Archive for the 'Economy' Category


The risks of easy financing for MRT3

The risks of easy financing for MRT3

A QUESTION OF BUSINESS | While Mass Rapid Transit Corporation (MRT Corp) CEO Shahril Mokhtar’s attempts to get the lowest possible price for MRT3, estimated to cost RM40 to RM50 billion, is laudable, some key questions involved go beyond his brief and need answers from his boss Prime Minister Najib Abdul Razak, who is also the finance minister. MRT Corp is wholly-owned by the Minister of Finance Incorporated.

This is a terribly convoluted project – it most likely involves massive amounts of foreign financing, interest rates to be set and whether they are floating or not, a minimum moratorium of eight years and a minimum repayment period of 30 years.

Last week, we explained why the tender terms favour China contractors. The focus here will be on the risks that MRT3, as tendered, poses to the country in general.

First, there are few bona fide organisations which are able to provide a 90 percent loan for a minimum period of 30 years. Even if they could, the nation faces horrendous risks in terms of movement of exchange rates and interest rates.

As an example, in 1980, one US dollar was worth 2.4 ringgit – now it’s about 4.2. That’s a depreciation of some 40 percent! If the ringgit depreciates against the currency in which the loan is taken, then the repercussions can be serious.

Former prime minister Dr Mahathir Mohamad lamented endlessly in the 80s about the fall of the ringgit against the yen when he took billions of ringgit equivalent in cheap (low-interest rate) yen loans to finance his heavy industrialisation programme. When the yen appreciated, there were huge foreign exchange losses which more than mitigated the low-interest costs.

And then there is the interest rate – one cannot assume that the interest rate will continue to be low. Few, if anyone, can hedge interest rates to provide a fixed rate for a period of at least 38 years – which is the minimum period for the moratorium and the repayment combined.

Also, low-interest financing is usually provided by governments or their agencies in return for sourcing products and other services from the host country. In the 80s, in return for easy financing, Japan required that products and services be sourced from the country.

Financial prudence out the window

The other danger of easy financing is that financial prudence gets thrown out of the window. Since one worries about repayment only much later, when one is no longer in power and accountable, the leadership more or less throws money away, especially if there are kickbacks and other corrupt practices involved.

It is a sad fact of life that powerful, developed and developing countries have often thrown whatever moral leanings they have aboard into some deep ocean so long as their self-interest and their hegemonic intentions are served by getting nations overly into debt to them.

On top of that, like moneylenders since time immemorial, they then swoop down on the poor borrower, in this case Malaysia, if they can’t repay and demand land and other assets far in excess of what is owed to them, extracting their pound of flesh in the end.

It is no exaggeration to say that we could pawn our country and jeopardise our future for many generations to come if we are not prudent about borrowing. There is also the considerable opportunity for corruption and pilferage of the country’s precious resources, which can impair good judgment.

Many companies cannot provide both a great financing package and a low, non-binding project cost which allows the cheapest possible and the most beneficial sourcing. As such, those that can provide the financing already have an advantage and are bound to inflate costs and other arrangements in their favour to compensate for favourable financing arrangements.

The financing may be in the name of MRT Corp, but without government guarantees – as in the loans for 1MDB – the financing cannot be arranged. And this loan, although effectively the government’s, does not get counted as government borrowing, again leading to rather loose financial controls. This is what we saw in 1MDB.

The risks of easy financing for MRT3
Nov 2017 – malaysiakini


1MDB suit: London consent award has element of fraud, says lawyer

1MDB suit: London consent award has element of fraud, says lawyer

Mohamed Haniff Khatri Abdullah says High Court should hear the merit of the suit as the court can declare the award reached between 1MDB and IPIC invalid under local arbitration law.

KUALA LUMPUR: A lawyer says the High Court should hear the merit of a suit brought by 10 opposition members against Prime Minister Najib Razak, the government and 1MDB for paying US$1.2 billion to Abu Dhabi-based International Petroleum Investment Company (IPIC) as there is an element of fraud.

Lawyer Mohamed Haniff Khatri Abdullah added in his submission before Justice Hue Siew Kheng that Second Finance Minister Johari Abdul had said the government had made part payment to IPIC and its “subsidiary”, Aabar Investment PJS Ltd.

He said Johari, in July last year, had said the government would fight tooth and nail in an arbitration proceeding with IPIC, following a dispute over the payments, in London.

“However, in April, it was revealed that the finance ministry decided not to contest, and entered a consent award to pay US$3.5 billion to the original Aabar,” he told Hue.

Parties made submissions in Hue’s chambers, but Haniff later told reporters the salient points of his submission as to why his clients were objecting to an application by Najib, the government and 1MDB to strike out their suit.

Haniff said the court should hear the substantive matter of the suit as it could declare the consent award invalid under local arbitration law.

Meanwhile, Najib’s lawyer Mohd Hafarizam Harun said the Pakatan Harapan youth leaders who filed the class action had no legal standing and did not suffer any damage.

“They are not parties in the arbitration and they are not adversely affected,” he said.

He also said the High Court had no jurisdiction to hear the suit as the arbitration proceedings had taken place in London.

Hafarizam said the plaintiffs were wrong to include Najib as party to the suit as he was not involved in the deal concerning IPIC and Aabar Investments PJS.

Lawyer Tan Hock Chuan represented 1MDB while senior federal counsel Alice Loke appeared for the government.

In July, the group, identified as Gerakan Anakmuda Tolak Najib (Ganti), sought a court order that the settlement agreement on May 11 between IPIC and 1MDB, which is wholly-owned by the government, at the London International Court of Arbitration be declared invalid.

The opposition youth members also sought to compel Najib, the government and 1MDB to provide detailed accounts of all money paid to IPIC and its subsidiary, Aabar Investment PJS.

The group claimed the consent award agreed on between IPIC and Aabar Investment PJS in London was wrong and fraudulent.

The group said it was forced to resort to suing Najib and two others as no action had been taken on those who made the “fraud payments” to the British Virgin Island-registered Aabar Investment PJS Limited or Aabar BVI, which IPIC claimed was not its subsidiary.

1MDB suit: London consent award has element of fraud, says lawyer
November 16, 2017 – FMT


Six months on, is something amiss in Bandar M’sia’s search for a master developer?

Six months on, is something amiss in Bandar M’sia’s search for a master developer?

MP SPEAKS | Like the RM7.41 billion failed sale of Bandar Malaysia to the Iskandar Waterfront Holdings-China Railway Engineering Corporation (IWH CREC) consortium and the subsequent imaginary sale to China’s Dalian Wanda Group, it looks like the current Request For Proposal (RFP) for Bandar Malaysia will suffer the same fate.

In my parliamentary question on Nov 8, I had asked the Finance Ministry for a simple update on the progress of Bandar Malaysia’s search for a new master developer.

The new tender process for Bandar Malaysia’s developer comes following the spectacular collapse of the RM7.41 billion deal with the IWH CREC consortium to acquire a 60 percent stake in Bandar Malaysia in May.

Following that was another dramatic public relations disaster when the Prime Minister Najib Abdul Razak failed to seal an improved multi-billion dollar Bandar Malaysia deal with China’s Dalian Wanda Group.

In an attempt to save face and salvage the project, Bandar Malaysia’s owner, the Finance Ministry, launched a new request for RFP to collect bids for a new master developer for the project.

The new RFP also included more stringent criteria including that the developer needed to be an affiliate of a Fortune 500 company and must have cumulatively generated RM50 billion in revenue in the last 3 consecutive years.

In the Finance Minister’s answer to my question, he only restated information which was already made known to the press for months.

He said that the RFP process had been completed and listed out the same criteria that had been said before.

He added that eight companies had met these criteria and that a final decision will be announced soon.

The reply shows that all is clearly not going to plans with the re-bidding process of Bandar Malaysia.

When the RFP was first announced in May, the new Bandar Malaysia chairman and Treasury secretary-general Irwan Serigar Abdullah said that the RFP deadline would close on June 30 and the final decision would be made by July 14.

The RFP was finally launched on July 5, with a deadline on July 20.

The Singapore Straits Times had reported on July 25 that seven Chinese state-controlled entities and two Japanese firms were in competition for the project.

They included China State Construction Engineering Co Ltd, China Communications Construction Company (CCCC) from China and Daiwa House Industry Group and Mitsui Fudosan Co Ltd from Japan.

Then on Aug 23, Tan Sri Irwan Serigar updated Malaysians with his announcement that “six companies have shown interest and visited the Bandar Malaysia project site”.

“We took them for a site visit and they need to submit their proposal by the end of this month,” he said.

However, Irwan said the government does not know how many companies, out of the six, will actually submit their proposals based on the RFP for the project.

Now, it is now four months after the RFP was announced and we have had no further updates as to who might become the master developer for the Bandar Malaysia.

Six months on, is something amiss in Bandar M’sia’s search for a master developer?
14 Nov 2017 – malaysiakini


The controversial contract that can cost BN the Felda vote

The controversial contract that can cost BN the Felda vote

ABOUT 15 years ago, tens of thousands of settlers signed a replanting agreement with Felda that activists claim has led to one of their biggest problems today – crushing debt.

That agreement is now being studied by the settlers’ children, activists, lawyers, and politicians who want to either challenge it in court or use it as fodder for their general election campaigns.

Some of the settlers and their lawyers allege that the agreement is lopsided.

Others are working with politicians in Pakatan Harapan to turn it into a defining issue that could sway the Felda vote which impacts 56 parliamentary seats in the peninsula – most of which are held by Barisan Nasional.

There are 112,635 Felda settlers, not including their wives and children.

“We are forming a committee to study this issue at the party level before bringing it to the Pakatan Harapan presidential council,” said Amanah communications chief Khalid Samad.

Amanah, together with Bersatu, PKR, and DAP, form the PH alliance.

“We hope to go on a roadshow in Felda areas to explain the issue just like we did with the 1MDB (1Malaysia Development Bhd) financial scandal, and offer solutions,” Khalid told The Malaysian Insight.

One of the lawyers studying the agreement, Dr Zulqarnain Luqman said 95% of the settlers signed the contract with Felda so that the agency could replant the holdings.

Hisomuddin Bakar, the son of a settler in Felda Cini, Pahang, said each Felda settler owned a four-hectare oil palm or rubber plantation, and by the beginning of the millennium, many of those trees were too old to bear fruit or latex.

He said Felda crafted an agreement wherein settlers would relinquish management of their estates to the agency so that it could replant the land with new trees.

It took about three years to replant and for the trees to mature, during which the holdings did not produce yields. During this period, each settler was paid a living allowance of RM1,500 per month.

Former plantation manager Shariman Alang Ahmad said oil palms took about three years to reach maturity and produce fruit.

“The optimal fruit bearing age is between eight and nine years, and the yield usually goes down once the tree is over 20 years old,” said Shariman, who worked for a government-linked company.

“At the end of the three years, when the trees started to bear fruit, Felda continued to manage the settlers’ holdings including maintaining the trees and harvesting the fruit.

“Felda did not return their holdings to the settlers because it claimed the settlers needed to repay the cost of replanting which ran into hundreds of thousands of ringgit,” Hisomuddin said.

Settlers were also told they needed to repay the living allowance they were paid during the three years.

Meanwhile, Felda continued to pay them RM1,500 per month while holding on to the holdings.

Settlers have claimed that their debts came up to over RM100,000 and that the agency could be collecting more than what it was owed.

“The question is, when are the settlers going to be done with the debt? Will it be passed on to their children and grandchildren?” said Hisomuddin.

One of the clauses of the agreement stipulates that the settlers may not, for any reason or under any circumstances, terminate the agreement until all debts and payments that are owed , including income advances, have been paid in full to Felda.

The controversial contract that can cost BN the Felda vote
15 Nov 2017 – TMI


Second deputy governor in Bank Negara to resign over the past year

We need more men like Sukhdave Singh

LETTER | Exemplary leadership, particularly so within our key public institutions, is vital for Malaysia’s continued progress towards becoming a truly developed nation.

Exemplary leadership can be summarised in a single word: credibility.

As stated by two leading leadership theorists, J. M. Kouzes and B. Z. Posner, “Credibility is the foundation of leadership.” Credibility encompasses both competence (having the ability to excel in your job) and character (demonstrating moral intelligence).

In this regard, it is a dark moment in our nation’s history that Sukhdave Singh, who epitomises credible leadership, recently announced his “early retirement” as the deputy governor of Bank Negara. He was due to retire in April 2019.

Sukhdave, who holds a PhD in Monetary and International Economics from Vanderbilt University (USA), joined Bank Negara in 1986. In April 2013, he was appointed as the deputy governor of Bank Negara for a three-year term. Due to his sterling performance, his term in the same position was extended in April 2016 for another three years. He is undoubtedly one of Malaysia’s most respected economists and central bankers.

In a recent note to his friends and colleagues, Sukhdave stated his reason – albeit tactfully – for leaving Bank Negara; “All I can say is that my life in the bank has been based on certain professional expectations, and when I find myself put in circumstances where those expectations can no longer be met, there could have been no other decision for me.”

Our nation definitely does not need “cari makan” or “politically correct” leaders without backbone who will sell their souls for self-serving agendas. I know too many of them.

I salute Sukhdave, whom I do not know personally, for being upright and maintaining the highest professional standards in executing his responsibilities.

History will remember him positively in the tradition of other exemplary Malaysian leaders such as the late Ani Arope, Tan Chee Khoon and Karpal Singh (Tiger of Jelutong) (photo).

I am deeply impressed with the above-mentioned well-written and succinct note by Sukhdave regarding his “early retirement” on Dec 31, 2017.

It captures the fundamental principles of exemplary leadership, including moral intelligence (“Remember that nothing shines a brighter light into the depths of your character than your behaviour when you believe that you have power over others”); practising humility (“No one gets to my position without the help of others”); and demonstrating self-respect and respect for others (“It is also never acceptable to use bullying as a means to exert your leadership. Respect yourself; respect those who work for you).

Sukhdave is also correct in stating that “leadership is a responsibility and not a privilege.” Exemplary leaders demonstrate responsibility to those they lead by bringing out the best in them and attaining a shared vision and not abusing power for their own personal gain or to bully others.

Above all, he personifies impeccable integrity, the importance of which is best summed up by Warren Buffett; “I look for three things in hiring people. The first is personal integrity, the second is intelligence, and the third is a high energy level. But if you don’t have the first, the second two don’t matter.”

In today’s highly competitive world, the future well-being of every nation greatly depends on credible leadership. Leaders with credibility such as Sukhdave are indeed rare, and thus his “early retirement” is definitely Malaysia’s loss.

Worse still, it adds further credence to the widely shared belief that to hold high office in the Malaysian public sector, one has to “toe the official line”. Integrity is much bandied about in our public sector but seldom appreciated and rewarded by our political leaders.

What a shame!

We need more men like Sukhdave Singh
29 Nov 2017 – malaysiakini


Pua chides deputy minister over 1MDB investigation ‘joke’

Pua chides deputy minister over 1MDB investigation ‘joke’

PJ Utara MP Tony Pua says deputy minister using Chinese words urging patience is not funny, when anything linked to opposition is dealt with ‘lightning speed’.

PETALING JAYA: The statement by Deputy Minister in the Prime Minister’s Department Razali Ibrahim on investigations into 1MDB makes a mockery of the enforcement agencies in the country, says Tony Pua.

The Petaling Jaya Utara MP criticised Razali for trying to be coy in the Dewan Rakyat and urging people to be patient with regard to the ongoing investigation into 1MDB.

On Tuesday, Razali told the Dewan Rakyat that “God-willing, the truth will be revealed” before using some Chinese words to make his point.

“In Chinese, we say man man lah, man man (slowly lah, slowly). We will wait for the (outcome of the) matter, which is under investigation by the relevant authorities,” he said.

Pua compared such attitude with the “lightning speed” at which relevant enforcement agencies act if there was any issue even remotely linked to the opposition or parties critical of the government.

“The government treating 1MDB as a joke just shows how ridiculously selective investigations in Malaysia are, as the first police reports filed against 1MDB were done in 2014.

“By comparison, the investigation into Penang Chief Minister Lim Guan Eng, started with a report to MACC on March 18, last year.

“Investigation papers were submitted to the AG in May and an arrest by MACC was made in June, all in a matter of four months,” Pua said.

He called the government’s attitude “obnoxious” as Malaysians had waited long enough for a decision on a case involving multi-billion dollars that’s already been ongoing for years.

“Worse, other countries have already investigated, charged and even jailed perpetrators involved in crimes linked to 1MDB, while Malaysian authorities continue to drag their feet on the matter.

“How much slower does the deputy minister expect investigations to slow down to?” he asked, on the investigation papers that had been given to the Attorney-General’s Chambers in June 2015, according to the home minister.

“That was over two years ago, and the Attorney-General and the police are still passing the investigation papers between each other.”

Pua chides deputy minister over 1MDB investigation ‘joke’
November 16, 2017 – FMT


A clarion call for all Malaysians to save the nation


Where are my brothers and sisters,
My friends of yesteryears?
Who together built this nation
With a democratic constitution?

The time has come for us to rise
In unison and in one voice
To save our beloved nation
For our future generations.

We have to fight against corruption,
And call for clean administration.
We have to fight against nepotism,
And abuse of power and cronyism.

We have to install good governance,
And law and order maintenance.
We have to fight religious bigotry,
And preserve racial unity.

We have to get rid of corrupt leaders
As well as their bootlickers.
We have to remove kleptoracy,
And re-establish true democracy.

Only then can the future be assured,
And our progress be measured
As a multi-racial country

Living in peace and harmony.

A clarion call for all Malaysians to save the nation
25 Nov 2017 – malaysiakini

Nuclear lessons for Malaysia (Part 1) (Part 2)
BN govt is directing attention to distant past and distant future, in order to distract people from present misdeeds and poor governance
Felda - A picture is worth a thousand words
How the 1MDB Scandal Spread Across the World (WSJ)
We cannot afford ridiculously expensive RM55 Billion ECRL!
All that is necessary
for the triumph of evil
is for good men
to do nothing.

- Edmund Burke
When the people
fears their government,
there is TYRANNY;
when the government
fears the people,
there is LIBERTY.

- Thomas Jefferson
Do you hear the people sing?