Subsidies for the poor or Umno-Putras, part 2

– Koon Yew Yin
The Malaysian Insider
1 July 2014

In the first part of my article on subsidies for the poor or the rich such as Umno-Putras, I drew attention to the subsidy cut on gas that has come into effect and analysed its impact on poor- and middle-class households.

In this second part, I shall look at the area of subsidies for the cronies of the political elite which run the country – subsidies which are beneath the radar, unaccountable, undeserved and which have been partly responsible for the financial mess that the country is now facing.

What should be in front line of subsidy cuts

What should comprise the first, second or third rung of subsidy cuts to balance the national budget should be open to national debate.

In what sector; and affecting which beneficiary group and by how much? All these questions are important and especially necessary since the government is facing pressure from several powerful quarters for special treatment and preference in the country’s socio-economic programmes.

Subsidy cut in higher education

One sector that we should consider subsidy cuts is higher education.

Although I am a strong advocate of strengthening access to higher education, there must be a rigorous cost-benefit analysis of public universities.

During the last 40 years, tens if not hundreds of billions of ringgit have been spent on Mara junior colleges and public universities where the enrolment has been skewed towards the Malays.

All these colleges and universities have done badly with low educational standards and unemployable graduates.

Last week brought damning evidence of the decline in the standards of public universities with not a single Malaysian local tertiary institution placed in Asia’s top 100.

The finding by the Times Higher Education Asia University Ranking 2014 is worrying because in the 1970s, Malaysian universities and colleges were acknowledged to be among the best in the region.

Shocking disclosure on UiTM campus construction ‘piratisation’

Now is the right time to evaluate this subsidy to public higher education using rational criteria and taking a holistic and national rather than racial approach.

This is especially necessary in light of recent disclosures that RM8.6 billion is being spent to privatise construction of six UiTM campuses nationwide.

Besides the key question of whether this new construction is necessary given the glut of UiTM graduates who cannot compete in the job market, there are other questions as to how the public funds will be spent and who benefits.

According to PKR MP and whistle-blower Rafizi Ramli, “This is a repeat of the same in all privatisation concessions of other UiTM campuses where each concession company has links with Umno leaders or businessmen with close ties with Umno.”

Citing information from CCM, he has claimed that Detik Utuh Sdn Bhd – where Tan Sri Tajudin Ramli is a majority shareholder – holds a minority stake in Unitapah Sdn Bhd, which was awarded a 23-year concession to build and rent out the Tapah campus to UiTM.

Further, Rafizi made a shocking disclosure that “every privatisation concession of UiTM branch campuses is making profit for Umno politicians through rental that is a burden on the rakyat”.

Besides Tajuddin, Rafizi has alleged that Datuk Shahrir Abdul Jalil – the brother of former minister Datuk Seri Shahrizat Abdul Jalil – had a stake in a company involved in the construction of a UiTM campus in Negri Sembilan.

This is a serious charge, which needs to be investigated by the anti-corruption authorities as well as made the subject of a special and separate parliamentary inquiry, especially if there was no open tender involved in the award of the concessions.

What we are seeing with educational expenditure is a repetition of the massive abuse with toll road, water and independent power producer (IPP) concessions.

Selected cronies are given a licence to print money by the government through long-term concessions which are negotiated behind closed doors and provide the concessionaires with guaranteed profit.

There is no open tender, no transparency, no competition, no cost-benefit analysis, and no papers or disclosure available to the public except when a whistle-blower emerges.

When will the toll collection stop? Why should the toll rate be increased when there are increasingly more road users?

Perkasa wants more spoon-feeding, subsidies for Malay businesses

The other major concern is the grant of RM20 billion from Petronas under a revised pro-Bumiputera New Economic Model (NEM) announced in September last year by the prime minister.

Not only does it appear that the subsidy grant of RM20 billion is not enough to appease Umno-Putras but we are now hearing arguments from Perkasa chief, Datuk Ibrahim Ali, that Petronas’s CEO, Tan Sri Shamsul Azhar Abas, should resign for saying that Petronas belongs to all Malaysians, and not just to the Bumiputeras.

What we are seeing is another attempt by rogue Umno or ex-Umno elements to hijack the nation’s scarce financial resources for the small group of Malay cronies (and non-Malay partners) in the name of the NEP and affirmative action to assist the Malay community.

Spoon-feeding the rich, such as Ibrahim and undeserving Malay companies, will not come cheap. Poor Malays will suffer as we can see clearly from the impact of the power price hikes.

And if that is allowed to happen, not only are the poor Malays the losers but the entire nation as our fiscal reforms will go down the drain.

Government should make the right choice

Subsidies for the poor or rich? Subsidies for bloated, inefficient and loss-making GLCs, such as MAS or subsidies for small and medium-scale enterprises?

Subsidies for the benefit all Malaysians or for Bumiputeras only? Subsidies for public universities to produce unemployable graduates and to benefit concessionaires?

We still have time to make the right decisions. But time and the nation’s wealth and money are fast running out. – July 1, 2014.