All posts by rafiziramli

Response to Umno Youth Chief’s Criticism of Buku Jingga: RM28 Billion Lost Is Real!

Pakatan Rakyat’s Buku Jingga has been a centre of much debate since its unveiling in December. Ironically, the immediate response on Buku Jingga by Barisan Nasional’s top leadership has added weight to its instant fame, not least when the Prime Minister himself promised to present to the nation a point-by-point rebuttal of the reforms outlined. While the nation is still waiting for the point-by-point rebuttal from the Prime Minister (either in the form of published article or through a live debate with the Leader of Opposition), Umno’s Youth Chief has kindly set out a basis for an exchange of arguments on the merits of Pakatan Rakyat’s Buku Jingga.

I must commend him for the efforts, although he only commented on 3 points out of the 10-point reform programs.  There was no response whatsoever on the commitment to restore the independence and integrity of the key national institutions of the nation such as the judiciary, Royal Malaysian Police and AG Chamber. Nor was there any mention of our promise to abolish ISA.

I would understand why he was silent on our commitment to make water a public asset of the rakyat and the pledge to guarantee availability of free wi-fi internet service to all urban and semi-urban areas; because Pakatan states are already striving to achieve this since taking over. Nevertheless, he could at least share with the rakyat why he thought it is not possible to set up a Royal Commission to decidedly resolve the problems of immigration and citizenship in Sabah; or what has been stopping BN’s Federal Government from raising the royalty for hydrocarbon extraction to states to 20%?

Irrespective of my personal feeling of the incompleteness of the response, I shall present Pakatan Rakyat’s arguments on the key issues raised by him last week.

He questioned the accuracy of the RM28 billion estimate of the public monies lost each year due to leakages, corruption and shoddy procurement practices, on the basis that it was not specifically reported in the Auditor General’s Report. My good colleague must understand the nature of audit and how audits are conducted. Having spent a good portion of my professional life as a chartered accountant and an auditor, I must impress on the public that audits are carried out on the basis of sampling. We test samples of transactions to estimate the extent and nature of the financial and operational positions.

The RM28 billion exact figure may not be reported explicitly in the AG’s Report, but the results of the audit clearly point to leakages of that proportion based on the extent of over-pricing and over-spending of individual items; as well as losses due to mismanagement detected during field audits.

One only has to peruse up to the quarter of the AG’s Report to understand the magnitude of the leakages. Let me give a few easy examples.

In the 2008 AG’s Report, it was revealed that the Federal Government had to bear an estimated loss of RM1.14 billion due to the mismanagement of the electrified double-tracking project between Rawang and Ipoh. Another RM500 million of taxpayers’ money was used to set off the accumulated losses of government’s investment in the US-based Columbia Aircarft Manufacturing Corp.

We should not forget too easily the shock that the nation had to endure when we discovered that taxpayers’ money paid for a RM42,320 laptop; perhaps the most expensive in the world. Or the gasp when we realised government departments paid RM262,256 maintenance cost of a Perdana over a 4 year period, when a market estimate is only RM15,000.

It feels only yesterday that the AG rapped the Youth & Sports Ministry for a series of out-of-this-world purchases; including  a RM224 screw-driver set, a RM5,700 car jack or a RM8,254 digital camera – when the market price per piece was RM40, RM50 and RM2,990 respectively.

My good friend can argue on technical ground that the RM28 billion was never reported per se in the AG’s Report, but his argument is out of touch with the reality on the ground. The excesses and huge leakages due to the mismanagement and BN’s lackadaisical attitude in combating corruption are real.

The examples cited in the AG’s Report are reflected annually in the overall financial position of the government. The financial indiscipline due to the lack of political will to impose good governance; has caused over-spending each year beyond what was approved for the annual spending budget.

Take the 2009 AG’s Report for example, released in June 2010 (the latest report available). In 2009, the Federal Government over spent by a whopping amount of RM4.83 billion above what was approved for its operational expenses. More alarming was the fact that this malpractice of financial indiscipline has persisted over the years – in between 2005 and 2009; the Federal Government’s cumulative overspending on operational expenses was RM19.41 billion.

Over the same period, the Federal Government’s development expenditure had also exceeded the approved budget for RMK9 by 34%. 42 projects listed as RMK9 projects exceeded the approved budget by a total amount of RM3.74 billion; topped by the defence procurement by a ministry previously helmed by the Prime Minister.

I can go on and list other numbers especially the amount of loans guaranteed or given to GLCs and government bodies; which forms a significant financial risk and liability to the Federal Government. By the end of 2009, the Federal Government guaranteed a total of RM84 billion in loans to 20 GLCs and 2 government bodies. If my good friend finds it difficult to comprehend the magnitude of this, we have to refresh our memories on the PKFZ loan guarantee fiasco which saddled the Federal Government with billions worth of debts.

Or he can visit my hometown of Kemaman to grapple with the magnitude of public funds that Perwaja has sucked over the years from the rakyat. As at 31 December 2008, Perwaja owed an amount of RM3 billion worth of debts that fell due on that date to the Federal Government. It was not able to pay; in fact it couldn’t even pay the RM319 million instalment due in 2009 that the loan had to be restructured and paid over a longer term. Such was an instance of a series of financial imprudence when public funds are used to subsidise the corporate companies. In 2009, 45.7% out of the 70 loans worth billions of ringgit given to corporate companies could not be serviced on time.

I listed all these examples published in the AG’s Report to provide a glimpse of the extent of leakages, over spending, financial indiscipline and corruption that are rampant in this country. The figures cited are bona fide audited figures presented to Dewan Rakyat by the Auditor General. These figures on their own, without the need to extrapolate and estimate as alleged by my good friend; already amount to billions of ringgit each year.

So, our basis for estimating that there is a potential saving of RM28 billion if we fix the leakages, mismanagement and corruption has its merits; corroborated by years’ worth of AG’s Reports. In fact, some quarters even believe that the estimate is conservative.

When Pakatan Rakyat takes over, with a single-mindedness for political and economic reforms, there is a room to return the RM28 billion back to the people in the form of the programs outlined in Buku Jingga.

I have an equally long explanation backed by facts and figures for the other 3 points raised by the good gentleman on gas subsidies/IPP, GLC and affordability of the RM500 teaching allowance; but it will have to be in different instalments of my column as the space does not allow it.

But I hope, this “point-of-information” (POI, as we often refer to interjections in debating tournaments) is enough to enlighten the public for today. I trust there will be more such debates in the press (through various writings) after this since my good friend has not responded to a debate challenge, so I shall keep the other points for the future!

This response was published in The Edge

Najib Should Focus On Managing The Economy, Not Witch-Hunting Pakatan Rakyat Leaders

Parti Keadilan Rakyat is appalled to discover the length that Prime Minister Dato’ Seri Najib Tun Razak had gone to push the Saudi Government for a probe on alleged Saudi’s funding of opposition parties in Malaysia, especially when he had not responded to mounting calls for an all-party probe on GFI (Global Financial Integrity) report that Malaysia’s illicit fund outflows reached USD291 billion (equivalent to RM888 billion) for the period 2000 to 2008.

The Prime Minister’s act of abusing a diplomatic channel to press for a probe against a democratically elected Leader of Opposition is scandalous enough, though not as shocking as his lackadaisical attitude towards the GFI report.

It is symptomatic of Umno/BN’s obsession with character assassination as the only way to meet political challenge. When challenged for a debate on Pakatan Rakyat’s Buku Jingga, the Prime Minister resorted to personal attacks. In the midst of widespread concerns of his administration’s ability to resuscitate private investments and stemming out the average annual illicit fund outflows of USD32 billion (equivalent to RM98 billion annually), we discover that he was more pre-occupied with personal probe on Dato’ Seri Anwar Ibrahim.

The GFI report demands a closer scrutiny especially when the method and data used are bona fide and globally accepted. The method is based on the World Bank Residual model which uses the change in external debt (through balance of payments data) to determine unrecorded capital leakages. These capital leakages are often caused by proceeds of bribery, theft, kickbacks and tax evasion. This model is universally accepted and it is unbecoming of a certain Deputy Minister of International Trade to question the veracity of the model. The data used in the model is available publicly and announced by Bank Negara Malaysia periodically.

In light of this, any Finance Minister would have been alarmed, especially when Bank Negara Malaysia’s own statistics show a persistent large negative “errors and omissions” since 2005. “Errors and omissions” in the Balance of Payments corresponds to a balancing figure to account for statistical inaccuracies and incomplete reporting of financial flows monitored by a central bank. A negative “errors and omissions” simply means that either the outflows have been underestimated (more funds leaving the country than officially reported) or the inflows have been overestimated (or a combination of both).

Since 2005, Malaysia has recorded a large negative “errors and omissions” in its Balance of Payment as follows:



Negative “errors and omissions” in RM billion











Source: Bank Negara Malaysia, November 2010

The total sum of probable underestimation of outflows reported by Bank Negara Malaysia in between 2005 and 2009 is RM120.8 billion – an official statistic from the Government of Malaysia that provides a degree of correlation to GFI report on the illicit fund outflows of the country.

Given the gravity of this, it is best that the Prime Minister concentrates on managing the country’s economy prudently and act promptly on alarming revelations contained in GFI report. He has no business going around abusing the diplomatic channel to undermine Pakatan Rakyat and Dato’ Seri Anwar Ibrahim.

Finally the table is turned around – Umno/BN’s accusation that Pakatan Rakyat utilises an international networking for political advantage now rings hollow in light of the Prime Minister’s own behaviour.



28 JANUARY 2011

Najib Patut Fokus Perbetulkan Ekonomi, Bukan Salahguna Kuasa Diplomatik Untuk Risik Pimpinan Pakatan Rakyat

Parti Keadilan Rakyat sangat mual dengan tingkahlaku Perdana Menteri Dato’ Seri Najib Tun Razak yang dilaporkan menekan Kerajaan Saudi untuk menyiasat tuduhan beliau bahawa Dato’ Seri Anwar Ibrahim dibiayai tokoh-tokoh Saudi, sedangkan sehingga sekarang Perdana Menteri masih membisu apabila berdepan dengan desakan pelbagai pihak supaya siasatan lanjut dibuat mengenai aliran keluar wang haram sebanyak RM888 billion antara tahun 2000 dan 2008 seperti dilaporkan GFI (Global Financial Integrity) baru-baru ini.

Walaupun tindakan Perdana Menteri yang menyalahgunakan saluran diplomatik untuk kepentingan peribadi itu mengejutkan rakyat, keengganan beliau menyiasat aliran keluar wang haram sebanyak RM888 billion itu saya kira lebih mencemaskan.

Umno/BN semakin taksub dengan jalan memfitnah dan menekan lawan sebagai satu-satunya cara berdepan dengan cabaran politik dari Pakatan Rakyat. Apabila dijemput berdebat mengenai Buku Jingga, Perdana Menteri menghamburkan serangan peribadi. Di kala kebimbangan rakyat mengenai kemampuannya menghidupkan semula pelaburan swasta dan mencegah aliran wang haram sebanyak RM98 billion setahun memuncak, Perdana Menteri nampaknya lebih sibuk menyalahgunakan saluran diplomatik untuk menjaga tepi kain Ketua Pembangkang.

Laporan GFI sememangnya perlu diberi perhatian berat kerana kaedah dan data yang digunakan adalah benar dan diterimapakai di seluruh dunia. Kaedahnya adalah berdasarkan model Bank Dunia yang merujuk kepada perubahan di dalam hutang luar negara (melalui data Imbangan Pembayaran negara) untuk menentukan ketirisan wang dan modal yang tidak dilaporkan mengikut undang-undang. Ketirisan wang dan modal ini disembunyikan dari pihak berkuasa kerana ia selalunya bersabit sumber rasuah, kecurian dan pengelakan cukai. Model ini diterimapakai di seluruh dunia, maka kenyataan seorang Timbalan Menteri Perdagangan Antarabangsa yang mempersoalkan kesahihan model ini menunjukkan kedangkalan beliau sendiri. Datanya pula adalah data rasmi yang diumumkan oleh Bank Negara Malaysia dari semasa ke semasa.

Oleh sebab itu, sepatutnya seorang Menteri Kewangan tidak akan tidur malam dengan pendedahan GFI itu, apatah lagi apabila statistik rasmi Bank Negara Malaysia sendiri menunjukkan angka negatif besar  “Kesilapan dan Ketinggalan” dalam Imbangan Pembayaran negara yang telah berlanjutan sejak tahun 2005.

Statistik “Kesilapan dan Ketinggalan” dalam Imbangan Pembayaran negara merujuk kepada angka pengimbang bagi mengambil kira anggaran statistik dan laporan aliran wang keluar masuk yang tidak dilaporkan sepenuhnya kepada Bank Negara Malaysia. Maka, angka negatif “Kesilapan dan Ketinggalan” bermaksud sama ada aliran wang tunai keluar yang dilaporkan adalah lebih rendah dari aliran wang tunai keluar yang sebenarnya berlaku; atau aliran wang tunai masuk adalah lebih tinggi dari yang sebenarnya masuk (atau gabungan kedua-duanya).

Sejak 2005, Malaysia telah mencatatkan angka negatif “Kesilapan dan Ketinggalan” yang besar di dalam Imbangan Pembayarannya seperti berikut:


Angka negatif “Kesilapan dan Ketinggalan” dalam RM billion











Sumber: Bank Negara Malaysia, November 2010

Jumlah keseluruhan kemungkinan aliran wang tunai keluar negara yang dilaporkan adalah lebih rendah dari yang sebenarnya berlaku bagi tahun 2005 hingga 2009 adalan RM120.8 billion seperti yang diakui oleh Bank Negara Malaysia sendiri. Statistik rasmi dari Kerajaan Malaysia ini selari dengan pendedahan laporan GFI mengenai jumlah aliran keluar wang haram yang mencecah puluhan billion ringgit setiap tahun.

Justeru, adalah lebih baik sekiranya Perdana Menteri menumpukan tenaganya memperbetulkan ekonomi negara dengan berbelanja secara berhemah dan bertindak segera ke atas pendedahan yang dibuat di dalam laporan GFI. Usahlah beliau menghabiskan wang negara mengunjungi negara-negara asing dan menyalahgunakan saluran diplomatik untuk menjaga tepi kain Pakatan Rakyat dan Dato’ Seri Anwar Ibrahim.

Akhirnya, fitnah Umno/BN bahawa Pakatan Rakyat menggunakan saluran antarabangsa demi kepentingan politik tidak ubah seperti meludah ke langit terkena muka sendiri; apabila Presiden Umno/BN sendiri yang sibuk memohon simpati dan bantuan antarabangsa untuk berdepan dengan Pakatan Rakyat dan Dato’ Seri Anwar Ibrahim.



28 JANUARI 2011