ETP Progress Report

IPP Owners Need Not Defend Their Contracts. The Government Is Doing All The Talking. Ever Wonder Why?

Ex-Government Appointees coming out of the woodwork? This Ani Arope would know what he is talking about, wouldn't he? The IPPs are basically Mahathir's babies and legacy. I am sure he will not let this go unanswered; the question is, what will he say. What can he say? We wonder why the IPP owners are not defending themselves but it's the government doing all the fire-fighting. Ani Arope's term "Economic Plundering Unit" will stick and one wonders who the EPU plunders for. This is in the Malaysian Insider:

Ani Arope blames high power tariffs on ‘Economic Plundering Unit’

By Debra Chong

June 03, 2011

KUALA LUMPUR, June 3 — Former Tenaga Nasional Berhad (TNB) chief executive Tan Sri Ani Arope is blaming the Economic Planning Unit (EPU) for rising electricity tariffs, saying the powerful agency forced the national power company to sign lopsided purchase deals nearly 20 years ago.

Ani said EPU, which he sarcastically dubbed "Economic Plundering Unit", forced Tenaga to buy electricity from an independent power producer (IPP), believed to be Genting Sanyen, at 14 sen per kilowatt hour (kWh) despite an existing offer of 12 sen/kWh then; other IPPs then were charging 16 sen/kWh.

Genting Sanyen became the first IPP to transfer 15 million watts (MW) in electricity to TNB’s national grid on April 15 and is scheduled to complete a RM1.8 billion upgrade on its existing gas-fired plant with a capacity for 720 MW by June next year.

“You don’t need to go to a fanciful business school to figure out why we need a tariff hike — just revisit the terms given to some IPPs,” Ani, who helmed the utility company between 1990 and 1996, said in his last Facebook posting three days ago.

“With the take-or-pay clause and with the 40 per cent excess reserve that we have today, one only has to produce half of one’s capacity and be paid 80 per cent of the agreed capacity. Well done the then-EPU — Economic Plundering Unit,” he added, mocking the economic unit under the Prime Minister’s Department.

Ani called for a review of the original terms with the IPPs as the storm over energy price deals continues to build up.

DAP publicity chief Tony Pua cited today Ani’s 2006 interview with English daily, The Star, to increase pressure on the federal government to declassify the power purchase agreements (PPAs) inked between TNB and the IPPs.

Ani caused a stir 15 years ago when he chose to resign from his executive chairman post rather than sign the imbalanced deals, which saw the first generation of IPPs created, such as YTL Power Services, Powertek and Malakoff during the Mahathir administration.

“TNB is the whipping boy. TNB has no control of the price it has to pay to the IPPs. Get to the source of the problem,” said the Penang-born who turned 79 on May 17.

The Najib administration has been savaged for allegedly protecting the interests of IPPs rather than the public.

Putrajaya announced the 7.12 per cent hike in electricity rates in an effort to trim a subsidy bill that would otherwise double to RM21 billion this year and promised the hike will not affect 75 per cent of domestic consumers.

But power prices will now rise by as much as 2.3 sen per kWh in areas taking TNB’s electricity supply, a potential source of public anger just ahead of a general election expected within the year.

The Star daily reported today the government was close to inking a deal for a 1,000 MW coal-fired plant in Manjung which will charge 25 sen/kWh.

The NEM: A Comment By M. Bakri Musa

M. Bakri Musa is one of my favorite commentators on Malaysian socio-politics. Here he gives his views on the 1st NEM report by the Najib government and I think it is very fair comment. All Malaysians must read this before the 2nd NEM report comes out.

Bakri Musa on NEM
April 3, 2010


Bakri Musa on NEM (New Economic Model)
Dr. M. Bakri Musa @ Morgan-Hill, Cal

With threatening clouds overhead, there are no prizes for predicting the flood, only for designing or building the ark. The recently-released New Economic Model (NEM) Report draws our attention (not that we need it!) to the darkening Malaysian skies, and then goes on advising us to build an ark.

That is as far as the report goes. There are no hints on whether the clouds would bring a tropical drenching or just a midday sprinkle. There are also no suggestions on the type of vessel we should build. A barge, yacht or a sampan will all keep us afloat, but beyond that they serve vastly different purposes, not to mention their enormously varying costs. And if the forecast calls for only a light sprinkle, then a simple umbrella would do; no need to expend scant resources on an unneeded ark.

We are told that following “public input,” another report will be released by June, in time for its recommendations to be incorporated into the Tenth Malaysia Plan and the 2011 Budget. This second report, we are further assured, will contain specific policy prescriptions – the ark design, as it were.

The current report is silent on how this “public input” would come about. Before deluding ourselves that we could participate in robust public debates, let me intrude a cautionary note. Acknowledging that there will be opposition, the report urges the government to take “prompt action when resistance is encountered.”

You can be assured that those UMNO-Putras and others glutton on the NEP-spawned patronage system would be spared this “prompt action.” They as well as the Perkasa boys can continue with their shrill voices opposing NEM. For Pakatan folks and others, however, be warned!

Major Conceptual Flaws

On a general level, this report suffers from three glaring conceptual flaws. One, it fails to recognize that the bane of past policies is in their implementation. Two, it ignores the major role culture plays in the successful execution of any economic initiative. And three, there is no attempt at learning from the successes and failures of earlier policies.

This last deficiency is surprising as well as disturbing. If NEM were to supplant NEP, then we should know the strengths and weaknesses of that earlier policy. Or if it was basically sound, then what or who perverted it, and where the failures were in its implementation.

No one argues with the twin objectives of NEP: eradicating poverty and eliminating the identification of race with economic function. Those are laudable goals; the second in particular for a racially diverse society like ours. Indeed, the report pays tribute to NEP for reducing poverty and minimizing inter-communal inequities.

Unfortunately, there the report ends. In an earlier chapter, the report duly lists the numerous problems facing Malaysia to day: widening inequities especially among Bumiputras; talented citizens leaving; the rise of a rent-seeking class; entrenched corruption; and the failure of our institutions.

What happened in between? Unless we know, there is little assurance that the laudable goals of NEM would not be similarly derailed. If we are unwilling to acknowledge and learn from the mistakes of the NEP, then we are bound to repeat them.

Thus there should be some critical analysis of the NEP, at least an elaboration of the positive elements and the highlighting of the negatives. The one chapter that should be in the report would be one titled, “How did we get in the mess we are in today?” I reckon that such a chapter would be filled with narratives on the failures of our institutions. It is this that doomed NEP.

On the role of culture, it is surprising that a committee made up of mostly Malaysians and those familiar with Malaysia would come up with a report that is totally oblivious of this reality. This cultural dimension is crucial not only in economics but also in management and health care. Of all people, Malaysians who are daily immersed in a diverse cultural environment, should be well aware of this.

An initiative that would be embraced by urbanite Chinese in Penang would fall flat among Iban rural dwellers of interior Sarawak. The solo entrepreneur model would probably find a fertile ground in Penang, but not in Kenawit. There, the social system would be more supportive of cooperative-like ventures.

Challenges for the urban poor regardless of race are radically different from those in rural areas; race only compounds those differences. The failure to recognize this dooms many an imaginative plan. When that happens, those policymakers would resort to blaming and stereotyping the poor victims. We have heard that many times.

The colonials brought modern schools to Malaysia with the best of intentions. Non-Malays responded to that gesture and benefited immensely. Malays did not, and suffered the consequences in terms of our economic and social development.

It would be wrong as well as cruel to conclude that Malays did not value modern education, as many (and not just the colonials and non-Malays) were wont to. For when those schools were named Tuanku Muhammad School instead of Convent of the Holy Infant Jesus, Malay parents readily enrolled their children. The content was still essentially the same but only the packaging was different; it was sensitive to the culture of the clients.

American consumers readily respond to their leaders’ exhortations to increase their spending to pull the country out of recession. For the Japanese however, the more their leaders urge them to spend, the more they save, and hoard. Same economic circumstances and the same economic rationale, but the responses and results are diametrically different. Culture explains that.

“Most of economics,” as Landsburg put it in his The Armchair Economist, “can be summarized in four words: ‘People respond to incentives.’ The rest is commentary.” Alas what are viewed as incentives in one culture can be definite disincentives elsewhere. That is the central challenge. Policymakers ignore this at their own peril.

The British, in an attempt to encourage Malays to save, duly increased the interest rates on Postal Savings Accounts. However, instead of increasing their deposits, Malays withdrew theirs! Malays viewed the increase as an inducement to a life of sin. Those sneaky white devils!

Ungku A. Aziz created Tabung Haji and labeled the investment returns as “dividends.” Malays swarmed to that institution, making it the largest in the region. Essentially the same content, but different packaging! The Ungku understood economics well and fully comprehended its central axiom: People respond to incentives.

An extension to this observation is that the incentives you offer would influence your responders. Offer honey, you get bees; rotten meat, maggots. When the committee decries the economic rent-seekers emerging under the NEP, it should carry the analysis further to find out the incentives offered. Rest assured that if NEM were to offer rotten meat as NEP did, NEM will too get its share of maggots.

On the crucial issue of implementation, the report only tangentially addresses the strengthening of our institutions when that should be the major focus. Our institutions are blighted with bloat, incompetence, and corruption; they simply cannot deliver.

Consider the current initiatives to improve the civil service, of which there are too many to count. First there was PEMUDAH, self-described as “a high-powered task force to address bureaucracy in business-government dealings.” It is chaired by no less than the Chief Secretary. Then there was the appointment of Koh Tsu Koon as the minister in charge of “Performance Management.” He had hardly warmed his seat when yet another minister, Idris Jalla, was made in charge of – you guess it – KPIs!

Who is in charge here? Meanwhile the civil service continues its bloat and ineffectiveness, as exemplified by Najib’s own cabinet. And if you have to get your driver’s license, you would still need the services of runners and touts, as well as some duit kopi.

Corruption will not be dented – much less ended – merely with the report blandly declaring “zero tolerance” for it. Make the Anti Corruption Commission independent, answerable only to Parliament or the King, and appoint a seasoned professional to head it. If you cannot find a native, recruit from the FBI or Scotland Yard. That one move would more effectively curb corruption and improve our institutions than all the KPIs, National Integrity Institutes, and NEM’s and others’ declarations of “zero tolerance.” It would also be considerably cheaper.

Accurate Portrait, But No Revelation

This report is refreshingly different from the usual government publications in that it is highly readable and the content well organized. The chapter headings too are clear and simple; they accurately reflect the contents, with such titles as “Where We Are?” Where Do We Want To Be?” and “How Do We Get There?” An index would have been useful, but the well laid-out and sufficiently detailed “Table of Contents” made up for that deficiency.

This report is remarkably free of gross grammatical gaffes and awkward syntax. The committee staff has also done a credible job with the executive summary. The report was made available online almost immediately. These features are rare with our government publications, and thus merit special commendation.

The full report is available only in English, a glaring omission considering that NEM would supplant NEP. As everyone knows, NEP is dear to most Malays, especially those of the Perkasa persuasion. Any tampering of NEP, even if it involves only one letter of its acronym, risks raising the hackles of those folks. Having the full report in Malay would have been a splendid start at trying to influence them, quite apart from being a politically smart gesture. Malay after all is our national language.

As things stand, those proficient only in Malay would have to be satisfied with the Ringkasan eksekutif (Executive summary). My hunch is that they would find the going rough, what with such phrases as “Menginovasi hari ini untuk hari besok yang cemerlang,” (Innovation today for a glorious tomorrow) and, “Inisiatif Pembaharuan Strategik” (Strategic Renewal Initiatives). I would have said it differently, “Cara baru untuk menjamin masa depan yang cemerlang” (A new way to ensure our bright future).

Dark clouds there are – and many – hovering over Malaysia, from the hundreds of thousands of skilled citizens who have migrated, to the anemic growth in our productivity. The report rightly points out the lack of political will to overcome these myriad problems. Kudos to the committee for this forthrightness!

The report paints a gloomy picture for Malaysia if it were to stay the course. Again, few would disagree with that. I wish those luminaries would help us sketch and build the appropriate ark, one that would meet our unique needs and challenges, instead of merely warning us of the impending flood.

The report does not lack for specifics. For example, it aims for an economic growth of at least 6.5 percent annually. Its target too is specific, the bottom 40 percent of Malaysians.

One specific suggestion on improving the government machinery is the proposal to “corporatize” and rename the Malaysian Industrial Development Agency (MIDA) to Malaysian Investment Development Agency. The committee pats itself for the brilliance of substituting “Investment” for “Industrial,” as then the agency could continue keeping its acronym and logo!

If only they recognize that changing even a single letter in a corporate name would entail changing entire letterheads, advertising plates, and web pages. The exercise would consume as much effort as if you had changed the entire name. It would have been more productive if the committee had recommended changes to MIDA’s mode of operations and strategies. After all, Warren Buffett’s Berkshire Hathaway did not need to change its name in order to diversify very profitably beyond its initial textile roots.

The Report goes out under the signatures of all but one (Dr. Norma Mansor) of NEAC members. Of the ten who signed and thus responsible for the report, three are non-Malaysians while two are Malaysians (or at least born locally) who have spent their formative careers abroad.

Of the remaining five – the ‘natives’ – only one, the chairman Amirsham Aziz, has substantive private sector experience, having spent his time in banking. He had a brief political career as a cabinet minister, but that was through the appointive senate route rather than through elections. In short, the chairman, like the rest of his committee, is short on political acumen as reflected in the lack of a Malay version of the report.

Again referring to the ‘natives,’ all have formal training in economics except for one. The exception is Dzulkifli Razak, Vice-chancellor of Universiti Sains Malaysia; he is a pharmacist by training. Two of the ‘natives’ were former academics but now, government bureaucrats. The resumes of the committee members are impressive, with seven having doctorates, all but one in economics.

I have no quarrel with the committee’s assessment of our current dismal state. I concur with its observations. I just wish that the committee members would have been more forceful in pointing out whether the Najib Administration’s many recent moves were in the spirit of or contrary to the committee’s aspirations. For example, the committee wisely noted the need for devolution of authority to lower levels, yet Najib’s recent response to the request for local elections runs counter to that.

Similarly, the committee decries the failure of our educational institutions. Yet it does not address whether the recent rescinding of the policy of teaching science and mathematics in English would accelerate or reverse this decline.

I hope that in its final report the committee would be more forceful in addressing these contradictions. The committee owes this obligation not only to the Najib Administration but also to all Malaysians. Doing so would also help us design and build a better ark.

Social Media In A Nutshell

This slide presentation sums up social media in its own way.

TRH Kebal?

UMNO bigwigs continue to avoid meeting TRH head-on regarding oil royalties for Kelantan, preferring instead to deploy relatively minor figures like Mustapa Mohamed and worse still, leaflets and newspaper advertisements.

It looks like TRH will continue to up the ante and we will see how long UMNO can wait and how far TRH will go to "bait the bull". This was in TRH's blog today:

Do the right thing

I see the Ministry of Information has taken out full page advertisements in the major Malay newspapers to argue that Kelantan has no right to oil payments under the Petroleum Development Act because the oil resources in question lie outside the 3 nautical mile limit that delimits state versus federal jurisdictions. The advertisement fails to point out that almost all the oil found in Malaysia is located more than 3 nautical miles offshore, and Petronas has nevertheless been making oil payments to the states.

By the argument deployed in the advertisement, Terengganu, Sabah and Sarawak too are not entitled to the “cash payments” of 5% of profit oil (commonly and a little inaccurately referred to as “oil royalties”). Everything is at the arbitrary behest of the Federal Government.

Yet last year, according to its annual report, Petronas paid out RM6.2 Billion in petroleum cash payments, with RM 3Billion to Terengganu, 2.3Billion to Sarawak and 0.9Billion to Sabah. One wonders what basis this payment was made on since none of this was for petroleum found within 3 nautical miles offshore of these states. The argument for depriving Kelantan of 5% cash payments on the basis of its petroleum resources being found beyond 3 nautical miles is an insult to the intelligence.

I have spoken and written at length on this issue and had been reluctant to say more on it. Moreover, as a member of the ruling party I am embarrassed to have to belabour elementary points against the government. This information campaign, whether through a leaflet campaign in the schools or through newspaper advertisements paid for with taxpayer money, implies either culpable stupidity or gross deceitfulness on the part of agents of the Federal Government. I had hoped to avoid that implication.

The government’s advertisement also exhumes a ten year old mis-quotation in a government newspaper to allege that I once denied that Terengganu had any right to the 5% cash payment. I said no such thing. If the government media is to be believed I also once converted to Christianity by wearing Kadazan headgear just in time to be exposed amidst a General Election campaign. Why does the government rely on a ten year old misquotation? Well, these days we have our own blogs.

In fact, as a BN backbencher at the time I opposed the Federal Government’s intervention to prevent Petronas from making oil payments to Terengganu and the move to channel those funds instead into “wang ihsan”. Tun Salleh Abbas and I offered ourselves as witnesses to the Terengganu state government in the suit it filed against the Federal government to recover those oil payments. Between the 2000 and 2009, 15.8 Billion was paid out through the legal black hole of wang ihsan, not to the rightful party as specified under the Petroleum Development Act, which is the state government’s consolidated fund, but to agencies more amenable to vested interests linked to the central government. The outcome of that spending is the Monsoon Cup, a Crystal Mosque in which it is impossible to pray, a leaking swimming pool, a collapsed bridge and a collapsed stadium. The people of Terengganu remain poor while Billions have been paid out in their name.

I am said to have changed my mind or somehow ignorant of the fact that Kelantan’s petroleum resources all lie offshore when the fact is that, on the instruction of the late Tun Razak, I drafted the Petroleum Development Act precisely because we wanted to ensure that Kelantan, Terengganu, and potentially Pahang and Johor would benefit from the 5% cash payments.

We did precisely because we knew that these states did not have oil onshore or within their territorial waters. The device we used was a Vesting Deed by which the states vested, in perpetuity, all their petroleum resources to Petronas, onshore or offshore. In return for this Petronas guaranteed the cash payment of 5% from oil found anywhere, offshore or onshore, of the state. This rendered any consideration of federal/state boundaries whether at 3 or 12 nautical miles or whatever irrelevant for the purpose of reckoning the payment. I traversed the country to sign this agreement with each Chief Minister of each state government. Tun Razak was driven by the nation-building concern that these poorer east coast areas, which are also predominantly Malay areas should benefit directly from offshore oil, and I drafted the Petroleum Development Act to reflect that concern.

It is this benefit to the people which Umno Kelantan opposes 34 years after the death of Tun Razak. It is also Razak’s legacy that they make a mockery of. It is a mark of how far Umno has strayed off course that the leadership of Umno, and in particular Umno Kelantan is doing its utmost to deprive the people of Kelantan of sovereign rights secured by an UMNO-led government of another day. No one in their right mind could mistake this as behaviour that is beneficial to Umno’s long term standing in Kelantan, let alone elsewhere as people observe this behaviour.

I am accused of putting state interest before party interest. However the issue goes far beyond Kelantan. The arguments used in yesterday’s newspaper advertisement undercut the rights of all the states in respect of a natural resource which is theirs as a sovereign right. It violates a contract between Petronas and the states, denies the Petroleum Development Act, denies the raison d’etre of Petronas (which was in the first place formed to ensure the integrtiy of the federation by way of an equitable sharing of this valuable resource) and sets the Federal Government in contravention of an Act of Parliament.

One immediate implication of the argument laid out in yesterday’s official clarification from the Ministry of Information is that Terengganu is also ineligible for the oil payments. This means that after cutting off oil payments when Terengganu fell into Opposition hands and replacing it with “compassionate payment” there is absolutely no basis for the government’s promise to return Terengganu to cash payments again. All of Terengganu’s oil is found very far offshore. In this matter whatever holds for Kelantan holds for Terengganu and vice versa.

In the end this is not a question of politics or personality. It is not about what I or anyone else says, nor of where Umno or PAS stand. It is about the government complying with written agreements governed by an Act of Parliament and respecting parliamentary democracy. The rights of the people are not to be fulfilled or withheld depending on who they have voted for. In treating Terengganu and Kelantan in this manner we are depriving them of money that is rightfully theirs, undermining sovereign state rights, and eroding parliamentary democracy. We should do the right thing by the people at whose pleasure we serve.

Broadside From The Old Man On Obama's Anniversary

Tun Mahathir does it again. I can finally claim to have something in common with our Tun...we have both watched "Avatar"!

This article was in the Malaysian Insider. The allegation about 9/11 being staged is not new. Michael Moore said it loud and clear in his documentary "Fahrenheit 9/11". Saddam was screaming it all the way to the gallows and with all the advances in surveillance technology, Osama Bin Laden is seemingly still comfortably having his dialysis purportedly in the boondocks of Afghanistan.

However, whether or not 9/11 was staged it is somewhat disconcerting to hear our Tun joining the ranks of conspiracy theorists when the "veil/shroud" of secrecy and spin is still firmly in place. I should think that this would be beneath someone of his stature (former) and it is yet another reminder that mere mortals cannot cheat Father Time. Welcome to the hoi polloi Tun.

But admittedly, I tend to agree with Tun on this particular allegation (I am especially skeptical about the absence of airplane debris after the crash at the Pentagon) and wait a minute! Perhaps that's another thing I have in common with Tun... wishful thinking.

Alas, my main concern here is not so much about what we think about 9/11 but about Malaysia generating more adverse publicity (we mostly know what the other issues are) and incurring the wrath of the "Jewish gods of money" who can rain hellfire and brimstone on our already fragile economy. He is Jew bashing again.

Do read:

Dr M says 9/11 attacks staged to hit Muslim world
By Asrul Hadi Abdullah Sani

KUALA LUMPUR, Jan 20 — Tun Dr Mahathir Mohamad today claimed the 9/11 attacks in the United States, that killed nearly 3,000, was staged as an excuse to “mount attacks on the Muslim world”, saying killing as an excuse for war is not new to the US.

The former prime minister also argued that Israel was created to solve the “Jewish problem” in Europe, saying the Holocaust had failed as a final solution against the community.

“In September 2001, the World Trade Centre was attacked allegedly by terrorists. I am not sure now that Muslim terrorists carried out these attacks. There is strong evidence that the attacks were staged. If they can make Avatar, they can make anything,” said Dr Mahathir during his speech at the General Conference for the Support of Al-Quds here. Al-Quds is the Arabic name for Jerusalem.

“Killing innocent people to provide an excuse for war is not new to the US. But whether the real or staged 9/11 attacks have served the United States and Western countries well. They have an excuse to mount attacks on the Muslim world,” he added.

Dr Mahathir also argued the creation of the Jewish state was decided after Europeans failed to massacre the community.

“The Jews had always been a problem in European countries. They had to be confined to ghettos and periodically massacred. But still they remained, they thrived and they held whole governments to ransom.

“Even after their massacre by the Nazis of Germany, they survived to continue to be a source of even greater problems for the world. The Holocaust failed as a final solution,” said the outspoken Malaysian leader who was noted for his anti-Western and anti-Zionist stand while in power for 22 years, until October 2003.

Dr Mahathir added that it was easier for the European powers to set up a Jewish state in Palestine.

“Creating a state for them was thought to be a better solution. It could be if some European territory had been allocated to make a permanent ghetto for the Jews. But of course if this was done then the affected European state would rise in arms and kill all the Jews the way they had been doing before. So the debate was about creating an Israeli state in Uganda, Africa, or somewhere in Latin America or Palestine of course.

“It was so easy to decide on Palestine, a British mandated territory. Restrictions on the disposal of mandated land could be ignored. This is nothing new — reneging on solemnly given undertaking is endemic with Europeans,” he said.

Dr Mahathir also accused democratic countries for being “hypocritical” and pointed out that the world is “partially civilised.”

“We live in a world that is only partially civilised. I say this because we still believe that the way to resolve conflicts between nations is to kill people in what is called war. The winner is the side which succeeds in killing the most number of people. Yet we vehemently declare that killing people is murder, a terrible crime worthy of the most severe punishment.

“We are being openly hypocritical. Mass killing is glorious but killing one man is a heinous crime,” he said in his speech.

Dr Mahathir also expressed his disappointment in Barack Obama and said that the US president has failed. Obama celebrated his first year in office today.

“Well, I am a bit disappointed because so far none of his promises have been kept. He promised to get out from Afghanistan but he ended up sending more troops there instead. He promised to close down Guantanamo but he has not closed down Guantanamo. Even other things he has not been able to do.

“It is quite easy to promise during election time but you know there are forces in the United States which prevents the president from doing some things. One of the forces is the Jewish lobby, IPAC,” he said.

Dr Mahathir had previously blamed the Jews for causing the Asian financial crisis.

Aiseh...What Is This Ah?

Two well known bloggers. Dato’ Mohd Ariff Sabri the former ADUN of Pulau Manis, Pekan who blogs under the name Sakmongkol AK47. His latest post, "Who is minding the Store?" describes a looming issue. Also included below is blogger Aisehman’s post on the same issue in his own blog. It appears the country is still exposed to being robbed in big chunks…it also appears that thieves have gotten more sophisticated. Please read:

MONDAY, 14 DECEMBER 2009
Who is minding the Store?

Who is minding the store?

We haven't heard of the 1 Malaysia Development Fund nowadays. Yes, I am referring to the RM5 billion that is managed by the 1 Malaysia Development Board 1MDB. Yes, it's that Fund formerly known as Terengganu Sovereign Wealth Fund. Just who came up with the idea is uncertain. Rumors have it, that it was a young man called Mr. Low from Penang. Mr Joe Low.

Creative ideas are most welcome. PM Najib has said that creativity will be a main element in his coming economic model. Anyway, the Fund started with RM 1 billion. It later became RM 5 billion obtained through the issue of bonds guaranteed by the government. Normally an entity is allowed to issue bonds if it is rated highly by some credit evaluating bodies. Like Moody's Investor Services for example. The accreditation body is satisfied the bond issuing entity can repay the bonds when they mature.

There are cases too, when the bond issue is underwritten by GOD- government of the day. Governments of course can never go bankrupt. The 1 Malaysia Development Fund- just call it the 1 Malaysia Fund will get additional RM6 billion when the oil royalties due to Terengganu will also be directed into it. This means it will have RM 11 billion war chest to play around with.

Just who are controlling the 1 Malaysia Fund? We know it reports directly to the PM. Although 1MDB reports directly to the Prime Minister, the sovereign fund will still have an eight-member board of advisors and a five-member board of directors.8 + 5= 13 members.

But will they be given a free hand to manage the fund? Or are they there just to grace the window? These people are drawn mainly from statutory bodies such as LTAT, Tabung Haji, FELDA etc. I have been informed some have already resigned from the board because they cannot stand excessive meddling.

But you retort- why should we tell you what we are doing? Especially to busy bodies like you people? Then we answer you- because we have been dismayed so many times when public money is treated as a private property. We have PKFZ which is the subject of intensive forensic investigation now and has become a public scandal. We are also disturbed by the customary practice of keeping everything very quiet until it becomes bad and blows off the lid. Most importantly we believed that public disclosure is the best form of accountability. Let it out in the raw and let the people judge. Some of the busybodies out there are pretty smart and perceptive.

The sovereign fund is said to be thought of by a character called Low. He is known among financial circles as Joe Low. He comes from Penang. He takes over where Patrick Lim left. I can imagine him say over a glass of Martini- hi, my name is Low. Joe Low. I prefer my drink shaken, not stirred.

He brought the idea of creating a sovereign wealth fund. It was probably meant as a solution to prevent the dissipation of Terengganu's Oil Royalties.

Now, this is another issue. Why did the TSWF- Terengganu Sovereign Wealth Fund suddenly become 1Malaysia Fund? HM The King seemed to have given his consent to the renamed entity. This federal wealth fund now takes over the money raised by KTIA headed by Shahrol Halmi. HM The King was very much interested when the TSWF was set up as he was royally chagrined over the usage of oil royalties due to Terengganu.

Because I think it's not safe to have the money parked in Terengganu. Warring factions in Terengganu will be fighting all over the place to gain control over the Fund. He must have realized that the previous state government spent the money frivolously. A lot too went missing and unaccountable. Even if the monies are placed under KTIA- meddling politicians can still make life for the managers miserable. And also perhaps, it is wiser to have the money under a federal entity because Mr. Low thinks; BN will not be the next state government.

Anyway- some other states may be thinking to set up their own SWF. Then they will ask the government to guarantee them. If you can do it to Terengganu, you most certainly can and must do for other states.

PM says, if these jokers come up with these equally creative ideas, his government will have nothing to do but issue guarantees and commit resources to ensure the fund is managed properly. He can't afford to, because the majority of his officers in the Treasury are more at home at eating kuacis ( eagle brand preferred) and chewing on chips at meetings. No way Jose, he says- let's have a Federal Sovereign wealth fund. And it's not Jose- its Joe. Joe Low that is.

We are not sure where this Low brought the idea to. To the PM or to his Majesty the King.

He probably brought the idea to both. As both his majesty and the PM are concern about the application of the oil royalties, it is logical that Low brought the idea to both. He goes over to the PM and tells PM, the King has sent him. He then goes over to see the King and says, PM sends him. Nice. Very nice.

I mean, it's not every day, HM the King calls up- Yo DSN, did you send Low over to me to speak on this and that? It's not every day PM calls up the King to say- A thousand pardons Your Majesty- did Your Majesty sent this sinkeh over?

This brings us to the interesting question- just who the heck is this Joe Low? Is he our Warren Buffet? The main stream media says he is a low key person. Well, after he splashed USD170k to fete the PM and his entourage in New York recently, he is not low-key any longer. He is a Big Key now. Which doors is he opening? And last week, he gave a private birthday party to the PM's wife at a leading hotel in Kuala Lumpur.

Much has been written about the merits of a SWF as a concept. I shall not repeat the observations made by many commentators. For example the Blogger Analyst at Large has written something noteworthy about this. Forget the fact that he doubles up as economic advisor for the DAP. He has raised cogent criticisms which deserve notice.

I am more concern about the shadowy group of young boys moving behind the scenes and appear to exert considerable influence on the PM. Most prominent is this Joe Low character.

We have seen the debilitating effects such intrusion and meddling on the morale of the officers and the damage caused to the previous PM. He was criticized by being overly compliant with the investment advice of one Patrick Lim. And the treasury people and even ministers were run over roughshod by a group of young highly educated boys infamously known as the 4th Floor boys.

Now and here, we have another shadowy group. Maybe it's not formal. But not less significant. Among them are Joe Low, one young Indian, and the son of a prominent Chinese tycoon. All of them are young and are said to be have unhindered access to the PM's wife.

They are said to have even attended briefings by treasury and Bank Officials. We need to recognize the dangers from the experience of the previous administration.

Obtrusive and incessant meddling into the running and management of the Funds can see our money being dissipated. Already at the inception of the 1 Malaysian Fund, RM 300 million has already leaked. For what purpose? To where?

If credible investments have not been made on account of meddling, we shall have to incur the payment of interest. That means our borrowed capital has not work to earn revenue from which to service interests let alone earn a conservative return of 5%. (That was what Sharol Halmi said) and I hope, this conservative expectation on returns is still adopted by the board members.

Some board members have left or resigned. They say this fund is too hot to handle. It could actually be, they saw the writings on the wall and could see where the Fund could end up. So, rather than being held accountable for something that will eventually be bad, better relinquish the honor of serving in that Fund.

The other cause of concern is why is the PM hesitant to exercise full control over the Fund? I mean, not personally but investing the board with total and unfettered discretion. Let the fund be answerable to Parliament.

Posted by sakmongkol AK47 at 11:06 AM

8 COMMENTS:

Anonymous, 14 December 2009 12:45
Here we go again now this chinese boy who has shaken up the night life in nyc entrusted with billions,well let the party begin at our expense only in BODOHLAND.

walla, 14 December 2009 12:55
If the reason to federate the fund was to move it out of the orbit of group conflicts within the state, then letting it now be externally guided will only deepen the perception that wherever funds are umnofied they will be swallowed wholesale.

To avoid such shenanigans, just make everything transparent. Let's say a fund is federated and the centralizers want to tap new ideas on how to grow and use it. Let's also assume the motivation is to lift up the state to which the fund is assigned, in particular to create jobs for the people and to add value to state activities which can translate to future earnings.

Just do an open tender with broad remits along the lines of the above para. Then more than just one vested party can provide their ideas which may end up even more investible than those submitted in enclosed settings. If this is not tried, how are the rakyat let alone a government to know there aren't better ideas out there?

So doing will put a stop to politicking for carta blanche favours that reek of kleptocratic practices which have sunk bigger governments elsewhere.

After the deadline, post the details on the web. Then after due process preferably with independent monitoring, make the decision with reasons provided.

If this is not done, people will think it's the same rigmarole of creating personal opportunities at high opportunity cost expenses of the rakyat. There has been too many such cases in the past. The olive in the stirred not shaken martini would have shriveled by the time we finish tabulating even half of them.

Always remember what someone had said when asked whether he had fueled cronyism. His reply? "How can i award contracts to people i can't trust?"

That reply cost this country mega-billions.

This post, for the dear old makcik selling goreng pisang by the roadside in Besut.

Anonymous, 14 December 2009 17:46
malaysia under the three spendthrift prime ministers havewasted the oppurtunity to make our country as great as our neighbour down south, which inescapbly will always be the yardstick by which the progress of the country and the achievement of our leadership must be measured.

For 22 years under tdm we were pursuing 'development'agenda which appeared grandiose and visible at the outsetbut in my view wanting in substance. KLCC, putrajaya andsome mega projects are all that we have to showfor something like RM 400 billions of oil money?

The relevant social engineering questions that we need toask would include?

> have we met the objectives of RMP 4,5, and subsequent rmp 's. I believe the gomen have skipped asking whether such objectiveswere ever met? Now we are in 9th mp without realising the effectivenessthe 6th,7th, 9th malaysia plans. Can we say that we have less poor peoplein this country compared to the 1980's?

Statistics indicate that out annual incomes improved tremendously.But would this translate into a meaningful lives of ordinary peoplewho make up 80 per cent of the population? From the terriblestate of 'uncollected municipal rubbish ' in Terengganu I would imagine people in oil -rich Terengganu are among the hard core poor of this country

>Has the ministry of housing met the housing need of the population?We do not know what the declared objectives? But comparing thestandards and quantity of housing with our neighbour's surely is like comparing the pumpkin and the small wild berry found wild.Not having funds cannot be an excuse because we could afford a newairport, a F1 track and fancy putra jaya!

>So far we have build all the grand infrastructure projects with foreign labour. Now can we build future buildings and infrastructureswith our local expertise from our youth? Our social engineering in the youth sector is emphasized with lots of songs/videos on the rakan themewith no visible success in any area. A few years ago menteriAzalina reported that there were a million drug addicts , and probably90 per cent of them were Malays. The story that a deceased toppolice officer left a legacy of rm 47 million fuelled therumours that the assets could be ill gotten -the result of a failure in drug enforcement!

Why in the world did the top leadership spend money for the monsooncup? An investment in goodwill as I cannot see any viable finacialreturns. Spending rm 800 million over 10 years to get a couple of millions a year for the local economy?

Is the local politico thick in the head or plain unashamedly corruptlike the deceased police chief who left a rm 47 million legacy?

Building silly stadiums [which collapsed embarassingly] andfancy cristal mosque where there is no population to use the facilty are the worst crime committed by tun dollah and his highfaluting level 4 morons .

The present pm najib is investing in a Formula 1 which I think isextravagant considering the state of the economy today. It cost Sterling 40 million to participate and another 40 million to run at the lowest levelin a year. This is big money for the whole country. Is the investment going to bring in rm 10million in touristdollars in a year? Possible but a poor strategy for resource allocation. . There areother pressing needs that need to be addressed.

Employment ,crime which are related to the lack of employment need urgent attention.

The free wheeling financial exuberance policies of tdm in the 90's cost all malaysians dearly even today . A sialan that parents whohave childrens overseas have to lived with. No thanks to tdmthe exchange rate for the usd have risen from the wonderful rm 2.20to the 3.60 that we are suffereing now. Why ? We want to sellmore protons? Is selling 30 000 protons or even less with falling exports the reason why parents whose children are studying overseas must suffer the extra cost of exchange rate? notoktok

Non-partisan, 14 December 2009 17:50
Well written and I hope someone in the corridors of power does listen.I have heard of similar 'rumours' within the Chinese corporate circle and they are not happy.Similarly many within UMNO will not be happy too once it is exposed and proven that the Chinese guy Joe Low is given the carte blanche to operate such huge fund. It is the rakyat's money.It doesn't augur well for UMNO/BN.

Anonymous, 14 December 2009 20:19
Singapore put their money into GIC and Temasek which invests their money... to generate more money for generations.We used it to build buildings (that need maintenance) and for pockets and dig more oil for more oil.Now you know we do not know how to run a country?

Peter Chen, 14 December 2009 20:35
Sakmongkol, you now have been appointed by Malaysians (actually just me) to make sure PKFZ twins or lesser do not ever happen again or risk hawking the future of our children and grandchildren and great grandchildren.....

telur dua, 14 December 2009 21:03
'A fool and his money is soon parted.' But not quite like the Red Sea.The fool being the Rakyat. They voted in this Government, didn't they? The 4th Floor boys most probably moved up to the 14th. They can make a hasty exit through the windows if the situation warrants it.Bye bye Ringgit, Hello poverty.

Anonymous, 14 December 2009 23:12
http://www.nypost.com/p/news/local/item_Fu1amZaRx9MOMsr9HCIOzK/0

******************************************************

Bleeding 1Malaysia
14 December 2009 106 views

It’s kinda intriguing to read about Hair, J Low, 1 Malaysia Development Bhd and a bunch of fuckin’ Arabs.

You would think the characters in this drama couldn’t be more disparate but they all got one thing in common.

One thing to rule them all. One thing to find them.

One thing to bring them all and in the darkness bind them.

Money.

This from the latest issue of The Edge:

One of the key peopke who had advised the King in establishing Terengganu Investment Authority (TIA) was Low Taek Jho, a young merchant banker with strong links to the Middle East. Known as Jho Low to his friends, the young man is also said to have done a few major corporate deals.

His lavish lifestyle in New York was the subject of a feature article in the New York Post last month. Jho, the son of Penang businessman Datuk Larry Low – a former shareholder and director of MWE Holdings Bhd – has however denied that it was he who had splurged on a lavish celebration as had been reported.

Coming back to TIA, the idea was to establish a fund along the lines of Mubadala, the sovereign wealth fund of Abu Dhabi. In fact, Khaldoon Al-Mubarak, CEO of Mubadala and chairman of Abu Dhabi Executive Affairs Authority, still sits on the board of 1Malaysia Development Bhd (1MDB).

Lots more stuff in there.

Including indications that some dealmakers made a killing in 1MDB’s RM5billion bond issue.

I’d by partying in the Big Apple too if it was me.

So where does Hair come in? I see strands of it all over the wrong places.

Watch this space. You ain’t see nothing yet.

I GIVE fair warning.

I hit the previous PM hard on this blog. Really hard.

It would only be fair if I uphold the same standards for Jibby.

This involves public money. Lots of it.

If you or anyone around you fucks around with our shit, Datuk Seri Mohd Najib bin Tun Abdul Razak, I will fuck you in the ass, regardless of whether you are partial to it or not.

I promise.

ALSO READ Sakmongkol AK47: Who is minding the store?

enuff said for now.

UPDATE: The Last Straw? TRH Making His Move?

Here they come! Hold the line! Stay the course!

Almost immediately after TRH posted "Honouring Our Agreements" in his blog, the barbarians gather at the gate. The writing on the wall must have been so obvious that this birdy from Negeri has predictably reacted the way he always does. I suppose barking birds can get rabies too.

Anyway, just read to know:

Ku Li explains the BMF scandal to us before you want to be a hero!

"Founding Petronas chairman Tengku Razaleigh Hamzah has insisted the federal government should not interfere with the national oil firm's duty to give 5 per cent oil royalty to oil-producing states.The Umno veteran said the Najib administration's refusal to pay the fee to Kelantan has cast serious doubt on the Putrajaya's "respect for the sanctity of contracts and the rule of law" and has implications beyond just that state." Malaysian Insider

The question I want to know is, was there a cover up by Tengku Razaleigh (Ku Li), as a Finance Minister then, in the BMF scandal in which a bank officer Jalil Ibrahim was found murdered in the then-British colony of Hongkong.

I, as a citizen, did not get any satisfactory ending to the episode! So Ku Li before you attack Najib administration you must explain to the rakyat about this before they can accept you as their new hero.

As for me you do not have that personality to be a leader, you abandoned Umno to form another Malay party thus splitting the Malays, now you appear to be sleeping with the enemy by the name of BABI, so what gives man! Why can't you enjoy your princely life and let a real politician runs this country.

BTW have you done enough for your Orang Asli supporters in Gua Musang like providing them with real education so they can become smart enough to not vote you again? I doubt it!

Posted by Pasquale

The Last Straw? TRH Making His Move?

Tengku Razaleigh Hamzah (TRH) is perhaps the most qualified politician amongst the current crop to be prime minister. He is definitely more qualified than Najib and Muhyiddin...and for that matter, he would make a better PM than even Anwar Ibrahim.

In this latest blog post, TRH has for the first time since Bodohwi made a statement so strongly against government policy. To be exact...Najib policy. It would be interesting to see when the issue eventually goes to court for that forgone conclusion. Will TRH move before or after? After may be too late but it is never too early for TRH to move!

Stay tuned...

Honouring Our Agreements

The Government has now responded to Kelantan’s claim to a portion of the profits derived from petroleum resources extracted offshore by PETRONAS.

Its response violates the letter and the intent of a solemn agreement signed between each State Government and PETRONAS under the Petroleum Development Act.

That agreement is made out in language simple enough for a schoolboy to understand, in both Bahasa Malaysia and English.

The Constitutional rights of the people of Kelantan are denied. However this has implications far beyond Kelantan:

1) It negates an agreement signed between the Kelantan Government and PETRONAS. By implication, it negates identical agreements signed by PETRONAS with every other state and deprives the people of their constitutional rights.

2) The Government’s refusal to recognize a straightforward contractual obligation on PETRONAS’s part puts a question mark over the status of oil payments due to the other oil-producing states. The States’ rights to 5% of profit derived from the extraction of any petroleum resources is based on a quid pro quo according to which the States vested entirely and in perpetuity all their rights and claims to petroleum resources to PETRONAS. In return for this PETRONAS is legally bound to pay the states the 5% directly

3) If PETRONAS no longer recognises its legal obligation to pay the States what is due to them under the Petroleum Development Act, the States, and in particular Sabah and Sarawak, will now wonder if the corresponding Vesting Deed by which they vested all their rights in their petroleum resources to PETRONAS remains in force.

4) The Government’s response substitutes for PETRONAS’s legal obligations under the Petroleum Development Act an arbitrary “compassionate payment” from the Federal Government. This casts serious doubt on the Malaysian Government’s respect for the sanctity of contracts and the rule of law. Let’s not talk about spurring investment to take our economy to a higher level if we fail to understand the importance of abiding by contractual obligations.

I helped craft and negotiate the Petroleum Development Act. As Chairman of Petronas, I signed separate and identical agreements in respect of these payments with each of the Mentris Besar of the States. I must insist that PETRONAS is bound by them and that the Federal government should not interfere in their fulfillment.

Tengku Razaleigh Hamzah
Member of Parliament, Gua Musang
–

I will discuss my response to the proposed parliamentary caucus on this issue in my next posting.

I last wrote on the issue of Kelantan’s right to oil payments in my letter to the Mentri Besar of Kelantan in July this year. PETRONAS was formed to unite the country under a single and simple formula for sharing the bounty of our petroleum resources. Any unraveling of this formula could have serious consequences for our Federation.

UPDATE: Of Robber Barons And Bottomless Pits?

My friend the famed communist fighter, Dato' Seri Yuen Yuet Leng still holds strongly to his opinion that Najib will deliver on his 1Malaysia. Having loyally served the nation and for a period under Najib's father during the difficult "communist" years, I cannot fault him for his steadfast belief in the son of the father.

Indeed the modus operandi of the BTN was always going to be a sore thumb; threatening to stick it up any genuine efforts to promote 1Malaysia.

There has always been whispers floating around about the controversial content of BTN courses that has only now been openly debated by the Opposition. Non-Malays who have been exposed to the unsavoury content of BTN over the last two decades had somehow been so cowed and fearful of speaking out.

They accept the fait accompli for fear of repercussions while on the other hand, Malays who have undergone the same BTN courses are probably too embarassed to speak out.

So, if the courses have been allowed to continue for more than 2 decades, then does that justify the BTN methods? Obviously not, but the non-Malays never dared to speak out in the past for fear of inciting violent reactions (contrived or otherwise). It always had to be that the Malays should be the ones who speak out against the BTN methods and now they have done so in droves. There is still a chance for Bangsa Malaysia yet!

Obviously, seige mentality and 1Malaysia ideals are mutually exclusive. I hope Dato' Seri Yuen is right and if this interesting piece in The Malaysian Insider today is anything to go by then, perhaps there is still hope for Najib. However, Najib should also look into the BTN-like indoctrination that goes on in the PLKN (National Service) that our youth have to swallow.

Please read:

Najib’s BTN dilemma
By Leslie Lau
Consultant Editor

KUALA LUMPUR, Nov 28 — Datuk Seri Najib Razak, his deputy Tan Sri Muhyiddin Yassin next to him, and a number of ministers were thoroughly briefed several weeks ago on the divisive nature of the controversial Biro Tata Negara (BTN) courses compulsory for civil servants and university undergraduates.

What will Najib (centre) do about the BTN?

At the end of the briefing, the PM spoke of the fear and siege mentality the BTN courses had created, particularly among Malay participants.

“This must end,” he told those present, including Muhyiddin, Datuk Seri Khaled Nordin and Datuk Seri Nazri Aziz.

The Malaysian Insider understands that all of the Cabinet members who were present at the briefing, arranged by Datuk Seri Idris Jala, nodded in agreement.

Najib is now facing increasing pressure to close down the BTN while the hawkish forces in his administration continue to defend what has been called racist brainwashing courses by participants and the Pakatan Rakyat (PR).

PR is now on a campaign to expose what its leaders say are political indoctrination programmes to ensure civil servants and students back Barisan Nasional (BN) and Umno.

An earlier proposal by the Najib administration to overhaul the BTN, or National Civics Bureau, may not be good enough, with more Malaysians speaking up against the courses.

If the government does not shut down the programme, Najib will face the prospect of more talk that his 1Malaysia talk is empty.

In recent week, a number of former participants which include PR politicians and journalists have spoken of their experiences at BTN camps.

They have pointed to how facilitators would stoke racial superiority, including portraying the Chinese as the most significant threat to the Malays.

PR parties such as the DAP have been portrayed as communist enemies of the country.

A constant theme of the BTN courses, especially for Malay participants, is the emphasis on racial ideology which is strikingly similar to Umno’s Ketuanan Melayu rallying cry, according to the accounts of some former participants.

Government ministers at Jala’s briefing several weeks ago had all privately acknowledged the need for BTN to be revamped.

Jala had spoken on the need to overhaul BTN, to make it more inclusive.

Jala has been charged with the responsibility of promoting Najib’s 1 Malaysia concept.

His team has been incubating ideas which touch on race, religion and other stumbling blocks to better race relations which have deteriorated.

The BTN courses have already been identified as one of those stumbling blocks.

But this week, as the flap grew over BTN, Muhyiddin defended the programme and denied that it was racist.

Instead the Selangor PR government has been the subject of attacks, particularly in the Bahasa Malaysia press, for attempting to ban its civil servants and students at state-owned institutions from attending the courses.

Umno leaders including Defence Minister Datuk Seri Zahid Hamidi, a close ally of Najib, have spearheaded a stout defence of BTN as an organization which promoted national unity and was being subjected to unsubstantiated attacks from PR.

While Najib remains overseas attending the Commonwealth Heads of Government Meeting (CHOGM), his ministers and party-owned newspapers have promoted the idea that BTN is a flawless organisation.

They are also criticising PR parties for being unpatriotic or being against national unity.

Such a stand is likely to put the Prime Minister in a difficult position.

The Malaysian Insider understands that there are moves within the administration to dilute the syllabus of BTN courses, as a compromise.

But such half-measures are not likely to be enough if Najib is serious about reversing what many Malaysians see as institutionalised racism.

The question now is whether Najib will stick to what was articulated in private.