The Government Should Offload Its Burdens

Will we see the re-introduction of fuel subsidies?

I find it puzzling that the government has shut its doors on Maju Holdings’s intention of buying the PLUS concessions (Govt Shuts Door On Maju’s Bid for PLUS – Malaysian Digest, 26 November 2017) when I don’t think they have actually met with Maju Holdings to discuss the proposed deal.

Although the Second Finance Minister said in September that the Finance Ministry would first and foremost get some clarification from Maju Holdings on how they plan to execute the no-toll-hike deal before deciding whether or not to allow the deal to happen, I can bet my bottom dollar that at the time of writing this post, they have not met.

The Second Finance Minister wants to obtain clarification from Maju Holdings before deciding

I have written on this matter before and I have laid down my reasons and Tan Sri Abu Sahid’s explanation that he made to the press during his interview sessions, but I am writing this again because I am alarmed at how the government has made a decision without even doing its due diligence on the matter.

The government’s decision to do away with four tolls beginning 1 January 2018 may be good news for those in the Klang Valley and those who go shopping at Bukit Kayu Hitam or drive into Thailand, but we also know that it costs 20 sen to 30 sen to use a public toilet.  So, nothing is for free.  While the people in the areas mentioned above enjoy their toll-free highway, the rest are made to pay in the form of an extension to the conclusion of the concession of other highways operated by PLUS beyond 2038.

That is not all.  The government would have to fork out RM110 million a year as compensation to PLUS, not inclusive of the compensation the government would have to pay every time they disallow a toll rate hike.  Multiply that figure alone by 20 years, it would come up to RM2.2 billion.  Now that is not a small sum of money.  RM2.2 billion could get you 22 80-bed hospitals that could benefit especially the rural areas of Sabah and Sarawak, or in a term that I am more familiar with, four squadrons of the KAI FA-50 supersonic advanced trainers and light combat aircraft. That is almost 50 badly-needed aircraft altogether.

Not only does the government have to think about finding money to compensate PLUS every year for the loss of income from the four tolls, the government also has to think about compensating PLUS and other concessionaires every time they are allowed to increase their rates.

With the global oil price rebounding, the government has also announced that it would think of a measure to not allow retail petrol (RON95). That sounds like more money flying away in the form of a subsidy – something the government has fought hard to do away with.

The proposed deal by Maju Holdings sounds sweet to me now.  Question is, what is the Finance Ministry and/or Khazanah afraid of?

Is it because Abu Sahid is perceived as Mahathir’s crony?  Then again, which owner of a Malaysian conglomerate isn’t a crony of Mahathir’s?  Out of the 10 richest persons in Malaysia in 2016 perhaps only a couple are not Mahathir’s cronies.

Is it because the Finance Ministry and/or Khazanah thinks that Abu Sahid does not know what he is talking about because he only operates a 26-kilometre highway therefore what does he know about a 800-kilometre one?  The question is what highway did UEM even operate before it was given PLUS? How different is Maju Holdings to MTD Prime and Anih Berhad that are now running the 358-kilometre East Coast Highway after running only the 60-kilometre KL-Karak highway?

Or are people on different levels making PLUS their cash cow? I’m just throwing my thoughts here because I cannot see what are they so afraid of if someone can help them lower their financial burdens.

The Finance Ministry keeps saying that it does not want to have to bail out Maju Holdings should the deal go wrong in the future, I ask myself, and perhaps the Finance Ministry and Khazanah too, should they not pray for the Maju Holdings to fail?  Abu Sahid wants to give the UEM and EPF RM4 billion in cash for free as a return on investments made in PLUS. That is a 20 percent Internal Rate of Return (IRR).

On top of that Abu Sahid through Maju Holdings, with the backing of his financiers, seeks to forfeit the government’s compensation of about RM900 million owed to the toll road operator, which arose as a result of toll hikes not being implemented.  Imagine what the government could do by chanelling this money to sectors that badly need such funds.

In other words, the government should pray for Abu Sahid to fail after giving him PLUS – the government takes back the highway which is already toll-free then as there would not be any concessionaire, while Maju Holdings would have to face its financiers.  The highway and all its infrastructures already belong to the government no matter what, and the government can still impose tolls albeit minimal to help maintain the PLUS highways.  So, what has the government got to lose?

Loss of income by EPF that affects its contributors?  I find that hard to swallow.  EPF has so much money that it would seek to re-invest in PLUS even after the deal takes place.  EPF needs to make money for its contributors. Or it could just seek to invest in another company.  EPF has so much money that it is investing in both money-making and money-losing companies as it is now.

Therefore, as a rakyat, I reiterate my concerns taking into account the amount of money needed to compensate PLUS for abolishing the four tolls, the amount of money needed to compensate PLUS and other concessionaires to not increase toll prices, and the imminent need to subsidise RON95 – has the government seen the assumptions made by Maju Holdings? Has the government called Maju Holdings or its financial adviser Evercore for a meeting like it said it would, before even deciding to shut the door on Maju Holdings? Has the government done a due diligence on the proposal by Maju Holdings?

The government should seriously rethink its stance in this issue.  There is just too much money that needs to be involved if the government continues to keep PLUS.  This is money that could be used to pay the other concessionaires to not hike up their rates as PLUS under Maju Holdings would not be increasing theirs until the concession agreement runs out.  Or the savings could go to building more schools, hospitals or buy more fighters for the Air Force.

The government has an opportunity to offload its financial burdens.  But why is it so afraid to take that step?

Sinking the Mamak’s Tongkang

mamaktongkang
Indian seamen being rescued from a sinking vessel. This has nothing to do with this article but it shows the desperation

Every time I read Mahathir’s postings on his blog, I would imagine him writing it himself and then pass it to probably his trusted aide, Sufi, to do some research and fill in the blanks before passing it back to him for the final touch before the article is posted at chedet.cc.  The URL used to be chedet.com if I am not mistaken but due to some dispute with the previous administrators the URL is now the current one. The administrators, while working for him, displayed their support for another contender for the Ketua Pemuda UMNO post instead of for Mahathir’s son, Mukhriz.  Anyhow, the contender they supported lost the race, and so did Mukhriz.  Mahathir was furious when he found out that they did not support his son and as the story goes, the two quit without ever disclosing the password for chedet.com.

I have never worked for Mahathir or for any other politician for that matter. I just write whatever I feel like writing. But I don’t have the same privilege that is someone to do the research for me. So when I read his latest post The 2017 Budget I felt disappointed that the research done was just as good as mine if not worse.

Mahathir wrote:

5. Why will the Government not have the money? It is because Government money is not used for good governance, for the development of the country and the well-being of the people.

This is like shooting blanks. The East Coast Highway began construction in 2001.  The project was first announced in 1994 for a new highway that would stretch from Karak to Kuala Terengganu but construction was delayed due to the Asian Financial Crisis. When construction commenced, the highway was shortened to only Kuantan as a lesson by Mahathir to the people of Terengganu whom had voted PAS instead in 1999.  You should remember what I wrote in a previous article on how vindictive Mahathir was towards the people of Kelantan and Terengganu for their support for PAS then.  So, Mahathir too never spent money for the well-being of the people.  Only his cronies prospered whenever projects are implemented.

The 11th Malaysia Plan has lined up many projects that would benefit the youth, the handicapped, the minorities and those who live in traditional villages.  Three pilot projects will be implemented for the youths under the 1Malaysia Youth City program in the Peninsular, Sabah and Sarawak.  For children between the age of 13 and 18 residing in welfare institutions they would be given the opportunity to undergo the Technical Vocational Education Training (TVET) to provide them with skill sets for them to face the world when they become independent.  A micro-credit scheme would be introduced to the Chinese community under the Chinese New Villages Special Loan Scheme program while a blueprint for the betterment of the Indian community will be prepared.

Six new hospitals will be built while three hospitals namely the Tawau, Kota Marudu and Miri Hospitals would be upgraded.  As it is, the Sri Aman Hospital would be completed as soon as possible. On top of that, 165 new Klinik 1Malaysia will be built nationwide to provide basic medical care for those in the rural areas.

Unlike under Mahathir, the Pan-Borneo highway that has begun construction will be toll free. Mahathir had had to make the people pay for the construction of highways despite claiming that the government had much more money under his administration and we in KL especially are still paying for the sins of Mahathir in the form of extended toll concessions to his cronies.  And for 22 years the people of Sabah and Sarawak had to endure endless ferry rides to get from one place to another while bridges have been and are being built under Najib’s administration despite not having any money as claimed by Mahathir. AND NO TOLL EITHER!

More Mass Rail Transit and proper extension of the Light Rail Transit to benefit the people in the Klang Valley have and are being constructed as compared to the time under Mahathir’s 22 years when the government seemingly had more money.  Double-tracking rail project, High-Speed Rail project and most recent was the announcement on the new East Coast Rail Link that would benefit the people of the very region Mahathir hated very much.

So where was your good governance or your concern for the well-being of the people back then?

Mahathir Wrote:

7. For this the Prime Minister has created sinecure jobs for a lot of loyalists. There are now nine Ministers, three Deputy Ministers in the Prime Minister’s Department.

8. There are now 51 divisions in the Prime Minister’s Department. The budget allocation for the Prime Minister’s Department has risen from RM5.2 billion in 2000 to RM20 billion in 2016, a four folds rise. It is 13 per cent of the 2016 budget of RM267 billion. It was less than four per cent between 2000 and 2008.

The Prime Minister’s Department is being run by the Chief Secretary to the Government. It now includes agencies that were not there during Mahathir’s time such as the Malaysian Maritime Enforcement Agency (MMEA/APMM) whose jurisdiction goes beyond the 12-nautical mile statutory limit of most of our Acts, enforces the EEZ but is not under the Ministry of Defence as it is not a military force. So who is to look after the development and the legislative requirements of the agency if not a Minister? The same goes for the Eastern Sabah Security Command (ESSCOM) which looks after the security of Sabah’s east coast from intrusion by foreign paramilitary units.  The Malaysian Islamic Development Department (JAKIM) also falls under the purview of the Prime Minister’s Department and that has to be headed by a Minister as given by the Act.  The Istana Negara, the Parliament, the Malaysian Anti Corruption Commission, the Elections Commission, the Economic Planing Unit, they all come under the purview of the Prime Minister’s Department.  Not forgetting Mahathir’s own Secretariat Office for the Former Prime Minister Tun Dr Mahathir Mohamad which did not exist prior to his resignation as the Prime Minister.  So is he complaining about the budget that the Prime Minister’s Department is giving his people so they can write lies and bite the hand that feeds them?  Maybe Mahathir’s cook needs to be pulled out. I don’t know what has the cook been feeding the old man that his mind has gone from that of a statesman to that of an estate’s man.

Mahathir Wrote:

10. Under BR1M, 7 million people got initially RM500 each. Now they are promised RM1,000. There will be more increases next year. 

11. At RM500 it will cost the Government RM3.5 billion. At RM1,000 it will cost RM7 billion.

12. Perhaps the very poor would benefit but for most of the recipients RM500 for a year is meaningless. The better thing to do is to give the really needy, the hard core poor sufficient monthly allowances to support their lives. For the rest create jobs and train them. But the Government is not encouraging job creation. Local industries are not supported. But imports are encouraged.

RM7 billion it would cost the government to give out BR1M.

BR1M would be chicken-feed for Mahathir. His cronies spend RM1,000 at Chawan in front of Bangsar Village or at the Bangsar Shopping Centre to feed his bloggers.

It may be a one-off thing but that means a staggering amount of RM7 billion gets circulated in the economy.  Being a layman my understanding of that would be that when there is more money in circulation, jobs are being created as people have more spending power. At RM500 or RM1,000 per person it may not seem much, but by having that extra money to spend encourages spending. Purchases will be made, demand is created, production needs to be increased, more business opportunities for new industrial players, and therefore more jobs are created.

It may not matter to Mahathir that it increases the disposable income of the lower income groups; it boosts consumer sentiments as it increases domestic consumption – the higher the amount of BR1M, the higher the domestic spending.  With subsidy cuts and spending more on BR1M Malaysia’s deficit has been reduced with a much larger chunk of the economic wealth going to those who need it the most.

And under the 11th Malaysia Plan the government is committed towards having 11,000 physically-challenged individuals to work for the government while in the five economic corridors in the Peninsular, Sabah and Sarawak alone 470,000 jobs will be created.

Mahathir Wrote:

19. The level of borrowings by the Government has reached record levels. Future generations will have to pay these loans.

20. All these will not show up in the budget. But the people will know as they struggle to make ends meet.

Singapore has a US$1.76 Trillion external debt with a Debt to GDP ratio of 106%.  Our debt stands at RM630.5 billion (US$150.6 billion) while our GDP is at RM1.157 Trillion (US$276 billion) making our Debt to GDP ration 54.5%.  If Singapore is not panicking then why should we?

In fact, if we compare the first seven years of Mahathir’s administration against Najib’s we can see that we should have gone bankrupt (in the words of Mahathir’s lackey Kadir Jasin) when our Debt to GDP ratio was well over 100% for two years in a row!

screen-shot-2016-10-19-at-17-04-44
Mahathir’s First Seven Years (1981-1987) with Hussein Onn’s Debt to GDP ratio in 1980 at 44% only

We could see that not only debt had increased during Mahathir’s first seven years, GDP also fluctuated and was at its highest point in 1987 yet debt was much higher!

Compare that to Najib’s first seven years and we can see

Screen Shot 2016-10-19 at 17.05.42.png
Najib’s First Seven Years despite the slump in oil prices in 2014 has seen an increase in GDP

As a matter of fact, the bad performance of Debt to GDP ratio during the 1986-1987 period under Mahathir was not the only time when the economy was in a critical situation going by Kadir Jasin’s definition, the country’s GDP was at negative 7% when Mahathir carried the country through the Asian Financial Crisis in 1998 – which was worse than when Tun Abdullah Ahmad Badawi ran the country during the Global Financial Crisis in 2008 which was at negative 1.5%!

So is Malaysia on the verge of bankruptcy?  “Although we were faced with the drastic fall in global crude oil prices in 2015/2016, which caused the government to lose more than RM30 billion in revenue, the country still recorded a positive economic growth which was 6% in 2014, 5% in 2015 and 4.1% in 2016 (6 months),” said Second Finance Minister Datuk Johari Abdul Ghani.

And despite losing that much revenue, the government could still finance its projects – thank you in large to the implementation of the GST which has allowed the government to have an alternative source of income and reduce the dependency on the the price of oil. To add the strawberry on top of that cake is that the inflation rate of 3.43% upon the implementation of the GST program has been reduced to less than 2% this year.


Perhaps Mahathir ought to fire whoever it was who helped research for that article of his.  Such a waste of allocation from the Prime Minister’s Department.  Seriously!

Oh! Why such a title for this posting?  Let me quote this rather amusing blog post:

Melayu Celup

Small in numbers, about 5% of the total Mamak population but rather loud and “glaring”. Though mostly from the 3rd Graded colony, they have graduated well and have an ability of a Chameleon (or think they can) with the Malays. Some examples of these low dignity Melayu Celups are Ahmad Rizal Naina Merican, Sheik Hussein Mydin and Zambry Kadir carrying the Mamak trade mark glaringly. But if they are lucky they will look like the controversial Sharifah Zobra or Mahathir Mohamed. Let me give you a secret, any names that ends with Naina, Kadir, Mydin, Merican, Pakir, Jabeen, Shaik, Mubarakh, Mohammad (no reference to the Prophet Mohamed S.A.W.) are downright, flat out, no doubt, true blue Mamak Tongkang or the immediate descendant’s.

I think the Mamak’s tongkang has just been sunk.