Sabtu, 17 Julai 2010

Philosophy Politics Economics

Philosophy Politics Economics

Koh Tsu Koon Lives in Parallel Dimension?

Posted: 16 Jul 2010 08:46 PM PDT

The Government yesterday launched a surprise "5-in-1" price hike programme, raising the prices of RON95 and RON97 petrol, diesel, white sugar and liquified petroluem gas (LPG) including cooking gas cyclinders by at least 2.8% and as much as 15.2%. In fact for white sugar prices, inclusive of a 20 sen hike in January on top of the current 25 sen hike, prices have increased by more than 31% this year alone.

It is hence shocking to hear the Prime Minister, Datuk Seri Najib Abdul Razak, supported by the Performance & Management Delivery Unit (Pemandu) claim in their subsidy rationalisation fact sheet that the price increases will have "minimal impact" on households in Malaysia.

In the fact sheet, it's "demonstrated" that the new teh tarik price taking into the impact of subsidy reduction of fuel and upward price adjustment would be around RM1.0155, or an increase of less than 2 sen.

The impact on other popular items such as roti canai was stated as being 0.24 sen per piece, 0.6 sen for rice, 6.3 sen for meat per kg and 1.05 sen for mee goreng.

Pemandu under the chairmanship of the Minister in Prime Minister's Department Senator Tan Sri Koh Tsu Koon must be living in a parallel universe for having the audacity to publish such numbers which are at best applicable only in a fictitious and theoretical universe, and at worse, showing the complete lack of understanding of real world market dynamics on the price of goods and services.

I challenge Tan Sri Koh Tsu Koon to find me a mamak stall in Malaysia which will increase the price of teh tarik by a mere 1.55 sen or the price of roti canai by a minute 0.24 sen in the entire country to prove the "minimal impact" of the latest round of 5-in-1 price increase.

Even anecdotal evidence of the previous price hikes have clearly demonstrated that prices will increase by a percentage much larger than the theoretical impact of the price hikes because of an real-world imperfect market. What's more, when the prices of fuel actually decreased subsequently, the inflated prices never returned to its previous levels.

The government should instead stop spewing these ridiculous and out-of-these-world hypothetical data but instead demonstrate how the Government will not only seek to trim the subsidies which affects the rakyat directly, but also the wasteful expenditure and subsidies to crony companies as well as clamping down on corruption which will have a much larger impact on government finances.

A People "Suffer" First Government?

Posted: 16 Jul 2010 08:44 PM PDT

The Prime Minister must prove to the rakyat that the "people first" slogan is not about increasing taxes and price, while reducing subsidies to the people first.

We would like to express our complete disappointment with the unequal actions taken by the Barisan Nasional government for prioritising the subsidies to the rakyat as the first expenditure to be cut as a result of fiscal deficits caused by the government's irresponsible and wasteful expenditures over the past decade.

We agree that some of the subsidies to the rakyat needs to be rationalised to ensure that the poor and needy receive a greater proportion of the benefits than the wealthy. However, the above should not be used as an excuse to victimise the people first without first taking concrete and visible actions to cut subsidies to large politically-connected companies or bloated expenditures for price-inflated projects.

The Prime Minister claims that even after the latest subsidy cuts, the government will still spend RM7.82 billion for fuel and food subsidies. However he fails to highlight the fact that Petronas will continue to provide subsidies to Tenaga Nasional (TNB), the independent power producers (IPPs) and the industrial sector, which was RM18.9 billion for its financial year ending March 2010.

Out of this amount, more than 40% or nearly RM8 billion goes to the IPPs. Unfortunately, most of the subsidies to the IPPs do not translate into lower prices of electricity for the users due to the unequal and unfair agreements which TNB was forced to sign with the IPPs. TNB has to not only purchase electricity from IPPs at prices much higher than what it could produce on its own, but it has also to pay for the total capacity of these IPPs, regardless of whether there is a demand or otherwise. Hence, there is an excess capacity as high as 50% today which is completely which has resulted in heavy subsidies for the IPPs, high prices of electricity for the users and massive profits for the IPPs.

The question to the government is, given the financial constraints that the government is facing, why isn't the government targetting the fat cats which are lynching off the tax-payers' hard-earned monies first, before attacking the livelihood of ordinary Malaysians?

The Government has also failed in other means to save money for the rakyat by continuing the practice of direct negotiations for large-scale privatisation contracts which often results in substantially higher prices and higher risk of project failure or further increases in cost. For example, the Government awarded the contract to build Malaysia's largest exhibition and convention centre at the cost of RM628 million to Naza TTDI Sdn Bhd without any tender, open or closed. The government has also awarded a 20-year, interest-free, unsecured and back-loaded RM320 loan to Syarikat Bekalan Air Selangor (SYABAS), a private company which will cost tax-payers more than RM250 million in interest.

The Government's lack of political will to tackle corporate subsidies and opaque procurement processes to politically-connected companies demonstrate without a doubt that it is failing to live up to the Prime Minister's slogan on "people first", but has instead made the people the first to suffer from the Government's transgressions, incompetence and a serious lack of accountability.

Muhyiddin Must Explain RM240m 'Fishy' Bond Deal

Posted: 16 Jul 2010 08:40 PM PDT

Explain 'fishy' bond deal, Muhyiddin told
S Pathmawathy
Jul 15, 10 3:16pm

Opposition parliamentarian Tony Pua demanded an explanation from Deputy Prime Minister Muhyiddn Yassin on a government-supported bond that purportedly defaulted on payments.

Pua was referring to a report in The Edge Financial Daily today on a RM240 million government letter of support-backed bond issued by Malaysian International Tuna Port Sdn Bhd (MITP) that has landed in the courts for defaulting on payments last year.

The Batu Maung port was to be developed into a fully integrated fisheries port specialising in tuna by 2008; and Pua, who is the Petaling Jaya Utara MP, asked Muhyiddin whether he had approved the "fishy deal".

"This is exactly like PKFZ (Port Klang Free Zone). The contractor comes in to get the concession agreement from the government, no money to finance, go to the bank, the bank doesn't want to lend and then appears a letter of support from somebody in the government to the bank to say that don't worry, the government backs this project, you can go ahead and lend money for this project.

"And now, the bond defaults. Multiple lawsuits. The question then, is the government going to pay for the bondholders? Who was the minister then? Muhyiddin Yassin (left).

"So the question to Muhyiddin is, did you approve this project? Did you approve this fishy deal? A RM240 million bond was issued, but now cannot pay, so who is responsible?" Pua demanded.

The business newspaper had reported that the Agriculture and Agro-Based Industries Ministry which was then under Muhyiddin had issued a letter of support through its statutory body the Fisheries Development Authority of Malaysia (LKIM), that LKIM would ensure MITP is in a position to meet its obligations to repay the bond.

According to Pua, MITP is 60 percent owned by a private company, Blindforce Sdn Bhd, and 40 percent by LKIM.

The letter of support acknowledged by the ministry's deputy secretary-general (development) Mohd Mokhtar Ismail and dated Oct 2, 2006 to OSK Trustees Berhad stated:

"MITP has to incur borrowings in order to implement this important national project. By virtue of this, we confirm the viability of MITP, including its ability to incur borrowings and repay which is critical to ensure the successful implementation and completion of the project as envisaged by the government through the concession agreement (for a 32-year period) dated Dec 16, 2004."

MITP's Bai' Bithaman Islamic Securities (BAIS) facility of up to RM240 million for a tenure of 10 years was assigned a long-term debt rating of A+ID by Malaysian Rating Corporation Bhd (MARC) based on a letter of support issued by the ministry.

Quoting a statement by MARC, Pua said that their valuation of the bond when it was first released was that "this bond has been given an A+ rating incorporating a strong reliance on government support for the highly visible tuna port privatisation project based on a letter of support issued by the Agriculture and Agro-based Industries Ministry to back the rated obligations".

Rating agencies 'not responsible for the accreditation'

Therefore, he urged Muhyiddin to take on his "ministerial responsibility" and hoped that the ministry officials will not be blamed for the acknowledgement.

"We believe this project would not have gotten through without the minister's complete involvement and knowledge. At this point in time, thankfully not the entire bond has been disbursed, only RM85 million has been disbursed.

"It's one of those hare-brained schemes LKIM comes up with now and then. (Before it was the) tiger prawn project in Langkawi (and) now (it) is tuna. I don't know what other projects they have in the books," Pua (right) said mockingly.

He added that rating agencies are not responsible for the accreditation, as if they do not approve the letter of support it is akin to saying that the government is not credible.

"If there are too many letters around, maybe rating agencies will start doing that because they'll say this government (is not effective) whatever letters they issue cannot be regarded as honourable."

Reiterating that this case was similar to PKFZ, Pua said that the "wording" of the letter of support issued to MITP is "stronger than that of the PKFZ letters".

"I mean, just for a quick note, they always say in the last paragraphs, just like the PKFZ letters, 'this letter is strictly limited to points raised in 2a, 2a and there is no express or implied guarantee with regards to the borrowings of MITP'. If there's no guarantee then why would you write it in such a way?" he asked.

Citing attorney-general Abdul Gani Patail's statement on the PKFZ case, Pua said "if there is no guarantee then why write it in such a way, when you write it in such a way then the government must honour its obligations".

"So we call for a complete stop to this sort of nonsense letters especially when it is written for a company with zero financial history, it is not backed by one of those super big public listed companies who are starting a new project. It's a brand new company backed by unknown investors," said Pua.
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