Tengku Razaleigh’s Speech at the launching of “Rich Malaysia, Poor Malaysians”


April 4, 2014

Tengku Razaleigh’s Speech at Sultan Sulaiman Club, Kg Baru, Kuala Lumpur, 8 pm on April 3, 2014 on the occasion of the launching of “RICH MALAYSIA, POOR MALAYSIANS”, authored by Anas Alam Faizli

Ku LiYBM Tengku Razaleigh Hamzah

I am honoured at having been invited by Anas Alam Faizli to launch his book, “Rich Malaysia, Poor Malaysians”, a collection of essays reflecting his thoughts on energy, the economy and education of our beloved country. I applaud Anas for his intellectual discipline to pursue writing which demands mental toughness, quiet tenacity and absolute patience. Indeed, he deserves our admiration.

He deserves our respect given that Malaysians are notoriously apathetic to reading, let alone writing. I respectfully submit that we do not write enough, both fiction and otherwise in comparison to, say, our sprawling archipelagic neighbour to the south. It is in this context that our author deserves our commendation – my commendation in particular – for a task well done, even though the themes are serious and difficult. Well done, Anas.

Book Launch on April 3, 2014Having skimmed through the book, I must admit that I have more than just a passing interest in it; and at least for two reasons. I am always interested in writings on the subject of energy, be they articles for lay reading or academic treatises. I feel especially close when oil and petroleum are discussed. This is because of my task previously to see through the legislation of the Petroleum Development Act, 1974; the negotiation of the production sharing contracts with oil majors whose roles were redefined as contractors to the national oil company in the post-PDA era; and, establishing and developing PETRONAS into a professionally reputable and internationally respectable national oil company.

Secondly, having been schooled in economics, I follow its development keenly, both at the national and international levels. This is strengthened further by my having once been the Minister of Finance charged with the financial and economic management of the country. And of course, given the collective responsibility of the Cabinet, national policies on such subjects as education interest me greatly.

Let us reflect, for a moment, upon the situation regarding the supply and consumption of petroleum in the country and the downstream role of PETRONAS in the retailing of this essential and strategic product. Given our continuous inability to guide the country out of the middle income trap into the high income bracket, we have been using, for long spells, petroleum subsidisation to solve the problem of its affordability by ordinary people in the lower strata of the economic chain. While the subsidising of consumer goods is not the most efficient of ways in managing the high cost of living, it is fairly understandable if the government extends a helping hand to the small man in that manner.

What is sinful and cannot be forgiven is the ease with which the power that be had been dishing out subsidies to such entities as the national power supplier, the independent power producers and some other non-power outfits. As has been pointed out by Anas, since 1997 this subsidy has amounted to RM136.5 billion. The sad part is that while these power producers continue to enjoy subsidised fuel price, petroleum subsidy to the consumers – which purportedly cost the government RM14 billion in 2011 – was partly discontinued recently.

It is glaringly obvious that the government has been treating PETRONAS as a cash cow. Anas continues to point out that over 37 years from 1974 – 2011, the government had been paid some RM529 billion in dividends, taxes, petroleum proceeds and export duties from the national oil company. The reliance on PETRONAS to help outfits with strong linkages to the government out of financial trouble has been going on from as far back as 1985. In that year it rescued Bank Bumiputera with a RM2.5 billion bailout and again in 1991 when it coughed up another RM1 billion. In 1997, Petronas had to rescue the financially ailing Konsortium Perkapalan Berhad for RM2 billion.

The national oil company was also made to underwrite the construction of the Twin Towers in the heart of the KL golden triangle for RM6 billion and the building of the extravagant Putrajaya for RM22 billion. In all, more than a half trillion ringgit have been spent. This amount could have been used more productively to fund a national pension programme for Malaysians as has been done by a certain Scandinavian country.

This extravagance that had been forced on to PETRONAS has also deprived the company from the much needed cash build-up for reinvestment which would ensure its business sustainability. Given the finite nature of hydrocarbon as a resource, it is important for PETRONAS to look further afield at investments in businesses outside of oil and gas.

Looked at from this perspective, it is all the more critical for the corporation to have a strong cash reserve for reinvestment purposes. It was this need for prudence that had led Tun Razak, the Prime Minister of the day, to impress upon me the need to ensure that Petronas would enjoy parity with such multinational companies as the once much touted seven sisters, two of which ultimately became its contractors.

Today PETRONAS is at par with the oil majors and it is ranked as one of Fortune 500’s largest and most profitable oil and gas companies. But sadly, it is being abused and treated as the piggy bank whenever the government needs cash in a hurry.

Ladies and gentlemen, why is this so? Why is there a discrepancy between what was visualised by the founding fathers of PETRONAS and what it has turned out to be 40 years on; that is, as a banker of sorts to the government.

The truth is that there had been consistent political interference and this had affected PETRONAS, even though it is a professionally well run corporation. There is a blurring of lines demarcating the party in power and government, and by extension, the party supremo and the head of government. Cynics would contend that it was done on purpose to facilitate the development of politics of patronage. This, in turn, led to the growth of crony capitalism.

This inter-ethnic dichotomy is no more than a duplication of effort which result in the inefficient application of resources. It is worsened by the economic disparity that continues to be persistently reflected along racial line, notwithstanding the efforts made to blur and wipe it out. As explained by Anas, the bottom 40% of Malaysia in economic terms is still made up of Bumiputera households.

Transpose this against the notion that about 90% of their incomes are made up of wages and salaries which are hardly commensurate with the relatively more rapid increases in living costs, this problem takes on a much darker hue. As an illustration of how low Malaysian income generally is, it is worthwhile noting that the EPF had been known to report that about 79% of its contributors earn RM3,000 or less a month.

This reality becomes more significant when we realise that disposable income contributes much to purchasing power, especially among the relatively poor as opposed to the wealthy where purchasing power is additionally sourced from assets other than salaries and wages. A report on the national human development goes further to say that the “Chinese has a higher purchasing power compared to other ethnic groups…” More problematic and easily a potential source of politico-economic problem is the assertion by the report that there is “homogeneity in the purchasing power gap.” It asserts that the super-rich, regardless of ethnicity, has about 18 to 20 times more purchasing power.

Purchasing power has a graver ramification from the standpoint of economic wellbeing. This has to do with the reality that a person who enjoys a high income is not necessarily guaranteed a better quality of life. Neither does the effort to improve the quality of life through high income mean much if the cost of living rises rampantly. Again, an observation by Anas is very illuminating here. He contends that a graduate who entered the job market for the first time, say, in 1978 on a monthly salary of RM1,000 could afford a lower-end car of RM12,400 or 12 months’ salary and take out a mortgage, perhaps, on a RM62,000 house in a fairly upscale Kuala Lumpur suburb.

Today, a fresh entrant into the labour market on a monthly salary of RM2,500, which is two and half times higher than his earlier counterpart, would find a roughly similar car costing him RM178,000, roughly 71 months of his salary. A house outside the Greater Kelang Valley area, in Nilai for example, would set him back by RM350,000. This situation could get worse in all probability.

Ladies and gentlemen, the challenge before us is to mitigate the socio-political issues and problems to a minimum. This will ensure that they do not become a part of our political culture and, by extension, our way of life. We must have the will to stop patronage and cronyism. In this way rent-seekers would be cut off. But herein lies the problem.

Political leaders are loath to upsetting the apple cart and disturb their cosy symbiosis with rent-seeking cronies. More often than not, these are the people whom they rely upon for political funds in their effort to continue to latch on to power.

What then could be done given this near-checkmate type of a situation? I say pressure must be brought to bear and it must be made known that we will not tolerate any more politics that is less than ethical. We must clearly and loudly make it known that politics must be practised with a high level of integrity. No, politics is not dirty but its practitioners, more often than not, are. In the longer run and in order to ensure that ethical politics of impeccable integrity is practised, we must overhaul our education system.

We need to shift our education paradigm from a system that emphasises regurgitating what is learnt by rote to amass distinctions to one that puts a premium on logical and critical thinking in which source as well as general reading is a major activity in providing the primary material. We must revisit our educational philosophy in order that we may give equal importance to classroom and off-classroom activities in educating the young Malaysian into a potential leader material for the public or private domains. Of course, this is a huge and important subject that needs proper addressing at, perhaps, another forum.

Ladies and gentlemen, in the last several minutes I have shared with you my thoughts on the subjects addressed by Anas in his book. I hope it has generated enough interest to trigger off your critical thoughts on the subjects or other related subjects. In the process it is hoped that some of you will go a step further to put pen to paper as Anas had done. On that note, I take this opportunity to congratulate the author for making the book available to the public which I have much pleasure in introducing. Thank you and I wish you a pleasant day ahead.

*This speech was delivered by former Finance Minister Tengku Razaleigh Hamzah at the launch of the book “Rich Malaysia, Poor Malaysians” by Anas Alam Faizli.

Anas Alam Faizli speaks in Bahasa Malaysia on his book, “Rich Malaysia, Poor Malaysians at Kelab Sultan Sulaiman, Kg. Baru. Kuala Lumpur, Malaysia on April 3, 2014 (below):

Book, Rich Malaysia, Poor Malaysians

Yang dihormati dif-dif jemputan yang terhormat,

YBM Tengku Razaleigh

Dr Syed Husin Ali, YB Saari Sungib, Tan Sri Kamal Salih, TokSu Norizam,

Pak Chong, Siraj, Azlan, Dato Din Merican, Sharaad,…

Para hadirin-hadirat yang dihormati sekalian,

Assalamualaikum warahmatullahi wabarakatuh dan salam sejahtera,

 Saya ingin merakamkan setinggi-tinggi penghargaan kepada YBM Tengku Razaleigh yang sudi merasmikan buku Rich Malaysia, Poor Malaysians dan Malaysia Kaya, Rakyat Miskin. Kredibiliti Tengku tidak dapat dipersoalkan – pengalaman Tengku sebagai Founding Chairman dan CEO Petronas yang juga pernah memegang tampuk kementerian kewangan dan perdagangan antarabangsa serta mantan pengerusi Bank Bumiputra.

Dalam pendidikan pula, Tengku pernah mengatakan pada bulan Julai yang lalu bahawa “Sistem pendidikan negara kita gagal dan kita tidak boleh mempertahankannya lagi. Tambah beliau, satu tindakan yang ikhlas, berani dan radikal diperlukan bagi mempercepatkan proses pembaharuan dalam pelajaran dan pembelajaran.”

Buku kerdil ini juga telah diangkat nilainya ke tahap yang lebih tinggi kerana sumbangan dua orang pemimpin yang saya sangat kagumi dan hormati- pemimpin yang mewakili gen-Y dan juga generasi veteran. Terima kasih yang tidak terhingga diucapkan kepada YB Nurul Izzah dan Senator Dr Syed Husin Ali yang telah mencurahkan pemikiran mereka seterusnya menyuntik kehebatan permulaan kepada buku kerdil ini. Terima kasih juga buat barisan panelis yang sangat tersohor, En Mohamed Siraj, En Azlan Awang, Dato’ Din Merican dan juga moderator Mr Sharaad Kuttan.

Anas Alam FaizliBuku ini merupakan himpunan esei yang telah ditulis dalam tempoh setahun. Manuskrip versi Inggeris dan Bahasa telah siap serentak tetapi versi Inggeris diterbitkan dahulu untuk menilai sambutannya. Walaupun ia merupakan himpunan esei tetapi Alhamdulillah berjaya disusun dalam satu bentuk kronologi yang mempunyai kekuataan tersendiri. Sebuah himpunan esei yang berbicara tentang isu-isu nasional dan global seperti isu tenaga, ekonomi, pendidikan dan kesukarelawan, yang saya harap mampu mencetuskan wadah bicara kritis dan berguna untuk semua.

 Penulisan dimulakan dengan berkongsi amanat almarhum Atok saya, Mohd Zain bin Abu dengan tiga prinsipnya iaitu:

1-  Pendidikan ialah perkara paling penting dan akan sentiasa menjadi keutamaan

2- Elakkanlah seberapa banyak permusuhan dengan orang lain

3-  Dan jadilah orang yang memberikan banyak manfaat kepada orang lain

Buku ini antara lainnya satu usaha untuk memenuhi wasiat Atok, dengan kerendahan diri, satu percubaan kecil untuk menjadi seorang yang bermanfaat.

Idea utama buku ini ialah satu penerimaan bahawa , Malaysia ialah sebuah negara kaya dengan hasil mahsul bumi.  Beratus tahun di jajah dan hasil kekayaan di larikan penjajah,  kita kembali memegang daulat sebuah tanah yang kaya dan mewah. Maka kerana itu,  sebaik sahaja merdeka, tanah ini tidak pernah  putus memberi sumbangannya baik daripada bijih timah, getah, kelapa sawit, bijih besi, bauksit, kayu balak dan terkini minyak dan gas yang menyumbang 40% hasil pendapatan negara.  Semua ini ialah sumber tidak ternilai yang perlu dihargai dan digunakan sebaik mungkin.  Oleh itu,  adalah sangat penting masyarakat umum memahami sebanyak mungkin mengenai industri yang menjadi “cash cow” negara ini.

Bahagian sumber petroleum Malaysia ini dimulakan dengan persoalan adakah kisah Petronas ialah kisah si tanggang? Beberapa soalan penting seperti – bilakah minyak akan habis? Dimanakah industri perkhidmatan tempatan dan isu-isu yang lain telah dikupas malah diakhirnya turut diberikan beberapa cadangan penyelesaian. Kemudiannya, satu penerangan mengenai sejarah Petronas, bagaimanakah ia beroperasi dan sistem fiskal Malaysia diperjelaskan. Konsesi vs PSC. Persengketaan Royalti Minyak juga telah disampaikan secara terperinci daripada perspektif semua negeri yang terlibat. Bahagian ini ditutup dengan cadangan pemberian ekuiti Petronas kepada negeri pengeluar minyak berbanding penambahan Royalti.

Bahagian Sosio-Ekonomi pula dimulakan dengan merungkai 8 realiti Malaysia dan mengapa pendidikan tinggi wajar dibiayai oleh kerajaan. Saya ambil jalan berbeza dan tidak membandingkan dengan negara lain tetapi melihat perspektif kaca mata Malaysia itu sendiri dan menyimpulkan mengapa kita perlukan pendidikan tinggi. Slogan saya dalam buku ini, 1 Keluarga 1 Graduan.

Esei berikutnya menghuraikan dengan panjang lebar apa yang dimaksudkan dengan Negara Berpendapatan Tinggi, Rakyat Berpendapatan Rendah. Malaysia Kaya, Rakyat Miskin.

Ilustrasi disampaikan dengan fakta dan diterangkan secara halus. Kemudiannya saya membuka kisah Mitos Si Kaya dan Si Miskin diikuti dengan penerangan bagaimana sebuah Negara Berkebajikan akan meluncurkan Malaysia kearah masa depan yang jauh lebih baik.

Menuju kearah demokrasi yang lebih kukuh dengan dua parti dominan negara, saya juga menulis bagaimana kaedahnya untuk memahami dan membuat analisis kritikal ke atas manifesto yang dijanjikan oleh parti-parti bertanding.

Bahagian ini ditutup dengan penjelasan panjang mengenai perjanjian TPPA yang sedang dirunding oleh Malaysia.

Seterusnya,  saya mengupas isu pendidikan dengan analisis pencapaian ranking antarabangsa Malaysia. Saya kemudiannya menyeru membina budaya membaca buat menuju mentaliti negara dunia pertama. 1996 – 2 muka surat, terkini 2 buku berbanding Jepun Perancis 10, AS dan Kanada 17 buku. Kemudiannya saya menyeru kepada penyemaian budaya berfikir dengan beberapa cadangan. Saya juga mempersoalkan jika sekolah moden itu satu pengkhianat kepada pendidikan. Bahagian ini ditutup dengan cadangan mendefinisikan semula falsafah pendidikan negara dengan cadangan Cinta sebagai Pedagogi dan FPN yang baru.

Saya percaya pendidikan boleh dijadikan penyelesaian kepada semua masalah yang dihadapi negara.

Bahagian terakhir menyentuh mengenai kesukarelawanan dan satu penulisan panjang yang menghuraikan mengenai bagaimana kesukarelawanan boleh berjaya dan menyumbang kearah pendidikan yang lebih baik. Saya juga nukilkan konsep kuasa ketiga dan bagaimana kesukarelawanan boleh menjadi agen menyubur demokrasi dengan memberi ruang suara kepada semua pihak.

 Buku ditutup dengan epilog bahawa gerakan massa Reformasi adalah milik semua  dan rakyat perlukan satu Rejuvenasi.  Seperti yang saya sering utarakan, penulisan ini adalah milik umum, dan saya seru warga umum untuk mengulas, mencabar dan memperkembangkan idea-idea di dalam buku ini. Usul-usul kritis yang padat di dalam buku ini saya mohon diperhaluskan dan semoga dapat dimanfaatkan oleh semua.

Akhir kata, Baca, Faham, Fikir dan Bertindak. Berjuanglah!

Terima Kasih.

 

Good Governance NOW


March 29, 2014

Good Governance NOW

COMMENT: I agree with Ms Tay. We have regressed as a nation due to Din MericanXweak and irresponsible leadership. Incompetence, inferiority complex from the top to bottom of our bureaucratic totem pole, and rampant corruption were  laid bare by MH370.

We should replace those who are not up to their tasks with with those who can get things done. We have competent people but they are have been ignored by their present bosses. Incompetence breeds incompetence.We have allowed kaki bodeks (yes-men) to rise to the top.The Peter Principle is at work in the Najib Administration. Unfortunately, our  Dear Leader is sleep walking.  –Din Merican

Speak up for good governance

by Salena Tay@http://www.freemalaysiatoday.com

Najib+Tun+Razak.snoozeHe is not Leading; he is being Led

Malaysia is now undergoing a tough time due to the MH370 tragedy.  It certainly did not help that two passengers managed to get on board with stolen passports.However, credit must be given to the Malaysian government for heading the largest ever Search And Rescue (SAR) operation in history.

Learning from this episode, our airport immigration and security procedures have to be improved. The government must acknowledge that there were weaknesses and these have to be acted upon and rectified.

The two major issues pertaining to the MH370 tragedy which posed questions are why was no action taken to check on the turn back done back by MH370, and also the issue of the contents of its cargo.People are demanding answers to these questions.

In addition to the above incident, on March 21 flight MH114 from Kuala Lumpur to Kathmandu was hit by ducks while approaching Tribhuvan International Airport in Nepal and MH066 from KL to Incheon in South Korea was directed to Hong Kong on March 24, 2014 due to a generator problem.

From here it shows that we are still far away from achieving Vision 2020 status, what with the recent news that the water ration will continue indefinitely.

The way things are going, we resemble a Third World nation. If we are on the road towards industrialisation and First World status, there should not be a water ration now as we are only six years away from year 2020, not sixteen years away.

No. We have not progressed but regressed. Our nation too has a big national debt (official figure of RM531 billion) and a big household debt (standing at 82%). This does not bode well for the nation despite economic growth of above 5%. The money is just not trickling down to the poor and the lowly.

Recently in Parliament, the government has also requested for more funding via the Supplementary Supply Bill. The additional funds requested amounted to RM2.39 billion. The breakdown is as follows:

1. Treasury allocation to the statutory funds – RM2 billion

2. Natural Resources and Environment Ministry – RM8.4 million (inclusive of panda project of RM5.6 million)

3. Public Service Department – RM55 million

4. Prime Minister’s Department – RM53 million

5. Works Ministry – RM50 million

6. Communication and Multimedia Ministry – RM46.9 million

7. Foreign Ministry – RM28 million

8. Agriculture and Agro-based Industry Ministry – RM20 million

9. Home Ministry – RM15.9 million

10.Energy, Green Technology and Water Ministry – RM13.8 million

Is the government spending wisely? What is happening? What can we as the small, powerless Joe Public say? We are voiceless.

Stop playing politics

We the citizens should speak up and tell the government where they are going wrong.

It is not enough to just rely on the opposition to speak up. We too have a job to do because it is our duty as a good and responsible citizen to see that Malaysia is well-governed. We owe it to our nation to see that things are run well.We must improve as our ASEAN neighbours are moving forward. Those who used to lag behind us in the not so distant past are now ahead of us.

The Federal Government must pull its socks up and start getting serious. There is no time to play politics. It must be noted that earlier this month (before the third week of March), the Transport Ministry had held a briefing for only the BN MPs regarding the MH370 issue. Why only for the BN MPs? Are the Opposition MPs not Malaysians too?

The Opposition MPs request to discuss this issue in Parliament was also rejected. Why so? Isn’t this amounting to politicking?Definitely the credibility of the nation will go down if we continue in this manner.

As mentioned many times earlier, the government must work together with the opposition for the good of the nation. And the people must keep both the government and the Opposition on their toes.

We must save our nation and save ourselves by abandoning all communal selfishness and siege-mentality.Let us speak up without fear or favour. We must sound out anyone in authority who does wrong.

We the rakyat of Malaysia must act now before it is too late. Time is running out. Citizens of Malaysia, let us work together for the common good and for the good of this nation.

Selena Tay is a FMT columnist.

Water Deal between Selangor and Putrajaya: Time to Come Clean, Khalid Ibrahim


March 1, 2014

Water Deal between Selangor and Putrajaya: Time to Come  Clean, Khalid Ibrahim

Commentary by the Malaysian Insider

UAE had written to Prime Minister Datuk Seri Najib Razak and Selangor Mentri Besar Tan Sri Abdul Khalid Ibrahim last April 12, seeking their intervention on the dispute, but no reply was received, lead counsel Rosli Dahlan said last month.

What’s the real deal, Mr. Khalid Ibrahim?

The Putrajaya-Selangor memorandum of understanding (MOU) for the acquisition of state water assets and construction of a RM1.2 billion water treatment plant does not seem to pass the smell test.

And if something does not smell right, it is not right.First off, Deputy Prime Minister Tan Sri Muhyiddin Yassin today described the MOU signed on Wednesday as a binding agreement, although PAS central committee member Dr Dzukefly Ahmad pointed out it was not, unlike a memorandum of agreement (MOA).

Lawyers have chipped in too on the matter, saying MOUs are not legally binding as they just reflect an intention to work together to a common goal.

“It is normally signed when two parties want to work together, but do not want a legally binding agreement with each other,” lawyer Syahredzan Johan told The Malaysian Insider.

“However, I am speaking from the perspective of not having seen the contents of the MoU signed between the Selangor state government and the Federal government.”

“What is important is the contents of the document, not the labeling. One can have a perfectly legally binding document and still call it a MoU,” Syahredzan said.

The lawyer zoomed in on the main contents of the MOU, saying, “I think in the instance of the current MoU signed by Selangor and Putrajaya, it is in relation to buying over the water concessionaires and the approval for the Langat 2 water treatment plant.”

For the two components to conclude, he said there would be legal agreements to acquire the water concessionaires and also to build the RM1.2 billion water treatment plant in Langat, Selangor.

Would the MOU expire if any of the two components do not take off? Does the MOU have a time-frame for each component? The only thing that is public knowledge is that the Selangor government must approve Langat 2 once the tender is issued for the construction.

Is it just about water supply or who will benefit from the construction contracts, one wonders.

While connected businessmen can shout with glee that they would get RM9.65 billion for the four concession holders, others will be happy that there is another infrastructure project to profit from after five years of haggling.

Media reports last year said three companies — Salcon Bhd, MMC Corp Bhd and Ahmad Zaki Resources Bhd (AZRB) — have been shortlisted to build the RM1.2 billion Langat 2 water treatment plant project.

The Pahang-Selangor interstate water transfer tunnel is being built with a soft loan of RM2 billion from the Japanese International Cooperation Agency (JICA). There is a 40-year repayment period for the 45km tunnel through the Titiwangsa mountain range.

Apart from that, the project entails the building of a dam and a pumphouse in Pahang, and a water treatment plant in Selangor with the total value said to be about RM7 billion.

While those living in Selangor and Kuala Lumpur will benefit from the project once it is completed as early as 2017, critics say the Langat 2 water treatment plant can only provide water capacity until 2025, and the government would require more plants and dams built after that in the country’s most densely populated area.

That would mean more projects in the future, and higher costs. Unless Putrajaya and Selangor insist that the water concessionaires take steps to cut down leaks that lead to a higher portion of non-revenue water (NRW).

There is a need for more treated water to cater to the rising population, but in the rush to provide that, the government should look into more ways to conserve water because more projects just means the taxpayers will have to bear the burden of underwriting the deals, while companies show the profits.

Muhyiddin also said today, “The MoU between the federal and state governments are for the benefit of the people to alleviate the water crisis in the Klang Valley with the construction of the Langat 2 treatment plant.”

This would take another three years. Nowhere does the MOU talk about ways to stop leakages and NRW. If PKR and Barisan Nasioanl (BN) politicians think they are doing Selangor a favour with the deal, they have to think again. The only ones benefitting appear to be the contractors. — February 28, 2014.

 

Fund Scandal Looms in Malaysia


February 27, 2014

Fund Scandal Looms in Malaysia

Mysterious sovereign wealth fund may be billions in debt

NAJIB_RAZAK_091213_TMINAJJUA_05_540_360_100Political insiders in Malaysia say Prime Minister Najib Tun Razak could be facing a fresh political crisis due to the murky dealings of a sovereign fund established five years ago to drive investment in strategic domestic industries.

A widening circle of critics, fed in part by exhaustive reporting on independent news sites such as Malaysiakini, say the fund may have run up as much as RM40 billion (US$12.18 billion) in debt and has few assets to show for it beyond what are described as overpriced acquisitions of independent power producers in Malaysia.

On February 18, Opposition MP Tony Pua of the Democratic Action Party announced on the floor of Parliament that the fund, 1Malaysia Development Bhd, known as 1MDB, had yet to file accounts for the financial year ended March 2013 and that KPMG, the independent auditor, had suddenly resigned. Deloitte Malaysia has since taken over the accounts.

In 2012, 1MDB made a US$1.75 billion private bond placement, one of the biggest private US dollar bond placements on record from Asia, through Goldman Sachs, to acquire a portfolio of power assets. Other bond placements also have been made. According to US laws, failure to file financial accounts is a violation of the law, which should be raising concerns among the bondholders.

 ‘Bold and Daring’
A United Malays National Organization operative told Asia Sentinel a major scandal is lurking in the fund, which is wholly owned by the country’s Ministry of Finance, although no clear evidence has emerged of the exact nature of the scandal.  

Former Prime Minister Mahathir Mohamad and former Finance Minister Daim Zainuddin, both of whom have soured on Najib, are said to be questioning the operation of the fund. There has been a rising tide of gossip about the fund’s political connections, particularly to Najib’s wife, Rosmah Mansor, and a close friend, Low Taek Jho, who was active in founding the fund. 

Jho Low, as he is known, has become a New York social figure, seen out with Paris Hilton and pouring Cristal champagne for a succession of showgirls.  He and Rosmah’s son by her first marriage, Riza Aziz, produced The Wolf of Wall Street, a major box office success that has been nominated for a Best Picture Oscar. Ironically, the film can’t be shown in Malaysia because of its excess profanity.

Low reportedly was behind Wynton Group, which showed an interest in bidding for the famed Claridge’s, Berkeley and Connaught hotels in London. According to a Malaysian website, in a court document filed in Ireland, Low made the approach in 2010.  According to the court filing, Low was said to have had the backing of an unnamed Malaysian “sovereign wealth fund,” which was not named. Low has acknowledged having friends in Khazanah Nasional Bhd, another Malaysian sovereign wealth fund. The 1MDB fund wasn’t mentioned

Little is known of 1MDB’s operations. As Asia Sentinel reported at the time, it raised hackles when it started in April 2009 as a fund arranged by Jho Low and started by the Terengganu state government, which borrowed RM10 billion (US$2.87 billion at 2009 rates). Critics questioned why an oil-rich state with revenues of RM5-7 billion a year would have to borrow money to start a sovereign fund rather than using windfall revenues from oil and other commodity bonanzas.

The Terengganu fund morphed into 1MBD under the Ministry of Finance in September 2009 to “focus on strategic development projects in the areas of energy, real estate, tourism and agribusiness.” The fund’s website quotes Najib saying its mission is to “be bold and daring… to break new ground and do things differently.”

1MDB soon acquired a strategic partner in an obscure Saudi firm, PetroSaudi International, headed by Tarek Essam Ahmad Obaid, a member of the vast Saudi royal family. Reports indicated that PetroSaudi had signed a memorandum of understanding with Ghana National Petroleum Corp. although the MOU has apparently not resulted in a major project.  

According to a statement by Azmi Khalid, then chairman of the Parliament’s Public Accounts Committee, 1MDB loaned PetroSaudi about US$1billion, leading to additional questions over why a government fund set up to explore investment in Malaysia was loaning money to a joint venture in Africa. PetroSaudi, despite rumored ties to the Saudi royalty, was unable to come up with its own cash in the joint venture but got 1MDB to accept a potential oil site in Turkmenistan. Subsequently, the loans to PetroSaudi climbed to US$1.7 billion.

Debt and not much else
An exhaustive probe of the sovereign fund by writers Ho Kay Tat and Afiq Isa for the Malaysian publication The Edge, found that about all 1MDB has to show so far “is a multi-billion ringgit debt portfolio, the bulk of which was used to buy several independent power producers at hefty price tags.” 

Its main asset is a 48-hectare chunk of land passed to the fund by the government when the Malaysian Air Force closed its base at Sungai Besi, near downtown Kuala Lumpur’s Golden Triangle. It is a near-priceless plot that 1MBD is to develop as a financial center called the Tun Razak Exchange, named for Najib’s late father. That work hasn’t started yet.

Through a series of complicated financial engineering moves in 2012, the loan to PetroSaudi was prematurely terminated and redeemed, according to Tony Pua’s presentation on the floor of Parliament.

“However,” Pua said, “the repayment of US$2.32 billion (RM7.93b) was made in a perplexing manner in a “segregated investment portfolio” based in the Cayman Islands. To date no one has been able to verify with any certainty who the investment portfolio manager is, the fund’s performance or for that matter, if the money actually exists.”

The “investment” in the Cayman Islands, Pua said, “raises highly suspicious questions as 1MDB is desperately trying to raise funds through new bond issuance in Malaysia to fund its aggressive acquisitions of independent power producers as well as its mega-projects in Bandar Malaysia and Tun Razak Exchange. In fact, 1MDB is already laden with an estimated more than RM40 billion in debt, and hence such investments is a luxury that 1MDB does not have.”

KPMG, in 1MDB’s first financial statement in 2010, raised an “emphasis of matter” over a US$1 billion investment in the PetroSaudi joint venture, which was subsequently converted into a US$1.2 billion (RM3.95b) loan within a period of less than six months. The “emphasis of matter” was removed in subsequent financial accounts as the joint venture was servicing the loan with interest payments, it was also highlighted that 1MDB extended an additional US$700 million (RM2.3b) in loans to the JV, despite receiving less than US$200 million in interest between 2011 and 2012.

To date,  no one has been able to verify with any certainty who the investment portfolio manager is, the fund’s performance or for that matter, if the money actually exists, Pua said.

Malaysia in 2014–A Perspective from Singapore


February 22, 2014

Malaysia in 2014–A Perspective from Singapore

For Singapore, due to history, geography, demography, economy and recent political experiences, Malaysia has perpetually been its lynchpin concern and preoccupation. In the past, S Rajaratnam, the Republic’s first foreign minister, had described Singapore’s relations with Malaysia as ‘special’ and there is nothing to suggest that this has changed in anyway. If anything, the ‘specialness’ has been intensified and further reinforced due to a whole array of factors, not least being the imperatives of national, regional and international economics. A weakening United States, an assertive China, an unstable Thailand and a new nationalistic leader in Indonesia can change the political and security architecture in the region to the detriment of both states and hence, their bilateral ties.

MALAYSIA-SINGAPORE-DIPLOMACYIn the 1950s and 1960s, culminating in Singapore’s expulsion from Malaysia in August 1965, the emotive dimension of Singapore’s view of Malaysia was dominant. Even though this has largely dissipated, it is not totally absent. Still, the pragmatism with which both states have moved forward is definitely a milestone achievement in bilateral ties in Southeast Asia.

For Singapore, continuity rather than change remains its key perspective on Malaysia. This was especially true after the May 2013 general elections where the Barisan Nasional (BN: National Front) was returned to power albeit with a weaker majority. Still, Prime Minister Najib, the United Malay National Organisation (UMNO) and the BN are in power and that is what matters even though the winds of change must also be disconcerting. The disquiet would be more, not so much from the economic aspect as it would be from the rising racial and religious polarisation of Malaysia in the last few years that was brought to the forefront during the last general elections.

The ‘Allah’ issue has not been helpful and the recent firebombing of a church in Penang has merely raised the ante of what this will mean for Malaysia and possibly, even multiracial and multi-religious Singapore. All that aside, the single most important development of late has been the rising warmth in Singapore-Malaysia bilateral ties under Lee Hsien Loong and Najib Tun Razak. While past imperatives of history, geography and demography remain relevant, most dominant in the new narrative has been the personal warmth of the two Prime Ministers (Lee and Najib) and the strategic nature of their bilateral ties.

Most of the past issues have been addressed or settled such as relocation of Customs and Immigration Complex, land reclamation and even water. Most importantly, has been the breakthroughs that both leaders have made vis-à-vis two issues, namely, the resolution of the Tanjong Pagar Railway Station and the land exchange deal as well as Singapore’s support for the Iskandar Development Project in Johor. Other positive developments in ties include the holding of annual leader’s retreats, re-establishment of links between both countries’ stock exchanges, Malaysia’s agreement to sell electricity to Singapore, the agreement to build high speed train link from Kuala Lumpur to Singapore, the amicable post-Pedra Branca technical talks to resolve legacy issues over the islands’ dispute and finally, the establishment of a Singapore consulate in Johor Baru.

If there is one key factor that has brought bilateral ties to a new height, it is the cooperation in the Iskandar Project. Not only is the Singapore Government supporting investments in the project through Government-linked companies such as Temasek Holding but also playing an important role in encouraging the private sector to invest in the project. Additionally, thousands of Singaporeans are expected to be permanently based in the Iskandar region and Johor as a whole, bringing interdependence to a level that was never seen before. To that extent, Iskandar has been the key game changer in Singapore-Malaysia bilateral ties of late.

The breakthrough in bilateral ties was a function of a number of factors. First, the decision by both sides to adopt a new approach to bilateral ties in order to garner win-win results. Second, the personal warmth of the top leaders was extremely helpful. Third, the calculation of the mutual benefits that would be gained by both sides in view of the increasing regional and global competition. Fourth, over the years, there has also been increasing economic interdependence with Singapore as one of the top investors in Malaysia over the last two decades or so. Two-way trade and investments are among the highest between the two states. Fifth, there is also the realisation of increasing security indivisibility of both states. Finally, the ideological pragmatism of both sides has also helped in boosting bilateral ties.

While Singapore expects Malaysia in 2014 to have a largely ‘normal’ year barring any unexpected events – all the more to be the case as the UMNO annual assembly has opted for status quo – the Republic is also mindful of the many uncertainties that can unexpectedly crop up to affect bilateral ties. While 2014 can expect the warming of ties to continue, this cannot be taken for granted. First, the warm ties of two Prime Minister, both of whom are sons of two former prime ministers  who were not close, may not survive personalities if a more nationalistic prime minister takes over in Singapore or Malaysia. Second, tensions could surface if the promised cooperation proves futile or produces one-sided benefits, say in Iskandar Project. Finally, growing domestic tensions in Malaysia, especially among the Malay and Chinese communities in Johor or in Malaysia could spill over into Singapore-Malaysia relations.

Hence, for Singapore, while Malaysia in 2014 is expected to continue ‘good business as normal’, there are also potential minefields that might explode, and hence, the need for caution. ‘Special relations’ are important but can never be taken for granted, and this also holds true of Singapore’s view of Malaysia in 2014.

Bilveer Singh is Associate Professor at the Department of Political Science, National University of Singapore, adjunct senior fellow at the S Rajaratnam School of International Studies and President of the Political Science Association of Singapore.

IMF reform and isolationism in the US Congress


February 3, 2014

IMF reform and isolationism in the US Congress

29 January 2014

Author: Jeffrey Frankel, Harvard Universityhttp://www.eastasiaforum.org/2014/01/29/imf-reform-and-isolationism-in-the-us-congress/

A long-awaited reform of the International Monetary Fund has now been carelessly blocked by the US Congress. This decision is just the latest in a series of self-inflicted blows since the turn of the century that have needlessly undermined the claim of the United States to global leadership.

The IMF reform would have been an important step in updating the allocations of quotas among member countries. From the negative congressional reaction, one might infer that the US was being asked either to contribute more money or to give up some voting power. (Quotas allocations in the IMF determine both monetary contributions of the member states and their voting power.) But one would then be wrong. The agreement among the IMF members had been to allocate greater shares to China, India, Brazil and other emerging market countries, coming primarily at the expense of European countries. The United States was neither to pay a higher budget share nor to lose its voting weight, which has always given it a unique veto power in the institution.

The change in IMF quotas is a partial and overdue adjustment in response to the rising economic weight of the newcomers and the outdated dominance of Europe. Voting share in the IMF is supposed to be in proportion to economic weight, not equal per capita or per country. This acknowledgement of reality, the principle of matching the representation to the taxation, is sometimes known as the Golden Rule: ‘He who has the gold, rules’. The principle is probably one of the reasons why the IMF has usually been a more effective organisation than others such as the UN General Assembly.

It’s not that President Obama hasn’t tried to exercise global leadership, as just about any US president would. He pushed for this agreement to reform the IMF at the G20 summit in Seoul in November 2010 (the first meeting of the group of leaders to have been hosted by a non-G7 country). He prevailed despite understandable European reluctance to cede ground.

Some American congressmen may not be aware of the extent to which the IMF reform agreement represented the successful efforts of the US executive to determine the course of the international negotiations. But then the rejection by the US Congress of an international agreement that the President had painstakingly persuaded the rest of the world to accept is not a new pattern. It goes back a century, to the inability of President Woodrow Wilson to persuade a myopically isolationist US Congress to approve the League of Nations (1919). Examples over the last century also include the International Trade Organization (1948), SALT II (1979), and the Kyoto Protocol (1997), among others.

A past history of trying to re-open international negotiations that the executive has already concluded is also the reason why Congress has to give President Obama trade promotion authority (that is, the usual commitment to fast-track congressional votes on trade agreements), or else Washington’s trading partners will not negotiate seriously. This would impede ongoing talks in the Pacific, with Europe, and globally (in the venues, respectively, of the Trans-Pacific Partnership, Trans-Atlantic Trade and Investment Partnership, and the World Trade Organization).

Commentators have been warning since the 1980s that the US may lose global hegemony for economic reasons, as an effect of budget deficits, a declining share of global GDP, and the switch from net international creditor to net debtor. One version is the historical hypothesis of imperial overstretch.

But the main problem seems to be a lack of will rather than a lack of wallet. Or perhaps it would be more accurate to describe the problem with US domestic politics as wild swings of the pendulum between excessive isolationism and excessive foreign intervention in reaction to short-term events, untempered by any longer term historical perspective.

After the United States lost 18 rangers in Somalia in October 1993 (Black Hawk Down), Congress became highly resistant to just about any foreign intervention, no matter how big the ‘bang for the buck’. Then, after 11 September 2001, it was prepared to follow President George W. Bush into just about any military intervention, no matter how dubious the benefit or how high the cost. The total cost of the wars in Iraq and Afghanistan has recently been estimated at US$4 trillion by Linda Bilmes. (It’s not just that the wars lasted for 10 years; the biggest costs of such wars come subsequently, particularly for medical care that veterans need for the rest of their lives.) These days, the pendulum has apparently swung back to the isolationist direction once again.

One had hoped that myopic congressmen had been made aware that among the costs of the foolish US government shutdown three months ago was damage to the country’s global credibility and leadership. Most visibly, to deal with the shutdown, the White House in October had to cancel its participation at the leaders’ summit of APEC in Bali and thereby stymie progress on the US-led Trans-Pacific Partnership. It was widely reported that the Asian countries drew from Obama’s absence the conclusion that they should play ball with China instead.

obama-xiThe increasing power of China and other major emerging market countries is a reality. It is precisely what makes it important that the United States support a greater role for these countries in international institutions such as the IMF, the G20, and APEC.

The rise of China could go well or badly for international relations. It depends in part on whether the status quo powers make room for the newcomer. This historical pattern famously goes back to Thucydides’ description of the rising power of ancient Athens and the resulting war with Sparta (History of the Peloponnesian War). Examples of the consequences of failing to accommodate the new arrival include the role of Germany’s rise in the origins of World War I 100 years ago.

The new Chinese President, Xi Jinping, has used the phrase ‘New Type of Great Power Relationship’. It sounds anodyne but may carry greater significance. The phrase apparently demonstrates awareness of the historical ‘Thucydides trap’. It signals China’s openness to working with other countries to avoid the tragedies of 460 BCE and 1914 CE. It is only sensible to take him up on his offer and smooth international relations into the future.

The potential for US leadership has survived remarkably well the loss of national status as an international creditor. This has partly been a matter of luck. In Asia, historical and territorial frictions among Japan, Korea and China, have kept US participation far more welcome in the Pacific than it would otherwise be. Meanwhile, in Europe, fiscal follies have been even more egregious than America’s.

Asians are aware that the IMF has stretched the rules to lend into the euro crisis on a greater scale than it did during the Asian crisis of 1997–98. They understandably feel entitled to a greater say in the running of the Fund. But the emerging market countries have been so disunited, for example, that no two of them could come together in 2011 to support a common candidate for IMF Managing Director, notwithstanding that the three previous incumbents were European men who flamed out before completing their terms in office. (The result was a European woman, Christine Lagarde. She has done a good job rather than kowtowing to Europe; but that is beside the point.)

The latent demand around the globe for enlightened US leadership, which first appeared at the end of World War I, is still there. It can survive budgetary constraints (and apparently can survive misguided military interventions). But it cannot survive an abdication of interest on the part of the US Congress.

Jeffrey Frankel is the Harpel Professor of Capital Formation and Growth at the Kennedy School of Government, Harvard University, and is the Director of Program in International Finance and Macroeconomics at the National Bureau of Economic Research, USA.

This article is an extended version of the article ‘Absent America’ that was first published on Project Syndicate. The author would like to thank Joe Nye and Ted Truman for comments.

When America Becomes Number Two


January 27, 2014

When America Becomes Number Two

by Kishore Mahbubani(01-21-14)

professor-kishore-mahbubaniKishore Mahbubani is Dean of the Lee Kuan Yew School of Public Policy and author of “The Great Convergence: Asia, the West and the Logic of One World.” 

In 2019, barely five years away, the world will pass one of its most significant historical milestones. For the first time in 200 years, a non-Western power, China, will become the number one economy in purchasing power parity (PPP) terms. America will become number two. Yes, it will take longer for China’s economy to overtake America’s in nominal terms but the trend line is irresistible. And in PPP terms, China’s economy could be twice that of America’s by 2020.

The big question for our time therefore is this: is America ready to become number two? Sadly, it is not, even though Bill Clinton wisely tried to wake up his fellow Americans as far back as 2003. In a very subtle speech at Yale, he asked whether “we should be trying to create a world with rules and partnerships and habits of behavior that we would like to live in when we’re no longer the military political economic superpower in the world.”

Unfortunately, Bill Clinton was too subtle. He was trying to hint to his fellow Americans that America should create a model of rules-based behavior that would then serve as a model for China when it emerged as the number one power in the world. His hint was ignored. Hence, few Americans today are aware that America’s national interests change dramatically when it becomes number two in the world. When it is number one, it is in America’s interests to see that the number one power has complete freedom to do whatever it wants to do. When it is number two, it is not in America’s interests to see that the number one power has complete freedom to do whatever it wants to do. Catch the difference?

Why have American leaders failed to prepare the American population for this significant change of interests? There are at least three reasons. Firstly, it is political suicide for any American politician in office to speak on America as number two. As I document in The Great Convergence, no serving American politician can use the words, “If America is number two…” or “When America becomes number two…” In the land of free speech, there is no effective freedom for serving politicians to speak undeniable truths.

Secondly, most American intellectuals continue to indulge in wishful thinking. In their minds, there is a deep ideological conviction that democracy represents the future and Communism represents the past. Since China is still run by the Chinese Communist Party, it can only represent the past, not the future. Many American intellectuals also believe that since they live in the world’s freest society, they cannot possibly be prisoners of any ideology. This is massive self-deception. When it comes to understanding China, Americans have allowed ideology to trump mountains of empirical data. This is why they cannot even conceive of China becoming number one.

Thirdly, and very sadly, China’s emergence is taking place at a moment of great political paralysis and disunity in the American body politic. If Nixon and Kissinger were managing American foreign policy today, they would have focused on the most critical challenge that America faces and found ingenious ways and means of implementing the wise advice that Bill Clinton offered in 2003 and prepared for a new geopolitical environment. The days of wise foreign policy management are long gone in Washington, DC. Furthermore, with Washington, DC being completely divided and polarized, the challenge of dealing with becoming number two is the last thing on the minds of American policymakers.

Sadly, the last thing on the minds of American policymakers will come true in five years. Will America wake up to this new reality before or after it happens?

http://www.huffingtonpost.com/kishore-mahbubani/when-america-becomes-numb_b_4603125.html 

France’s real scandal: Hollande’s Economics


January 19, 2013

France’s real scandal: Hollande’s Economics

by Paul Krugman

WEAKNESS: Hollande’s plans to change economic course make for despair

Paul KrugmanI HAVEN’T paid much attention to François Hollande, the President of France, since it became clear that he wasn’t going to break with Europe’s destructive, austerity-minded policy orthodoxy. But now he has done something truly scandalous.

I am not, of course, talking about his alleged affair with an actress, which, even if true, is neither surprising (hey, it’s France) nor disturbing. No, what’s shocking is his embrace of discredited right-wing economic doctrines. It’s a reminder that Europe’s ongoing economic woes can’t be attributed solely to the bad ideas of the right.

Yes, callous, wrongheaded conservatives have been driving policy, but they have been abetted and enabled by spineless, muddleheaded politicians on the moderate left.

Right now, Europe seems to be emerging from its double-dip recession and growing a bit. But this slight uptick follows years of disastrous performance.How disastrous? Consider: By 1936, seven years into the Great Depression, much of Europe was growing rapidly, with real GDP per capita steadily reaching new highs.

By contrast, European real GDP per capita today is still well below its 2007 peak — and rising slowly at best.

Doing worse than you did in the Great Depression is, one might say, a remarkable achievement. How did the Europeans pull it off? Well, in the 1930s most European countries eventually abandoned economic orthodoxy: They went off the gold standard; they stopped trying to balance their budgets; and some of them began large military buildups that had the side effect of providing economic stimulus. The result was a strong recovery from 1933 onward.

Modern Europe is a much better place, morally, politically, and in human terms. A shared commitment to democracy has brought durable peace; social safety nets have limited the suffering from high unemployment; coordinated action has contained the threat of financial collapse. Unfortunately, the Continent’s success in avoiding disaster has had the side effect of letting governments cling to orthodox policies.

Nobody has left the euro, even though it’s a monetary straitjacket. With no need to boost military spending, nobody has broken with fiscal austerity. Everyone is doing the safe, supposedly responsible thing — and the slump persists.

In this depressed and depressing landscape, France isn’t an especially bad performer. Obviously it has lagged behind Germany, which has been buoyed by its formidable export sector.

But French performance has been better than that of most European nations. And I’m not just talking about the debt-crisis countries. French growth has outpaced that of such pillars of orthodoxy as Finland and the Netherlands.

It’s true that the latest data show France failing to share in Europe’s general uptick. Most observers, including the International Monetary Fund, attribute this recent weakness largely to austerity policies.

But now Hollande has spoken up about his plans to change France’s course — and it’s hard nothollande2 to feel a sense of despair. For Hollande, in announcing his intention to reduce taxes on businesses while cutting (unspecified) spending to offset the cost, declared; “It is upon supply that we need to act”, further declaring that “supply actually creates demand”.

Oh, boy. That echoes, almost verbatim, the long-debunked fallacy known as Say’s Law — the claim that overall shortfalls in demand can’t happen, because people have to spend their income on something.

This just isn’t true, and it’s very much not true as a practical matter at the beginning of 2014. All the evidence says that France is awash in productive resources, both labour and capital, that are sitting idle because demand is inadequate.

For proof, one need only look at inflation, which is sliding fast. Indeed, both France and Europe as a whole are getting dangerously close to Japan-style deflation.

So what’s the significance of the fact that, at this of all times, Hollande has adopted this discredited doctrine? As I said, it’s a sign of the haplessness of the European centre-left.

For four years, Europe has been in the grip of austerity fever, with mostly disastrous results; it’s telling that the current slight upturn is being hailed as if it were a policy triumph. Given the hardship these policies have inflicted, you might have expected left-of-centre politicians to argue strenuously for a change in course.

Yet everywhere in Europe, the centre-left has at best (for example, in Britain) offered weak, half-hearted criticism, and often simply cringed in submission.

When Hollande became leader of the second-ranked euro economy, some of us hoped that he might take a stand. Instead, he fell into the usual cringe — a cringe that has now turned into intellectual collapse. And Europe’s second depression goes on and on. New York Times/http://www.nst.com.my

Najib and his Big Spending Ministers lack EMPATHY


January 16, 2014

Najib and his Big Spending Ministers lack EMPATHY

by Jeswan Kaur@http://www.freemalaysiatoday.com

Puisi Kangkung

Pucuknya angkuh memanjat bukit,
tak sedar akar terendam air parit,
rakyat mengeluh lelah dan sakit,
sedikit diberi banyak diungkit..

wat is kangkung

Pucuknya angkuh memanjat bukit,
Tak sedar akar diair parit,
Bagaikan melepas anjing tersepit,
Dah jadi pemimpin , rakyat digigit.

-attributed to but denied by Ungku A. Aziz

 

Rosmah and NajibThe regular Malaysians are having it hard, having to deal with an expensive cost of living and at the same time being dictated to about their religion, that too by politicians who are hopelessly ignorant and insensitive in more ways than one.

That the start of 2014 has been turbulent for Malaysians in general and the non-Malays in particular is an understatement.

With the ruling Barisan Nasional government displaying zero empathy in relating to the hard-pressed rakyat’s plight in surviving the harrowing escalating cost of living, the people are left to their own devices to do what is best for them.

As such, Malaysians who are already bogged down with the challenge of coping with the onslaught of hardships can do without the sardonic remarks made particularly by the BN MPs.

Leading the way is the country’s Prime Minister Najib Tun Razak whose inability to feel for the rakyat has further worsened matters. While the rakyat back home suffers, Najib decided to enjoy himself abroad. It seems that both he and wife Rosmah Mansor were overseas during the Christmas and New Year period.

However, keeping in mind today’s harsh reality and the people’s struggle to come to grips with the rising cost of just about everything, from electricity tariffs to the proposed LRT ‘platform fees’, leaders like Najib should exercise wisdom each time he begins to open his mouth to address the rakyat, his intentions whatsoever.

Bad enough that the Najib-Rosmah indulgences come at the expense of the taxpayers’ welfare. It is unfortunate for the nation that Najib is one leader who fails to take cognisance from past mistakes.

Prodigal Najib

The Premier was recently lambasted by the very rakyat whose well-being he assured would be top priority. This time it was Najib’s callous statement that Malaysians are not thankful even though the price of kangkung (water spinach) has gone down.

In a video uploaded on YouTube on January 12, Najib who is also UMNO President, questioned why the government was always at the receiving end each time prices of goods increased but was never praised when prices came down.

“When prices of things go up, everything goes up, including sawi and kangkung. There are times when the prices of vegetables go up and down.Today I read in the newspaper that the prices of some things which have dropped. The price of kangkung increased before this and now it has gone down.When this happens, they don’t want to praise the government. But when it rises, they blame the government… This is not fair as it is due to weather conditions,” Najib was quoted as saying in the video.

It does tell just how much Premier Najib ‘understands’ the rakyat’s predicament. And that explains too why the people are fed up and decided to participate in the rally that took place at the iconic Dataran Merdeka on new year’s eve.

As for Najib, his very costly, the RM38 million worth ’1Malaysia’ programme has fallen flat on its face as far efficient governance goes, judging by the premier and fellow ministers’ addiction to profligacy.

Fooling the rakyat with ‘Putrajaya 11′

In the meantime, the 11 austerity measures outlined by Najib which Putrajaya would be implementing within the civil service to reduce expenditure and cut costs is meaningless if the leaders themselves are not prepared to control their disastrous spending habits.

Following in the footsteps of his ‘boss’ Najib, Agriculture and Agro-Based Industries Minister Ismail Sabri Yaakob thought he too could escape public scrutiny and flaying for the lavish wedding ceremony and dinner in big city Kuala Lumpur he held for his daughter.

Ismail’s daughter Nina Sabrina and celebrity Indonesian fashion designer Jovian Mandagie’s wedding included the akad nikah ceremony, the first to take place at the previous Istana Negara building before the palace was converted into a museum and renamed National Palace Royal Museum.

Then there was a two-day reception at a five-star hotel in Kuala Lumpur, attended by royalties, celebrities, politicians and socialites who were entertained by Indonesian diva Ruth Sahanaya and Malaysia’s Jamal Abdillah.

Just how much Ismail had frittered away on the Dec 14 and 15 reception is anyone’s guess as the minister is not telling.It is regrettable that Ismail got carried away with the glitz that comes with assuming power. The veteran minister could have done better than to find the RM25,000 paid to use the Istana Negara for eight hours a ‘value for money’ deal, simply because his son-in-law received a “good package” in return for the publicity.

Was that so? What about the six Balinese dancers in full regalia flown in to perform? Was there a ‘discount’ there too?To Ismail, the glamour and grandeur of a five-star hotel like the Shangri-La outweighed the humility of a community hall or balai rakyat.

Like Ismail, his colleague the Home Minister Ahmad Zahid Hamidi too is preoccupied withZahid HamidiX prestige. The latter hosted an extravagant birthday bash also at a five-star hotel in Kuala Lumpur which his guests claimed was a 2014 New Year’s party.

From Najib to his coterie of inept ministers, all share a common thread – their desperation to outdo one another not by way of serving the rakyat but by impressing friends by organising opulent dinners etc.

It is best that Najib’s economic adviser, Minister in the Prime Minister’s Department Abdul Wahid Omar knock some sense into premier Najib and the rest of the ‘spendthrift BN politicians’ to spend wisely.

It is these MPs who need an earful and not the rakyat when it comes to emptying the wallet without batting an eyelid.

Advising the already taxed Malaysians to look for alternatives and be thrifty is easy for the former banker- turned- politician.“I go to the market every week. I know that the prices of basic necessities are high, but consumers have a choice in what they spend their money on,” he was quoted as saying in a news report.

Dare Abdul Wahid tell the same to his ‘political masters’? Does he have the guts to tell boss Najib that it is all about ‘leadership by example’?

Jeswan Kaur is a freelance writer and a FMT columnist.

To Ash (Abu) Kassim and MACC: Investigate the Corrupt Elite or Shut down


January 3, 2014

To Ash (Abu) Kassim and MACC: Investigate the Corrupt Elite or Shut down

by Jeswan Kaur@http://www.freemalaysiatoday.com

Najib in PenangRakyat DiBelakangkan, Hidup Shiok Sendiri

While Prime Minister Najib Tun Razak and his wife Rosmah Mansor enjoy life on the fast lane expecting everyone to put up with their spendthrift lifestyle, his stepson Riza Shahriz Abdul Aziz proved no different, lavishing RM110 million on a condominium in New York.

When the very leader who promised to stand by his rakyat under the ‘People first, Performance now’ banner makes a U-turn and defies cries for him and his controversially flamboyant wife to cut back on their expenses, there is little saying what next is in store for the people.

This show of defiance has left the rakyat unhappy and the recent announcements of hike in essential goods and services further compelled the people to vent out their frustrations – which they did on the eve of new year 2014 when thousands turned up to march in protest against the rising cost of living.

The problem is not that Malaysians are a rowdy bunch; nor is it true that they have embraced anarchy to vent their frustrations against the Barisan Nasional administration. Rather, the issue that needs to be dealt with is this – Putrajaya is acting irresponsibly and ‘independently’ from the rakyat, unwilling to empathise with them at a time when the cost of living has shockingly skyrocketed.

Instead, the BN government is busy ‘looking the other way’, playing politics by way lgeof condemning the opposition parties for spending beyond their means. One such case involves Penang Chief Minister Lim Guan Eng who recently found himself cornered when the RM298,263.75 silver Mercedes-Benz S300L the state purchased for his official use became the bone of contention for Barisan Nasional politicians.

Perhaps Lim’s timing in buying the luxury car was out, given the fact that the rakyat is now facing an avalanche in rising prices of items. But then when Rosmah’s travel to Qatar using the government jet was deemed necessary to ensure her safety, the same concern seems flippant in Lim’s Mercedes Benz issue.

Najib claims he “feels the rakyat’s pain” – but does he really when the premier turns vindictive against anyone who dared question his and Rosmah’s spending habits?

The Heat weekly publication showed gumption when it published an article titled ‘All eyes on big-spending PM Najib’ published for the week Nov 23-29, which subsequently led to the tabloid newspaper being suspended indefinitely without even being given a chance to explain itself.

Deep rooted corruption

It is bad enough that the country’s leadership unabashedly misuses public funds or turns a deaf ear when such abuses are reported. What is even more distressing is the fact that the relevant government agencies are afraid to act against unscrupulous politicians, especially when it involves the Prime Minister and his family.

The C-3

Be it former Prime Minister Dr Mahathir Mohamad or his successor Abdullah Ahmad Badawi or the present Premier, they are all guilty of abusing the nation’s coffers. A decade back Mahathir denied that he had helped the disgraced Zimbabwean leader Robert Mugabe build a new mansion worth millions near Harare and gifted him with rare Malaysian rainforest timbers.

During his days as advisor to Petronas, Mahathir made sure son Mokhzani benefitted directly or indirectly through Kenchana Petroleum.Likewise, son Mirzan too enjoyed his share of good fortune via Miguel Corp. Mirzan was appointed a director of the Philippines conglomerate after acquiring a 19.9% share in the corporation for RM2.9 billion through an investment vehicle.

Even though Mirzan later resigned from the board of San Miguel Corp in April 2010, he stayed on as a director of Petron Corporation, an associated company of San Miguel Corp that owns a network of refineries and petrol dealership in Philippines.

Badawi’s son Kamaluddin too made news for the wrong reasons. He was the leading shareholder of Scomi Group, a local oil and gas company which manufactured centrifuge parts allegedly ordered by a businessman BSA Tahir who was later arrested on suspicion of involvement in an illicit nuclear network run by Pakistani scientist Abdul Qadeer Khan.

And Scomi, during Abdullah’s tenure, had secured government contracts worth RM1 billion and Kamaluddin, then in his late 30s was estimated to be worth RM90 million, something which baffled industry analysts.

Rakyat getting frustrated

Clearly, the country has no dearth of cases for the Malaysian Anti-Corruption Commission (MACC) to investigate, especially those involving children of VIP and VVIPs. The problem is that MACC does not have the guts to go after these ‘elite’ wrongdoers, choosing instead to bully the likes of Teoh Beng Hock, a political aid who in 2009 was found dead under ‘mysterious’ circumstances at the MACC building in Shah Alam.

MACC when pressured by opposition Parti Keadilan Rakyat to investigate Najib, his wife Rosmah Mansor and their family for living beyond the means of a politician confessed that it lacked the power to do so.

Incredulous as it sounds, MACC has gone to reveal that it is yet another ‘toothless tiger’ in the BN administration. That MACC needs approval from its political masters to investigate known personalities tells it all, that the commission can never carry out its duties unbiased.

Had MACC any gumption, it would long put an end to the corrupt regime of Sarawak Chief Minister Taib Mahmud, whom the Swiss-based NGO, Bruno Manser Fund in its report: ‘The Taib Timber Mafia. Facts and Figures on Politically Exposed Persons from Sarawak, Malaysia’ revealed to be worth US$15 billion (RM45 billion) and the “richest man in Malaysia”, his wealth having been derived from “plundering the state during his three decades as Chief Minister of Sarawak”.

The report added that Taib and his 20-member family clan are collectively worth US$21 billion (RM64 billion). Is this piece of information not damning enough for the MACC to act upon? Until such time that the MACC can muster the courage to haul up corrupt leaders, the rakyat will have no choice but to consider other options of getting their frustrations heard.

Lack of Accountability


December 31, 2013

Lack of Accountability is a major stumbling to Malaysia’s progress

by Tan Siok Choo@ww.thesundaily.my

Tan Siok ChooACCOUNTABILITY is an infrequently used word in Malaysian authorities’ lexicon. Regulators’ persistent refusal to determine who was responsible for a mishap is effectively a denial of accountability. If allowed to continue, this no-fault syndrome could stymie Malaysia’s progress.

Parts of buildings and flyovers sag, MySikap, a new online transaction system, generated chaos while Malaysian students fare poorly in international assessments.

Despite injuries to individuals, property damage, massive inconvenience to car owners and question marks about Malaysia’s education system, determining how and why all these reversals happened is still lacking.

Possibly the most egregious example of construction frailties is Serdang’s seven-year-old hospital. Since 2011, the hospital has suffered from seven instances of crumbling masonry.

On December 4 this year, the emergency ward’s ceiling fell, the second occurrence within a month. Five days later, a similar failure hit its staff quarters. A partial collapse also plagued the intensive care unit, maternity ward and the main lobby which suffered twice – first in January 2011 and again a year later.

Thanks to tremendous public pressure, the Health Ministry named Ranhill Sdn Bhd as the developer who built this hospital. Till today, the authorities have yet to publicly announce whether an investigation has been undertaken to explain why these mishaps happened and what action is being taken to prevent future recurrences.

On February 28 this year, part of a flyover in Cyberjaya tumbled.According to newspaper reports, the flyover was built by PKNS, completed in 2009 and handed to Projek Lebuhraya Utara Selatan (PLUS). Denying the flyover was handed over to it, PLUS disclaims responsibility for the partial collapse.

On the issue of responsibility for the flyover, the authorities remained resoundingly silent.Terengganu has witnessed so many instances of crumbling construction that Kuala Terengganu MP and architect Datuk Raja Kamarul Bahrin says the state is now nicknamed “Terengganu Darul Runtuh”.

Incidents that have given the state this unofficial moniker include:

  • in June 2009, the ceiling of the RM292.9 million Sultan Mizan Zainal Abidin Stadium broke while early this year, the steel structure propping up the roof fell;
  • in October 2009, the roof of the Masjid Kampung Batu Putih in Kerteh crumbled;
  • in May this year, the roof of Masjid Kampung Binjai Kertas in Hulu Terengganu gave way; and
  •  in September this year, the Kampung Tebauk mosque in Bukit Tunggal was similarly afflicted.

Despite the plethora of construction woes bedevilling Terengganu, state and federal officials have remained eloquently silent.

Another eyebrow-raising event was the shambles caused by the new MySikap portal that prevented thousands of consumers last month from registering car ownership, renewing their driving licences and undertaking other car-related transactions.

Initially, a top official from the Road Transport Department announced the setting up of an independent panel to assess MySikap’s problems. Several days later, he reversed this decision without offering any explanation.

Although he proposed a system upgrade and suggested the portal could be stabilised by using additional servers loaned by IBM, will these proposals prevent another mishap without launching an investigation into why MySikap failed?

Emulating the Transport Ministry is their counterparts from the Education Ministry. Admittedly, the latter has announced their determination to improve Malaysian students’ dismal performance in Trends in International Mathematics and Science Study (TIMSS) and Programme for International Student Assessment (PISA).

No Education Ministry official has explained the performance gap between local and international assessments. Without this root cause analysis, how will these officials know whether Malaysia’s education system needs a revamp?

In the recent PMR examinations, 7.33% of students obtained Grade A in all subjects. In contrast, only 2% of our students were the highest achievers in the 2011 TIMSS and 1.3% in the 2012 PISA, Gelang Patah MP Lim Kit Siang claims.

Yet another troubling issue – why was Malaysia ranked 52nd among 65 countries in the PISA assessment while Vietnam attained a surprisingly lofty ranking of 17th?

Differences in the marks obtained by Vietnamese and Malaysian students aren’t a fissure but a chasm. Vietnamese students scored 511 for maths, 509 for reading and 521 for science while their Malaysian counterparts’ results were nearly 100 points lower – with 421, 424 and 425 respectively.

Accountability doesn’t mean indulging in a blame game. Without determining why the performance of Malaysian students have stagnated and possibly declined, will the authorities’ proposed remedial action be effective?

This is akin to a doctor prescribing a proposed course of treatment without undertaking a biopsy to determine whether a growth is benign or malignant.

A starting point for any improvement must begin with an understanding of what went wrong. Next is determining why the failure happened. Only then can the process of renewal and rebuilding begin.Acknowledgement of a failure is the essential first step towards progress.

Image of Moderate Islam in Malaysia tarnished


December 25, 2013

Farouk Musa:Image of  Moderate Islam in Malaysia tarnished

by Hazlan Zakaria@http://http://www.theantdaily.com

The hardline stance that religious authorities and the Barisan Nasional government in particular are taking has tarnished the image of moderate Islam in the country and is causing others to view Muslims and Islam with apprehension.

“The way we think made Islam here not attractive anymore, unlike in the west Din and Faroukwhere Islam is attractive to non-Muslims because of the freedom and fairness in Islam,” Islamic Renaissance Front chairman Dr Farouk Musa told theantdaily.

For one, he said, the principle of “no compulsion in religion” was what made non-Muslims comfortable with the religion as practised in the West.

“(But here) now we see the government interfering in personal faith; you must be sunni and ahli sunnah wal jamaah, how can it be like that? Faith is between you and God. It is an individual thing.”

He warned that this was what happened to the Muslim Brotherhood in Egypt, flushed from their electoral victory, had no respect for the rakyat as a whole and ignored non-Muslims and failed to stop religious persecution.

Brotherhood leader Mohamed Morsi, Farouk said, did not show that he was a ruler for all of Egypt when he became President, but his actions show that he was only a ruler for the Muslim Brotherhood, ignoring others and leading to his downfall.

Farouk noted that as of now, Prime Minister Datuk Seri Najib Razak was also showing the same symptoms as he appeared to be only a PM for UMNO Malays and presides over religious intolerance.

The Islamic thinker stressed that the important thing in Islam was to be just, and to be just not only to Muslims but non-Muslims and Muslims of other schools of thought.

“Like Syiah followers being persecuted, for them it is worse than being non-Muslims. We do not show the face of Islam that is moderate.Neither do we exhibit other qualities that Muslims should,” Farouk said, zooming in on cleanliness which is supposed to be an Islamic trait.

“Islam values cleanliness, but we Muslims here are not the cleanest. Why? It is because we do not embody the teachings of Islam but only observe the rituals blindly without understanding.”

The same, he said, was true of the “implementation of our so-called Islamic economy.”To us Islamic economy is only that there is no usury,” he added.

But this, argued the scholar, was not true as there were other principles of Islamic economy like attaining fairness and social justice.

However, he lamented that ulama and religious authorities failed to see the big picture of social justice leading to zakat or tithe funds which were meant to help the poor being used to buy various assets.

Islamic tithe or zakat is supposed to be finished in the year it was collected and for aid to the poor and those in need, not accumulated annually or used for management expenses like buying buildings and assets.

zakatRed Tape in the Zakat Business

“Red tape is also making it more difficult for the poor to apply for aid. Then they get angry if the poor go to the church for assistance,” Farouk lamented.The same, he argued, was true for the understanding of Malaysian Muslims towards hudud or Islamic criminal law.

“The focus is only on the mechanics of the punishments like cutting off of a thief’s hand but not understanding the underlying principles of fairness and justice behind it,” he said.

What is more important than the mechanics, he believes, is setting the framework to achieve justice and fairness first. The hardline stance and uncompromising way that Islam seems to be practised in Malaysia, he argued, was because Muslims here paid too much attention to rituals and literal readings of the teachings of Islam.

And sadly, as the rituals are observed, most did not understand the reasoning and message behind the rituals but followed blindly, much as many recite the Al-Qur’an by rote without really understanding what it means.

The teachings of Islam as well as the hadith and sunnah are taken literally without looking for the context and explanations.Such literal and ritual-focused practice, Farouk said, led to the rigid version of Islam that we have in Malaysia today.

All in all, a recipe for disaster, as it may lead us down the path to extremism.

Seen in India. Christmas, like Ramadan, is the perfect interfaith footbridge for Muslim-Christian fellowship.

Seen in India. Christmas, like Ramadan, is the perfect interfaith footbridge for Muslim-Christian fellowship.

Bits and Barbarism


December 23, 2013

Bits and Barbarism

by Paul Krugman@http://www.nytimes.com

Paul KrugmanThis is a tale of three money pits. It’s also a tale of monetary regress — of the strange determination of many people to turn the clock back on centuries of progress.

The first money pit is an actual pit — the Porgera open-pit gold mine in Papua New Guinea, one of the world’s top producers. The mine has a terrible reputation for both human rights abuses (rapes, beatings and killings by security personnel) and environmental damage (vast quantities of potentially toxic tailings dumped into a nearby river). But gold prices, while down from their recent peak, are still three times what they were a decade ago, so dig they must.

The second money pit is a lot stranger: the Bitcoin mine in Reykjanesbaer, Iceland. Bitcoin is a digital currency that has value because … well, it’s hard to say exactly why, but for the time being at least people are willing to buy it because they believe other people will be willing to buy it. It is, by design, a kind of virtual gold. And like gold, it can be mined: you can create new bitcoins, but only by solving very complex mathematical problems that require both a lot of computing power and a lot of electricity to run the computers.

Hence the location in Iceland, which has cheap electricity from hydropower and an abundance of cold air to cool those furiously churning machines. Even so, a lot of real resources are being used to create virtual objects with no clear use.

The third money pit is hypothetical. Back in 1936 the economist John Maynard Keynes argued that increased government spending was needed to restore full employment. But then, as now, there was strong political resistance to any such proposal. So Keynes whimsically suggested an alternative: have the government bury bottles full of cash in disused coal mines, and let the private sector spend its own money to dig the cash back up. It would be better, he agreed, to have the government build roads, ports and other useful things — but even perfectly useless spending would give the economy a much-needed boost.

Clever stuff — but Keynes wasn’t finished. He went on to point out that the real-life activity of gold mining was a lot like his thought experiment. Gold miners were, after all, going to great lengths to dig cash out of the ground, even though unlimited amounts of cash could be created at essentially no cost with the printing press. And no sooner was gold dug up than much of it was buried again, in places like the gold vault of the Federal Reserve Bank of New York, where hundreds of thousands of gold bars sit, doing nothing in particular.

Keynes would, I think, have been sardonically amused to learn how little has John-Maynard-Keyneschanged in the past three generations. Public spending to fight unemployment is still anathema; miners are still spoiling the landscape to add to idle hoards of gold. (Keynes dubbed the gold standard a “barbarous relic.”) Bitcoin just adds to the joke. Gold, after all, has at least some real uses, e.g., to fill cavities; but now we’re burning up resources to create “virtual gold” that consists of nothing but strings of digits.

I suspect, however, that Adam Smith would have been dismayed.Smith is often treated as a conservative patron saint, and he did indeed make the original case for free markets. It’s less often mentioned, however, that he also argued strongly for bank regulation — and that he offered a classic paean to the virtues of paper currency. Money, he understood, was a way to facilitate commerce, not a source of national prosperity — and paper money, he argued, allowed commerce to proceed without tying up much of a nation’s wealth in a “dead stock” of silver and gold.

So why are we tearing up the highlands of Papua New Guinea to add to our dead stock of gold and, even more bizarrely, running powerful computers 24/7 to add to a dead stock of digits?

Talk to gold bugs and they’ll tell you that paper money comes from governments, which can’t be trusted not to debase their currencies. The odd thing, however, is that for all the talk of currency debasement, such debasement is getting very hard to find. It’s not just that after years of dire warnings about runaway inflation, inflation in advanced countries is clearly too low, not too high. Even if you take a global perspective, episodes of really high inflation have become rare. Still, hyperinflation hype springs eternal.

Bitcoin seems to derive its appeal from more or less the same sources, plus the added sense that it’s high-tech and algorithmic, so it must be the wave of the future.

But don’t let the fancy trappings fool you: What’s really happening is a determined march to the days when money meant stuff you could jingle in your purse. In tropics and tundra alike, we are for some reason digging our way back to the 17th century.

Malaysia still bleeding billions in dirty money


December 12, 2013

Malaysia still bleeding billions in dirty money

by Steven Gan@http://www.malaysiakini.com

EXCLUSIVE Crime, corruption and tax evasion – the hemorrhaging of billions of ringgit in dirty money from Malaysia, one of the world’s top countries in illicit capital flight, continues unabated.

Just be a Crony and you can get away with a lot of things

A total of RM173.84 billion (US$54.18 billion) was siphoned out of Malaysia in 2011, Washington-based financial watchdog Global Financial Integrity (GFI) says in its latest annual report that tracks capital flight.

NONEHaving catapulted into second position last year when close to RM200 billion of dirty money was siphoned out of Malaysia in 2010, putting the country just under Asian economic powerhouse China in global capital flight. Malaysia is ranked No 4 in this year’s GFI report.

GFI has yet to obtain data for 2012 and 2013, but these will be included in future reports.

For 2011, Malaysia is behind giants Russia (US$191.14 billion), China (US$151.35 billion) and India (US$84.93 billion). Still, the level of illicit cash flowing out of Malaysia is second highest in the past decade.

This is despite Bank Negara Malaysia (BNM) having set up a task force in 2010 to implement measures to put a plug on illicit funds leaving the country. However, BNM has taken pains to stress that the estimates by GFI are essentially ‘unrecorded financial flows’, which are not necessarily synonymous with ‘illicit financial flows’.

The central bank also pointed out that, among others, the data does not take into account goods that are exported via re-export hubs.

“After taking into account Malaysia’s trade that is exported via Singapore and Hong Kong (re-export hubs), the estimate of trade mispricing between Malaysia and its top 10 trading partners were reduced significantly by about 70 percent,” BNM said in a statement in March.

“Since the estimates in the report of trade mispricing do not take into consideration such discrepancies in trade statistics, the estimates of illicit flows are overstated.”

The ‘Hong Kong Effect

GFI Chief Economist Dev Kar, who authored the 2013 GFI report with Junior Economist Brian LeBlanc, said the financial watchdog had taken cognisant of the re-exporting issue and this was addressed in its latest report.

World’s top 10 in illicit outflows 2011“We adjusted for the ‘Hong Kong effect’ in estimating trade misinvoicing by Malaysian traders. Essentially, the revised methodology involves taking account of disaggregated re-exports data published by the Hong Kong Census and Statistics Department that breaks down re-exports to and from Hong Kong by destination and source countries, including Malaysia,” Kar told Malaysiakini.

“Because such a detailed breakdown of re-exports data are not published by Singapore, a similar adjustment of Malaysian exports and imports involving Singapore could not be made.However, please note that the adjustment involving Singapore would be far smaller (due to the fact that Hong Kong eclipses Singapore as a trade entrepot, i.e., the volume of re-exports) and are unlikely to impact the misinvoicing estimates significantly.”

BNM has also argued that the entire errors and omissions (E&O) figure could not be attributable to illicit activities, as it also includes genuine statistical errors from the compilation of statistics of external trade and cross-border financial transactions.

NONEKar (left) said BNM was correct that the net errors and omissions (NEOs) reflect both statistical errors and unrecorded capital flows.

“Economists have for decades used the NEOs as a proxy for illegal capital flight provided two conditions are met – (i) they are persistently negative and (ii) they are sizable.Both these conditions are met in the case of Malaysia whose reported balance of payments statistics are basically reliable (due to the fact that they average around 2 percent of total trade).We therefore feel that persistently negative NEOs under conditions of overall statistical reliability, provides prima facie evidence of illegal capital flight.”

Kar nevertheless commented Malaysia’s central bank for the formation of the task force following publications of GFI reports.

“At a minimum, such governmental actions convey to the public that it is serious in addressing governance issues and that it will take action against corruption wherever such actions are warranted.”

Tax haven secrecy

GFI’s latest report released today – ‘Illicit Financial Flows from Developing Countries: 2002-2011′ – is its 2013 annual update on the amount of illicit capital flowing out of developing economies, and it is the first of GFI’s reports to include data for 2011.

“Anonymous shell companies, tax haven secrecy, and trade-based money laundering techniques drained nearly a trillion dollars from the world’s poorest in 2011, at a time when rich and poor nations alike are struggling to spur economic growth,” said GFI President Raymond Baker.

“While global momentum has been building over the past year to curtail this problem, more must be done. This study should serve as a wake-up call to world leaders: the time to act is now.”

The report incorporated for the first time trade data on re-exports from Hong Kong and the first to integrate bilateral trade data for those countries which report it – making this report the most accurate analysis of illicit financial outflows produced by GFI to date.

“We’re constantly striving to improve the accuracy of our estimates. We determined that by omitting data from the use of Hong Kong as a trade intermediary, the previous methodology – which was accepted by most economists studying trade misinvoicing – had the potential to overstate illicit outflows from many Asian countries,” said Kar.

Illicit Money FlowCorrecting for this ‘Hong Kong effect’ sharply reduces the share of outflows from Asia.

“Nevertheless, Asia still has the largest share of illicit flows among the regions, and six of the top 15 exporters of illicit capital are Asian countries (China, Malaysia, India, Indonesia, Thailand, and the Philippines),” said Kar.

“The estimates provided by our new methodology are still likely to be extremely conservative as they do not include trade misinvoicing in services, same-invoice trade misinvoicing, hawala transactions, and dealings conducted in bulk cash,” added Kar, who served as a senior economist at the International Monetary Fund (IMF) before joining GFI in January 2008.

“This means that much of the proceeds of drug trafficking, human smuggling, and other criminal activities, which are often settled in cash, are not included in these estimates.”

Financial transparency

The US$946.7 billion of illicit outflows lost in 2011 is a 13.7 percent increase from 2010 – which saw developing countries hemorrhage US$832.4 billion – and a dramatic increase from 2002, when illicit outflows totaled just US$270.3 billion.

The GFI study estimates the developing world lost a total of US$5.9 trillion over the decade spanning 2002 through 2011.

“It’s extremely troubling to note just how fast illicit flows are growing,” said Kar.

World’s top 10 in illicit outflows 2002-11“Over the past decade, illicit outflows from developing countries increased by 10.2 percent each year in real terms – significantly outpacing GDP growth. This underscores the urgency with which policymakers should address illicit financial flows.”

Meanwhile, Baker hailed the effort by some countries to increase the transparency in the international financial system as a means to curtail the illicit flow of money.

“Much progress has also been made in targeting anonymous shell companies over the past year, with the United Kingdom announcing in October that they would be creating the world’s first central public registry of corporate beneficial ownership information,” he said.

“(British Prime Minister) David Cameron should be commended for his courage, but the rest of the world must now move to follow suit – making public registries of beneficial ownership information the global standard.”

Cameron was spurred to action following a global investigation coordinated by Washington-based International Confederation of Investigative Journalists (ICIJ) in April this year, which included a team from Malaysiakini.

Four fallacies of the 2nd Great Depression


November 30, 2013

Four fallacies of the 2nd Great Depression

NOT SCIENCE: The truth of many economic propositions depends on people’s expectations

Lord SkidelskyTHE period since 2008 has produced a plentiful crop of recycled economic fallacies, mostly falling from the lips of political leaders. Here are my four favourites:

THE Swabian Housewife. “One should simply have asked the Swabian housewife,” said German Chancellor Angela Merkel after the collapse of Lehman Brothers in 2008. “She would have told us that you cannot live beyond your means.”

This sensible-sounding logic currently underpins austerity. The problem is that it ignores the effect of the housewife’s thrift on total demand. If all households curbed their expenditures, total consumption would fall, and so, too, would demand for labour. If the housewife’s husband loses his job, the household will be worse off than before.

The general case of this fallacy is the “fallacy of composition”: what makes sense for each household or company individually does not necessarily add up to the good of the whole. The particular case that John Maynard Keynes identified was the “paradox of thrift”: if everyone tries to save more in bad times, aggregate demand will fall, lowering total savings, because of the decrease in consumption and economic growth.

If the government tries to cut its deficit, households and firms will have to tighten their purse strings, resulting in less total spending.

As a result, however much the government cuts its spending, its deficit will barely shrink. And if all countries pursue austerity simultaneously, lower demand for each country’s goods will lead to lower domestic and foreign consumption, leaving all worse off.

THE government cannot spend money it does not have.This fallacy, often repeated by British Prime Minister David Cameron, treats governments as if they faced the same budget constraints as households or companies. But governments are not like households or companies.

They can always get the money they need by issuing bonds.But won’t an increasingly indebted government have to pay ever-higher interest rates, so that debt-service costs eventually consume its entire revenue?

The answer is no: the central bank can print enough extra money to hold down the cost of government debt.

This is what so-called quantitative easing does. With near-zero interest rates, most western governments cannot afford not to borrow. This argument does not hold for a government without its own central bank, in which case it faces exactly the same budget constraint as the oft-cited Swabian housewife. That is why some eurozone member states got into so much trouble until the European Central Bank rescued them.

THE national debt is deferred taxation.According to this oft-repeated fallacy, governments can raise money by issuing bonds, but, because bonds are loans, they will eventually have to be repaid, which can be done only by raising taxes. And, because taxpayers expect this, they will save now to pay their future tax bills. The more the government borrows to pay for its spending today, the more the public saves to pay future taxes, cancelling out any stimulatory effect of the extra borrowing.

The problem with this argument is that governments are rarely faced with having to “pay off” their debts. They might choose to do so, but mostly they just roll them over by issuing new bonds.

The longer the bonds’ maturities, the less frequently governments have to come to the market for new loans. More important, when there are idle resources (for example, when unemployment is much higher than normal), the spending that results from the government’s borrowing brings these resources into use.

The increased government revenue that this generates (plus the decreased spending on the unemployed) pays for the extra borrowing without having to raise taxes.

THE national debt is a burden on future generations. This fallacy is repeated so often that it has entered the collective unconscious.

The argument is that if the current generation spends more than it earns, the next generation will be forced to earn more than it spends to pay for it. But this ignores the fact that holders of the very same debt will be among the supposedly burdened future generations.

Suppose my children have to pay off the debt to you that I incurred. They will be worse off. But you will be better off.

This may be bad for the distribution of wealth and income, because it will enrich the creditor at the expense of the debtor, but there will be no net burden on future generations.

The principle is exactly the same when the holders of the national debt are foreigners (as with Greece), though the political opposition to repayment will be much greater. Economics is luxuriant with fallacies, because it is not a natural science like physics or chemistry. Propositions in economics are rarely absolutely true or false. What is true in some circumstances may be false in others. Above all, the truth of many propositions depends on people’s expectations.

Consider the belief that the more the government borrows, the higher the future tax burden will be.

If people act on this belief by saving every extra pound, dollar, or euro that the government puts in their pockets, the extra government spending will have no effect on economic activity, regardless of how many resources are idle.

The government must then raise taxes and the fallacy becomes a self-fulfilling prophecy.

So how are we to distinguish between true and false propositions in economics? Perhaps the dividing line should be drawn between propositions that hold only if people expect them to be true and those that are true irrespective of beliefs.

The statement, “If we all saved more in a slump, we would all be better off,” is absolutely false.We would all be worse off. But the statement, “The more the government borrows, the more it has to pay for its borrowing,” is sometimes true and sometimes false.

Or perhaps the dividing line should be between propositions that depend on reasonable behavioural assumptions and those that depend on ludicrous ones.

If people saved every extra penny of borrowed money that the government spent, the spending would have no stimulating effect. True. But such people exist only in economists’ models.– Project Syndicate/www.nst.com.my

Vietnam in ASEAN and ASEAN in Vietnam


November 24, 2103

east-west-center-asia-pacific-bulletinNumber 242 | November 21, 2013

ANALYSIS
Vietnam in ASEAN and ASEAN in Vietnam

By Le Dinh Tinh and Hoang Hai Long

Vietnam is increasingly looking to ASEAN as a main pillar for its foreign policy. A landmark shift occurred when Vietnam chaired ASEAN in 2010 and important regional issues such as community-building, economic connectivity, and the South China Sea were discussed and membership for the United States and Russia to the East Asia Summit was granted.

Today, the overriding theme in Vietnam’s foreign policy is international integration; earlier, the country emphasized only domestic economic growth and integration. Acknowledging that economic integration remains the core policy goal of Vietnam, security and regional politics are now also beginning to take a more prominent role.

Why ASEAN?

Vietnam recognizes that by working with ASEAN it can have a greater impact on regional and global events, rather than by just acting alone. ASEAN is Vietnam’s bridge to the wider world and a safety net when the country faces global and regional problems. Economically, ASEAN offers substantial benefits to Vietnam. Bilateral trade was almost $38 billion in 2012, a ten percent increase from 2011 and accounted for 17 percent of Vietnam’s total trade. ASEAN is Vietnam’s third-largest market for exports after the United States and the European Union, ahead of Japan and China. Vietnam’s exports to ASEAN exceeded $17 billion in 2012, a 26 percent increase from the previous year. Singapore and Malaysia are Vietnam’s 7th and 8th largest export destinations, totaling $1.5 billion and $2.8 billion, respectively. Vietnam’s agricultural exports to ASEAN totaled almost $4 billion in 2012, a four-fold increase since 2000.

It is anticipated that intra-ASEAN trade will total 35 percent of ASEAN’s total trading volume by 2020 after implementation of the ASEAN Economic Community in 2015. In addition, over a fifth of the total foreign direct investment that Vietnam receives comes from ASEAN members, almost $47 billion at the end of 2012, with Singapore and Malaysia the largest ASEAN investors. Another growing market is tourism and people-to-people exchanges. Overall, the mutual Vietnam-ASEAN economic benefits continue on an upward trend.

On the geostrategic stage, Vietnam has membership benefits in the Asia-Pacific Economic Cooperation (APEC), the World Trade Organization (WTO) and the ambitious Trans-Pacific Partnership (TPP), partly because it is a member of ASEAN. Other benefits of free trade agreements, including the ASEAN Free Trade Area (AFTA), is that they have enabled Vietnam to meet international standards for macro-economic policies, tackling corruption and stimulating home-grown enterprises.Vietnam policy makers need to focus on a peaceful and stable security environment. For the sake of long-term development, Vietnam must be a fully active participant in the evolving security and political architecture currently unfolding in the region.

ASEAN is not only a logical starting point for this venture; it is the anchor for the region’s future. First, ASEAN provides an open venue for smaller countries to come together and establish new relationships and cement existing ones on the basis of mutual interests. With ASEAN, small member countries can align their interests, thus supplementing their relationships with major countries. As the Asia-Pacific attracts more attention, major countries are proactively seeking to strengthen bilateral ties with various actors in the region.

Taking advantage of this new opportunity, Vietnam has reciprocated positively, deepening relations with all permanent member countries on the UN Security Council, along with other important partners including India, Japan, South Korea, and Australia.

However, as the security climate in the region becomes more complicated, a vortex of constantly shifting interests and alliances is unfolding due to the maneuvering of major powers. Vietnam is naturally seeking an enhanced web of interlocking interests with its immediate neighbors and despite its flaws ASEAN has proven to be a transparent, inclusive and effective partner for Vietnam. This partnership creates, among other things, added leverage for Vietnam to boost relationships with major countries, for instance, via the ASEAN+1 (China) and ASEAN+3 (China, Japan and South Korea) mechanisms.

Second, ASEAN helps magnify Vietnam’s ability to politically integrate into the larger Asia-Pacific region. The East Asia Summit (EAS) is the key framework for regional leaders to discuss political and strategic issues while the ASEAN Regional Forum (ARF) is developing into an inclusive multilateral security forum. The ASEAN Defense Ministers’ Meeting Plus (ADMM+) enables ASEAN member to interact with major powers and provides a high-level venue to discuss transnational defense-security cooperation.

These forums and their success to date have proven ASEAN’s value as an honest broker and mediator for all parties in sensitive security issues. ASEAN’s centrality in regional security architecture cannot be underestimated and this relevance, vitality and influence will continue well into the future.

Why Vietnam?

ASEAN’s strength has always been the unified and combined strength of its members, and in order for ASEAN to be strong and cohesive its members have to be economically prosperous and secure. Vietnam’s successful economic development is certainly due in part to its ASEAN membership, and in turn Vietnam has also made many positive contributions to the strength of ASEAN as an institution.

After more than 20 years of reform and opening up, also known as the era of “Doi Moi” (renovation), Vietnam has made significant achievements on all fronts, including economic growth, social progress and political stability. From an import-based economy, Vietnam has exerted herself onto the global stage in trade and investment. Recently, Vietnam has risen to the status of a lower middle-income economy and is working to achieve a per capita income level of $3,000 by 2020.

Vietnam has already achieved the majority of its Millennium Development Goals ahead of the 2015 deadline, most notably in eradicating poverty and extreme hunger, and reducing child and maternal mortality rates. The country is also set to meet universal education targets by 2015.

Vietnamese Deputy Foreign Minister Pham Quang Vinh, who is also Vietnam’s current and longest-serving ASEAN Senior Officials’ Meeting (SOM) leader, often explains that it is strategically important to create an ASEAN community that applies its dynamism toward creating a shared peace, security and prosperity for the region and beyond. Vietnam’s market is 90 million, the third largest in ASEAN, with approximately 70 percent of the population between 15 and 64 years old.

Vietnam’s chairmanship of ASEAN in 2010 is a vivid example of Vietnam acting as an able and committed member when it comes to translating ASEAN goals into real and tangible results. Vietnam needs ASEAN and ASEAN also needs Vietnam. Vietnam-ASEAN interaction is increasingly inter-twining the two entities’ destinies and identities together into one, to mutual benefit.

About the Author

Mr. Le Dinh Tinh is Deputy Director General of the Institute for Foreign Policy and Strategic Studies at the Diplomatic Academy of Vietnam.Hoang Hai Long is a B.A. Student in the Department of Political Science at Depauw University. Mr. Le Dinh can be contacted via email at tinhiir@gmail.com and Mr. Hoang at longhoang_2014@depauw.edu.

The East-West Center promotes better relations and understanding among the people and nations of the United States, Asia, and the Pacific through cooperative study, research, and dialogue.

Established by the US Congress in 1960, the Center serves as a resource for information and analysis on critical issues of common concern, bringing people together to exchange views, build expertise, and develop policy options.The Asia Pacific Bulletin (APB) series is produced by the East-West Center in Washington.

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APB Series Coordinator: Damien Tomkins, Project Assistant, East-West Center in Washington

The views expressed in this publication are those of the authors and do not necessarily reflect the policy or position of the East-West Center or any organization with which the author is affiliated.

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Anwar Ibrahim criticises Menteri Besar, Selangor


November 24, 2013

Anwar Ibrahim criticises Menteri Besar, Selangor

by Lee Shi-Ian@http://www.themalaysianinsider.com

anwar-khalidOnce again Selangor Menteri Besar Tan Sri Khalid Ibrahim has been publicly criticised by Datuk Seri Anwar Ibrahim over his tardiness in taking action and implementing measures for the benefit of the people.

“Pakatan Rakyat’s achievements are not measured in terms of whether there is a surplus or deficit in the budget but how we prioritise the needs of the public,” Anwar said.

“Khalid is one of the most loyal and attentive friend and colleague compared to other PKR leaders. However, there are times when he is among the slowest leaders to take action,” he said.

“I admonish a leader for a reason, I point out mistakes and errors so that he will tighten the loose screws,” Anwar said during the closing ceremony of the special PKR national congress in Shah Alam.

“Khalid is very attentive to other people’s ideas and opinions, especially from his fellow PKR colleagues. Unfortunately, he does not put what has been said into practice,” Anwar, who is the party’s supreme leader, admonished Khalid who looked on unperturbed.

Last month at a forum in Petaling Jaya, Anwar had criticised Khalid over the latter’s failure to use Selangor’s surplus funds to help the needy, resulting in some party members labelling him as “stingy”.

Prior to the Opposition leader’s closing remarks, the 800-strong crowd comprising PKR delegates and observers unanimously approved several amendments to the party’s constitution. The amendments to PKR’s constitution will be sent to the Registrar of Societies (RoS) next week to be rubber-stamped.

Anwar had the attention of the 800-strong crowd at the Dewan Raja Muda Musa in Section 7, Shah Alam as he described the challenges facing PKR, DAP and PAS.

“We are facing a mighty political opponent who has billions of ringgit in their treasury. They will spend millions of ringgit to ensure that they remain in power,” Anwar said.

He said Pakatan Rakyat had to intensify their efforts to woo support from the rural voters, who remember Barisan Nasional whenever they receive gifts and handouts.

“We are talking about a very strong political party who has money to burn and a mighty election machinery ready to steamroll any opposition,” he said.

“But one of our advantages is that we have a lot of young, talented politicians who can reach out to the masses,” he said.

Anwar said Barisan Nasional had spent millions trying to defeat the party’s two young politicians, his daughter and Lembah Pantai MP Nurul Izzah and Pandan MP Rafizi Ramli, but failed.

“We must not give up, yes, the road ahead of us is long, hard and winding but we can surpass these obstacles and reach the summit,” he said.

One of the weaknesses which Anwar noted in the new generation of young politicians was a lack of humility. He said the young politicians were talented, savvy and sometimes over-confident.

“But this is a weakness which can be rectified as the older leaders can guide the next generation and set them on the right path,” he said.

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