Isu Utama ETP – Analisis TERAS Pengupayaan Melayu
- SUMBER KEWANGAN DAN KRITERIA PROJEK
Dari mana kerajaan membuat jangkaan akan memprolehi RM1.4 trilion pelaburan dari sektor swasta? Apa criteria kerajaan untuk menentukan projek-projek dalam ETP? Pecahan bahawa 60% pelaburan dari swasta , 32% dari GLC dan 8 % dari kerajaan berdasarkan faktor apa ? Apa jaminan persekitaran ekonomi global akan berterusan dalam tempoh 10 tahun untuk kerajaan mengunjurkan bahawa pelaburan swasta dan GLC akan mencapai angka RM 1.376 trilion?
- PENDAPATAN PER KAPITA DAN KEBERGANTUNGAN KEPADA ESKPORT
ETP mengunjurkan untuk meningkatkan pendapatan per kapita sebanyak 2 kali ganda pada 2020. Bagaimanapun ekonomi negara sangat bergantung kepada eskport kerana ekonomi Malaysia sangat berasaskan esport. Dengan pelaburan yang dijangka bernilai RM1.4 trilion itu , sejauhmana pasaran dunia dijamin akan tumbuh dan mengikut sektor dan negara mana Malaysia bergantung kepada eskportnya.?
- BAJET DEFISIT MASEH BESAR DAN FDI MASEH RENDAH
Pada tahun 2009 kerajaan membentangkan bajet defisit yang paling besar dalam tempoh 20 tahun yang lalu iaitu 10% berbanding GDP. Separuh dari pelaburan keseluruhannya adalah dari kerajaan. Namun Menteri yang membentang ETP tersebut tetap mengatakan unjuran yang dibuat adalah kredibel. Padahal sumber kewangan maseh banyak bergantung kepada modal domestik kerana FDI yang masuk ke Malaysia maseh kecil. Soalnya apakah unjuran ETP ini realistik? Syarikat kerajaan seperti CIMB itupun nampaknya melabur keluar negara kerana insentif dan potensi di negara lain lebih tinggi.
- PIHAK SWASTA MAHU LIBERALISASI TOTAL
Pihak swasta mendapati kerajaan terlalu mengawal kepentingan GLC dan ini menganggu persaingan bebas . Industri swasta sering melihat kerajaan sebagai penggangu . Sejauhmana kerajaan akan menjaga kepentingan dana awam dalam syariakt GLC dan dalam masa yang sama melaksanakan dasar liberalisasi sepenuhnya seperti yang dituntut oleh syarikat konglomerat besar?. Apakah kerajaan akan kembali kepada pendekatan bahawa swasta lebih efisien dari kerajaan , dan dengan itu pengswastaan total akan diamalkan untuk mencapai pertumbuhan ekonomi lebih tinggi seperti yang didakwa oleh pihak industri?.
- ETP FOKUS KEPADA UNTUNG RUGI , BUKAN SOAL KEBAJIKAN DAN KEADILAN SOSIAL
ETP mengikut Idris Jala adalah “Private sector driven” , ertinya ETP adalah fokus kepada swasta bukan berteraskan kepentingan awam. Pertimbangan utama adalah kurangkan kos , maksimakan keuntungan. Soalnya dimana kepentingan rakyat diutamakan jika bertembung antara untung-rugi syarikat dengan kebajikan rakyat? Kenapa ETP tidak menyentuh persoalan ini?
- ISU KONSITENSI DALAM DASAR KERAJAAN.
Pihak swasta merasa kerajaan tidak konsisten dalam dasar dan proses perlaksanaan dasar. Dengan itu keyakinan terhadap kerajaan dipersoal. Pihak industri swasta menganggap dasar hak bumiputera dianggap kabur dan menyekat pelaburan dalam sektor yang melibatkan kuota ekuiti bumiputera. Malah pihak industri mempersoalkan maksud syarikat bumiputera yang berkemampuan mengikut takrif kerajaan. Bermakna yang dipersoal ialah ketelusan dalam menentukan persaingan antara syarikat bumiputera dan bukan bumiputera . Sejauhmanakah kerajaan akan tunduk kepada kehendak syarikat swasta untuk mengenepi kepentingan bumiputera berdasarkan persaingan bebas dalam ETP?
Bold RM1.4 trillion plan to transform economy
13 Sep 21, 10
Malaysia on Tuesday unveiled ambitious plans to boost its economy by mobilising hundreds of billions of dollars of private investment, although questions remained over whether the money would materialise.
The plans ranged from a new mass transit system to relieve congestion in the capital, Kuala Lumpur, to building a huge oil storage facility next to neighbouring Singapore to form a regional oil products trading hub.
A government thinktank said it had identified investments worth RM1.376 trillion (US$444 billion) over 10 years, of which 60 percent would come from the private sector, 32 percent from government-linked companies and 8 percent from government.
The investment aims to double per capita income and push Malaysia into the ranks of “developed” nations by 2020, rebalancing Asia’s third most export-driven economy towards domestic demand and the service sector.
These numbers ‘pie in the sky’
“The plan does not provide a clear sense of where the money is coming from. A lot of these numbers are pie in the sky,” said Bridget Welsh, a Malaysia specialist at Singapore Management University.
Malaysia is competing for investment with other fast-growing countries in Southeast Asia and neighbouring Indonesia recently unveiled plans to boost infrastructure too.
In the past 10 years, private companies invested just RM535 billion (US$172.4 billion), according to official data and Malaysia’s private investment rate of around 10 percent of gross domestic product (GDP) is among the lowest in Asia and a third the level it was before the 1998 Asian financial crisis.
The government, which in 2009 ran its biggest budget deficit in 20 years as a percentage of GDP, contributes around half the investment in Malaysia and the minister in charge of presenting the investment plans said the new targets were credible.
“I don’t think the government would publish a document that thick if there is no political will. It’s a risky strategy to expose yourself so publicly when you have no plan to do it,” Idris Jala told a public presentation on the plans.
The plan relies heavily on domestic capital as foreign direct investment in this country which in the early 1990s accounted for almost 40 percent of the Southeast Asian total accounted for just 3.8 percent in 2009, according to United Nations data.
Malaysian companies like leading bank CIMB and telco Axiata have started building a regional presence in large, fast growing countries, such as Indonesia.
Economists warned without a new policy framework to encourage investment the Malaysian plans would be hard to realise.
“It will be difficult to achieve the private investment growth target set by the government if there are no additional tax incentives given to the focus sectors,” said Gundy Cahyadi, regional economist at investment bank OCBC.
New jobs would be ‘middle-class’
The plans aim to create another 3.3 million jobs by 2020, many in the high-value service sectors such as Islamic finance. Idris said 46 percent of the new jobs would be “middle-class”.
Despite churning out tens of thousands of graduates, Malaysia’s education system has failed to deliver and is becoming increasingly polarised by arguments over language between the majority Malay population and minorities such as the large ethnic Chinese population.
The government thinktank that designed today’s investment plan said that in 2003 Malaysia had just 21,000 finance and accounting professionals qualified to be employed by multi-national companies compared with 341,000 in India and 127,000 in the Philippines.
“How can you create middle-class jobs when you do not have an education system that works,” said Singapore Management University’s Welsh.
There is also policy risk in Malaysia. Recent plans for a radical overhaul of the country’s costly subsidy regime proposed by the same thinktank that outlined the investment plans were shot down by government politicians who feared unpopularity.
Will ETP work with uneven playing field?
Aidila Razak Sep 21, 10
Questions over the creation of a level-playing field in business cropped up at the Performance Management and Delivery Unit (Pemandu)’s Economic Transformation Programme (ETP) launch despite what appeared to be a high-level of optimism.
When asked what the government should do to encourage private investment, captains of industry did not mince their words.
Addressing this at the Chief Executive Officers (CEO) Forum following the launch, AirAsia chief Tony Fernandes bluntly said: “Government should get out of business, it will make us all much happier.
“The government should not see their role as a protector of GLCs (government-linked companies) but an enabler to both these companies and private companies,” he said to applause from the full-house audience of 4,000 people.
Fernandes, who confessed that “most of his grey hair (sprouted) from competing with a GLC, added that when the government as a regulator sits on the board of GLCs, “there will never be a level-playing field no matter what they say”.
“I am not a GLC slayer, there are good GLCs like CIMB which has been set free and Celcom which has competed without much government help.
“(But) Public Bank does not have to call up CIMB to open a branch at Jalan Ampang,” he said. While Fernandes did not name Malaysia Airlines, he was clearly referring to the national carrier.
Similarly, Federation of Malaysian Manufacturers (FMM) president Yong Po Kuan said that it does not matter if private investment comes from GLC or otherwise, but “both must be free to compete (and) the government should not involve itself in business per se”.
Fernandes and Yong were on a panel with CIMB chief Nazir Abdul Razak, HSBC deputy chairperson Mukhtar Hussein, Celcom CEO Shazalli Ramly and Credit Suisse head of research Malaysia Steven Hagger.
The panel discussion was held following the launch by Pemandu CEO Idris Jala of an ambitious RM1.4 trillion development plan to be implemented over the next nine years with investments mainly from the private sector.
Nazir: Bumi quotas hold back investors
For Nazir, the one thing that needs to be addressed is consistency in government regulations.
“It is necessary to have absolute certainty in rules and regulations. We don’t want surprises and changes.
“(For example) the invitation for more entry point projects (as part of the ETP)… There must be a clear process. The last thing I want is for someone else to come in and (take over my) project. That’s my worry,” he said to nods from the audience.
An area which Nazir previously highlighted to be relatively vague and is causing investors to hold back is affirmative action policies involving bumiputera equity quotas.
Grilled on this by the media later, Idris – the man behind the ETP – said bumiputera companies that are capable are “encouraged” to compete on their own two feet.
However, he could not provide details over how the government will decide if a bumiputera is considered ‘able’ enough to compete or not.
Nor could he say what guidelines there would be in terms of the “managed liberalisation” of such quotas.
“In the case of small and big stores, it is crucial for the government to play the part of the regulator to protect small stores.
“In regulating bumiputera/non-bumiputera competition, the government plays the part of keeping it fair and transparent, which is easier said than done,” he admitted.
‘If it fails, it is your fault’
Earlier in his opening speech, Idris addressed a popular concern that there is not enough political will to push the programme through.
“The government will not publish such a thick document… it is risky to expose yourself if you have no plans to do it.
“Don’t get vortexed on philosophical and wasteful academic debates. Remember, (the ETP) is private sector driven, so if it fails, it is your fault,” he told the audience, comprising a large number of industry players.
The ETP is a product of 12 national key economic area labs largely from the private sector.
The programme provides detailed groundwork in changing the economy so the gross national income per capita will reach at least US$15,000 by 2020.
During the eight-week lab, the members recognised 131 entry-point projects which is expected to draw in RM1.4 trillion in investment by 2020, of which 92 percent will be from the private sector.
Anwar: Investors looking away despite NEP
Sep 18, 10 4:40pm
As along as the government does not develop a system of governance that is just, corruption-free and instills confidence, the country will continue to lose the attention of foreign investors, says Opposition Leader Anwar Ibrahim.
This is because investors look for such fundamentals as justice and integrity, without which investors will not be taken in by whatever economic models are presented by governments, said the PKR leader and Permatang Pauh MP.
“Unfortunately, this reality is ignored by the ruling elite, although it is the people who suffer the burdens (of such distortions), said Anwar in a statement.
The former deputy prime minister also cited a Malaysian Insider report on a Bank of America-Merrill Lynch survey that is said to have found Malaysia to be among the least attractive in the Asia-Pacific region for investors.
“Even though the government tries to portray a positive picture (of the Malaysian economy), the truth is that Malaysia has fallen two rungs from its previous position of 10 in the investment bank’s latest Fund Managers Survey.
“Surely this report expresses my concern relating to the current economic position of the country under the administration of (Prime Minister) Najib Abdul Razak, which purportedly will be unveiling a brilliant economic model to attract investors,” said Anwar.
What should be addressed is the perception by investors that Malaysia can no longer compete with other countries such as Indonesia, he added.
A survey last week by the World Economic Forum of 139 nations reportedly showed that Malaysia had slipped two places in global competitiveness rankings to 26th in the past year, while Indonesia surged 10 places to 44th.
“Due to these developments, we doubt the New Economic Model of the prime minister will be able to rehabilitate the nation’s stagnant economy,” said Anwar, who once helmed the ministry of finance.
Anwar said the government’s target of attracting RM2.2 trillion in ten years – 92 percent of which is to come from the private sector – will surely raise scepticism among those investors who are staying away from Malaysia.
“I wish to stress here that investors lay stress on a judicial system that is clean, a corruption-free environment and a leadership that instills confidence.
“The presentation of detailed economic policies while ignoring the fundamentals mentioned above will only be coldly received,” he added.
ETP skips fundamental issues for big toys
Aidila Razak Sep 21, 10
Performance Management and Delivery Unit’s (Pemandu) Economic Transformation Programme (ETP) open day was a series of hits and misses as the government made a bold attempt to sell the public on one of Prime Minister Najib Abdul Razak’s transformation pillars.
On the surface the event was a roaring success, attracting about 4,000 participants who packed the hall for the morning launch and forum.
The booths on each of the 12 national key economic areas were easy to navigate, and break-out sessions offered a closer look into the programme.
But participants eager to sink their teeth into more than just the free flow of food on offer were left slightly underwhelmed, as details of the so-called “cangkul (shovel)-ready” programme were noticeably missing.
For example, at the popular breakout session for the Greater KL national key economic area (NKEA), participants were told by Pemandu’s NKEA director Ahmad Suhaili Idrus that many of their questions could not yet be answered.
Queried on the implementation details of the Mass Rapid Transport project that is meant to transform the public transport landscape of the city, he said, “We don’t have the answer now. These questions can only be answered in a few months to come.
“You must remember that we are still in the 9th Malaysia Plan and all this is under the 10th Malaysia Plan, which will start at midnight on Dec 31, 2010,” said Ahmad Suhaili.
No answers in sight
A visit to the booths manned by members of 12 NKEA labs where these ideas were said to have sprouted also yielded few details, mainly because many of the ideas are still very much in the planning phase.
Question marks abound over the completion date of the evidently popular high speed train – said to ferry passengers between Singapore and Kuala Lumpur in two hours – with no answer in sight as feasibility studies are still under way.
“I suspect it will take a long time to come to fruition because we still have to talk to the Singapore government,” said one lab member.
Questions on details like the cost and mechanics of getting all Malaysians wired to broadband by 2015 were glossed over by another lab member, who merely said that it will happen if there is a demand.
Further probe into the specifics of the 131 entry point projects committed to by the private sector also came to naught as the companies spearheading the projects were strangely absent.
At the other extreme, some booths, like the Oil, Gas and Energy and the New Economic Model booths were so technical that expert lab members were unable to really break down the jargon and terminology.
Many participants are likely to have left either confused, or ill at ease, for example at the idea of having a nuclear reactor “somewhere we don’t know yet” by 2021- a proposal that despite being fuzzy on details is evidently absolutely on the cards.
What is clear, however, is that some of the projects mooted require amendments in policy, procedure and even laws, like the unified building by-laws that the lab member of Communication Content and Infrastructure booth proposed to be amended to make broadband available in all homes.
‘Fundamental issues not addressed’
Participants who managed to get hold of a lab member could also only pray that their verbal feedback is brought back to Pemandu, as feedback forms left hardly any room to say ‘yea’ or ‘nay’ to the many projects mooted, appearing to serve rather as a tool to measure scepticism.
And scepticism will be a major hurdle for Pemandu, considering the many ‘hows’ and ‘wheres’ still missing in many of the projects mooted and presented..
One person who was left unconvinced was DAP-Bukit Bendera parliamentarian Liew Chin Tong (right), who told Malaysiakini that he found the ETP “disappointing”.
“I don’t think Malaysia can benefit much from this, because there is no clear direction and it does not deal with fundamental issues,” he said.
The fundamental issues that the project-based approach does not address, said Liew, are “issues of low productivity, low skills and low wages”.
He added that future growth must come from innovation, and not “big capital investment into big infrastructure toys, like mass rapid transport and nuclear (plants)” even if this investment is privately-driven.
A nation of failed economic development plans
AB Sulaiman Sep 20, 10
COMMENT The world can be a nasty place especially in terms of planning, where your best and well intentioned plans can produce the worst unintended results. The country’s numerous development plans is a perfect example of this.
Since Independence we have always strived to be a country with strong social, economic and political credentials: a strong healthy and united people, public safety and security, great infrastructure, mature democracy, clean human rights record, good education system, governed under rule of law, and of course, a justice-minded judiciary.
To top them all off we are to enjoy a per capita income equal to the peoples in advanced economies. We wish to be an advanced country in our own right.
The current realities are anything but. The people are fragmented while some are migrating to friendlier lands, our infrastructure while adequate is wasteful, our democracy is an ugly disguise for authoritarianism, our education system produces non-thinking graduates, the rule of law has become the rule by law, and the judiciary is an international laughing stock.
The latest world indices would confirm this. There are many but I’d mention just two. First, the 2009 figures for FDI showing an 81 percent fall from US$7.32 billion to US$1.38 billion. At this paltry level we now have joined investment-unattractive countries like Myanmar, Cambodia, Laos and Timor–Leste.
Not only that, apparently the FDI into Thailand and Indonesia have overtaken that coming into Malaysia, once the darling of international investors.
Two, as for per capita income we are at about US$7,000 while the advanced countries we wish to join are at US$30,000 and above. We are less than a quarter of the way to our self-proclaimed goal.
On looking back, we started well in the arena of economic development, but somewhere along the line we faltered and very badly.
Faltered from the start
I reckon we faltered beginning 1970 when we introduced the New Economic Policy (NEP). This was when we began propounding and experimenting economic development plans beyond the parameters of sound economic principles.
Specifically we made plans and projections not in the interest of the country, but in the interest of a segment of the population, namely the Malays.
Now this might be an explosive statement to make so I have to make my stand clear.
The fact of the matter is that the factors of production in an economic set-up are land, labour, capital, entrepreneurship, and in an increasingly knowledge-based world economy, on the ability to access and utilise knowledge. I ‘borrow’ these factors as principles for economic development.
For an economy to expand therefore, all scarce resources must be optimally channelled for the development of these principles.
I’d reiterate: develop land, inject capital optimally for investment, encourage entrepreneurship, enhance the level of knowledge through smart education. Only then can the economy expand and achieve sustainability.
This last element of sustainability is important – the developing economy must reach a level when it can sustain or regenerate itself without anymore support from any planning agency.
Anything less than this and we can see an economy not going anywhere, and could in fact regress, like our current situation. Lim Kit Siang sums it well – the economy would be a ‘work in regress’.
What has gone wrong with our string of development plans? In my view there are several, and I mention them here despite being aware that many commentators have mentioned them constantly. Perhaps there can be some wisdom in saying the same things again, hoping somewhere along the line the decision makers can begin to listen.
Several hundred billion USD wasted
First, after 1970 we seem to divert the elementary formula for economic development mentioned above, into some non-optimal channels resulting in massive wastage. Our planners channelled land development mainly to the Malays. We made development plans for sectarian, not for national interests.
In this way the Malays gain comparatively easy access to scarce capital they cannot fruitfully use because of their lack in entrepreneurial skill and spirit. Their lack in education and knowledge have rendered their productivity level below that of their non-Malay counterparts.
I am aware of course that this resource misallocation was for a special reason and thereby meant to be implemented only for twenty years. But when this time was up the authorities would merely forget this proviso.
As events turn out, such allocations have proven to be below optimum level; even wasteful of scarce resources. External observers have noted that the NEP wasted several hundred billion US dollars!
Favouring race over economics
When the leaders saw that the Malays could not cope and the non-Malays restive they use race and religion to both spur the Malay on and to push away any non-Malay disgruntlement. In other words the leaders dismissed the traditional economic factors of national asset creation in favour of Malay racism and cultural hegemony under the banner of Ketuanan Melayu; and of Islam.
I might be out of academics but I have never known racism and religion to substitute economic factors in any country’s asset creation efforts. Surely the planners have not forgotten that this new formula was experimental in nature and to last only for twenty years.
In any case, here we see the early unintended results of the NEP. On the part of the Malays we see a community of people developing a false sense of confidence that they have progressed ahead on the platform of race and religion; whereas in actuality they have not.
On the part of the non-Malays they see the wastefulness of the country’s allocation of scarce resources in the interest of racism and religion as the sure way towards non-sustainability and regression.
And yet the authorities would prevent the citizens to even debate the issue.
No post mortem conducted
Come 1990 and the NEP report card had shown the recklessness of this development programme. Malay achievements were nowhere in sight.
Would there be some form of post-mortem analysis to see the good and bad points? To see whether the country should progress ahead in the same race-and-religion principles?
There has been no such effort, not to my knowledge anyway. It has been more of the same: more racism, more religion. And here we see the continuation of a string of failed development programmes.
Dr Mahathir Mohamad (left) announced the Vision 2020 stating that the country would join advanced nations by this magical year. It was well-intended perhaps, but with the economic principles remaining unchanged, that is in favour not of the country but of the Malays, the country began its slide downwards.
When Abdullah Ahmad Badawi took the reins of power, many people had thought that he might just do the right thing to put the country back on the right track again. But he used religious motives (remember Islam Hadhari) to lead the people forward – there was no change there either.
Now we have Najib Razak leading the nation out of the dangerous zone of falling into the steep precipice of a failed state. He has his own plans of course, and its called 1Malaysia: people first, performance now. Will he make any headway?
I just say this to him for whatever it is worth. Go ahead with your development plans based on the proven factors of production as mentioned severally above.
But do not be distracted by sectarian interests, nor for religious considerations. Go for optimum scarce resource allocation and economic sustainability.
AB SULAIMAN is an observer of human traits and foibles, especially within the context of religion and culture. As a liberal, he marvels at the way orthodoxy fights to maintain its credibility in a devilishly fast-changing world. He hopes to provide some understanding to the issues at hand and wherever possible, suggest some solutions. He holds a Bachelor in Social Sciences (Leicester, UK) and a Diploma in Public Administration, Universiti Malaya.
The bumiputera corporate equity issue revisited
Lim Teck Ghee Sep 5, 10
COMMENT More than five years have passed since the Asian Strategy and Leadership Institute (Asli) corporate study report revealed that bumiputera ownership of corporate equity in the Kuala Lumpur Stock Exchange had exceeded the 30 percent target.
The study’s findings of a 45 percent bumiputera share were based on a different method of measurement compared with the official one.
Using market value as opposed to the par value valuation official method, and allocating the equity of GLCs according to racial share, the study noted that time had come to do away with the policy that had been implemented since the 1970s.
The study’s findings raised a hue and cry not only because it challenged the official data on the share equity attained by the Malay community, but more importantly because it challenged the official orthodoxy.
Strong reactions from various Umno leaders at that time indicated their fury – and perhaps fear – that the Asli study negated a long-held belief on how the bumiputera corporate equity strategy was necessary for bumiputera economic advancement, and synonymous with the interests of the Malays.
Lost in the firestorm were the study’s recommendations that encompassed a wide spectrum of issues. Those recommendations are reproduced below.
I hope they will be read more carefully by the present crop of policymakers and politicians who are trying to find their way out of what has correctly been referred to as the “bastardisation of the NEP”, an assessment made by one of the nation’s foremost bankers, Nazir Razak (right).
Findings on corporate equity
The following findings and recommendations are drawn from the Centre for Public Policy Studies’ 2006 report.
GLCs are leading shareholders of corporate equity. The GLCs’ pattern of operation reflects little entrepreneurial and manufacturing capacity.
Regulatory agencies ensure that 30 percent of the equity of quoted firms are owned by bumiputera. These agencies do not, however, ensure that individual bumiputera allocated large volumes of publicly-listed equity, especially during IPOs, retain their ownership of this equity.
Publicly-listed shares distributed to bumiputera minority shareholders during IPOs should be done in a more equitable and transparent manner. Currently, an elite benefits from such IPOs, and these shares are quickly divested for huge profits.
The continuous divestment by bumiputera shareholders (partly as a means of asset diversification) has been mainly responsible for the so-called “under achievement” by bumiputera in relation to the NEP corporate equity targets based on the official definition.
Even if this divestment is not taken into account, bumiputera share of corporate equity presently is well in excess of the target of 30 percent, if more objective methodologies of measurement are used.
There is little intra-ethnic business cooperation among leading Chinese businessmen. There is growing evidence of inter-ethnic partnerships forged on a basis where the partners contribute equally to the development of an enterprise.
Government regulation and policies, principally in the form of NEP measures, are stymieing entrepreneurial development and hindering domestic and foreign investment.
Recommendations of the report
Enterprises owned by the GLCs must be managed by competent professionals with expertise in the business of the company under their charge. Senior management positions should not be determined on the basis of ethnic background but on merit and professional achievement.
The government should cease allocating equity to individual bumiputera during IPOs. The allocation of shares to bumiputera before IPOs tend to promote ‘Ali-Baba’ relationships that only serve to undermine investor confidence and foster ill-will.
Bumiputera trust agencies, such as the ASN and ASB, should be the primary beneficiaries of IPOs allocated to this community. At the same time, there should be equal determination by the government to increase the share participation of the Indian and East Malaysian bumiputera communities through similar community-based trust agencies.
Government initiatives to promote enterprise development on the basis of affirmative action will undermine entrepreneurial endeavours, that have emerged primarily among SMEs without state support.
The government should focus its attention on promoting key economic sectors and SMEs as a means to develop Malaysia’s economic potential. The government should particularly tap into the potential of the new middle class to create thriving enterprises and find means to support such endeavours.
Racially-oriented affirmative action and the promotion of Malay-owned businesses have created serious intra-ethnic Malay cleavages while also hindering the creation of a competitive economic environment. The government should not continue with the promotion of such policies.
In calculating the respective ethnic shares of the corporate equity, there is need to apportion the share of GLCs as well as nominee companies according to the ethnic composition of the country. This will provide a fairer and more objective computation of the respective ethnic shares as compared with the current methodology.
Government policies to enhance Malay bumiputera and other ethnic minority participation in commerce and industry are better achieved through capacity-building efforts such as investment in human resource development and skills training rather than through forced equity restructuring.
Continuing wayang on Malay equity
It is understandable why Perkasa and similar parasitic groups are raging away at the corporate equity issue. The ultra-nationalist movement badly needs issues that can burnish its credentials as the protector of Malay interests and derail the structural reforms the country needs to flourish.
What is incomprehensible is why Umno continues to harp on the attainment of the racial corporate equity share target as a key goal to be pursued for the Malays and the country as a whole.
It is absolutely the wrong target to focus on because it has been conclusively shown to benefit only a minority of well-connected and already wealthy business and political leaders – numbering perhaps no more than a few tens of thousands of individuals and their families at most.
One would have thought that the RM52 billion out of RM54 billion of equity value sold off by bumiputera preferred investors between 1985 and 2005 would be sufficient proof that these individuals do not need more perks and special treatment.
More important, the bumiputera corporate equity target is the wrong target as it will only distract from the more important challenges that the nation and especially the Malays and other bumiputera communities need to face up to.
DR LIM TECK GHEE is director for the Centre for Policy Initiatives. This article first appeared in Chinese in the weekly paper Red Tomato.
ETP to boost nightlife and spa industry
The Najib administration wants to turn Malaysia into a major nightlife hub to boost its tourism industry under the Economic Transformation Plan (ETP).
This will see the establishment of several major nightclubs, the hosting more major concerts, relaxing of guidelines for performers and the “repackaging” of international events such as Formula 1 and MotoGP.
According to the ETP roadmap released yesterday, this is part of the government’s 12 entry-point projects (EPP) to resolve the problem of having steadily increasing tourist arrivals, but being hampered by a relatively low yield.
This move is likely to see political repercussions from religious conservatives who regularly protest against concerts by international stars, with openly gay US pop sensation Adam Lambert being the latest target.
One of the 12 EPPs involves the relaxing of stringent guidelines for concerts and international events, which currently keep many foreign performers away, but are yet panned by critics as being too lax.
From the last quarter of 2010, international performers who fulfill three minimum criteria are being exempted from the existing guidelines imposed by the Central Agency Committee for Application for Filming and Foreign Artists Presentation (Puspal).
The three criteria for exemptions are:
- A-rated, based on the Billboard top 100 in the past five years;
- Attract a minimum of 2,500 spectators per event; and,
- Have performed in at least three international venues.
Instead of the Puspal guidelines, events that fulfill all three criteria will be treated with “more flexible guidelines”, tax exemptions and relaxed immigration requirements for performers and their crew to help develop Malaysia as a hub for international events.
Performances will also have to carry audience warnings (such as ‘G: General’ or ’18+: 18 years old and above’).
Under this EPP, RM467 million will be spent on the cumulative investment required on this portion of the plan and it will be completely borne by the government, with the overall gross national income (GNI) estimated at RM427 million and the creation of 8,000 jobs.
Five new ‘party zones’
What is even more surprising is the EPP on the establishment of dedicated entertainment zones in Greater Kuala Lumpur/Klang Valley, Genting Highlands, Penang, Langkawi and Kota Kinabalu to triple Malaysia’s nightlife earnings to RM1.8 billion by 2020.
The move will see six new nightclubs capable of coping with at least 900 visitors on weekends begin operation by early 2012, with two more opening in 2013 and 2014 respectively.
“By 2014, there will be at least 10 nightclubs in the new entertainment zones. The expected impact of this will be RM0.7 billion in GNI and approximately 5,614 new jobs by 2020,” the report says.
These dedicated zones will also see the extension of operating hours for entertainment outlets, extension of working visas for foreign artistes and crews and the relaxing of the local to foreign artistes ratio specified in the current Puspal guidelines.
This EPP also states that there will be a clear demarcation of entertainment zones to minimise any adverse impact on local residents and ensure a buffer zone of 100m from residential and religious areas.
The announcement of the five new party-friendly zones is also likely to stir up conservatives who earlier this year forced the Najib administration to scuttle plans to legalise sports gambling.
Regulating and boosting spa industry
The ETP also seeks to boost and regulate Malaysia’s spa industry, which is expected to reach RM830 million by 2020, driven mostly by tourists.
“However, skills requirement and service delivery remains the most pressing issues hindering potential growth,” notes the report.
This is also hampered by immigration policies that severely restrict the hiring of foreign semi-skilled workers and the limited number of local spa therapists.
To resolve the human resource shortage, three centres of excellence (CoEs) are to be established to serve as training centres to produce local spa therapists.
The goal is to produce 1,500 therapists annually and bring the ratio of local to foreign therapists to 70:30.
The three centres of excellence will be located in the Greater Kuala Lumpur/Klang Valley, Johor and Sabah due to their “proximity to spa establishments”.
The ETP report also states that a Spa and Wellness National Council will be established by mid-2011 to regulate the industry. Its board members will comprise industry players and government officials.
Funding for this project is RM23 million, and will be borne by the three centres of excellence and the national council. The estimated GNI is RM0.4 billion, with the creation of 3,500 new jobs.
It’s RM26,000 a day to maintain homes of PM, DPM
Prime Minister Najib Razak’s recently announced Budget 2011 has revealed shocking details about the amount of money put into the “rental and maintenance” of the official residences of the country’s top politicians.
According to Budget 2011, a whopping RM26,000 a day is spent on the rental and maintenance of the official residences of the prime minister and deputy prime minister, Bukit Bendera MP Liew Chin Tong said in Penang.
In a written reply to his recent parliamentary question, Liew said, he was told that RM4,149,000 was paid a year as rental to Putrajaya Holdings – the master developer of the federal administrative capital Putrajaya – and another RM1,896,616 on maintenance.
In the same reply, Liew added, Prime Minister Najib Razak revealed that the government forked out RM6 million a year for the rental and maintenance works for his official residence, Seri Perdana.
“The government also pays RM3.4 million (RM2,273,888 for rental and RM1,129,992 as maintenance) for Seri Setia, the deputy premier’s official residence,” he told a Post-Budget Dialogue organised by Penang-based Socio-Economic and Environmental Research Institute (Seri) last Friday.
“This makes up a total of RM9.4 million a year; in total, or about RM26,000 a day for the residences of the PM and DPM alone,” added Liew, who is also Seri executive director.
Earlier last week, Liew (left) told a press conference at the Parliament lobby that an RM65 million spruce-up would be carried out on Najib’s official residence over the next two years.
RM16b to be spent in 2 years
He said the renovation plan for the 10-year-old complex was part of the RM16 billion budget for the Prime Minister’s Department, to be spent in 2011 and 2012.
About 80 participants attended the Seri dialogue, which aimed to provide a succinct analysis of the 2011 Budget and the implications of the various policies and measures introduced.
LLG Cultural Development Centre chairperson Toh Kin Woon, who chaired the dialogue, said the 2011 Budget was expected to provide an insight into the directions and strategies the government planned to execute under the 10th Malaysia Plan, New Economic Model and the Northern Corridor Economic Region.
Other speakers at the dialogue included economists Chan Huan Chiang and Manokaran Mottain.
In his delivery, Chan, who is Malaysian Institute of Economic Research associate research fellow, said that Malaysians have been living off the assets of this oil rich country.
“One definition of sustainable development is that the present generation must not deny future generations the same productive capacity,” said Chan, who is also associate professor at the Centre for Policy Research, Universiti Sains Malaysia.
But, some good news for Penangites
He said that despite Malaysia having a population of 27 million, of whom 12 million were workers, there were only 4.5 million tax files and just about two million taxpayers.
He also warned that poor public delivery systems, such as poor basic amenities for the people, would eventually lead to security problems and a high crime rate.
However, not all of the items in the Budget were bleak news.
Senior economist at AmResearch Manokaran Mottain said despite the negative points, the Budget provided some good news for Penangites.
Manokaran said Penang was set to be the “Gateway to the Northern Corridor” and stood to be transformed into a modern and vibrant city, as well as a logistics and transportation hub.
Under the 10th Malaysian Plan, major investment projects for Penang included the second Penang Bridge, expansion of the Penang International Airport and improving the frequency and reach provided by the RapidPenang bus service.
“Penang’s economy is expected to rebound strongly, by 7.7 percent this year, before moderating slightly to 5.7 percent in 2011,” said Manokaran, who was a senior economist with Bank Negara from 1987 to 1996.
“Manufacturing is the most important component of the Penang economy, with the sector expected to grow by 8.5 percent and account for 50.9 percent of the state’s GDP this year,” he added.
Award for nuclear plant as early as 2014
If the Economic Transformation Programme (ETP) is to be followed to a tee, the contract for Malaysia’s first-ever nuclear power plant will be awarded as early as 2014.
This is in order to ensure that the twin unit power plant begins operations in 2021.
According to the ETP timeline, which is “still under development”, all studies will be completed by the end of next year, while planning will be concluded by the start of 2013.
However, procurement work will start midway into 2012, while construction in earnest will begin in 2017.
The project is expected to cost RM21.3 billion of investment up to 2020, although it is unclear if the government will foot the whole bill.
Interestingly, the plan, which details out timelines for project work including site safety analysis and developing regulation, does not state the duration allocated for public engagement and acceptance.
This is despite stating it as the first step in “four critical path items (which) must be addressed with highest priority”.
The four critical path items are:
- Public acceptance of the project
- Ratification of relevant international treaties
- Developing correct regulatory framework
- Approvals for plan sites, including from local populace.
The Nuclear Power Development Steering Committee, headed by the Energy, Green Technology and Water Ministry, was set up in July 2009 and has been mandated to plan and coordinate the project.
The committee is tasked to conduct studies to aid the preparation of an infrastructure plan, expected to be ready by 2013.
According to the ETP roadmap, site selection study and pre-feasibility study are also expected to be completed by then.
The nuclear project will be spearheaded by national energy giant TNB, which had recently expressed that it is ready to do so.
More big hydro for Sarawak?
Commenting on this at the ETP roadmap launch yesterday, Minister in the Prime Minister’s Department Idris Jala said that nuclear is only one of several renewable energy sources explored.
“Discussions will take place (about nuclear). There will be no shortcuts, safety is paramount,” he said.
Among the other sources of renewable energy noted in the roadmap are five more hydroelectric dams, like Bakun, in Sarawak.
While hydroelectric power is touted as green energy by some, environmentalists refute this claim due to the severe damage that big hydroelectric dams cause to the eco-system.
The Bakun hydroelectric dam, for example, has caused tremendous loss of rainforest, while badly planned relocation efforts of about 10,000 indigenous people have left problems still unresolved.