Ekonomi & Kewangan

NEM & Subsidy Removal: Proof Of BN’s Double Standard And Flagrant Inconsistency

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The 5 sen price hike imposed on RON95 fuel is a second successive increase in 6 months. The announcement made by Dato’ Seri Idris Jala also included subsidy removal on other essential household items such as sugar (20 sen increase), diesel (5 sen increase) and LPG (5 sen increase).

While Barisan Nasional claims the quantum of these price hikes is too small to have an impact on the public, the policy direction that is taking shape cannot be mistaken. Barisan Nasional through PEMANDU has outlined (announced during Subsidy Rationalisation Open Day on 27 May 2010) a subsidy removal plan to impose a 6-monthly price hike on RON95 fuel. The announcement last night confirms that similar price hikes will take place in the future and perhaps at an even bigger quantum as the originally proposed quantum of price hike was at 10 sen per price hike for every 6 months[1].

A similar phased removal of subsidy on other essential household items was also outlined including the removal of gas subsidies extended to wealthy IPPs owned by business elites and cronies of Barisan Nasional. Amazingly, the only hikes implemented so far are on those items that hit directly on the people’s purse; not the cronies’.

PEMANDU estimated that a total of RM1.12 billion could be saved in 2010 if subsidies on gas price to IPPs and non-power sector are reduced. This could have been achieved if gas price to IPP and non-power sector is increased by RM4.65 per mmbtu and RM2.52 per mmbtu respectively. Currently, the government through PETRONAS subsidises the IPPs and industries to the tune of RM19 billion annually as the subsidised gas price of RM10.70 per mmbtu (for IPPs) is remarkably lower than the average market price of imported gas of RM38 per mmbtu (should the country need to import the gas to meet the demand against a shortfall in production).

Therefore, the Prime Minister and his government must answer why it is hell-bent on pushing for subsidy removal on fuel, sugar and LPG that will undoubtedly increase the burden of the lower income group; when similar zeal is not shown vis-a-vis the rich corporate giants?

This is more so when nothing has been done so far (despite promises after promises) to reform the subsidy allocation system. This is pivotal to ensure that the lower income group will continue to benefit from state assistance to counter the rising cost of living. PEMANDU seems to be extremely efficient at pushing for the subsidy removal; yet extremely slow at coming out with a solution to redistribute the subsidy that are meant for the poor.

Thus, I share the scepticism of the public in reviewing the recently announced concluding part of the NEM. Barisan Nasional outlines ambitious ideas and concepts on bringing reforms to the economy, yet its track record at implementing these ideas have been appalling.

Barisan Nasional talks about the necessity to reduce subsidy in order to cut the nation’s deficit as a result of its carefree spending in the last decade. It chases the small change in the form of subsidy removal on household items most widely used by the people, yet it procrastinates on confronting the real subsidy monsters (in the form of the IPPs).

In the end, the RM126 million saved from the 16th July’s 20-sen hike on sugar is not even enough to pay for PEMANDU’s own exorbitant cost as reported by Malaysiakini (3rd December 2010). Where is the moral authority of a government that takes RM126 million from the poor to pay RM66 million to consultants for the set up of a government unit and another RM65 million for its whole operation in 2010?

Hence, I take the recent announcement on NEM with a pinch of salt. Barisan Nasional will continue to hoodwink the public of its intention to transform the public sector, but it quietly  pays the new breed of civil servants in PEMANDU top of the range salaries that will easily beat the private sector.

Its NEM document dedicates a substantial part on promoting competition through liberalisation and deregulation, but behind closed doors it awarded a licence to operate the prized 700 MHz to YTL (yet again) without an open tender, much to the chagrin of the telecommunications industry.

There is a patent of flagrant inconsistency between the public pronouncement and the honesty to carry out the announcement. This is not surprising as the whole machination of this administration is based on the perpetuation of a public image crafted by firms of public relations that are paid by the taxpayers’ money – with the sole intention of buying Barisan Nasional additional time before the people casts their judgement.

The onus is then on Pakatan Rakyat and the people to keep a vigilant eye on each of the decision by this administration. If we fail in this endeavour, we are definitely en route to paying a fuel price at RM2.10 litre within a year’s time.

YB DATO’ SERI ANWAR IBRAHIM

LEADER OF OPPOSITION

4 DECEMBER 2010

[1] Please refer to Subsidy Rationalisation Open Day, 27 May 2010

KEADILAN

No surprise here, Zaid — The Malaysian Insider

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NOV 8 — It is no surprise to hear that Datuk Zaid Ibrahim has dropped out of the race for the PKR deputy presidency. Or quit all party posts.

It is no surprise that he feels “that any political party with such hypocritical and false values will not be able to offer meaningful reforms to the people of this country.”

It is no surprise that he doesn’t feel wanted anymore by the party. That his offer to run for the deputy presidency was seen by the “adoring fans of Anwar Ibrahim as a ‘spoiler’ standing in the way of their march to Putrajaya”.

The same thing happened to him in Umno. He joined the Abdullah administration in the aftermath of Election 2008 as the de facto law minister only to quit later over the detention of DAP leader Teresa Kok, blogger Raja Petra Kamarudin and journalist Tan Hoon Cheng under the Internal Security Act (ISA).

The one-time Kota Baru MP was later kicked out of Umno after he was seen attending gatherings held by the party’s political foes.

The maverick politician joined PKR in June 2009 and was given a hero’s welcome but has apparently worn out that welcome with his run for the party’s No. 2 post.

He had big plans for the party. The lawyer, who built up the country’s largest partnership that bears his name, ran the secretariat to turn the informal Pakatan Rakyat (PR) pact into a formal organisation comprising PKR, DAP and PAS.

He even quit the party political bureau to quell talk of ambition to replace Datuk Seri Anwar Ibrahim if the PKR de facto chief was ever jailed for sodomy again.

And offered to run for the No. 2 post if Anwar ran for the party presidency in its first-ever direct elections. Anwar declined.

But Zaid never seemed serious about his candidacy. His candidacy was contingent on Selangor Mentri Besar Tan Sri Khalid Ibrahim not entering the race. But he persisted when Khalid mulled the proposition.

He did the same when asking Lembah Pantai MP Nurul Izzah Anwar to join the contest. She said no.

Today, Zaid pulled back his hat from the ring, citing “there is no attempt on the part of the party leadership to address the various issues of manipulation and unfair electoral practices, although these issues were raised repeatedly.”

It came as no surprise to many. It was always a matter of time especially after the votes from the Sabah chapter went the way of the popular vice-president Azmin Ali.

But Zaid joined PKR with both his eyes open. It’s a party built on the dreams of many but crafted from the DNA of Umno where most leaders, including Zaid, came from. Some things never change.

A pity. Zaid and others might have their grouses but his latest move will narrow his options. HIs image will also take a hit.

What he and PKR does in the next few days will be interesting. But no surprises expected.

Ekonomi & Kewangan

The technology challenge of a high income nation

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(This is the second part of a 3-part articles published in The Edge addressing the challenges facing Malaysia in attaining a high income nation, in spite of the blue-print spelled out in NEM, ETP and various documents presented by Barisan Nasional so far)

The national target to achieve a high income nation status is not a new target. From as early as the Eighth Malaysian Plan (8MP) announced a decade ago, Malaysia had set its eyes on high value economic activities. What had changed over the years is the catch-phrase – 8MP introduced “moving up the value chain” and by 2010, this has been packaged to “high income nation”.

Nonetheless the essence is still the same. Malaysia has to move beyond the existing model of a manufacturing hub built on cost competitiveness – essentially cheap labour, cheaper overhead and user of technology – up the ladder to become an economy that creates value. Only through creation and innovation can we command higher prices for the products and services we introduce to the global market. It is a simple truth about technology and product life cycle – those which innovate can charge premium while the technology/product is still a novelty and the premium tapers off once it becomes a household good/service.

While recognising the need to shift from a technology user to a technology provider is straight-forward enough, instituting that shift in our industry and economy has been a painful experience and remains arguably the most challenging transformation Malaysia faces as an economy and a nation. The most futile bit about this challenge is its paramount role in the economic fabric of our country – a sustainable high income nation is a fallacy unless we achieve considerable improvements in the manner we accelerate the research, development and commercialisation (R&D&C) activities in the country.

To be fair to the government, several efforts had been made to step-change our technological capability. Unfortunately, these efforts were short-cuts and measures designed to own technologies rather than to develop and sustain the capabilities that innovate the technologies. Owning a set of technologies is not the same with having the sets of skills cultivated in the right climate and given the right incentives; the former can be bought and sold to the highest bidder while the latter becomes an intrinsic strength of an economy.

So we embarked on a series of large-scale and high profile national projects in the name of technology transfer. We started heavy industries including a highly controversial national automotive project, partly to accelerate the transfer of technology. Eventually it became obvious that what we did was to pay royalty to our foreign partners to use their patents and technology in our locally manufactured goods.

And so we embarked onto a new set of short-cut measures – if we couldn’t develop the technology fast enough in spite of having the industries, we could buy niche technology firms abroad to support the local industries. This was followed by a series of expensive acquisitions of foreign technology firms; some remain in Malaysian control till this very day, a few were later sold at a great loss to the nation.

But we don’t buy technology if we want to reap the benefit of economic premiums attached to technology ownership; we must develop it ourselves.

This is where I was alarmed that throughout the announcements of several blue-prints (from NEM to the recently unveiled 2011 budget), there does not seem to be any major shift in the national game-plan to accelerate the build-up of technology R&D&C capabilities in our quest towards a high income economy.

For a start, the strategy is still heavily reliant on government’s intervention and public institutions to invest in R&D&C.

This is a flawed strategy as the best catalyst for technology development to flourish is profit – Edison did not devote his life to invention so that he could become a dean of a science faculty; he set a target of x number of invention per month to be produced by his research lab because he could sell them for a profit. A strategy that relies heavily on non-profit oriented entities to lead a technology capability build up is bound to fail because it is detached from the very enabler that allows resources to be plunged back into R&D&C i.e. profit motivation.

Hence, I was unpleasantly disappointed when the 2011 budget did not expound on new radical ways that Putrajaya will inject enthusiasm into companies to allocate more resources into R&D&C. Even what was announced was shockingly disappointing – a RM20 million additional allocation to increase the percentage of PhD holders in public institutes of higher learning pales in comparison to the RM200 million allocated for 1Malaysia Training Scheme. The former would have had some impacts on the technology journey of the economy, the latter is a populist scheme meant to train unemployed in sewing and other low value economic activities. There is nothing wrong with any scheme that benefits the people, yet this smacks lack of political will to push through one key component to progress to a high income economy.

The other big announcement related to technology is the creation of UNIK (Unit Inovasi Khas/Special Unit for Innovation) parked at the Prime Minister’s Department, which among others will “draft a legislation to allow for higher degree of commercialisation of researches by public institutions and coordinate the efforts for commercialisation”.

I abhor another set of bureaucracy when the responsibility to foster R&D&C in the country was already given to MOSTI. A new unit in a different department under a different minister means more meeting, more labs, more away-days and more reinventing the wheel (as far the basic process to identify and fast-track commercialisation of a research).

But above all, this does not at all alter our philosophical approach to developing the technology capability vis-a-vis private sector’s involvement. The most pronounced incentive for R&D&C is the double-tax deduction facilities given qualified R&D expenditures incurred by companies. This has failed miserably judging by the fact that we hardly made any leaps in terms of R&D spending as a percentage of GDP compared to competitors.

Based on a statistics produced by MOSTI and UNESCO, Malaysia spent a mere 0.64% of its GDP on R&D in 2008 (latest figure available), compared to 2.39% (Singapore), 3.23% (South Korea), 2.58% (Taiwan) and 3.4% (Japan). In terms of the number of engineers and technical researchers per million population, we were completely out of league at 367, compared to Singapore (5,713), South Korea (4,162), Taiwan (4,159) and Japan (5,148). These indicators are the two most commonly used to indicate a nation’s level of commitment and success in building technology capabilities.

The current and past methods to approach technology development have certainly failed, especially in developing a vibrant research culture among our conglomerates and research companies. Celcom and Maxis may be one of the largest cellular operators in the region, yet they are not known for their technology edge. The same can be said about most of our large corporations.

I personally think the shift has to take place by moving the emphasis from public sector to private sectors. Then, give these corporations enough reasons to invest and build the culture for building and sustaining technology capabilities. When it pays to be innovative and to build the technology capabilities, companies have more motivation to do it.

One of the ways is to set a certain criteria that a company of a certain size and profitability must invest a percentage of its profits into R&D&C activities; similar to a concept of research cess levied on mining and oil & gas operations in some countries. The amount invested is exempted from tax and if the government wants to go a step further, it can exempt the profit stream resulting from a successful commercialisation of a developed technology for a number of years.

This can have two immediate effects. One, it can drastically increase the amount of capital invested in R&D&C in our economy albeit forcefully. Secondly, it provides more monetary and instant incentives for companies to invest compared to the current double-deduction regime when most of the entities set up for R&D do not make profits in the first place.

We can debate until the cows go home on ways to accelerate R&D&C activities in the country. The beauty of it is we do not have to invent because there are plenty of lessons to learn from our competitors and other countries on how they charted their technology journey – all it takes is a bit more of political will and less preoccupation with winning the votes.

And building technology capabilities is a journey and long term by default.

Pilihanraya

PRK Batu Sapi: Good Analysis by Clara Chooi (Malaysian Insider)

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I will write my views about what the result of Batu Sapi by-election means to PKR and Pakatan, but for the time being Clara has done a good job to start the discussion.

Poor turnout dampens BN’s Batu Sapi victory

ANALYSIS, Nov 5 — Despite the euphoria, Barisan Nasional’s (BN) comfortable victory in Batu Sapi last night was a significant showing of the people’s political apathy and the fact that many were still entrenched in the era of “government knows best”.

While BN has insisted that yesterday’s results were proof that the people had accepted Datuk Seri Najib Razak’s development initiatives and 1 Malaysia platform, one significant factor was ignored — the poor turnout of voters.

If anything, the meagre 61.5 per cent turnout clearly indicated that the locals here have little or no regard for politics and place it low on their list of priorities.

Those who did turn up to vote yesterday were largely the community’s elderly, namely the staunch BN supporters of the past, who knew very little of the political changes made by their brethren across the South China Sea.

Many villagers, when met during polling day yesterday, had looked aghast at the uproar the by-election had brought to their otherwise peaceful township and were plagued with questions on why the polls was any different from past elections in the area.

Even Sabah Progressive Party’s (SAPP) candidate Datuk Yong Teck Lee said the small group of supporters seen waving flags and chanting outside the polling stations was a trend alien to the local folk of Batu Sapi.

In previous elections, said the former chief minister, voters merely sailed in and out of polling stations with ease.

The failure of nearly 40 per cent of the community here to turn up to cast their vote showed that many cared very little over who represented them in Parliament.

If they were indeed politically aware and anxious to support either the BN or the opposition parties of PKR and SAPP, they would have made an effort to let their voices be heard.

But the fact that they did not, resulting in BN’s victory, does not necessarily mean that the majority of voters in Batu Sapi were supportive of Najib’s slew of development initiatives.

In all likelihood even, most of the rural folk living here do not even know what the NEM, ETP, GTP, NKRA and NKEA are, along with the other plans the prime minister may have for Malaysia.

How could they, when they lack access to simple information and even basic amenities like running water or electricity?

Another significant takeaway from yesterday’s polls was Pakatan Rakyat’s (PR) success in securing second place.

Although PKR had clearly walked into the race as the underdog, with predictions pointing to its likely failure to secure the seat, in just nine-days of campaigning, the peninsular-based party had managed to push through to second place, above even locally-based SAPP.

Talks with villagers during the last few days of campaigning showed that PKR, armed with its experiences from the peninsular, had managed to make its presence felt in Batu Sapi.

Local folk whispered the tales of corruption the party had brought with them, and grew starry-eyed in the presence of political giants like Datuk Seri Anwar Ibrahim, Tan Sri Khalid Ibrahim, Lim Kit Siang and even Lim Guan Eng.

With their round-the-clock efforts, PKR also managed to clinch the support of the Chinese community here, which make up about 38 per cent of the total electorate.

The party hit many stumbling blocks along the way, however, as they were up against BN’s massive election machinery and resources.

For the local folk in Batu Sapi, many of whom were struggling with monthly salaries of just RM400, simple gifts were enough to convince them that BN was the better choice.

One PKR leader told The Malaysian Insider, “They are so poor and they need these things now. They cannot see beyond tomorrow and the fact that they can get even more if they dared to make a change.”

PKR’s leaders also spoke of problems with teaching people how to vote for the opposition, after finding that some local folk were not even aware of party emblems other than the BN’s.

On the final day of campaign, the party had to mobilise a team of campaign workers to teach the people how to mark their ballot papers.

PKR elections director Fuziah Salleh said that the villagers had long been accustomed to BN’s logo and when faced with a ballot paper, their immediate reaction was to mark an “X” next to it.

Still, despite these shortcomings, PKR’s Ansari managed second place yesterday with 3,414 votes, behind BN’s Datin Linda Tsen Thau Lin’s 9,773 votes. In third place was SAPP’s Yong with 2,031 votes.

If nine days of hectic campaigning could secure PKR second place, who is to say what will happen in Batu Sapi come the next general election, still at least months away?

Rafizi Ramli

Miscellaneous

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Time moves very fast especially when all that you need most is time.

It’s been quite a while and as I desperately hope the fall-out from the fiasco of pulling out at the last minute (that one, ha ha) quietly dies off, I can’t help but revisit certain things that you subconsciously forget before.

In the midst of the fast-paced events of the last 2 months, I missed out one important date/event that I had never failed to remember before. A close friend, who was as good as a brother to me, passed away silently in his sleep due to a cardiac arrest on 22 October 2007 at the tender age of 31. I was overseas at the time and it was a race against time flying back and chasing kereta jenazah so that I could see his face before he was buried – I didn’t make it and that experience (losing somebody so important in your life) haunted me. Each year, as 22 October approaches, I usually go through a somewhat peculiar calmness, as I revisit his life and death and try my best to honour him with prayers and Quran recital.

This year, I missed it completely – didn’t even send an sms to his widow and 4 children left behind.

The budget, shuttling between one place etc quickly eclipsed the personal and spiritual journey that I carefully observed these last few years.

Now that November is around, the clock ticks again as I wait for 24 January, the date when a great mentor and friend passed away. Allahyarham Adlan Benan Omar passed away on 24 January 2008 due to various sickness. In my mind, he is irreplaceable as the most talented and brilliant intellectual giant of my generation. You can google him and you will feel how special this person was from all the tributes people made about him.

Hopefully 24 January 2011 that marks Ben’s 3-year of leaving us will not pass uneventful.

Politics, public life and everything takes a toll on us. In 2009, when I decided to walk away from the promise of corporate high-flyers life, I wanted to take a 6-month break so that I could observe Ramadhan peacefully and then write a book, maybe a memoir of my time with the late Adlan Benan Omar. It never happened as I began to receive many calls.

After the tumultuous events of the last 2 months (which was private and personal to me despite the whole campaign being public), I learnt one important lesson, which I hope to share with the young and budding politicians out there, wherever you are.

A public life does not mean you have to lose your originality. Being a public figure and a leader is about being transparent – the moment you change who you are because you want to suit to what you think the public wants, then you are a politician; often will be viewed with disdain in the future for the fork-tongued image often associated with politicians.

The public does not want more politicians, they want statesmen and leaders. A statesman and a leader leads even if he/she is not in synch with what the society’s trend and opinion is at a particular time. But that’s why he/she is a leader – because the task entrusted upon him is to lead towards change; not to propagate what is already accepted or popular with society.

As I revisited Gandhi or Naidu (Sarojini Naidu, to those who may not know), I am reminded that they never lose their humanity in spite of living their life in a glass. Gandhi was more remembered for his kindness and thoughts, more than his open defiance of the British rule. Naidu was not remembered for her genius (she was considered a child prodigy and a genius) but for her words and exemplary choices she made to defy the norms of her society.

So let us remember that one should not lose oneself in search for a place in the public life.

With the reminder, I re-post one of Arwah Adlan Benan’s many writings on history (which I am sure he typed over a plate of goreng pisang in 10 minutes!) so that I can be reminded of the great people before us, whom we seek to follow on this path.

Al-Fatihah.

Assalamualaikum and Salam Sejahtera Dr Aman et al,

Re: Dr Aman’s previous e-mail. Thank you for the notes.

The role of the Bendahara in a succession was so important not only because he was the most senior noble and officer of state, but also because often he held the largest fiefdoms.

On the death of Mahmud Riayat Shah III of Johor in 1813, a unique situation occured. Except for Tengku Long (later Sultan Hussein Muhammad Shah) and Tengku Komeng (later Sultan Abdul Rahman Muadzam Shah I), sons of the deceased Sultan, no other blood princes of the line of Sultan Sulaiman Badrul Alam Shah I (1722-1760) were alive.

The Johor monarchy had no settled system of succession. Before 1699, only three of nine successions were of sons succeeding fathers. The eldest son, or a porphyrogenitus (“anak gahara”) did not necessarily have a better claim than his brothers unless nominated so by their father during his lifetime. The bearer of the title Tengku Besar was
usually considered to be the heir apparent. Neither Tengku Long or Tengku Komeng was so named.

The Bendahara, the senior member of the Royal Family (being a direct descendant of Tun Abbas, ELDEST son of Sultan Abdul Jalil Riayat Shah IV d. 1720) could have proclaimed Tengku Long as Sultan. In fact he did not do so, though Tengku Long was in Pekan getting married to his daughter. Probably the Bendahara was unsure what to do. As was Tengku Puteri Hamidah, the dowager queen of Mahmud III but mother of neither princes. Obviously, Mahmud III had not named his successor.

A precedent existed. When Sultan Sulaiman died in 1760, he also left two sons. The eldest, Tengku Abdul Jalil, was away in Selangor at the time of his father’s death. The younger prince was in Riau. But as Tengku Abdul Jalil was Tengku Besar, he was proclaimed Sultan Abdul Jalil Muadzam Shah V, even while he was at sea. Sultan Abdul Jalil in fact died at sea, before reaching Riau, to be succeeded by a six year old boy as Sultan Ahmad Riayat Shah, reigning for less than a year. In turn, his only surviving brother, Mahmud, aged less than two years, duly became Mahmud Riayat Shah III.

But Tengku Long was not the “Tengku Besar”, and as such may not have been considered his father’s choice. The precedent was not followed and the rest, as they say, is history.

Several Bendaharas have determined the succession in the Melaka-Johor dynasty. Bendahara Seriwa Raja Tun Perpatih Sedang gave his consent to the coup which placed Sultan Muzaffar Shah (1446-1456) as Sultan instead of the boy ruler Sultan Abu Shahid (1444-1446). Bendahara Paduka Raja Tun Perak insisted that the murderous Crown Prince Raja Muhammad of Melaka (d 1475) be replaced and exiled. He was also instrumental in replacing the next eldest prince Raja Ahmad with his younger brother Raja Hussein/Radin. One of the Bendaharas of Johor, either Paduka Raja Tun Isap or Seri Maharaja Tun Khoja Ahmad was instrumental in placing a Pahang-Kelantanese prince Raja Umar as Sultan Ali Jalla Abdul Jalil Riayat Shah II of Johor in 1571, the only case in Malay hisory of a father succeeding his own son as Sultan, and thereby supplanting the Melaka dynasty with a rival ruling house.

Thanks,

Adlan Benan Omar

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