno Besut. Umno wants to use this to frightened Malays in supporting Barisan Nasional. It is malicious and we will get our legal bureau to take all the necessary actions against Umno for holding this event with such a defamatory headline,” he said.

Pua (picture) called on Umno president Datuk Seri Najib Razak to cancel the ceramah after the prime minister’s recent call for a need to marginalise extremists at the United Nations General Assembly in New York.

Kelantan opposition leader Datuk Md Alwi Che Ahmad is slated as one of the speakers at the ceramah in Besut.

The DAP has already lodged a police report in Kuala Terengganu and will lodged another report in Besut this evening.

ETP: GLCs To Invest Beyond Their Market Capitalisation?

Video by Lutfi Hakim & Arthur Lam

I was invited by the Malaysia Australia Students' Council Association (Victoria) to take part in their Malaysia Aspiration Programme forum entitled "Economic Challenges Towards 2020" on the 25 September 2010.

I gave my views on the ambitious Economic Transformation Programme (ETP) on what it hopes to achieve and where it might just fall short. I thought the Education Attache from the Malaysian High Commission was a little nervous with my presence at a students' forum, but I stuck to policy issues and I think they breathed a collective sigh of relieve at the end of the session ;-)

The above video clip captured a part of my short speech (we were given 10 minutes) and a segment of the very long (2 hours I think) Q&A session ;-)