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Rebuking Idris show Umno’s distaste for subsidy cuts

By Debra Chong
Malaysian Insider
June 03, 2010

KUALA LUMPUR, June 3 — Datuk Seri Idris Jala’s plan to save Malaysia from going broke appears to be stillborn, as Umno’s constant attacks on the minister show that the Najib administration has no appetite for subsidy cuts.

Prime Minister Datuk Seri Najib Razak also appears to have distanced himself from Idris’ proposal, after he told the Perkasa-led Malay Consultative Council meeting last week that proposals to save RM103 billion in subsidies were not yet finalised.

“Idris’ proposal is stillborn. I don’t think the Najib administration has the courage to carry out the cuts… not across the board and not as Idris planned it,” DAP publicity chief Tony Pua said.

Analysts contacted by The Malaysian Insider agreed. Continue reading “Rebuking Idris show Umno’s distaste for subsidy cuts”

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Re: Idris Jala: M’sia must cut subsidies, debt by 2019 or risk bankruptcy

Letters
by Sara Wak

Dear YB Idris Jala and Koh Tsu Koon,

For the last many years, the BN Govt has been handing big ang pows to the rich Malays who are given APs, and it has been said by the BN Govt that this practice will go on until 2013 0r even 2014!

Why can’t the Govt control the issue of APs to people who want to import cars? The govt can collect RM30,000 to RM40,000 on each important cars. Why must the BN Govt decides to pass the right to collect these payments to only a handful of rich Malays?

How many APs are issued to these rich Malays a year ? Like what Rafidah did when she was minister , in giving APs and shares to her relatives?

The Malaysian Economy has deteriorated so much for the last decade because of all these handouts to the UMNO cronies. Malaysia was ahead of Korea, Taiwan and Singapore, and look at it now, it is even behind countries like Thailand, Vietnam and others in Asia !
Continue reading “Re: Idris Jala: M’sia must cut subsidies, debt by 2019 or risk bankruptcy”

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Vote BN for bankruptcy, warns Pakatan

Malaysian Insider
By Asrul Hadi Abdullah Sani
May 29, 2010

KOTA BARU, May 29 — Pakatan Rakyat (PR) leaders used dire forecasts of a gloomy future if there are no subsidy cuts to warn that voting for Barisan Nasional (BN) in the next general election would lead the country to bankruptcy.

A government minister this week had predicted Malaysia could be bankrupt by 2019 if it does not begin to cut subsidies for petrol, electricity, food and other staples, which cost RM74 billion last year. But the Najib administration is waiting for public feedback before deciding on actual cuts.

DAP leader Lim Kit Siang said it was not subsidies but BN’s corruption and abuse of power that has led the country to current financial crisis.

“I cannot imagine if DAP, PKR or PAS had made the announcement that country will be bankrupt by 2019. If we did, Umno would have labelled us as anti-nationalist and traitors. We probably would have been locked up in ISA and given free food.

“Remember Vision 2020? We were supposed to become a developed nation by 2020 but unfortunately one year before 2020, we are already bankrupt,” he told a crowd last night in Tanah Merah, a two-hour drive from the Kelantan state capital.

Lim was one of many PR leaders in the state speaking at ceramahs ahead of the PKR convention this weekend. Continue reading “Vote BN for bankruptcy, warns Pakatan”

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Najib’s qualification instead of endorsement of Idris Jala’s warning that Malaysia could become next Greece and go bankrupt unless it saves RM103 billion in next five years to reduce the nation’s huge debt proof of lack of political will to address subsidy syndrome

Four things stand out in yesterday’s Subsidy Rationalisation Lab Open Day of the 1Malaysia Government Transformation Programme (GTP) where the Minister in the Prime Minister’s Department and CEO of Performance Management and Delivery Unit (Pemandu), Datuk Seri Idris Jala made his presentation on the country’s proposed five-year subsidy rationalization roadmap.

Firstly, the absence of Tan Sri Dr. Koh Tsu Koon, the Minister in charge of the 1Malaysia GTP and Chairman of Pemandu. Why is he on leave in the United States on such an important event in the Government Transformation Programme or is he seriously considering, according to reports quoting Gerakan sources, relinquishing the post as Minister in the Prime Minister’s Department after the humiliation in the last meeting of Parliament where he dared not stand up to vouch for what 1Malaysia stands for – that he is Malaysian first and Chinese second?

Secondly, Idris’ failure to address the root causes of the national economic crisis instead of just dealing with its symptoms.

Idris warned that unless Malaysians bite the bullet and wean off subsidies to save the government RM103 billion in five years to reduce the nation’s deficit and huge debt, Malaysia could become another Greece and go bankrupt in nine years.

Although Idris said the government would focus on big ticket items such as fuel, electricity and toll to achieve the savings, he failed to focus on the biggest ticket items – corruption, mismanagement, extravagance and lack and accountability.

When corruption, mismanagement, extravagance and lack of accountability cost the government from RM10 billion to RM28 billion a year, what credibility has the government to talk about slashing subsidies affecting the rakyat when it has nothing to show to end the rampant and worsening state of corruption, the gross abuses of power and public funds like indiscriminate issue of APs and various forms of “piratisation” in the name of privatization? Continue reading “Najib’s qualification instead of endorsement of Idris Jala’s warning that Malaysia could become next Greece and go bankrupt unless it saves RM103 billion in next five years to reduce the nation’s huge debt proof of lack of political will to address subsidy syndrome”

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DAP says cuts cannot be limited to subsidies

Malaysian Insider
By Shazwan Mustafa Kamal
May 27, 2010

KUALA LUMPUR, May 27 — DAP’s Tony Pua grudgingly admitted today that cutting subsidies could lower Malaysia’s debts, but he said the cuts will only be successful if leakages from graft and help for big corporations are plugged first.

“I feel that in general, the points raised were agreeable. But at the same time, these plans can only be put into motion if other conditions are first met.

“He (Datuk Seri Idris Jala) was quite naughty when he said that Pakatan Rakyat (PR) agreed with lowering subsidies. We agree to it but with conditions,” DAP National Publicity Secretary Tony Pua said shortly after he attended a government open day on rationalizing cutting subsidies.

The Petaling Jaya Utara MP told The Malaysian Insider that while the government has outlined ways in which to gradually lessen subsidies, other “main causes of debts” had not been carefully addressed.

According to Pua, the issue of subsidies was a small problem compared to the actual cause of Malaysia’s huge deficit problem. Continue reading “DAP says cuts cannot be limited to subsidies”

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The DAP Ipoh Resolution

The DAP Ipoh Resolution:
MUAFAKAT TRANSFORMASI MALAYSIA
(adopted by the DAP National Conference 2010 in Ipoh on Sunday, 17th January 2010)

PREAMBLE

  1. That the nation is waiting for a profound change is beyond doubt and that it is now a fact that the government-of-the-day is incapable of changing the intolerably arbitrary, self-serving, unjust, cruel and corrupt system of governance;

  2. That the world does not stand still to wait for Malaysia, and we risk watching Asia changing and its economy growing not as an active participant but as bystander if we do not catch up fast;

  3. That to save Malaysian governance from further deterioration, the economy from further plunder, and the people from further injustices is a shared imperative;

  4. That the Democratic Action Party (DAP) therefore, in partnership with other Pakatan Rakyat parties and in cooperation with civil society, is determined to transform Malaysia through a new muafakat (consensus)

    • by reversing distortions and corruptions of the Constitution, the rule of law and the system of governance,
    • by restoring mutual respect amongst Malaysia’s multiethnic, multicultural and multi-religious peoples,
    • by renewing trust in public institutions and in the security services,
    • by rejuvenating the economy
    • by conserving the environment,
    • by revamping the education system, and
    • by re-establishing hope in our future as a nation;

    5. Continue reading “The DAP Ipoh Resolution”

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Malaysia’s Disastrous Capital Flight

Asia Sentinel
by Our Correspondent
11 JANUARY 2010

Money leaves the country on an unprecedented scale

Churches are not the only thing to have been going up in flames in Malaysia. Take a look at the nation’s foreign exchange reserves. They fell by close to 25 percent during 2009 according to investment bank UBS even though the country continued to run a huge surplus on the current account of its balance of payments.

Says UBS: “Question: which Asian country had the biggest FX losses in 2009?” The answer is Malaysia and by a very large margin; we estimate that official reserves fell by well more than one quarter on a valuation-adjusted basis”. It describes the situation as “bizarre” and contrasts Malaysia with other countries with large current account surpluses – Thailand, China, Taiwan, Singapore, and Hong Kong – which have seen their reserves increase – as should be expected.

In short there has been an exodus of money from Malaysia on a scale which surpasses that which occurred during the Asian crisis. Nor is this just a mirage. The decline is also reflected in a sudden decline in base money supply – even while, thanks to Bank Negara, broader M2 has continued to grow modestly. Continue reading “Malaysia’s Disastrous Capital Flight”

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Abu Dhabi poised to throw lifeline to Dubai

From Times Online
November 28, 2009
By Rhys Blakely in Dubai

Abu Dhabi is poised to come to the aid of Dubai’s debt stricken-businesses, but only on a “case by case” basis, senior bankers an officials said today.

The Dubai Government sent global markets into a tailspin this week after it asked creditors of Dubai World, the state-owned conglomerate behind the city state’s building boom, for a six-month standstill on $80 billion of debt repayments.

The move kindled fears that the world economy is yet to rid itself of toxic debt, and may even succumb to a fresh downturn in a “double dip” recession.

Oil rich Abu Dhabi, which has the world’s largest sovereign wealth funds, thought to be worth as much as $700 billion, could easily bail out Dubai, but is thought to be unwilling to pour more money into its neighbour’s beleaguered property sector, which has buckled under the weight of a series of half-finished grand projects. Continue reading “Abu Dhabi poised to throw lifeline to Dubai”

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2010 Budget: sound and fury without substance (4)

By S.C.

Key Budget Allocations

The budget allocations listed in the budget speech are indeed astonishing and represent a long litany of projects and allocations, the direct beneficiaries of which appear to be special interests and well connected individuals.

This should be no surprise as the budget has become the chosen means to distribute corporate welfare with a few sops for the public at large. One may well ask why billions more are being channelled to infrastructure at a point in time when the economy is in greater need to strengthen institutions, develop human capital and to widen the safety net programmes to protect the weak and the vulnerable elements of our population. Continue reading “2010 Budget: sound and fury without substance (4)”

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2010 Budget: sound and fury without substance (3)

By S.C.

The Track Record

The Budget for 2010 must be seen against the larger canvass of economic management by the BN Government over the recent past.

It should be recalled that the global Great Recession began in mid 2007 as the sub-prime fiasco in the United States began to unfold. The economic slowdown spread and gained momentum in 2008. As the gathering storm clouds hovered over the horizon, many Governments began to react and take counter recessionary measures.

The Barisan Nasional Government for its part remained in a state of denial. Ministers dismissed with some arrogance the notion that the Malaysian economy would succumb to the global slowdown. They argued rather smugly that Malaysia was immune as it had decoupled from the global economy. Continue reading “2010 Budget: sound and fury without substance (3)”

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2010 Budget: sound and fury without substance (2)

By S.C.

The Macro-Economic Scene

The key economic indicators and assumptions used in the budget formulation are:

  • Malaysia economy to grow 2-3 percent in 2010 after a contraction of 3 to 4 percent in the current year.

  • Per capita income to increase by 2.5 percent to RM24, 661. This rate of growth is inconsistent with a GDP growth rate of 2 to 3 percent as population growth is in the region of 2.5 percent; this would yield a per capita growth of close to zero

  • Budget 2010 allocations total RM191.5 billion, of which RM138.3 billion is for operating expenditure and RM53.2 billion for development expenditure.

  • Federal government revenue in 2010 to decline by 8.4 percent to RM148.8 billion despite the tax changes proposed.

  • Budget deficit at 5.6 percent of GDP compared with 7.4 percent in 2009.

  • Exports will revive to 3.5 percent growth after having fallen by over 23 percent in the first half of 2009; this assumption is dependent on developments globally;

  • Private consumption will grow by 2.9 percent as against 0.5 percent in the current year

  • Inflation will remain low

  • Unemployment will not exceed 4 percent

  • Private investment will grow by 3.4 percent in 2010

    • Continue reading “2010 Budget: sound and fury without substance (2)”

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The 2010 Budget: sound and fury without substance

By S.C.

Introduction

The maiden Budget unveiled by the Prime Minister was anticipated with great expectations of a new direction to move the Malaysian economy on to a new path of growth and revival through the adoption of policy reforms designed to restore competitiveness. These expectations, sadly, were not met.

The 40-odd-page two-hour long Budget speech delivered by the Prime Minister in Parliament was a great disappointment. It contained little by way of a bold policy agenda or a set of much needed measures to begin to restore the Malaysian economy to health.

The speech was long on rhetorical assertions and a litany of expenditure proposals; it contained little in the way of actual innovative thinking despite the Prime Minister’s resolve to adopt a new model for the economy “based on innovation, creativity and value-added activities”.

There were hardly any credible steps outlined as to how the unsustainable record high fiscal deficit of 7.4 percent recorded in 2009 was to be slashed. The broad assertion that the reduction of the deficit to 5.6 percent was to be largely achieved via proposed expenditure cuts in the year ahead. The main spending cuts are to come from reduced “operating expenditure”, lower food and fuel subsidies, and less money for development spending. Yet the expenditure proposals for 2010 allocate 11 per cent more money for the Government wage bill in 2010 for the nearly one million workers on the payroll which account for almost 10 per cent of the work force and constitute a mainstay of the BN government’s support. Continue reading “The 2010 Budget: sound and fury without substance”

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Malaysian Economic Democratisation – Extract 6

(Extracts from DAP Alternative Budget 2010 launched on 7th October 2009)

9. Thrust II: Rakyat First – Restructuring and Reallocation

9.3 Unfair Public Contracts
The Malaysian economic landscape is littered with many one-sided contracts and concessions under which private entrepreneurs reap supernormal profits while the government or government-linked companies continue to bear considerable business risk. Major privatisation exercises were conducted and concessions granted in manners that were not open, accountable and transparent through public tenders.

An Unfair Public Contracts Act will be enacted and an independent public commission to be known as the Public Contracts Commission will be formed to review such lopsided concessions that are deemed to be against the public interest.

Constitutional and corporate lawyer Tommy Thomas if of the view that such an act will be constitutional as it will be similar in nature to the Land Acquisition Act 1960 which allows the government to take over any private land for public purpose, provided adequate compensation is paid.

Such legislation is not unique to Malaysia. Eminent domain (United of States of America), compulsory purchase (United Kingdom, New Zealand, Ireland), resumption/compulsory acquisition (Australia) and expropriation (South Africa and Canada’s common law system) are examples of the inherent power of the state to seize or expropriate private property without the owners’s consent provided, of course, Continue reading “Malaysian Economic Democratisation – Extract 6”

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Malaysian Economic Democratisation – Extract 5

(Extracts from DAP Alternative Budget 2010 launched on 7th October 2009)

9. Thrust II: Rakyat First – Restructuring and Reallocation

9.2 Managing Oil Wealth

Over-reliance on Oil and Gas

Malaysia is blessed with abundant natural resources. In particular, we are thankful that the country is rich in oil and gas, which created Malaysia’s sole representative in the Fortune 500, Petroliam Nasional Berhad (PETRONAS). Since the incorporation of PETRONAS Group 35 years ago, the Group has paid RM471 billion to the Government, in addition to bearing a cumulative gas subsidy of RM97 billion.

In the most recent financial year ending March 2009, PETRONAS achieved profit before tax of RM89.1 billion amidst the challenging economic backdrop. Of greatest importance was the fact that PETRONAS contributed RM61.6 billion to our national coffers in taxes, royalties, dividends and export duties last year. Contribution from PETRONAS Group alone was budgeted to make up some 46% of the Federal Government revenue for 2008. This represents a steep increase from approximately 20% in 2004. The heavier reliance on oil and gas industry for Malaysia over the years signals an alarming trend.

Despite the fact that the total Malaysia hydrocarbon reserves has increased marginally from 20.13 billion barrels of oil equivalent (boe) at January 2008 to 20.18 billion boe at January 2009, and the reserves replacement ratio (RRR) has improved from 0.9 times to 1.1 times during the same period, our reserves will inevitably run dry at some point. During an interview with Bernama in June 2008, the president and chief executive officer of PETRONAS Group, Tan Sri Hassan Marican said that “we will continue to produce for another 20 years or so.” In more immediate terms, “Malaysia will become a net importer when its domestic consumption, growing at six percent per annum, is expected to overtake national production in 2011.”
Continue reading “Malaysian Economic Democratisation – Extract 5”

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Malaysian Economic Democratisation – Extract 4

(Extracts from DAP Alternative Budget 2010 launched on 7th October 2009)

8. Thrust I: Economic Democratisation – Fiscal Decentralisation

8.2 Fiscal decentralisation policies

Other countries, such as Canada, Spain, and the UK have been moving in the opposite direction recently compared to Malaysia, by increasing decentralisation. Nearer to home, China and Indonesia have also successfully decentralised much of their financial and economic decision-making process. Even smaller countries such as Switzerland and Belgium have developed forms of fiscal federalism. To ensure that Malaysia is able to tap into the sizeable latent potential benefits arising from the political accountability, economic efficiency and economic growth, DAP proposes that states are granted greater control over their finances.

8.2.1 Tax revenue sharing agreements
It is proposed that the federal government enter into tax revenue sharing agreements with states so that there is a stronger link between a state’s performance and its revenue share. 20% of individual and corporate income taxes collected in a state, as determined by the residence of the taxpayer and location of the establishment, will become the state’s entitlement. Income taxes will continue to be collected by the federal government using the existing infrastructure, but the states’ portion will be distributed back to the states for each financial year. This is the system which has been adopted by Germany.
Continue reading “Malaysian Economic Democratisation – Extract 4”

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Malaysian Economic Democratisation – Extract 3

(Extracts from DAP Alternative Budget 2010 launched on 7th October 2009)

8. Thrust I: Economic Democratisation – Fiscal Decentralisation

8.1 Greater economic efficiency and political accountability

Many countries have pursued fiscal federalism and have devolved or are devolving more power to state and local governments. China and Indonesia’s recent economic success has also been linked with the decentralisation of economic decision-making. In the UK, the Calman Commission has recommended that Scotland be given greater tax-varying powers in order to further improve their devolution process. This is largely because of the economic efficiency and accountability arguments.

Certain areas of expenditure responsibilities should be decentralised because states and local governments are better placed to tailor their programmes to local needs. For example, state governments are more likely than the central government to know their region’s comparative advantage and hence promote investment initiatives accordingly. In order to decentralise expenditure, revenue must also be shared with states. Instead of being dependent on the federal government spending directly in the states, states would be able to implement their own programmes encouraging tourism, SMEs and industry. In this case, when the 13 states are unshackled in their courting of investment projects with their tailored policies, it is very likely that more and better investments will be attracted and made.
Continue reading “Malaysian Economic Democratisation – Extract 3”

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Malaysian Economic Democratisation – Extract 2

(Extracts from DAP Alternative Budget 2010 launched on 7th October 2009)

5. Key Policy Highlights

Based on the 3 key thrusts outlined above to achieve greater economic democratisation via fiscal decentralisation, to place rakyat first with restructuring and reallocation, and to empower Malaysians through economic capacity building, the key policy measures proposed include:

  1. Tax revenue sharing agreements where 20% of individual and corporate income taxes collected in a state will become the state’s entitlement. For Selangor and Penang, this revenue sharing agreement would entitle them to approximately RM 3.2 billion and RM 500 million respectively. An equalisation and development grants formula based on a function of population, poverty, area development, cost, human development and gross revenue per capita indices will also be given to ensure that poorer states do not lose out.

  2. States will be given the rights to borrow up to a maximum of 50% of their annual ownsource revenue, which is revenue raised directly by the state governments.

  3. We will set up a fund of RM 400 million to provide grants to state governments to reinstate local council elections, conduct delineation studies, hold trainings and promote awareness via publicity and education campaigns after amending the Housing & Local Government Act.

    4. Continue reading “Malaysian Economic Democratisation – Extract 2”

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Malaysian Economic Democratisation

(Extracts from DAP Alternative Budget 2010 launched on 7th October 2009)

4. Budget Objectives

To meet the challenges of improving Malaysian global economic competitiveness while addressing the growing rich-poor disparity in Malaysia and being mindful of the fiscal constraints and harnessing our oil resources effectively, the DAP Budget 2010 is themed “Malaysian Economic Democratisation”.

The goals of economic democratisation is to ensure that public funds and expenditure by the government will be more effectively and efficiently spent in accordance to the needs of the people, ensure that public projects are structured in mechanisms which will benefit the rakyat as opposed to politically-connected operators as well as enabling Malaysians to achieve greater economic freedom.

The process of “economic democratisation” will hence focus on 3 key thrusts, that are:

  1. Economic Democratision – Fiscal Decentralisation

  2. Rakyat First – Restructuring & Reallocation

  3. Empowerment & Enablement – Capacity Building

Continue reading “Malaysian Economic Democratisation”

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DAP Alternative Budget 2010

The DAP Alternative National Budget 2010 marks the progress the Party has made in the field of economic policy making, and our readiness to assume the role of a governing party in the Federal Government as and when such opportunities arise in the near future.

Our first Alternative National Budget was launch on the 5th September 2007 for the year 2008, before the last historic general elections where Pakatan Rakyat denied the Barisan Nasional two-third majority in the parliament, and winning government in 5 Malaysian states. This new Alternative National Budget 2010 picks up from where we left off in 2007, enhancing our proposed economic policies with stronger strategies and proposals based on further in depth research and analysis.

As Malaysia face one of the most challenging economic period in times of uncertain global demand, it is critical that the Malaysian government takes decisive actions to spur the economy and ensure that we will not only recover from this recession, but also emerge stronger and more competitive than we were before the onset of the recession. However, a review of the Barisan Nasional (BN) government’s actions to date coupled with its track record over the past 12 years paints a less than optimistic picture.

At a time when the economy is faltering globally, is exactly the time for the government to be pump-priming to boost domestic demand and competitiveness. However, despite the urgent need to boost government expenditure, the BN government is now finding out the hard way that they have in essence, run out of money to spend and are struggling to contain and maintain the high and escalating cost of government. Continue reading “DAP Alternative Budget 2010”

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Federal intervention is only way out in Kampung Buah Pala, says Kit Siang

The Malaysian Insider
By Asrul Hadi Abdullah Sani

KUALA LUMPUR, July 3 — The DAP wants former Penang Chief Minister Tan Sri Dr Koh Tsu Koon to solve the Kampung Buah Pala fiasco by lobbying for federal intervention.

Lim claimed that Koh, now a federal minister, was responsible for the controversy as it was during the Barisan Nasional (BN) government’s rule of Penang that the decision was made to alienate the land concerned to a private developer.

“I think the only solution is for Koh Tsu Koon as the former chief minister, who is responsible for this problem in Kampung Buah Pala, to take it up with the federal government and ask the federal government for an allocation or a grant to the Penang state for an amount necessary to have a win-win solution,” he said.

A small number of families in Kampung Buah Pala, in the Glugor area of Penang, are facing eviction after a private developer won outright ownership of the land recently.
Continue reading “Federal intervention is only way out in Kampung Buah Pala, says Kit Siang”