Malaysia to have antitrust law, current laws to have more bite

STAR, 26 January 2010

PUTRAJAYA: The Competition Act will be in place soon to protect consumers against market abuse from cartel activities and monopolies, said Domestic Trade, Co-operative and Consumerism Minister Datuk Seri Ismail Sabri Yaakob.

He said it was time for Malaysia to have such a law in place to ensure consumers were protected from the unscrupulous trading practices of cartels and monopoly businesses.

He said the draft of the new legislation had already been submitted to the Attorney-General’s Chambers and would be up for its first reading in Parliament in March.

“We are excited to have the Act in place because then we would have the authority to act against companies which gang up to set a high price for goods or services.

“The Competition Act will also allow us to act against those who monopolise certain type of businesses and prevent them from increasing their fees indiscriminately without considering the consumers just because the public are not able to get similar service elsewhere,” he told reporters after meeting representatives from consumer associations.

He said the Act was expected to be enforced by the end of 2011 as time was needed to educate the public as well as business operators on the new law.

Ismail Sabri said that several Acts under the ministry would also be amended to further protect consumers against indiscriminate and unfair business practices. This includes a review of the Price Control Act to include laws on anti-profiteering.

He said soon, consumers would be protected against businesses that were found to have increased prices of goods “to a ridiculous level,” citing an example where restaurant owners could face prosecution if they charge an additional 20sen or 30sen for a glass of teh tarik (pulled tea) when the increase of sugar was about 20sen per kilo.

He said with the amendments, consumers also need not worry about a surge in the price for goods that were suddenly in demand, such as the increase in the price of facemasks in the wake of the Influenza A(H1N1) outbreak last year.

Ismail Sabri said amendments would be made on the Hire Purchase Act to protect consumers from unfair practices when their cars were repossessed, while a review of the Consumer Protection Act would look at unfair contract terms.

The Copyright Act would be amended to allow action be taken against those who possess pirated DVDs.

“We are also amending the Direct Selling Act to further safeguard consumers from multi-level pyramid schemes and get-rich quick businesses because we can soon take action against companies which are not even registered with us,” he said.

Ismail Sabri said consumer associations were briefed on the amendments and they supported the efforts undertaken by his ministry to further protect consumer rights.

New rules to limit amount of petrol a vehicle owner can buy

STAR, January 17, 2010

KUALA LUMPUR: The Government is likely to put a cap on the amount of subsidised petrol a car owner can buy monthly, when the new petrol pricing mechanism starts on May 1.

Without a cap on the amount for each car, those eligible for the subsidised petrol would “definitely abuse it,” said Domestic Trade, Co-operatives and Consumerism Minister Datuk Seri Ismail Sabri Yaakob.

“They will buy as much petrol as possible and transfer it into a drum or somewhere, and then sell it to those who are not eligible.

“Those living near Thailand will sell it across the border,” he said in an interview yesterday.

Ismail Sabri said the Government was still discussing how much the limit should be and said this would be revealed to the public when it was fixed.

He admitted that those travelling long distances frequently and had no transport allowance might lose out due to the monthly cap.

However, there were others who would stand to gain, such as those driving small cars, living in small towns and working close to where they live.

The Government recently announced that it would fix a two-tier pricing system for petrol, depending on engine capacity, while foreigners would have to pay the market price.

Currently, the Government is subsidising petrol at 30 sen per litre for all. The market price for RON 95 is RM2.10 per litre but because of the subsidy, the pump price is only RM1.80.

Ismail Sabri said a person would be eligible for subsidised petrol for only one car.

He said, however, that if the cars were registered to different people, like the owner’s wife or children, then each would be eligible for the subsidised petrol.

On whether there would be two different pumps (subsidised and not subsidised) at petrol stations, he said that would not be the case; instead the pumps would have two prices or just the market price but those entitled to the subsidised price would pay less.

The Government was also looking at inserting a chip into the MyKad with information of the car, so that those eligible could swipe their MyKad for subsidised petrol.

The new pricing mechanism would apply only to the peninsula in the initial phase but it has raised many questions with few answers.

In Butterworth, DERRICK VINESH reported that Ismail Sabri said the archaic Hire Purchase Act would reviewed to protect car buyers from being harassed by car repossessors and finance companies.

“The laws at present seem to favour the banks and finance companies rather than consumers.

“Under the 1Malaysia concept, the people come first,” he said after opening the Consumer Awareness campaign at Sunway Carnival Mall Seberang Jaya here yesterday.

The other Acts also to be amended were the Copyright Act; Consumer Protection Act, Price Control Act and Direct Selling Act.

“We hope the Acts can be amended and passed in Parliament by the third quarter of the year,” he said.

At another function, Ismail Sabri said amendment to the Copyright Act 1987 would make owning even one copy of a pirated VCD or DVD an offence.

Malaysia’s subsidy dilemma

Malaysian Insider, Jan 18, 2010

KUALA LUMPUR, Jan 18 — While it appears that the government has decided on a piecemeal removal of subsidies, some Cabinet members, senior government officials and economists believe that a complete withdrawal would benefit the country more.

The Malaysian Insider understands from government officials that a total removal of subsidies for fuel, gas, flour and sugar could save the government up to RM50 billion a year.

Some Cabinet members and government officials are understood to be mulling the idea of biting the bullet, instead of doing it little by little.

They are arguing that the huge sum of money saved could be used to provide targeted help for the lower income group.

The savings from removing subsidies could also be used to free up money for various government infrastructure projects that would directly stimulate the economy.

The idea of a piecemeal removal has already proven to be problematic.

While the subsidy on gas is likely to be reduced soon, the plan for a two-tier pricing mechanism for petrol has attracted strong public criticism.

From May 1, Malaysians and non-citizens will pay different petrol prices as foreigners are not eligible for fuel subsidies, Domestic Trade, Cooperatives and Consumerism Minister Datuk Seri Ismail Sabri Yaakob announced recently.

To further complicate matters, not all Malaysians will get to enjoy subsidised petrol either. An announcement on the detailed mechanics of the system will be made on May 1, the day it goes into effect.

The minister said the petrol subsidy for those who qualify will be based on the engine capacity of their vehicles. The focus will be on those with lower income, who also usually use cars with smaller engines, he said.

The government currently subsidises 30 sen of the cost RON 95 petrol. The original price of RON 95 is RM2.10. The price of subsidised RON 95 is RM1.80.

In an interview with The Star published yesterday, Ismail said the government is likely to put a cap on the amount of subsidised petrol a car owner can buy monthly, when the new petrol pricing mechanism starts on May 1.

These proposals have attracted widespread criticisms because they are cumbersome and still subject to abuse or could end up penalising those in the lower income group.

Government officials in favour of removing subsidies altogether contend that a total withdrawal would remove the need for such complicated measures.

And they also argue that political fallout would be minimal as long funds from the savings are targeted at the right people and actually reach them.

The argument is that with up to RM50 billion freed up, direct cash aid could be awarded to those in need of such help.

Such a move appears to be a better option but Cabinet members remain unsure as to the best way to handle the subsidy problem.

Bringing foreign capital back to KL

KUALA LUMPUR, Jan 18 — Last month, Prime Minister Datuk Seri Najib Razak called his country’s top business tycoons for a little pep talk.

The message was simple. Jump-start domestic investment and help the government generate economic activity, said financial executives familiar with the meeting.

Najib is concerned because not only were foreign direct investment flows slowing, but key businessmen were also moving out of the economy.

Only months before the meeting, Asia’s richest businessman and Malaysia’s top corporate figure Robert Kuok sold off his long-established interests in the sugar importing and refining business. Save for his Shangri-La hotels nationwide, Kuok has little visible business interests left in Malaysia.

Meanwhile, casino operator Genting, engineering and property group YTL, and the telecommunications and multimedia holdings controlled by tycoon Ananda Krishnan have been restructuring their respective corporations in recent months.

They want to channel financial resources generated locally to finance overseas expansion plans.

Whether Najib’s cajoling of these corporate chieftains will force them to search inward for business opportunities is not clear.

But the vandalism of several churches nationwide over the use of the word ‘Allah’ by Christians will weigh heavily on their plans for future investments.

“It has all the hallmarks of a self-created problem which will trouble investors — not just foreign but domestic ones as well,” said Manu Bhaskaran of Centennial Asia Advisors in Singapore. “They would have noticed that the majority ethnic group in Malaysia appears insecure and how and why this insecurity has been bred.”

Malaysia stands at a crossroads in its economic development.

The country’s export-led economic model is sputtering because of weak global demand, while higher labour costs are forcing companies to consider other investment locations. Meanwhile, state-led infrastructure development that has kept the construction sector humming has dried up.

The boom in commodities is fading and exposing the government’s overdependence on its revenue from petroleum to fund the country’s bloated civil service and development programmes.

Najib has declared that he will unveil an economic blueprint next month that will detail the government’s plans to create a new economic model, which can help chart Malaysia’s transformation to a high-income economy.

But private economists said he faces several challenges and chief among them will be tackling structural gaps such as the shortage of skilled labour, a weak education system and a state-dominated economy that leaves little room for private sector competition.

Furthermore, the government’s reluctance to dismantle barriers that fuel a vast political patronage system has bred inefficiencies. These include the awarding of contracts on a negotiated basis rather than competitive bidding.

“The (new economic) model needs to be holistic and should go beyond economics and trade. Malaysia needs more openness,” Dr Mohamed Ariff, head of the Malaysian Institute of Economic Research (Mier), told a regional conference in Singapore recently.

Official figures show that approved investment for the first nine months of last year totalled RM19.1 billion, of which RM12.2 billion was foreign direct investment.

That is a far cry from the RM62.8 billion of approved investments in the previous year, with just over RM46 billion in the form of foreign capital.

Mier estimates that the economy contracted by up to 3.3 per cent last year. The independent think-tank believes the economy will grow by as much as 3.7 per cent this year.

But private economists said the rebound will be clouded by several factors, such as a swelling fiscal deficit and abnormal capital outflow. According to government officials, close to RM117 billion flowed out in 2008 and a further RM54 billion in the first half of last year.

Najib’s immediate challenge is to recreate an environment that will encourage investment. As a percentage of the nation’s gross domestic product (GDP), private investment currently hovers at around 11 per cent, from about 36 per cent during the mid-1990s.

Private economists like Bhaskaran of Centennial believe that Malaysia needs to get private investment to around 20 per cent of GDP quickly. To meet that target, Najib will need to implement a “thoroughgoing reform to reverse the degradation of institutions” such as the civil service, judiciary, police and the country’s universities, said Bhaskaran. — The Straits Times

Penang demands more funds from Putrajaya

KUALA LUMPUR, Dec 26 — Penang Chief Minister Lim Guan Eng (picture) said today he would be demanding a fairer deal from Putrajaya, after it was revealed that the state contributed RM25.6 billion to federal coffers between 2001 and 2008, but received only RM794 million in federal grants during the period.

In his Christmas message to the state, Lim said the Finance Minister had revealed recently in Parliament in a written reply to him that Penang contributed RM25.670 billion in the form of taxes and customs duties between 2001 and 2008.

"In other words, Penang received back only a shocking three per cent of what it contributed during the 8 years from 2001-2008.

"Even if we were to include federal projects of around RM10 billion during this period, the total amount spent in Penang would amount to at most 40 per cent," he said.

Penang appears to have joined its fellow Pakatan Rakyat (PR) state Kelantan in demanding better treatment from the federal government.

The Kelantan government had recently demanded the federal government pay it oil royalties, but Putrajaya, controlled by Barisan Nasional (BN), has refused.

Instead the BN federal government says it will offer Kota Baru what it terms compassionate payments, because it claims Kelantan is not entitled to oil royalties.

Penang, one of the country's industrial powerhouse states, has found access to funds difficult because its relatively small size means the state government's revenues from property taxes remain low.

Lim said today that the discrepancy between what the state contributes to the federal government and what it gets in return had resulted in the state being left out of the development mainstream.

"Even Singapore’s Minister Mentor Lee Kuan Yew made the observation that Penang was developing slower compared to other towns such as Ipoh or Seremban," he said in reference to remarks made by Lee when the Singapore leader visited the state earlier this year.

Penang, he said would now be seeking a fairer deal from the federal government to allow all Penangites equal opportunity for success and prosperity regardless of race, religion, gender or background.

- Malaysian Insider

Parliament: GST Bill tabled for first reading

STAR, 16 December 2009

KUALA LUMPUR: The much anticipated Goods and Services Tax (GST) bill is tabled in the Dewan Rakyat for first reading by Finance Minister II Datuk Seri Ahmad Husni Hanadzlah.

He also told the House that the second reading of the bill would be in the meeting of he Dewan Rakyat scheduled for March next year.

Later, at the Parliament Lobby, Ahmad Husni said the GST of 4% would be implemented in the middle of 2011.

With the implementation of GST, Husni said it would be a win-win situation for all as the Government would be receiving an additional RM1bil in revenue for the first year - from the current RM12bil to RM13bil.

At the same time, he said businesses would save RM4.1bil in taxes and the export sector would save RM1.4bil.

"The Government is proposing to impose GST at a rate which is lower than the sales and services tax rates, and to allow certain exemptions from GST, expecially on essential goods such as agricultural products - vegetables, basic food like rice, sugar, flour, cooking oil, fish, meat and chicken - so as to ensure that it will not burden the rakyat at large, especially the poor and the lower income group.

"The main purpose for the Government to introduce GST is to make the current taxation system more comprehensive, efficient, effective, transparent and business friendly.

"The sales and services tax will be abolished and be replaced with GST, which is a more efficient tax system in terms of cost effectiveness," he said.

Ahmad Husni said based on the proposed model, businesses were expected to benefit in terms of lower cost of doing business as GST was not considered as cost to business.

"GST will be able to reduce bureaucratic practices in the management and administration of the country's tax system and overcome the various inherent weaknesses that exist in the imposition of sales tax and service tax," he said.

He said companies with revenue RM500,000 and below would be exempted from imposing GST and about 70% of small and medium sized industries would also be exempted.

Asked whether GST would have any impact on inflation, Ahmad Husni said: "No. It will make businesses more competitive as the cost of business has reduced."

MCMC fast tracks RM5bil USP fund

STAR, Friday December 4, 2009

PETALING JAYA: The Malaysian Communications and Multimedia Commission (MCMC) is fast-tracking the use of its Universal Service Provision (USP) fund, having awarded RM264mil last week, and will announce a further RM1.4bil worth of funding before the year-end, sources said.

According to the 2008 annual report of the MCMC on the USP fund, the fund size totalled RM4.7bil as at the end of last year. The figure is believed to have topped RM5bil to date. This would make the MCMC one of the richest government regulatory bodies. (The USP fund is deposited with local banks CIMB, RHB, EON Bank and Maybank, the annual report revealed.)

The USP awards were given to telecommunications operators that had submitted proposals, based on tenders the MCMC had put out earlier this year, for broadband coverage in under-served areas.

The fund came into force in 2003, collecting at least 6% of revenue from all licensed telecommunications operators, which amounted to an average of close to RM800mil per year, although the collection surpassed RM1bil in 2008 alone.

The USP fund is aimed at providing telecoms facilities and Internet access to under-served areas, which are essentially areas where telecommunications operators have not ventured into due to insufficient demand.

As at the end of last year, only RM314mil of the USP fund had been disbursed and most of this was to provide basic telephony services, with the main recipient being Telekom Malaysia Bhd (TM).

Since last year, the MCMC has changed the USP fund’s focus from basic telephony to broadband, with speeds of more than 256 kilobits per second.

The MCMC lists out the geographical pockets concerned and invites proposals from licensed operators, offering to fund the additional costs involved to make the venture into those areas viable.

The MCMC picks the proposals that give the “most bang for the buck”, as one industry observer explained it. Operators are able to claim not only the capital expenditure involved but also operational expenditure for up to five years. The operators are also allowed to charge the end customer for the services they roll out in those areas.

On Tuesday, aggressive WiMAX operator Green Packet Bhd said it had clinched a RM41.5mil USP project to roll out its wireless broadband service in parts of Kedah and Perak.

However, it is understood that other operators had also won parcels of the RM264mil worth of USP contracts, the largest recipient being TM. TM declined to provide specifics but did confirm that it had won some of the recent USP fund tenders.

Industry players reckon that TM, being the largest fixed-line operator, has an advantage in winning USP-funded projects due to its widespread fixed-line infrastructure already in place. TM also contributes relatively less to the USP fund (see chart) as the contribution formula takes into account how much of rural roll out a licensee has undertaken in a given year. It should be noted that TM has refuted comments that it has a “sunken cost” advantage as it continuously invests in upgrading and maintaining its infrastructure and network.

The MCMC’s fast track in disbursing the USP fund is said to be driven by the Government’s target of having 50% broadband penetration in the whole country by the end of next year.