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.

S'gor never asked PAAB to lead talks, says water panel

Edge, 14 December 2009

KUALA LUMPUR: The Selangor state government did not request for Pengurusan Aset Air Bhd (PAAB) to step in to lead the talks in the state's water consolidation exercise as allegedly claimed by PAAB CEO Ahmad Faizal Abdul Rahman.

The members of parliament of Selangor Water Panel, which consist of Tony Pua (Petaling Jaya Utara-DAP), Dr Dzulkifli Ahmad (Kuala Selangor-PAS), William Leong (Selayang-PKR) and Charles Santiago (Klang-DAP), also refuted claims that it was the Selangor government that had caused the water talks to break down.

Ahmad Faizal had blamed the Selangor government for delays resulting in the state's water consolidation talks exceeding a year, according to an interview published by an English daily last Saturday.

"It is the federal government's insistence that Syabas remain the concessionaire for water distribution in the state.

"During the negotiations, the state government had even accepted a compromised proposal where Syabas will remain 51% majority shareholder on condition that there would be an independent professional management and equal board representation," said Pua in a press conference in parliament lobby today.

The water panel also slammed the federal government for offering Syabas a way out of its cash flow problems.

"The fact the federal government had been secretly negotiating a RM320 million interest free, unsecured and back loaded loan facility to Syabas serves only to prove the federal government's bad faith in the entire water talks, for while the state government is negotiating hard the terms of the new concession, the federal government is offering Syabas a way out for its major cash flow problems, which removes the incentive for Syabas to deal with the state government," said Pua.

He added that the lack of commitment from the federal government was clear when it refused to use it powers to get Syabas to the negotiating table with the state government.

According to Pua, Section 114 of Water Services Industry Act gives power to the Energy, Green Technology and Water Minister to force water players to hand over the assets for the sake of national interest.

In the said article, Faizal had also disclosed that PAAB would take into account the fact that the concessionaires' "liabilities are much higher than the tangible assets".

"This means the rakyat will have to bear the liabilities of these concessionaires as part of the takeover of water assets," said Pua.

He said PAAB was not consolidating or restructuring the state's fragmented water industry but was purchasing the concessionaires' assets at higher prices while continuing to issue operating and maintenance licences.

Leong meanwhile said PAAB's conduct had deviated from the objective of the Act.

"The objective of the Act is to enable the state government to operate the water concessions. Now this facility has been given to the concessionaires and not the state government," he said.

Santiago added that there was a sense of "regulatory capture" in the water issue where the companies being regulated were determining the outcome.

Asked what the water panel intended to do in the coming weeks, Pua said it would not rule out "necessary actions" on both concessionaires and the federal government should their meetings fail to achieve a result.

PAAB plans better offer to Selangor water concessionaires

STAR, 11 December 2009

PETALING JAYA: With the ball now in its court, Pengurusan Aset Air Bhd (PAAB) plans to make an offer it deems “more palatable” to Selangor’s water concessionaires next week, said chief executive officer Ahmad Faizal Abdul Rahman.

The water players, he said, would be given two weeks to revert.

“There is not much room for negotiation. We have based our offer on the results of the due diligence and the balance sheet. There is only so much one can negotiate on the difference in the interpretation of these figures.

“We will address the main concerns of the concessionnaires and the offer would be fair to all parties in the context or spirit of the WSIA (Water Services Industry Act 2006).

“We will take care of their liabilities and they will continue to operate although they will now be governed by the regulator (National Water Services Commission),” he said in an interview with StarBiz.

“The offer is palatable. I believe they will take it up.”

After over a year of heated negotiations led by the Selangor government with the water players which merely resulted in a deadlock, the state government finally gave up its bid in late November and asked PAAB to intervene.

There is wide expectation with PAAB leading the talks, there will soon be a resolution to the protracted talks that have significantly delayed the water restructuring plans in Selangor.

Faizal said the new offer would “more or less” be the same as the state’s offer which had valued the water-related assets at about RM9.2bil or one time book value.

“The numbers may be more or less the same but our approach is different. For example, certain things that were previously not recognised as assets, we will now do so in our offer. The approach is to relieve them of the debt-servicing burden while they can keep their business. So, the thinking will be different.

“The idea is not to touch the business yet. We will just take over the assets,” he said.

PAAB, fully owned by the Minister of Finance Inc, had earlier planned to make an offer this week but certain issues needed to be ironed out.

“We had presented the offer to the Government which had some (points for) clarification and issues. We have also sent the due diligence report to the Selangor government and probably need to bounce some issues with them as well,” he said on the reason for the short delay.

The Selangor water sector restructuring exercise, which includes buying over water assets, is part of a national initiative to regulate the water services industry for Peninsular Malaysia and Labuan under the WSIA.

This (taking over of assets) will make concessionaires “asset-light” companies and enable them to concentrate on their core activity of treating and supplying clean water to consumers while being relieved of high cost of borrowings to maintain water infrastructure such as dams and treatment plants.

The water assets in Selangor are parked under concessionaires Puncak Niaga (M) Sdn Bhd (PNSB) and Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) — both of which are controlled by Puncak Niaga Holdings Bhd — as well as Syarikat Pengeluar Air Sungai Selangor Bhd (Splash) and Konsortium Abass Sdn Bhd (Abass).

Abass is 55% controlled by Kumpulan Perangsang Selangor Bhd (KPS) while Splash is a 40%-owned associate of Gamuda Bhd.

The Selangor government’s investment arm, Kumpulan Darul Ehsan Bhd (KDEB), meanwhile has 30% in Syabas and Puncak Niaga holds the remaining 70%.

To recap, the Selangor government via KDEB, had offered in February to acquire PNSB and Syabas for RM3.12bil, Abass for RM525.67mil and Splash at RM2.06bil in an effort to consolidate the assets but the offers were rejected by all four concessionaires as being too low.

In June, KDEB raised the offer price for PNSB and Syabas to RM5.297bil, Abass to RM1.892bil and Splash to RM2.975bil but it was rejected by both PNSB and Syabas, aborting the entire offer.

PAAB is now expected to step in to break the stalemate.

“To the public, it looks like the offer is coming either from the Selangor government or the Federal Government or PAAB. But actually, there’s only one offer.

“We have a committee with representatives from PAAB, the Federal Government, Selangor government and so forth. Everything that is carried out by the Selangor government had been endorsed by this commitee.

“The difference is if before this, the Selangor government was leading the negotations, now we, PAAB, are doing so,” said Faizal.

In a short response to a StarBiz query, Energy, Green Technology and Water Minister Datuk Peter Chin said he had given his officers until end-March 2010 to complete the entire water restructuring exercise.

So far, PAAB has bought water assets from Malacca, Negri Sembilan and Johor, which means there are nine more states to go.

Govt Has No Intention To Abolish APs For Sugar, Rice

December 07, 2009

KUALA LUMPUR, Dec 7 (Bernama) -- The government does not intent to do away with giving approved permits (APs) for sugar and rice importation as it will only expose the prices to speculation and fluctuations in the international market.

International Trade and Industry Deputy Minister Datuk Jacob Dungau Sagan said the government, however, would continue to monitor and review the policy and implementation of the existing AP system if it was beneficial for the people in the long term.

"The government is responsible for ensuring that the prices of essential consumer goods are always at a reasonable level and not burdening the people," he said in reply to a question from Datuk Ismail Kassim (BN-Arau) in the Dewan Rakyat today.

Sagan said the existing import system for essential goods should not be seen as a monopoly to benefit certain parties only as the government had a mechansim to intervene if there were elements of consumer exploitation.

"The current policy is actually aimed at ensuring that the government has control over the supply and prices of the commodities, besides encouraging local refining of raw sugar for added value."

Sagan said at present APs to import raw sugar were only given to four sugar refineries.

To ensure raw sugar could be obtained at a low price, these companies had signed long-term contracts with the foreign suppliers, he said, adding that their utilisation capacity was at 60 to 65 per cent per year.

Sagan said if the importation of raw sugar was left open, it would affect the production capacity of these local refineries.

"The price of sugar in Malaysia is the lowest compared to that of other countries, including the neighbouring countries.

"If sugar import is not controlled by the government, it is feared that the importers will not bring in the sugar when the price is high in the international market."

He said insufficient and erratic supply of sugar in the local market would create problems for the food manufacturing industry, restaurants and other eateries, and the people.

-- BERNAMA

Sugar Price To Stay At RM1.45 Per Kg For Now

December 04, 2009

PUTRAJAYA, Dec 4 (Bernama) -- The government on Friday assured the people that the price of sugar will remain at RM1.45 per kg as it has no intention of withdrawing the subsidy in the near future.

Deputy Domestic Trade, Cooperative and Consumerism Minister Datuk Tan Lian Hoe issued the statement as the ministry has detected an increase in the demand for the commodity following an announcement that it was studying whether to withdraw the subsidy as proposed by various quarters to reduce sugar consumption among Malaysians.

"The ministry has not made any proposal to the Cabinet and the Cabinet has not discussed this. So we assure you that the price of sugar will be maintained at the present moment," she said.

She advised traders and consumers not to resort to panic buying of sugar or to hoard the commodity, and warned that the ministry would come down hard on hoarders.

Enforcement officers of the ministry were deployed throughout the country to monitor the situation and ensure that no one bought sugar in excessive amounts or hoarded the commodity, she said.

Tan told reporters the country had enough sugar to meet the demand.

The minister, Datuk Seri Ismail Sabri Yaakob, said on Tuesday that the ministry was studying whether to withdraw the sugar subsidy as proposed by various quarters to reduce sugar consumption among Malaysians.

Tan said any proposal to withdraw the subsidy would be discussed in-depth because, although it could help to reduce the intake of sugar, it was important to ease the burden of the poor.

The government is spending RM720 million this year to subsidise 60 sen for every kilogram of sugar and maintain the price at RM1.45. The sugar price may reach RM2.45 per kg next year if the ministry decides to abolish the subsidy.

Tan said the ministry would continue to strive to get the people to reduce their sugar intake through awareness campaigns.

"Sugar is the mother of various ailments. We do not want to be seen to be contributing to illnesses in the people by providing the subsidy," she said.

-- BERNAMA

Ministry Studying Proposed Sugar Subsidy Withdrawal

December 01, 2009

KUALA LUMPUR, Dec 1 (Bernama) -- The Domestic Trade, Cooperatives and Consumerism Ministry is studying whether to withdraw the sugar subsidy as proposed by various quarters to reduce sugar consumption among Malaysians.

Its minister Datuk Seri Ismail Sabri Yaakob said the ministry viewed the proposal seriously and the question of whether to abolish the sugar subsidy would be discussed at the Cabinet level soon.

"We (ministry) are studying whether to reduce or abolish the sugar subsidy. We admit that the subsidy given by the government is high," he told reporters after launching a campaign to reduce sugar intake among consumers organised by the Consumers Association of Penang (CAP), here, today.

Ismail Sabri said this year the government had allocated RM720 million for the sugar subsidy so as to maintain the price at RM1.45 per kilogramme.

However, he said, the sugar price might reach RM2.45 per kg next year if the ministry decided to abolish the subsidy.

"Among the factors considered for the proposed subsidy abolishment is that Malaysia is the only country that gives sugar subsidy to its people, besides encouraging them to live a healthy lifestyle by consuming less sugar," he added.

Earlier at the function, CAP president S.M. Mohd Idris urged the government to abolish the sugar subsidy which incurred a high cost for the government.

Recently, several other consumers associations also proposed the same.

-- BERNAMA

Government May Impose GST At Four Per Cent, Says Husni

November 26, 2009

KAJANG, Nov 26 (Bernama) -- The government plans to impose goods and services tax (GST) at four per cent, Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah said on Thursday.

"We are replacing the current sales and services tax, which is currently between five and 10 per cent," he told reporters at the Culture, Ideas and Values Workshop organised by the Foundation For the Future at Country Heights Resorts in Kajang.

He said the GST implementation was important for the country's future.

"The revenue source must be sustainable. If we can get sustainable revenue, we can get a good budget," he said.

He said the Consumer Price Index (CPI) would not increase if the GST was implemented.

Selected essentials like rice, sugar, cooking oil, flour and domestic transportation would not be subjected to GST.

Husni said the GST Bill would be tabled for first reading in the current sitting of Parliament and is expected to be tabled for second reading March 2010.

GST would be implemented 18 months after the second reading.

The government expects an additional RM1 billion in annual revenue one year after the GSt is introduced.

To a question on whether the Finance Ministry would establish a task force to investigate unpaid debts of RM500 million owing to 34 Class A Bumiputera contractors by Syarikat Perumahan Negara Bhd (SPNB), Ahmad Husni said:" There is no task force being set-up."

SPNB is a wholly owned subsidiary of the ministry.

"We have given money to them (SPNB) under the stimulus package. What is the need for a task force. This is not something very complex that needs a task force.

"We are confident the board of directors and management will resolve the issue," he said, adding that SPNB has already settled a portion of the outstanding debts with the contractors.

-- BERNAMA

Government May Impose GST At Four Per Cent, Says Husni

November 26, 2009

KAJANG, Nov 26 (Bernama) -- The government plans to impose goods and services tax (GST) at four per cent, Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah said on Thursday.

"We are replacing the current sales and services tax, which is currently between five and 10 per cent," he told reporters at the Culture, Ideas and Values Workshop organised by the Foundation For the Future at Country Heights Resorts in Kajang.

He said the GST implementation was important for the country's future.

"The revenue source must be sustainable. If we can get sustainable revenue, we can get a good budget," he said.

He said the Consumer Price Index (CPI) would not increase if the GST was implemented.

Selected essentials like rice, sugar, cooking oil, flour and domestic transportation would not be subjected to GST.

Husni said the GST Bill would be tabled for first reading in the current sitting of Parliament and is expected to be tabled for second reading March 2010.

GST would be implemented 18 months after the second reading.

The government expects an additional RM1 billion in annual revenue one year after the GSt is introduced.

To a question on whether the Finance Ministry would establish a task force to investigate unpaid debts of RM500 million owing to 34 Class A Bumiputera contractors by Syarikat Perumahan Negara Bhd (SPNB), Ahmad Husni said:" There is no task force being set-up."

SPNB is a wholly owned subsidiary of the ministry.

"We have given money to them (SPNB) under the stimulus package. What is the need for a task force. This is not something very complex that needs a task force.

"We are confident the board of directors and management will resolve the issue," he said, adding that SPNB has already settled a portion of the outstanding debts with the contractors.

-- BERNAMA