Wednesday, November 23, 2011

Did the Cost of KLIA2 Double?

It was reported on the front page of The Edge Financial Daily yesterday that the cost of KLIA2, or the new low-cost terminal has ballooned to more than RM4 billion or more than double its original budget.

The severe cost overrun is shocking and shows that the Minister of Transport, Datuk Seri Kong Cho Ha has failed in his responsibilities to keep the cost of its projects. MCA Ministers of Transport has a history of failing miserably in managing project costs which has resulted in the rakyat having to bear the burden of billions of ringgit in cost overruns such as the RM12.5 billion Port Klang Free Zone, the RM5.8 billion Ipoh-Rawang double-tracking railway and the purchase of substandard train systems for KTM Bhd at inflated prices.

Now it appears that the KLIA2 project will be added to the list of MCA Transport Minister’s incompetence. The consequences of such extravagance will be enormous as the higher cost will either be translated into higher airport taxes and charges – hurting both domestic consumers and international passengers, and ultimately our tourism industry. Or if the charges are kept at currently levels, then the cost burden will be shifted to the Government which has to unnecessarily subsidise the airport via soft loans, grants or drastically reduced financial returns from the project owner, Malaysia Airports Bhd (MAB).

It is worthwhile to note that in early 2009, Sime Darby, in partnership with AirAsia had proposed to build a new KLIA low-cost airport in Labu at the cost of only RM1.6 billion without costing the Government a single sen. However, the plan was scrapped by the Government, partly because MAB had promised to build a new terminal at KLIA at the cost of less than RM2 billion by June 2011.

Therefore the Minister of Transport must provide full clarification and justification as to why he has failed to manage and control the cost of the new airport. He must also explain why the project has been delayed to April 2012 as announced by the MAB Managing Director, Tan Sri Bashir Ahmad in August this year, and whether there will be any further costly delays to the project.

If Datuk Seri Kong Cho Ha does not respond to parliament in a transparent and accountable manner, I will be formally requesting the Public Accounts Committee and the Auditor-General’s office to investigate the project to find out the real reasons for the massive RM4 billion KLIA2 scandal.

1MDB Got Sg Besi Land for a Steal

Did the Government subsidise 1MDB by more than RM3 billion by “selling” the 495 acres of prime land in Sg Besi to 1MDB for only RM1.6 billion?

We would like to call upon the Government to confirm that the 495 acres of land in Sg Besi, or the existing RMAF Sungai Besi airfield has been sold in June this year to 1Malaysia Development Bhd (1MDB) for RM1.6 billion or only RM74.20 per square feet.

If true, then this prime land is sold without any tender to 1MDB at a ridiculously low price at the expense of the Government tax payers.

Recently, the Penang state government has conducted an open tender for 101 acres of land, of which 65% of the area still needs to be reclaimed. The winner of the bid offered RM1.07 billion or RM240 per sq ft.

There can be no doubt that the land in Sg Besi surrounded by developed infrastructure will be worth well in excess of the market price of land in Penang, given its unbeatable location in Kuala Lumpur. At RM240 per sq ft, the Sg Besi land should already be worth a whopping RM5.2 billion. Despite its high potential valuation, the Government has chosen to transfer the land to 1MDB for only RM1.6 billion or RM3.6 billion less.

It would not be a far from the truth to say that the land could be worth a lot more given its development potential compared to other pieces of land in Kuala Lumpur which are valued at in excess of RM500 per sq ft.

The sale of land to 1MDB at such subsidised and preferential prices will only lead to the loss of revenue to the government for additional investments and programmes for the people. In addition, any profits generated by 1MDB as a result of development on Sg Besi will be inflated as it was handed the land at bargain basement prices.

The Prime Minister has clearly failed to meet his own promise of “open tenders” and maximising income from undeveloped land. Just before he took over the premiership, he was reported in The Star (5 Nov 2008) to have said:

Open tenders to ensure transparency and value for money as well as to generate more income will be the way forward for the Government. Deputy Prime Minister Datuk Seri Najib Tun Razak said the Government would ensure that a large portion of government procurement would be via open and restricted tenders... Najib said that the Government planned to maximise income on all its existing assets, including on parcels of land that have not been developed, via open tender.

On the contrary, it is the Pakatan Rakyat Penang state government which has walked the talk by practising its policy of “Competency, Accountability and Transparency” by implementing open tenders which have maximised revenue for the state government on its assets. This in turns allow the state to implement additional development and welfare programmes to help the man on the street.

We call upon the Government to disclose in full the terms of the agreement on all land sale to 1MDB and explain why 1MDB has been given such unfair preferential treatment, which will in turn only crowd out investments from the private sector.

Friday, November 18, 2011

Ismail Sabri and KR1M Victimises the Poor

Pakatan Rakyat MPs are the real heroes fighting for the interest of Malays and poor Malaysians by exposing the substandard and illegal products being peddled by BN Ministers as “cheap” and “quality” products comparable to branded goods

Pakatan Rakyat members of parliament have over the past 2 weeks exposed the fact that many of the goods sold in Kedai Rakyat 1Malaysia (KR1M) were not only substandard, illegal and unhealthy, many of these products were also not cheaper than products sold in existing hypermarkets.

We were criticised by the Domestic Trade, Cooperatives and Consumerism Minister, Dato’ Ismail Sabri as being unfair by not comparing “apple to apple”, that is we should not be comparing 1Malaysia products with house-branded products from Tesco, Giant or Carrefour.

However, we have proven that the comparison was indeed not “apple to apple” for products such as the “oyster sauce” because the sauce from Tesco contained real oyster extracts, the 1Malaysia product had only flavouring and no oysters.

At the same time, the comparison of 1Malaysia milk powder with that of Nestlé’s Nespray 1+ demonstrated not only a far inferior product but also the fact that the latter was 24% cheaper than the former. The 1Malaysia milk powder was short of at least 15 legally required vitamins and minerals, deficient in calcium and iron and provided a 802% overdose of Vitamin A, putting at real risk our very young children.

Instead of facing up to the problems, Dato’ Ismail Sabri has chosen to go on an inflammatory rant calling Pakatan Rakyat MPs, DAP and myself racists for allegedly being anti-Malay in our exposés.

Dato’ Ismail Sabri said on his Facebook ( and Twitter on Tuesday 15th November 2011 that

“tony phua DAP ni masih tk habis2 menfitnah KRIM. kini dgn tuduhan tdk berkualiti. semlm isu ini tlh dijwb oleh Mydin & pembekal IKS. jelas agenda DAP yg ingin menguburkan KRIM yg rata2 supplier nya terdiri dari IKS bumiputra. Rata2 pembeli nya terdiri dari gol berpendapatan rendah bumiputra. Mydin pun bumiputra. malangnya ada bumiputra spt nurul izah & zulkifli 'menyalak' bagi pihak DAP..”

The racist accusations made by the Minister is not only completely baseless, it is the complete opposite of what the Pakatan Rakyat MPs are trying to achieve. By exposing the list of poor quality and illegal products which do not meet the minimum legal standards set out in the Food Act 1983 and Food Regulations 1985, it is Pakatan Rakyat that is truly fighting for the interest of the mostly Malay consumers at KR1M as well as other poor Malaysians.

If not for our exposés, many Malays and other poor Malaysians will still be consuming poor quality oyster sauce, evaporated millk, ice-cream, sardines and fruit jam sold at KR1M. What is worse, if not for Pakatan Rakyat highlighting the shocking deficiencies of the 1Malaysia children’s milk powder which resulted in the product’s withdrawal yesterday, a whole generation of Malay and poor Malaysian children might end up suffering from malnutrition, disease and poor physical development.

It is the BN Ministers like Dato’ Ismail Sabri who are more than willing to sacrifice the interest of ordinary Malays and Malaysians by giving unsubstantiated “guarantees” on the quality of KR1M products and pander to the monetary and vested interest of certain businessmen.

The fact that Dato’ Ismail Sabri’s ministry is going to subsidize the KR1M stores to the tune of RM40 million in 2012 to sell some of these products to ordinary Malaysians without first ensuring strict quality control over the products shows that BN Ministers are only keep to score political goals with KR1M. They are not at all interested in the welfare of Malaysians, especially the Malays, who will suffer the most.

Wednesday, November 16, 2011

1Malaysia Growing Up Milk: Legal or Safe?


A. Completely missing key nutrients from 1Malaysia Growing Up Milk Powder per Food Regulations 1985 based on "follow-up formula" for infants 6 months and above to 3 years old:

  1. Essential fatty acids – e.g., Omega 3, Omega 6 etc.
  2. Vitamin D
  3. Vitamin C
  4. Vitamin B1
  5. Vitamin B2
  6. Nicotinamide
  7. Vitamin B6
  8. Folic Acid
  9. Pantothenic Acid
  10. Vitamin B12
  11. Vitamin K1
  12. Vitamin H
  13. Vitamin E
  14. Iodine
  15. Zinc

B. Grossly inadequate quantity of certain key nutrients

  1. Calcium – only 4.1mg per 100kcal or 4.5% of regulatory minimum requirement
  2. Iron – only 0.1mg per 100kcal or 7.4% of regulatory minimum requirement

C. Grossly excessive quantity of Vitamin A

  1. Vitamin A – 6012 I.U. per 100kcal or 802% above maximum regulatory limit (750 I.U.)
  2. May contribute to Hypervitaminosis A. Effects may include liver problems, reduced bone mineral density, coarse bone growths, skin discoloration, hair loss

D. KR1M is more expensive than Nespray 1+

Although there are differences in packing sizes (small packs are usually relatively more expensive) but a per gram calculation of a 300g pack of KR1M milk powder versus a 1kg pack of Nespray 1+ showed a remarkable price difference of 23.8%, that is, Nespray 1+ is cheaper.

E. Contradictory ingredients between English and Bahasa Malaysia Version

On the ingredients labelling, the Bahasa Malaysia version says “pepejal susu rendah lemak” but the English version says “instant wholemilk powder”. So is it “susu rendah” or “wholemilk”?

Saturday, November 12, 2011

KR1M Product Quality Issues

Click for a larger image (or open image in new window) to read

Food Act 1983 Offences

Offence: Clause 13 - Food containing substances injurious to health
Penalty: Fine not exceeding RM100,000 and/or imprisonment for a term not exceeding 10 years

Offence: Clause 13B(2)(e) - “Adulterated food” – non-compliance with the standard or specification prescribed by any regulations made under this Act.
Penalty: Fine not exceeding RM20,000 and/or imprisonment for a term not exceeding 5 years

Offence: Clause 14 - Prohibition against sale of food not of the nature, substance or quality demanded.
Penalty: Unspecified fine and/or imprisonment for a term not exceeding 5 years

Offence: Clause 15 - Labelling etc., not complying with standard of food
Penalty: Unspecified fine and/or imprisonment for a term not exceeding 5 years

Offence: Clause 16 - False labelling
Penalty: Unspecified fine and/or imprisonment for a term not exceeding 3 years

Thursday, November 10, 2011

KR1M v Carrefour: A Comparison

Below is a sample basket comparison between products from Kedai Rakyat 1Malaysia (KR1M) and Carrefour. So who's "cheaper"? Can you see the supposed 30% to 50% savings from RM40 million subsidized KR1M?  You be the judge:

Click image for a larger view.

Read also write up on the above here.

Kedai Rakyat 1Malaysia - Not Cheap At All

Barisan Nasional leaders should stop propagating misleading claims and making false advertisements promoting how cheap Kedai Rakyat 1Malaysia (KR1M) products are when they are not.
"Items at Kedai Rakyat are markedly cheaper than those in supermarkets and hypermarkets and helps families cut down on their expenses without losing out on quality." The first Kedai Rakyat 1Malaysia was opened by Prime Minister Datuk Seri Najib Razak in June offering goods at 30 to 50 per cent lower than the market prices of similar products. (Domestic Trade, Cooperatives and Consumerism Minister Datuk Seri Ismail Sabri Yaakob, New Straits Times 27/8/2011)

Prime Minister Datuk Seri Najib Tun Razak launched the first of many 1Malaysia shops in the country, designed to help bring down the prices of goods and ease the burden of the common man… Najib said the shop retailed 250 grocery items under the brand name “Kedai Rakyat 1Malaysia” at prices 30% to 40% lower than market prices… He said it would also allow the Government to get basic necessities at the cheapest prices from Mydin whenever there were disasters like flood. (The Star 23 June 2011)

Semua kedai koperasi sekolah dan kedai runcit koperasi disaran menjual produk 'Coop 1Malaysia' (Coop 1M) bagi membantu kerajaan mengekang masalah kenaikan harga barang. Menteri Perdagangan Dalam Negeri, Koperasi dan Kepenggunaan, Datuk Seri Ismail Sabri Yaakob berkata, melalui langkah itu, warga sekolah dan ibu bapa mempunyai satu lagi alternatif untuk mendapatkan barangan keperluan dengan harga berpatutan. (Utusan Malaysia 3 November 2011)
Sample product advertisements on KR1M website:

A shopping trip to a local hypermarket such as Carrefour buying products ranging from condensed creamer to canned sardines to dishwashing liquid will immediately show that the truth is far from the outrageous claims made by the Domestic Trade, Cooperatives and Consumerism Minister and the Prime Minister.

While some products are indeed cheaper in the Kedai Rakyat 1Malaysia (KR1M), the price differential is far less than the claims of 30% to 50% for most products. For example, KR1M claim to sell a 425gm can of sardines for RM2.99 “saving” the consumer a whopping 51%. However, a check in Carrefour showed that a 425gm of sardines (Double Swallow brand) sells for RM2.49 or 20% cheaper than in KR1M!

For a 1 litre bottle of 1Malaysia bleach, KR1M will charge you RM1.90, claiming huge savings of 36%. However, one can easily purchase 1 litre of Carrefour or Tesco branded bleach for only RM1.29 or a massive 47% cheaper than in KR1M!

Even when the 1Malaysia products are indeed cheaper, they are nowhere the claimed “savings”. For example, for a 400gm packet of frozen minced beef, it would cost RM4.89 in KR1M. In Carrefour, the Ramly branded packet will cost RM5.29 or only 8% more, instead of the claimed 18% “savings”.

Based on a basket of 23 common daily household goods and food items compiled per the attachment, it showed that if the same items are bought in Carrefour, a consumer will actually save 8%, paying RM120.53 instead of RM130.49 in KR1M. See full product list here.

The manner which KR1M and the Barisan Nasional cabinet ministers have been going to town telling the rakyat how ridiculously cheap the products sold in KR1M is completely irresponsible and misleading. In fact, the Ministers and KR1M should be investigated for breaching the Malaysian Code of Advertising Practice (MCAP). For example, the code says that

“Advertisements should not contain any statements or visual presentation which directly or by implication, omission, ambiguity, or exaggerated claim, is likely to mislead the consumer about the product advertised, the advertiser, or about any other product or advertiser, in particular with regard to… value or total price actually to be paid.”
In fact it is the Domestic Trade, Cooperatives and Consumerism Ministry which is responsible for regulating the industry and ensuring that consumers are not cheated by misleading claims under the Consumer Protection Act 1999. However, when the Ministry itself is guilty of such offences as a result of the Barisan Nasional government’s vested interest in KR1M, then it becomes a gross breach of its responsibility to the rakyat.

We call upon the Ministers and KR1M to stop misleading the rakyat with false advertising and make claims which can only be substantiated with comparisons with products of equivalent quality.

We are very happy if the Government can promote quality products which are cheaper to the rakyat but such promotions should apply to any company capable of delivering cheaper prices and not completely biased support towards 1 company who may or may not offer cheaper prices.

In fact we note with trepidation that the Government is taking the opportunity to force various government-related agencies to take and offer KR1M products – such as the announcement on Coop 1Malaysia in schools and the setup of Kedai Rakyat Majlis Agama Islam Wilayah Persekutuan (MAIWP). We fear that the measures will end up only profiting certain business entities instead of offering real quality products at the cheapest possible prices to the man on the street.

Wednesday, November 09, 2011

UMNO Hypocrites Over Civil Service

The racist reactions by Umno politicians to proposals to improve the efficiency of our civil service and government expenditure prove that the Party prioritises only its bigoted political interests and marginalises the needs of the nation

I am almost amused by the “shock and fury” expressed by Umno politicians, the far-right Perkasa and Umno-owned Utusan Malaysia on a straightforward comment which I had made in a forum in Johor Bahru on 30th October 2011, in response to a question posed by a member of the audience.

I had presented at the Budget 2012 forum the rising Government operating expenditure and the fact that the largest and fastest rising component of the expenditure is the allocation for “Emoluments, Pensions and Gratuities”. I had shown the chart below which clearly highlights the rise of the Government’s total wage bill:

 The chart shows that our total civil service wage bill has increased from RM20.9 billion in 10 years ago in 2001 to RM30.2 billion 5 years ago in 2006 to a massive RM64.1 billion expected next year in 2012.

The member of the audience had asked, what could be done to resolve the issue. I said that this matter will be one which is highly sensitive and a very difficult issue to deal with. I had specifically emphasized that the civil service cannot be reduced overnight and any rationalisation of the civil service has to be conducted over the long term. I had offered certain suggestions such as the termination of civil servants who have failed to perform their responsibilities as well as offering optional early retirement programmes for those who are interested.

However, the reaction from the UMNO chauvinists clearly showed that they are not interested in solving the problem but are more interested in inflaming racial sentiments and making irresponsible wild allegations with the sole purpose of creating racial hatred.

It was perhaps most disappointing to hear the widely respected and normally rational, MP for Johor Bahru, Datuk Shahrir Samad stooping so low as to turn a healthy discussion on the size of the civil service into a racial issue. He has said that “Motif mereka hanyalah mahu menaikkan sentiment rasis dan bukannya berasaskan ekonomi.”

The reaction by the Johor Bahru MP, other Umno politicians and Perkasa is completely hypocritical for it was the Prime Minister, Datuk Seri Najib Razak himself who has proposed a new civil service scheme for the government workforce.

In his Budget 2012 speech, the Prime Minister himself had proposed that “a flexible remuneration system will be introduced to retain or terminate civil servants based on performance. Civil servants must accept this challenge and be prepared to change. Hence, the Government will introduce the New Civil Service Remuneration Scheme or SBPA [will] introduce an exit policy for underperforming civil servants and for those who opt to leave the service”.

Why is it that these very critics and race-champions have not raised a single note of objection to the Datuk Seri Najib Razak’s proposal but when the same issue is raised by an opposition politician, then all hell breaks loose.

In fact, even the Chief Secretary, Tan Sri Sidek Hassan has said the same when questioned by reports the day after the Budget speech where “…he insisted that the “exit policy” announced in Budget 2012 would be strictly enforced.”

“If you want to go out, we will allow you to go out. When we think that it is better off for you for a civil servant to be outside the public service, then we will allow them to go out. When they misbehave, and we think they should go out, we’ll ask them to go out,” he said.

Therefore Datuk Shahrir and all other shameless critics should focus on the task at hand as put forth by the Prime Minister and the Chief Secretary themselves and stop playing racial politics with the sole purpose of inciting racial hatred among Malaysians for the purposes of shoring up declining support for an UMNO that is bankrupt of ideas.

Sunday, November 06, 2011

UUCA Appeal Defies "Political Transformation Programme"

The decision by the Cabinet to allow the appeal of the Court of Appeal judgement that Section 15.(5)(a) of the University and University Colleges Act 1971 (UUCA) is unconstitutional flies in the face of the Prime Minister’s “political transformation programme”

After a series of calls for the Government to not appeal the Court of Appeal judgement that Section 15.(5)(a) of the UUCA is made by top politicians from both Barisan Nasional and Pakatan Rakyat, hopes were high that the Cabinet will abide by and accept the Court’s decision.

The UMNO Youth Chief, Khairy Jamaluddin, Deputy Higher Education Minister, Dato’ Saifuddin Abdullah and MCA Youth Chief, Datuk Wee Ka Siong have made a show of openly supported the Court’s position that the relevant section of the UUCA is unconstitutional and the UUCA should be amended accordingly.

In the “spirit” of the political transformation programme launched by the Prime Minister, Datuk Seri Najib Razak on the eve of Malaysia Day where he announced the proposed repeal and amendment of various draconian Acts such as the Internal Security Act (ISA) and the Printing Press and Publications Act (PPPA), Malaysians were expecting an enlightened decision by the Cabinet to finally remove the shackles of academic freedom at our institutions of higher learning.

However, the BN government has instead chosen to abdicate its responsibility to the Attorney General, purportedly to make a study of the “points of law”. The excuse could not be more lame as regardless of the Court decision, the Cabinet could have taken opportunity to announce a proposed amendment of the UUCA, particularly the controversial Section 15.

In fact, the Cabinet should have taken the bold decision not only to amend Section 15.(5)(a), but the entire Section 15 of the Act which severely restricts the freedom of academics and students in our local universities.

Section 15.(1) states that students of the University, even if they are of voting age or PhD students, cannot be members of any political party, or any other organisation as determined by the Minister of Higher Education.

Section 15.(2) states that no University students’ body shall have any association with any political party, or any organisation as determined by the Minister of Higher Education.

Section 15.(6)(a) states that students and academics will only have the “freedom” to make statements on their areas of study and research while 15.(6)(b) prohibits their participation in any seminar, symposium or event organised by any political party, even if it is within their area of expertise.

The above sections of the Act are obviously unreasonable and unconstitutional on so many grounds – such as the Article 8 which states that “all persons are equal before the law” forbidding discrimination against students and academics; and Article 10 which guarantees the “freedom of speech and expression” as well as “the right to form associations”.

I have filed the proposed amendments to the above Sections of the Act during the sub-committee debate on the UUCA Amendment Bill in December 2008 arguing on its unconstitutionality. However, the motion was defeated unanimously by the BN members of Parliament.

We call upon the Cabinet not to make the same mistake twice, at the expense of not only the Prime Minister’s “political transformation programme”, but also the reputation and credibility of our institutions of higher learning. Without academic freedom, our universities will never be able to achieve our goals of becoming “world-class” institutions. Regardless of the final decision by the Attorney-General, Datuk Seri Najib Razak must retake the initiative and commence the process of removing all unconstitutional and unreasonable elements from the UUCA.

Saturday, November 05, 2011

Forum: Malaysia's Economy - Where To?

Date: 7 November 2011 (Monday)
Time: 8pm
Venue: Hotel Sri Petaling,30 Jalan Radin Anum, Bandar Baru Sri Petaling (Google Map)

  • Teh Chi-Chang, Executive Director of REFSA on "The 2012 Malaysian Budget and its Shadow"
  • Tony Pua, MP for Petaling Jaya Utara on “Economic Transformation: For Better or Worse?


  • Teresa Kok, Senior Exco Member of the Selangor State Government and Member of Parliament for Seputeh

Organised by Teresa Kok’s office

For any enquiries, please contact 03-7983 6768, 012-2929839

Friday, November 04, 2011

Another Bailout for Puncak Niaga

The Government of Malaysia has continued to place the interest of UMNO cronies above that of ordinary Malaysians as it continues to bail out privatized water companies by taking over their debts and granting them additional loans.

Puncak Niaga Holdings Bhd has announced on 1st November 2011 that the Government, via the wholly owned subsidiary of Pengurusan Aset Air Bhd (PAAB) – Acqua SPV Bhd, has agreed to acquire all Redeemable Unsecured Notes (RUNs) with an outstanding value of RM328.12 million. The RUNs are essentially debt instruments issued by Puncak Niaga in 2001.

As part of the bailout exercise, Puncak Niaga gets to defer its annual installment repayment by 5 years to the debtors, now the Government of Malaysia, from the original date of 18 November 2011. There is no other private company in Malaysia, except for known cronies of Barisan Nasional (BN), which can enjoy such preferential treatment.

This is on top of a 20-year RM110 million loan recently granted by the Federal Government to Syarikat Bekalan Air Selangor Bhd (SYABAS) on 17th October. SYABAS is a 70% subsidiary of Puncak Niaga and the loan is meant for a pipe replacement project which is supposed to be within the scope of SYABAS’s concession agreement. In the SYABAS loan agreement, the company is not only given a preferential 3% interest, it is only required to commence repayment of the principal installments in the 3rd year of the loan. On top of that the interest accrued on the loan shall only be payable in 10 equal installments commencing 2022 or 10 years after the loan is granted!

The above loan is on top of the “back-loaded interest free unsecured RM320.8 million loan” granted by the Federal Government to SYABAS less than 2 years ago in December 2009. For this loan, SYABAS is only required to commence repayment with amounts less than RM5 million until 2025, with the overwhelming remainder payable only from 2026 onwards! And as the statement implies, the loan is completely interest-free and requires absolutely no collateral from Syabas.

That’s not all – Acqua SPV Bhd had acquired all bonds issued by the Selangor state water concessionaires for the amount of RM6.5 billion in May this year. According to the Financial Daily, a market source had confirmed that “in terms of price, the buying back is at 94.49 against mark to market value of only 54.54 at the end of last month”. It is bad enough that the Federal Government has decided to bail out the Selangor water concessionaires, but for it to pay a whopping 73.2% higher than the market value of these bonds borders on being outrageous and an abuse of taxpayers’ money.

The persistent need to bailout the privatised water companies in Selangor proved the unmitigating disaster of BN’s privatisation exercise which only served to profit its cronies and impoverish the rakyat. When these companies were profitable, none of their dividends were accrued to the Government, but when they are unable to repay their mountain of debt it is the BN Federal Government who will come to their rescue with tax-payers’ money.

What is worse is the fact that the Selangor State Government had offered both the Federal Government and the water concessionaires a way out with its restructuring proposal where the ownership of the latter returns to the state government in exchange for a resolution of their debt burden. Instead the Federal Government had chosen to back its cronies in the privatised water industry by bailing out these companies without any commitment at all from the latter for a restructuring exercise in the spirit of the Water Services Industry Act 2006.

Now that these companies have been granted reprieve from their debt obligations, there will be no urgency on their part to resolve the restructuring imbroglio. As a result the losers will be the rakyat who will not only suffer from the risk of higher water tariffs in the future from these private water companies, but also having to bear the burden of paying for the very expensive bailout of the very same companies.

The reckless abuse of tax-payers’ funds must stop or the risk of Malaysia’s “bankruptcy” as warned by Datuk Idris Jala as a result of unsustainable debt and deficit will only become a certainty.

Thursday, November 03, 2011

Pemandu Should Support "Financial Accountability Commission"

Pemandu must support the set up of a Financial Accountability Commission (FAC) to ensure that the Government Transformation Plan (GTP) is not completely derailed

Among the chief targets of the Government Transformation Plan (GTP) launched in December 2009 by the Prime Minister, Datuk Seri Najib Razak and PEMANDU is to fight corruption, particularly in “Government procurement”.

The GTP wrote that “We will reduce leakages of funds allocated for national development and operational expenditure and ensure transparency in the award of contracts. Currently the public perceives that there is a lack of transparency in our procurement processes.”

According to the GTP, “to prevent a repeat of incidences like those reported by the Auditor-General”, the Government will “gradually reduce” the use of “support letters” and require the disclosure of details of government procurement contracts. In addition, the GTP also called for “stiffer punishment” because fo cases which are not prosecuted (and many aren’t), “departmental disciplinary actions taken are usually light e.g., the issuance of warnings.

However, as per the results published by the Auditor-General for 2010, the result of the GTP is scarce and scores of cases of leakages, abuse of power, mismanagement and incompetence were still in place.

The Marine Parks Department for example, took the leading role by purchasing binoculars worth not more than RM1,940 was purchased at RM56,350, more than 28 times the market price. It was of course not the only offending item – the Department purchased RM192,694 worth of products including common items such as laptops, printers, LCD TV, DVD Player when their total value should not exceed RM20,193.

What proved the futility of the GTP was the presence of many repeat offenders who obviously had little regard of the measures put in place by PEMANDU. The Ministry of Education is a persistent offender with a litany of lapses recorded by the Auditor-General on a yearly basis, such as a RM160.7 million project in Sabah to equip 300 schools by 2008. However, as at the end of 2010, only 2 computer laboratories were completed.

Majlis Amanah Rakyat (Mara), an agency tasked to uplift the welfare of bumiputeras is again chastised for making high-priced purchases such as an oven worth RM419 for RM1,200, folding beds worth RM100 for RM500 among other things despite having taken the limelight in the previous year for paying RM42,320 for each notebook computer.

The reasons for the failure of the GTP measures were multifold – they were either ineffective such as a voluntary disclosure of procurement contracts or there was little political will by the Government, particularly from the Cabinet to enforce stronger disciplinary measures against the relevant offenders. The result is naturally the continued abuse of finances in Government procurement and project management as proven in the latest Auditor-General’s report.

Therefore, we’d like to call upon PEMANDU to support our call to set up an independent Financial Accountability Commission (FAC) answerable to the Parliament and empower to mete out punitive actions against Government officers found guilty of misconduct, corruption, negligence or sheer incompetence. The FAC should not be staffed with any civil servant to avoid conflicts of interest, but instead by headed by leading professionals in the field of audit and integrity such as the Malaysian Institute of Certified Public Accountants (MICPA) and Transparency International (TI) Malaysia.

Only then, there is hope that “real” actions will be taken against offending officers, lending teeth to the GTP’s fight against corruption in government procurement processes and ensuring substantial deterrence to continued abuse in the management of government finances.

Tuesday, November 01, 2011

Defence Ministry Yet to Resolve Last Year's Scandals

Site visit with Johor Bahru DAP Members to
Skudai 7th Brigade Army Camp

The Minister of Defence should not be mischievous in asking the Federal Opposition to stop objecting to defence procurement but instead answer for the complete lack of action against irregularities raised by the Auditor-General in its annual reports

Bernama has reported that the Defence Minister, Datuk Seri Zahid Hamidi has stated that the Royal Malaysian Air Force will buy new aviation ground support vehicles (AGSV) next year as the existing fleet was becoming too costly to maintain. He said that “The majority of AGSV are old and need to be replaced. The Auditor-General’s Report clearly shows the critical need for the new assets.”

He urged further for the federal opposition not to question his ministry’s need to spend on new assets during times of peace, saying the Auditor-General’s report should “open their eyes” to reality.

Datuk Seri Zahid Hamidi should not be so mischievous as to blame the federal opposition for objecting to defence procurement such as to purchase new equipment to replace items which are no longer usable or safe to use.

We have never protested against the Ministry of Defence from purchasing new equipment or vehicles. What we have protested strongly is the complete lack of transparency in the manner where these items are purchased, which appear to cost substantially higher that the necessary spend.

Datuk Seri Zahid Hamidi for example, in his reply to my question in parliament, has refused to clarify what makes the difference between the RM7.55 billion procurement of 257 armoured personnel carriers from Deftech Sdn Bhd and the price which the latter paid to acquire these vehicles from FNSS Defence Systems, a Turkish defense manufacturer for RM1.7 billion. The Minister had claimed ignorance over the RM5.9 billion difference, despite the fact that he witness the signing of the agreement between the 2 companies in Turkey earlier this year.

What is more important is the fact that while Datuk Seri Zahid was quick to state his intent to acquire new AGSVs, he has failed to explain or take action against all various discrepancies and potential abuse cited in the Auditor-General’s report. In the report for 2010 for example, the Auditor-General found that the maintenance contracts for the aged AGSVs did not have the necessary expertise to repair the vehicles and late penalties were not meted out to these contractors when they failed to repair the vehicles within the necessary time frame.

The Auditor-General had also criticised the “improper payments” of allowance to the Territorial Reserve Army personnel who according to the records, did not attend the relevant training. He had even recommended that the relevant officers be punished via “surcharge” as permitted under Section 18(b) of the Akta Tatacara Kewangan 1957.

While the Ministry of Defence may need time to “sort out” the problems highlighted by the Auditor-General in the current report, the Minister has no such excuse for not having dealt with the problems raised in the 2009 report. One of the scandals arising from the previous year’s report is the construction of a new RM256 million Skudai 7th Brigade Army Camp which was awarded in 1997 but has only achieved 18.3% completion.

I’ve personally visited the site (see photos) yesterday and found the construction site to be still in deplorable conditions, with massive soil erosion causing major mud floods in neighbouring residential areas and abandoned “ruins and relics” peppering the site. And yet, despite the massive delay, and recommendations by the Auditor-General to do so, the contract with the developer Kausar Corporation Sdn Bhd has yet to be terminated.

The Grand Canyon of Malaysia (1)

The Grand Canyon of Malaysia (2)

The Ancient Ruins of Skudai (1)

The Ancient Ruins of Skudai (2)

The Ancient Ruins of Skudai (3)

What is worse is the fact that Kausar Corporation has collected their construction fees in full via a land swap deal where the company was already given the ownership of a 153 hectares piece of land. Kausar was able to pledge this piece of land to a bank for the amount of RM465 million showing that the land which could be worth as much as RM800 million is well above the cost of construction of the camp.

It is the Army and the tax payers who have to suffer as the Ministry of Defence has already (over)paid for the construction works in full, and yet after more than 15 years, the Army is still awaiting its “new” camp to be completed. Despite the above, no action to date has been taken against the developer, including terminating the contract, charging late penalties or reclaiming the land which has been awarded to them.

The Minister of Defence, Datuk Seri Zahid Hamidi must answer for all of these major scandals instead of just putting his priority gleefully to procure new vehicles, and blaming the federal opposition for taking him to task.