US President Barack Obama calls for debate on TPPA

November 21, 2015

COMMENT: I welcome US President Barack Obama’s statement that the TPPA should be debated by the general public. The President is fully aware that this trade pact affects our lives.

The TPPA must not just serve the interest of US corporations at the expense of other stakeholders. This debate will happen in the United States which practises  open, transparent and accountable governance. But I am not sure about Malaysia.

Our government is well-known for using the Official Secrets Act toMustapa-Mohamed-TPPA-300x202 keep the Malaysian public in the dark on matters of national importance. It also is arrogant and presumptuous to think that “government knows best”. Its handling of the TPPA negotiation is no exception.

We have, however, been assured by our MITI Minister, Dato’ Mustafa Mohamed, that his ministry will be organising some sort of dialogue cum briefing for all stakeholders including Malaysian business and other civil society organisations, which have raised serious and valid concerns about the TPPA. So far, I am not sure if the Minister has kept his word. Perhaps, the Minister is still waiting for the “right time”. The right time is now, so please get on with it.

There should also be a White Paper to our Parliament, giving a full account of the recently completed round of negotiations in Atlanta and the benefits and costs of this pact to Malaysia. Our parliamentarians should be allowed to debate it and reach a consensus.–Din Merican

US President Barack Obama calls for debate on TPPA

by Reuters

Obama at Taylors University

US President Barack Obama gestures while speaks at a meeting with students from the Young Southeast Asian Leaders Initiative at Taylor’s University in Kuala Lumpur, November 20, 2015. — Reuters pic

US President Barack Obama launched a defence today of a signature Pacific trade pact kept largely under wraps and said the public would get its say before legislators in each country debate the full details.

The Trans-Pacific Partnership (TPP), a “mega-regional accord” covering four-tenths of global GDP, was so complex it would not have materialised if all interest groups were involved in the protracted talks, he said.

“If you are negotiating with 12 countries and there’s no space for everyone to agree on the deal … then it would never get done,” Obama said during a town hall at a Kuala Lumpur University.

“The nature of the trade agreement is so many interests are involved, so what we’ve done instead is close the initial deal, it’s subject to review ….each country then has to ratify and it’s subject to the legislatures.”

Obama was responding to a question from a Malaysian youth who said the TPP was elitist and excluded most voices. Barring occasional leaks, details of the TPP have been kept secret during the more than five years of negotiations, angering those affected by its broad implications.

“I still have to get it past Congress,” Obama added. “I believe it’s a good deal and we’ll get it done, but there’s no guarantee.”

The pact could come up against some opposition in Washington. Obama has long championed the deal but needs to muster support among moderates to ensure ratification.

He recently said it would allow the United States to “write the rules of the road” for 21st century trade, but warned: “If America doesn’t write those rules, then countries like China will.”

The pact covers countries from Japan, Canada and Australia to Mexico, Vietnam and Malaysia and would slash tariffs between them and set common standards on issues ranging from workers’ rights to intellectual property protection.

Obama used the US pharmaceutical industry as an example of resistance and how concessions needed to be made.“We were very specific in the chapter to say that we have to protect generics for low-income persons,” he said.

“Here’s proof that this wasn’t just some giveaway to the drugs companies. Right now a lot of drugs companies in the United States are mad at me because they said ‘how come we didn’t get more protection?’

“Well, part of our job is to promote the US drug industry but part of our job is also to be good partners with countries that have people who are sick.”  — Reuters–

Banks’ dollar borrowing adds a layer of risk to Malaysia’s creeping crisis

November 9, 2015

Banks’ dollar borrowing adds a layer of risk to Malaysia’s creeping crisis

by Reuters

To get an idea of how fragile Malaysia’s external account is, consider this: the amount of foreign money invested in ringgit bonds and the dollar borrowings of its banks will together more than wipe out the country’s currency reserves.

Eighteen years after being battered by the Asian financial crisis, Malaysia is once again facing a perilous combination of heavy short-term overseas borrowings by banks and scarce foreign exchange reserves.Add in a festering political scandal and looming interest rate rises in the United States and the country is showing many of the symptoms that could presage another currency crisis.

The ringgit has plummeted and credit markets are pricing in deep concern over Malaysia’s external finances. Richer Malaysians are slowly shifting money abroad.It depends on what will be the catalyst that turns the worry into a crisis,” said Patrick Yau, an equity analyst with Citi in Singapore.

“The big question is whether there is enough funding to prevent a crisis. The system was over-reliant on foreign funding in the previous crisis.”

The foreign currency liabilities of Malaysian banks alone account for nearly half of the country’s US$98 billion overseas borrowings.

Overseas investor holdings of Malaysian central bank and government debt are US$47 billion and the country’s total short-term debt has doubled since 2009 to US$79 billion.

Bankers in Kuala Lumpur say they have learnt their lesson from the 1997 crisis, and thus their foreign currency borrowings are mostly offset by matching dollar lending.

“I think the risk is from the currency volatility,” Dato’ Seri Nazir Razak, chairman of Malaysia’s second largest bank CIMB, told Reuters in an interview.

The ringgit is down 19% against the dollar this year, and could suffer further if some US$30 billion of deposits placed by foreigners in Malaysian banks are taken out. “The risk would be if the currency depreciation results in a credit event where borrowers really suffer as a result of the drop in currency, wherein they actually have dollar cost basis. That is when, on a second order basis, banks will get affected.”

Creeping crisis

Such heavy overseas borrowing still carries two potential risks, however, according to some analysts.

First, offshore banks or even retail investors could unexpectedly pull back their deposits or funding. At risk would be the US$30 billion of deposits placed by foreigners with Malaysian banks. Second, the assets could turn bad if the businesses that have borrowed the foreign currency cannot repay them.

Either could trigger a vicious downward spiral for the ringgit, which is already down 19% against the dollar this year. In a worst-case scenario, Malaysia’s US$94 billion foreign currency reserves would fall far short of covering the resulting funding flows.

Back in 1997, the external borrowing binge was led by corporates. Short-term debt was 33% of total borrowings of US$43.9 billion, while currency reserves were less than US$22 billion. The ringgit was overvalued, and Malaysia ran a current account deficit so was hugely dependent on foreign funding.

Now most analysts assume the resource-rich country’s current account surplus – its earnings from exports of manufactured goods and liquified natural gas – indemnifies it against a balance of payments crunch.

“If it turns into a run, then they don’t have enough reserves,” said Tim Condon, ING’s Chief Asia economist.”Still, they don’t have to raise money. It’s hard to get a balance of payments crisis in a country running a current account surplus.”

Political dimension

That surplus has nonetheless shrunk rapidly as global oil prices have tumbled. It is forecast to be just US$2.6 billion in 2016, the lowest since Malaysia started running surpluses in 1998.

Meanwhile the ongoing investigations into allegations of corruption and mismanagement at state fund 1Malaysia Development Berhad (1MDB), which has racked up debts of US$11 billion, have raised questions around Prime Minister Datuk Seri Najib Razak’s political future and the stability the country has long been known for.'”Malaysia is facing a number of issues. Individually they are all manageable, but it’s a question of how they interact,” said Elaine Koh, a Director at Fitch Ratings in Singapore. Koh thinks the banking system is at an inflection point, but says it’s difficult to tell whether the situation will worsen.

The simmering policy uncertainty, market volatility and intervention by the central bank have meanwhile led to a fall in ringgit deposits in the banking system.

As businesses and individuals moved out of ringgit, foreign currency deposits at local banks rose US$3 billion in the third quarter of this year and US$5.7 billion so far this year.

“Fund managers and other institutional investors have been moving funds away from Malaysia,” said Simon Chen, a senior analyst at rating agency Moody’s in Singapore.

Retail deposits, however, were still growing at a stable pace and the banking system wasn’t showing any signs of funding stress, Chen said.

“If the deposit outflows persist and to the extent that we see retail deposits grow at a smaller pace or even contract, that’s when the excess liquidity in the banking system will decline and funding will become tighter.” – Reuters, November 9, 2015.

Malaysia-China relations–Leveraging the Business Connection

October 29, 2015

Malaysia-China relations–Leveraging the Business Connection

By Dr. Lim Teck Ghee

Although the solutions to our economic malaise have to be rooted in our own structural reforms – political and socio-economic – there is no doubt that the China connection can make a difference – a big difference!

The British-China relations–Triumph of Business Sense over Political Ideology

Malaysia does not need protection by or from any sheriff – old and new. But we badly need Chinese trade and investment if we want to grow our jobs and sustain our current consumption and lifestyle.–Dr. Lim Teck Ghee

The extraordinary British press coverage of Chinese President President Xi Jinping’s current visit to Britain is worth reading as to what the British are saying about themselves and the state of the world.It prompts us to take a serious look at ourselves today. It is about time we review our commercial relations with the rest of the world.

Many local media columnists in Britain were outraged that  David Cameron’s government was making such a big deal of the visit. As a Fortune magazine article succinctly put it:

Britain is sucking it up big time this week, having finally learned to kowtow after a 218-year trade relationship in which it has tended to be the one handing out the humiliations. ((Geoffrey Smith, A weakened Britain finally learns how to kowtow to Beijing)

Why did the British Prime Minister David Cameron, Opposition Leader Jeremy Corbyn, Her Majesty The Queen and others – roll out the red carpet for the Chinese leader? Why did Her Royal Highness Kate Middleton, Duchess of Cambridge, wear a symbolic red gown in a banquet dinner in Buckingham Palace where Queen Elizabeth and the Duchess of Cambridge were said to have “showered Xi and his wife with the fairy dust of royalty ancient and modern”?

The Queen  Honoring XiKate and XiObviously, it is not because of any newfound love of the Chinese. Put it down to the realities of the global economy and Britain’s declining competitiveness.

Why the Need to suck up to China?

Veteran Labour MP Paul Lynn remarked in Parliament that Britain was behaving like a supplicant fawning spaniel that licks the hand that beats it. But the fact is that the British taxpayer has to pay for his salary and allowances; and the country’s treasury badly needs an injection from the world’s largest economy if the ordinary British citizen is to not bear the burden of higher taxes and continued loss of jobs.

The Chinese economy is now worth $17.6tn, marginally higher than the $17.4tn the International Monetary Fund estimates for the US. For the first time since 1872, when it overtook the UK, the US has been knocked off the top spot by China. The IMF calculated these figures by using purchasing power parity (PPP) which compares how much you can buy for your money in different countries.

And this is among the bag of goodies that Xi is bringing to Britain on this current state visit:

• £30 billion of business agreements, including a one third stake in the UK’s first nuclear plan for a generation.
• an expected big jump in Chinese tourists to Britain with easier visas. Each Chinese tourist typically spends £2,688 on an average visit, totaling about £500 million a year.
•further increases in Chinese student enrolment in Britain. Presently accounting for nearly 90,000 of the 310,000 higher education non-EU students, the fortune and health of many British higher education institutions, and their student-related housing and service industries, depends on the expansion in Chinese student numbers.

The Lesson for Malaysia—Not TPPA

U.S. President Barack REUTERS/Hugh Gentry

Secret Deals at Malaysia’s Expense–TPPA?

Here lies the lesson for us too in Malaysia as we face an increasingly bleak economic future with many analysts noting that the amber lights have been flashing for some time with the sharply devalued ringgit, decline in foreign investment, high levels of individual and household debt, rising cost of living, and falling business confidence.

Capitalizing on our China Connection

Although the solutions to our economic malaise have to be rooted in our own structural reforms – political and socio-economic – there is no doubt that the China connection can make a difference – a big difference!

Just as the British, and other nations, are attempting to strengthen relations with the largest market in the world, Malaysia can do much more to take advantage of China’s progress. And our policy makers do not need to reinvent the wheel or borrow from the British in establishing a higher level of Malaysia-China partnership and cooperation.

The following proposals on Malaysia-China relations, for example, are from the “Transforming the Nation: A 20 Year Plan of Action” report prepared by the Federation of Chinese Associations Malaysia (Huazong) in July 2012. They appear to have been largely ignored

• A comprehensive review of existing policy towards China in all sectors – economic and non-economic – with a view to broadening linkages and cooperation for the mutual benefit of both countries. This review should incorporate inputs from the private sector, civil society and other key stakeholders.
• Inter-university exchange programmes to increase students’ knowledge and experience of the two countries. Scholarships and other forms of assistance should be granted by local foundations to sponsor students.
• Expansion of cultural tourism. Government’s role in the development of Malaysia as a halal hub aimed at attracting Muslim tourists from China should be expanded

It has been rumoured that some time later this year will see a visit from a high ranking Chinese leader to Malaysia – perhaps Xi himself. Will we see a round of mainly indifference or even China and Chinese bashing? Or will we capitalize on the rise of China to salvage our sinking economy the way the British are doing?

Fortunately our relationship with China – for a start – is not on the same level as the one which Britain has had. Our relations with China begun with the Second Prime Minister, Tun Abdul Razak’s visit to China and we have yet to fully capitalize on this ground breaking relationship.

Hopefully this observation from a British commentator on the Guardian website will give pause to our local hotheads blowing hot air on anyone or anything associated with their definition of pendatang:

He doesn’t need lil’ ole us to make him feel important. He’s president of the world’s biggest superpower. I hope he’s gone away feeling we did make an effort and the UK is a country worth bothering with. However much it seems to irk some people, there’s a new sheriff in town and I hope they’re nicer to us than we were to them when our star was in the ascendancy and we owned half the world (and went to war with them when they tried to stop buying the opium we liked flogging them.)

Malaysia does not need protection by or from any sheriff – old and new (and the TPPA). But we badly need Chinese trade and investment if we want to grow our jobs and sustain our current consumption and lifestyle.

2016 Budget, Forecasting and Muharram

October 27, 2015

2016 Budget, Forecasting and Muharram

by Saleh Mohammed

NAJIB RAZAK_MALAYSIA_BUDGET_2016 The after-dawn lecture on October 25 at Masjid At-Taqwa in Taman Tun Dr Ismail by religious teacher Dr Ahmad Faisal Abdul Hamid gave me the inspiration to write this article. He gave a fresh perspective on the meaning of muharram. And he does so on many other matters.

You may ask what is the connection between the three things? Budget is a statement of the financial position of an administration for a definite period of time based on estimates of expenditures during the period and proposals for financing them. Forecast is to predict or estimate (a future event or trend) while Muharram is the first month of the Islamic calendar.

What do people normally think of when it comes to a new year? It is the resolve to do better during the 12 months ahead. Resolutions made right can make a huge difference in boosting happiness and morale.

Surely, when a government draws up the yearly budget, it would also include questions like what would make the public happier. What concrete actions would bring change and how will it hold itself accountable? All these will include forecasting and planning.

Now let us look at Budget 2016, the theme of which is “Prospering the Rakyat”.My appreciation to those involved in putting it in place especially the civil servants.

In the last few days we have heard lots from both sides, ranging from thumbs up and also a dichotomy where this is the first budget to transform Malaysia into a high-income advanced economy but the planned GDP growth does not reconcile.

I would like to touch on a few items only due to space constraints. A word of thanks to Prime Minister Dato’ Seri Najib Razak for giving emphasis on vocational and education training to enhance employees’ income.

All in all, technical and vocational education and training (TVET) will receive around RM5 billion allocated to 545 TVET institutions. The industrial skills committee has a gargantuan task and I believe they have given due consideration on both VET and dual VET. In a study, it is said in a world of perpetual technological change, a dual VET system is expected to be less prone to problems of educational mismatch early in the career.

Points to consider for systematic elements of success include relevance of curricula; close contact to the labour market; high level of training quality especially experienced teaching staff; incentivise training providers and the competences and qualifications acquired should be made comparable to those acquired in the academic path.

The public look forward to another initiative that will spend lots of money to be successful. China, it seems is building vocational parks or “education factories”.

For obvious reasons, goodies are promised to the 1.6 million civil servants with starting pay to be fixed at RM1,200. There will also be salary adjustment, improving 252 schemes of service and a special assistance of RM500 to all. Pensioners will get a minimum pension rate at RM950 a month while all 700,000 pensioners to receive a special payment of RM250.

The total costs of emoluments and supplies and services as a percentage of total operating expenditure will increase to 50% (2015: 46%).

I guess with this jump, the rest of the public would expect corresponding increase in productivity. Next, the government has targeted an annual labour productivity growth of 3.7%.

There was an article – Microsoft has come up with Office 365 which is their answer to reinventing productivity. It will revolutionise the information technology business, specifically mobility and cloud.

This will increase the possibility of people working remotely and help not only in reducing costs but also a host of other things including town planning.

It is also hoped instances where budget allocated in a year has to be finished irrespective, lest allocation will be cut in the coming year, is non-existent. It will be good if the government could start a “think outside the box” campaign for civil servants. It may be worth the while to incentivise and encourage ideas to optimise all activities.

Pity me and the rest of the private sector retirees – no idea on the total number. Not only we do not get goodies, we are faced with the GST and other multiple increases with the latest being the toll charges.

I am still asking myself, are there any problems with my citizenship since I am not included in this “Prospering the Rakyat” category? A lot more people like me are on the losing side and feels like we will just wither away without anyone noticing. I am also wondering, is there equitable distribution of wealth among the public?

That leads to the how are we going to get the government to hold itself accountable? The very least is to show yearly, the actual amount spent against the budget as is done in commercial organisations. Additionally, to show whether the objectives for the expenditure were met.

For the sake of unity, I was attracted to the statement, “… we need to achieve an inclusive and sustainable growth as well as build a competitive, progressive and a morally strong nation, with a society that is united… ultimately, the success of the nation depends on our ability to remain united.”

On that score, I do feel there is no need to use the phrases api di dalam sekam and gunting dalam lipatan to make a point. Wasn’t the budget speech started with the words “In the name of Allah, the Most Gracious and the Most Merciful”? Can we not follow?

For the record, Islam does not forbid forecasting unless for sinful purposes, e.g. gambling.

Najib’s populist budget ala Robin Hood

October 24, 2015

Najib’s populist budget ala Robin Hood

by Murray Hunter

MALAYSIA’S Prime Minister Najib Abdul Razak tabled the 2016 Malaysian Budget in the Dewan Rakyat (Parliament) Friday. This was always going to be a tough budget for the embattled leader, with a rapidly depreciating Ringgit, low oil and gas prices, low rubber and palm oil prices, an increasing inflation rate, rising unemployment, and extremely low consumer and investment confidence prevailing throughout the country. That’s not to mention the 1MDB scandal which is dogging his every day in office.

Ahmad Maslan al HoodOne of Najib’s Hoods

Najib, to a heckling opposition that showed signs stating “Where is the RM2.6 Billion”, proclaimed that Malaysia is not a failed state and the poverty rate during his tenure in office has gone down from 3.8 percent in 2009 to only 0.6 percent today. He also claimed that the budget deficit will be reduced from 6.7 percent last year to only 3.6 percent of GDP this year. However this is assuming economic growth of 4-5 percent, driven by private investment of 6.7 percent and increase of private consumption of 6.4 percent, which may appear optimistic.

With what some elements of the Malaysian press have called a ‘Robin Hood’ budget – increasing taxes on the rich, with the benefits to be dispersed more to the poor – Najib sprinkled a lot of populist measures into the budget to shore up his electoral support. This was particularly the case in Sarawak, which is due to have a state election next year.

Najib themed this budget “prospering the Rakyat (people)”, basing it on two priorities; strengthening economic resilience and easing the cost of living.

Such moves included a GST rebate on prepaid mobile phone charges beginning January 1 next year, raising civil servants bonuses and allowances, increasing low income household hand-outs to 4.7 million homes, and making special grants to longhouses in rural Sarawak.

Najib also announced a first homes deposit financing scheme, more scholarships for students, minimum pension rates, and more tax relief for low and middle income earners.

There are also a number of GST exemptions made on medicines, and lifting the thresholds that require farmers paying GST from RM50,000 to RM100,000. These measures should prove popular in the UMNO heartland, giving Najib the option of going for a snap election should he decide on that route later in the year.

SEE ALSO: Malaysia: No end game in sight for Najib Razak

Najib listed over nine infrastructure projects that the Government hopes will spur on the economy over the next few years. A number of Klang Valley freeways will be upgraded, along with expansion of the MRT network. The jewel in the crown is the announcement of the Pan-Borneo Expressway, which will link Sabah and Sarawak. Just to add sweetness to the announcement, Najib committed that the expressway would be toll free. RM730 million will also be allocated for flood-mitigation projects, and a number of new hospitals will be built, which with little doubt will be awarded to companies associated with UMNO divisional leaders, throughout the country.

In addition to highways and the MRT, a number of airports including Kauntan and Kota Bahru will be upgraded.

Although one of the prime precepts of the budget is to attract private investment, there appears little in it to assist in achieving this objective. In fact a rise in taxes at the higher income levels above RM500,000 could be seen as a deterrent to potential investment, according to some commentators immediately after the budget.

To appease the rating agencies, Najib outlined a reform package for the civil service. This reform package is aimed at keeping costs down by putting a freeze on new positions and other operating expenditures such as ceremonies and dinners, very common within the Malaysian civil service.

This budget shows the Government’s weak position to move on making major reforms. The budget has been primarily designed to win an election in Sarawak and provide Najib with an option to call a national election, should he feel the need to.

The rhetoric of the budget is about empowering Bumiputreras in business and education, thus focusing on the specific electoral demographics Najib needs to continue carrying in the next election to win.

The budget has attempted to shore up support in the Malay hinterland, where special programs for making grants (almost RM5Billion allocated) to special Bumiputera development programs are hidden in a number of entrepreneurship programs announced within the budget.

A number of Najib supporters may also benefit from the new infrastructure initiatives, where it will be very interesting to see if companies like George Kent (M) Bhd., a Najib family associate company, get lucrative contracts on the MRT projects. It is also interesting that RM17.3 billion ringgit has been allocated to the Defence Ministry to upgrade technologies.

Najib, through this populist budget, has also ensured that there will be little chance that BN members of Parliament would consider blocking it due to the benefits it shelves out to constituents.

The 2016 budget has been a crafty move by the ‘Prime Minister to shore up his own personal position, and give him the option for an early election should he need it.

Budget 2016–What to watch out for, apart from Prime Minister Najib Razak.

October 24, 2015

Budget 2016–What to watch out for, apart from Prime Minister Najib Razak.

by Ong Kian Ming


Need to worrry about what is hidden in our national debt figures

To the man on the street, he would be looking out for how the budget affects his pocket directly, whether it is through the income tax rate, the GST rate or how much BR1M is being paid out and at what income levels. This is only natural.

However, for policy makers, lawmakers and analysts, the budget is a more holistic document that has larger implications on the economy beyond the direct impact to one’s pocketbook.

Here are some of the things I will be looking out for in today’s budget and budget-related documents which will be tabled in Parliament.

1) Where will the expenditure cuts and increases be?

During every budget session, the Finance Ministry provides a thick book entitled “Anggaran Perbelanjaan Persekutuan” or “Estimated Federal Expenditure” which provides a breakdown of the estimated operating and development expenditure for the items under each ministry for the current fiscal year and for the upcoming fiscal year.[1]

Except for budget junkies, most members of the public would not have seen the contents of this book before. But it is an important book in that it tells us exactly where the expenditure cuts and increases will take place.

For example, total government expenditure was expected to increase from RM264 billion in 2014 to RM274 billion in 2015. But this increase in expenditure is not distributed evenly. The Prime Minister’s Department saw its estimated budget increase from RM16.5 billion in 2014 to RM19 billion in 2015, an increase of RM2.5 billion while the Transport Ministry saw its estimated budget decrease from RM5.2 billion in 2014 to RM4.6 billion, a decrease of RM0.6 billion.

This document tells us where the government’s spending priorities lie, moving forward and points to possible areas of less than transparency discretionary spending.

For example, most of the RM2.5 billion increase in the budget of the Prime Minister’s Department was in development expenditure which includes RM1.5 billion for PR1MA housing, RM1.9 billion for spending on the 5 development corridors and a shocking RM1.6 billion for “special projects” (details not listed). At the same time, the operating expenditure for the public universities was cut by an estimated RM1.1 billion from RM8.5 billion in 2014 to RM7.4 billion in 2015.

There are many interesting items which are revealed in this document, ranging from the small – RM20 million in 2015 for the ANGKASA space programme – to the large – an estimated RM2.2 billion in 2015 for various paddy related subsidies.

BUDGET-2016-breakdown-trends_620_572_100But How to bringing down the Budget Deficit?

As they say, the devil is in the detail, and the details which are listed in this document have real economic and social implications which warrant closer scrutiny.

2) Changes in off-budget items

During each budget session, the Finance Ministry and the Accountant General’s Department of Malaysia publishes a document entitled “Federal Government Financial Statements” or “Penyata Kewangan Kerajaan Persekutuan”.

It provides details of the actual government expenditure for the previous budgetary year. It also provides a list of outstanding government loans, a list of government investments and a list of government guarantee loans by GLCs and government owned companies.

Why are these lists important? Firstly, the list of outstanding government loans tells us exactly how much some of these companies owe to the federal government.

For example, it tells us that, as of 2013, the Port Klang Authority (PKA) still owed the government RM3.7 billion as a result of a “bail-out” soft loan provided by the government to save PKA from the PKFZ scandal.

It also tells us that the Indah Water Konsortium (IWK) and the National Feedlot Corporation (NFC) owed the federal government RM2 billion and RM225 million respectively as of 2013.

While these loans are listed as government assets, the fact that many of them are given to companies that are not in a position to service these loans means a high probability that the government has to write some of them off as bad debts. Which means that ultimately, the taxpayer would have to foot the bill.

Secondly, the list of government investments tells us the exact shareholdings of the government in various listed and non-public listed companies.

This list tells us which companies the government has effective control over. And, with a bit of digging, it may also reveal to us some of the ways in which the government “hides” its debts.

For example, two of the companies featured in this list – Pembinaan BLT Sdn Bhd and Pembinaan PFI Sdn Bhd – are actually special purpose vehicles set up to finance various development projects which do not appear in the official development expenditure budget.

Pembinaan PFI’s debts, for example, stood at RM26.5 billion as of FY2014 and it has no independently generated revenue which means that the interest payments on its debts will have to come from federal government sources.

Will there be any more Pembinaan PFI’s and BLT’s in this list? We will see after today’s budget announcement when the government’s financial statement for 2014 is released.

Thirdly, the list of government guarantees shows us how much the government has to spend to “bail out” companies on this list if they ever declare bankruptcy.

RM5.8 billion of 1MDB’s debts are government guaranteed as of 2013 as are RM29.2 billion of PTPTN’s debts. Total government guarantees (otherwise known as “contingent liabilities”) stood at RM157.5 billion as of 2013. If these guarantees were added to government debt, then our debt to GDP ratio would exceed the 55% government limit.

Of course, some of the companies featured in this list such as TNB and Khazanah are of sound financial standing and would probably not require a government bailout in the near future. But at the same time, the government’s exposure to companies such as 1MDB is much more than the listed RM5.8 billion of government guarantees. How much more has the government’s exposure increased?

We will know after perusing the latest financial statements of the federal government.

3) Auditor-general’s report on the financial status and management of the federal government

The auditor-general also releases its yearly report on the financial status and management of the federal government and the individual ministries during the year end budget parliamentary session.

It is not a very well-perused document but it contains important information such as the quality of financial management by the individual ministries, the companies which have problems servicing their government loans and the expenditure status of certain trust accounts.

It was in this document that I discovered that Pembinaan PFI had spent close to RM30 billion in development expenditure-related projects and it was also here that I found out that companies such as Cyberview Sdn Bhd had accumulated RM571 million in payment arrears to the federal government.

So while the attention is being paid to some of the headline grabbing items in the budget, I will be carefully scrutinising some of these “hidden” items in the budget and budget-related documents that may contain other interesting and perhaps even more important information pertaining to the financial situation of our country.

* Dr Ong Kian Ming is Serdang MP.