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Sunday, June 19, 2011

A government of the Cronies, by the Cronies and for the Cronies

Sulaiman Kamal | 2:32 AM | | | | | | Best Blogger Tips

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A government of the Cronies, by the Cronies and for the Cronies
Well, here is breaking news for everyone.  Malaysia does not appear to have a government and we kid you not.
The people who are in power in Putrajaya don't quite behave  like a normal government does  - at least not in the developed world. Some aspects of their behavior are reminiscent of pirates intent on plundering and pillaging the nation 24 by 7. And mind you, this damning indictment comes from one of the creme de la creme of corporate Malaysia - a former head of national enery firm Tenaga, no less!
On the political front, the opposition has been hollering if indelible ink had been used in the 12th General Election in March 2008, Prime Minister Najib Razak and his rag-tag Cabinet would not be sitting in Putrajaya now.
For those who are tender-hearted, rest assured that if this happened, Najib and the likes of Musa Aman and Taib Mahmud won't be selling durians or nasi lemak. But very likely, they'll be living it up in Monte Carlo, the Alps, London, New York, Paris while the opposition guys, Anwar Ibrahim, Lim Kit Siang and Hadi Awang, sweat it out trying to balance the unbalanceable Malaysian budget -  irreparably busted by decades of reckless BN spending.
So this is the state of play in Malaysia - for now at least. A rogue-regime with all the characteristics of a robber-regime versus their likely inheritors - the Pakatan Rakyat, made up of a bunch of young smarties and political veterans seasoned by decades of enforced frugality and hard work.
Once they take power, the inheritors will surely be turned into a 'coolie'-regime. Yes, the Pakatan will have to slog 24 by 7 for next decade at least to be able to clear all the dirt and faeces from the Aegean stables vacated by the UMNO elite.  Work has already begun at some of these swills and faeces-farms, which coincidentally mirror the 4 most essential elements.
The Water Margin
First of all, the water industry. Tun Dr Mahathir during his tenure as Prime Minister had ordered a privatization of water assets on the basis that privatization would improve services and save the government cost.  But to pundits and many industry experts, it was a bailout. And that is not an unfair premise given that one of the major water players is none other than the treasurer of Selangor Umno - SYABAS' Rozali Ismail.
JBAS (Jabatan Bekalan Air Selangor) which was making profits around RM50 to RM80 million per year was privatized in 1997 and thereafter incurred losses as the treatment of water which was bringing JBAS huge profits was privatized to 3 companies:
1. Puncak Niaga Sdn Bhd (PNSB);
2. Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (SPLASH); and
3. Konsortium  Abass Sdn Bhd (ABASS).
Meanwhile, "non-revenue water (NRW)" was still under JBAS.
JBAS,  after corporatization became PUAS (Pengurusan Air Selangor Berhad) and was put under the management of the Selangor State Government.  PUAS incurred deficits (losses) amounting to RM350 million until it was privatized to SYABAS (Syarikat Bekalan Air Selangor) in the year 2005.
The SYABAS shareholders are: 1. Puncak Niaga Holdings Berhad (PNHB) - 70% share; 2. Kumpulan Darul Ehsan Berhad (KDEB) - 15% share; and 3. Kumpulan Perangsang Selangor Berhad (KPSB) - 15% share.
The Federal Government through the Ministry of Finance has one 'golden share' in SYABAS.
To the rakyat or populace, the government announced that after privatization, the water services would be more efficient and lessen the government's burden as the private sector would now oversee the water services. Sad to say, at that time, the rakyat lapped up Mahathir's promises.
To the concesssionaires and keen parties in the private sector, who no doubt would have to put up huge capital and long-term investment, the government offered high tariffs, subsidies and compensation. Sad to say, they too believed Mahathir's promises and some of them are now stuck!
In order for the government to keep its promises to the private sector, the rakyat have to be burdened. Just like in the electricity tariffs. For the government to continue subsiding IPPs to the tune of RM19 billion, they must cut the subsidy from elsewhere. Guess where? If the answer is from the rakyat and other Malaysian industries, not fortunate enough to have a crony CEO, then this is correct.
Take for instance Selangor, where the BN government agreed to allow an increase in water rates of 37% (in 2009), 25% (in 2012) and 20% (in 2015). PM Najib now intends to bail out the water concessionaires who have incurred debts of RM6.4 billion to bond-holders.
It's a puzzle where the money comes from, considering that his administration is always yapping about not having enough money for all. Yet, somehow, his government is ever-ready and ever-willing to assist the 'special' firms. Of course, at the same time, the burden of the rakyat is increased.
The Fire Thieves?
Now for the other element, fire or rather, electricity.
TNB (Tenaga Nasional Berhad), similar to JBAS was a nationalized body and it was efficient and making profits until it was privatized and strangled by the IPPs (Independent Power Producers).
It was the Economic Planning Unit (EPU) that was responsible for this whole fiasco. TNB is able to provide electricity at the rate of 8 sen per unit (for each kWhr) but had to pay the IPPs at the rate of 23 sen per unit. In actual fact, TNB is able to supply electricity at the rate of 17 sen per unit without the IPPs. The reserve capacity of electricity at over 50% is one of the world's highest.
It is obvious that the BN Government is profiting their cronies at the expense of the rakyat. Why should Malaysians pay so much for something they don't use. And the scary thing is that this outsized bill is recurring and continuous - not one-off.
Every month, billions of ringgit of unused power is paid for with the hard-earned money of Malaysian taxpayers. The money eventually leaves the bank account of the Malaysian government and ends up in the accounts of the crony firms.
No wonder, some of the tycoons who head these firms are on the Forbes list of the world's richest! Incidentally, they are called cronies because they are the chosen friends of the ruling elite in UMNO, the party that rules Malaysia.
It was this cruel, vicious cycle of keeping the poor, poorer and the rich, richer that caused former TNB Chairman Ani Arope to resign years ago. He has been vindicated by the latest uproar over the IPPs and no longer fears calling a spade a spade. Recently, he publicly berated the EPU as the Economic Plundering Unit.
Now, with more people speaking up, it becomes clearer why the BN Government had to increase the electricity tariffs at the rate of 7.12% on June 1 - so that the rakyat pays more to the government-controlled TNB, which in turn has more money to pay back to the government, and the government can then continue to pay the cronies the same benefits as before - without having to borrow more money.
Not that Najib and friends are averse to borrowing more money. mind you. Far from it. But going from past record, Malaysians can expect the new debt will be channelled to other 'nice', new projects meant to create 'nice', new income streams for the pockets of the cronies and from there to themselves.
Meanwhile, Energy minister Peter Chin claimed that 75% of the households will not be affected by the increased tariffs although he failed to mention that the waiver for those who use less than RM20 electricity per month will no longer be applied from 1st Jan 2012 onwards and that food prices will go up tremendously as the food industry is a major user of electricity.
In BN's traditional stiff upper-lip style, Peter Chin only gave the good news but concealed the bad news!
Inflation will definitely go up and the Consumer Price Index is now more than 4.7%.  As expected, food prices have gone up, some items by more than 7%.
The First Airbender
As for the element of air, the Entry Point Projects (EPPs) are good examples of hot air. There is nothing concrete or solid about these. But let's be fair and give Najib his say.
The Economic Transformation Programme was launched with 131 Entry Point Projects (EPPs). The National Key Economic Areas (NKEAs) are the engines of growth, while the Entry Point Projects are the spark plugs that will fire up these engines, to a new level of performance.
They are called Entry Point Projects because these projects kick start the programme and they are not finite. These are high impact projects, matched with specific ideas and actions, to spur the growth of the NKEAs. Some involve large infrastructure investments while others have a more direct effect on the output of their sectors and on the life of Malaysians. These are all focussed on actions and not mere concepts. 
To-date, 18 Entry Point Projects have been launched with more to be announced. A majority of these are driven and led by the private sector.
The role each EPP plays is clearly defined in the Economic Transformation Programme. For example, the Greater Kuala Lumpur/Klang Valley NKEA has nine EPPs that together will ensure economic dynamism whilst being ranked amongst the most liveable cities by 2020. 
All the EPPs within the NKEAs will lead Malaysia towards achieving a high- income nation status with a per capita income of RM48,000 (USD15,000) and create 3.3 million new jobs by 2020.  -  http://etp.pemandu.gov.my/ETPedia-@-EPP_-;_Entry_Point_Project.aspx
So, what would do readers and Malaysians think? Are they concrete? Are they feasible? Are they realizable?
Back to Earth
If the BN Government continues to favour the cronies, the poor and low-income group will suffer the most as their real income depletes according to the ratio of price increase to their take-home pay.
PM Najib has stressed much on the slogan of 'People First' but so far, it has been merely lip service. From the cuts in power and fuel subsidies to the obstacles placed in Selangor's water revamp, it is clear the rakyat will continue to be victimised by his government's excesses.
In fact, accusing the rakyat of being addicted to subsidies as akin to being addicted to Opium is the ultimate insult that Najib has heaped on the rakyat.
What must be stressed again is that the distortion of the national economy is not only due to subsidies alone, but also due to the government's favouring the GLCs (government-linked companies) and crony-corporations.
Private researchers, especially the foreign houses, will only go so far as to point out that subsidies per se must be reduced. But they do not point out which portion and whose portion of the subsidies that have to be slashed or even abolished. To further point the finger at the cronyism and the particular firms enjoying the largesse would be to put themselves on a very powerful blacklist.
It is up to Malaysians to speak up and the Pakatan lawmakers have been very vocal. They have even threatened to take the government to court to get the top-secret deals with these 'special' firms publicised.
If Najib still wants to do something good for the people of Malaysia before he leaves, his government should look at other sources of income, for example, curbing corruption, stemming the leakages in its delivery system, avoid costs over-runs and being prudent in financial spending. At the same time, his government should stop helping the cronies with immediate effect.
Otherwise, he and his Cabinet will have no choice but to holiday at Monte Carlo, the Alps, London, Paris, New York. Or even Kazakhstan. But at their own expense, this time!

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